The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 25 JAN, 2017

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INTERNATIONAL

 

Textile industry demands cut in import duty on raw materials

 

Chandigarh : The Rs 50,000-crore textile industry based in Northern region has sought enough provisioning for technology upgradation fund, rationalisation of duty structure on man-made fibres and lowering of import duty on raw materials used in making finished products in the forthcoming Union Budget. According to credit rating firm ICRA, increasing the allocation under the Technology Upgradation Fund Scheme (TUFS) to a level equivalent to average of actual releases over the past 3-4 years would be beneficial for the industry in order to attract capital investments in the downstream sectors (fabric-making and apparels), thereby facilitating higher value-addition in the country. The industry also pitched for rationalisation of duty structure on man-made fibres to enhance the sector’s competitiveness globally and increase its share in the global textile trade. At present, man-made fibres attract 12.5% excise duty. Harkirat Singh, MD, Woodland, while talking to The Tribune, said, “Being an essential item for the common man, textile items should be kept under GST with the minimum possible tax slab of 4-5%. Secondly, there are lots of raw materials like nylon and technical fibres which we wish to import from other countries and manufacture finished products here. However, high duty acts as a deterrent and instead we import finished products. So, the government must lower the import duty to promote “Make in India” initiative. He said tax on import of some of the raw materials was higher vis-a-vis tax on import of finished products. In Punjab, the textile industry accounts for 19% of the total industrial production and contributes around 38% of the total exports from the state. Punjab accounts for 14% of the total cotton yarn production in the country and is one of the leading exporters of yarn, hosiery and ready-made garments. The MD of Ludhiana-based Vallabh Fabrics Ltd said, “Punjab is one of the major states for textiles. The government must allocate some textile park for the state to give fillip to the sector. In addition to this, we demand that any new scheme by the Centre should be directly transferred to the textile players rather than through the state government as it only results in delay and confusion.” Ajit Lakra, MD, Superfine Knitters Ltd., said: “Due to demonetisation, there was a considerable slowdown in consumer demand for apparels in December. So, we want some kind of relief from the government. Reduction in interest rates is a welcome step but there is a need to further lower it. Also, there is a need to cut tax rates to widen tax net. Moreover, the customs duty on capital goods of textile industry should be reduced from 20-22% to 10%.”

Source: The Tribune

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India-EU FTA to benefit apparel sector

The CII-BCG report also suggested that the state governments should promote infrastructure with plug and play facilities. A free trade agreement with the European Union (EU) besides rationalisation of taxes and duties would help in promoting the growth of India's apparel sector, says a report. The CII-BCG report also suggested that the state governments should promote infrastructure with plug and play facilities. "Duties and taxes must be rationalised to avoid inefficiencies and high energy and overall costs. A power subsidy, inclusion of power charges under GST, and similar rates for both cotton and synthetic products are recommended," the report said. It said industry should engage in driving productivity through extensive training and investments in process improvements and automation. The report "strongly calls for a free trade agreement with the EU. An added provision could be to treat the poor states of India on a similar basis as least developed countries," the report added. India and EU are negotiating a free trade pace since June 2007. The talks were stalled on several issues including IPR. It also said that rebranding is essential, accompanied by focused marketing interventions such as global roadshows. Companies should invest in product development and in cutting edge innovations, it said.

Source: moneycontrol.com

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Promote textile tourism between India, Bangladesh: Irani

Union textiles minister Smriti Irani has called for promoting textiles tourism between India and Bangladesh and modernising infrastructures at the borders of the two countries to encourage border haats. She also emphasised on the need to promote business cooperation in jute and fabric segments to increase trade between the neighbouring nations. Irani also addressed the issue of the imposition of anti-dumping duty on jute imports from Bangladesh while speaking at the Indo-Bangladesh Multi Sectoral Cooperation International Conference, according to media reports. She said that commodity dumping has affected Indian farmers’, lower income workers as well as the entire Indian jute industry. She suggested that Bangladeshi leaders in jute diversification can work with the Indian jute companies to explore the global market. The minister also said that the firms from both countries can work together in the fabric sector and jointly address the issues of standards and non-tariff barriers.

Source: Fibre2fashion

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Smriti Irani for TiECON

The sixth edition of ‘TiECON’, entrepreneurship summit will be held in Hubballi on January 27 and 28 with the theme ‘Get Smart’-smart ways to scale and sustain business/ideas” and Union Textile Minister Smriti Irani will participate in it. On the first day of the event being held at Hotel Denissons, a women’s conclave will be held and it will have workshops on woman entrepreneurship and woman achievers and young woman entrepreneurs will share their success stories. President of Hubballi Chapter of TiE (The Indus Entrepreneurs) Sandeep Bidasaria said that on January 28, the event would have the keynote address, discussion and fireside chats by eminent speakers on successful business ideas. Union Textile Minister Smriti Irani,Minister for Large and Medium Scale Industries R.V. Deshpande, Minister for Information Technology and Tourism Priyank Kharge and others will be the key speakers at the event, he said.

Source: The Hindu

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Cabinet approves setting up of a world class Integrated Exhibition-cum-Convention Centre at Pragati Maidan, New Delhi by ITPO

The Cabinet Committee on Economic Affairs, chaired by the Prime Minister Shri Narendra Modi has approved the proposal of India Trade Promotion Organisation (ITPO), a Mini Ratna Category-1 Company under the Department of Commerce, for redevelopment of Pragati Maidan by setting up of a world class Integrated Exhibition-cum-Convention Centre (IECC) at Pragati Maidan, New Delhi. The total cost of the project will be Rs.2,254 crore. ITPO will utilise Rs.1,200 crore out of its free reserves towards funding of the project. ITPO will raise institutional loan / soft loan / external aid / land monetization for the balance amount of Rs.1,054 crore with government guarantee for the amount of institutional loan. The redevelopment of Pragati Maidan is envisaged in two phases. Phase-1 redevelopment is expected to complete by May 2019. Phase-1 of the project will result in redevelopment of nearly 3.26 lakh sq.mtrs. After redevelopment, the exhibition space will be doubled to 1.19 lakh sq.mtr. as against 65,000 sq.mtr. presently. Redevelopment will also include creation of a state-of-the-art Convention Center with seating capacity of 7,000 persons. For execution of this mega project, ITPO has assigned the work to National Buildings Construction Corporation Ltd. (NBCC) as a Project Management Consultant. ITPO would call for global bidding for selection of project executor(s) for construction of the project. With India’s growing international profile and increasing presence at summit, ministerial and other levels, a need has been felt to have a modern world class Integrated Exhibition-cum-Convention Centre at New Delhi to provide an appropriate venue for international events. Present facilities are far short of international standards. To ease road congestion, grade separator will be provided at the junction of Mathura Road and Bhairon Road. Also, there will be direct connectivity through subway from Mathura Road to Ring Road across Pragati Maidan.

Source: PIB

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CBDT issues Guiding Principles for determination of Place of Effective Management (POEM) of a Company

The concept of Place of Effective Management (POEM) for deciding the Residential Status of a company was introduced by the Finance Act, 2015. It is effective from 01.04.2016 and accordingly shall apply from assessment year 2017-18 onwards. The guidelines for determining the POEM has been uploaded on website of the Income-tax Department (www.incometaxindia.gov.in). These guidelines of POEM have been finalised, after placing draft guidelines in public domain for seeking comments from stakeholders and general public, and with extensive consultations thereafter. The Final Guidelines on POEM contain some unique features. Active Business outside India (ABOI) test has been provided, so as not to cover companies outside India which are engaged in active business. The intent is not to target Indian Multi Nationals which are engaged in business activity outside India. The intent is to target shell companies and companies which are created for retaining income outside India although real control and management of affairs is located in India. It is emphasised that these guidelines are not intended to cover foreign companies or to tax their global income, merely on the ground of presence of Permanent Establishment or Business connection in India. Adequate administrative safeguards have been incorporated in the guidelines by mandating that the Assessing officer (AO), before initiating inquiry for POEM in a case of a taxpayer, will seek approval from Principal Commissioner of Income Tax/ Commissioner of Income-tax. The AO shall also obtain approval from Collegium of Principal Commissioners of Income-tax before holding that POEM of a non-resident company is in India. It has been further decided that the POEM guidelines shall not apply to companies having turnover or gross receipts of Rs. Fifty (50) Crore or less in a financial year. The guidelines also contain illustrations to clarify the situations whether POEM shall or shall not apply.

Source: PIB

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India will wait & watch US move on TPP, says Commerce Minister

India will watch how things pan out following US President Donald Trump’s decision to get out of the ambitious Trans-Pacific Partnership (TPP) agreement with eleven other Pacific-rim countries, including Japan, Australia, New Zealand and Canada, as it was never a part of the pact, Commerce Minister Nirmala Sitharaman has said. “What the new US administration is doing is probably what they had said they would do during the election campaign. We can only watch as we are not part of the TPP,” Sitharaman replied when asked by the media to comment on the development on the sidelines of a CII event to promote services trade. While the US decision to exit TPP may not directly affect India, it could have ramifications on trade pacts being negotiated by the country such as the RCEP deal with the 10-member ASEAN and five others, including China and bilateral pacts with Australia and New Zealand, a Commerce Department official told BusinessLine. “We will have to see how the negotiating strategies of other countries change because of the US walking out of the TPP. Our reactions have to be carefully measured,” the official said. The Minister also said that India was working on a formal proposal on a pact on Trade Facilitation in Services (TFS) and hoped to submit it at the World Trade Organisation before the next Trade Ministers’ meeting in Buenos Aires in December.

Services exhibition

Speaking at a curtain raiser for the Global Exhibition on Services scheduled in April, Sitharaman said the manpower advantage that India had would help scale up the sector. As many as 400 buyers from 70 countries are expected to participate in the four-day event beginning April 19.  There would be around 600 delegates represent 20 services sectors. The three new areas being added are retail and e-commerce, sports services and Railway services.

Source: Business Line

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India, Bangladesh need to step up business cooperation: Smriti Irani

Textiles Minister Smriti Irani on Tuesday emphasised on the need to increase cooperation between businesses of India and Bangladesh in areas like jute and fabrics to promote trade and investments. Businesses of both the countries can collaborate in sectors like textiles to explore global markets, she said. She was speaking at the Indo-Bangladesh Multi Sectoral Cooperation International Conference. When asked about India imposing anti dumping duty on imports of jute from Bangladesh, she said dumping of the commodity has impacted the livelihood of farmers, lower income workers and the Indian jute industry. The minister suggested that Bangladeshi companies that are leaders in jute diversification can cooperate with Indian jute industry and possibly explore “the world market”. Similarly, she said firms of both the sides can join hands in the fabric sector. “Both sides can also work on the issues of standards and non tariff barriers and jointly address,”she added. Further, Irani talked about promoting textiles tourism and modernising infrastructure at borders to promote border haats.

Source: Indian Express

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The Budget 2017: 6 reasons why the Indian economy needs a fiscal stimulus

In 2016, the monsoon was good, and the Seventh Pay Commission enabled urban consumption demand. Thus, it seemed that FY17 would clock 7.6-8% growth. But just when India’s economic growth started on a long-term trajectory, demonetisation suppressed it, and 7.6-8% growth is now unattainable. The latest IMF projection of India’s growth rate for FY17 is 6.6%.

Overall economic activity

Demonetisation negatively affected sectors such as services, real estate and allied sectors, construction, consumer durables, automobiles, FMCG, and the informal sector. The services sector contributes more than 65% to India’s GDP. The Nikkei/Markit Purchase Managers’ Index (PMI) dropped from 54.5 in October to 46.8 in December post-demonetisation. This fall below the threshold level of 50 implies a contraction. Similarly, the manufacturing PMI dropped to 52.3 in November from October’s 54.4—its biggest month-on-month decline since March 2013—while the Nikkei India Composite PMI Output Index recorded 47.6 in December, from 49.1 in November, again a 38-month low. Interestingly, the IIP showed a growth of 5.7% in November 2016 despite the note ban effect, but it can be argued that this lift could have arisen on the back of a weak base in November 2015 that had a 3.4% contraction.

Consumption-based sectors

Consumption is a major expenditure that contributes to GDP. The demonetisation drive has suppressed private consumption demand, and households have postponed their purchasing of consumer durables. Sectors like consumer durables, FMCG and retail (except organised retail) have been severely affected and should report significant fall in revenues in the future. The sales of FMCG companies had gone down by R3,840 crore in November as compared to October. The automobile sector witnessed its biggest drop of 18.66% in sales in 16 years in December, especially in two-wheelers, where over 60% of sales are in cash. Employment has also seen a significant decline in these sectors in the past two months. While this may persist for another two quarters on the back of low and cautious consumer spending, it is expected to gain momentum from the second quarter of FY18.

Real estate

Demonetisation severely affected real estate, which was already battling a prolonged demand slowdown. Since then, it has seen a 25% reduction in sales, especially in tier-2 and tier-3 cities. According to brokers and analysts, sales in major cities like Delhi, Mumbai and Bangalore have seen a major dip as consumers are taking a ‘watch and wait’ approach amidst the speculation on further measures for benami properties. Hence, we could expect another weak quarter for the real estate sector.

Informal sector, employment

The informal sector, which accounts for more than 45% of the GDP and 80% of employment, has been severely hit by demonetisation, as daily wage labourers find it difficult to secure employment. For instance, the textile sector—which employs nearly 70 lakh people as daily labourers—was unable to pay them because cash supply was inadequate. Similarly, industries like leather, handloom and construction were badly hit, with significant wage implications for its casual workforce. In fact, the economy is already experiencing a decline in employment growth during a period of high growth, and it might aggravate in the next few quarters when the actual effect on GDP growth is felt on the ground. This leads us to ask: How can the Union Budget offset the possible impact of demonetisation?

Budgetary expectations

Now, since all the impacted sectors may not rebound equally, we expect a Budget that incorporates demonetisation-induced changes and adequate fiscal incentives. Hence, the focus should be on offsetting the demand downturn by improving sentiment in the economy and increasing investment rates for higher growth. In addition, the government is expected to announce a special corpus to fund digital payment systems in rural areas.

Taxes and revenues

On the revenue front, the government has gained from the declarations made in the Income Disclosure Scheme-1 (IDS-1) that ended in September 2016. The disclosures, estimated at R60,000 crore, generated R30,000 crore in tax revenues. According to experts, another bout of tax revenue amounting to R1 lakh crore is expected from IDS-2. The gains from IDS-2 will accrue to the next fiscal year and could be used to finance a big portion of the fiscal deficit. The government could use the amount raised through IDS-1 by spending on infrastructure and helping offset the expenditure accruing next year in the form of the Seventh Pay Commission arrears as well as revised structures. In the long run, demonetisation is expected to increase the tax base and tax revenue as the share of the formal economy increases. As a result, we may expect widening of the tax base, an increase in the tax-to-GDP ratio, reduction in corporate tax, and raising of tax exemption limits. Reduction in personal income taxes and increase in exemption limits will increase liquidity with households and will boost consumption spending, especially the lower income group. However, the government should be careful about tax cuts if it can increase the base, as tax revenues have been quite stagnant in the past couple of years, and explore other avenues like disinvestment, market borrowing, etc. This will increase production capacity and employment and, concurrently, improve private investment in insurance and mutual funds. To offset this reduction in tax revenue, the tax base should be widened. On the other hand, reduced corporate tax will increase revenues and net profits for firms, which will positively impact investment and facilitate higher economic growth and job creation.

External sector

The external sector has been showing signs of fragility and weakness—exports have been falling for the last 24 months and the recent Fed hike, coupled with Donald Trump’s victory in the US Presidential elections, has fuelled outflows of FIIs. The export industry can be revived through the upcoming Budget if the finance minister provides sufficient financial stimulus to boost the sector. For instance, a scheme for providing subsidised credit to exporters, which will expire on March 31, 2017, can be extended. As suggested by the Federation of Indian Export Organisations, a special export development fund can be used to help small exporters. In addition, the government should try to administer an effective oil price-through mechanism to mitigate the effects of higher oil prices, and should provide incentives for the renewable energy sector, especially domestic manufacturers of solar panels, to reduce dependence on imports. In summary, while the government will have enough buffer to provide the necessary fiscal stimulus to revive the economy, it is expected that it will be more pragmatic in its approach to concomitantly fulfil the long-term objective of fiscal consolidation.

Source: Financial Express

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Taxation: the enemy within

The economic experts, also known as glitterati at Budget time, are at it again. Which means that not only do old myths get rehashed, but also that new myths get created. One of the favourite all-time Indian myths is that one must increase tax rates to increase tax revenue—and that the tax rate on Indian corporates is too low. This year, there is a greater urgency to the myths. Assembly elections are due in five major states, including in UP, a 204-million population state. If it were a country, it would be the fifth-largest in the world by population, just ahead of Brazil (201 million) and some 54 million behind Indonesia (258 million). The stakes are high because of state elections and an (expected) people’s verdict on demonetisation. If the Modi-Jaitley combine were to bring about an economically popular budget (not populist), then the fear among the political opposition is that the Modi-led BJP will run away with all the prizes. Unlike previous Budgets where indirect tax changes were paramount (an excise duty cut for Tweedledum, an excise duty increase for Tweedledee), in Budget 2017, direct tax changes should (will?) reign supreme. Personal income tax rates were reduced to a three-tier structure (10-20-30%) in 1997. The flat corporate tax rate was reduced to 35% in 1997 and to 30% (where it now stands) in 2005. Perhaps, not coincidentally, both these changes were brought about by P Chidambaram in his role as the then finance minister. The finance ministry, and Budgets, have come forth with additional taxes in the form of surcharges and cesses over the years, but the tax rate has been considered untouchable. This year there is good reason to hope that the government will change the structure (tax slabs and rates) in a major way. Previously (in joint work with Arvind Virmani, goo.gl/8Yb4ar and goo.gl/bl9CMx), I have discussed the desirability of increasing tax revenues by reducing tax rates. Two options, both with a negative income tax component, were offered—either a flat tax rate of 12%, or a two-tier tax schedule of 10% and 20%.This article is concerned with what needs to be done with our corporate tax rate structure. The existing reality is a flat tax rate of 30%, and an effective tax rate of 25%. The 5% gap between the stated and effective rate is because of exemptions. How does this effective tax rate compare with other countries, especially our competitors? Very badly. The Indian corporate sector is one of the most heavily taxed in the world. Don’t believe me, but believe every major study done on this subject in the last decade. In the 2012 study, in National Tax Journal, a major academic journal, Douglas Markle and A Shackelford “Cross Country Comparisons of Corporate Taxes” find that for the two decade period 1988-2009, India had the fifth-highest effective corporate tax (23%) rate. In a 2015 study (The 2014 Global Tax Competitiveness Report), Duanjie Chen and Jack M Mintz aggregate corporate income taxes for 95 countries for every year between 2005 and 2014—India had the 14th-highest corporate tax rate for the manufacturing sector (29.5%). Every year, the Centre of Business Taxation, Oxford University, aggregates corporate income tax rates across 48 countries. They estimate two indicators of taxation—Effective Average Tax Rates (EATR) & Effective Marginal Tax Rate (EMTR). In 2016, India had the fourth-highest EATR, at 30.8%; the top three are the United States, France and Argentina. India ranks seventh-highest with an EMTR of 22.8%. One of Modi government’s major goals has been to improve business conditions in India, also known as Ease of Doing Business. For the last two years, our rank has stayed constant at 130.5 (131 and 130 in 2015 and 2016, respectively). The major reason for our rank not changing is the high rate of taxation of the corporate sector. The World Bank estimates that in 2016, Indian corporates will pay a tax rate of 60.6% of corporate profits. This is composed of 21% corporate income tax, 4% dividend distribution tax, 15% social security contributions, 14% central sales tax, etc. How much do our East Asian competitors pay? An average of 35%; our South Asian neighbours pay 38%, Bangladesh corporates pay 35%. India’s rank on tax rates—172 out of 190 countries. So, stop wondering as to why the investment rate has been steadily going down, and is now close to zero for the corporate sector. Stop wondering and blaming all and sundry as to why the Indian manufacturing sector does not grow, and lags behind practically every major country in the world. Start blaming ourselves, and our penchant (inherited from the socialist Congress) for taxing the rich in order not to have money to pay for the poor—suit boot ki sarkar is what Modi inherited from the Congress. Finance minister Arun Jaitley had announced that he wanted to move to a 25% corporate tax rate, to be comparable to our East Asian competitors. Let us say that Jaitley removes all exemptions and reduces the corporate tax rate to 25%. If the cess and surcharge stay, then this policy will do nothing to improve India’s competitiveness; the 5% reduction in tax rate will be exactly equal to the exemptions now removed. If the corporate tax rate is reduced to 25%, and cess or surcharge or exemptions are removed, then India’s competitiveness will begin to improve and Make in India slogan will begin to have meaning. If exemptions are to be removed, which they should, then the corporate tax rate should be reduced to 20%. This is compatible with the maximum marginal personal income tax rate of 20%. If tax rates are brought down, wouldn’t tax revenues decline? No—they will increase, because of increase in tax compliance. If the Modi government believed that reduction in tax rates did not increase tax compliance, then they were entirely wrong in their demonetisation policy. Demonetisation explicitly (and correctly) targeted tax evasion—a meaningful reduction in effective corporate tax rate is the correct follow-through to the logic, and pain, of demonetisation. I have talked to several individuals about the possibility of significant, not-just-tinkering tax reforms in Budget 2017. As with much else since May 2014, the opinion is divided not along caste lines but around whether you voted for Modi (not BJP) in 2014. The people arguing for bad tax policy (i.e., don’t change effective corporate tax rates) are the same who don’t want Modi to be an economic reformer. If, especially post demonetisation, the corporate tax rate is not reduced, the economy will be hurt, and Modi’s popularity will begin to take a hit. Most important, the economy’s growth rate will begin to falter. This must be what the opponents of meaningful economic reform want. For obvious reasons, these opponents of economic reform cloak their Trojan horse arguments in terms of helping Modi, i.e., don’t cut tax rates for corporates, because this will confirm in the people’s minds that the Modi government is really suit boot ki sarkar. What will truly damage Modi (and the BJP) is the economic growth not accelerating, if job growth does not begin to happen, if demonetisation pain is not replaced by demonetisation gain. A necessary political and economic strategy for India’s success is for Modi/Jaitley to do the opposite of what the Nehru-Gandhi Congress has done for the last 70 years, i.e., make a significant cut in the corporate tax rate.

Source: Financial Express

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A run-up-to-GST Budget

Budget 2017-18 may turn out to be one of the most trend-setting Budgets to be presented by the National Democratic Alliance government. This is the first time that the Railway Budget has been merged with the Central Finance Budget and there is no distinction between Plan and nonPlan expenditure. This apart, the Budget would be presented on February 1, almost a month earlier than the usual date. Further, preceded by the historic move of demonetisation and expected to be followed by the path-breaking tax reform of goods and services tax (GST), this Budget carries high expectations for both consumers and business owners. With the conclusion of the GST Council’s last meeting, the tax reform’s journey towards realisation has progressed substantially. Resolution between the Centre and the states on the much-debated issue of sharing administrative control over taxpayers should also set the pace to reach the remaining milestones and for the government to roll out GST. The decision that states will assess more than 90 per cent of small taxpayers with turnover below ~1.5 crore is welcome and in line with the existing scheme of indirect taxation in the country. At present, the Centre does not assess manufacturers with turnover of up to ~1.5 crore, as they are exempted from excise duty. The challenge for the state tax authorities would be to gear up to assess taxation of services where most of the small service providers fall in the lower bracket and who have been assessed only by the central tax authorities so far. The next major steps for the GST Council would be to finalise the draft of the GST law, supporting legislations and tax rate schedules for various goods and services in accordance with an already decided multi-rate structure. The realistic timeline for the nationwide rollout of GST was pushed by a quarter to July 1. This short deferment was indeed required, as this would provide the much-needed time for analysis and preparedness for both the government and the businesses. Budget 2017-18 might be the last one before the country moves to a GST regime. This means it is the last opportunity for the government to further realign the existing tax structure for a smooth transition. Any major amendments such as further introduction and/or increase in rates of cesses or restrictions on availability of credit, which lead to cascading of taxes and are against the spirit of GST, are uncalled for. The central government has in the last couple of years taken several legislative and administrative measures to foster ease of doing business. However, recent amendments in service tax law around taxability of certain cross-border transactions came as a surprise for various service providers, who were given little time to prepare for critical changes in their tax positions and compliances. These included taxability of digital services provided by overseas service providers to Indian customers, tour operator services and inbound transportation of goods through sea routes in which no Indian person was involved as a contractual party to the service agreement. With the existing regime set to lapse in a few months, having these kinds of sudden tax changes may not only lead to higher tax uncertainty but could also distort the outlook of overseas investors towards India as an emerging market and investment destination. These kinds of amendments should be brought in at a stage so that industry does not panic. At this point, the government should try to improve the existing machinery for processing refund claims and introduce measures for timely conclusion of pending cases to minimise their spillover into GST. Other expectations from this Budget include realignment of existing cesses such as Swachh Bharat Cess on services and infrastructure cess on automobiles to bring down the cascading of taxes. Creditable cesses such as Krishi Kalyan Cess and NCCD should be made more fungible to allow their credit against other taxes. This would help reduce possible rollover/lapse of credit for these cesses with the taxpayers on the GST cut-over date. As services could possibly attract up to 18 per cent of tax rate under GST, a marginal increase in service tax rate may be announced to rationalise it further with GST. However, it could be a risky proposition as the tax rate would increase without a commensurate increase in efficiencies that GST would provide to service providers. This might increase the tax burden substantially for the end consumers, who may be hoping for some tax relief given that demonetisation caused them great inconvenience. Post demonetisation, India has witnessed multifold surge in the use of digital payments, including mobile wallets, debit and credit cards and NEFTs. While the government has already extended certain tax concessions to promote digital payments, further benefits on service tax, excise and Customs should be provided for the economy dealing with cash crunch. The overall expectation of industry from this Budget is further realignment of the existing indirect tax structure with GST framework without radical changes, as it remains busy preparing for this tax reform.

Source: Business Standard

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Trump effect on GST

As the world waits for Donald Trump to get going as the 45th president of the US, there’s great attention on the changes his administration is likely to introduce in the US trade policies. Most of these changes will have far-reaching impact on the prospects of bilateral trade between various countries and the US. Some of the changes might impact India and can extend to the prospects of India’s impending Goods and Services tax (GST). Trump wants US businesses to produce from home rather than from overseas. He has specifically targeted automobile manufacturers in this regard. Trump would like US automakers like Ford and General Motors to assemble vehicles in the US, rather than from facilities in Mexico or other foreign countries and export them to the US, as they often do now. He has also urged German and Japanese automakers such as BMW, Mercedes Benz and Toyota to do likewise. Indeed, automakers and other US manufacturers currently manufacturing overseas and exporting to the US are likely to face high customs duties on their exports if the Trump administration is serious in implementing the threat. Trump also plans to reduce corporate income taxes for making manufacturing from the US a more attractive option for American and global businesses. He might also impose a tax on the US companies that outsource services. All these policies are part of his plans to protect existing American jobs and create new ones. This was one of the central themes of his electoral campaign. American workers who lost their jobs from the relocation of US businesses to Mexico and other parts of the world have supported Trump wholeheartedly. For Trump, it is now ‘payback time’. High customs duties on exports to the US and lower corporate income taxes will create disincentives for American companies that are manufacturing overseas. These include American companies producing from India. The new fiscal policies can adversely impact the participation of US companies in the Make-in-India initiative. Several prominent US companies are already producing or have plans for producing from India. Ford has several manufacturing facilities in India from where it assembles and exports vehicles. Apple is expected to begin assembling iPhones in India from later this year. Major aircraft manufacturers like Lockheed Martin and Boeing have also committed to investing in India. Trump’s policies can make India a less attractive location for all these companies. It can make India similarly less attractive in the supply-chain visions of other foreign investors that service the US market as a destination for their final products from India. American companies from India that are likely to face high customs duties on their exports to the US would be worried over retaining their cost advantages. This might lead them to lobby with the Indian government for concessions. The most likely concessions they would demand are payment from indirect taxes. Exporters from India are currently exempted from paying several indirect taxes. These include the value added tax (VAT), sales tax and central excise. The Duty Drawback facility allows exporters to claim refunds on central excise and customs duties paid on raw materials and other inputs used in exports. Exporters are also not required to pay customs duties on import of several capital goods and essential inputs for exports under various incentive schemes of the government of India. The introduction of the GST in India will change the scenario. The GST will replace multiple indirect taxes like the central excise, sales tax, VAT and service tax by a single consolidated tax. The consolidation will bring to an end the exemptions associated with various taxes for exporters. As of now, it appears that exporters will first have to pay the GST on all raw materials, inputs and other services they source domestically for their exports and later claim refunds. This would imply greater expenditures for exporters since refunds will materialise only after several months. For US companies exporting back to the US, this might mean incurring more costs, both in producing in India as well as in exporting to the US through higher customs duties. The advent of the GST combined with Trump’s economic policies for discouraging imports might impact cost competitiveness of US businesses in India, forcing them to lobby hard for seeking exemptions from upfront payment of GST. Apple’s demands for tax concessions, for example, which are now on exemption of customs duties on imported components required for assembling IPhone, might expand to include upfront exemption from GST. This would increase the complications and challenges of administering the GST in India since the GST is likely to be implemented on a non-exemption principle. Donald Trump and his trade policies were certainly not among the ‘shocks’ that the GST planners had accounted for!

Source: Financial Express

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Bring back BCTT, remove retro tax: CMs’ panel to PM

Reintroduction of the banking cash transaction tax (BCTT) while providing tax refund to consumers using digital payment up to a certain proportion of annual income is one of the key recommendations made to the Prime Minister by the Committee of Chief Ministers on Digital Payments, with an aim to disincentivise cash transactions and promote electronic payment modes. The BCTT, which was levied on cash withdrawals of over Rs 50,000, was originally introduced in 2005 to keep a track of unaccounted money and trace its source, but was withdrawn with effect from April 1, 2009. Furthermore, the Tax Administration Reforms Committee chaired by Parthasarathi Shome had also in 2014 recommended reinstating the said tax as “an effective administrative measure”. The panel of chief ministers headed by Andhra Pradesh CM N Chandrababu Naidu has also suggested that relief be provided to merchants engaging in digital transactions by not levying any retrospective taxes on them. According to the presentation made to Prime Minister Narendra Modi, the committee has suggested a ceiling on cash usage in all types of large sized transactions. Further, to encourage the expansion and acceptance of connectivity and electronic infrastructure the committee has recommended the Ministry of Electronics and Information Technology to provide a subsidy of up to Rs 1,000 for smartphones for small merchants and those outside the income tax bracket. A 50 per cent subsidy has also been suggested for biometric sensors such as fingerprint readers and iris scanners. While addressing reporters on Tuesday, Naidu said that there was a huge opportunity in India to promote digital transactions because non-cash payments by non-banks per capita per annum is 11 in the country, compared with 26 in China, 728 in Singapore, 355 in the UK, 142 in Brazil, 70 in South Africa and 32 in Mexico. Similarly, the report highlights that the number of non-cash pay points per million people are 1,080 in India, against 31,096 in Singapore, 30,078 in the UK, 25,241 in Brazil, 7,267 in South Africa, 7,189 in Mexico and 16,602 in China. Interestingly, most of the recommendations put forth by the panel of chief ministers headed by Andhra Pradesh CM N Chandrababu Naidu, which was constituted in November after the government announced discontinuation of high currency denomination notes, are in line with the terms of reference of another committee on digital payments chaired by former finance secretary Ratan Watal. Moreover, some of the suggestions — such as creation of a fund from savings generated through cashless transactions for incentivising bank acceptance infrastructure creation in semi-urban and rural areas – have also figured in the report submitted by the Ratan Watal-led committee. Both committees have submitted suggestions on overlapping issues such as ways for leveraging Aadhaar for authentication of digital transactions, various measures to encourage digital payments through means such as tax rebates, incentives, etc. Apart from the CMs, the panel also included special invitees such as Niti Aayog CEO Amitabh Kant, former chairman of the Unique Identification Authority of India Nandan Nilekani, Boston Consulting Group chairman Janmejaya Sinha, netCORE managing director Rajesh Jain, iSPIRIT co-founder Sharad Sharma and IIM (Ahmedabad) Professor (Finance) Jayant Varma.

Source: Indian Express

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 ‘US Pulling Out from Trans-Pacific Trade Agreement Won’t Hurt India’

The withdrawal of the US from the Trans-Pacific Partnership (TPP) trade agreement will not directly affect India and most experts view it as a development that will ease pressure on the country to become a part of big trade blocs. The government said it is watching the situation. “We can only observe what is going on... since India is not a part of it,” commerce and industry minister Nirmala Sitharaman said on the sidelines of a Confederation of Indian Industry event on services on Tuesday. US President Donald Trump pulled out of the TPP through a presidential memorandum on Monday. The US had been looking to rewrite trade rules through the TPP and there was considerable pressure on India to look at its own regional trade grouping, the 16-member Regional Comprehensive Economic Partnership (RCEP). The pressure was high on India since the two trade blocs have seven common members including Australia, Japan, Malaysia, Singapore and Vietnam. There was also a sense that the emphasis was shifting TPP gave a sense that emphasis was shifting away from the WTO to trade blocs The rule says only fabrics produced from yarn by a TPP country can qualify for duty-free status away from the World Trade Organization to bilateral arrangements and trade blocs. “There is some sense of relief because it will put a pause on some standards that were being set in the TPP on issues such as intellectual property. However, the threat of such standards is not gone. We also have to keep an eye on China because the picture of global trade would change if it takes the reins of TPP,” said Biswajit Dhar, professor at Jawaharlal Nehru University. The move is also a breather for textile exports, which were at risk because of the TPP’s Yarn Forward Rule. The rule mandates that only fabrics produced from yarn made by a TPP country can qualify for dutyfree status. “It is a good development for the country because India’s exports of intermediate goods to TPP countries might have got hit in case norms like the Yarn Forward Rule had come into place,” said Ajay Sahai, director general of the Federation of Indian Export Organisations. India will, however, need to keep an eye on the situation. “Instead of TPP, the US might sign individual agreements with these countries. The TPP doesn’t impact us much. However, we must be wary of some TPP provisions sneaking into the WTO,” said Abhijit Das, head of the Centre for WTO Studies at the Indian Institute of Foreign Trade in New Delhi.

Source: Economic Times

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Trump for the Asian Century

It took two World Wars for the sun to finally set on the British Empire and Pax Americana to entrench itself. It will take just one Trump presidency to herald its successor, the more subtly named Asian Century. People tend to get more exerted over Donald Trump’s economic agenda than over his statements on geopolitics, after, of course, passions are expended on his politics of race and gender, whose flaws are self-evident. But Trumpian economics is likely to prove unsustainable and, therefore, short-lived. Take the policy of immediate concern to India, the new US president’s intent to clamp down on H1B visas for Indian techies, so as to force companies in the US to hire more American workers. This plan will not work. Unemployment rate in the US technology sector is something like 2%. There is a severe shortage of engineers, pushing up their salaries.

America for Americans

There are two reasons for such shortage. The proximate one is that not enough college-going Americans opt for Science-Technology-Engineering-Maths (STEM) courses. There is another, more fundamental problem. Not enough Americans are going to college, because there are not enough college-age Americans. Nor are there enough collegeage Germans or Britons or Frenchmen or even Chinamen. India will account for some 136 million, fully one quarter, of the addition to the global workforce in the current decade. China will add less than a fifth of India’s contribution. (Based on these numbers, Morgan Stanley’s Chetan Ahya forecast in 2010 that India’s growth rate would overtake China’s by 2015.) The largest number of young people taking an engineering course will be from Indian. After that, it would be the turn of Africans. This is the simple reality of the world’s demographics. Trump cannot change that. Before artificial intelligence develops to a level that can dispense with the average engineer, the world cannot dispense with Indian engineers. What visa regime these engineers work under is a matter of detail. What about those trade wars Trump threatens? Ignorance is bliss on the campaign trail, but unworkable in the White House. As much as 40% of the value of those nasty Mexican exports to the US comes from inputs produced in the US, by American workers. If those exports are halted, the US economy would lose those jobs.

What about the promised trade war against China? Cheap imports from China account for more than 50% of the consumption basket of poor and less well-off Americans. If these imports are made more expensive through penal tariffs, the standard of living of millions of Trump supporters would take a nosedive. Prices would rise, as would wages, and, eventually, interest rates. One thing guaranteed not to rise would be presidential popularity. No, it is not his economics that matters, but his isolationist streak. America First means, in Trumpian Lexicography, that Americans should spend on America’s defence rather than on protecting other countries. Hence his sentiment that Japan and South Korea should fend for themselves rather than live under an expensive American protective umbrella. Nato, says Trump, is a relic from the Cold War past that does not take into account the emergence of such a likeable, like-minded leader like Vladimir Putin in Russia. Not all members of Trump’s cabinet share this isolationist streak. But Trump should be expected to make dissenting appointees fall in line, rather than the other way around.

Leaves Asia to China

Trump has promised a spending spree on American infrastructure, to create more American jobs. This would matter more to his supporters than the money spent on American bases in South Korea or Japan. China is in the process of beefing up its defence capability. The size of the Chinese economy today, at a little over $10 trillion, is the size of the US economy in 2000, when it was the world’s undisputed sole superpower. Some might carp that China is far behind the US in terms of per-capita income. When it comes to projecting power, absolute income matters. A ti- ny economy might have a high percapita income but its entire GDP might not be sufficient to buy a modern aircraft carrier. China has just shown off its first aircraft carrier. It is building a few more. It is building a new silk route across Asia to Europe, investing huge amounts of money that buys influence and shifts loyalties. If the US scales down its international engagement in the name of America First, China will move in to fill the space vacated. It will become stronger, as would its client states, including one it cultivates to our west. In response to perceived Chinese ascendance, Japan, South Korea, Vietnam, Indonesia and India would all scramble to beef up their security. Abe would likely win support for his mission to junk Japan’s pacifist constitution. American and European firms would lap up hefty Asian defence orders. Thus would Trump catalyse the Asian century.

Source: Economic Times

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Move to revive and promote fading heritage textile crafts

The world renowned fashion designer from Ahmedabad, Asif Shaikh, is on a mission to revive and promote the fading heritage textile craft s. Textile heritage is part of culture and if lost, it will lose an important aspect of the culture. The textile crafts can only be kept alive if artisans get their due recognition for which Shaikh founded Crafts+Design+Society (CDS) recently registered as a company known as CDS Art Foundation. CDS Art Foundation will facilitate collaboration between textile artisans and fashion designers. The artisans and designers will not only co-create and innovate but also create contemporary couture with traditional textile crafts such as ajrak, bandhani, pashmina, patola, batik, ikat and kalamkari, among several others. Their aim is not just to empower artisans, but also to encourage the younger generation in artisan families to learn and continue evolving these heritage crafts. This can only be achieved when craftsmen not only get recognition, but also opportunities to create, innovate and sustain the art, said Asif. CDS Art Foundation aims to educate textile craftsmen on aspects such as innovation and experimentation which they don't usually take up due to limited means. Instead of giving the artisans a livelihood, they aim to enable them to innovate and create a market for their craft. The goal is to make India's hand-crafted textiles as inspiring as any global brand. This will inspire the younger generation in artisan families to preserve their generations-old textile craftsmanship, said Gauri Wagenaar, committee member, CDS Arts Foundation and an art historian. To give these artisans respect and recognition, CDS curated a fashion show, 'Walking Hand-in-Hand', which was held at the National Institute of Design (NID) in Ahmedabad last year. The collection shown, a line of garments, was co-created by artisans and designers in a particular craft, who also walked the ramp and explained their craft. Part of the collection was also showcased at Lakme Fashion Week in Mumbai last March. 'Walking Hand-in-Hand' will be held again this year as part of Archiprix 2017 at Cept University on February 9. The couture presented at the show will comprise textile crafts such as bani thani paintings from Rajasthan, bandhani and Bhujodi from Bhuj, ajrakh from Kutch, batik from Mundra, Kashmiri weaves and ikat from Telangana and Maheshwari from Madhya Pradesh, Banarasi weaves, among others. Before each collection, the craft will be explained in brief with details of its origin, so people know what it is about. Fabrics are an integral part of architecture and therefore, Archiprix 2017 will be a good platform to showcase traditional Indian textile crafts before world renowned architects, said Asif. After showcasing their craft at Walking Hand-in-Hand 2016, two artisans from Kutch got an opportunity to do so on a global platform. Abdul Jabbar Mohammad Khatri, a 9th generation artisan of Ajrak block printing art from Dhamadka in Anjar taluka of Kutch, conducted a workshop at Nottingham Trent University last year. Many people approached him after the shows at NID and Lakme Fashion Week in Mumbai. He was invited by Nottingham Trent University and British Academy to conduct a three-day workshop on Ajrak. They also organized an exhibition where his collection was showcased, said Jabbar who began learning the art from the age of eight. Another textile craftsman, Abdul Jabbar Mohammad Khatri, specializing in bandhani - a tie-and-dye craft - showcased his collection at the Paris Fashion Week soon after doing so in the city. Walking Hand-in-Hand was the first opportunity which gave credit to the artisans who have always been backstage.

Source: Yarns and fibres

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Global Crude oil price of Indian Basket was US$ 54.34 per bbl on 24.01.2017

The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 54.34 per barrel (bbl) on 24.01.2017. This was higher than the price of US$ 53.92 per bbl on previous publishing day of 23.01.2017.

In rupee terms, the price of Indian Basket increased to Rs. 3703.43 per bbl on 24.01.2017 as compared to Rs. 3671.16 per bbl on 23.01.2017. Rupee closed weaker at Rs. 68.16 per US$ on 24.01.2017 as compared to Rs. 68.08 per US$ on 23.01.2017. The table below gives details in this regard:

Particulars   

Unit

Price on January 24, 2017 (Previous trading day i.e. 23.01.2017)                                                                  

Pricing Fortnight for 16.01.2017

(Dec 29, 2016 to Jun 11, 2016)

Crude Oil (Indian Basket)

($/bbl)

                  54.34              (53.92)        

54.24

(Rs/bbl

                 3703.43       (3671.16)       

3691.57

Exchange Rate

  (Rs/$)

                  68.16              (68.08)

   68.06

 

Source: PIB

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Job creation key to reviving consumption

This Budget will be a crucial one to get the Indian economy on a faster growth track. We are expecting a growth-oriented Budget with various stimuli to revive consumer confidence.  The need of the hour is to lift more people out of poverty, improve the living standards of millions of Indians, in both rural and urban areas, and enable more Indians to live economically empowered lives.  Millions of consumers are increasingly aspiring to consume affordable and quality products. Growth has, however, recently been dampened due to insufficient job creation and tepid growth in disposal income. We hope that this Budget will enable concrete measures to spur growth in jobs, increase disposable income and help support the revival of rural and urban consumption. We look forward to the government accelerating its pro-growth, pro-reform agenda.  Proactive reforms to stimulate demand, by increasing the money in the hands of the emerging middle-class and rural India, will help bring FMCG growth back on track.  Focused efforts are needed to improve agricultural productivity and better target subsidies to put more money in the hands of farmers. Accelerating rural infrastructure projects will also lead to more productive jobs being created in rural India.  The government should also take concrete efforts to accelerate job creation, particularly non-farming jobs in areas such as manufacturing and construction. Through improving the ease of doing business, making labour markets more flexible and speeding up infrastructure projects, the government can help support job creation.

Source: Business Line

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After long, cotton close to Rs 6000/quintal

NAGPUR: The suicide-prone cotton growers of the region could look forward to 'acchhe din' this year. Raw cotton prices ruled around Rs 5700 a quintal on Monday. Experts do not rule out the prevailing uptrend continuing and rates touching Rs6000 soon. If that happens, it will be a five-year high providing much needed relief to the ever-distressed farmer of Vidarbha. The government-fixed minimum support prize is Rs4160. Farmers burned their fingers last year having sold the produce in a hurry at prices of Rs4000/quintal. Traders ramped up rates to around Rs5000 by the end of last season. Wiser now, farmers are playing the waiting game. So even as Sankranti, when arrivals in market are at peak, has passed only around 95 lakh quintals have come to the market. As per figures floated by Cotton Corporation of India (CCI) and Cotton Association which track availability, this year the yield is bumper and certain to be around 450 lakh quintal. So with more than 350 lakh quintal of crop still with farmers and demonetization having slowed down the business in most of November and December, things are getting to normal now. Traders from Gujarat have descended in large numbers in Vidarbha and are buying at farmer's doorstep. Starting from Rs5000, rates have firmed up to Rs5700 a quintal. "The demand is high this time from Bangladesh and Pakistan that have developed into large textile, garment markets for the world. Also, rates of cottonseed and cake used as cattle feed have gone up benefiting the entire business," explained N P Hirani, chairman of the Maharashtra Cotton Growers Cooperative Marketing Federation. "Indeed the demand is high and sentiment firm in open market," confirmed Kishore Tiwari, chairman of the task force to address farm distress in 14 cotton-growing districts of Maharashtra. "CCI has now opened procurement centres and is paying Rs5400 a quintal in race with private traders who have cornered all supplies so far," said Tiwari. "At Rs6000 a quintal, cotton growers can make some money. Anything less than that is a losing proposition," said Hirani pitching in for farmers. "In fact, like Gujarat, which pays a bonus amount over and above the MSP, Maharashtra should also chip in to protect its farmers," he said. For years, the federation ruled the roost in state but now their procurement centres are deserted as farmers prefer open market where private traders offer much more than the MSP at which federation purchases.

 

Source: Times of India

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Pakistan: Textile raw material imports allowed duty exemptions

The revenue authority has waived Customs duty and one percent regulatory duty on the import of these raw materials. The Federal Board of Revenue on Tuesday issued two different notifications to allow the exemption on goods imported under 13 different HS Codes. The raw materials included different categories of cotton and artificial staple fibre. The exemption has been granted to boost textile exports under the recently announced export package by the prime minister. The decision will come into effect from January 16, 2017 to June 30, 2018. A day ago, the Federal Board of Revenue has issued similar notification to provide incentives to the textile sector. The Federal Board of Revenue had announced zero rated sales tax on the import of machinery other than the locally-manufactured ones. It also said that only those textile units can avail of this facility, which are registered with the Ministry of Textile Industry. The sales tax incentive is also available to the textile industry on the import of raw cotton and further supply to the spinning industry.

Source: The News International

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Vietnam Textile Factories Hum at Full Capacity Despite TPP Snub

Vietnamese clothing maker NhaBe Garment Corp. had a lot riding on the Trans-Pacific Partnership. The supplier to brands such as Calvin Klein, Michael Kors and Kenneth Cole  While TPP’s demise takes some of the shine off Vietnam, the country’s young and low-cost workforce are magnets for international investors. has seen its exports more than doubled since 2011 to $729 million last year -- and it increased its factories two-fold to 35, betting on a big drop in tariffs from Vietnam’s membership in the 12-nation trade pact. With a pen stroke, President Donald Trump killed the ambitious trade agreement, a deal that promised to deliver an estimated 8 percent boost to Vietnam’s gross domestic product by 2030, according to the World Bank. Yet that hasn’t dented enthusiasm among multinationals for the communist country, which was on track to be the top exporter of goods to the U.S. last year among the Association of Southeast Asian Nations. “We have filled all the factories,” said NhaBe managing director Michael Laskau in charge of order, design and manufacturing. “I don’t expect our customers to leave us.” Trump’s incendiary trade rhetoric directed at China and his threat to impose 45 percent tariffs on Made-in-China products remains a powerful incentive for companies to shift manufacturing to other countries, with Vietnam emerging as a strong contender.  “Vietnam will continue to attract foreign direct investment in labor intensive firms as well as those that want to capture the burgeoning domestic market,” said Trinh Nguyen, a senior economist at Natixis SA in Hong Kong. The country has been enjoying a foreign investor-led economic boom for years as it transformed from mainly an exporter of agricultural commodities, such as rice and coffee, to a Southeast Asian manufacturing hub. Tainan Spinning Co., a textile company based in Taiwan that employs 4,500 workers in Vietnam, said in an e-mailed statement that the demise of TPP won’t affect its plans there. “Given the company’s strength and commitment, Tainan Spinning is considering further expansion in Vietnam in the second half this year,” it said. China Bashing Few China alternatives can match Vietnam’s low wages that are about a third of its northern neighbor as well as good access to ports, said Joseph Incalcaterra, Asia economist with HSBC Holdings Plc in Hong Kong. “Vietnam still looks quite good,” he said. Companies that may need to look for China alternatives include Yue Yuen Industrial Holdings, a major supplier of shoes to brands including Adidas AG and Nike Inc., according to Bloomberg Intelligence analyst Catherine Lim. Yue Yuen and textile maker Shenzhou International Group Holdings “may shift production to factories in countries such as Vietnam and Indonesia to mitigate the impact on customers” of U.S. penalties against Chinese imports, Lim wrote in a Dec. 14 report. Yue Yuen relies on Vietnam for more than 40 percent of its production, according to a spokeswoman, thanks to its low salary costs, local government support and a skilled workforce. “We don’t expect any material impact from TPP on our decision of Vietnam production line,” the spokeswoman said. There’s no question that TPP would have been a big win for Vietnam. Vietnam’s exportsto the U.S. climbed 15 percent to $38.5 billion last year, according to Vietnam Customs. Textiles and garments account for almost 19 percent of Vietnam’s exports. The TPP would have eliminated the 17 percent tariff on U.S. imports of garments from Vietnam, Nguyen Xuan Huy, an analyst with CIMB Securities Vietnam, wrote in a report published Monday. The TPP would have given Vietnam-based garment makers “a major advantage in exporting their products to the U.S.,” he wrote. Without the trade deal, “that advantage has evaporated.” Also, as Nguyen with Natixis pointed out, “Vietnam still does not have a free trade agreement with the US -- a very important trade partner and the largest economy in the world.” TPP would have reduced tariffs in Vietnam’s key footwear and garment industries. U.S. companies in Vietnam were disappointed by Trump’s move. “The President’s action to withdraw from the TPP is bad news for American and Vietnamese companies, investors, workers, farmers and consumers,” Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi, said in an e-mailed statement. FDI Boom Still, there are signs that Vietnam has already made the transition to the post-TPP era. Last year, despite the announcements by Trump and Democratic rivals Hillary Clinton and Bernie Sanders against the trade deal, Vietnam continued to attract foreign direct investment in record numbers. As part of the TPP negotiations, Vietnam’s government agreed to accelerate reforms to state-owned enterprises. While the TPP is unlikely to proceed without the U.S., the government isn’t going to retreat from those investor-friendly reforms, according to Vu Tu Thanh, chief Vietnam representative of the U.S.-Asean Business Council. That should help Vietnam and other Southeast Asian countries avoid suffering from a post-TPP investment letdown, he said. “I don’t think investment in the U.S. will come at the expense of Asean,” he said. “There is enough money out there sloshing around.” hit a record last year, growing 9 percent to an estimated $15.8 billion. Manufacturing and processing accounted for the bulk of pledged foreign investment, led by two Korean projects: a $1.5 billion investment by LG Display Co. and a $550 million investment by LG Innotek Co.

Source: Bloomberg

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Pakistan: Textile Exports Year End

With the export package announced, one may hope that the latter half of fiscal 17 brings some improvement. For now, the numbers for December still spell out the same story; as of the calendar year ended, textile exports are down 4.3 percent year-on-year (down 1.2% month-on-month). As usual, all basic items (raw cotton, yarn, and cloth) registered a decline in dollar and quantity terms, save for yarn, which showed a 5.7 percent increase in quantity exported. At the value-added end of the spectrum (knitwear, bed wear, towels, and readymade garments), all items have encouragingly shown slight improvement in both quantity and dollar terms (save for towels). According to a source at PRGMEA, there has been an increase in demand along with a higher unit price for readymade garments, particularly in the EU. As for knitwear, a source mentioned that lower cotton prices have translated to lower export earnings.Going forward, there's a lot to expect from the industry. For one thing, domestic cotton prices are currently on an uptrend due to higher demand from spinners and exporters. Then again, the abolition of duty on raw cotton imports could counter this. However, Indian cotton rates are currently higher than the domestic cotton prices, so all is well for the time being. In other news, the NTC has imposed an anti-dumping duty on certain fine counts coming in from India. This is in addition to the duty that is already in place for yarn imports since last year. This caused ire among the value-added industry, who are demanding that the duty and sales tax on import of cotton yarn be abolished. Still, the export package has been accepted with open arms by all associations, with APTMA promising positive results within the next six months. However, there are a couple of big issues that remain. Firstly, a large part of the exporters refunds are still pending. Secondly, the high cost of energy is not being addressed.

Source: Business Recorder

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Protests in B'desh shake up apparel brands

At first, the police knocked. Then they tried to kick the door down. Protests over low wages had erupted at dozens of garment factories in Bangladesh, one of the top suppliers of clothing for global brands like H&M and Gap, and the officers had come to question Jahangir Alam, president of a local trade union in Ashulia, a suburb of the capital, Dhaka. They told his wife he would be back within a few hours. That was a month ago. Instead, his wife said, Alam has sat in a jail cell so dark he could not see his own hands. She said they had spoken briefly when she finally tracked him down to a Dhaka court. Alam is one of at least 14 labour activists and workers who have been detained since the unrest began in December, according to arrest records. The demonstrations disrupted work at factories that supply clothing to global fashion companies like Inditex of Spain, owner of the Zara brand, and PVH, which owns the Tommy Hilfiger brand. The police say the unrest has led to the suspension or firing of roughly 1,500 workers, many of whom took part in the protests. The police have accused the activists of inciting vandalism and other crimes, and several factories have pressed charges against many of their workers. But labour rights groups say the government is trying to scare workers into silence by detaining innocent people. They say the detentions, and the looming risk of more arrests, are the biggest setback for workers since the collapse of Rana Plaza, a building that housed garment factories, where more than 1,100 people died in 2013. That tragedy, one of the worst industrial disasters in history, exposed major safety hazards at factories in Bangladesh, which churns out a steady stream of low-cost goods. And it prompted some of the world’s biggest brands to push for better conditions for the workers who make their clothes. By some measures, conditions have improved. But the brands now say the arrests and firings could undermine the progress they have made. In letters to Bangladesh’s prime minister, Sheikh Hasina, and other officials, retailers urged the government to take action to protect workers, including addressing wage issues that had led to the protests. The minimum wage in Bangladesh is about Rs 22 an hour. They stopped short, though, of threatening further action. “Such situations damage the industry’s reputation and confidence levels, which we, together with the government and social partners, are all working so hard to bolster,” wrote Rob Wayss, executive director of the Accord on Fire and Building Safety in Bangladesh. The accord, a coalition of retailers, is dedicated to improving safety for the country’s garment workers. Gap, in a separate letter, said it was troubled by the recent events, and urged officials to ensure that no one was targeted “solely because of any association with a trade union or other group.” The prime minister’s office did not respond to repeated requests for comment. Bangladesh exports billions of dollars’ worth of clothes each year, making it the world’s second-largest exporter of ready-made garments after China. But its factories are efficient for some of the same reasons that they have been deadly: overcrowded buildings, limited oversight and a government that has historically repressed workers’ efforts to organise and fight for better conditions. In the wake of the Rana Plaza collapse, retailers formed two coalitions dedicated to improving the lives of workers: the accord, led by H&M, and the Alliance for Bangladesh Worker Safety, which includes Gap and Wal-Mart. Both groups have created safety standards and mechanisms to enforce them, although the accord, with a legally binding arbitration provision, is largely seen as the stronger of the two. The alliance has no such clause, but it can impose financial penalties and expel members that violate its terms. Both groups point to progress, like the installation of fire doors and regular safety inspections. But as international attention has waned in the years since Rana Plaza, worker rights groups have expressed concern that the gains could be lost. “Now the spotlight is off Bangladesh,” said Richard Appelbaum, a labour and worker rights expert at the University of California, Santa Barbara. “The government is responding more typically as it would have responded several years ago, if it could have.” The police came for Alam at night, said his wife, Jhorna Begum. When he did not return after several days, Begum scraped together about $12 to pay a lawyer who helped track him down to a local jail. The couple saw each other briefly when Alam appeared in court, just long enough for them to shout at each other across a crowded room. With two children at home, Begum said she could not afford to fight his case. She recently returned to work as a machine operator for the Palmal Group, another garment-maker. “We live hand to mouth, waiting for the paycheck at the end of the month,” Begum said, tears in her eyes. “I don’t know when he’ll get out — how am I supposed to run my family without him?” Living in fear While Begum was willing to give her name to a reporter, many garment industry workers are afraid to speak out for fear of reprisals by the government. Labour rights workers suspect that agents of the government or factory owners ransacked a number of union offices after the protests. And the death of Aminul Islam, a labour activist who was found tortured and killed in 2012, is still fresh in many minds. Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association, a trade association that represents factory owners, said factories, too, had come under pressure: Costs have risen 17.5% annually for the past two years, he said, even as global clothing prices have decreased. Rahman added that while global retail brands had called on Bangladeshi factories to improve safety standards and wages, they had resisted paying higher prices to help compensate for the increased costs. He also said that fewer than 1,500 employees had been fired, and that some had returned to work. Both Gap and H&M said that they supported a regular wage review mechanism to ensure stability in the future, and that they were monitoring the situation closely. Labour advocates, though, say the global companies should be doing more, since billion-dollar brands like H&M have a lot of leverage with local factories and the government. A spokesman for H&M, Patrick Shaner, said in an email that the company had no plans to change its sourcing arrangements. Other companies that buy clothes from the factories that are pressing charges, including Abercrombie & Fitch, PVH and American Eagle Outfitters, did not respond to requests for comment. “At a certain point in time you have to wonder just how much the brands and retailers will tolerate,” said Scott Nova, executive director of the Worker Rights Consortium, a labour rights group based in Washington that is among the most active nonprofits working in Bangladesh’s garment industry. “They can tell the factories to drop these charges.”

Source: International New York Times

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Zimbabwe: Cotton Output Set to Surpass Projections

ZIMBABWE'S cotton production is likely to surpass the initial projections amid revelations that some farmers who have not registered under the Government's free inputs programme planted the crop using the seed leftover from the previous season. Last season, the Government disbursed free inputs, but some cotton farmers received the seed way after the planting deadline while others were discouraged by poor rains. While Government distributed about 6 000 tonnes, it is estimated that an additional 2 000 tonnes of seed left from last season might have also been planted, according to Quton executive director Mr Edworks Mhandu. Farmers under the Government's free input programme are expected to produce a minimum 110 000 tonnes this year, according to Cottco, which is administering the programme, an increase from 30 000 tonnes. However, estimates are still provisional and subject to revision. Last week, The Herald Business visited some major cotton growing areas in Mutoko, Bindura, Shamva, Mt Darwin, Muzarabani and Guruve where some farmers expressed concern over inadequate supplies on fertilisers and chemicals. "We are giving farmers inputs enough for 2 hectares but some farmers have planted more than 2 hectares. That extra hectarage is not cover under the programme. "Cottco area manager for Mutoko Mrs Melody Ngonyamo said. "We also have farmers who are not registered. "They now need chemicals and fertilizers. So we are doing the verification first to establish if these farmers are not contracted by other companies. If we can, we will help." Farmers who spoke to this newspaper said the Government should distribute more inputs. "We are very happy with this programme but we are now having shortages of top dressing fertiliser and chemicals," Mutoko farmer Mr Lovermore Bvumbwe said. I planted about three hectares and I am receiving inputs enough for only two hectares." Field assistant officer for Mutoko Mr Ephias Gonogono suggested that there was need for hectarage validation to ensure farmers receive fertilisers enough for the planted crop. "We are giving inputs enough for two hectares but there are some instances where some farmers planted less than a hectare but still get fertiliser for two hectares or where farmers planted three or four hectares or even more but receive top dressing for two hectares. "There is need to conduct a proper validation to establish the actual planted hectarage before distributing fertilisers and chemicals to minimise these shortages," said Mr Gonogono. In an interview, Cottco acting business manager for Zambezi Valley Mr Walter Hokonya said the company was going to make proper verification in view of helping free growers. "We are going to work with the Agriculture and Marketing Authority to establish if they are genuine free growers," he said. In the Zambezi Valley district, Cottco has contracted about 52 000 growers who planted about 73 000 ha. The potential yield is 33 000 tonnes, up from 6 000 tonnes achieved last year. Cottco enjoys about 80 percent of the market, way above competitors such as Grafax, ETG, Alliance and China-Africa. Despite the hiccups, farmers say they expect an abundant harvest this season and have urged Government to provide more inputs next season. "We're hopeful that the harvest will be significantly much better this year," said Mr Morgan Mupamuchena, who planted 6 hectares in Muzarabani and was grower of the year in 2002. Mr Luke Mukamba, who farms in Shamva said the programme had brought relief to thousands of farmers who for years, have been exploited by private cotton merchants. Mrs Rosemary Mukamba of Mutoko said farmers have been encouraged by the support from Government was hopeful that this year's harvest would be bumper. "The crop outlook is fantastic; we have received very good rains and we expect very good yields," he said. Many farmers had previously shunned the sector are now being attracted back. "We happy that Government has finally come to our rescue. "We now need more chemicals to protect the crop from being attacked by diseases to enhance chances of a good yields," Mutoko farmer Mr Tichafa Njenge, 32, said. At some point, cotton was referred to as "white gold" in apparent reference to handsome profits obtained made by the farmers. However, the opening up of the cotton sector to new players was the death knell for Zimbabwean cotton. From being one of global cotton's top quality producer the sector had virtually collapsed. The success of cotton in Zimbabwe was built around the Cottco inputs credit scheme which started in 1992 and ensured that farmers received adequate funding and quality incentives.

Source: All Africa.com

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How one textile firm survived Chinese Competition?

Competition from China decimated South African textiles but one firm has found a way to fight back. By specializing in high performance fabrics, Gelvenor Textiles survived a brutal industry shakeout and built a business that now exports to 27 countries around the world... including China. "China hurt our textile industry but we succeeded," said Gelvenor CEO Dicky Coetzee. South Africa's textile industry employed more than 200,000 people in 2001. That number has since fallen to 80,000. Gelvenor has thrived where others failed by choosing to compete with global textile giants on quality rather than price, innovating constantly to develop existing fabrics. "We use the AAPL, Tech30) Apple (model -- they didn't invest the cellphone but they mastered its use and that's what we do when we innovate," said Coetzee.  Gelvenor is based near Durban and employs 280 people. The company recently patented what it calls "revolutionary" fabric used to run conveyor belts in the mining sector. It hopes to secure local and international clients. Gelvenor has had most success in the field of aeronautical fabrics -- used to make parachutes and hot air balloons -- ballistic textiles and fire resistant materials. It was the first company in the world to manufacture low bulk, low volume parachutes and the first to use microfiber parachute yarns. The parachute fabric is "thinner, lighter and stronger," which appeals to sports enthusiasts and the military, Coetzee said.  Gelvenor's parachute material is popular with sports enthusiasts and military customers. Gelvenor, based in Hammarsdale near Durban, began life in 1965 manufacturing synthetic fabrics. It now employs 280 people with annual sales of $28 million -- that's up 50% in five years, according to Coetzee. Its biggest markets are Russia, the United States, Israel, Australia and China. The Middle East was also important but demand collapsed in tandem with oil prices since 2014. U.S.-based Performance Designs was the biggest buyer of Gelvenor parachute fabric in 2016. The South African firm also supplies Russia's space program.

Source: CNN News

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Leading Thai textile producer orders Brückner stenter

Nan Yang Textile Company, a leading textile group in Thailand and one of the largest vertically integrated apparel companies in Asia, has ordered a Brückner stenter for the company’s heat-setting operations. Some of the features of the Brückner Power-Frame stenter include the high drying performance, in combination with a homogeneous air flow and temperature distribution, achieved due to the alternatingly arranged thermos-zones and the split-flow design with separately adjustable upper and lower air. Reproducible finishing results and the robust design ensuring a long service life of the machines are further strong advantages of the stenter, the company reports.  A family-owned machinery producer with nearly 70 years of experience, the Brückner group, with head office and production site located in Germany, is known as technologically leading producer of high-tech lines for the dry finishing of knitted and woven fabrics, as well as of technical textiles, nonwovens and floor coverings. Nan Yang Nan Yang is a manufacturer and marketer of the readymade knitted garments, knitted fabrics and cotton yarn. The garment division has modern machines to ensure the bulk production of T-shirts, polo shirts, night shirts, pyjamas, leggings, shorts, sportswear and two piece sets made of cotton and cotton blends with elastane or viscose. The company produces yarn-dyed stripes and prints. Clients, among others, include Nike, Uniqlo, Lotus, Under Armour, and adidas. Nan Yang produces 20,000 metric tonnes of yarn per year. Its 425 circular knitting machines produce 20,000 metric tonnes of fabrics, and the garmenting facilities in Thailand and Laos produce 31 million pieces of ready-made knitted apparel each year. The company sets up a new garment unit in Vietnam with a capacity to produce 18 million pieces per year which will start operations in 2017. The company has already installed machinery imported from Germany, Japan, US, Italy, Taiwan, Switzerland, and many other European countries to ensure a fast and efficient production, reduction of costs, optimum equipment utilisation and reduced manpower.

Source : Knitting Industry

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Distinctive product zones return to Intertextile Shanghai Apparel

The distinctive product zones return to Intertextile Shanghai Apparel Fabrics – Spring Edition 2017, which will run from March 15-17, 2017 in Shanghai. These zones include, All About Sustainability, Functional Lab, Premium Wool Zone and Verve for Design, all in hall 5.2, while Accessories Vision and Beyond Denim zones are in halls 8.1 and 6.2, respectively. Hohenstein Institute, Intertek, Testex and SGS are among those returning to the Educational Zone of All About Sustainability, which will also feature an Ecoboutique display area showcasing eco-friendly garments and a Forum Space for presentations on the latest products, services and market information. Around 300 domestic and overseas functional fabrics suppliers will feature in the Functional Lab Zone and will feature two pavilions hosted by the Gyeongbuk Natural Color Industry Institute and Dyetec, both from South Korea. The Premium Wool Zone will see wool and cashmere fabrics exhibitors from Peru and the UK, like Aris Industrial, Beijing Vitality Textiles, Harrisons of Edinburgh, Huddersfield Fine Worsteds, Loa Hai Shing, Merino Brothers and Scabal. The Beyond Denim Zone will have around 100 exhibitors from China and abroad, with products including denim yarn, as well as stretch, embroidered, jacquard and knit denim fabrics on offer.

Source: Fibre2fashion

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First textile polyethylene terephthalate plant to be set up in Russia

Russia to set up its first polyethylene terephthalate complex producing textile in the town of Vichug located in the Ivanov region. A total amount of investments in the project amounts to approximately 25 billion rubles ($419 million). At present, preparatory procedures are underway, while construction of the complex itself is planned to start in summer. Pavel Konkov, Governor of the Ivanov region said that the modern integrated plant will be capable to release almost 200,000 tons of synthetic fiber and yarn per year, The enterprise is scheduled to be launched in the year 2020. The textile grade PET production plant will become an "anchor" project - with the production volume of up to 200 thousand tons of polyester fiber and PET-chips per year. The Ivanovo region is a part of the Central Federal District of Russia with population exceeding 1 million. Mr. Konkov, the governor of the Ivanovo region said that in the future it will provide the creation of a complex of new textile plants, specializing in the production of innovative import substitution products for special and technical purposes with the use of polyester fibers and yarns. The idea to establish its own production of synthetic fibers was born in the region even before the import substitution has become a common trend. However, during the implementation some problems were revealed - the project turned out to be very capital-intensive, while the dependence on imports has not been considered a serious problem. The is no production of synthetic fibers in Russia so far, although the production of the man-made fabrics is actively developing in the world. However, when the policy of import substitution has been taken, the construction of the plant was not only relevant for a given region, but also for the domestic light industry. This is a modern production facility in Russia, which is necessary for the industry. When the plant in Ivanovo region reaches its full capacity, it will cover all the needs of Russian producers of raw materials.

Source: Yarns and fibres

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