NATIONAL

• Excise, VAT exempted goods by states should be GST exempt: India Inc
• Indian economy to grow at 7.8% in 2016-17: FICCI survey
• States ask industry to pass on GST benefits to end-users
• Industry pitches for GST rate of 18%

INTERNATIONAL

• Discussion on textile, apparel in Dhaka
• Indonesian textile industry aims to enter top five ranking in global export
• East Africa govts must employ industry-friendly policies to revamp textile sector
• Cambodia's garment sector may lag behind as global manufacturing hub

Textile Raw Material Price 2016-08-30

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14969 USD dtd 30/08/2016)

The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Excise, VAT exempted goods by states should be GST exempt: India Inc

India Inc on Tuesday proposed that goods fully exempted from excise duty and VAT by states should be categorised as exempted goods in the GST regime, which is likely to be implemented after a minimum of six months from the date of adoption of the GST law by the GST Council. “Goods fully exempted from the levy of excise duty and VAT by all the states be categorised as exempted goods in the GST regime as well,” Federation of Indian Chambers of Commerce and Industry (FICCI) said in a release following a meeting here with the Empowered Committee of State Finance Ministers on the Goods and Services Tax. “Goods chargeable to nil rate of excise duty but charged to VAT in most states could be identified for levying a merit rate of GST. All other goods (except jewellery and demerit goods) could be subjected to the standard rate,” the statement said. “As per current indications and reports, goods will be categorised as being subject to merit rates (12 per cent), standard rates (18 per cent) and de-merit rates (40 per cent). Certain goods will be exempt from GST while bullion and jewellery would be charged to 1 per cent/2 per cent,” FICCI added regarding classification of goods for applying GST rates.

Industry chamber CII (Confederation of Indian Industry) addressing the Empowered Committee hoped that the GST rate would be kept at 18 per cent. “GST is a game-changer for India. We hope that the standard tax rate would be kept at a reasonable level of 18 per cent which would greatly contribute to growth, employment and incomes, and boost Indian industry’s global competitiveness,” Chandrajit Banerjee, Director General, CII said. Ficci suggested that with a view to check inflation and check the tendency to evade taxes “the merit rate should be lower and the standard rate should be reasonable”.

On implementing GST, FICCI said that in order to provide adequate time to trade and industry to prepare “for a hassle-free roll out of the GST regime”, a minimum of six months time should be permitted from the date of the adoption of the GST Law by the GST Council. “Additional time would be required in case the GST Law as passed by parliament or state legislatures is significantly different from the one adopted by the GST Council,” FICCI said. FICCI also requested the empowered committee that certain existing exemptions such as the area based exemptions under excise legislation and incentives under states’ industrial policies should be converted into an effective, non-discretionary tax refund mechanism. The industry body further recommended that valuation provisions under GST, which is a transaction based tax, should give primacy to actual transaction value. “Valuation provisions under the draft GST laws are reflection of valuation laws of a single point tax like excise duty. Wide powers have been given under the draft GST laws to authorities to reject declared transaction value,” the statement said. CII President Naushad Forbes said that GST Law should provide for seamless movement of goods without any rigid administrative requirements that will delay transit and add to costs. “There should be a foolproof mechanism of movement of goods between states and a single registration process, and industry should not be subjected to dual administration of assessment, audit, etc both by the Centre and states,” Forbes said. In a meeting here with Revenue Secretary Hasmukh Adhia earlier in August, Indian industry chambers had raised concerns on the draft GST law, flagging issues like dual administrative control and wide discretionary powers for tax authorities. “Provisions may lead to unwarranted disputes in future so it requested to give a re-look at the law before finalising,” a FICCI representative told reporters here after the meeting.

SOURCE: The Financial Express

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Indian economy to grow at 7.8% in 2016-17: FICCI survey

India’s economy is likely to expand 7.8 per cent during the current financial year on the back of good monsoons, said economists polled by Ficci. Releasing the latest survey, Ficci said there has been a “marginal improvement” in growth estimate for 2016-17 as against the previous round and “this comes at the back of better performance of the agriculture and industry sector”. The monsoon season has been good this year which is expected to support agricultural production, it added. Reserve Bank has also said the near-term growth outlook for India seems brighter than last fiscal and the economy is likely to expand at 7.6 per cent in 2016-17. Ficci’s Economic Outlook Survey puts across a median GDP growth forecast of 7.8 per cent for the current fiscal year. Further, the estimated median GVA (gross value added) growth for Q1 FY17 has been put at 7.6 per cent. The survey was conducted during July-August among leading economists belonging to the industry, banking and financial services sector. However, the survey results indicate a marginal decline in the service sector growth this year vis-à-vis the estimated growth in the previous survey round. The participating economists also felt it will take time for the banks to make any further reduction in deposit rates. They said while the moves undertaken by the RBI and government are likely to reduce the banks’ operational cost, the high stock of NPAs and provisions for public sector banks are posing a challenge as far as transmission is concerned. As per the survey, the median growth forecast for IIP has been put at 3.5 per cent for the year 2016-17, with a minimum and maximum range of 2 per cent and 4.3 per cent, respectively. Ficci said the median inflation forecast for 2016-17 has noted a marginal increase in comparison to the previous round. The median forecast for Wholesale Price Index based inflation rate for 2016-17 has been put at 2.4 per cent while for Consumer Price Index it is 5.2 per cent. “The improvement in rural demand on the back of a pickup in farm sector is likely to give an impetus to industrial growth. Industry is projected to grow by 7.3 per cent in 2016-17, 0.2 percent points higher than the projection as per our previous survey round,” Ficci said. The chamber further said that recent data points indicate an increase in inflation on the back of elevated food prices, but nonetheless, “prices are expected to remain range bound going ahead given good monsoons and an improved acreage”. In addition to the forecast for key macro variables, the economists were asked for views on certain topical issues. The Government, earlier in 2016, decided to cut interest rates on small savings. The RBI implemented the Marginal Cost Lending Rate (MCLR) Framework with effect from April 1, 2016. Alongside, refinements were seen in liquidity management by RBI to allow for an improved transmission. However, transmission of monetary policy still remains an issue. Given this backdrop, economists were asked to share their views.

SOURCE: The Financial Express

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States ask industry to pass on GST benefits to end-users

The Empowered Committee of State Finance Ministers has implicitly asked India Inc to pass on to consumers any advantage that may be derived by keeping standard tax rates for goods and services tax low, as industry bodies have demanded. At the first meeting of the State Finance Ministers after the Constitution Amendment Bill to enable a GST regime received Parliamentary approval, the Committee wondered if low taxes would mean cheaper products. The States have been pitching for a GST rate of not less than 18 per cent in order to protect their revenues during the transition period. “It will be between 18 per cent and 22 per cent with a band of 1 per cent,” said a State Finance Minister, adding that industry associations did not object to a 5 per cent tax on gold and jewellery. The industry responded to say that low tax rate would increase competition, which in turn would help them pass on the benefits. “When value-added tax was introduced, hardly any benefit was passed on to customers despite promises from industry associations; it is likely that companies will similarly not pass through lower taxes to consumers,” said a State Finance Minister, adding that the Committee had asked industry chambers to revert to them with a detailed study on the issue. The Confederation of Indian Industry has called for a standard rate of 18 per cent to ensure that the tax revenues of the Centre and the States would not be adversely impacted by the introduction of GST. Meanwhile, FICCI said the merit rate under GST should be lower and the standard rate should be “reasonable”. Nasscom, in its representation, said the sector is creating huge job opportunities and allowing small industries to sell their products. Stating that e-commerce facilitates competition, it made a case for the sector to be exempt from GST

SOURCE: The Hindu Business Line

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Industry pitches for GST rate of 18%

Companies on Tuesday pitched for a standard goods and services tax (GST) rate of 18 per cent and sought time to switch over to the new regime at a meeting with the empowered committee of state finance ministers chaired by West Bengal Finance Minister Amit Mitra on Tuesday. States, which are seeking a higher tax rate of 20 per cent, asked companies if they would pass on low rates to consumers. The finance ministers did not buy the argument of the e-commerce industry, which sought an exemption from the tax, that it merely provided a platform for vendors and customers and did not make money out of sales. This was the first meeting of the empowered committee of state finance ministers since the passage of the Constitution Amendment Bill for the GST in Parliament. The meeting discussed GST rates and the accountability of the goods and services tax network. Thirteen states have ratified the Bill. Telangana and Mizoram had the legislation approved by their assemblies on Tuesday. The Centre is targeting April 1, 2017 to roll out the GST, but industry said it needed more time to prepare. The Federation of Indian Chambers of Commerce and Industry (Ficci) said at least six months would be needed from the date of adoption of the GST law by the GST Council.Flipkart, Amazon and Snapdeal argued they provided service to vendors and were liable to pay the tax only on service income. They said the vendors selling goods on their portals should be liable to pay the GST. When Mitra questioned the billion-dollar valuations of some of these companies, e-marketplace companies said advertisement was their source of income. According to the model draft GST law, e-commerce will come under the ambit of the tax.

The National Association of Software and Services Companies (NASSCOM) said in its representation e-commerce created huge job opportunities and allowed small industries to sell their products. “E-commerce brings in competition, but you are also adding some value. Else how are your companies generating so much valuation,” Mitra said, asking these companies to revert in writing what the tax structure should be for them.  Pitching for a lower GST rate, industry argued an 18 per cent standard rate would provide it a competitive advantage in the global market. It also sought a single centralised registration for service providers and no tax on freebies. “A maximum rate of 18 per cent should be the standard GST rate. A five-year guaranteed compensation will ensure that an 18 per cent rate is workable,” said Naushad Forbes, president of the Confederation of Indian Industry (CII).  “For industry, which seeks to be competitive in the global marketplace, a standard rate of 18 per cent will be advantageous in order to boost exports and generate employment,” the CII said in its presentation. It argued the average standard rate of value-added tax in high-income countries was 16.8 per cent, while that in emerging market economies was 14.1 per cent, although rates in China and Mexico were higher. Ficci said the standard rate should be such that “it checks inflation, and the tendency to evasion”. The industry associations pointed out a higher rate would push up inflation, affecting consumption, demand and, in turn, investment.

A committee headed by Chief Economic Adviser Arvind Subramanian had suggested a standard GST rate of 17-18 per cent and a lower rate of 12 per cent for essential goods. It has also suggested a “sin tax” of 40 per cent on luxury cars, aerated beverages, paan masala and tobacco.  The industry bodies argued that since free supplies were of zero value, they should not be taxed. The draft model law provides these will be taxed. The chambers also pitched for allowing the use of input credits in this case because the value of free supply was embedded in the supplies for consideration.  The model GST law provides benefits for after-supply discounts will be allowed only if these are part of an agreement at the time of supply and specifically linked to relevant invoices. “For consumer goods and retail companies, where the transactions are voluminous, it is impossible to link after-supply discounts to invoices. The condition of linking discounts to invoices should be removed,” the CII said.

KEY DEMANDS RAISED BY THE INDUSTRY

• Standard GST rate of 18%
• Adequate time for implementation for IT preparedness
• Single assessment, audit by either the centre or state
• No tax on e-commerce companies (want to pay tax only on service component)
• No tax on freebies
• Single registration for service providers
• Grandfathering of area-based exemptions for hilly and N-E states
• Prompt refund mechanism

WHAT STATES WANT

• Higher tax rate of well over 20%
• E-commerce companies in the tax net
• Sole administrative powers for assessment and audit up to Rs 1.5 crore annual turnover

SOURCE: The Business Standard

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Discussion on textile, apparel in Dhaka

A discussion on textile and apparel -- TEXAPP Bangladesh 2016 -- will take place on the sidelines of the 17th Textech Bangladesh 2016 International Expo at the International Convention City Bashundhara in Dhaka. The aim of the discussion is to bring textile and apparel industry leaders and machinery importers of Bangladesh under one roof, said the organisers, CEMS USA and CEMS Bangladesh, in a statement. Bangladesh has the potential to become the leading country in textile and apparel exports; for this to happen, proper reforms, strategies and coordinated efforts should be in place, the organisers said. The discussion as well as the show will help set the stage for Bangladeshi textile and apparel industry leaders and machinery importers to focus, discuss, decide and set goals for future exports. Analysts will discuss issues related to the formation of a common position of the Bangladeshi textile and apparel industry leaders in the global arena and talk on a topic “driving business with knowledge” at the forum. Discussants include MA Kader Sarkar, secretary of the textiles ministry; Mashud Ahmed, vice-chancellor of Bangladesh University of Textiles; Faruque Hassan, senior vice-president of Bangladesh Garment Manufacturers and Exporters Association; AH Aslam Sunny, first vice-president of Bangladesh Knitwear Manufacturers and Exporters Association, and NN Mahapatra, national vice-chairman of Textile Association (India).

SOURCE: The Daily Star

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Indonesian textile industry aims to enter top five ranking in global export

Indonesia in terms of textile and garment production as well as export which currently ranks tenth (controlling a global market share of 1.8 percent) far behind China is preparing several incentives including tax incentives and lower gas prices for export-oriented textile companies that should bring Indonesia in the top five rank of the world’s largest textile and textile products export in the next couple of years. Airlangga Hartarto, Indonesian Industry Minister, said that Indonesia needs to become the dominant player at home first (currently the domestic market is dominated by cheap textile imports from China, a trend that worsened after the implementation of the ASEAN China Free Trade Agreement [ACFTA] in January 2010), followed by expansion on an international scale by raising Indonesia's textile exports. The world's major textile consumers are the European Union, United States, China and Japan. In 2015 the value of Indonesia's textile exports reached USD $12.3 billion, contributing 1.21 percent to the nation's gross domestic product (GDP). This labor-intensive industry provides employment to some three million Indonesians. Hartarto added that the Industry Ministry is making efforts to develop vocational schools to create adequate human resources (equipped with international standards). Considering that the ministry aims to see a 5 - 6 percent (y/y) growth pace in the texti ile industry in the years ahead, it will require an additional 600,000 workers, each year.

Key to grow into the ranks of global textile leaders is efficiency, Hartarto said. Raw materials used in the textile manufacturing process are currently imported from abroad, implying higher production costs, especially in times of rupiah depreciation. By scrapping the value-added tax (VAT) on raw materials, Hartarto wants local textile manufacturers to start sourcing raw materials at home instead of looking beyond borders. Meanwhile, lower gas prices will also ease production costs in the textile industry. In one of the economic policy packages that have been released by the Indonesian government, lower gas prices were promised to several labor-intensive industries. However, these industries are still waiting for the government to take action. Recently an official at the Industry Ministry said these industries will be able to enjoy lower gas prices starting from the second half of August 2016. Indonesian Textile Association (API) Chairman Ade Sudrajat said that it is important for the government to lower gas prices immediately in order to make the nation's textile industry more competitive. Also Indonesia needs to pay more attention to the inflow of illegal textiles. Another important decision to boost Indonesia's textile exports is the signing of a free trade agreement with the European Union (Indonesia-EU comprehensive economic partnership agreement, or CEPA). However, the signing of free trade deals between Indonesia and other regions in the world still require time, particularly as there exists opposition both in parliament and society against participating in such. Currently, it is difficult for Indonesia to compete with Vietnam on markets in Europe and in the USA because Indonesia is not engaged in free trade partnerships with these regions. Therefore, Indonesian textile exports to Europe are subject to import duties in the range of 11- 30 percent, while Vietnam can export its textile products to the European Union without import duties. This makes Vietnam's products much more competitive.

SOURCE: Yarns&Fibers

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East Africa govts must employ industry-friendly policies to revamp textile sector

The ongoing assessment of supply capacities for textile, apparel and leather products in the region must be handled with utmost care and the outcomes made to truly reflect the situation on the ground. The exercise, which is spearheaded by the East African Community Secretariat, is meant to facilitate planning for the phasing-out of second-hand leather and apparels products, in line with a directive of the last EAC heads of state summit. The 17th Ordinary Summit of the EAC heads of state, which was themed, EAC: Advancing Market-Driven Integration held in March in Arusha, Tanzania, directed partner states to procure their textile and footwear requirements from within the region where quality and supply capacities were competitively available. This was done with a view to phasing out importation of used textiles and footwear within three years. The summit directed partner states to sensitise all stakeholders and directed the Council of Ministers to provide it with an annual review with a view to fast-tracking the process. But even as the region seeks to promote vertically-integrated industries in the textile and leather sector, it is equally important to gauge the level of preparedness by the industry to fill in the gap that will be left by the expected ban. The industry may need support measures and incentives to expand investment in order to meet the sudden rise in demand for products. But it is clear that the region does not currently have the capacity to supply the market with the required amounts of garments and shoes. Uganda, for example, has few cotton ginning factories despite being a major cotton producer. The Uganda Manufacturers Associations lists around 30 garment and footwear producers among its members.

Although the intent of regional governments in banning second-hand clothes and shoes is noble — to boost local textile industries — that approach may not be the best for now. The governments may need to rethink and re-strategise on a more viable means of promoting the textile industry in the region even as it plans to phase out second-hand clothes. Indeed, a ban is likely to prove unpopular with East Africans. Banning imports of used clothes and shoes means that the population has to choose between buying new imported goods and those produced locally. If the latter are costly, or of poor quality, East African citizens will have to spend more on these goods. Poorer people, who are more likely to purchase second-hand shoes and clothes, will suffer. Second-hand clothes businesses employ thousands of people directly and indirectly. Banning the sale of such clothing means sending thousands of families into absolute poverty and destitution, which may be catastrophic for our young economies. The change must therefore be phased out and done with ultimate care.

Governments must also be sincere on the real causes of the collapse of the textile industry, rather than blaming it all on infiltration by the second-hand market. The challenges facing the industry are myriad and phasing out the second-hand clothes won’t solve all of them. Failure to address other causes of the collapse of the industry will make moves to revamp the industry stillborn. The governments must now walk the tightrope of reviving the textile industry without destroying livelihoods. The governments may need to streamline activities in the sector in such a way that the local textile industry provides quality products at an affordable price while at the same time offering thousands of jobs. Many factors have adversely affected the sector, including liberalisation of the economy in the 1990s. The influx of textiles into the region became a major problem, with the average capacity of utilisation in the textile mills reduced to about 50 per cent. In Kenya, for example, the textile sector was once the fifth largest foreign exchange earner in Kenya, but dropped to a minute contribution of the Gross Domestic Product from the mid and late 1990s. It is evident that cotton production offers the greatest potential for increased employment, poverty reduction, rural development and generation of increased incomes in arid and semi-arid areas of countries such as Kenya. The sub-sector is capable of bringing rapid economic development in the region. And no wonder, it has been classified as a core industry that has the potential to revamp economies. Governments must employ industry-friendly policies to revamp the sector. Reducing costs faced by manufacturers is mandatory. Ensuring a cheap and reliable supply of power and developing transport infrastructure by providing good feeder roads will also serve to boost the sector. Introducing tax relief for producers and export incentives for firms targeting international markets, or even asking foreign firms to use domestic labour and inputs are other methods the government can employ to develop the sector.

SOURCE: The Geeska Africa

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Cambodia's garment sector may lag behind as global manufacturing hub

Cambodia garment sector may find itself lagging behind as a global manufacturing hub as it is facing a number of challenges such as regulatory obstacles, insufficient infrastructure, an uneducated workforce and lukewarm global demand — in its quest to cultivate its industry and move up the manufacturing value chain. The country's political atmosphere, largely undiversified economy and weak supply chain only compound its troubles. According to the country's Garment Manufacturers' Association, orders for Cambodian clothing has fallen 30 percent this year and that political uncertainty has forced more than 70 factories to close or relocate.

In the early 1990s, Cambodia emerged on the global scene as a major garment manufacturer and exporter, aided by a young, inexpensive workforce, favorable investment policies and preferential access to Western markets. The surge in Cambodia's garment industry, combined with two decades of relative political stability and economic liberalization, helped the country rebound from decades of war to build one of the region's fastest-growing economies. But Cambodia has not moved past its reliance on the garment industry, which supplied 70-80 percent of its export revenue over the past decade and employed a large portion of its workforce. And over time, the sector has fallen victim to the country's many political and structural challenges.

Given the country's heavy dependence on a single industry, it is perhaps unsurprising that labor issues are a hot-button topic in Cambodian politics. The country's high level of unionization and the simmering enmity between its ruling and opposition parties adds fuel to the debate. As elections in 2017 and 2018 approach and Cambodia's political scene remains largely unsettled, opposition parties will likely keep leveraging labor. Over the past three years, repeated wage hikes have more than doubled pay for garment manufacturing jobs in Cambodia to $140 a month, putting the country on par with — or above — many of its regional competitors, including Vietnam, Bangladesh and Indonesia. Now, opposition parties and unions are demanding that the rate increase to $177 per month. As other countries in the region, such as Myanmar and Vietnam, pursue international trade more aggressively, Cambodia's climbing manufacturing wages will continue to erode its competitive edge in the years to come. The problem for Cambodia is that wages in its garment industry rose too high, too quickly, at a time when the country is ill prepared to move up the manufacturing value chain or to diversify its economy.

Of the major garment exporters worldwide, Cambodia is among the most dependent on textile and clothing for export revenue, employment and investment, second only to Bangladesh. Though both countries suffer similar deficiencies in infrastructure and labor productivity, Cambodia's industrial capacity is still well below that of Bangladesh and largely operates at the downstream end of the industrial chain. Cambodia's garment industry, moreover, is heavily concentrated around the capital city of Phnom Penh. And unlike Bangladesh, where local entrepreneurs control much of the industrial chain, Cambodia's garment factories are mostly owned by foreign brands, making the industry highly vulnerable to external shifts. Nonetheless, if Phnom Penh addresses these challenges, Cambodia's small economy, young labor force and relatively amiable relations with major regional economies such as China and Japan could work in its favor.

SOURCE: Yarns&Fibers

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