All footwear, irrespective of prices will attract Goods & Services Tax (GST) at 12 per cent while barring cotton, all textile products including readymade garments will have GST at the rate of 12 per cent. This will be possible as GST Council has decided to do away with inverted duty structure (IDS). It could result in rise in prices of low-priced products. An ‘Inverted duty structure’ means a higher duty on inputs and a lower levy on finished products. This results in a higher refund to industry which affects the cash flows for companies and revenue collections for the government. Also, consumers do not gain anything, In its meeting on Friday, the Council decided: “GST rate changes in order to correct inverted duty structure, in footwear and textiles sector, as was discussed in earlier Council Meeting and was deferred for an appropriate time, will be implemented with effect from January 1, 2022.” However, post the meeting, rates were not announced.
Footwear
A senior government official told BusinessLine that now rates will be not be levied on the basis of price bucket and it will be a uniform rate of 12 per cent. As on date the GST rate, is 5 per cent for products with value up to ₹1,000 per pair. Items priced above ₹1,000 attracts a rate of 18 per cent. Another official explained that more than two-thirds of the products are sold at price up to ₹1,000 and because of higher rate of inputs, refunds go up to almost ₹2,000 crore per annum. Ramesh Kumar Dua, Managing Director, Relaxo Footwear said having one GST rate for footwear sector is ideal as it will help bring in transparency in the system and remove any scope of manipulation done for tax evasion especially in the unorganized sector. He said the move to correct the inverted duty structure will help ease the challenges faced by the industry with regards to getting refunds. A senior executive with a leading footwear major added that a single rate will be a good move as it will simplify the framework and resolve all confusions in the sector.
Textile sector
An official said that with the correction of inverted duty structure in textile sector the rate on cotton yarn will continue to be 5 per cent while it will be 12 per cent on mandmade fibre, yarn, readymade garment, fabric and dying. As of now for garments and made-up articles, rate is 5 per cent of the sale value not exceeding ₹1,000 per piece and 12 per cent for articles of sale value exceeding ₹1,000 per piece. Here on, all will have GST at the rate of 12 per cent.
Source : Business Line
Mandating food service aggregators such as Zomato and Swiggy to collect tax from the customer and pay it directly to the government from January next year is welcome. The Goods and Services Tax (GST) Council has taken some positive steps at its meeting last Friday, but failed to think and act bold, for example, on bringing petro-fuels under GST. Of course, harmonising the rates on inputs and the final output in sectors such as textiles, footwear and renewable energy devices — where the tax rate on inputs is higher than that on the output — was overdue. An inverted duty structure leads to a pile-up of input tax credits and problems in claiming refunds.
Source: Economic Times
FTAs have to be signed keeping two things in mind - mutually reciprocal terms and focusing on products and services with maximum export potential Last week, the Commerce Ministry said that the negotiations for India-UK Free Trade Agreement (FTA) will commence from November this year. The governments in both the countries are eager to conclude an interim agreement quickly but the businesses are yet to warm up to the idea. Under various trade agreements, India allows imports of certain goods at lower rates of duty mostly from countries in Asia, Africa and South America. The imports from the least developed countries and most developing from these regions have not gone up significantly.
Source: Business Standard
To celebrate and commemorate 75 years of progressive India and its glorious history, the Ministry of Commerce & Industry is organizing special events and programmes throughout next week as part of the ‘Azadi Ka Amrit Mahotsav’ celebrations. The Department of Commerce will observe the ‘Vanijya Saptah’ (Trade & Commerce Week) during the period 20-26 September, 2021. A slew of programmes and events are being organized across the country highlighting Aatmanirbhar Bharat, Showcasing India as a Rising Economic Force and Green & Swachh SEZs besides handholding sessions focusing on ‘From Farm to Foreign Lands’ and exporter conclaves, ‘Vanijya Utsav’, covering all 739 districts of the country. Inspired by the Prime Minister Shri Narendra Modi’s call to convert each district into an export hub from the ramparts of Red Fort in his Independence Day Address on 15th August, 2019, the ‘One District One Product’ (ODOP) scheme was unveiled in September, 2020 under the directions of the Union Commerce and Industry Minister Shri Piyush Goyal. ODOP is seen as a transformational step forward towards realizing the true potential of a district, fuel economic growth and generate employment and rural entrepreneurship, taking us to the goal of AtmaNirbhar Bharat. During the Vanijya Utsav, to be held on 24-26 September, 2021 exporter conclaves/meets will be held in more than 700 districts, including Mega events in 100 districts, organized by the Directorate General of Foreign Trade (DGFT) along with Export And Market Development Assistance (E&MDA) and respective State Governments. The District Export Promotion Committees (DEPCs), chaired by the District Commissioners/Collectors of respective district, will be key stakeholders in organizing these conclaves. It will include 2-3 hours of handholding sessions for local exporters/entrepreneurs on foreign trade issues involving stakeholders such as the Lead Bank, local export chambers/associations and Export Promotion Councils (EPCs). Also, five National Seminars/Exhibitions will be organized by the Indian Institute of Foreign Trade (IIFT) in five regions of the country, - North, South, East, West and NorthEast (venues details required) on the theme “Azadi and Export Promotion/Import Substitution - आत्मनिर्भरता की ओर”. During these events, the onboarding of Micro, Small & Medium Enterprises (MSMEs) on Government e-Marketplace (GeM) and in EPCs will also be completed. Another major campaign of the ‘Vanijya Saptah’ will be the 35 Export Promotion events/exhibitions being organized on 21-22 September, 2021 by all the 14 EPCs with at least one event in each State/UT showcasing India as a Rising Economic Force. The EPCs will mobilize the local exporters, manufacturers and industrial units to make Export Promotion a Jan Andolan. Several Union Ministers and Chief Ministers/Ministers of respective States will address the events and interact with the participants during these events. Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) is also organising soft launch of two events namely National Single Window System and Industrial Park Rating System. The digital platform will allow investors to identify and apply for various pre-operations approvals required for commencing a business in India. This will provide end-to-end facilitation, support, including pre-investment advisory, information related to land banks and facilitating clearances at Central and State levels. Industrial Park Rating System (IPRS) recognizes best performing parks, identifying interventions and serving as a decision support system for investors and policy makers. ‘Industrial Park Rating System 2.0’ will widen its coverage and aim to bring in qualitative assessment further to the pilot phase. Under IPRS 2.0, the assessment of Industrial Parks including private industrial parks and SEZs with introduction of qualitative indicators for assessing these parks/zones is being undertaken across parameters identified under the 4 pillars i.e. Internal Infrastructure & Utilities, External Infrastructure & Connectivity, Business Support Systems, and Environmental & Safety Management. The Industrial Corridor Programme is aimed at supplementing the efforts for realising the manufacturing potential of the country and raising its contribution to GDP. States like Maharashtra, Gujarat, Uttar Pradesh, Andhra Pradesh and Madhya Pradesh are organising events on the progress made in the Industrial Corridor in their state. These programmes are being organised by Dholera Industrial City Development Limited (DICDL), Gujarat, Aurangabad Industrial Township Limited (AITL), Maharashtra, DMIC Integrated Industrial Township Greater Noida Limited (IITGNL), Uttar Pradesh, CBIC Tumakuru Industrial Township Limited, Karnataka and NICDIT Krishnapatnam Industrial City Development Limited, Andhra Pradesh and DMIC Vikram Udyogpuri Limited (VUL), Madhya Pradesh. DPIIT will also organise National Level Workshop with all Ministries/Departments and States/UTs for showcasing the work carried out to reduce compliance burden. The exercise is focused on three aspects, - elimination of regulatory burden in all procedures, rules, notifications, circulars, OMs etc. which add to time and cost burden without achieving any tangible improvement in governance, repeal/amend/subsume redundant laws and decriminalization of all laws with respect to technical and minor noncompliance issues, while retaining strict criminal enforcement for serious fraudulent offences that jeopardize and prejudice public interest. NICDC will be organising events at the ports in Kolkata, Chennai and Mumbai highlighting the progress, employment and business opportunities generated on the basis of the export/import container visibility service across PAN India and Logistic Data Bank. NICDC will also organise an event highlighting the actions undertaken by the SPV and progress made in the 6MW Model Solar Power Project at Neemrana, Rajasthan. A Virtual Investor Summit or Investor Forum will be organised by Invest India in NorthEast and an interaction with Private Industrial Parks. About ten lakh plantation workers will participate in special events slated to be held across all plantations/central locations on 26th September under the theme ‘From Farm to Foreign Lands’, being organized by the Plantation Division of the Commerce Department. Keeping in line with the Prime Minister Shri Narendra Modi’s primary undercurrent of development, more than 250 Special Economic Zones (SEZs) will run a Swachhta campaign and tree plantation drive in their respective zone focusing on ‘Green & Swachh SEZs’ on 23rd September. A National Essay Competition on the theme “Azadi and Export Promotion/Import Substitution - आत्मनिर्भरता की ओर” will also be organized on 20th September by the India Brand Equity Foundation (IBEF), coinciding with the commencement of the Vanijya Saptah. There will be separate completion for each of the five regions, namely North, South, East, West and North-East, and the top five entries will receive prizes in each region. Azadi Ka Amrit Mahotsav is being celebrated by every State, Ministry and Department in various ways. It embodies all that is progressive about India's socio-cultural and economic identity. The Prime Minister, Shri Narendra Modi inaugurated the curtain raiser activities of the ‘Azadi Ka Amrit Mahotsav’ in Ahmedabad on March 12, 2021, 75 weeks before 15 August, 2022 and it will continue till 15 August, 2023. Prime Minister has urged people to celebrate this festival for 75 weeks with the sole purpose of leading the country on the path of development and benefit the people of our nation.
Source: PIB
71% of growing SMBs say their business survived the pandemic because of digitisation. The latest Small and Medium Business Trends report, based on the responses of 2,534 small and medium business (SMB) owners in North America, Latin America, South America, Europe, and Asia Pacific, reveals that SMBs are embracing technology, to increase productivity, agility, and data security. (The survey was conducted by The Harris Poll on behalf of Salesforce between June 21 and July 12.)
India scenario • Communities and governments step up: 62% of SMBs in India say financial support from their community has been vital to their business’ survival • Customer and employee engagement: Post-pandemic, 59% of SMBs in India have expanded ways customers can reach them • SMBs embrace the digital-first world: In India, 99% of SMBs plan to offer contactless services permanently, leading with secure digital payments (78%), mobile orders (68%) and digital customer service (62%)
Employee engagement • Nearly one in five SMBs furloughed employees during the pandemic, but nearly half of those (49%) have rehired those they furloughed • More than two in five SMBs have provided flexible working arrangements during the pandemic
Source: Business Standard
There is a strong opinion among sections of the economists' fraternity and independent analysts that the government could allow the fiscal deficit to exceed the budgeted level by a significant margin to find resources for giving a much-needed boost to consumption spending, which is at a low ebb However, tax collections – both direct and indirect – will also cross the FY22 budgetary goals (Rs 15.45 lakh crore), he said at the Idea Exchange programme of the Indian Express Group. The secretary conceded that the government’s recent package for the crisis-ridden telecom sector could pressure its non-tax receipts this fiscal. Still, some analysts peg the extra revenue mop-up at Rs 2 lakh crore in FY22. This means the Centre’s additional spending commitments can be easily absorbed by the extra revenue flow, without endangering its FY22 fiscal deficit target of 6.8% of GDP. If anything, its curbs on “wasteful expenditure” across dozens of departments in the first half of this fiscal could generate savings of about Rs 1.15 lakh crore, according to an FE estimate There is a strong opinion among sections of the economists’ fraternity and independent analysts that the government could allow the fiscal deficit to exceed the budgeted level by a significant margin to find resources for giving a much-needed boost to consumption spending, which is at a low ebb. The secretary, however, sought to temper expectations of large demand-side stimulus. The revival of economic activity itself will stir demand, he said. “Directly stimulating demand is subject to fiscal constraints. The problem with stimulus in a vibrant democracy is that it is easier to start a spending programme than to stop it. It may lead to a situation where the government will spend even when there is no need to spend.” Amid concerns about a slowdown in the growth of capital spending, Somanathan, who holds the expenditure portfolio, made it clear that the finance ministry hasn’t imposed any curb on capex. It’s up to the individual departments to utilise the budgetary space available to them for capex, he stressed. The Centre’s capex rose only 15% in the April-July period from a year before, against the full-year target of 30% (from the actuals of FY21). Since the presentation of the FY22 Budget – in which the government pushed for capital spending, with high multiplier effect, to reverse a Covid-induced growth slump – such expenditure dropped in March, May and July from a year earlier. “We wanted to reach that (budgeted target of capex growth) but it’s not up that much. Any non-incurring of capital expenditure is not because of any curb…Capital expenditure may require land acquisition, construction, etc. We are reviewing the progress…” Somanathan said. For the budgeted goal of Rs 5.54 lakh crore to be realised, the Centre’s capex needs to soar by 36% on year between August 2021 and March 2022. The secretary exuded confidence that the Air India sell-off plan will be pulled off. “The fact that we have received two bids for Air India, is a good sign.” The government’s minority stake sale in LIC is “at an advanced stage of preparation”. Despite elevated tax collections, the government won’t resort to fiscal profligacy. “There are (increases in) expenditure commitments which one shouldn’t lose sight of when they say revenues have gone up,” he said. As such, the government has already chosen the path of “calibrated fiscal expansion” to counter the damage caused to the economy by the pandemic. That’s why the budgeted fiscal deficit is at an elevated level of 6.8% for FY22, and not 3%, he said. Nevertheless, the secretary asserted that the government will continue to prioritise expenditure on the poor and the vulnerable, and on those areas of the economy that need protecting. “NREGA, food & fertiliser subsidy and capex will be fully funded. We don’t want to accumulate arrears, including in export benefits. We are trying to protect those who need protecting, while also protecting macro-economic stability,” he said.
Source: Financial Express
The CM laid the foundation stone for works under the Mahatma Gandhi Nagar Vikas Yojna Chief Minister Basavaraj Bommai has said more encouragement would be given to industries that create more number of jobs. Speaking to press persons after laying foundation stone for works under the Mahatma Gandhi Nagar Vikas Yojna in Davanagere on September 19, he said proposals pertaining to setting up three textile parks in Karnataka have been submitted to the Union Government. Under the Production Linked Incentive scheme (PLI) scheme, the Union Government aimed to provide more encouragement to textile and automobile sector as it would lead to creation of more jobs. The State government also has planned to set up automobile clusters, he said. Mr. Bommai said that under the Mahatma Gandhi Vikas Yojna, works worth ₹125 crore have been initiated in Davanagere. Along with these works, Smart City projects are being implemented to facilitate Davanagere's overall development, he added. The chief minister said across the State, works worth ₹1,500 are being initiated. Apart from the projects under the 75th Independence Day AMRUT schemes, additional grants of ₹25 lakhs would be given to each gram panchayat, he said. Mr. Bommai said that the quality of silk produced in central and North Karnataka districts is equivalent to the silk imported from abroad. Both State and central governments have plans to develop sericulture in a big way in around ten districts.
Source: The Hindu
Like last year, which saw a 11% rise on-year over a low base of FY20, it expects 11-13% rise in capex this fiscal, assuming that states spend 80-85% of the budgeted estimate. India’s top 21 states – accounting for more than 90% of aggregate state capital expenditure – are aiming for an ambitious 36% rise in capital outlay this fiscal (to Rs 6 trn) over revised estimates of FY21 (Rs 4.4 trn). This target seems too high, CRISIL has said. Like last year, which saw a 11% rise on-year over a low base of FY20, it expects 11-13% rise in capex this fiscal, assuming that states spend 80-85% of the budgeted estimate.
Source: Financial Express
Welspun India has said it is looking to invest around Rs 800 crore on capacity expansion of its home textiles and flooring businesses over the next two years. Welspun India, the country's largest home textiles manufacturer, would invest Rs 656.5 crore on its home textiles business expansion during FY'22-23. Its plans include augmenting its towel manufacturing capacity by 20 per cent to meet the growing demand from the overseas customers. The board of the company in a meeting held on Saturday approved plans to augment towel manufacturing capacity at its Anjar, Kutch (Gujarat)-based plant to 1,02,000 metric tonnes per annum (MTPA) from the existing 85,400 MTPA. "Keeping in view the recent trend of customers focus to track the entire value chain i.e., 'Farm to Shelf', the board has approved an investment in 40 looms for towel fabric at Anjar which represents 7 per cent of installed capacity," said Welspun India in a late night regulatory filing. While for its Vapi, Valsad (Gujarat) based plant, the board has approved additional investment relating to automation for faster production turnaround at lower cost. At Vapi, the company has commenced expansion of rugs capacity expansion by 80 per cent during the last financial year. "The company is expected to invest Rs 656.5 crore for the aforesaid expansion over FY'22 and FY'23," it said. The benefits of these expansions will start accruing in phases from Q1 FY'23 onwards, it added. "This expansion has a revenue potential of Rs 1,207 crore from the second year of operation," it added. Besides, the board of its subsidiary Welspun Flooring Ltd has also approved a capex of 143.6 crore. "The board of the wholly-owned subsidiary company, Welspun Flooring Ltd, at its meeting held on September 18, 2021, approved capex of Rs 143.6 crore to be invested over FY22 and FY23...," it said. This is for de-bottlenecking and rebalancing of its facility at Telangana, including setting up of a 25 MW renewable energy power plant and to further the group's commitment towards ESG by embedding sustainability and circularity at every stage of its value chain. According to Welspun India, in the current financial year, it has invested Rs 281 crore in capex and the total investment during FY'22 will be Rs 750 crore including the investment approved by the board on Saturday for the home textiles and flooring businesses. "There is no change in the company's guidance for the current financial year for Net Debt position i.e., Rs 2,400 crore as on March 31, 2022," it said. Welspun India is a part of Welspun Group, a conglomerate which has businesses interests in sectors including - Line Pipes, Home Textile Products, Infrastructure, Warehousing, Steel, Oil & Gas, Advanced textiles and Flooring solutions.
Source: Free Press Journal
A business delegation from the industrial city of Khmelnitsky (Ukraine) expressed interest in purchasing products from Uzbek textile manufacturers, Trend reports citing Uzbek media. In the Association "Uztekstilprom" with the assistance of the Embassy of Ukraine in Tashkent, negotiations were held with a business delegation from the industrial city of Khmelnitsky, headed by a representative of the local Administration, as well as among the heads of textile companies in the city. The meeting was also attended by representatives of domestic textile companies interested in establishing close partnerships with potential partners from Ukraine. The Ukrainian side was provided with information about the economic reforms being carried out in the republic, as well as the achievements and potential of the textile industry of Uzbekistan. In particular, they noted the importance of maximizing the use of existing opportunities for the further development of trade, economic and investment ties between the business circles of the two countries. In particular, foreign partners expressed interest in visiting manufacturing enterprises of the country, as well as in the implementation of mutual projects for the joint production of textile products, taking into account the logistics capabilities of Khmelnitsky to create a joint logistics hub for the subsequent export of products of domestic manufacturers to third countries. Within the framework of the meeting, the Ukrainian delegation held appropriate negotiations in the B2B format with the heads of individual domestic textile manufacturers and discussed the supply of finished Uzbek textile products to the Ukrainian market. As a result of the meeting, an agreement was reached to make all the necessary efforts to expand direct close contacts between representatives of the textile industry of the two countries, establish cooperation ties and further deepen trade, economic and investment cooperation in the textile industry.
Source: Azer News
To resolve this issue, the Ministry of Commerce has formed a committee to look into the matter Traders have sought amendments to certain sections of the Foreign Exchange Transaction Guideline of the Bangladesh Bank to resolve the problems of non-bonded exporters. This move was sparked off by the National Board of Revenue (NBR) requesting the Bangladesh Bank to order banks to refrain from opening back-to-back letters of credit (LCs) for factories that do not have a bonded warehouse license. For a back-to-back LC, an importer issues an LC to an exporter and the exporter can use it as collateral to get another LC issued for sourcing raw materials and accessories on credit. But if the facility is withdrawn, factories will have to make full payments plus VAT in cash for local purchases. To resolve this issue, the Ministry of Commerce has formed a committee to look into the matter, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Senior Vice-President Mohammad Hatem told Dhaka Tribune. He said the decision has put a stop to exports for those factories that do not have a bonded warehouse license. “However, the ministry has formed a committee headed by the commerce secretary and relevant officials of the Bangladesh Bank, NBR, BGMEA and BKMEA. We hope that the committee will submit its guidelines in this regard soon,” he added. Asked about the way to solve such problems, he said, one or more sections of the Foreign Exchange Transaction Guideline of the Bangladesh Bank should be amended. “However, I hope that the overall situation of the sector will come up in the committee’s report, which will ensure transparency,” he further said. According to NBR sources, there was ambiguity surrounding the whole issue, but they hope this committee will be able to come up with solutions. The sources further said that the NBR would not have any objections if back-to-back LCs are allowed for factories without bonded warehouse facilities. The previous letter could be withdrawn through another letter to Bangladesh Bank, they said. NBR issued the letter on August 31, after which exporters without bonded warehouse licences in the garment and textile sectors held meetings with the Ministry of Commerce. After the meetings on Wednesday and Thursday, the ministry decided to form an integrated working committee to resolve the issue. The number of members without a bonded warehouse license is 500 for the BKMEA, 350 for the BGMEA, and 104 for the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA). These companies export about Tk500 crore worth of goods annually.
Source: Dhaka Tribune
