Considering the change in the rate, the industry has been clamouring for a reversal as they feel, it will make their products costlier, which will impact the sale. At a time when sections of the textile industry were demanding correction of inverted duty structure to ease cash flow, the recent notification issued by the Central Board of Indirect Taxes and Customs (CBIC) has not augured well with the industry.
What is the issue The GST on Man-Made Fiber (MMF), MMF yarn, and MMF fabrics were taxed at 18 percent, 12 percent, and 5 percent under GST respectively. The taxation of inputs at higher rates than finished products created credit build-up and cost escalation. It further led to the accumulation of taxes at various stages of the MMF value chain and the blockage of crucial working capital for the industry. GST Council in its last meeting took a decision to correct the inverted tax structure and come up with a notification No. 14/2021 dated 18.11.201 raising tax from 5 percent to 12 percent for several textile and apparel items from January 2022.
Industry claims Considering the change in the rate, the industry has been clamouring for a reversal as they feel, it will make their products costlier, which will impact the sale. Terming it as unjustified and does not meet the basic object of removing inverted duty as envisaged by the government, the Confederation of All India Traders (CAIT) said, "Instead of simplifying and rationalising the GST tax structure, the GST Council has made it as most complicated GST law in India over the world." CAIT secretary general Praveen Khandelwal said, "The question is whether the inverted tax structure is totally corrected? The answer is a big no. In the cotton textile industry there was no inverted tax structure, then why fabric and other cotton textile goods were brought under the 12 percent bracket. Even in the man-made textile industry, at the stage of manufacturing garments, sarees and all types of made-ups there was no inverted tax issue. Without having any understanding of the stages of the textile industry such a harsh decision will be a regressive step." "The central government's notification to increase the rate of GST on basic items like textiles and footwear from 5 percent to 12 percent is being opposed all over the country including Delhi and the CAIT has decided to launch a mega agitation across the country against such arbitrariness. The agitation will be led by two important trade associations of cloth trade namely Delhi Hindustani Mercantile Association and Federation of Surat Textile Association (FOSTA) under the umbrella of CAIT. Apart from textiles and footwear, trade organisations of all types of trade, workers, employees associated with them will also participate in it. CAIT has urged finance minister Nirmala Sitharaman and textile minister Piyush Goyal to keep the notification in abeyance and start consultation with traders," Khandelwal said. Expressing similar concerns and sharing the impact of the increase in GST on the businesses, Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said, "The increase in GST rates on textiles and apparel is not in anybody’s interest due to its impact. On the business side, it will add to the financial burden of an already-stressed sector, slow down its pace of recovery and affect working capital requirements especially in the case of MSME businesses which account for 90 percent of the industry. On the consumer side, it will lead to a rise in the prices of garments, thereby hurting consumption. On the government side, in the long run, it may lead to many unorganised businesses going out of the GST net." RAI believes that a far more beneficial and reasonable solution is to make the Entire Value Chain subject to a flat 5 percent GST rate. This will not only resolve the Inverted Duty Structure anomaly but also give a fillip to the industry.
Government response Union finance minister Nirmala Sitharaman on during her recent visit to Jammu and Kashmir said the recent government notification on uniform Goods and Services Tax (GST) at 12 percent for the textile and apparel sector was aimed at correcting the inverted duty structure that was leading to accumulation of input tax credit by companies. She did not subscribe to the industry’s fears that this would lead to higher prices of finished products. "Every time adjustments in rates do not lead to the price increase for customers. A higher rate on inputs was leading to higher refunds to taxpayers and needed correction. Correction of the inverted duty structure was decided at the GST Council," she said at a media briefing during her two-day visit to Jammu & Kashmir. "Inverted duty structure was a problem for the MMF sector. The GST rates currently are 18 percent for fibre,12 percent for yarn and 5 percent for fabrics. The recent notification issued as a follow-up to the recommendations of the 45th GST Council meeting prescribing a uniform rate of 12 percent across the MMF chain has reportedly left some sections of the sector ‘distressed and disappointed’. The MSME sector which is largely focused on fabric production would undoubtedly get impacted. While the rate hike for them at 7 percent is substantial, the new rates will ensure no blockade of credit. While this was not unexpected, the MSME sector’s demand for maintaining a status quo or a uniform 5 percent rate is perhaps not justified. The new rate is effective from January 1, 2022, and gives the sector sufficient time to prepare themselves," said Najib Shah, former CBIC chairman.
Source: CNBCTV18
Assuring the industry of government support against a possible surge in anti-competitive imports, Goyal said that large-scale stakeholder consultations are being done before India inks free trade agreements. India will strongly pitch for significant outcomes at the upcoming World Trade Organization (WTO) ministerial without compromising the country's interests and push for a permanent solution to the public stockholding issue, commerce and industry minister Piyush Goyal said. Goyal, who is also the consumer affairs minister, told ET in an interview that his ministry is in talks with stakeholders and will come out with a robust set of rules, aimed at protecting the interests of consumers and promoting the orderly growth of e-commerce within the laws of the land. Assuring the industry of government support against a possible surge in anticompetitive imports, Goyal said that large-scale stakeholder consultations are being done before India inks free trade agreements. Responding to a question on the government asking ecommerce marketplaces to function under law, Goyal said that the government's policy on ecommerce has been "crystal clear" and there is no scope for ambiguity. Agreement on Public Stockholding "After this level of clarity of what is intended within the law, it is very surprising that reputed companies have chosen to find ways and means to go around the spirit in which they were allowed to first come in and set up their marketplace operations," he said. Indian trade bodies have often accused American ecommerce majors Amazon and Walmart-owned Flipkart of FDI policy violations. "The fact that an effort was made to stop questions being asked about anti-competitive practices, which is the Competition Commission's mandate, on the grounds that an inquiry is already going on under FEMA by the Enforcement Directorate-two subjects which have absolutely no relevance with each other. The effort to stall the investigation for 18 months leaves a lot of questions on the table," Goyal said. WTO Ministerial The 12th ministerial conference of the WTO will be held from November 30 to December 3 in Geneva where India would press for a permanent agreement on public stockholding for food security and intellectual property waiver for Covid vaccines and supplies. "India has been pushing for a permanent solution to the public stockholding on which we have a peace clause. But it's important that WTO finalises all the elements of the public stockholding agreement and we shall be working on that," Goyal told ET. India has been arguing that its foodgrain procurement programme is for food security and should not be subject to the WTO rules on farm subsidies. On the discussions on Covid medicines and vaccines, Goyal said any response to the pandemic will not be credible unless it includes a waiver from Trade-Related Intellectual Property Rights (TRIPS) agreement. The minister said that India is open to engaging on WTO reform but would like to know more about the agenda on which the reform discussions will evolve. "We are also very keen that the fisheries subsidies being used by certain countries indiscriminately, which is causing harmful fishing and depletion of fish stock, should be addressed in a fair manner recognising the spirit of the WTO, which includes recognising Special and Differential Treatment (S&DT) available for developing countries," he said. He said multilateral organisation should be run on the basic principles on which it was founded and consensus is one of them, responding to new issues such as ecommerce and the environment being discussed at the WTO. "So we believe issues like ecommerce or digital trade should come into the working groups and should not be negotiated or discussed through plurilaterals," Goyal said.
Source: Economic Times
Under the Chairmanship of Secretary, DPIIT, the Empowered Committee of North East Industrial Development Scheme (NEIDS) 2017, in its 9th meeting granted registration to 105 new industrial units in the North East. Till date, a total of 391 new industrial units with a proposed total investment of INR 2631.19 crore have been granted registration under NEIDS, 2017. With this all applications recommended for registration by the concerned state governments upto 31st October 2021 has been considered by the Empowered committee. The total incentives envisaged by these 391 industrial units amounts to INR 1740.06 crore with projected employment generation of 15,987. To promote industrialization in NE States and to boost employment and income generation, Government notified NEIDS, 2017 on 12.04.2018. The Scheme was formulated on the basis of suggestions received from State Governments, Industrial Associations and other stakeholders. The Scheme covers both manufacturing and service sector. This could be achieved through key initiatives taken including developing an online application portal which allows submission of application and claim forms online besides online processing of the cases with each stage being intimated to the applicant. The Government of India has also delegated the powers for processing and approval of the claims to the State Governments with a view to expedite the release of incentives to the industrial units. All the stakeholders are being periodically engaged through symposiums and workshops and one such mega engagement was held on 30th November, 2019 with the theme of “Accelerating Investment & Industrial Development in North-Eastern Region” by DPIIT with team members from Invest India and Ease of Doing Business (EoDB) Division, Departments heads in industries Departments of all the 8 State Governments, National bodies like APEDA and NER representatives from Industry Associations such as CII, FINER, Laghu Udyog Bharati, ASSOCHAM and FICCI etc besides manufacturing and service sector units located in North East Region and other Stakeholders. Hand on training the processing on NEIDS portal was also provided.
Source: PIB
CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said that in the cotton textile industry there was no inverted tax structure, then why fabric and other cotton textile goods were brought under the 12 per cent bracket. The Confederation of All India Traders (CAIT) said that instead of simplifying and rationalising the GST tax structure, the GST Council has made it as "most complicated GST law in India over the world" and much against the GST structure shown to CAIT by the then Finance Minister Arun Jaitley. CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said that in the cotton textile industry there was no inverted tax structure, then why fabric and other cotton textile goods were brought under the 12 per cent bracket. Even in the man-made textile industry, at the stage of manufacturing garments, sarees and all types of made ups, there was no inverted tax issue. Without having any understanding of the stages of the textile industry such a harsh decision will be a regressive step. The Central Government's notification to increase the rate of GST on basic items like textiles and footwear from 5 per cent to 12 per cent is being opposed all over the country, including Delhi, and the CAIT has decided to launch a mega agitation across the country against such arbitrariness. The agitation will be led by two important trade associations of cloth trade, namely Delhi Hindustani Mercantile Association and Federation of Surat Textile Association (FOSTA) under the umbrella of CAIT. Apart from textiles and footwear, trade organisations of all types of trade, workers, employees associated with them will also participate in it. Bhartia and Khandelwal said, "Roti, Kapda & Makaan are three basic things of life. Bread has already become very expensive due to high rise in prices, buying a house is beyond the reach of a common man and the cloth, which was accessible, has also been made expensive by the GST Council. "After all, what kind of treatment is being done to the common man of the country. In this matter not only the Central Government but also the State Governments are completely guilty because these decisions have been taken unanimously in the GST Council and no one has opposed such an irrational decision," CAIT said. They have demanded that the increased rate of GST on clothes and footwear should be withdrawn immediately. They said that retail trade in the country has already been destroyed due to Covid and now that the business was resuming on track from this year, the increase in the GST rates will be the last nail in the coffin of the trade, CAIT said. Bhartia and Khandelwal said that according to sources, it has been learnt that the Fitment Committee of GST has recommended an increase in the GST rate on gold jewelry from 3 per cent to 5 per cent and the current tax rate in GST 5 per cent has been recommended to 7 per cent, 12 per cent to 14 per cent and 18 per cent to 20 per cent. They said that this proposed increase in tax rate is highly irrational and unjustified and is clearly arbitrary action by the fitment committee. In the matter of increase in clothes and footwear, no consultation was done with any stakeholder of the country. GST is being distorted continuously and the concept of "One Nation-One Tax" has been made a joke. They said that traders across the country have mobilised against this unilateral and arbitrary increase against which the traders across the country are in great anger and resentment. To decide about the future strategy of the agitation, the CAIT has convened a video conference on November 28 with the leaders of textile and footwear trade across the country, which will also be joined by prominent trade leaders of all States. Bhartia and Khandelwal said that it is very unfortunate that the GST which was talked and explained to CAIT by the then Finance Minister Arun Jaitley, who by soliciting the support of trading community on June 4, 2017 was a simple tax structure having minimal compliance, but has been blown up and replaced by a very complex GST tax system. Prime Minister Narendra Modi's announcement of Ease of Doing Business and One Nation-One Tax is being openly ridiculed, CAIT said. CAIT said the officers have become autocratic and either the command of the responsible leaders has become lose or they are also involved in torturing the traders. Traders across the country will no longer tolerate this situation.
Source: Economic Times
Minister says New Delhi’s agenda at the WTO ministerial includes a permanent solution to the public stockholding issue, recognition of S&DT in fishery subsidies and underscoring the necessity of TRIPS waiver proposal. A key outcome of the recent talks with the US is that all the baggage of the past has been buried, says commerce and industry minister Piyush Goyal. In an interview with Bodhisatva Ganguli and Kirtika Suneja, Goyal, who is also the minister for textiles, consumer affairs, food and public distribution, says India has made very important and necessary commitment towards a stable and predictable regulatory regime. Edited Excerpts: What was broadly the outcome of our talks with the US trade representative? The fact that we could come out with such an elaborate expression of convergence on so many issues itself is a big outcome. The last time, we weren't able to come up with a joint statement. I think the big-ticket outcome is that all the baggage of the past has been buried. The mood was very enthusing and the commitment on both sides towards stronger and deeper relations was very evident. Would one be correctin saying thatthe withdrawal of Generalised System of Preferences is not a top priority now? Absolutely not. I mean, we have of course discussed it, and the US Congress is also seized of the matter. Probably they are considering it but it's not something which will make or break the Indo-US trade or relations. We have by and large assessed the various lines on which we get concessions in the GSP and our trade and export on those lines has not been affected at all. Are we on track on a free trade agreement with the US? When did we ever board on to that track? There has never been any track for an FTA with the US. Since India has till now opposed non-trade issues, whatis the take on issues like labour and environment,that they have mentioned? Yes, but that was the legacy of the past when India was concerned to talk about these issues. After Prime Minister Narendra Modi came into government in 2014, India has become a champion of these issues in the whole world. We strengthened all the laws protecting labour and strengthened the penalties on child labour. We have probably made some of the finest legislations to promote women's rights and gender equality, far ahead of many of the developed countries in terms of our Indian commitment to women and gender equality. On labour, we've come out with the four codes and addressed every aspect of a person's working life. This government has a lot to showcase on these subjects and therefore we are not shy of discussing any of these subjects, because India comes up winner. When it comes to environment, we are proud to say we are one of the few countries in the world who met every one of their INDCs (intended nationally determined contributions), we now have a net zero (emission) deadline, which is more aggressive than anybody ever imagined. We are just about 10 years behind China, despite being probably 30-40 years behind China in terms of development — the period from 1979 to almost 2010. So, despite that, we have taken very aggressive targets. Our carbon intensity based on the gross domestic product has been further sought to be reduced. We are looking at very aggressive renewable energy targets. So, on every score, today, India is a champion of environment issues, and a world leader. So, we proudly discuss these issues. At various international fora, everybody is amazed at the way India has shown its true work in terms of a trusted trade partner, trusted service provider, a resilient economy, the deft handling of Covid-19, the rapid upscaling of health infrastructure and development of vaccines, including the world's first DNA-based vaccine, world's first nasal vaccine, and an mRNA vaccine. So, India has demonstrated to the world talent beyond the world's imagination. China has recently launched something of a crackdown on tech companies and there is a curtailment of civil liberties in Hong Kong.Is there any benefitin terms offoreign capital inflows thatIndia can draw from these? India is one of the most investor-friendly and transparent destinations for foreign capital. We have a rule of law, a very robust judicial system and a very vibrant media, which ensures that investors are respected and given fair treatment. We have a government which is not only decisive, but also sensitive to the concerns of global investors. We have a leader who has earned the trust of people around the world — governments, businesses and all stakeholders. We have made very important and necessary commitments towards a stable and predictable regulatory regime. For example, we erased the legacy of the retrospective taxation that we inherited. And I can proudly say that in seven and a half years, we have not done any retrospective amendment or change in law. All of these are being noticed by the world. They can perceptibly experience the formalisation of the economy, the change in levels of transparency, honesty and integrity. The much more liberal and welcoming attitude towards foreign direct investment and foreign institutional investment, speed of approvals, the ease of doing business and the culture of innovation that’s being promoted, have been a source of attraction. Never before has the interest to trade with India and to engage with India on trade been more than today. We have FTA negotiations proceeding at a breakneck speed with the UAE. We have a Comprehensive Economic Partnership (Agreement) underway with Australia. The United Kingdom and India have completed all the pre-launch formalities (for FTA) including scoping and their own process of getting parliamentary approval. Very soon the minister should be in India and launch talks with the UK. Our work towards an investment agreement and geographical indications agreement with the EU is already underway. Our teams have been engaged and have announced their chief negotiators. The Prime Minister met the European leaders in Rome on the sidelines of G20 and they reiterated their desire to speed up discussions and work with India. Canada is another country which has expressed a desire to engage with India for an FTA. The six-country bloc of GCC has already sent their secretary general and we have both agreed to form a working group which has already started discussing the way forward for the early launch of an FTA. We've launched an FTA with Israel. And, therefore, I can say with some element of confidence that basis all these various active engagements and basis the discussions I've had with several trade ministers, including Mexico, Italy and Spain, there is a widespread interest to have India in their resilient supply chains and to work with India to look at greater market access on both sides. There is a serious interest to resolve legacy issues and move forward on a fast-track basis. And the flurry of visitors who have been seeking time have come to India from across the world is encouraging. What are the key priority areas and the red lines in the upcoming ministerial ofthe World Trade Organization? India has been pushing for a permanent solution to the public stock holding on which we have a peace clause. But we do believe it's important that WTO finalises all the elements of the public stock holding agreement and we shall be working on that. There is discussion around forming a working group to find a permanent solution. We are very keen that we should instead look at resolving the issue and fast tracking it. We are also very keen that the fisheries subsidies been used by certain countries indiscriminately, which is causing harmful fishing and causing the depletion of fish stock, should be addressed in a fair manner, recognising the spirit of the WTO which includes recognising the Special and Differential Treatment available for developing countries. We are open to engaging on WTO reform but would like to know more about the agenda on which the reform discussions will evolve. We do believe that the Trade-Related aspects of Intellectual Property Rights (TRIPS) waiver proposal that South Africa and India put forward, is necessary to address the concerns of the lessdeveloped countries and many developing nations to find adequate vaccines for their requirements, but also medicines and therapeutics that may be required for fighting the current pandemic and any future such health emergency. And the WTO needs to respond both to this pandemic and prepare for future pandemics. No such response will be credible without a TRIPS waiver element in it. Was this discussed with the USTR? USA is on the record, that they have supported the TRIPS waiver for vaccines. It is something that will be discussed more on the multilateral fora. But I'm happy that the US has stood up for a TRIPS waiver and recognise that in all fairness, there should be equitable distribution of all these requirements to address the Covid-19 pandemic or any future pandemic. Is an outcome possible without public stock holding and TRIPS waiver? The nature of every negotiation, which is based on consensus, will always have an outcome. Now the elements of that outcome will have to be seen. There will, of course, be an outcome of the ministerial but what will be the elements of that, we have to wait and watch. Is there a concern that there may be a replay ofthe Bali ministerial when we had the trade facilitation agreement, butthere was nothing substantial on agriculture and we only gotthe peace clause… India would pitch very strongly for significant outcomes without compromising India's interest in any way. The farmer unions have demanded the MSP to be made part ofthe statute as a law. Would that have implications for the WTO negotiations? Can we legally do that and be WTO compliant? The two issues are not related right now. There's no relation. A lot ofjoint statement initiatives on ecommerce, gender, domestic services and regulation are being pushed in the WTO. Are we still opposed to these? Will we engage in any manner? We believe that a multilateral organisation like the WTO should be run on the basic principles on which it was founded, and consensus was one of those principles. So, we believe issues like ecommerce or digital trade should come into the working groups and should not be negotiated or discussed through plurilaterals. The consumer affairs ministry came out with rules on ecommerce. Where are we in terms of any finality? We received some very interesting thoughts and suggestions (during the public consultation process) which the department is engaged with the stakeholders to understand and see where there is merit, so that we can come out with a more robust set of rules to protect the interests of consumers and promote the orderly growth of ecommerce within the laws of the land. The government has said these companies should function under law, as marketplaces are supposed to… I actually went through all the circulars in the last 20 years. And it's so crystal clear, there is no scope for ambiguity at all. The consistency in each of the Press Notes on this subject is really remarkable. And after this level of clarity of what is intended within the law, it is very surprising that reputed companies have chosen to find ways and means to go around the spirit in which they were allowed to first come in and set up their marketplace operations. The very fact that some companies tried to stall a simple thing like an inquiry, basis certain complaints by the Competition Commission of India, which is the law of the land, which all of us have to adhere to. The fact that an effort was made to stop questions being asked about anti-competitive practices, which is the Competition Commission's mandate on the grounds that an inquiry is already going on under FEMA by the Enforcement Directorate, two subjects which have absolutely no relevance with each other. There's no contradiction. They're two separate issues which are being inquired. One has nothing to do with the other at all. But the effort to stall the investigation for 18 months leaves a lot of questions on the table. And the fact that soon after the honourable Supreme Court of India decided that they will have to subject themselves to the inquiry. We heard about several companies being closed down or sought to be closed down, raises a lot of questions. Our approach has always been very consultative. We believe that ecommerce and the success of ecommerce is important for India. We have been encouraging our startups and various companies to expand their footprint of ecommerce. We are encouraging technology in all spheres of business and life in India. Nobody can deny that technology has come to stay, and it's good for people and for the country. And therefore, our approach has always been dialogue. We would like to see more collaboration between the large companies and small retailers, or between ecommerce firms, and with the large mom and pop store ecosystem in the country. We would like to see more and more MSMEs gain, and exports expand on the back of world markets opening up ecommerce. It can be a win-win solution and that's what we are working towards. What are your exporttargets going toward? I've often said that no country in the world can make everything. However, at the same time, there are many things that India has competitive or comparative advantages but have continued to remain at very small levels of the global market potential. So, we are working with industry to identify the areas where we believe have huge potential or potential to grow, both in traditional sectors and newer sectors which would mean diversifying the basket. What we need to do is to make them competitive, bring scale to their operation, and bring quality focus into their working. We work with our missions in other parts of the world after identifying potential markets, and connect our stakeholders with missions internationally. So, we are looking at a very major facilitative role with our exporters because without expanding traditional business and expanding to newer products and newer markets, we won't be able to reach that trillion-dollar merchandise export that we are aiming to work for. Since India is entering into new generation of FTAs, how do we avoid the pitfalls seen in the earlier FTAs such as with Asean, where the perception is thatthey have eaten into our manufacturing? I have studied the older negotiations of FTAs in some detail and will highlight three things. One, the extent of stakeholder consultations was inadequate and therefore in identifying the areas that you should have been looking for greater market access or concessions and duties or areas of India's interest, were not fully obtained by us. Similarly, areas which we should not have given up basis stakeholder feedback, have unfortunately got compromised. The FTAs could have been conceived much better, could have been more balanced and more fair towards Indian businesses. This time around, we are making sure that the extent of stakeholder consultation is just very detailed and large. The advantage is that throughout the Covid period, almost on a weekly basis, I was engaging with exporters, with industry through video conferencing. So, we were able to get a wealth of knowledge about where different sectors stand. Second, whenever you do FTAs, you also have to strengthen your domestic industry to be able to take the maximum benefit of the potential opening up of markets. In the past, domestic industry was left to fend for itself. If there was irregular or anti-competitive imports or subsidy based, unfair priced imports coming in, action under the law was very slow, very weak due to which Indian industry didn't get a level playing field. This time around, through various initiatives, like the production-linked incentive (PLI) scheme, our efforts to promote different industrial clusters or industrial parks, the PM Mega Integrated Textile Region and Apparel scheme, the defence corridors, the industrial parks, we are making an effort to strengthen domestic manufacturing capabilities. We are introducing strong quality control orders to promote the adoption of quality by domestic industry. And at the same time, thanks to the stakeholder consultation, and with the good work that the Steering Committee for Advancing Local ValueAdd and Exports (SCALE) led by Pawan Goenka, largely a private sector-led initiative with government acting as a facilitator, we've been actually able to identify the areas of India’s strengths and focus areas. That has helped us know what exactly we should pitch for when we are negotiating FTAs and what exactly we can give and can’t give. Also, the Directorate General of Trade Remedies has become far more responsive, their decisions are time bound, very transparent, data has become much more robust and actions are speedy, which has given the confidence to Indian industry that the government will back them up if they're facing unfair competition. Lastly, we have been able to change the mindset of businesses from depending on subsidies and government clutches to a mindset of engaging with the world from a position of strength with confidence. That is evident from the fact that the $400 billion export, an all-time historic high, will happen after we have withdrawn the Merchandise Exports from India Scheme. Now all we do is refund the unremitted duties which are not a part of the goods and services tax, to bring a level playing field. That is a very redeeming feature of this $400 billion achievement. I think these are the factors which will strengthen India's position vis-a-vis other countries, build credibility of India as a fair and good trading partner and encourage other countries to expand business with India. We are looking at equitable and balanced free trade agreements, opening opportunities for businesses on both sides, trying to create employment for our Indian young boys and girls in a big way, open up markets for startups, for big and small industry, for entrepreneurs and MSMEs, agri products. It is a wholesome, comprehensive, holistic thinking that Prime Minister Narendra Modi has always focused on and that is exactly the way we're looking at foreign trade. What is your assessment of the PLI scheme? Which sectors are the most promising? Incidentally, these 13 sectors have been selected after a lot of engagement with stakeholders and the SCALE committee. So, really, each one of them shows promise in its own way. For example, I have two sectors in the Department for Promotion of Industry and Internal Trade. One is LEDs and one is air-conditioners, and both are sectors where India has a huge market. We are the world leader in LEDs today. Air-conditioners, as an environmentally conscious country, we have stopped the import of air conditioners which have gas in them and so now, there's a huge demand to make air conditioners locally. We have intelligently supported the input components that go into LED or air-conditioners, which will automatically have an impact on output costs and finished cost of products. When the inputs become more competitive, the finished product is bound to be more competitive. In textile, we realised that traditionally, we have supported only cotton textiles or handloom, and we will continue to do so as that's our strength area. But the world has moved towards technical textile or manmade fibre (MMF). Two-third of the world market, about a trillion dollars, is now technical textiles and MMF. India had not ever promoted those sectors and hence, we have brought out a PLI to bring large-scale investments in these sectors to increase India's contribution both to our domestic market and globally. The reasons why we feel the chances of misuse have been significantly reduced are (number one) we are looking at very, very simple schemes — very simple to administer as they are production-linked. So, there are records which will be given to the GST, which would help us determine what should be the PLI payment, the targets and benchmarks are all quantified in value terms. There's very little subjectivity either in the accrual of accounting, or in the payment of incentive. And lastly, while preparing or deciding on these 13 sectors, we have focused a lot on scale, so that we can benefit on economies of scale and create jobs in a very big way. Employment has been our principal focus and we have also looked at environment because many of the sectors are in a way directly or indirectly impacting the environmentwhether it's LED, or auto components. This exercise, in our ministry’s estimate, will add about $350 billion (Rs 25 lakh crore) to India's production output and impact livelihoods for about 4 crore (40 million) people. So, this is a game-changing scheme inspired by Prime Minister's thinking on making India a manufacturing hub. And we are all very confident and the feedback from industry is just fabulous. Arvind Panagariya has raised concerns thatimporttariffs have gone up for some items in the lastfew budgets and we might be reverting to an older era... Tariffs have gone up and also gone down. It’s a continuous process and every country uses it as a mechanism to ensure a level playing field basis data on necessary and unnecessary imports and the needs of the country. Very often while tariff may go up through circulars or customs notifications, the effective rate of duty is not as much as the tariff. I have done an analysis of the whole picture and I find that our Indian tariffs at the aggregate are really not very much. Look at total imports into the country, and total import duty collected, and when you reduce some import duty which is on products which are processed for re-export and refunded, you find there is hardly any import tariff. There may be specific items which are of a nature that you don’t want to encourage but that is a tool that the entire world uses. When I explained this to the USTR, she appreciated it and said we never thought of it that way. We have tasked officials of both countries to do a study and assessment. It emerged out of a conversation on peanut butter where they have exorbitant tariffs. I said you raise the issue of a tariff and I raise of peanut butter. Every country protects where it is most sensitive. Maybe the US side has really not appreciated, and this is some old narrative which is continuing in your mind that India is highly taxing. The Cabinet has approved the PM Garib Kalyan Anna Yojana to provide free ration till March 2022… We have extended the scheme for four months. This is important in the context of global image of India and potential for the future. In the G20 summit, the trade ministers meeting before that and at COP26, international leaders are amazed at the sensitivity that PM Modi and the Indian government have shown towards their people. Through the Covid period, India would have given free food grain over and above the national food security programme, to 80 crore people for 19 months. We spent Rs 2.6 lakh crore. By the time this programme gets over, we would have distributed 763 lakh metric tonne of free food grain. The world gets stunned at the sensitivity that PM Modi has for the poor and lesser privileged sections of the society, for his concerns to ensure that not a single person goes hungry through the Covid period, and for the effective way that India managed such a massive food security programme through technology and transparency without any complaints of leakages or of anyone having to face hunger. They look upon India as a role model. We have instances of developed nations having food riots and people ransacking stores, but India didn’t see a single incident thanks to the timely intervention that PM Modi had with the Aatmanirbhar Bharat programme and PM Garib Kalyan Yojana and within that the PM Garib Kalyan Anna Yojana. It has risen the stock of India and PM Modi at the comity of nations and earned a lot of goodwill and recognition worldwide for us.
Source: Economic Times
The Union Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles, Shri Piyush Goyal has termed the Insolvency and Bankruptcy Code (IBC), 2016 as a “gamechanger reform” that has been the most successful law in insolvency resolution in the country. Addressing the 5th Foundation Day function of the Indian Institute of Insolvency Professionals of ICAI (IIIPI) here today, he hoped the faster Insolvency Resolution enabled by the IBC will eventually pave the way for banks to bring down the ‘Cost of Credit’. “Since the enactment of IBC, India’s rank in ‘Resolving Insolvency’ indicator in World Bank’s Ease of Doing Business Report has seen a meteoric rise of 84 places! Our recovery rate has also dramatically improved from 26 (cents on dollar) to 71.6 (cents on dollar),” he said. Shri Goyal said the IBC has brought about a marked shift in attitudes of lenders & borrowers, acting as an effective deterrent against unscrupulous borrowers and imparted banks the tool to follow due diligence and confidence about recovery. The Minister said, in view of the Covid crisis, the Government suspended the IBC for a year, from March, 200 to March, 2021. “This helped India bounce back much faster. The economy is doing well and five years down the line the outlook looks very, very bright.” Shri Goyal said the IIIPI members are serving the nation’s interest by saving businesses and entrepreneurship in the country. “This has a big impact on ‘Saving Jobs and Reviving companies’ and by creating new banking opportunities.” Stating that the IIIPI being the largest body of such professionals in the country, it has a fiduciary duty cast on its members and has a three-pronged roles to play, - legislative, executive and quasi-judicial. The Minister listed out five guiding principles for Insolvency professionals, - Integrity, Objectivity, Competency, Confidentiality and Transparency. He called upon the CAs to use technology in resolution of bad loans, look at new innovative ideas and set benchmarks.
Source: PIB
The agency said that rising consumption, push for domestic manufacturing and benign funding conditions will support new investments Benefiting from strong consumer demand and high commodity prices, Indian companies will show significant growth in EBITDA over next 12-18 months, according to Moody’s. The rating agency, which has 22 Indian corporates under its scanner, said growing government spending on infrastructure will support the demand for steel and cement. Also, rising consumption, push for domestic manufacturing and benign funding conditions will support new investments. The effects of supply chain disruptions will ease as semiconductor supplies ramp over the next few months, it added. The steady progress in vaccinations against Coronavirus (Covid-19) will support a sustained recovery in economic activity. The economic growth will rebound strongly in India. It has pegged growth in gross domestic product at 9.3 per cent for FY22 and 7.9 per cent for FY23. While overall economic sentiment is upbeat, the rating agency did sound a word of caution. If new waves of infections were to occur, it could trigger fresh lockdowns and erode consumer sentiment. Such a scenario would dampen economic activity and consumer demand, potentially leading to subdued EBITDA growth of less than 15-20 per cent for Indian companies over the next 12-18 months. In addition, delays in government spending, energy shortages that lower industrial production or softening commodity prices could curtail companies' earnings. India's currently low interest rates will reduce funding costs and support new capital investment as demand grows. However, rising inflation may result in a fasterthan-expected increase in interest rates, which would weigh on business investment. Referring to their borrowings, Moody’s said refinancing risk is manageable for most rated companies. Around $7.3 billion of rated foreign currency bonds are maturing through 2023. Out of which around $3.1 billion of the maturities pertain to high-yield issuers Around 57% of foreign-currency bond maturities through 2023 are for investment-grade companies, including government-related issuers which have strong access to capital markets. The remaining bond maturities through 2023 pertain to high-yield companies that are repeat issuers in international bond markets. These companies – including JSW Steel Ltd, Bharti Airtel Ltd and Vedanta Resources Limited (B2 stable) – are likely to maintain good funding access. Macrotech Developers Limited, a Lodha group entity, has a $225 million bond maturity in March 2023. The refinancing risk will be alleviated if the company repays the bond out of collections from existing sales over the next few months, Moody said.
Source: Business Standard
Avoiding mention of an FTA during the recent visit of the USTR to India reflects policy maturity and pragmatism on both sides US Trade Representative (USTR) Katherine Tai’s visit to India was certainly not a routine one. It covered an unusual amount of ground in moving forward on bilateral trade concerns and cooperation on emerging issues. The coverage reflected the seriousness with which the US and India are looking to handle their trade partnership in the days to come. Trade has been an area of divergence between both countries. Notwithstanding robust engagement in other spheres of global and regional geopolitics and geo-economics, trade has been a rare sore spot. The Trump Presidency complicated matters in this regard. During the Trump period, India and the US actively discussed the prospects of a bilateral FTA. The discussions, though, were hit by regular disruptions. These ranged from the US withdrawal of the preferential GSP status to Indian exports in the US market, the unilateral hike in tariffs on steel and aluminium imports into the US;,temporary suspension of H1-B visas and regulatory restrictions cramping the scope of H1-B visas, particularly spouses of their holders, creating great uncertainties for Indian professional migrants to the US. The Trump administration’s overall attitude towards trade also caused friction between the two countries. Trump’s cynicism of the multilateral rules-based trade framework of the WTO, particularly his refusal to appoint judges to the appellate tribunal for resolving disputes, found India and other major economies at a loss to remove the logjam. Further Trump’s repeated allusion to large developing countries having benefitted heavily from the concessions they get from the WTO, and his pushing emerging market economies out of the scope of non-reciprocal market access preferences, didn’t go down well with India. India, did, however, stay engaged with the US on a bilateral trade deal. That the deal eventually couldn’t be pulled off has much to do with the insufficiency of trust and comfort between negotiators. India’s trade pessimism, as reflected in its pull-back from a megaFTA like the RCEP, symbolised its own hesitation over entering into bilateral FTAs and the unhappy compromises they entail. On the other hand, the Trump administration’s overwhelming tendency to ruthlessly extract market access from bilateral FTAs, for political messaging aimed at domestic constituencies, limited flexibilities on both sides. The Biden administration has taken a more accommodating attitude towards trade. It is back at the WTO with a purpose. While retaining the emphasis on ‘America First’, it is talking to major trade partners in a more purposeful manner. Unlike its predecessor, which failed to balance robust strategic engagement with allies like India with equally meaningful advances on trade, the Biden administration is more sure of its expectations on trade from its allies. This explains why the stress on worker-friendly trade policy notwithstanding, the Joint Statement issued on the occasion of the USTR’s visit documents specific details on bilateral trade concerns. In a sense, it might have become easier for the US and India to talk trade over the last one year. Strategic realignments after Covid-19, particularly the economic rise of the Quad and Indo-Pacific, including efforts to safeguard strategic supply chains, have made both countries reflect closely on many issues connected to bilateral trade. Both realise the importance of ironing out creases that are holding back more trade if they need to contribute to an economic framework for the Indo-Pacific—a goal announced by the US secretary of commerce Gina Raimondo during her visit to Asia last week, along with the USTR. Greater engagement between business and government stakeholders of both countries in recent months, along with the urgency to focus on critical areas of mutual concern: clean energy and technology, infrastructure and connectivity, vaccines and healthcare products, have created an enabling and trustworthy environment for discussing bilateral trade. It is hardly surprising therefore that mangoes and cherries from India and the US should be able to cross borders with ease soon. There is also much promise in the areas marked for future work: digital trade, healthcare, environment, standards and conformity assessment. The attention on working on the basics such as bilateral disputes at the WTO, implementation of the global Trade Facilitation Agreement (TFA) and an effective visa regime for professionals, signals eagerness of both countries to correct fundamentals issues affecting bilateral trade. It is also interesting to note that both countries avoided mentioning a bilateral FTA during the USTR’s visit. The emphasis, instead, was on building ‘an ambitious vision for the future of the trade relationship’ by energising mechanisms like the bilateral Trade Policy Forum (TPF). Avoiding mention of an FTA reflects policy maturity and pragmatism on both sides. Both countries understand that as large countries with numerous vocal minority lobbies, reaching a comprehensive FTA will be hugely challenging. It makes more sense to devote energy on creating the foundation for a trade deal rather than harping on it.
Source: Financial Express
The prospect of Vietnam-Norway trade relations was the theme of an online business conference held by the Ministry of Industry and Trade in collaboration with the Norwegian Ministry of Trade, Industry, and Fisheries, the Vietnamese Embassy in Norway, the Norwegian Trade Policy Department (Innovation Norway) and other agencies on November 25. The prospect of Vietnam-Norway trade relations was the theme of an online business conference held by the Ministry of Industry and Trade in collaboration with the Norwegian Ministry of Trade, Industry, and Fisheries, the Vietnamese Embassy in Norway, the Norwegian Trade Policy Department (Innovation Norway) and other agencies on November 25. Vietnam’s participation in free trade agreements (FTAs), including the Vietnam-EU FTA, has brought positive impacts on trade relations between Vietnam and Norway in recent years, said Norwegian Deputy Minister of Trade, Industry, and Fisheries Janicke Andreassen. Vietnamese Ambassador to Norway Le Hong Lam informed the conference that two-way trade between the two countries reached 528.5 million USD in 2020, an increase of 19.52 percent from the previous year. Of the figure, Vietnam’s exports to Norway were valued at 216.9 million USD. In the first nine months of 2021, two-way trade value stood at 365.5 million USD, with 103.7 million USD worth of Vietnam’s exports to Norway. Vietnam’s main export items are seafood, cashew nuts, textile-garment, footwear, steel products, transport means and parts. Meanwhile, it imports seafood, machinery and equipment, fertilisers and chemicals and steel and iron products from Norway. Business participating in the event were provided with information on products that Vietnam can offer. Asbjorn Warvik Rortveit, regional director for Southeast Asia at the Norwegian Fisheries Association, introduced opportunities for cooperation in the seafood sector in Norway, as well as consumer preferences for seafood products. Representatives from large Norwegian corporations such as Equinor and Norwep also talked about possibilities for cooperation in clean energy. After the conference, the Trade Promotion Department and the Embassy of Vietnam in Norway connected about 60 Vietnamese and Norwegian enterprises for exchange.
Source: Vietnam Plus
Uzbekistan became the first country to be officially admitted to the UK enhanced framework generalised scheme of preferences (EF GSP) on November 1 after intense efforts by both sides to conclude the process in only six months. A key factor behind granting the status was that Uzbekistan ratified 27 key conventions in the areas of human rights, labour standards, environment and sound governance. The development sends a hugely positive signal of intent from both countries to turbo boost the UK-Uzbekistan trading relationship, particularly now that there will be zero import duty on more than 7,800 products made in Uzbekistan, according to a UK government press release. The GSP provides Uzbekistan with access to the world’s fifth largest economy and the most international consumer and retail market in the world worth over £437 billion. For the United Kingdom, it facilitates access to a fast-growing and developing market, which is a key hub to access the wider region, as well as Uzbekistan’s unique textile and agricultural products. The enhanced framework is for countries that are classified by the World Bank as lowincome and lower-middle income countries, and are economically vulnerable due to a lack of export diversification and a low level of integration with the international trading system.
Source: Fibre2 Fashion
If fashion were a nation, its emissions would be higher than aviation and shipping combined. At COP 26, where net-zero commitments were being announced, ‘phase-down’ versus ‘phase-out’ of coal was being debated, and even methane pledges were being made, it was the oil and gas lobby representatives who were walking around smug and grinning as they had dodged the bullet once again, thanks to the United States, the European Union and rich countries protecting their interests. But outside the venue, a group of intrepid campaigners were pointing to the insidious role of oil and gas industry in the rising greenhouse gas (GHG) emissions from a completely unlikely source that the well-heeled suits at the conference were oblivious to, or deliberately ignoring – the role of the fashion industry in carbon emissions, specifically cheap synthetic fibres like polyester, nylon, acrylic and elastane, produced from oil and gas. Climate & Fast Fashion: The Industry is Busy ‘Greenwashing’ If fashion were a nation, its emissions would be higher than aviation and shipping combined. At COP 26, where net-zero commitments were being announced, ‘phase-down’ versus ‘phase-out’ of coal was being debated, and even methane pledges were being made, it was the oil and gas lobby representatives who were walking around smug and grinning as they had dodged the bullet once again, thanks to the United States, the European Union and rich countries protecting their interests. But outside the venue, a group of intrepid campaigners were pointing to the insidious role of oil and gas industry in the rising greenhouse gas (GHG) emissions from a completely unlikely source that the well-heeled suits at the conference were oblivious to, or deliberately ignoring – the role of the fashion industry in carbon emissions, specifically cheap synthetic fibres like polyester, nylon, acrylic and elastane, produced from oil and gas. Synthetic fibres represent over two-thirds (69%) of all materials used in textiles, which is expected to reach nearly three-quarters by 2030. The production of polyester alone is leading to annual GHG emissions equivalent to 180 coal power plants, and this is projected to nearly double by 2030. 1.29 Billion Barrels of Oil a Year. As the transport and energy sector’s demand for oil and gas declines, the fashion industry’s dependence on fossil fuel-derived synthetics has become the backbone of the industry as well as the catastrophic fast-fashion business model. The production of synthetic fibres currently accounts for 1.35% of global oil consumption, which exceeds the annual oil consumption of Spain and amounts to 1.29 billion barrels of oil a year. By 2016, the apparel and footwear industries accounted for approximately 8 per cent of global greenhouse gas (GHG emissions). It is not as if the industry itself is unaware of its carbon footprint. There is a United Nations-led initiative launched in December 2018, called the Fashion Industry Charter for Climate Change, which aims to drive apparel manufacturers to net-zero greenhouse gas emissions no later than 2050, in line with the goal of keeping global warming below 1.5C. Since the launch of the charter, 125 companies have committed to climate action. In 2019, some of the largest fashion brands in the world also put their names on Science Based Targets initiative net-zero corporate standard. Companies that have signed the charter include big brands like Adidas, Burberry, Decathalon, Fossil, Gap, Levi Strauss, Ralph Lauren and Mango. But their carbon targets and initiatives remain voluntary, and even as brands make impressive-sounding sustainability declarations, the companies behind the brands are reluctant and obtuse about what real steps the industry is taking to reduce its carbon footprint or rein in overproduction. Overproduction & Excessive Consumption According to Nusa Urbancic of the Changing Markets Foundation, which launched a new report titled “Synthetics Anonymous: Fashion brands‘ addiction to fossil fuels” on the sidelines of COP26, “From production to end of life, cheap synthetic fibres, the main drivers of the fast-fashion business model that is propelled by excessive consumption and overproduction, cause significant environmental issues.” The Changing Markets report not only exposes fashion brands’ addiction to synthetics but also demonstrates rampant greenwashing across their voluntary commitments and products. The report found that the 46 clothing companies they analysed are still largely ignoring growing plastic pollution and waste crisis stemming from their addiction to synthetic fibres. In addition to a significant lack of transparency about the amount and source of synthetics in their collections, fashion brands resort to green washing tactics – such as down cycling polyethene terephthalate (PET) bottles to clothes – rather than moving to truly circular solutions, in which products are designed to be more durable, reusable, repairable and recyclable. Especially of concern is the lack of a systemic approach to addressing the environmental and health risks of microplastic pollution. Most brands only consider end-of-pipe solutions, such as washing machine filters and wastewater treatment plants, which merely shift the problem elsewhere. There are many ways the fashion industry can reduce emissions, besides moving away from synthetic fibres, like switching factories from coal to renewable energy, among others. But according to Carry Somers, founder of Fashion Revolution, a fashion activism movement, “The real and most powerful way to reduce the industry’s impact would be to make less stuff and for the consumers to revisit their wardrobes and see if they really need to buy more.” The truth is if fashion was a nation, it would be the seventh-largest economy, with emissions higher than aviation and shipping combined. The fashion industry needs to address this urgently.
Source: The Quint
More freight train services linked China and Europe in the first 10 months of 2021 than the number for all of last year, demonstrating their strong resilience amid the COVID-19 pandemic. National railway service operator China State Railway Group said 12,605 services carrying nearly 1.22 million containers operated between China and Europe from January to October. The number of trains was up by 26 per cent year on year, while freight volume was 33 per cent higher. October witnessed 1,262 China-Europe freight train services. Last year, some 12,400 freight train services carrying 1.14 million containers operated between the two regions. The number of trains was 50 per cent higher than in 2019, and freight volume was up 56 per cent year on year. The group said the steady and safe operation of the services has seen them win favor in the international logistics market and become an important strategic channel for global trade, according to information provided on a Chinese government portal. The company has drawn up plans to increase the capacity of overseas corridors, such as by opening new routes and offering new transport models. The number of services along new routes rose last month to account for 35 per cent of overall trips, up from about 20 per cent in the first half of the year. More return trips were handled in the first 10 months of the year to help to reduce costs, with the ratio of inbound services to outbound ones rising to 81 per cent. To improve the cargo-handling capacity of border railway ports, expansion projects have been carried out in places such as Ereenhot in the Inner Mongolia autonomous region and Horgos and Alataw Pass in the Xinjiang Uygur autonomous region. With over 70 routes, the freight train services have provided transport support for the socioeconomic development of countries and regions involved in the Belt and Road Initiative. The blocking of the Suez Canal by a stuck ship in March led to an increase in inquiries about China-Europe freight train services. The network has now reached more than 170 cities in 23 European countries, transporting more than 50,000 kinds of products.
Source: Fibre2 Fashion
