MUMBAI— Mr. Syed Shahnawaz Hussain, Minister of Industry, Govt. of Bihar has called upon Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) member to invest in the State of Bihar as an expansion of their business. Bihar can be a textile hub and supersede even Bangladesh as it has available skilled and semi-skilled labourers required for the textile industry. Bihar is positioned in a very strategic location to cater to not only the entire India but also to the entire SAARC region, stated Mr. Shahnawaz Hussain while addressing an interactive session on the proposed New Textile Policy of Govt. of Bihar, here yesterday. Mr. Shahnawaz Hussain emphasised the strategic location of Bihar in eastern India for both domestic and export markets. He explained that most districts were easily connected via nearby airports in Bihar and/or adjoining states. He explained that the state has implemented the system of online filing of Common Application Form (CAF) to make the single window system really effective. The Minister informed about recent large investment intentions that the state has received such as that of JSW, Essar and Micromax among others. He informed that a majority of workers who have returned due to Corona were from the textile sector and are wanting a more decentralised industrial set up which can enable them to ‘work from home’. Mr. Shahnawaz Hussain extolled the entrepreneurs to come and invest in Bihar availing of various benefits including demographic dividend and together take the country ahead of Bangladesh. Earlier, Mr. Mr. Dhiraj Raichand Shah, Chairman, SRTEPC informed that Indian Textile industry has huge potential globally. Today India’s share in global textile and clothing trade is around 5% whereas China alone occupies more than 60% of global trade. The MMF textile sector is a sunrise sector not only in India but globally. More than 70% of textile fibres are coming from MMF and the share has been increasing, whereas the share of natural fibre is declining day-by-day. In technical textiles, use of MMF is more than 90%. In India, we have predominant use of natural fibre/ cotton with 60% share and MMF is only 40%. This is an opposite to the global trend. India is not producing enough as per global demand and trends, SRTEPC Chairman pointed out. There comes the need of a sound Textile Policy that helps the industry to help its products and exports to be competitive, Mr. Shah said and added that the proposed new textile policy of Bihar should primarily address the issues pertaining to fiscal aspects, raw-material security, capital and technology aspect, skill & training, labour, issues etc. He also informed that the state of Bihar has a good weaving sector with growing numbers of power-looms. It has natural fibre base like banana, bamboo, jute, silk, etc. However, since Bihar has Barauni oil refinery and Haldia and Paradip Refineries are also not very far off, there is scope for producing MMF in the state, Mr. Shah mentioned. SRTEPC Chairman insisted that the proposed New Textile Policy of the state should be industry friendly to encourage and attract further investments in the state. SRTEPC members are looking forward to have an excellent Textile Policy from the Govt. of Bihar that will not only pool more investment in the sector but also encourage the MMF textile segment, SRTEPC Chairman emphasised. Mr. Brijesh Mehrotra, Addl Chief Secretary, Govt. of Bihar, briefed about the possible opportunities for investment in Bihar in his address to the stakeholders. Mr. Ravishankar Shrivastava Investment Commissioner Bihar briefed about the Investment Climate in Bihar by giving details about the infrastructure, it's geographical advantage and the incentives offered by government of Bihar to attract investments. While intervening in the presentation, Mr. Shahnawaz Hussain explained the opportunities and the locational advantages in reducing logistics cost in setting up textile industry in Bihar.
Source : Tecoya Trend
The government has budgeted Rs 1,900 crore under the scheme for FY22, against Rs 1,600 crore (RE) for FY21. This scheme usually allows manufacturing and merchant exporters an interest subsidy of 3% on pre-and-post-shipment rupee credit for exports of 416 products (tariff lines). The Reserve Bank of India (RBI) on Thursday extended the validity of the interest equalisation scheme for pre-and-post-shipment rupee export credit by three months through September 30. This will continue to help exporters struggling to cope with the damage caused by the second Covid wave. The government has budgeted Rs 1,900 crore under the scheme for FY22, against Rs 1,600 crore (RE) for FY21. This scheme usually allows manufacturing and merchant exporters an interest subsidy of 3% on pre-and-post-shipment rupee credit for exports of 416 products (tariff lines). The central bank’s notification came after the government approved the extension of the scheme, with “same scope and coverage”. The move comes at a time when the country’s exports have staged a rebound after witnessing a roller-coaster ride in the wake of the pandemic last fiscal. Merchandise exports surged over 69% in May from a year before to $32.3 billion, driven by a favourable base and improved demand from key markets. Importantly, goods exports have now crossed the pre-Covid (same months in 2019) level for three straight months, in what appears to be a strengthening trade recovery. Of course, export growth was low even before the pandemic — outbound shipments rose about 9% in 2018-19 but again shrank by 5% in 2019-20. So only a sustained uptick over the next 2-3 years would help recapture the lost heights. Hailing the extension, A Sakthivel, president of the exporters’ body FIEO, said the scheme will “help the identified export sectors to be internationally competitive and to achieve a higher level of export performance”.
Source: Financial Express
The goods and services tax (GST) has significantly reduced the compliance burden on companies as well as the taxation for them, said Finance Minister Tarun Bajaj, identifying a reduction in tax blocks and the inverted tariff structure next on the agenda for the levy, which marks four years Has. “We still have problems with the reverse tariff structure and tax rates. The GST Council will comment on this over time. These problems have been brought to the attention of the Council a few times and it is aware of them. ” said ET in an interview. “In the next one or two sessions, we will be focusing on these issues for submission to the council for decision.” Because of Covid, the government didn’t want to make too many changes in the past year, he said. Bajaj said there was a recommendation to consider merging the 12% and 18% bands. “When I look at my numbers, 5% is roughly 22% (articles), 12% is 18%, 18% is 47% – those are the three main rates. These can also be reduced to two over a period of time, ”he said.
Experts report several tariffs
One of the items on the agenda for the Council to consider is whether the 12% and 18% bands can be merged. “You (the Council) will have to see some points rise from 12 to 12 and more and others fall. So this reaction has to be seen, ”he said. Experts have said that several sentences complicated the GST, the main feature of which is supposed to be a simple, easy-to-manage delivery across the country.The GST, which includes several state and central taxes, was introduced on July 1, 2017. Bajaj said the overall tax burden under the GST has decreased significantly. “If you used to buy something, you never knew what the tax was. The tax rate was almost 31% on more than 200 items when you factored in VAT and central consumption tax, ”he said, adding that this rate is currently only applicable to 29 luxury items. “The tax rates have actually dropped sharply.” Bajaj said a number of steps had been taken to facilitate compliance and more were foreseen in the form of quarterly payments after quarterly returns. “One of the reforms that we have made is that we have introduced e-bills, we have enabled automatic submission of returns … we have already submitted quarterly returns and monthly payments,” he said.
“QRQP NEEDS DISCUSSION”
He said quarterly returns and quarterly payments, or QRQP, needed further discussion. “We would discuss it in the officials committee and then be taken up by the council,” he said, adding the idea was to further reduce the compliance burden. Under the previous regime, companies had to fill out hundreds of forms, he said. Also, “refunds become automatic and seamless with the use of technology,” he said. Regarding complaints about the arbitrariness of the authorities, he said the government is definitely ready to investigate and correct it.In the course of the systemic change, the department falls back on the increasing use of technology. For example, he said, “We are able to create a network map (using data from various sources) to identify a counterfeit trader.” Technologies such as artificial intelligence have been used extensively to identify such entities.
Source: Economic Times
As the goods and services tax (GST) regime completes its fourth year today, there are still issues that bog several industrial sectors in India. The tax regime did benefit the textile, garment and footwear sectors in a variety of ways, but issues that need redressal include those related to GST slabs, an inverted duty structure and challenging GST norms. There is a government proposal to change four GST slabs into three and footwear industry associations have demanded reduction in GST rates on footwear to 12 per cent. GST reduced input costs of the garment industry by subsuming complicated taxes like octroi and entry tax into a uniform tax system. Excise and value-added tax (VAT), which differed from state to state, earlier applied to yarn and branded garments and that added to the input cost. With GST, input costs were reduced. Different agencies managed various kinds of indirect taxes earlier. GST reduced compliance burden. There is a demand that all indirect taxes must be brought under GST so that exporters only need to claim a refund of the input taxes paid, making the system more efficient than separate reimbursement schemes. According to Apparel Export Promotion Council (AEPC) chairman A Sakthivel, though the GST regime initially posed a lot of problems due to lack of clarity and understanding of the procedures and compliance requirements and technical glitches, over time it has been having the intended effect of streaming payments, reducing multiplicity in taxes, easing out documentation and compliance requirement and better record keeping. It has also encouraged integration of manufacturing activities in the units, he told Fibre2Fashion. The government had proposed to reduce GST slabs from the current 5 per cent, 12 per cent, 18 per cent, and 28 per cent, to three slabs—8 per cent, 18 per cent and 28 per cent. But a decision regarding that seems to have been postponed. Man-made fabric (MMF) now attracts 5 per cent GST, which the government was earlier considering to raise to 6 per cent or 12 per cent. The proposal faced strong opposition from industrialists. In February this year, the Southern Gujarat Chamber of Commerce and Industry (SGCCI) opposed the government’s proposal to change the slabs, saying that would have a negative impact on the textile sector. The continuous rise in import of MMF, especially after GST was implemented, was deeply hurting the domestic textile sector, the Confederation of Indian Textile Industry (CITI) lamented in late 2019. Analysis by CITI showed the primary reason was the removal of countervailing duty after GST was implemented, which overnight made imports cheaper by more than 12 per cent. The production of polyester fabric in the country’s largest MMF hub Surat decreased by 40 per cent after GST was imposed in 2016. An SGCCI report in August 2019 said the higher cost of raw material, including yarn, was posing a major challenge to the MMF sector. Import duty on fabrics and garments was subsequently increased by the government to control imports, and therefore, the import of fabrics has been relatively under control, but import of garments could not be controlled through this measure because of free trade agreements. According to Indian Texpreneurs Federation (ITF) convener Prabhu Dhamodharan, a single GST structure at the lowest slab for the entire value chain for cotton helped in a big way and improved overall efficiency and compliance at multiple levels. “Rationalisation of duties at the MMF value chain is a long-pending reform and we are confident that such rationalisation will improve the competitiveness of the sector. MMF being a growth engine for the textile and apparel sector, we need to address this on a priority basis,” Dhamodharan told Fibre2Fashion. The textile processing industry is suffering from an inverted duty structure as their output GST is low (5 per cent) while that on raw material and service inputs, GST is 18 per cent, said Suresh Manoharan, secretary of the State Industries Promotion Corporation of Tamil Nadu (SIPCOT) Textile Processors Association in Perundurai. “Processing units are not able to fully utilise GST input tax and their input tax credit (ITC) ledger is getting accumulated, leading to cash flow issues,” he explained. Processing units cannot get ITC refund as the GST law does not allow refund of service inputs, said Manoharan, suggesting amendments to allow the same and raising output GST to 12 per cent. “The inverted tax structure blocks the working capital for businesses due to input tax credit accumulation. Hence, the resolution of inverted duty structure in the textile value chain is an area that needs attention,” AEPC’s Sakthivel said. Sakthivel said another concern is the lack of clarity on applicability of rebate restriction with regard to procurements made under advance authorisation after payment of integrated GST (IGST). If a company has taken one advance authorisation license and taken the benefit of IGST exemption, even on one import transaction, which may not even constitute 1 per cent of total transactions, such units are completely barred to export goods under the IGST paid route. He has already taken up this issue with the chairman of the Central Board of Indirect Taxes and Customs and the GST policy wing of the department of revenue. Textile processors in Tiruppur some time back appealed to all political parties to bring down GST for processing due to steep hike in prices of raw materials in recent months. The Clothing Manufacturers Association of India (CMAI) urged the government last December to reduce GST on all readymade garments to 5 per cent from 12 per cent and retain the same on all types of cotton yarn, synthetic yarn, fabrics and made-ups. The issue of inverted duty structure—raw materials attracting taxes higher than finished products—is a major issue in sectors like footwear and textile, which government officials believe affects producers with little benefit to consumers. It also makes domestic industry less competitive against imports. In case of textiles too, officials reportedly have examined tax rate amendments required to correct anomalies. The idea is to limit the 5 per cent tax to fewer items in this sector. A recent brief survey carried out on textile units in Tamil Nadu, Uttar Pradesh, Haryana and Gujarat by the Small Industries Development Bank of India (SIDBI) revealed that the sector also faces several operational roadblocks at the ground level, including challenging GST norms. The SIDBI survey found that ongoing changes in the GST portal and filing of returns has created confusion for units, with exporters stating that getting integrated GST refunds is a major challenge. The input credit chain affected the unorganised sector in the textile industry. Any textile industry start-up needs investment in value-added services like marketing, warehouse rentals, logistics, courier and other product fulfilment costs, and all these attract a GST of 18 per cent. This is also considered by many as a major impediment. The fitment committee of the GST Council, which recommends rate changes, has proposed increasing the rate on footwear (less than ₹1,000), readymade garments and fabrics to 12 per cent from 5 per cent now. More expensive footwear items are taxed now at 18 per cent. For inputs like MMF and yarn, the panel has proposed reducing the rate to 12 per cent from 18 per cent to correct the distortion. The GST Council last met on May 28 after seven months—its 43rd meeting. Footwear manufacturers were said to absorb the 18 per cent GST in a manner not to cause a sudden rise in product prices, which further reduced profit margins for small manufacturers. Although the government allowed input credit, the benefit did not translate into much saving for the highly labour-intensive footwear industry. The footwear industry has been requesting the government to consider reducing the GST rates on all footwear priced above ₹1,000 to 12 per cent to allow the industry to continue growing and be able to improve its position in the global market. According to Puran Dawar, president of Agra Footwear Manufacturers and Exporters Association, the issue of fake invoicing needs to be addressed and a rating of suppliers should be posted on the GST portal. Since July 2017, footwear businesses are struggling to receive GST refund in case of export through courier as many courier companies do not adhere to all export documentation, he told Fibre2Fashion, calling for separate procedures for online and courier-based exports. Though many industry groups have demanded a single GST rate for the entire polyester industry chain, Federation of Gujarat Weavers Welfare Association (FOGWA) president Ashok Jirawala feels such a decision will adversely affect the polyester business in the country. At present, GST rate is 18 per cent on purified terephthalic acid (PTA) and monoethylene glycol (MEG), 12 per cent on polyester yarn and 5 per cent on greige fabrics. The pending issue of lapsed GST credit of weavers also needs to be addressed, he told Fibre2Fashion. While Dawar suggested mandatory inclusion of all taxes in the sale price of a product to avoid billing fraud, Jirawala recommended offering GST registration to only genuine businessmen after stringent verification to prevent fraudsters from benefitting. Given the large number of unregistered units associated with the apparel value chain, the incidence of mismatches in GSTR-2A is high, AEPC’s Sakthivel said. GSTR-2A is a purchase-related dynamic tax return automatically generated for each business by the GST portal. Although a 20 per cent deviation in books versus GSTR-2A is allowed, that still leads to substantial blockage of refunds, he said. Sakthivel, who backs the idea of 5 per cent GST across the entire value chain, said a uniform rate will protect the industry from inverted duty and reduce the blocked ITC refunds. Two options exist now for exporters for taking the ITC refund on goods export. First, the exporter can export under a letter of undertaking or LUT (without payment of tax) and claim the refund of unutilised ITC. Second, the exporter can export on payment of IGST (without LUT) and claim its refund. The Finance Act, 2021, has proposed that IGST refunds (without LUT) will now be restricted to a class of persons, goods or services, but no notifications have been issued so far regarding that class. Sakthivel said he has requested authorities to allow both options of taking the refunds for apparel exporters as the IGST route is simpler and faster and reduces blockage of funds.
Source: Fibre2Fashion
The fourth anniversary of introduction of GST, the GST Day, 2021, was marked by Central Board of Indirect Taxes and Customs (CBIC) and all its field offices across India here today. The national level programme was organised by CBIC through virtual mode on the digital platform which was attended by all field formations. GST with enhanced revenue collections for last eight months has been instrumental in building an Aatma Nirbhar Bharat. The year marked enhanced taxpayer facilitation with COVID-19 relief packages being announced to ease the burden of compliance. As part of the programme 31 officers were awarded with the GST Day commendation certificate across all zones and to one officer posthumously. In a message on GST Day 2021, Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman said that it is a matter of great satisfaction that we have overcome most challenges, including two waves of unprecedented COVID-19 pandemic, in providing stability to this new tax regime. The Finance Minister was happy to note the buoyant tax collections which crossed Rs. 1 lakh crore for eight months in a row with record GST collection of Rs. 1.41 lakh crore in April, 2021. The enhanced revenue collection in recent months should now be the “new normal, She added. Smt. Sitharaman appreciated CBIC effort in recognising more than 54,000 GST taxpayers for their contribution to nation building on the eve of four years of implementation of GST. Taxpayers facilitation during pandemic involved two COVID-19 relief packages covering late fee waiver, interest rate reduction, relaxation of timelines and conducting refund drives to enhance liquidity in the hands of taxpayer. Further, GST rates on vaccines, essential medicines and products/services used for prevention and treatment of COVID-19 were also reduced. The Finance Minister condoled the loss of 189 personnel and remembered their contribution to the national effort and noted the effort of CBIC in releasing a book “Shraddhanjali” to pay homage to these departed souls. Smt. Sitharaman also congratulated all awardees of ‘Commendation Certificate’ for their exceptional contribution in GST administration. In his message, Minister of State for Finance & Corporate Affairs Shri Shri Anurag Singh Thakur expressed gratitude to trade and industry, specially MSMEs, whose continuous support and feedback has helped the Government in steadily improving GST laws, procedures and systems over last four years. Shri Thakur condoled the loss of many precious lives from the GST family to COVID-19 pandemic. Shri Thakur congratulated all officers selected for commendation certificate for their dedication, hard work and the spirit of serving the nation. In his virtual message played during the programme, Shri Bibek Debroy, Chairman, Prime Minister Economic Advisory Council, highlighted that GST is a work in progress which is improving by each passing day. GST has cut down on large number of indirect taxes, brought down litigations and removed inter-state restrictions. During the programme, video messages of eminent personalities from various fields were also played. Chairman CBIC Shri M. Ajit Kumar lauded the efforts of CBIC officers in facilitating taxpayers during the pandemic and use of technology to ensure minimum physical interaction. He appreciated the taxpayers for coming back strong post covid and ensuring V-shaped recovery of economy. CBIC effort in recognising more than 54,000 GST taxpayers for their contribution to nation building is a testimony to the fact that their support to GST is imminent. CBIC Members highlighted the automation done over the years in GST processes and exhorted the officers to enhance the use of technology. Sh. Vivek Johri, Member GST appreciated the DGARM reports and MIS generated which is used by field formations to increase revenue collections.
Source: PIB
Number is below the critical no-change mark of 50 for the first time since July 2020. India’s domestic factory orders and production contracted for the first time in 11 months in June as restrictions to contain the Covid-19 pandemic put manufacturing into “reverse gear”. The IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) slipped to 48.1 in June from 50.8 in May, moving below the 50-level separating growth from contraction. The factory output averaged 51.5 in the opening quarter of 2021-22, the lowest threemonth figure since the year-ago quarter, according to the survey. “The intensification of the Covid-19 crisis in India had a detrimental impact on the manufacturing economy,” said Pollyanna De Lima, economics associate director at IHS Markit. “Growth of new orders, production, exports and input purchasing was interrupted in June as containment measures aimed at bringing the pandemic under control restrained demand. However, rates of contraction were softer than during the first lockdown.” New order growth that started in August 2020 ended in June, with firms linking the deterioration in demand to the pandemic. The pace of contraction, however, was much softer than what was registered at the onset of Covid-19 last year, it said. The survey highlights that weakness in demand and a reduction in production requirements led firms to restrict input purchasing in June. Buying levels fell at a marked pace that was among the fastest seen since data collection started in March 2005. “The dip in the June PMI is somewhat at odds with the mostly positive high-frequency data available so far. While diesel consumption has contracted on a year-on-year basis in June, this is likely to be on account of high prices diverting some freight to the railways,” said Aditi Nayar, chief economist, ICRA. Following the phased unlocking, goods and services tax (GST) e-way bills, vehicle registration, electricity demand, and petrol consumption have all reported a sequential improvement over May and growth in June. On the job front, companies were at their least optimistic for almost a year. “As a result, jobs continued to be shed midway through the year. The fall in employment was marginal, but took the current sequence of month-on-month contraction to 15 months,” said the report. De Lima said companies became increasingly worried about when the pandemic would end, which resulted in downward revisions to output growth projections. As a result of subdued optimism, jobs were shed again in June. “Out of the three broad areas of the manufacturing sector monitored by the survey, capital goods was the worst affected in June. Output here declined at a steep rate due to a sharp fall in sales,” De Lima said. Falling new orders, business closures, and the Covid crisis triggered a reduction in output among Indian manufacturers. The decline was moderate relative to those seen in the first half of 2020, but ended a 10-month sequence of growth, the report said. The June data pointed to marked declines in both pre- and post-production inventories. The former posted the first contraction in 10 months. Amid reports of raw material scarcity, transportation issues, and states’ restrictions, supplier performance worsened again in June. However, average lead times lengthened only slightly. Input costs increased further in June, with firms reporting higher prices for chemicals, electronic components, energy, metals and plastics. The rate of inflation was, however, the joint-lowest in five months (equal to May). The PMI data is released monthly in advance of the comparable official economic data. It is compiled from responses to questionnaires sent to purchasing managers in a panel of around 400 manufacturers.
Source: Business Standard
The West Bengal Authority of Advance Ruling (AAR) ruled that the arranging sales of goods should not be considered as ‘export of service’. The applicant, Teretex Trading Private Limited is an independent service provider, he is going to undertake supply of services at his own risk and cost without being appointed as an agent by the supplier or by the recipient of goods. The applicant does not represent the party for whom he is procuring the order for supply of goods nor has any authority to negotiate at the time of procuring order for them. He does not assume any obligation either on behalf of the supplier or on behalf of the recipient of the goods. The applicant has categorically denied his role of an agent or representative but has admitted that he arranges or facilitates supply of goods for the party for whom he procures order to supply goods. The applicant has submitted that in some industries, such as Textiles and Chemicals, there is the normal practice of selling goods through independent mediator/service provider without being appointed him as an agent against commission at the rate normally prevalent in the market which is generally 1% or 2% depending on the volume of trade. Further, in other industries, the mediator/service provider may arrange sales at his own risk and cost without being appointed as an agent. Rate of commission in such cases is also followed by certain market norms and negotiable between the overseas seller of goods and the service provider who arranges the sales. The applicant has sought the advance ruling on the issue whether supply of services by the applicant by way of arranging sales of goods to the recipient located outside the country shall be considered as ‘export of services’ or not. The Coram of Sushmita Bhattacharya and Jyoti Banik noted that the place of supply is determined under section 13 of the IGST Act, 2017 where location of supplier or location of recipient is outside India. In the present case, the applicant being the supplier of services is located in India and the recipient of services being located outside the country attracts the provisions of the aforesaid section of the Act ibid. We have already discussed that the applicant is found to be an ‘intermediary’ as defined in clause (13) of section 2 of the IGST Act, 2017.So, the place of supply shall be determined under subsection (8) of section 13 of IGST Act, 2017 which shall be the location of the supplier of services i.e., in West Bengal for the present case. The AAR ruled that the supply shall be treated as an intra-State supply in terms of subsection (2) of section 8 of the IGST Act, 2017 and tax will be levied accordingly. This transaction will, therefore, not be covered within the definition of export of services as provided in Section 2(6) of IGST Act, 2017 as it is not satisfying one of the conditions of place of supply being outside India, as enumerated in Section 2(6)(iii) of the IGST Act, 2017 and consequently shall not be treated as zero-rated supply as provided in section 16 of the IGST Act, 2017.
Source: Taxscan
The Centre’s credit guarantee scheme pushes down the interest rates on savings as also PSBs’ interest income The concept of credit guarantee by the government, on loans given by commercial banks, is as close as it can get for a link to be established between the sovereign and private borrower. As borrowers tend to be small—SMEs or tourist guides or MFIs—it is a unique way of supporting flow of funds. This has been actively followed by the government as part of Covid relief, and opens the doors for more such inclusions as these are blanket guarantees. How does the economics of this look? The government spends nothing on such loans as it is a contingent liability. The Centre offered Rs 3 lakh crore last year and another Rs 2.6 lakh crore this year (total Rs 5.6 lakh crore). As of FY20, the latest for which data is available, total outstanding guarantees of the Centre were Rs 4.7 lakh crore, with incremental guarantees being Rs 20,000 crore. This was before Covid. Now the amount will be more than double. Outstanding debt as of FY22 would be Rs 136 lakh crore, which means that these new guarantees will be around 4% of total. But this will be a fiscally neutral position and will have an impact only if there are defaults and the government has to step in. Now, guarantees have been going out of fashion in line with FRBM, and states are being told to lower these when supporting state PSUs. This is why we had the UDAY scheme for discoms where states were asked to transfer such debt on to their books rather than shield through this curtain. The pandemic has led to a U-turn when it comes to off-balance-sheet items. The Centre had, in the FY22 Budget, sought to get more transparent with FCI transfers by including the amount in the Budget. But, these unusual circumstances have justified such an action. The government, however, needs to put in place a rule on guarantees so that they don’t become a habit. The other important thing about guarantees is that there is a cost involved on the commercial side. The government has fixed the ceiling interest rate on all these loans, which can range from 7.95% to 9.25% (SMEs). This is below the market rate that can be 4-5% higher for MSMEs. This is good for the borrower, but what about the bank? If Rs 5.6 lakh crore is being disbursed at a rate of 5% lower than normal rate, the loss of income for banks would be around Rs 28,000 crore. This is one of the reasons why banks continue to pay lower interest rates on deposits as there are too many compulsions imposed as part of the government’s social/welfare policy. Ideally, this should have been done as an interest rate subvention, which is the case with farm loans. But, here, it appears the government saves Rs 28,000 crore on the revenue account, which gets reflected in lower interest income for banks for a period of at least three years until the amount is repaid. This is a big burden to PSBs which are just about getting up. What about repayments? Most of these loans have/are being given for three years (plus moratorium), which means that the quality of the asset will be standard until such time they come for final repayment. It will be interesting to see how the mechanism works because, with an average NPA ratio of 10% in this segment in the past, there could be progressive claims from the government on interest and principal payment. The fact is that if a tourist operator or an MSME is unable to operate, there is no wherewithal to support repayment schedules. The missing link is the appetite for funds and the willingness to lend. Banks will still cherrypick customers, while borrowers won’t overleverage merely because there are cheaper funds with a guarantee. The economy has to turn first before this becomes attractive. Loan guarantees, on their own, may not be able to provide momentum for this growth.
Source: Financial Express
For the first time in the history of Pakistan, exporters have been levied with 300% higher tax as compared to local businesses. The federal government in its budget has facilitated the local SMEs and neglected, as usual, the SMEs of export sectors. The value added textile sector had in its budget proposals demanded of the federal government to reduce income tax as well as sales tax rates for exporters but in vain. Globally, there are no taxes on export businesses, and where taxes are levied on exports the rate is lower than the one levied on local businesses. However, in Pakistan the situation is the opposite. The value added textile sector is very disappointed that the government has not accorded consideration to its demands. This joint statement was made by Jawed Bilwani, chairman, Pakistan Apparel Forum, Riaz Ahmed, central chairman, Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, chairman, Pakistan Knitwear and Sweater Exporters Association; Feroze Alam Lari, chairman, Towel Manufacturers Association of Pakistan; Abdus Samad, chairman, Pakistan Cloth Merchants Association, Khawaja M. Usman, former chairman, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, Shaikh Shafiq, former chairman, Pakistan Readymade Garment Manufacturers & Exporter Association, Zulfiqar Ch., chairman, All Pakistan Textile Processing Mills Association, Khawaja Muhammad Younus, chairman, All Pakistan Bedsheets & Upholstery Manufacturers Association, Shoaib Majeed, chairman, Pakistan Denim Manufacturers & Exporters Association, Naveed Illahi, chairman, Pakistan Bedwear Exporters Association, and Yusuf Yaqoob, chairman, Pakistan Weaving Manufacturers Association. The textile exporters demanded restoration of Zero Rating of GST -- No Payment No Refund System. Imposition of 17% GST has made the textile exporters specially SMEs financially unviable as their precious liquidity, without any purpose, stuck up and they throughout the year face financial difficulties to fulfill their export commitments. It is on record that 33% SME exporters have closed their export business since imposition of 17% GST which blocked exporters’ precious liquidity. With the continuation of 17% GST in 2021-22, many more SME textile exporters who managed to survive last year shall fear closure as well in the wake of liquidity pressure. 17% GST on exports and refund after months is the key hurdle in the boost in exports. Therefore, for the sake of survival of SMEs textile exporters and employment provided, it is highly crucial to restore no payment no refund GST regime which has been tried and tested or reduce GST rate to 5%. Needless to mention here that the government had imposed 17% GST in 2019-20 in order to collect GST on local sales of five export sectors to which the FBR is not successful. The FBR has miserably failed to broaden the tax base and for this purpose more than 10,000 officials of the Enforcement Department are working who are responsible to broaden the tax base. They also expressed their concerns over and reservations about stating that the Finance Minister in the Zoom meeting, responding to the demand, had promised to suspend the EDF surcharge from now on which is deducted at the rate of 0.25% of exports value.
Source: Business Recorder
Nationwide initiative aims to overcome barriers to U.S. production, support pilot programs and investment As part of its commitment to support U.S. production, Walmart is launching American Lighthouses. Announced at the conclusion of the retailer’s annual Open Call event on June 30, American Lighthouses aims to bring together key stakeholders in specific regions of the country to identify and overcome top-down barriers to U.S. manufacturing. The program is designed to “support and pilot innovative projects and provide tools and resources for businesses to invest in U.S. production, making the supply chain more efficient, sustainable and making it easier for U.S. manufacturing to flourish,” said Laura Phillips, senior vice president, customer and business development and U.S. manufacturing for global sourcing at Walmart. Textiles will be the initial area of focus, with will expand to include metals and motors, food processing, plastics, pharmaceutical and medical supplies. The recent Open Call event featured more than 900 small businesses from across the country pitching their products made, grown or assembled in the U.S. to Walmart and Sam’s Club merchants today – the largest number to take part in the one-day event. Business owners represented all 50 states, the District of Columbia and Puerto Rico. Of those businesses, 167 of their products are advancing to the next stage in the process to land a deal with Walmart or Sam’s Club and another 705 are receiving further consideration. Businesses that advanced during Open Call will now work with merchants on opportunities to sell their products in Walmart stores and Sam’s Clubs. All businesses which took part in Open Call are eligible to sell their shelf-stable products on Walmart’s various online platforms: Walmart.com, Walmart Marketplace or Samsclub.com.
Source: Home Textiles Today
Liquid-controlling properties built on a biodegradable, botanic-derived raw materials. Veocel lyocell fibers with Dry technology from Lenzing ensure comfort for sensitive skin when employed in nonwovens for personal care and hygiene products Increasingly, consumer expectations are extending beyond functional needs to focus on natural materials and ingredient transparency, the company says, but consumers should never have to compromise between functionality, comfort and sustainability, and it is critical that such intimate products provide both. While most hydrophobic fibres are fossil-based, Dry technology by Lenzing allows cellulosic Veocel fibres to achieve similar liquid-controlling properties built on a biodegradable, botanic-derived material. The fibres are soft to the touch and gentle on the skin, making them beneficial for such applications that have direct contact with the skin. “We have observed a growing trend of consumers who are mindful of product ingredients, so we created a product that can offer both sustainability and performance,” said Jürgen Eizinger, vice president of Lenzing’s global nonwovens business. “These new fibres are certified biodegradable and compostable, offering an eco-friendly and quality alternative to fossil-based materials. The Veocel brand is continually expanding its capacities and innovations for wood-based speciality fibres as a means to reduce the industry’s reliance on fossil-based materials in personal care products.”
Source: Innovation in Textiles
Climate change and the COVID-19 pandemic are forcing many industries to cut their carbon footprint and shorten their lengthy and fragile supply chains. Textile and clothing businesses, in particular, are under pressure. Now, a small pilot project in the northwestern British town of Blackburn offers one low-key way forward. Blackburn, a former mill town that was once the center of the global textile trade but went into steep decline in the second half of the 20th century, is now hosting a curious little experiment in clothes making. It’s called Homegrown Homespun. The plan is to create a garment entirely from local resources; in the words of the organizers, “to grow our own jeans.” The project is underway on a small patch of land between a busy road and a canal close to the center of town. Last year this .75 acre plot was derelict, covered in refuse, strewn with burnt mattresses and rusting metal. Today, it’s a neatly fenced field of luxuriant green. “We’re growing flax for linen and woad for indigo dye with the aim of growing our own pair of jeans in Blackburn,” said Justine Aldersey–Williams, a dye expert, head of North West England Fibreshed and one of the project organizers. “We don’t need to go off around the world importing materials when we’ve got good natural materials here,” Aldersey-Williams said. The two plants at the heart of the project have a long history in Britain. Woad once grew across the country. Ancient Britons daubed their bodies in its blue dye in a vain attempt to scare off the Romans. And, before cotton became the dominant cloth during the Industrial Revolution, flax was grown widely across the United Kingdom, as well. “Flax is a fantastic plant because it doesn’t require any irrigation, doesn’t require any pesticides or herbicides,” said clothes designer and manufacturer Patrick Grant, who’s also running Homegrown Homespun. “Flax is such a fantastic crop for making clothes from.” The linen derived from flax is a natural product, Grant said, unlike most of the fossil fuelbased synthetic fabrics used in today’s clothes. And it’s incredibly hard-wearing, he said. “Far, far more hard-wearing than cotton. It’s a great fabric for workwear. They used to make sailcloth out of linen. It’s a very durable fabric, so we’re developing a denim-like fabric,” he said. Grant and his colleagues aim to grow, harvest, spin, weave and dye at least one pair of jeans from their field of flax in time to unveil the garment at the next British Textile Biennial, a series of exhibitions and events in October. “The current system for producing and distributing clothing is incredibly polluting, environmentally and ethically — not fit for purpose,” he said. “We’re trying to demonstrate that there is another way, that you can make clothes completely locally, that cause no harm to the environment and do it in a way that’s economically sustainable.” The Homegrown Homespun team hopes that the initiative will eventually lead to the birth of a local community of growers, spinners, weavers and dyers producing high-quality clothing that will not be as cheap as mass-produced fast fashion but will represent better value for money as it will last. And they believe it will prove popular. “I think there’s now a real market for clothing that’s more sustainable and more ethically produced, that has more local supply chains. I think there’s a real opportunity for that now,” said Jenny Rutter of Super Slow Way, a local arts organization that’s also involved in the project. “We hope to scale up and maybe move to medium-scale production so we can build a new regenerative textile industry here in Blackburn which, remember, was the home of the Industrial Revolution,” she said. Patrick Grant took up the theme. “At one point, over 70% of the world’s cotton textiles were made here,” he said. “The world was once clothed by the mills of this area. So this is a great place to see whether we can reshape this industry and create an economically sustainable model that’s good for local people and good for the planet. “ No one seriously believes that Blackburn will ever fully regain its former textile manufacturing glory. That would be pie in the sky, spinning a yarn, indeed. But the organizers of this experiment believe there could be at least a small niche industry in the making here — an industry that can only grow.
Source: Marketplace
