The entire textile trade and industry is in shock over the government’s decision to increase tax on textile, which is supposed to be the second largest revenue generating commodity after agriculture. This will not only add to the financial burden of the end user, but will also affect small businessmen and will encourage tax evasion and malpractice. The increase in tax rate will hamper the domestic trade as well as the exports. — Upkar Singh Ahuja, CICU president Rajat Sood, a senior member of the Chamber of Industrial and Commercial Undertakings (CICU) and representative of the textile industry, said the textile trade was badly hit by Covid-19 and was still struggling for its survival. “Under such circumstances, this increase in tax rates on textile will be a setback to textile Sector,” he said. CICU president Upkar Singh Ahuja and general secretary Pankaj Sharma said there was no tax on textile/fabrics for a number of years. “Bringing the textile industry under the tax net again will lend a big blow to the entire textile industry,” said Ahuja. The CICU had made a representation immediately after the last GST council meeting, in which it was proposed to correct the inverted duty structure on textile. It was requested on behalf of the industry that the status quo be maintained at five per cent. However, instead of reducing the rate, a notification was issued to increase the tax, said Ahuja. “This will not only add to the financial burden of the end user but will also affect small businessmen and will encourage tax evasion and malpractice,” he said. “This increase in tax rate will not just hamper the domestic trade, but will also affect the exports,” said Ahuja, adding that “on one hand the government talks about ‘Make in India’ and ‘Atmanirbhar Bharat’, on the other hand it levies such high taxes, creating an atmosphere of uncertainty and gloom”. The Chamber of Industrial and Commercial Undertakings has also written to Union Finance Minister Nirmala Sitharaman, urging her to introduce a single rate without any cap and category on value. The trade body also requested her to withdraw the notification regarding increase in tax rate. This action of the government will not only boost the economy, but will create an atmosphere of hope and certainty. If this request and the condition of the textile industry is not taken seriously, the entire industry will suffer, maintained the industrialists.
Source: Tribune India
The Tamil Nadu Textile Merchants Association has said that the increase in GST on textiles and garments from 5% to 12% from January 1, next year would impact the industry badly and render crores of people dependent on this industry jobless. In a representation to the Prime Minister Narendra Modi, Union finance minister Nirmala Sithraman, Union minister for textiles and others, secretary of the association, Ashraf Tayub said that the recommendations of the 45th GST council to increase the GST on textiles could have a colossal negative impact and affect the total textile and garment industry and lead to the closure of lakhs of factories and shops. This in turn could cause unemployment to crores of people dependent on this industry. Eighty-five per cent of the textile and garment shops are in the small and medium sectors and have a turnover of less than Rs 40 lakh per annum and they are not in the GST ambit. But all of them pay GST on their purchases. The existing 5% GST is fully borne by the traders and industries and not passed to the customers. If the GST is increased, it would lead to inflation and they would not be able to compete with the larger stores and would be forced to close down. Small and medium textile and garment retailers constituting about 65% of the Indian market are already suffering due to competition from the conglomerates, which have penetrated even the smallest cities and towns. This is an industry which employs lakhs of uneducated, illiterate and physically challenged people. Job losses in this sector could impact other trades like restaurants, hotels, travel and packaging. He said that the government should increase the threshold limit of GST to more than Rs 2 crore turnover and allow inter-state transportation of goods for non-GST small traders and industries also. This would boost free sales across the country, he said.
Source: Times of India
The settlement is broadly on the lines of the one reached under the Unilateral Measures Compromise reached among the UK, Austria, France, Italy and Spain with the US on October 21 this year. India and the United States have reached an agreement to settle differences relating to the 2% equalisation levy imposed by New Delhi on ecommerce operators. The settlement is broadly on the lines of the one reached under the Unilateral Measures Compromise reached among the UK, Austria, France, Italy and Spain with the US on October 21 this year. Under the agreement, India will continue to impose the levy March 31, 2024, or till the implementation of Pillar 1 of the OECD agreement on taxing multinationals and crossborder digital transactions. The US will terminate the trade tariff actions it had announced in response to the levy and will not take any further actions. "India and US have agreed that the same terms that apply under the October 21 joint statement shall apply between the US and India with respect to India's charge of 2% equalisation levy on e-commerce supply of services and the US' trade action regarding the said equalisation levy," the finance ministry said in a statement. It added that India and the US will remain in 'close contact' to ensure there is a common understanding of the respective commitments, and any further differences of views on this matter are resolved through constructive dialogue. The final terms of the agreement will crystalise by February 1, 2022, the ministry added. "Under this agreement, and consistent with and applying the same terms as the earlier agreements with Austria, France, Italy, Spain, the United Kingdom, and Turkey, in defined circumstances the liability from India's equalisation levy on ecommerce supply of services that US companies accrue in India during the interim period will be creditable against future taxes accrued under Pillar 1 of the OECD agreement. The period during which the credit accrues will, however, be from April 1, 2022 until either the implementation of Pillar 1 or March 31, 2024 (whichever is earlier)," the USTR said in a statement. As per the statement, the US will terminate the currently-suspended additional duties on goods of India that had been adopted in the DST Section 301 investigation. The statement added that USTR was proceeding with the formal steps required to terminate this Section 301 trade action and in coordination with Treasury, will monitor implementation of the agreement going forward. "The India-USA agreement on a transitional approach is beneficial to India as it can carry on with the present 2% levy with certainty until Pillar 1 takes effect," said Amit Maheshwari, tax partner at tax and consulting firm AKM Global. Once the OECD agreement rolls out, the 2% equalisation levy will have to be withdrawn. This applies to other countries as well that have imposed a similar tax. According to the terms agreed upon by five countries in the October 21 agreement, India will have to provide credit if collected tax over this period is more that it gets when the OECD regime rolls out for a similar period.
Source: Economic Times
20 most profitable companies account for 65% of corporate profits Big private sector companies have cornered a large chunk of the corporate profit pie in the last few years as small and public sector firms struggle with poor profitability. This has resulted in a steady rise in profit concentration. India’s 20 most profitable companies accounted for nearly 65 per cent of all corporate profits in the listed space in the first half of 2021-22 (FY22), as against a 62.4 per cent share in FY21 and 52 per cent a decade ago in FY12. However, this was lower than the record-high profit concentration of 72 per cent in FY20.
Source: Business Standard
Showcasing an array of regional handloom textiles, the ongoing ‘The Grand Handloom Fair’ pays homage to skilled craftspeople of India. Aruna from Vasant Vihar, who was busy shopping at Dastkar’s The Grand Handloom Fair at Nature Bazaar in Chhatarpur on Monday afternoon, said, “Handloom is all I wear so I always visit the Dastkar fair to pick up something.” Working to uplift Indian artisans, Dastkar, a non-government organisation founded in 1981 by Laila Tyabji—one among the many notable names in the crafts sector—unveiled their handloom fair on Monday. The fair, which will continue till November 28, features more than 100 exhibitors. When we visited the venue on the first day, we noticed stalls featuring handloom textiles from about 19 states from across the country. Apart from textiles on showcase, there were regional musical performances hosted alongside ongoing demonstrations on spinning and weaving. A testimony to regional artisans and the cultural heritage of our county, this fair is supported by Nila House—a craftsmanship centre established by the Lady Bamford Foundation, which is a charitable trust from Jaipur. Weavers from independent small business or NGO-based crafts projects are showcasing a range of fabrics like brocades, Khadi, and others using natural dyes and prints such as Ikat and Bagru. There are woollens from Ladakh, Uttarakhand, and Kashmir as well as handlooms such as Kanjeeveram, Banarasi, Patola, Pashmina, and Paithani along with lesser-known crafts like Tangalia from Gujarat and Loin Loom weaves from Dimapur. Adhering to COVID-19 protocols such as mandatory masks, visitors are subject to temperature checks and sanitisation at the entrance.
Taxing yet fruitful
Antaran, an initiative by Tata Trusts that works towards strengthening the craft ecosystems, has brought Nagaland’s Loin Loom weavers to the forefront. Also called backstrap loom textiles, these intricate yarns are mostly crafted by women. Each weave takes about a week to create, mentioned Baby Resu, a weaver affiliated with Antaran. Similarly, Y Kanchana, from Andhra Pradesh, who received the Kamaladevi Puraskar in 2020 by the Delhi Crafts Council, brings the Srikalahasti Kalamkari—an art of dyed hand-painting on fabric produced in Srikalahasti—to the Capital. “These are hand-painted using natural colours that I make myself. Each saree takes almost 25 days to create,” she said. Kanchana added that to create a perfect Kalamkari, one must have optimum climate; so in a tropical country such as India, the process is extremely taxing. Being in the Capital for the first time, she shared that though the language was a barrier for her, she had never felt this welcomed at any other exhibition. “Even though I can’t speak fluent English or Hindi, Dastkar supported me. Everyone is ready to help out if there is any problem,” Kanchana shared.
A fair representation
As a flock of handloom lovers and shoppers reached the venue from all over Delhi-NCR, this curated fair is helping fulfil the textile needs of a number of citizens. Swetashree Mazumdar from Noida, who was here with her friend Sonya Madeira from the UK, said, “Both Sonya and I have always supported handlooms. It is something we believe in as a cause. Meeting the craftspersons face-to-face is such a beautiful feeling.” However, as an afterthought, she added, “Dastkar should think about ensuring a representation of the country. For the reach that they have, there are still many regions that are underrepresented. We are still missing Phulkari from Punjab, and the majority [crafts] from the North East. So, I think they should try and ensure that there is at least one representative from each state.”
Source: New Indian Express
Vietnam’s ministry of industry and trade (MoIT) recently forecast that the total importexport revenue this year may reach $640-$645 billion, with a slight trade deficit. The ministry attributed that to the efforts of the business community in overcoming pandemic-induced difficulties to maintain production, especially those in the garment, textile and leather sectors. By the end of the year, domestic businesses can regain a growth rate like it was before the pandemic broke out, according to the ministry. Sectors that are traditionally strong in export like telephone, electronics, machinery and accessories are also likely to post export growth of 15-25 percent this year, it said. MoIT said that after three years of implementing the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and a year of the European Union Vietnam Free Trade Agreement (EVFTA), the positive impact of those deals on the country’s exports has shown clearly, especially in markets without any FTA with Vietnam before, a news agency reported. For example, exports to Canada, Mexico and Peru have been increasing at 25-30 per cent per year. However, the ministry also pointed to major difficulties facing businesses, including labour shortage, especially in southern localities, as well as a lack of materials for production, high logistics cost, and restrictions from COVID-19 prevention and control measures.
Source: Fiber 2Fashion
Turkey and the United States reached a consensus on transforming the existing Digital Services Tax into a new multilateral solution as well as lifting the additional customs tax, boosting local exporters' business expectations and paving a way for greater exports to the U.S. market. The agreement allows for the termination of U.S. retaliatory trade measures imposed against Turkey and will take on the same terms agreed on by Washington in October with Austria, Britain, France, Germany and Italy, the U.S. Treasury said. The move comes amid a historic agreement that was reached last month between 137 countries of the OECD-G20 inclusive framework, which represents nearly 95% of the world's gross domestic product (GDP), on a two-pillar package of reforms to the international tax framework that will be implemented in 2023. A total of 136 countries agreed in principle to withdraw their digital services taxes as part of a sweeping global tax deal made on Oct. 8 to adopt a 15% global minimum corporate tax and grant some taxing rights on large profitable companies to market countries.
Record-breaking exports Mustafa Kamar, Turkey’s Jewelry Exporters' Association head, said that they took a deep breath after the agreement was signed between Turkey and the U.S. Kamar said that the sector broke a record in the history of the Republic after signing a jewelry export deal of $920 million between Nov. 1-22. “This export represents an increase of 300% compared to the same period of the previous year, and achieved in just 20 days,” he noted. He said the trade tension between the U.S. and China as well as the disruptions on supply chain worldwide were helpful in reaching this record-breaking export volume. “The slowdown in the supply chains led to new searches in the U.S. We have become preferred by responding to the demand in a fast and high-quality manner,” he said. Explaining that they outperformed their targets by 170% with $5.5 billion of exports in 11 months, Kamar said: “We made $800 million of our $5.5 billion export to the U.S.” They will increase their exports to the country to over $1 billion at the end of the year, he commented, and plan to reach $3-4 billion in exports in two to three years. “We are currently in the top three in jewelry exports to the U.S. We foresee that we will be the leader in 2023,” he said. Uğur Uysal, Chairperson of the Istanbul Carpet Exporters' Association, meanwhile said this agreement is very important for them as well as for the American market. “We aim to close this year with $3 billion of exports. Almost half of this comes from our exports to the U.S.,” he said. Saying that they are the leader in machine-made carpets in the U.S., Uysal pointed out that while a logistics crisis continues around the world, “The U.S. prefers Turkey instead of China for carpet imports. Demand will continue to increase. We foresee that our exports will increase by 20% in 2022. “We will make half of that to the United States,” Uysal said. Istanbul Ready-to-Wear and Apparel Exporters' Association Chairperson Mustafa Gültepe also stated that the decision came as a breath of fresh air, particularly for the home textile industry. “The U.S. is a very big market for the home textile industry,” he said, noting if the additional customs application had been implemented, the exports to this market would have even decreased to zero. “Currently, we have $800 million of exports to the U.S. and we think this will reach $1 billion by the end of the year.” The U.S. Treasury Department said in a statement on Tuesday that “these reforms will provide for a tax framework that is fairer, more stable, and better equipped to meet the needs of a 21st-century global economy.” "This compromise represents a pragmatic solution that helps ensure that countries can focus their collective efforts on the successful implementation of the OECD-G20 inclusive framework's historic agreement on a new multilateral tax regime and allows for the termination of trade measures adopted in response to the Turkish Digital Services Tax," it added.
Source: Daily Sabah
Sri Lanka is located ideally for direct maritime or short sea connectivity with many countries in the wider region. As an island economy, Sri Lanka’s regional connectivity has been mainly through its main seaport in Colombo, for South Asian countries. Colombo is ranked among the top 25 Ports in the world. The ports of Chittagong in Bangladesh and the Ports of Colombo and Hambantota in Sri Lanka are located nearly 1,515 nautical miles from each other. Robust, smooth connectivity and linkages between these three ports would ensure and facilitate more shipping, tourism and investments between the two friendly countries. Education and sports are other areas of collaboration between the two nations. On the other hand, Bangladesh and Thailand are near neighbours, connected by the Bay of Bengal. The development of these maritime ties would benefit both countries in terms of trade, investment, and regional communications. The two countries are in talks to sign a Free Trade Agreement (FTA) to boost trade and investment. Bangladesh is geographically positioned as a gateway between ASEAN and SAARC (South Asian Association for Regional Cooperation) with potential access to both for each other’s export-driven manufacturers. ASEAN includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam, while SAARC includes Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. The Chittagong Seaport is the main seaport in Bangladesh. Around 90 per cent of Bangladeshi trade is conducted through the Chattagram Port Terminal there, with the rest being taken up by Bangladesh’s Ports at Mangla and Payra. Thailand’s Ranong Port is situated on the Kraburi River of the Kra Peninsula, across from Myanmar and on the Indian Ocean coast and lies 1,220 Km from Chittagong. Thailand’s Southern Economic Corridor project, approved by the Thai Government in August 2018, emphasizes the development of Ranong Port as a gateway to trade with Bangladesh, India, Myanmar, and Sri Lanka. Using Ranong Port for trade with Bangladesh’s Chittagong, Payra, and Mangla ports will reduce the distance between the two countries and boost trade. Then this connectivity can then be extended to India’s Kolkata, Chennai, and Mumbai ports and Iran’s Chabahar Port through the Colombo Port.
Bilateral ties The launch of direct shipping services amongst Colombo, Mumbai, Chennai, Chittagong and Ranong ports has received a new push as trade amongst the countries is increasing. Sri Lankan Foreign Minister Prof. G. L. Peiris recently met his Bangladeshi counterpart AK Abdul Momen in Dhaka and expressed interest in collaborating in the shipping field, with cooperation between the Ports of Chittagong and Colombo and Hambantota. He emphasized the need for feeder services and coastal shipping arrangements. Both of them discussed bilateral commercial ties. Cooperation on a transshipment hub would be beneficial to Bangladesh because of the reduction of time and nautical miles, a Bangladeshi newspaper reported. Sri Lanka’s investment in Bangladesh is around US$ 2.5 billion. About 110 Sri Lankan companies are operating in Bangladesh. The annual bilateral trade volume is now around US$ 200 million. Sri Lanka is keen on a Preferential Trade Agreement (PTA) with Bangladesh and is happy that technical negotiations have commenced and are proceeding, Peiris said. On the other hand, bilateral trade between Bangladesh and Thailand reached US$ 837.08 million in 2019-20. Bangladesh’s total exports to Thailand in 2020 were US$ 35.46 million while imports from Thailand were worth US$ 801.3 million, very much in Thailand’s favour. Bangladeshi exports to Thailand are on an upward trend, however. This year exported values are expected to reach just under US$ 40 million, a 12 per cent increase YoY. According to FDI stock data in Bangladesh, Thailand is the 15th largest investor in the country. This however would increase significantly if an FTA can be agreed upon, and the two countries build direct maritime connectivity between Chittagong and Ranong ports. There is a precedent. When Bangladesh signed an FTA with the SAARC members in 2006, its imports and exports doubled within ten years, being a relatively constant (there was a dip in 2011) and a sustainable 10 per cent GDP growth in trade per annum. In terms of commodities, Thailand mainly exports cement, cereals, plastics, man-made staple fibers, sugar and sugar confectionery, machinery and mechanical equipment, cotton and cotton cloth, salt, sulfur, clay, stone, and mineral fuels to Bangladesh. In the reverse direction, Bangladesh exports garments, vegetables, textile fibers, garments, animal products, electrical and electronic equipment, frozen fish, and crustaceans to Thailand.
Southeast Asian countries Direct sea connectivity between Chittagong and Ranang can be expected to play an important role in expanding trade and commerce between the two countries. The time and cost of transporting goods between them can be reduced by 30 per cent and are likely to play a key role in building ties with other Southeast Asian countries, including Myanmar and India. The introduction of direct shipping between the two countries will encourage traders from both countries to expand their regional trade and investment. Thailand could increase trade ties with India, Bangladesh, and Sri Lanka under the framework of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC). The establishment of trade and economic corridors through coordination between the Look East Policy of India and Bangladesh and the Look West Policy of Thailand and the establishment of connectivity through coastal shipping is likely to bring prosperity for all. Dhaka is additionally counting on Bangkok’s support for Bangladesh’s bid for membership in the Mekong-Ganga Cooperation Forum as well as the ASEAN Sectoral Partnership. Thailand and Bangladesh are also both active partners in the Belt and Road Initiative (BRI). If Chittagong and Ranong Port connectivity can be extended to Iran’s Chabahar Port through Sri Lanka’s Colombo and the International North South Transport Corridor project (INSTC) through to Central Asia and Turkey, this will create significant trade potential. Although the Maritime Assistance Agreement between Bangladesh and Thailand was completed in 1986 and is currently in force, changes need to be made to bring these opportunities to fruition. But Bangladesh and Thailand can renew the agreement for ensuring their business interests. Progress is being made. Thai ambassador to Bangladesh, Makawadee Sumitmor stated at a bilateral business meeting with the Chittagong World Trade Center in September this year that there is a trade gap between the two countries. She also said that the expansion of the India-Myanmar-Thailand trilateral route will boost trade in this region and that she was waiting for the signing of a Memorandum of Understanding between Thai authorities and the Chittagong Port Authority to establish direct shipping links by sea. There are huge opportunities for Thai investors in infrastructure, light engineering, agriculture and food processing, and tourism and healthcare. Thailand and Bangladesh both could and should utilize these potentials. But smooth connectivity is needed to boost trade. Colombo, Mumbai, Chennai, Chittagong and Ranong Port connectivity would boost trade and tourism. India, Sri Lanka, Bangladesh and Thailand can all benefit from this mutually rewarding sea connectivity project. (Pathik Hasan is a Dhaka-based NGO activist, researcher and freelance writer on contemporary international issues whose work has been published in many local and international publications. Academic background: BSS (Peace and Conflict Studies) and MSS (International Relations) under the University of Dhaka.
Source: Daily News
Say govt has not fulfilled its promise to bring down duty The federal government should take notice of the excessive taxes and duties imposed on polyester yarn, which is the main raw material of the textile industry, said Pakistan Yarn Merchants Association (PYMA) Central Chairman Saqib Naseem. In a meeting with office-bearers of the Karachi Chamber of Commerce and Industry (KCCI) on Tuesday, Naseem urged the government to reduce the customs duty on polyester yarn to 7% from the current level of 11%. The government had assured the industry of bringing down the customs duty to 9% in the current fiscal year’s budget, he recalled, adding that the promise had not yet been fulfilled. He demanded that the government abolish the anti-dumping duty in the wider interest of the textile sector. He underlined that previous governments had provided relief to the industry through different textile packages. On the contrary, the present government burdened the industry with taxes. Highlighting the importance of commercial importers, Naseem said that they acted “as a bank” for thousands of small-scale textile units, which could not import large quantities. Thus, the government should reduce taxes and duties to arrest the soaring cost of production, he added. In addition, Naseem demanded that the government reduce the turnover tax to 0.1%. He was of the view that the excessive turnover tax was making it difficult for them to continue their business operations, given the limited profit amid rising cost of production. On the occasion, KCCI President Muhammad Idrees said that the authorities should cooperate with traders in order to facilitate industries and exports. Talking to The Express Tribune, AHL analyst Arsalan Hanif underlined that polyester yarn was the basic raw material used by the textile mills. Their demand to reduce customs duty would make them competitive against other countries and would reduce their cost of doing business, he said. He said that the move would encourage new textile units as well, as it would increase their profit and enable them to attract new customers by selling goods at competitive prices. However, the reduction in duties would result in an increase in imports and the import bill, he said. “Reduction in turnover tax will be beneficial to the entire sector as this will be the biggest incentive for the textile companies,” said Hanif. Topline Securities analyst Saad Ziker was of the view that the federal government should fulfill its promise of reducing the customs duty. It would provide some relief to the textile industry in this inflationary environment, he said and termed the industry the “backbone of our economy”. He maintained that the government should take those steps which would be beneficial to the export sector and result in contraction of the current account deficit. On the contrary, Arif Habib Commodities CEO Ahsan Mehanti said that if the government wanted to accumulate forex reserves, then exports should be prioritised over taxes at the import stage. “Any tax concession to exporters is beneficial,” he added.
Source: Tribune
