COIMBATORE: Textile industry sources termed the 5 per cent GST rate on cotton textiles as a progressive decision and one that would give impetus for the growth and development of the entire textile value chain. Hailing the decision, Texprocil Chairman Ujwal Lahoti thanked the powers that be and the Council for accepting the suggestion put forth by the industry and keeping the rates low. "The low rate will not only ensure compliance but encourage farmers to grow more cotton, will not cast any additional burden on the sector and above all ensure that India regains its competitiveness in the world market". Having said that he requested the government to announce drawback rates so as to take into account the unrebated duties under GST and continue the Rebate of State Levies (ROSL) scheme for made-ups and extension of the scheme to fabrics and yarn as well. He reiterated the Council's demand for speedy refund of Input Tax Credits on exports so exporters' funds did not get blocked. The Southern India Mills' Association Chairman M Senthilkumar said as the textile sector has been under the optional route since 2004 and fabrics under the zero VAT rate, 5 per cent GST would bring substantial revenue and ensure tax compliance as well. The 5 per cent GST rate on cotton fibre would benefit 20 million cotton farmers, while the same rate on readymade garments below Rs 1,000 would benefit the common man. "We hope that textile job works would be exempted from service tax considering that the units that operate in the powerloom, knitting, processing and garmenting space are predominantly decentralised and micro and small enterprises in nature," he said and added that the 18 per cent GST on man-made fibre and synthetic yarn would have an inverted duty structure problem as the fabric would attract only 5 per cent GST. A Sakthivel, Regional Chairman, FIEO Southern Region, said the lower GST rates across products would go a long way in promoting 'Make in India'. Further, the simplified procedure for job works by allowing movement of goods by challan would help develop the supporting ecosystem, which is much needed for the garment industry’s competitiveness. The focus given to the domestic textile industry would give a push to exports. "We will be able to achieve $230 billion by 2020 by way of exporting more value-added products," Sakthivel said.
Source: Business Line
Coimbatore: The local textile sector The Southern India Mills' Association (Sima) said Union textiles minister Smriti Irani and finance minister Arun Jaitley had kept in mind the issues prevailing in the textile sector while fixing the tax rate under GST. Chairman of the association, M Senthilkumar, said, "The textile industry has been under the optional route since 2004 and the fabrics have been under zero VAT rate. The 5% GST would bring substantial revenue apart from widely broad-basing the tax net across the textile value chain and ensuring compliance. The 5% GST on garments below Rs 1,000 would benefit the common man." seem confused about the tax rates for fabric and garments under the goods and services tax bill. While industry associations welcome the new figures, entrepreneurs say there will be opposition from traders, as the proposed tax rate is more compared to the existing rate. On the proposed tax rate on cotton, Senthilkumar said 5% GST would help sustain the competitiveness among cotton farmers. "The 5% GST rate on cotton fibre would sustain the competitiveness of over 20 million cotton farmers as the rate across the value chain would enable the cotton industry to remain globally competitive, achieve substantial growth rate and increase cotton fibre consumption, thereby increasing the earnings of farmers." Besides, Sima hopes that the textile job work will be exempted from service tax, a factor essential to benefit the decentralised micro, small and medium enterprises comprising powerloom, knitting, processing and garmenting sector. While associations have predominantly welcomed the tax rate, yarn merchants seem to have apprehensions over it. Gopal Maheshwary, a yarn merchant from the city, feels that the proposed rate will face opposition from loom centres in Maharashtra, where the tax is 2%. "The tax is 250 times the present rate. And yarn is not traded in small quantities that the impact will be ignorable. Since the consignments are huge, it will lead to a sharp increase in the prices," he told TOI. Demonetisation has done enough damage to the yarn business and the GST rate will make things worse in the sector, Gopal Maheshwary said. "Yarn sales have dropped since demonetisation. Businesses are yet to get back on track and the GST will further contribute to the dullness in the sector," he added.
Source: The Times of India
New Delhi: Textiles products, especially those made from cotton yarn and fabric, are likely to cost more with the government setting a higher rate for them under the GST to be rolled out from July 1. A section of the industry believes differential rates for cotton and synthetic fibre under the new indirect tax regime will lead to interpretational issues. The Goods and Services Tax (GST) Council on Saturday fixed 5 per cent rate on cotton fibre, yarn and fabric, which attract zero duty at present. However, some states levy a value added tax (VAT) on cotton yarn and fabric in the range of 2 to 4 per cent. "The apparel industry was looking forward to a simplified tax regime under GST with an single rate for the entire value chain. The multiplicity of rates announced will lead to interpretational issues. "Cotton value chain was largely under optional duty route. Introduction of 5 per cent tax will lead to increase in production cost," Apparel Export Promotion Council Chairman Ashok G Rajani said. Union Finance Minister Arun Jaitley announced that all natural fibres including cotton, cotton yarn, fabrics and ready-made garments valued below Rs 1,000 have been classified under 5 per cent GST rate. Garments valued above Rs 1,000 will attract 12 per cent tax, while it will be 18 per cent for synthetic or man-made fibres and synthetic yarn, with the fabric irrespective of fibre being classified under 5 per cent GST rate. "As the textile industry has been under the optional route since 2004 and the fabrics have been under zero VAT rate, the 5 per cent GST rate would bring substantial revenue apart from widely broad-basing the tax net across the textile value chain and ensuring compliance," Southern India Mills Association Chairman M Senthilkumar said. Chairman of The Cotton Textiles Export Promotion Council Ujwal Lahoti requested the government to announce drawback rates to take into account the un-rebated duties under GST and continue the rebate on state levies scheme for made ups and also extend it to fabrics and yarn. However, Confederation of Indian Textiles Industry Chairman J Tulasidaran told PTI that the entire textiles value chain will benefit and the inflation in apparel will come down, thereby benefiting the buyers.
Source: PTI
Voluntary compliance and a 5% GST rate on textile products will generate revenues of Rs 11,000 crore. Cotton textiles will be taxed at 5% while man-made yarn will be at 18% under GST. Textiles share of GDP and exports are 6% and 13% respectively. The textile industry has expressed content over the GST rates claiming that it will benefit the entire value chain. Cotton textiles have been placed in the 5% GST bracket while man-made yarn will be taxed at 18%, the GST Council said in its 15th meet on Saturday. Goods and Service Tax rates were announced for six items including – textiles, biscuits, footwear, rough diamonds, gold and apparel by the GST Council headed by Finance Minister, Arun Jaitley. “A 5% GST would generate revenues to the tune of Rs 11,000 crores, a three-fold increase over current revenues from the sector,” a release by Future Retail Group on May 31 said. The report gathered views of textile industry veterans who said, “A low uniform GST rate would also encourage voluntary compliance and get rid of all competitive distortions arising out of the current differential tax regime.” The value chain of the textile industry will benefit from the GST rates with natural yarn taxed at 5%, man-made yarn taxed at 18%, readymade garments at 12% and no tax on jute. “The GST provides a historic opportunity for simplifying the tax structure and promoting fibre neutrality, innovation, technology development and productive efficiency in the sector. It can play a central role in accelerating growth in the domestic market, thereby enabling India to become a significant player in the international markets,” Rakesh Biyani, Joint Managing Director, Future Retail said. Industry experts are of the opinion that the GST rates on textiles are very progressive and will lead to the growth of the entire value chain. “The textile and apparel sector plays a critical role in the Indian economy. Next to food, it is the single largest component of the consumer basket. Its share of GDP and exports are 6% and 13% respectively,” Future Retail report said. Textile sector is the second largest employer after agriculture in India, the report added. Till now the sector has been governed by unorganised and small players who benefit from the exemption of central excise. “The sector is characterised by small and inefficient manufacturing, arising out of the exemption from the central excise for those Rs 1.5 crores of turnover,” Future Retail report said. "We hope that Government will take care of this segment's interest by continuing rebate on state levies and draw back rates," PTI quoted Apparel Export Promotion Council Chairman Ashok G Rajani in a report.
Source: Zee Business
Hyderabad: Handloom products are likely to cost more under GST as the new tax regime results in multiple tax points at several stages of fabric manufacturing and sales, according to representatives from the Telangana handloom and powerloom industry. GST turns out to be a major jolt to the handloom and powerloom sectors, which run on thin margins or mostly with losses, they said. At present, handloom products manufactured by weavers are exempted from tax. Now, tax on cotton yarn, man-made yarn, dying chemicals, manufacturing and sales will attract a higher rate and will impact handloom and powerloom sectors in negative way, according to Adepu Ravindar, honourary president of Sircilla Dyes & Chemicals Merchants’ Association and former chairperson of Sircilla Municipal Corporation. Speaking to The Hans India, Ravindar said: “So far, there was no tax on handloom products. Earlier, the Centre wanted to impose excise duty, but we at all-India level raised voice against it and subsequently, the government withdrew it. Now, GST coming into force and it’ll impact over 35,000 powerlooms in Sircilla and handloom sector. We demand for single tax or no tax on handlooms and powerlooms sectors.” A section of the industry believes differential rates for cotton and synthetic fibre under the new indirect tax regime will lead to interpretational issues. The Goods and Services Tax (GST) Council on Saturday announced that five per cent rate on cotton fibre, yarn and fabric, which attract zero duty at present. Handloom and power loom products are exempted from Central Excise and state VAT. How can the government impose GST on them, questions Ammanabolu Prakash, president of the Telangana Federation of Textiles Associations, which represents 119 associations across the state. “New tax regime is unfortunate for the textile sector and moreover, traders are also not prepared for GST adoption. Coming under the influence of major players in the textile industry, the government imposed GST on small textile traders and handloom sector. Right from yarn to manufacturer, wholesaler and retailer, there would GST on three to four stages. After agriculture, the second largest employment provider is textile industry and it’s an unorganised sector. We demand exemption of GST for the textile sector. For instance, there’re over 100 textiles shops in Siddipet and you can’t find one computer there. How can the government impose online GST regime on them,” says Prakash. The textiles industry says that differential treatment for cotton, silk and synthetic fibre on GST rate is an opportunity lost for a uniform rate for the textile sector. Silk and jute yarns have been exempted, but cotton and natural fibres and all other yarns will be levied a 5 per cent GST. Manmade fibres will, however, attract 18 per cent rate. “But, silk yarn, making of silk saree and sales may attract tax. Apparels with prices over Rs 1,000 will attract 12 per cent and 5 per cent on those below Rs1,000. We need clarity on this. However, man-made or synthetic fibre yarn will attract 18 per cent GST. This is also very high,” adds Ravindar. However, khadi yarn, Gandhi topi, national flag will not attract any tax under the GST regime.
Source: The Hans India
Merchandise export value may have grown just 5% in 2016-17 after two successive years of contraction, but volumes of outbound shipments rose for most goods at a faster pace, showed the data compiled by the commerce ministry. This indicates fluctuations in global commodity prices continue to influence India’s exports value more than any worthwhile slowdown in overseas demand. As many as 19 of the top 30 commodity segments (in which data in both volume and value terms are available) witnessed export volumes either rising at a faster pace or dropping at a slower rate than the shipment value in 2016-17. Similarly, 21 of these 30 commodity segments—including petroleum products, iron and steel, marine products, spices, buffalo meat, aluminium— registered growth in export volumes in 2016-17, against 15 in the previous fiscal. These 30 segments together accounted for 45% of the total exports value (in dollar terms) in the last fiscal. Even in 2015-16, the global commodity price crash was the main driver of a 16% contraction in export value, as export volumes in many cases had increased, showed the data. The commerce ministry has compiled volume data on 99 of the 168 principal commodity segments. Volumes data are not available in all cases as even within a particular segment, commodities are measured by different units and are not strictly comparable. In certain cases, a finished product (hand-crafted gold or diamond jewellery, for instance) has different commodities as inputs. The rise in merchandise export volume mirrored the phenomenon after the global financial crisis, when exports value suffered but volumes remained almost stable (in 2009-10). In good years, though (for instance, 2010-11, when export grew nearly 40% in dollar terms), the rise in export value was driven by a broad-based and an even sharper rise in volumes. Interestingly, export volume of iron and steel products jumped almost 91% to 14.45 million tonnes last fiscal, while growth in value term was around 59% ($8.73 billion). Similarly, despite an almost 4% fall in value, the volumes of buffalo meat exports rose in 2016-17–albeit marginally by 1.2% to 1.31 million tonnes. In 2015-16, too, when commodity prices had plunged, certain items—primarily the value-added ones–such as drug formulations, biologicals, bulk drugs, drug intermediaries, spices, coffee, unmanufactured tobacco managed to beat the global crash in commodity prices, as export value of these products had risen even when volumes shrank (in the range of 1.2-44.8%). Global commodity prices plunged 28% in 2015-16 from a year before, driven by a sharp 40% crash in prices of oil, 20% in industrial metals and 7.5% in gold, according to a report by Yes Bank. Consequently, roughly 55% of the $48-billion fall in India’s exports in the last fiscal was caused by lower petroleum exports. So while the country’s overall exports plunged almost 16% in dollar term and 10% in rupee term, excluding oil, the exports dropped just 8.7% in dollar terms and just 2.1% in rupee terms. Export value of both goods and services (in real term) rose 4.5% in the last fiscal, against a 5.3% drop in 2015-16, showed the latest GDP data.
Source: Financial Express
The government’s move to keep the Goods and Services Tax (GST) rates on various textiles — including cotton fibre — and low-priced garments roughly around the current levels will prevent any flare up in prices, industry executives said on Sunday. But their hope for a single rate for both natural and man-made fibres under the GST regime to correct a historical imbalance in favour of the cotton-based textile structure has been dashed. The GST rates on silk and jute fibres, however, have been kept at zero. Although ready-made garments above Rs 1,000 each will attract a 12% GST, against the current tax incidence of roughly 7% in many states (a 2% excise duty and a 5% value-added tax), the input tax credit facility under the new regime will easily offset any perceived losses due to a higher tax rate. According to Ashok G Rajani, chairman of the Aparrel Export Promotion Council and chief of Midas Touch Exports, the GST rates on garments are reasonable and could lead to some items becoming even cheaper in the new regime. As such, shirts below Rs 1,000, used by most Indians, will attract just a 5% GST rate. While the government has kept the GST rate for cotton fibre at 5%, the same as now (although there is no excise duty on cotton fibre now, states impose a 5% VAT), it didn’t reduce the tax rate for man-made fibre and fixed it at 18%, against the current tax incidence of roughly 17.5%, including both excise duty and VAT. At present, while a 12.5% excise duty is levied on man-made fibres, cotton fibres attract none. The industry has been demanding reduction in the excise duty on man-made fibres, saying such a disparity is preventing domestic synthetic fibre producers from scaling up operations. The huge duty difference has ensured that India’s textile market remains cotton-driven, in a stark contrast with the trend globally, apart from eroding the country’s export competitiveness in the man-made fibre segment. While man-made fibres account for around 60-70% of the world’s total fibre consumption, they make up for just 30-40% of Indian fibre demand (with cotton textiles contributing the rest). According to OP Lohia, chairman of Indo Rama Synthetics, the GST should have one rate for all fibres and this disparity must end. Synthetic fibre is a poor man’s necessity, as cotton fibre is more expensive, he said. The excise duty on man-made fibres, which was as low as 4% in 2009-10, was raised by the previous government. This came as a shocker to synthetic fibre producing companies that had invested much in expanding capacity to cater for growing domestic demand for man-made fibre, Lohia said. Also, as Lohia pointed out, the hike in the excise duty massively dented growth in the synthetic fibre segment — from roughly 10% in 2009-10 to a meagre 0-5% annually in recent years. Confederation of Indian Textile Industry chairman J Thulasidharan hailed the decision to keep most of the textile and garment items at 5%. But he also pointed out that high rates of 18% announced for MMF, fabric and yarn, dying and printing units and embroidery items can lead to an increase in input costs and can adversely impact the entire textile value chain.
Source: Financial Express
With just over three weeks left for the roll-out of the goods and services tax (GST) from July 1, issues related to electronic way (e-way) bill, anti-profiteering guidance and area-based exemption rules, among others, are yet to be addressed. Though the return filing rules have been simplified, experts argue that such changes just ahead of the GST roll-out will only complicate the IT preparedness of the industry and the GST Network (GSTN). The revised return rules have done away with the need to mention invoices along with the product code. Now, only the harmonised system of nomenclature (HSN) code of product needs to be mentioned by the seller. In addition, there will be no need to issue an advance invoice if the final supply is made within the same month. “While we are appreciative of the simplified revised rules for returns, the industry and the GSTN will need to make changes in the software with just 25 days left for the implementation. The government should avoid making any more changes before the roll-out. After three months of implementation, more incremental changes could be considered," said MS Mani, senior director, Deloitte. “There are nine million taxpayers, so for every change, nine million changes will have to be made," he added. Pratik Jain of PwC India said that with the changes in the rules, the GSTN would have to change the formats and would take some time to do the testing. “GSTN testing needs to be expedited now," said Jain. The GST Council, with Finance Minister Arun Jaitley as chairman and state finance ministers as members, has finalised rates for almost all goods and services and simplified transition and return rules. It will meet again on June 11 to take up the unfinished agenda, besides reviewing the rates demanded by the industry. The government is considering relaxing provisions related to e-way bill by enhancing the threshold limit and removing inter-state supplies from its ambit. According to the draft rules, moving goods worth more than Rs 50,000 will require prior online registration of the consignment and securing an e-way bill, to check tax evasion by allowing officials to inspect consignments anytime during the transit. However, the industry is expecting clarity on anti-profiteering rules, area-based exemptions and tax treatment for supply to Jammu & Kashmir ahead of the roll-out. While the finance minister said the anti-profiteering committee will be set up by the GST Council comprising both state and central officials, the industry is looking for guidance will respect to determination of profiteering and the penal provisions. The GST legislation says it will be mandatory for companies to pass on the benefit due to reduction in rate of tax or from input tax credit to the consumer as an anti-profiteering measure. “Before the GST implementation, the industry needs clarity on how it will be monitored, or how profiteering will be seen with respect to a company or products. Clear guidelines are required for that to plan prices under the GST regime," said Jain of PwC. The government is also yet to issue rules for refunds for businesses set up in hilly states and north eastern states that currently enjoy excise exemption. Under the GST, these companies will get exemption by way of refunds. “While the return formats and transition rules will make it possible for most of the industries to plan their transition and the IT companies to release the ERP patches for the GST implementation, there are still issues that require clarity like area-based exemptions and SEZ rules that will only be clear after the next meeting," said Bipin Sapra, partner, EY.
Source: Business Standard
NEW DELHI: Apparel up to Rs 1,000, biscuits and footwear will get cheaper, while gold will get slightly costlier from next month as the Centre and states, excepting West Bengal, resolve to roll out GST from July 1. The GST Council, chaired by Finance Minister Arun Jaitley and comprising state counterparts, today decided to tax packaged and branded food items at 5 per cent, tendu leaves at 18 per cent and bidi at the highest rate of 28 per cent. Unlike cigarettes, there will be no cess on bidi. While biscuits will be taxed at a flat rate of 18 per cent, footwear costing up to Rs 500 will be levied a 5 per cent GST and for those above this would be taxed at 18 per cent. In the textiles category, silk and jute fibre have been exempted, while cotton and natural fibre and all kinds of yarns will be levied a 5 per cent GST. Man-made fibre and yarn will, however, attract a 18 per cent tax rate. All categories of fabric will attract a 5 per cent rate. Man-made apparel up to Rs 1,000 will attract a 5 per cent tax, lower than the existing 7 per cent. Those costing above Rs 1,000, will continue to attract 12 per cent. "Both in the case of footwear and textiles, a major concession has been given," Finance Minister Arun Jaitley said, adding the Council will meet one more time on June 11 to review the preparedness before the July 1 rollout. Currently, biscuits costing less than Rs 100/kg attract an average tax of 20.6 per cent, while those above this price attract 23.11 per cent. "Both have been fitted in the nearest tax slab of 18 per cent," Jaitley said. Footwear costing up to Rs 500 currently attracts 9.5 per cent tax, and in GST it would be taxed at 5 per cent. Rest are taxed between 23.1-29.58 per cent, which in GST regime, would be levied 18 per cent tax. Gold will become slightly costlier as the current incidence is 2 per cent and after "extensive debate" the Council proposed to tax gold and gold jewellery at 3 per cent. Also, input tax credit can be claimed for gold jewellery manufacture. Jaitley said while some states wanted a 2 per cent tax rate, others were in favour of a 5 per cent tax on gold and hence, the Council decided on a "vertical division". Solar panel equipment will be taxed at 5 per cent, he said, adding lottery tax is yet to be decided. When asked about West Bengal Finance Minister demanding a delay in GST rollout, Jaitley said "Others did not express this view" and exuded confidence that the state too would roll out GST from July 1. "We are quite confident of being able to stick to the target date (of July 1)," he said. West Bengal Finance Minister Amit Mitra said the rollout of the Goods and Services Tax from July 1 will have "serious problems" and there is no harm in delaying its implementation by a month. Kerala Finance Minister Thomas Isaac, however, said "Everybody has agreed for July 1 rollout". The Council also agreed to set up a Committee comprising officials from Centre and states to look into the complaints with regard to anti-profiteering clause that seeks to prevent companies from making undue gains post GST rollout, Jaitley said. The final rule with regard to functioning of the Committee will be framed later. In all, the Council at its 15th meeting decided on tax rates on 6 items including rough diamond at 0.25 per cent and placed agriculture equipment at two slabs of 5 per cent and 12 per cent. Also, it approved two rules relating to transition and returns forms. The GST Council also decided to amend the transition rules allowing traders and retailers to make claim of 60 per cent against the CGST or SGST dues where the tax rate exceeds 18 per cent. For tax rate below 18 per cent, it will be retained at 40 per cent. The draft transition law provided that once GST is implemented, a company can claim credit of up to 40 per cent of their Central GST dues for excise duty paid on stock held by businesses prior to the rollout. Several dealers are choosing to wait and watch rather than buy and holding on to inventories and lobbied the government seeking an increase in the credit limit.
Revenue Secretary Hasmukh Adhia said that for transition stock, the government will refund 100 per cent excise duty for goods costing above Rs 25,000, bears a brand name of the manufacturer and are serially numbered like TV, fridge or car chasis.
"On all those items, even if it is coming through the dealer, the manufacturer will give the credit transfer document to the distributor and the distributor will be able to take 100 per cent credit for the big ticket items," Adhia said. With regard to CSD canteens, Jaitley said since current price levels were to be maintained, so the current position where they maintain half the taxation benefit will be maintained. Jaitley said the GST Council will meet again on June 11 and review the rates based on industry representations in case the fitment committee finds that there is a substantial increase from the present burden. It will also take up the rules for e-way bill and accounts and records. Also, the company developing the technology backbone for GST -- GST Network-- made a detailed presentation on the amount of work done and IT preparedness. The GST Council in its previous meeting last month had fixed over 1,200 goods and 500 services in the tax bracket of 5, 12, 18 and 28 per cent. Prices of foodgrains, especially wheat and rice, has been exempt from GST. Currently, some states levy Value Added Tax (VAT) on them. While common-use products like hair oil, soaps and toothpaste as also electricity will cost less from July 1. GST will subsume all major levies including excise, service tax and VAT, unifying 16 different taxes, and make India a single market.
Source: Indian Express
Tax on advances made in course of a business transaction– both for goods and services– and the subsequent compliance requirements under the goods and services tax (GST) regime are giving Corporate India the heebie-jeebies. Tax experts feel the move to tax advances is likely to increase cost of a transaction under the new indirect tax regime and could trigger a change in the way companies do business. Some businesses may even resort to a change in nomenclature of an ‘advance’ to ‘security deposit’ to avoid paying the tax, fear experts. “It seems the GST regime discourages the practice of giving advances," says Harpreet Singh, partner–indirect tax, KPMG India. Tax on advances made is a key departure from the current tax regime. The receiver of an advance would be liable to pay GST, treating the advance as inclusive of the tax, points out Bipin Sapra, tax partner, EY. As part of compliance, the receiver is required to issue a receipt voucher, equivalent to the value of the advance. Accordingly, this would need to be disclosed in the GST network (GSTN). In case the supply is not made for which the advances were received, a refund voucher has to be issued. This too has to be reported in the GSTN. Singh points out that it is important to determine the full value of the taxable supply to which the advance pertains. “Otherwise, the correct tax may not be paid at the time of advance, leading to interest liability and penal consequences," he says. Interestingly, receipt of a security deposit is not treated as a consideration for provision of any supply and accordingly does not attract GST. “It is critical that security deposits should not be mixed with advances, as only advances against a taxable supply are liable to GST and not security deposits," says Singh. Tax experts anticipate that treatment of advances and the compliance requirements under GST regime may discourage businesses to follow the practice of giving advances. “There are substantial compliances involved for advances. Further, the recipient of the supply cannot take credit of the tax paid to the supplier based on the advance receipt voucher. It can be done only on the basis of invoice," says Sapra. Singh’s advice to businesses which have to deal with advances is to put an automatic trigger point in the enterprise resource planning system to highlight that the tax liability is due immediately on receipt of advance, even if the supply has not taken place.
Source: Business Standard
How can the US economy keep creating jobs and still grow so slowly? One explanation can be found in the latest employment data: The sectors adding the most workers are among the less productive. The Labor Department’s monthly survey for May suggests that employers were still in a hiring mood. They added an estimated 138,000 jobs — less than expected but still enough to push down the unemployment rate, which declined slightly to a 16-year low of 4.3 per cent (albeit due to a drop in the number of people actively seeking work — a requirement for being counted as unemployed). In all, non-farm payrolls have expanded by more than 16 million jobs since the end of 2009. Impressive as the employment growth may be, it won’t do as much as it could for the economy unless those workers start producing a lot more goods and services. So will they? To get a sense, I took 14 industry sectors and divided them into three productivity groups, based on a very rough estimate of how much their output per hour increased during the decade through 2016. The results aren’t encouraging. The high-productivity-growth group — which included sectors such as manufacturing and information —saw by far the smallest job gains, only 0.4 per cent in the year through May. It’s still more than a million jobs away from recouping its losses in the last recession. The groups with slow and middling productivity growth — including sectors such as education, hospitality and construction — gained 1.8 per cent and 2.6 per cent, respectively. Employment is also shifting towards sectors with lower levels of output per hour, a phenomenon that should reduce measures of economy-wide productivity growth. The trends are troubling, because producing more for each hour worked is crucial to boosting wages and increasing living standards in the longer run. The shift toward lower-productivity jobs also supports a theory posited by the late economist William Baumol: That as some sectors figure out how to make do with fewer workers, overall employment will inevitably gravitate towards those that can’t or don’t (which also helps explain why costs keep growing in the latter). Manufacturing might ultimately need hardly any workers at all, but we’ll pretty much always need the same number of people to perform a live concert. To be sure, measuring productivity is a tricky business. If the quality of entertainment, health care or houses has increased more than the economic data reflect, workers in those sectors might be a lot more productive than we recognise. Also, past gains might not be the best guide to the future: Driverless cars and trucks, for example, promise to be a game changer in the transportation sector. Still, it’s worth considering what can be done to boost productivity in services. As economist Victoria Bateman has noted, various barriers to trade and to the free flow of labour — such as poorly crafted immigration policies and excessive occupational licensing — stifle the competition needed to catalyse gains. Removing such obstacles might not have an effect on all kinds of jobs, but every bit helps.
Source: Business Standard
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$ 48.53 per barrel (bbl) on 02.06.2017. This was lower than the price of US$ 50.17 per bbl on previous publishing day of 01.06.2017. In rupee terms, the price of Indian Basket decreased to Rs. 3126.48 per bbl on 02.06.2017 as compared to Rs. 3234.72 per bbl on 01.06.2017. Rupee closed stronger at Rs. 64.42 per US$ on 02.06.2017 as compared to Rs. 64.47 per US$ on 01.06.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on June 02, 2017 Previous trading day i.e. 01.06.2017) |
Pricing Fortnight for 01.06.2017 (May 12, 2017 to May 29, 2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
48.53 (50.17) |
51.67 |
|
(Rs/bbl) |
3126.48 (3234.72) |
3331.68 |
|
|
Exchange Rate |
(Rs/$) |
64.42 (64.47) |
64.48 |
Source : PIB
BATHINDA: The state agriculture department and the Punjab Agricultural University (PAU) at Ludhiana are concerned over 1.06 lakh hectares area where cotton crop Vary of pest attack, the farm department has asked its field officers to identify the late-sown areas and to keep extra vigil there. The issue was discussed in the meeting of the inter-state consultative monitoring committee, comprising officials from Punjab, Haryana and Rajasthan. The meeting was held on Saturday at Bathinda. was sown after May 15. Cotton has been sown over 3.82 lakh hectares in Punjab, though the target area was 4 lakh hectares. The fibre crop was sown over 2.76 lakh hectares before May 15, the date recommended by agri experts. Punjab agriculture commissioner Balwinder Singh Sidhu and PAU vice-chancellor (VC) Baldev Singh Dhillon echoed that there was no pest attack on the crop so far and there was no need to panic. PAU has issued an advisory to farmers not to apply sprays on cotton without the recommendations of experts. VC Dhillon said that in two villages of Bathinda district some pests were reported on leaves of cotton crop, but their number was much below the economic threshold level (ETL) - the pest population that is needed to be controlled to ensure no loss to the farmers. He said, "So far there is no fear of pest attack on cotton. However, we are concerned about late sowing of the crop. The officials have been asked to maintain extra vigil on late-sown cotton and keep a watch on ETL of pests. They have also been asked to keep a check in Fazilka area, where cotton has been sown near orchards, making it more prone to insect attack." Sidhu said, "Reports of some packets of spurious cotton seed being sold in markets have also come up. We are keeping a watch that the crop may not get damaged due to such seeds. Agriculture department officials have been asked to be on their toes to ensure smooth growth of crop."
Source: The Times of India
MUMBAI : In a bid to reach more number of Salman Khan fans, Mandana Retail Ventures, which has the licence for the superstar’s Being Human brand of clothing, is moving from the metro markets to 2 & 3 towns with its exclusive and franchise stores. However, the retail company is not planning to lower its prices (average ₹1,500) for the smaller price sensitive markets and is even staying from e-commerce as it does not believe in giving discounts. “The reason for moving to tier-II and tier-III markets is to reach all the fans of Salman Khan. But, we will not have different styles or pricing as the spending power in such places is as good as the metro markets where consumers are equally aspirational,” said Manish Mandhana, Director, Madhana Retail Ventures, during the earnings call. The company has stepped up the royalties for the Being Human brand which it gives the Salman Khan Foundation from 3 per cent to 5.75 per cent for the next three years. Besides smaller markets also comprise the bulk of e-commerce sales due to lack of brick & mortar stores. But since Mandhana Retail wants to stay away from giving discounts, it is not willing to drop prices or even give discounts to retain its premium image in the apparel segment.
Source: Business line
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has criticised the proposed budget for 2017-18, saying it has not fulfilled their ‘justified’ demands. Its President Siddiqur Rahman also told a press conference at the BGMEA Building in Karwan Bazar on Sunday that the budget was not ‘welcoming’ for the RMG industry. Describing the hurdles the apparel industry is facing now, he proposed withdrawing tax at source for the sector for two fiscal years and cutting corporate tax to 10 percent for the next five years. Finance Minister AMA Muhith has proposed to cut corporate tax from 20 percent to 15 percent in the budget for fiscal 2017-18. The tax at source, however, is rising from 0.7 percent to 1 percent. “From what we’ve seen, we can’t say that this budget is well-disposed to the readymade garment industry. But there is still time. Please fulfil our demands within the time so that we can describe it as friendly to the RMG sector,” Siddiqur urged the government. Before Muhith presented the budget on June 1, the BGMEA had also demanded extra 5 percent incentives for BGMEA and BKMEA and adoption of a stable revenue policy to encourage investors. On Sunday, Siddiqur claimed that production cost had risen 18 percent due to the devaluation of euro, Britain’s exit from the European Union, gas crisis, and various other reasons.“That’s why the tax at source needs to be withdrawn for the next two fiscals. We also demand the 20 percent corporate tax be halved," he said. He also said the extra 5 percent incentives for the RMG entrepreneurs were needed to help them enter new markets. According to him, the growth in exports to new markets in clothing sector was 1.21 percent in past 10 months. The growth was 15 to 20 percent last year, he said. The $28 billion RMG sector contributes to around 80 percent of Bangladesh's total export.
Source: bdnews24.com
Exports grew at a solid pace in 2016, rising by 7.2 percent to $7.3 billion, but the number of registered exporting factories fell by 10.4 per cent, while the number of workers declined by 2.9 per cent, compared to 2015. The figures were published in the sixth edition of the International Labour Organisation’s Cambodian garment and footwear sector bulletin. According to the report, there were three main factors behind the discrepancy between strong exports on the one hand, but weaker employment on the other. These factors include a rise in the industry’s productivity, statistical problems with the measurement of employment and factory numbers, and an increase in production in subcontracting factories. ILO country director Maurizio Bussi said: “A rise in employment and production in subcontracting factories could be a concerning development if subcontracting is being used as a way to undercut regulations, including labour law and the minimum wage”. Unlike registered exporting factories, subcontractors are not monitored by the Better Factories Cambodia programme. “The situation should be carefully monitored by stakeholders and relevant agencies of the Royal Government of Cambodia,” Mr Bussi added. The report said garments and footwear are still the country’s most important exports, accounting for 78 percent of total merchandise exports in 2016. “The EU remains the most important market destination for Cambodia’s garment and footwear exports, with the US second,” it said. “The sector’s exports to the EU and US combined accounted for only 65 percent in 2016, down from 72 percent in 2015, with an increasing share going to markets outside the US and EU, notably Japan and Canada.” The report highlighted improvements in the income of workers, despite the overall drop in staff numbers. “The average monthly earnings (including overtime) of Cambodia’s garment and footwear workers increased from $145 in 2014 to $175 in 2015 and to $195 in 2016. Adjusted for inflation, real average monthly wages/earnings were 8 percent higher in 2016 than they were in 2015,” it said. The World Bank in its latest economic outlook on Cambodia said while the country’s economic growth remain strong, growth in garment exports eased, expanding at 8.4 percent (in value terms) year-on-year in 2016, compared with 12.3 percent in 2015. “Rising labour costs, driven in part by the increasing cost of living, US dollar appreciation, and competition from other regional low-wage countries, in particular Myanmar, continue to exert downward pressure on prices of exported garment products,” the World Bank said.
Source: Khmer Times
About 50 million Bangladeshis are no longer living in extreme poverty as a result of the improving economy - Dhaka Tribune Bangladesh’s economy grew by 7.1% in 2016, which is the fastest expansion in 30 years Quartz India recently published an article which claims that Bangladesh is one of the happiest economic stories, and statistically happier than India. Bangladesh’s population of 160 million is as big as France, Germany, and the Netherlands combined. The country is also easily the poorest of the world’s 10 most populous, the Quartz article states. It also states that, according to the Asian Development Bank, Bangladesh’s economy grew by 7.1% in 2016, which is the fastest expansion in 30 years. For the sixth year in a row, GDP growth was greater than 6%. Most analysts expect the run to continue. For instance, the ratings firm Moody’s says the country’s growth is likely to remain “robust.” According to Quartz India, Bangladesh’s rapid growth would not be so exciting if it did not reach the poor. A recent World Bank report found that between 2005 and 2010, average incomes for the poorest 40% of households grew 0.5% faster than for the country as a whole. By comparison, in India the poorest 40% of households did worse than the national average over a similar period. As a result of this inclusive growth, poverty rates have plummeted. In 1991, well over 40% of the population lived in extreme poverty. Today, the World Bank says that less than 14% still does. That is, about 50 million fewer Bangladeshis are in extreme poverty as a result of the improving economy. Given its size and the depth of its poverty, the country’s recent economic boom must rank as one of the world’s happiest economic stories right now, the Quartz article claims. It cites Yale economist Ahmed Mushfiq as saying that Bangladesh’s recent success can be attributed to two major factors: the flourishing ready-made garments industry and the country’s robust NGO sector. In 2015, Bangladesh exported over $26 billion in clothing, second only to China. Clothing exports make up nearly 14% of the GDP and 80% of all exports. Estimates suggest the garment sector grew by more than 10% in 2016. In the article, Ahmed explains that the industry thrives in spite of Bangladesh’s poor infrastructure and difficult regulatory conditions due to an accident of history. Bangladesh was the beneficiary of a textile quota system imposed by the US in the 1970s to protect local companies against competition from the growing South Korean garment industry. To get around the quota, Korean manufacturers set up shop in Bangladesh. The Bangladeshi business community picked up technical expertise from this setup and has since started its own companies. Mushfiq credits Bangladesh’s success in poverty reduction and health to the country’s high-performing NGOs. Historically, the country has had a powerful civil society running much of its education and health services. Mushfiq says the sector acts like a parallel government. Brac, the world’s largest NGO, started in Bangladesh, and claims to have provided over 60 million Bangladeshis with access to toilets. The country’s NGOs are also likely the reason it outperforms India on human development indicators such as gender equality and life expectancy. Of course, not all is well, the Quartz article claims, adding that democracy is under threat as the ruling Awami League party tilts in an increasingly authoritarian direction. A lack of public infrastructure investment holds down growth, and has made Dhaka, the crowded capital of 15 million people, a perennial contender for the title of the world’s least liveable city, the article states. It cites Mushfiq’s biggest concern as a repeat of the Rana Plaza disaster, in which a garment factory outside of Dhaka collapsed in 2013 and killed over 1,100 workers. Worker safety must be a top priority of the government, he says in the article, not just for the sake of saving lives but also to make sure that the industry avoids international boycotts over working conditions, which would devastate the economy.
Source: Dhaka Tribune
The National Labour Council and the Pakistan Institute of Labour Education and Research on Sunday expressed serious concern over grave violation of labour laws by textile manufacturers, especially local brands such as Khaadi, that do not provide safe working conditions to its workers and terminate the labourers when they demand their due rights. The statement came following ongoing protests against the local textile manufacturing brand, Khaadi, which is reported to have removed 32 of its workers before Ramazan after they demanded their basic rights. Despite ongoing protests as well as instructions of the National Industrial Relations Court, the workers have still not been reinstated. In a statement, NLC and Piler leaders Karamat Ali, Latif Nizamani, Habibuddin Junaidi, Shafiq Ghauri, Saeed Baloch and others observed that local textile manufacturers often hire workers through the third-party employment system. The workers, in many cases, are paid less than the official minimum wage amount set for unskilled workers –fixed at Rs15,000 per month by the government. To add to that, the workers are not allowed availing leaves and in case of emergency leaves the wages for the days they could not attend work are deducted. The workers complain that they work for over 12 hours instead of the designated eight hours and are not paid overtime for the extra hours put in. The owners demand more productions per worker when they receive additional orders. The statement further maintained that these textile companies earn millions of rupees from their sales in local markets, especially during Ramazan but do not pay proper payments to their employees. Many textile manufactures also export their products. The working conditions in factories of the textile brands are unsafe as most of the companies often lock doors from the outside during work hours on the pretext of avoiding theft, the labour leaders maintained. Citing the deaths of over 250 workers in the Ali Enterprises fire (Baldia factory), the officials maintained that the high number of casualties occurred because the owners had locked all the exit points from the outside. “The provincial labour department is responsible to ensure safe working conditions and health and safety of workers at workplaces, but the labour inspection system is inadequate as the number of inspectors available with the department is far smaller than the number of industries. This has encouraged manufacturers to violate labour laws.” The labour leaders further stated that the employers and industries’ associations should take measures to ensure safe working conditions for labourers as well as see to it that they are provided their due rights.
Source: The News International
Cotton production can be enhanced to around 0.8 to 1.0 million bales from the existing hardly 0.1 million bales annually, experts said. Cotton Development Board has adopted a five-year project titled "Extensive Cotton Cultivation" considering importance of the sector and its further development. On successful implementation of the project, the cotton production will increase many fold and that will save huge foreign currency. Besides, better quality edible oil and oil cake are manufactured from cotton seeds and cotton stalk is one of the best domestic fuels. As oil cake is highly enriched with protein and fat many people use it in cow fattening farm and fish farming for better outputs. The observations came at a regional workshop titled "Prospect of Cotton Farming in Barind Tract and Extension Strategy" held at the conference hall of Barind Multipurpose Development Authority (BMDA) in Rajshahi metropolis yesterday. Agricultural scientists and researchers at the daylong discussion urged the farmers and others concerned to expand cotton farming in the vast barind tract for boosting up its production to meet up the country's demand. They viewed prospect of boosting cotton production in the drought-prone barind region is bright as its topography and climatic condition suitable for the cash crop. Chairman of BMDA Dr Akram Hossain Chowdhury and Executive Director of CDB Dr Farid Uddin Ahmed addressed the discussion as chief and special guests respectively with Deputy Commissioner of Rajshahi Helal Mahmud Sharif in the chair. Dr Farid Uddin said there is an enormous prospect of boosting cotton production after the best uses of existing natural resources.
Source: The Financial Express Bangladesh
Katsina State Government and BUA Group have entered into agreement to facilitate 500 million dollars Katsina Textile and Garment Cluster that incorporates about 500 Small and Medium Enterprises (SMEs). The State Governor, Aminu Bello Masari, gave the government’s commitment to cooperate with the billionaire industrialist and founder of BUA Group, Abdulsamad Rabiu, on the project when he received BUA’s Executive Director, Kabir Rabiu, in Muhammadu Buhari House, Katsina. Masari, who approved a committee led by his deputy, Mannir Yakubu, to facilitate the initiative and determine the suitable location of 500 hectares of land for project, said the government has not only waived all fees and taxes involving the state but would bring its influence to bear on those involving federal government in a bid to boost diversification of the nation’s economy. He added: “Your coming is really in tandem with our plan in the North West to have an economic body that will propel this kind of agenda. I think Katsina was identified to produce cotton and rice as well as textile and garments.” The governor further said the multiplier effect of the Katsina Textile and Garment Cluster will go beyond Katsina and Nigeria borders, while applauding the direction and focus of the project. On his part, Alhaji Kabir Rabiu said the conglomerate with enterprise value in excess of five billion dollars has concluded plans to invest in the cluster as part of the efforts to make the comatose textile industry viable again in Nigeria. Rabiu disclosed that the infrastructural development of the project expected to generate over 25,000 jobs would commence soon after its ground breaking ceremony before the end of this year. “Really, we have the resources to commence site infrastructural development as well as the anchor textile that we need to put in place within the cluster. We will divide it into two phases of 250 hectares each to get the development done as soon as possible. “A lot of companies have already indicated interest in it. If you look at the garment industry, it is a huge sector. Nigeria imports 23 million pairs of jeans every year. If you see the cost of making it, it is nothing to write home about and we have the kind of cotton in this country to make jeans,” he stated. The Executive Director of BUA, who gave snapshot of the group, revealed that Nigeria’s textile imports from China and India were valued at about four billion dollars, adding that Nigeria could fix its ailing textile sector by developing textile and garment clusters as in other countries with thriving textile industry. He urged the federal government to initiate incentives for textile clusters due to their huge potentials in wealth and job generation and other socio-economic development. “If you look at the percentage as in GDP, in some economies, textiles contribute about 90 per cent but the Nigerian textiles contribute may be less than two per cent,” said Rabiu.
Source: Leadership Newspapers
