The Supreme Court recently ruled that the recommendations of the GST Council are not binding on states or the Centre The Goods and Services Tax (GST) Council is unlikely to change the inverted duty structure for textiles at its next meeting, which is expected to be held in the third week of June, CNBC TV-18 reported on June 3, quoting sources. The GST Council may also take up the Group of Ministers (GoM) report on online gaming, casinos, and race courses. The GoM, headed by Meghalaya Chief Minister Conrad Sangma, has a consensus on a tax rate of 28 percent on these services. The GST Council is also likely to extend the timeline for GoM on the rate rationalisation by six months. The council may begin discussions to bring Virtual Digital Assets (VDAs) and crypto assets under the GST ambit. The Supreme Court recently ruled that the recommendations by the GST Council are not binding on states or the Centre and only hold a persuasive value. The parliament, as well as state legislatures, possess equal and simultaneous powers to legislate on GST and the Council can advise suitably in the event of repugnancy between laws laid down by the two federal units, the court said. It may be noted that on May 3, the Centre released an amount of Rs 86,912 crore to cover the entire amount of GST compensation due to states until May 31, 2022.
Source: Money Control
The President of India Ram Nath Kovind has urged the representatives of the industrial sector of the country to not only work towards reducing pollution in the existing industries but also contribute in establishing new environment friendly industries. President Kovind referred to the issue of climate change as a formidable problem. He said that the government of India has announced in the CoP-26 Summit that by the year 2030, India will reduce its carbon emissions by one billion tonnes and try to become a net zero emission economy by the year 2070. But the cooperation of the industries is very important in achieving this goal, he said at the 90th year celebrations of the Merchants Chamber of Uttar Pradesh. The President further said that the objective of any business organisation should not only be to work for the benefit of its members but it should also become a participant in the all-round development of the society and country.
Source: Fibre2 Fashion
The GoM was set up in September last year, and was then tasked to submit its report in two months. In December, the group was given further time till March-end, but it is yet to finalise its recommendations. A group of ministers (GoM) headed by Karnataka chief minister Basavaraj Bommai will get another six months to submit its report on restructuring of Goods ans Service Tax (GST) slabs, a senior government official told FE. “This (rate rejig) is a complex exercise involving, among other things, correction of inverted duties in many value chains,” the source said, citing the reasons for giving the group more time. Th GoM was set up in September last year, and was then tasked to submit its report in two months. In December, the group was given further time till March-end, but it is yet to finalise its recommendations. The GOM’s mandate is to “review the current tax slab rates and recommend changes as needed to garner more resources.” Another extension will mean that the restructuring of the GST slabs to raise the revenueneutral rate (RNR), from a little over 11% now to 15.5%, would be delayed. High inflation has reduced the urgency of the exercise as a rate rejig keeping with RNR objective in mind will inevitably lead to higher rates for a large number of goods and services. There are four major GST slabs now – 5%, 12%, 18% and 28%. A clutch of demerit goods in the 28% bracket also attract cesses, the proceeds of which go to separate fund meant to compensate states for “revenue shortfall.” The GoM will consider merger of tax rate slabs, required for a simpler rate structure in GST. The GST Council is likely to meet in the second half of this month to deliberate on how some states’ revenue concerns will be addressed after the cessation of a five-year revenue compensation period on June 30. Under the GST compensation mechanism, which is Constitutionally guaranteed, state governments are assured 14% annual revenue growth for the first five years after the tax’s July 2017 launch. The rise in monthly gross GST collections have given some breathing space to the government to recalibrate an action plan on tax rates as the shortfall in GST by states after end of compensation mechanism will not be that high, officials reckon. Gross GST collections have been in excess of Rs 1.4 trillion in the past three consecutive months against a monthly average of Rs 1.23 trillion in FY22. However, the Centre reckons that the monthly average for the whole of the current fiscal year will be around Rs 1.3 trillion. While the Council made some attempts to correct inverted duty structures across several value chains, the decision to roll back a uniform GST rate for textiles proved that it won’t be an easy option either. The council had to drop a plan to hike the GST rates for most textile products in the man-made fibre value chain from 5% to 12% in late December 2021, amid protests from the industry from Gujarat and other states. It may not be able revisit the issue soon.
Source: The Hindu
The Federation of Indian Export Organisations (FIEO) has urged the government to increase the validity of Rebate of State & Central Taxes and Levies (RoSCTL) and Remission of Duties and Taxes on Export Products (RoDTEP) scrips to 24 months as a support for exporters. It has also appealed to link transferability with realisation, extend RoDTEP to EOUs, SEZ and advance authorisation, expand usages of RoDTEP and RoSCTL scrips and logistics support for the sector looking at the higher freight cost. In view of the merchandise report for the month of May 2022, FIEO President, Dr A Sakthivel said that the highest-ever exports of over USD 37 billion during May of a fiscal year, shows the continuous resilience of the exports sector amidst rising global uncertainties. He said that the top sectors, which have performed impressively during the month were petroleum products, engineering goods, electronic goods, RMG of all textiles, gems & jewellery, organic & inorganic chemicals, drugs & pharmaceuticals and rice. Labour-intensive sectors also contributed to the exports basket, which itself is a good sign, further helping job creation in the country, said Sakthivel. FIEO Chief also reiterated that the benefits of the newly signed FTAs and the PLI scheme will further help us in building as we continue to move ahead during the fiscal. Imports growth is of little concern and may be looked into. However, he added that rising imports of gold may lead to impressive gems & jewellery exports in next 1-2 months with lead time.
Source: KNN India
Modi will launch the national portal for credit-linked government schemes - Jan Samarth Portal. It is a one-stop digital portal linking government credit schemes, the PMO said, adding that it's a first of its kind platform which directly connects beneficiaries to lenders. Prime Minister Narendra Modi will inaugurate the Iconic Week Celebrations of the Ministry of Finance and the Ministry of Corporate Affairs on June 6. The PMO noted in a statement that this week is being celebrated as part of the 'Azadi Ka Amrit Mahotsav' (AKAM) from June 6 to 11. Modi will launch the national portal for credit-linked government schemes - Jan Samarth Portal. It is a one-stop digital portal linking government credit schemes, the PMO said, adding that it's a first of its kind platform which directly connects beneficiaries to lenders. The main purpose of the Jan Samarth portal is to encourage inclusive growth and development of various sectors by guiding and providing them with the right type of government benefits through simple and easy digital processes. The portal ensures end to-end coverage of all the linked schemes. The PMO said Modi will also inaugurate a digital exhibition which traces the journey of the two ministries over the past eight years, and release special series of ₹1, ₹2, ₹5, ₹10 and ₹20 coins. These special series of coins will have the theme of the logo of AKAM and will also be easily identifiable to the visually impaired persons. The programme will also be organised simultaneously at 75 locations across the country, and each location will be connected through virtual mode with the main venue, it said.
Source: Economic Times
India signed an FTA with the UAE in February, New Delhi’s first such pact with any economy in a decade, and sealed another trade deal with Australia in April After a gap of about nine years, India and the EU will likely resume the much-awaited negotiations for a proposed free trade agreement (FTA) from June 27, as both the sides eye a deal by next fiscal, sources told FE. Before the negotiations begin, commerce and industry minister Piyush Goyal may visit Brussels later this month — either ahead of the next ministerial of the World Trade Organization starting June 12, or after that — to set the stage for the talks, one of the sources said. “The EU team will visit India after that to formally resume the negotiations,” he added. Sources last week said both the sides would first take stock of the progress made so far and discuss how to proceed further. “It makes sense to focus on points of convergence first before moving on to the contentious matters,” one of the sources had said. Formal negotiations between the two sides for the FTA were stuck over stark differences after 16 rounds of talks between 2007 and 2013. The EU insisted that India scrap or slash hefty import duties on sensitive products such as automobiles, alcoholic beverages and dairy products, and open up legal services. Similarly, India’s demand included greater access to the EU market for its skilled professionals, among others. However, both the sides have now decided to take the negotiations to their logical conclusion. The EU, even after the Brexit, continued to be India’s largest export destination (as a bloc) in FY22, although it has lost some appeal. The country’s outbound shipments to the EU jumped 57% on-year in FY22 to $65 billion, albeit on a contracted base. Similarly, its imports from the EU jumped 29.4% last fiscal to $51.4 billion. In April, the EU and India decided to set up a trade and technology council to boost bilateral ties, as the bloc’s president Ursula von der Leyen met Prime Minister Narendra Modi here. This move underscored growing co-operation between New Delhi and Brussels, as the US is the only other country that has a technical agreement with the EU, along the lines of the one signed with India now. The council is aimed at providing political-level oversight of the entire spectrum of the India-EU ties and to ensure closer coordination. India signed an FTA with the UAE in February, New Delhi’s first such pact with any economy in a decade, and sealed another trade deal with Australia in April. Currently, it is also negotiating FTAs with the UK and Canada. The Gulf Cooperation Council, too, has evinced to sign an FTA with India. The negotiations are a part of India’s broader strategy to forge “fair and balanced” trade agreements with key economies and revamp existing pacts to boost trade. The move gained traction after India pulled out of the China-dominated RCEP talks in November 2019.
Source: Financial Express
Surendranagar is among the biggest cotton-producing districts of Gujarat. The district is also home to a large number of cotton ginning factories as well as a few cotton-seed processing units. CHIEF MINISTER Bhupendra Patel said on Friday that the state government will extend necessary support if industrialists from Surendranagar propose a textile park in their district to set up cotton value-addition vertical. “There is a big cotton industry here… If you do value addition to cotton, it will be hugely beneficial. If you all come together and think about setting up a textile park here, the state government will stand by you,” Patel said. He was addressing the inaugural ceremony of Zalawad Business Conclave, a business meet organised by Zalawad Federation of Trade and Industries, a chamber of industrialists and businessmen of Surendranagar district. Incidentally, Surendranagar is among the biggest cotton-producing districts of Gujarat. The district is also home to a large number of cotton ginning factories as well as a few cotton-seed processing units. The CM said that under the leadership of Narendra Modi, Gujarat has made huge strides in industrial development over the last 20 years. Patel sought the businessmen’s help in making India a five-trillion USD economy and an atma nirbhar (self-reliant) Bharat. He also said that the state government will take steps to strengthen the education eco-system in Surendranagar as demanded by the businessmen.
Source: Indian Express
Its aim is to encourage indigenous and specialised products and crafts of the local region Traveling across Karnataka by train and ambling along in the stations in the days ahead could be a delight for shopaholics and those keen to explore local specialities. For, the Mysuru Division of South Western Railway will extend the concept of ‘’One Station One Product’’ to 67 railway stations across Mysuru, Chamarajanagar, Hassan, Mangaluru, Madikeri, Tumakuru, Shivamogga, Chikmagaluru, Chitradurga, Davangere and Haveri districts coming under its jurisdiction. From savouring benne dose at Davangere railway station and purchase of Molkalmuru sarees to buying spice and copra products at Arsikere; from purchasing coffee in Hassan to Nanjangud Rasabale in Nanjangud town, the options are limited to the local specialities. Likewise, if in Harihar, shop for cardamom and beetle leaf or pick up Channapatana toys at Srirangapatna. Look out for red chillies at Byadagi or jaggery at Naganahalli… the list approved by the authorities covers various specialities unique to different regions. ‘One Station One Product’ was announced in the Union Budget 2022-23 aims to encourage indigenous and specialised products and crafts of the local region by providing display and sale outlets at railway stations across the division. Range of products include handicrafts, artefacts, textiles and handlooms, traditional garments, local agricultural produce, processed/semi-processed foods, spices and forest products, sandalwood-based products, coffee and cardamom etc and stations have been assigned products that are unique to the local region. The decision to extend the scheme to 67 stations follows encouraging response and positive feedback for the initiative at Mysuru railway station under the scheme as part of going vocal for local. The concept is aimed to popularise local indigenous products at the railway station to provide an opportunity to passengers to experience the rich heritage of India and creating additional income opportunities for the marginalised section of the society, according to the railway authorities. The focus of sale and promotion is on a product that is unique to an area and in Mysuru sandalwood-based articles were identified and Karnataka Soaps and Detergent Limited, an enterprise of the State Government, and three other agencies were given stalls to market and sell their products. Given the strong response the authorities propose to invite applications from the agencies, artisans, weavers, craftsmen, self-help groups, tribal cooperatives, and marginalised and weaker sections of the society dealing with these products, to sell their products at railway stations across the division. The duration of the stall will be for a period of 15 days at a nominal fee of ₹1,000. If more than one application is received for a particular station a priority roster will be made and established through a draw of lots and this will continue till all applicants in the priority roster are exhausted, the release added. A temporary functional stall with easy access to passengers will be made available to the participants and they can sell the products at the station and on platforms also.
Source: The Hindu
India and the European Union need to enhance trade and investment partnership, says French Ambassador Emmanuel Lenain who also suggests New Delhi to look beyond the UK The European Union (EU) is now looking to do more business with India by way of greater investments in Europe as tension with Russia over the Ukraine war and geopolitical concerns with China pose massive challenges to the bloc and the world at large. With the EU imposing stringent actions on Russia, Brussels is now putting its focus back on India by trying to expedite the long pending free trade agreement with New Delhi as well as a separate investment pact, negotiations for which will be launched soon. In addition, EU’s growing tensions with China is forcing European companies to look for other destinations to open their shops and it believes India can play a critical role in that. “We don’t want to solely depend on China for manufacturing products. So, there is strong support from the government to bring some production back to the EU, and there are plans (that are being designed). But we know that there will be costs. We cannot bring everything into Europe and that’s where India comes into the picture,” French ambassador Emmanuel Lenain said at a business interaction. “We know that in the next two decades at least, we won’t experience that kind of uncertainty and discomfort that we have with China.” In April, EU chief Ursula von der Leyen had arrived in the country for a two-day visit to bolster strategic partnership with India. Trade in goods and services between the two sides stood at Euro 96 billion in 2020. Though the EU is India’s third largest trading partner and second largest export destination, von der Leyen had asserted that there remained a ‘lot of untapped potential’ for the two partners. Among the 27 EU member countries, France has emerged as the topmost destination for foreign investments surpassing Germany and the UK, as per an EY Attractiveness Survey released recently. A post-COVID-19 rebound caused investment in France to soar 24 per cent to 1,222 projects in 2021, the report said. Investment in the UK remained steady, increasing by 2 per cent to 993 projects. In contrast, the number of projects in Germany tumbled by 10 per cent to 841. “The war in Ukraine, soaring inflation and potentially burdensome regulation are the key factors that may slow foreign investment in Europe in the long term … Businesses remain optimistic that Europe will retain its status as a highly attractive long-term destination for foreign investment. But policymakers cannot afford to sit back. Many factors could undermine the continent’s long-term attractiveness, not least the war in Ukraine,” said the survey. France along with the EU, Lenain said, will ensure that it does business only with countries that believe in the rule of law and democratic rights. India and Bangladesh have benefitted the most as more and more French textile companies move out of China, said Ugo Astuto, EU envoy to India. Europe is emerging as the most attractive destination for Indian companies as businesses face difficulties and more complex global supply chains that are riddled with challenges which did not exist before, he added.
Source: The Print
Gujarat plays a key role in boosting the Indian economy The Government of Gujarat had set up a Task Force Committee in the month of February 2022 under the Chairmanship of Dr. Hasmukh Adhia, former Union finance secretary for working out the strategy for government of Gujarat for making India a $5-trillion economy as per the vision of Prime Minister of India. The Task Force Committee has already submitted its Final Report to Gujarat Chief Minister Bhupendra Patel. India intends to achieve the GDP target of $5 trillion by 2026-27 in nominal terms. In 2021-22, India became a $3.09-trillion economy in nominal terms. Average annual nominal growth for the last 10 years (2012-13 to 2021-22) is nearly 10.5 per cent. Therefore, if the past growth rate is sustained, India would be a $5-trillion economy by 2026-27. Let us see what the Report says. The target of a $5 trillion economy by 2026-27 is contingent on growth at the state level. Five states—Gujarat, Tamil Nadu, Maharashtra, Uttar Pradesh, and Karnataka—constitute approximately 49 percent of the nominal GDP of the country. All five states grew at an average annual nominal growth of nearly 10 per cent or more during the pre-COVID period (2012-13 to 2019-20); they have the potential to continue to grow at a rapid pace in the coming years, if everything goes well. The contribution in the economy of big states like Bihar is also important but, unfortunately, it is not doing well in industry. There is a big scope in the packaging and food industry in Bihar but somehow this state is not focusing on this sector even though production of vegetables and other agri products is higher than in other States. The Reserve Bank of India, major multilateral institutions, and rating agencies released their latest FY22 real GDP growth forecasts for India. As per these forecasts, GDP growth ranges from 8.3 per cent (World Bank) to 10 per cent (ADB). These exceptionally high levels of growth do partly reflect a base effect since India’s GDP had contracted by 7.3 per cent in FY21. The FY23 growth forecasts, therefore, indicate a more normal level of growth in the narrower range of 7.5 per cent to 7.9 per cent. Taking a longer-term view, as per the October 2021 issue of IMF’s World Economic Outlook, the Indian economy is poised to become the global growth leader FY22 onwards. Not only does it overtake China amongst major economies in FY22, it is projected to retain this position for the next five years. India is a big economy in the world after the US, Russia, and China. Gujarat plays a key role in boosting the Indian economy. PM Narendra Modi rightly says that Gujarat ka Vikas Desh ka vikas—Gujarat’s development for Nation’s development. Gujarat is a national leader in automobiles and auto-parts, pharma and medical devices, chemicals and petro-chemical, sanitary/ceramics goods, textiles, garments, apparels, etc. Gujarat is also the world's largest petroleum hub, global leader in diamond processing (Surat), and Asia’s largest dairy (Amul). Gujarat contributions in all these sectors will help boost the Indian economy. The country has to depend on Gujarat’s economic growth to achieve the target of a $5- trillion economy besides Maharashtra, Tamil Nadu, UP, and Karnataka. In the next financial year, the picture will be clearer whether the nation will be able to achieve this target or not.
Source: Daily Pioneer
The Council for the Development of Cambodia (CDC) late last month approved four textile-related projects worth about $17 million that are expected to create 4,990 jobs. This brings the total number of projects in January-May 2022 to 72, with a cumulative capital investment of nearly $2.66238 billion. These projects are expected to create 60,949 jobs. The garment, footwear and travel goods sectors accounted for the bulk of these projects, although others were in fields like fruit processing and packaging, hotels, hospitals, and business centres among others, a Cambodian newspaper reported. In the first four months of 2022, the country’s total exports were worth $7.6062 billion, up by 32.1 per cent year on year, while imports amounted to $10.04330 billion, up by 5.5 per cent, according to the general department of customs and excise. The trade deficit for January-April narrowed by more than 35 per cent to $2.4371 billion from nearly $3.8 billion a year ago.
Source: Fibre 2 Fashion
The government is going to extend the existing reduced 15% corporate tax for the textile sector for another three fiscal years, subject to its compliance with some conditions, according to finance ministry officials. Spinning, yarn dyeing, finishing, coning, fabric dyeing, printing or any other such industries will also enjoy the benefit. But the companies must be registered under the Companies Act, and comply with all provisions of that ordinance. If they have paid any penalty slapped by any government authorities for violation of environmental rules and regulations, that fiscal year they have to pay a regular tax rate. The extension will be effective from 1 July this year and will remain in effect until 30 June 2025. Currently, the corporate tax rate is 30% for non-listed companies and 22.5% for the listed ones. The government has taken the move to extend the reduced tax rate facility as part of its revenue incentive policy geared towards making this industry globally competitive, ministry officials said. Bangladesh has secured second position in RMG exports globally because of such support. And, to retain this achievement and to get expected revenue from this sector, the reduced tax rate should continue for the textile sector, they noted. As the statutory regulatory order to this effect will expire on 30 June this year, the new budget will propose extending the facility up to 30 June 2025. Welcoming this move, Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon told The Business Standard that it is an encouraging move for the sector that is in the same league as others grappling with raw material price hikes. He requested that the government continue this facility till 2030 to deal with post-LDC challenges. Envoy Textile Chairman Kutubuddin Ahmed told TBS such an extension to the reduced tax rate is not enough. The sector's total tax burden is higher as they have to pay source tax that is not adjustable with the corporate tax. The textile sector requires more focus if the government wants to strengthen the backward linkage industry of the apparel sector, he also said. The government should provide the textile sector with more facilities, such as easy access to gas and electricity connections, so they can expand their capacity and bring in new investors, Kutubuddin noted. At the same time, the sector should get loans at a low interest, he added. BGMEA former president Kutubuddin Ahmed said the apparel sector has strengthened its footprint globally, but if the textile sector fails to boost its capacity before the LDC graduation, the RMG industry might face challenges after Bangladesh's graduation to a developing nation in 2026. VAT on wholesale of fabrics cut to 2% In the meantime, VAT on wholesale of fabrics at the local market will be slashed to 2% from 5% from the next fiscal year, sources said. The decision has primarily been made targeting Old Dhaka-centric fabric markets. Most of the country's wholesale fabrics are sold in the markets. Besides, there are many wholesale fabric markets in Narayanganj, Narsingdi, Pabna and Sirajganj. Businesses complained that the current VAT rate is much higher. Seeking anonymity, an official at the National Board of Revenue said even though fabrics in huge quantities are being sold at the wholesale level across the country, VAT collection from this sector is not satisfactory. So, the NBR aims to increase VAT collection by cutting the rate. Monsoor Ahmed, chief executive officer (in-charge) at BTMA, said the VAT rate cut will give a relief to local consumers as product prices have already gone high due to hikes in raw material prices. He also demanded that VAT on synthetic and viscose yarns be reduced in line with cotton yarns. Currently, the revenue board collects Tk3 in VAT on sales of 1kg cotton yarns and Tk6 for non-cotton yarns. Abu Motaleb, director at Federation of Bangladesh Chambers of Commerce and Industry, and also general secretary of the Old Dhaka-based business platform, told TBS that profits of many wholesale traders do not even exceed 2%. So, if this VAT rate is reduced to 0.5% and electronic fiscal devices are provided to traders at low costs, VAT collection from wholesalers of fabrics will see success, otherwise not, he said. There is no exact information on the number of transactions in fabric sales per month across the country. But Abu Motaleb said the Old Dhaka-centric markets have a monthly turnover of around Tk1,000 crore.
Source: TBS
Vietnam Briefing examines Vietnam’s position in the China plus one strategy appearing as a favorable investment destination due to its proximity to China, its coastline, and lower export tariffs implemented by free trade agreements. We also look at the complementary relationship between Vietnam and China due to close trade ties. Recent media reports have underlined Vietnam as an export destination with exports surpassing those of Shenzhen in March. Several analysts have said that this is a result of Vietnam benefitting from a shift in global supply chains. While this is true, we need to examine which products are being exported at what cost and which industries have shifted their supply chain ecosystem to the country. We have discussed the China plus one strategy in several articles on Vietnam Briefing, but we will look more in-depth given the current scenario in the aftermath of the pandemic. Vietnam’s exports rose to 48.2 percent in March from the month earlier and 14.8 percent for a year earlier to US$34.7 billion while Shenzhen’s exports contracted 14 percent year on year to US$18.3 billion due to pandemic related lockdowns as per customs data. Since the US-China trade war, and even before that, businesses have been looking at Vietnam as a China plus one destination due to cheaper labor costs, particularly in electronics and supply chain industries. But rather than competing, the two countries are complementing each other. Vietnam still imports a significant amount of raw materials from China, South Korea, Japan, and others and has a less developed supply chain network. Products are then processed and completed before being shipped to the US, the EU, and so on. It is important to note that Vietnam’s current trajectory is what China’s coastal areas were at several years ago. Vietnam and China’s bilateral trade jumped to US$230.2 billion and China is Vietnam’s largest trade partner and the second-largest export destination. It is also important to note that Shenzhen is just one city in China compared to Vietnam as a whole country. And while Vietnam’s success should be applauded Shenzhen has moved away from lower-quality manufacturing to high-end manufacturing something that even Vietnam wants to mature into. Several large tech companies such as Huawei and ZTE have headquartered in Shenzhen. Vietnam, in contrast, has benefitted from lower costs in land and labor and with a younger population. This is especially seen in labor-intensive industries such as textiles and garments, footwear, and electronics. Vietnam will hope that it can emulate a similar path to Shenzhen in attracting hi-tech industries. While Vietnam is not yet at the level of China in terms of developed supply chains, infrastructure, and business environment, there are signs of a shift. Recently, Hong Kong’s richest man Li Ka-Shing made headlines when it was announced that his company CK Asset Holdings would invest in real estate in Ho Chi Minh City. Most recently, Apple also asked its suppliers to diversify production out of China due to the country’s strict pandemic-related lockdowns to countries like Vietnam and India. There were also reports that the Airpods 2 Pro could come with a ‘Made in Vietnam’ stamp in the future. Signs of a high-tech shift Vietnamese auto manufacturer VinFast part of the VinGroup conglomerate also made headlines when it announced that it will stop producing gasoline-powered vehicles by the end of 2022 and will focus on only electric vehicles. Vinfast plans to build an electric vehicle factory in North Carolina, US. It has also inked a deal with Intel to develop autonomous technology for its vehicles, while also building electric vehicles in Vietnam Earlier in the year, the government passed a US$15.21 billion economic stimulus with a part of it on infrastructure spending with the government using infrastructure to drive urbanization. Businesses in Vietnam also benefit from several government incentives such as tax incentives, exemptions on land and water rent, as well as favorable investment policies for certain industries like high-tech. In addition, Vietnam’s plethora of free trade agreements, offer several competitive tariff rates for businesses looking to manufacture and then export to other countries. Pandemic and lockdowns There are two different approaches that China and Vietnam have followed in relation to the pandemic. Vietnam and China followed similar models of closing borders and locking down their countries at the beginning of the pandemic. This served them well, as it kept case numbers low. However, the Delta variant broke through which proved traditional lockdown measures ineffective. After vaccinating most of its population and suffering the sharpest declines in GDP. Vietnam reopened its economy on October 1, 2021 and decided to follow a live with COVID approach. This allowed factories and businesses to resume operations; Vietnam slowly relaxed border control measures allowing foreigners entry without quarantine and allowing business and tourist travel. In contrast, China has been following a zero-COVID policy and has locked down its major economic centers such as Shanghai. The disruption has snarled supply chains, with goods stuck at ports, airports, and trade hubs. Disruption in logistics has also affected several cities such as Shenzhen, Guangzhou, Dongguan, and Foshan affecting their economies. Time will tell if these changes are temporary or if manufacturers start to shift away from China in the longer term. But if lockdowns are prolonged with no exit strategy, then businesses may seriously consider alternative locations like Vietnam despite China’s welldeveloped supply chain networks and logistics. This will likely be an expensive initiative but may reap benefits in the long term. Complementary rather than competing Even before the pandemic, Vietnam’s deep integration into the economy made it reliant on imports for raw materials. Shutdowns in China, also hamper Vietnam’s exports and businesses have complained that their exports are hampered due to their inability to source raw inputs from China. Emulating China’s supply chain network will also be an expensive affair but is likely to happen in the long term. Vietnam is also likely to follow China’s model of upgrading its economy by attracting hi-tech industries. The government already has investment policies in place to attract these kinds of investors. Vietnam cannot be the factory of the world at present but rather supplements businesses with operations in China. Vietnam is also in a convenient position with the West and the East. While sizing up Vietnam as an alternate destination, investors should be aware of the country’s limitations as various bottlenecks have emerged. While investors will continue to diversify operations, Vietnam and the wider ASEAN region are primed for this future growth.
Source: Vietnam-Briefing
The sector has been enjoying a reduced rate (15%) for more than 10 years The government is set to extend the existing reduced 15% corporate tax for the textile sector for the next three fiscal years, subject to compliance with some conditions, said sources from the Finance Ministry. According to sources, the extension will be effective from 1 July this year (first day of fiscal year 2022-23) and will remain effective till June 30, 2025. According to textile industry stakeholders, currently the corporate tax rate is 30% for nonlisted companies and 22.5% for the listed ones. However, the sector has been enjoying a reduced rate (15%) for more than ten years, they also said. Sources also said that the spinning, yarn dyeing, finishing, coning, fabric dyeing, printing or any other such industries will also enjoy the benefit of tax rate retention. However, the companies must be registered under the Companies Act, and comply with all conditions and provisions of that ordinance. Moreover, if the factories have paid any penalty implied by any government authorities for violation of any environmental laws, rules, or regulations, the factories will be out of the purview of this benefit, and must pay regular tax for the respective fiscal year, the source also said. A ministry official said that the government has taken the initiative to continue the reduced tax rate facility for another three years as part of their revenue incentive policy to make the industry competitive in the global arena. Due to continuous policy support from the government, the apparel industry of the country has secured second place globally. Moreover, the ministry also noted that the reduced tax rate should continue for the textile sector for the next several years to sustain this achievement and to get expected revenue from this sector. Hence, the proposed national budget of fiscal year 2022-23 will propose to continue the reduced tax rate facility up to June 30, 2025 as the statutory regulatory order (SRO) to this effect will expire on June 30 of this year. Textile millers react Textile millers welcomed the move which the government termed as a smart and encouraging move. Talking to Dhaka Tribune, Fazlul Hoque, vice-president of the Bangladesh Textile Mills Association (BTMA), said that it was an encouraging move for the textile sector, as well as the country's economy. “The government is going to continue this till 2025 and we certainly welcome this decision. We have been enjoying this facility for many years and we hope that this facility will be further enhanced for the needs of the industry,” he added. He also said that the industry was now going through a difficult time on various issues including the Covid-19 pandemic, inflation, rising price of raw materials, hike in the transportation costs, and many more. “This kind of policy support is definitely welcoming for the country's industry in this tough situation. We asked the government to extend this facility for several years,” he added. Azhar Khan, chairman of Mithela Textile Limited, also echoed similar sentiments, adding that the local textile sector required more attention from the government as it was the prime backward linkage industry of the country’s top export earner - the apparel sector. Earlier, on February 11 of this year, the BTMA sent their budget proposals to the NBR urging an extension of 15% income tax till 2026 in a bid to encourage investment. Meanwhile, the platform also urged to set value-added tax (VAT) on all kinds of yarn at Tk3 per kilogram for the fiscal year 2022-23 from Tk6. Mohammad Ali Khokon president BTMA, made the demands in the budget proposal for the fiscal year 2022-23. Moreover, the organization also urged the government to keep the tax at the source at 0.5% and treat it as a final settlement to encourage new investment and also demanded a withdrawal of a 2% tax on cotton purchases from local sources.
Source: Dhaka Tribune
The ZDHC Foundation (ZDHC) and The Microfibre Consortium (TMC) have unveiled details of the next stage of a major initiative to address the issue of microfibres in textile manufacturing wastewater. TMC is a research-led sustainable textiles NGO, working to convene the global textiles sector through the microfibre 2030 commitment and roadmap. Following the release of ‘Control of Microfibres in Wastewater’ manufacturing guidelines by TMC, the two organisations will now collaborate closely during a new phase of the project, combining the expertise of ZDHC in sustainable chemical management and the science led fibre fragmentation (previously referred to as microfibre release) knowledge of TMC, ZDHC said in a media statement. Designed to help companies and supply chains better control microfibres in wastewater during textile manufacturing which includes apparel and footwear products, the preliminary guidelines in the document identify an approach that can be taken throughout the industry, to best support change within manufacturing. Building on the first phase of this work which looked to identify and landscape utilisation of existing technologies across the industry, this upcoming phase will focus on the measurement and baselining so that progress can be managed effectively and transparently. To support this, a dedicated task team from ZDHC and TMC will focus on three key areas. It includes defining a test methodology to identify globally available test methods to measure fibre loss within waste water at a manufacturing level. The next part is determining a baseline for microfibre loss from manufacturing facilities. Lastly, they will align with a harmonised data infrastructure, working to identify a reporting structure that captures the measurement and control of microfibres from manufacturing facilities. The work will be managed as three key interconnected workstreams that draw from the strengths of the two organisations, and which leverage the unique knowledge building that is achievable as a result. ZDHC and TMC are also encouraging businesses and other stakeholders from the textile industry to both adopt the manufacturing guidelines captured in ‘Control of Microfibres in Wastewater’, and also contribute to the next phase of the project, adding to the collective knowledge base that is being drawn on to tackle the issue, according to ZDHC. “The collaboration between TMC and ZDHC is a great example that two organisations can come together by building a competence centre around fibre shedding. This will leverage each other's expertise and infrastructure,” Frank Michel, executive director of the ZDHC Foundation, said in a statement. “We are looking here to maximise change, without the need for huge investment or complicated modifications within textile production. This new collaborative phase with ZDHC and our combined networks, offers up unique value in the strength between the two organisations, whilst leveraging existing approaches to work at the manufacturing level. There is an urgency for us to be able to measure consistently from facility to facility, so that we can manage loss and ultimately impact. I offer up a call to action for industry at all levels, synthetic and natural fibres, high fashion to outdoor, to align and encourage manufacturing facilities to support this work,” Sophie Mather, executive director of TMC, said.
Source: Fibre 2 Fashion
The UN Global Compact has launched its China strategy aiming to accelerate and scale the collective impact of business in China to drive progress towards the Sustainable Development Goals (SDGs). China is home to the largest number of Fortune 500 companies and more than 44 million small and medium sized enterprises (SMEs). Greater engagement with Chinese companies and stakeholders supports the UN Global Compact Global Strategy 2021–2023 which aims to accelerate and scale the global collective impact of business by upholding the Ten Principles and delivering the SDGs through accountable companies and ecosystems that enable change. It also represents the next step in the UN Global Compact’s ambition to enhance its reach and collaboration with the global South, UN China said in a media release. Recognising Chinese companies as important contributors to advance the 2030 Agenda for Sustainable Development and working with national partners through its Liaison Office in China, the UN Global Compact aims to increase its impact by engaging key stakeholders in China to maximize their collective impact to achieve the SDGs both in China and globally through thought leadership, policy dialogues, capacity building activities, action-oriented projects, and innovative partnerships. It also aims to mobilise Chinese companies’ collective action and impact in supporting China’s development priorities as reflected in China’s 14th Five-Year Plan (FYP 2021–2025) and the United Nations Sustainable Development Cooperation Framework 2021–2025 for China. Specifically, the China strategy identifies seven key areas, covering all Ten Principles of the Global Compact through which the UN Global Compact will maximise its impact: combat climate change; reduce inequalities; advance decent work; take collective action against corruption; engage the private sector through the Belt and Road Initiative to advance 2030 Agenda; strengthen South-South cooperation through China-Africa business collaboration on the SDGs and foster business innovation and SDG partnerships through the Global Development Initiative. Launching the China strategy at the UN Global Compact Leaders Summit, Sanda Ojiambo, assistant secretary-general and CEO of the UN Global Compact said: “The Sustainable Development Goals cannot be achieved without China and the engagement of Chinese companies. As the fastest-growing market for the UN Global Compact in the Asia Pacific region, we have seen a rapidly growing number of companies from China stepping up to address regional and global challenges. We know that China’s development path is closely linked with other countries. “With this strategy we have committed to maximising our impact in China through longterm investment and constructive collaboration with the private sector and key stakeholders. At the UN Global Compact, we stand ready to collaborate and support the Global Development Initiative, helping the private sector to fully align with recognised international norms and standards embedded in the Ten Principles of the UN Global Compact.” Ambassador Zhang Jun, permanent representative of the People's Republic of China to the United Nations said: "China stands ready to strengthen exchanges and cooperation with the UN Global Compact. We look forward to enhanced ambition and actions by its members for the 2030 Agenda. Let’s jointly take actions to make greater contributions to global recovery and sustainable development."
Source: Fibre2 Fashion
