image rotation

MARKET WATCH 19 JUNE, 2017

NATIONAL

INTERNATIONAL

No need to worry about GST: Shah to traders

Mumbai: BJP president Amit Shah addressed Goods and Services Tax (GST)-related concerns raised by the city’s textile trading community on Saturday evening, saying the fines and penalities envisaged under the new tax regime would not be enforceable for six months after it comes into force on July 1. Party sources said businessmen from the textile and garments industry, who form the traditional vote bank of the BJP in the State, had been petitioning the party top brass to address GST-related issues. Speaking at an ‘opinion-makers meet’ attended by with a select group of city residents from various sectors on Sunday, Mr. Shah said his party has been pro-free trade and free agriculture policy since inception. “We had said we support free trade and free agriculture [when BJP’s predecessor Jana Sangh was formed], and today too we are supporting free trade and free agriculture.” He said the Congress is a ‘special purpose vehicle’ formed to get Independence. “Everybody who wanted Independence gathered under the banner of Congress.... the party was like a special purpose vehicle to gain Independence. Once the purpose was served, the structure of the Congress became irrelevant. There were hardly any principles, hence after Independence it remained in politics only and only for politics.” He added that the Jana Sangh had always believed in ‘nation first, party second and the person last’, which the BJP follows. Mr. Shah said, “When Sonia Gandhi steps down from her post [as Congress president] everybody knows who will be the next party president. Can anyone guess who will be the next president of the BJP? It could be anyone, because we have an internal democracy.”

Source: The Hindu

Back to top

Reduce GST on MMF & yarn from 18 to 12 pc; Textile industry

The Textile industry in the region today expressed the hope that the June 18 GST council meeting would consider reducing the GST rate on Man Made Fibres, filaments and yarns from 18 per cent to 12 per cent. There would be huge accumulation of excess credit with 18 per cent GST rate on yarn and only five per cent GST rate and non-refund of accumulated input tax credit at fabric stage, Southern India Mills' Association (SIMA) Chairman, M Senthilkumar said in a statement here. This would significantly increase the fabric cost and seriously affect the independent spinning and weaving sector, including powerlooms, he said. He hoped that the Council would also include garments, made-ups and other sewn products related to job work under five per cent GST rate of service tax. To buttress his point, he said that an independent weaving unit with around 50 looms and producing 100 per cent viscose fabric would incur an additional cost of over Rs two lakh per annum with 18 per cent GST rate on yarn when compared to a composite unit. Even with 12 per cent GST rate on yarns, the additional cost would be Rs 1.3 lakh per loom per year, thus creating an unhealthy competition between composite and independent weaving units, he said. The Government could have classified the entire textile value chain under five per cent to avoid such problems or refund the accumulated input tax credit at every stage so that the cost is not increased, level playing field is created and ensure proper compliance. The differential rates and non-refund of accumulated input tax credit would not only affect the industry, but also lead to wrong declaration and corruption, he said. Meanwhile, some 400 members operating individual mills, under the banner of Indian Texpreneurs Federation (ITF), in a letter to the Centre, said MMF-based yarns were brought under 18 per cent, while MMF fabric brought under five per cent. ITF secretary Prabhu Dhamodharan in a statement urged the Council to fix MMF and blended yarns under 12 per cent rate. NVM APR APR

Source: Business Standard

Back to top

CBEC chief says the biggest challenge is trade and industry should not have any difficulty

 “We will have to look at facilitation as there may be bonafide, genuine mistakes,” said Vanaja N Sarna, Chairperson, Central Board of Excise and Customs, adding that enforcement may not be the key focus of the government in the initial days of the Goods and Services Tax (GST) regime. In an interview to BusinessLine, she said the government is fully ready for the rollout of GST. Excerpts:  Apart from relaxation in return filing, will the tax authorities also go slow on penal provisions in the early months? It depends on what kind of an issue it is. But I would not think that enforcement is the order of the day. We will be looking at a smooth rollout and facilitation is the key word. A lot of people will struggle; there will be bonafide and genuine mistakes that may occur. We will have to look at facilitation. By when will the anti-profiteering authority be set up? We are fine tuning the provisions of the anti-profiteering authority. There has been a lot of discussion in today’s GST Council meeting, which caused the re-look. We will set it up as soon as possible and hopefully it will be in place by July 1. What is the biggest challenge in the implementation of GST? July 1 is quite close. The biggest challenge is that trade and industry should not have any difficulty. Our effort has been to get everyone ready. Our officers are trying to help them understand the rules of the law. In a recent letter, I have also asked the range officers to be ready and help assessees in physically uploading invoices and also in filing returns and registrations. Is the government ready for the July 1 rollout of GST? Absolutely, we are completely on track for a July 1 rollout. Our advertisements have also asked taxpayers to be ready for the scheduled launch of GST. How will GST help the common person? It should be rather good. The man on the road who buys something from a store is not aware that there are embedded taxes at the factory gate, which he doesn’t see on his bill. So a shopkeeper or a seller can actually put any price and he may not know. With GST, every tax has been subsumed. For a buyer, he is paying what he sees on the bill.

Source: Business Line

Back to top

Brace for short-term growth slowdown post GST rollout

As the July 1 deadline for the rollout of the Goods and Services Tax (GST) nears, uncertainty over the transition has driven businesses across the country to offload stocks at hefty discounts, halt production and even organise protests. All this may, however, be only a precursor to the likely economic disruption in the coming quarters, given the low level of awareness about GST and preparedness for it, especially in the unorganised sector. Most GDP growth forecasts for FY18, which are in the 7.2-7.5 per cent range, have not factored in any negative impact arising from GST. But the experience of other countries that implemented GST in recent years shows that in almost all of them, the GDP growth rate slowed in the quarters following GST implementation. Some countries saw inflation moving higher as well.

Cross-country comparison

Australia, Malaysia, Canada and Singapore have adopted GST, and their experience of economic growth slippages in the immediate aftermath of its implementation is illustrative. Malaysia, which adopted GST in April 2015, saw GDP growth rate fall from 4.9 per cent in the June 2015 quarter to 4 per cent by June 2016. Singapore’s growth, too, fell from 10.2 per cent to 6.9 per cent over the 12 months following implementatin of GST. A similar trend was observed in Australia and Canada as well, post-GST. It’s possible, of course, that this decline in growth may be due to other factors. Canada, for instance implemented GST just before the sub-prime crisis unfolded in 2008; and the Malaysian transition to GST coincided with a crash in commodity prices in 2015.

Short-term volatility

Economists, however, believe that a short-term disruption in growth is likely in India too. “A fall in growth rate is a possibility because the transition to GST can have a fairly disruptive impact on the economy in the short term,” says Sunil Kumar Sinha, Principal Economist and Director Public Finance, India Ratings & Research. “Many businesses are not ready with the new system, and the old system cannot be used after July 1. This can bring businesses to a added. “The GST transition is likely to create cash flow/margin volatility for many companies over the next few quarters. These uncertainties will still imply that businesses operate on barebone inventory levels, hurting near-term sales numbers,” says Sanjay Mookim, India Equity Strategist, Bank of America Merrill Lynch. “We have not factored in any negative impact on the GDP due to GST. However, we acknowledge that there could be some disruption in economic activity due to GST. How that will unfold is unclear,” says Tanvi Garg, Economist, HDFC Bank. She thinks growth could become lumpy, with some quarters witnessing higher growth. For instance, the four other countries witnessed a bump-up in the growth in the quarter preceding the GST rollout, probably because consumers front-loaded buying, as is now happening in India. standstill,” Sinha

Inflation, tax collection

Canada and Australia also witnessed a spike in inflation after GST implementation, but the Malaysian government managed to rein in prices. In India, the Centre’s vigilance and execution of anti-profiteering rules are key to controlling inflation. Most economists see tax collection too being hit in the coming quarters. “The more intricate-than-expected GST rate structure can affect compliance and may dent the predicted expansion of the tax base. It does not, however, alter the efficiency benefits that are likely to accrue as businesses re-size, relocate and re-engineer logistics,” says Mookim.

Thumbs-up for the long run

Economists, however, concur that in the long run, GST will be a game-changer. “There will be short-term disruptions but in 2 to 3 years, GST will help growth,” says DK Joshi, Chief Economist, CRISIL. “Over the long term, most countries implementing GST have witnessed buoyancy in tax collections and a significant improvement in their current account balances,” adds Garg.

Source: Business Line

Back to top

Return timelines extended: India Inc gets GST filing breather for 2 months

Amid doubts in some quarters over the tech preparedness for the goods and services tax (GST), the high-powered GST Council on Sunday decided to introduce the new indirect tax system from the midnight of June 30-July 1, but gave a relaxed timetable and exemption from penalties and late fees to industry while filing returns in the first two months. However, some states expressed fears that the relaxation given on filing returns would lead to a revenue loss for them. “We don’t have the luxury of time to defer the implementation of the GST... The official launch of the GST would take place on the midnight of June 30 and July 1,” Union Finance Minister Arun Jaitley told reporters after a five-and-a-half-hour meeting of the Council, whose chairman he is. Revenue Secretary Hasmukh Adhia said the Centre was ready, but it was companies that wanted time to plug in. “GST Suvidha Providers and other software providers wanted 10-15 days’ time to test the system. Besides, banks, civil aviation, and telecom wanted more time to get their system in place.”  The Council also approved the anti-profiteering rules. A five-member anti-profiteering authority will be set up to decide on levying penalty if businesses do not pass on the benefit of price reduction to consumers under the GST regime. The authority, to be headed by a retired secretary-level officer, can take suo motu action, besides acting on complaints of profiteering.  Where the consumer cannot be identified, the amount would be credited to the consumer welfare fund, according to an official. The Council decided to have two GST rates for lotteries, depending on whether these are run by states or private players, tweaked the criteria for tax rates for the hotel industry, and came up with a negative list for the composition scheme. It also lowered the threshold of turnover for availing of the composition scheme to Rs 50 lakh a year in the case of Northeastern states and Himachal Pradesh.  It decided to defer implementing the e-way Bill and have an existing system of states in its place for the time being. According to the relaxed timetable for filing returns, the assessees could file their detailed invoice-based returns by September 5 for July, Adhia said. Had this relaxation not been given, the assessee would have to file returns by August 10. Similarly, for August, these returns could be filed by September 20, a relaxation of 10 days, Adhia said. However, the businesses will have to file Form 3B by August 20 in the case of July transactions, and by September 20 in the case of August transactions. These would be based on their own assessments of their tax liability and input credit. Under normal circumstances, these returns are auto-generated under the GST system. Later self-assessed returns would be matched with auto returns and the difference, if any, would have to be paid by the assessee, the revenue secretary said. “This would help assessees get the practice of filing returns and the system will also not get unnecessary load,” Jaitley said. The finance minister, however, said that this was being done because a number of traders and companies were not sure of their preparedness. However, some states, including Assam, feared that they would lose revenues due to the relaxed timeline for filing returns. But, Adhia said Form 3B and filing taxes based on them would ensure that the government did not lose revenues. No late fees and penalty would be levied for the filing of returns for these two months. “This is intended to provide a sense of comfort to the taxpayers and give them elbow room to attune themselves with the requirements of the changed system,” an official statement said. Jaitley, however, said that from September, there would be strict adherence to the timeline. So far as tech preparedness is concerned, Jaitley said 6.56 million registrations had been made in the GST Network (GSTN). The 6.56 million is 81 per cent of the 8.01 million registrations under the state-value added tax, central excise duty and service tax. These 8.01 million registrations had some common registrations as well, Jaitley pointed out, indicating that registrations under the GSTN were progressing well. Registration under the GSTN will re-open from June 25. Adhia appealed to businesses not to panic and rush for registrations if they had provisional identity numbers. The Council also decided to defer the implementation of the e-way bill, which is an electronic permit required for moving goods worth over Rs 50,000 - both intra-state or inter-state. Jaitley said there were different views on the issue and hence it was decided that states which had their own system might continue till the bill was put into effect. “The decision to leave e-way bills to the states for now would increase complications for businesses, which were expecting to operate in a simpler environment for inter-state trade. Hopefully e-way bills will be used only for select goods and on a highly restricted basis and will not become a mandatory transit document,” M S Mani of Deloitte said. There were also differences between states over the issue of tax on lotteries. Kerala wanted it to be at 28 per cent and other states at lower rates. Finally, it was decided that state-run lotteries will have 12 per cent, while state-authorised lotteries, run by private players, will attract 28 per cent.  In a relief for air-conditioned hotels, the Council decided to raise the threshold of tariff for the 28 per cent tax to Rs 7,500 from Rs 5,000 proposed earlier. Those in the range of Rs 2,500-7,500 would attract 18 per cent. The Council came up with a negative list for the composition scheme which have three items only - ice cream, pan masala, and tobacco.  The composition scheme is a facility for medium and small enterprises to pay a lower tax under the GST regime, without availing of input tax credit.

Source: Business Standard

Back to top

GST: Two-year sunset for anti-profiteering

The anti-profiteering body under the coming goods and services tax (GST) regime will be wound up after two years of the roll-out. The mechanism was finalised on Sunday by the GST Council. “The body is only required initially when tax rates change under the new tax regime,” said Revenue Secretary Hasmukh Adhia. The GST takes effect from July 1. GST rules mandate businesses to pass on the benefits from lower tax incidence, arising from rate reduction and/or input tax credit, to the consumer. Companies held to have not passed on the benefit will be made to forfeit whatever is deemed to be the profiteered amount (from the time the GST takes effect). Also, to reduce their price(s) by the amount commensurate with the reduction in tax incidence. The amount paid as forfeiture  will go into a consumer welfare fund. A three-stage anti-profiteering structure has been approved. This will comprise the nine-member standing committee of the GST Council, a director-general (safeguards) or DG (S), and a five-member Authority. All complaints will first go the standing committee. It will filter and send on the serious cases to the DG (S), which will probe and give its finding to the  (yet to be formed) five-member panel. The latter panel will be chaired by a retired secretary to the Government of India. The other four members will be joint secretary-rank officers who have been commissioners of commercial tax or excise, from state or Centre. These members will be referred to the GST Council by a search-cum-selection panel. The DG (S) will look into the balance sheet of companies, see if they have gained from the GST and whether the benefits have been passed on to consumers. Despite a higher standard rate of 18 per cent, service providers will get input tax credit that will lower the effective incidence of the GST to around the current incidence of 15 per cent, says the government. It has already asked the services sector to reduce prices, especially telecom and banks. “The five-member final Authority will be set up soon. It will not be needed immediately, as complaints will first go to the standing committee, which will take a month to screen. The DG(S) will take two to three months to investigate, which gives three months to set up the final authority,” said Adhia. There was no provision under the current indirect tax laws to penalise anyone not passing on tax-related benefits to consumers. Profiteering will be decided on a product basis, not on earnings at an entity level. This means that a company could also operate at a loss but be penalised if, say, it is deemed to have profiteered on even one product line out of four. Pratik Jain of consultancy PwC India said: “It has been reiterated that the anti-profiteering provisions are meant to be used as a deterrent and would be invoked only against specific complaints.” The Centre already has a consumer welfare fund, operated by the department of consumer affairs. Set up in 1992, it is credited with money that is not refundable to manufacturers. As of 2014, around Rs 17 crore was available in it. This amount is meant for financial assistance to promote and protect welfare of the consumer, create consumer awareness and strengthen the consumer movement.

Source: Business Standard

Back to top

Transitioning tax credits under GST

With the goods and services tax (GST) looming, one of the biggest challenges that businesses are grappling with is the transition of existing tax credits. Such credits, once transitioned, can be used to pay GST on outward supplies. Credits that cannot be transitioned become a sunk cost for businesses, given that outward supplies will attract GST at the prescribed rates, but at the same time, a corresponding credit will not be available for offset. The GST law contemplates two broad scenarios in which credits can be carried forward. The first is a currently registered assessee under the central/state laws, who can transition 100 per cent of the credit shown in his returns. The second is a currently unregistered assessee, who can transition 100 per cent credit for inputs in stock or inputs contained in semi-finished goods/finished goods in stock on the date of transition, on the basis of a duty-paying document issued within one year preceding the GST. Where such document is unavailable, the transition credit is limited to 40 per cent of CGST/SGST paid on the supply of the goods under GST (60 per cent where the collective rate of GST is 18 per cent or more, as in the case of mineral water, computers, cameras etc.). In both scenarios, transition of credits is permitted only in respect of goods/services which satisfy the dual condition of being eligible for credit under the existing rules, as well as being eligible for credit under the GST law. Industry input on the transition provisions has already resulted in some relaxations — (i) the credit allowance was increased from 40 per cent to 60 per cent where the collective GST rate is 18 per cent or more; (ii) the time limit for declaring transition credits was increased from 60 to 90 days; (iii) traders will also be able to avail of credit basis a Credit Transfer Document (CTD) issued by manufacturers within 30 days of GST for distinctly identifiable goods above ~25,000 (such as televisions, refrigerators, car chassis, engines etc.) The government must be complimented on having been responsive to the changes that industry has sought. However, certain ambiguities and open issues remain. To begin with, there may be some assessees who fall into a gap between the two credit transition scenarios contemplated under the GST law. For instance, there may be excise-registered manufacturers who pay duty at a concessional rate on the condition that they do not avail of CENVAT (Central Value Added Tax) credits. There is no contemplation of how such persons can carry forward their existing credits, as they do not reflect the credit in their current returns, nor can they transition 100 per cent credits under the second scenario which is available only to unregistered persons. Another major issue is for traders who had not obtained the optional first stage/second stage dealer registrations under excise (a not uncommon practice in the auto sector, among others). A number of these traders have recently applied for these registrations so that manufacturers can issue them excise invoices to enable a 100 per cent credit transition. Apart from the ground level challenges in obtaining these registrations in time, it is also unclear if traders can transition 100 per cent credits even for stock received by them prior to being granted the dealer registration, presuming that they are able to belatedly obtain a (revised) excise invoice from the manufacturer which the tax authorities accept. Under the GST law, there is also no provision which speaks to a situation of pending disputes concerning the eligibility of credits under the current law. For instance, an assessee may have received an adjudication order or appellate order (subject to further appeal) ruling against his eligibility to avail of certain credit(s). Similarly, some assessees will have reversed credits under protest under the existing law, or reversed credits to pay mandatory pre-deposits required for filing an appeal. These credits may become available in the future if the outcome of the dispute is favourable to the assessee. The recoverability of such amounts under the GST, either in the form of input tax credit, or by way of refund, is unclear. Given the proximity to the transition, complete clarity is required for assessees to take necessary steps at this stage — not only in terms of readying supporting documentation where credits can be transitioned, but also negotiating with counterparties on who will bear the sunk cost where credits cannot be transitioned. The importance of addressing these open issues under the transition provisions is escalated by the fact that there is a single-window opportunity for assessees to properly harvest existing tax credits on the crossover to GST. Concomitantly, the right to credits which are not transitioned as part of this one-time exercise may potentially be extinguished.

Source: Business Standard

Back to top

GST Council Sticks to Rollout Deadline, Allows Filing of Returns Till September

New Delhi: India’s tryst with its most comprehensive indirect tax reform, the goods and services tax (GST), will begin on July 1. The GST Council, the apex decision body for the new tax, has stuck to the scheduled rollout. GST aims to bundle state and central levies into one and create seamless national market. But the norms for filing returns have been relaxed till September to ensure the transition doesn’t hurt small traders and others who may not be ready for the new regime. The council also approved the creation of an antiprofiteering authority that will exist for two years while clearing some other crucial elements of the proposed tax framework at its meeting on Sun- ANTI-PROFITEERING FRAMEWORK Council approves DG Safeguards framework for to conduct anti-profiteering investigation Standing Committee Anti-profiteering to vet applications authority to take final call on penalty Authority to exist for two years day. It set the rate on lotteries at12% of face value for those run by state governments and at 28% for those authorised by states but run by private entities. It revised levy for restaurants inside five-star hotels to the standard rate of 18% from 28%. Besides, only hotels with room tariffs above .₹ 7,500 will now face a 28% levy against .₹ 5,000 earlier. For room tariffs between .₹ 2,500 and .₹ 7,500, the rate will be 18%. “We do not have the luxury of time to defer GST... The GST Council decided to roll out (GST) from the July 1,” union finance minister Arun Jaitley, also council chairman, told reporters on Sunday. “The official launch will be on June 30 midnight.” The relaxation in filing of returns until September will mean no late fees or penalties. “This is intended to provide a sense of comfort to taxpayers and give them elbow room to attune themselves with the requirement of the changed system,” an official statement said. Traders will have time until July 20 to pay tax based on a simple return while invoice details can be filed from July 15 onwards. The registration window will open from June 25 for new registrants as also those migrating from the existing system to GST. Most states have already passed state GST laws with West Bengal opting for an ordinance. Revenue secretary Hashmukh Adhia said states have put in place systems and are in readiness for the impending rollout. The council also took stock of the GST Network’s IT preparedness. The “state of readiness of IT network was discussed at length,” Jaitley said, adding that 81.1% of existing taxpayers have enrolled on GSTN. Of the total 8.091million, 6.56 million have registered, he said, adding that some may be out of the tax net as the exemption threshold is pegged at ₹ 20 lakh, instead of ₹ 5 lakh or ₹ 10 lakh in some states. Industry was divided on the rollout, with some seeking a deferral of the start date, although Assocham reversed its earlier stand to back a July 1 rollout. Jaitley said industry will now have 42 days before it has to make any filing. “Industry is ready for the landmark tax reform of GST, which is expected to bring significant gains for economic growth, employment and exports,” said Chandrajit Banerjee, director general, Confederation of Indian Industry. “CII is undertaking more than 100 workshops across the country to enable enterprises to comply with the new regulations.”

ANTI-PROFITEERING

The council approved the operational framework and rules for the proposed anti-profiteering authority that will ensure that consumers get the benefit of any cut in taxes under GST. A standing committee of nine members, consisting of state, central and GST Council officials, will examine complaints that will be passed on to the Director General Safeguards for investigation. The anti-profiteering authority, which will be set up soon, will take the final call on whether a company has engaged in profiteering. If it has, the amount will have to be refunded to consumers and if that’s not possible, given to the consumer welfare fund.

NUTS AND BOLTS

The council approved changes in the threshold for the composition scheme in the Northeast to ₹ 50 lakh instead of ₹ 75 lakh, raised at the last meeting and applicable for all other states, citing the small trader base there. It also expanded the negative list for the composition scheme to include ice-cream, pan masala and tobacco. The council also gave the go-ahead to five sets of rules dealing with advance rulings, appeals and revisions, assessments, anti-profiteering and funds settlement. Another set of rules dealing with the contentious E-way bill was discussed at length but could not be finalised because of divergent opinions among states. The Eway draft bill mandates that any transfer of goods over ₹ 50,000 will need an E-way permit for transfer within and outside a state. Jaitley said until a final decision is taken, existing provisions would prevail. The council has set a 5% integrated GST on shipping vessels with input tax credit. “The relaxation for filing transactionwise details returns in July, August till September with interim aggregate return will provide relief to the industry and is very welcome,” said Harishanker Subramaniam, national leader — indirect tax Services, EY India. “Key rules like anti-profiteering have been approved with a body set up in July. It’s critical to understand these rules. Statement that anti-profiteering will be more a deterrent needs to be followed in practice.” MS Mani, senior director at Deloitte Haskins & Sells LLP, said: “The announcement of an extended time line for filing the returns... should not make businesses complacent as the additional time available is very limited... Several issues relating to real-life problems raised by business to the sectoral committees are yet to be decided upon and may not now see the light of the day before GST rollout.”

The Confederation of All India Traders (CAIT) welcomed the relaxation in filing returns under GST for July and August. “However, allowing continuation of existing system of different states for checking inter-state transactions may bring distortions in first phase of GST itself and as such it would have been much better if provision of E-way bill and HSN code is suspended for at least six months,” the lobby group said. CAIT reiterated that the transition period should be extended to March 31, 2018, and no penal action taken against traders for procedural lapses. “Much needs to be done at the level of empowerment of small businesses with technology as about 60% of the traders still have not adopted computerisation,” it said. “CAIT has also urged that since GST Council is scheduled to meet on June 30, 2017, a re-look at 28% tax slab is much needed because various items which are neither luxury and nor demerit have been placed under this slab.”

Source: Economic Times

Back to top

Farmers take up cotton after incurring losses in soya

Kamareddy: Encouraged by showers under monsoons, the farmers have pinned hopes on cotton crop with soya cultivated last year leaving them high and dry. The farmers of the district generally cultivate cotton, but on the advice of the state government they shifted to soya. They suffered severe losses as rains experienced at the time of harvesting the crop played havoc with their lives and they were not able to regain even the investments. Predicting steep fall of prices in the international market for prices, last year the state government advised the farmers against raising the cotton. In the last kharif, the area under soya cultivation was 70,000 hectares while the area under cotton was 6000 hectares. However, cotton farmers derived benefit to the hilt as a tonne of cotton last year fetched at least Rs 5500. Agriculture department officials estimate that soya will be cultivated in 72,000 hectares and cotton on 10,000 hectares during the current kharif. But the official expectations might prove wrong. The farmers appear to raise cotton in at least 60,000 hectares as evidenced by poor demand for subsidised soya seeds. The farmers are not evincing any interest to buy the soya seeds. As a result, the soya seeds are gathering dust in godowns. In anticipation of unprecedented increase of area under cotton this season, fertilisers and cotton seeds sales have picked up momentum. However, some of the seeds companies are trying to pass off spurious seeds as high-yielding varieties. Unable to verify whether a particular seeds are approved by the government, the farmers are buying only those seeds suggested by the middlemen. Agriculture officials have been cautioning the farmers against blindly buying the seeds recommended by the middle men and verify whether the particular seed is approved by the government or not. The cotton farmers have taken up cotton crop expecting good price for cotton as was experienced last year.

Source: The Hans India

Back to top

Global Crude oil price of Indian Basket was US$ 45.94 per bbl on 16.06.2017

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$ 45.94 per barrel (bbl) on 16.06.2017. This was higher than the price of US$ 45.60 per bbl on previous publishing day of 15.06.2017. In rupee terms, the price of Indian Basket increased to Rs. 2966.87 per bbl on 16.06.2017 as compared to Rs. 2931.34 per bbl on 15.06.2017. Rupee closed weaker at Rs. 64.59 per US$ on 16.06.2017 as compared to Rs. 64.28 per US$ on 15.06.2017. The table below gives details in this regard:

Particulars    

Unit

Price on June 16, 2017 Previous trading day i.e. 15.06.2017)                              

Crude Oil (Indian Basket)

($/bbl)

45.94                (45.60)

(Rs/bbl)

2966.87           (2931.34)

Exchange Rate

  (Rs/$)

64.59                (64.28)

Source: PIB

Back to top

Boost to Rivatex as India grants Sh3 billion for machine upgrade

The Eldoret-based Rift Valley Textile Mills (Rivatex EA) has received Sh3.016 billion from the Indian Government to facilitate technology transfer and upgrade. Indian firm Lakshmi Machine Works (LMW) Ltd will modernise Rivatex’s textile machines to enable the firm to compete globally. Indian High Commissioner to Kenya Suchitra Durai said the funds would help Rivatex expand its productivity. The financial support follows a visit by Indian Prime Minister Narendra Modi last July where an agreement on trade was signed between Exim Bank of India and the national Treasury. “Modernisation of Rivatex factory is expected to revive the textile and cotton industry in Kenya and generate employment,” said a statement by the company. The LMW managing director, Mr Sanjay Jayavarthanavelu, also wants the curriculum of Moi University School of Engineering reviewed to be in tandem with the needs of modern industries. Experts from LMW had earlier visited Moi University’s School of Engineering to assess its problems and requirements. “There is a need to examine the possibilities of supplying latest machinery to the department’s labs and to help in skills development and capacity building,” said Mr Jayavarthanavelu. The Cabinet Secretary for the Ministry of Industry, Investment and Trade, Mr Adan Mohamed, blamed high electricity costs and inadequate raw materials for the slow revival of the textile industry. “High cost of power is making it difficult for investors in the textile industry to break even. The government therefore needs to increase electricity supply at affordable rates for the sector to maximise production,” said Mr Mohamed when he toured the firm last year. “Cheap imports are not a threat to growth and expansion of the textile industry in Kenya. What is required is proper managerial strategies to target export markets,” said Mr Mohamed. But it is emerging that the Eldoret-based firm is operating below capacity due to an acute shortage of raw materials. This is dampening the hopes of North Rift residents who were looking forward to revival of the once vibrant textile sector to provide additional employment opportunities and economic growth. “We are producing an average of 10,000 bales against a capacity of 70,000 bales annually, which has impacted negatively on our operational costs,” said the firm’s managing director, Prof Thomas Kipkurgat, in an earlier interview. The textile firm was bought by Moi University at Sh205 million after it was placed under receivership more than 10 years ago. The company used to produce a total of 15.73 million metres of fabric before it was placed under receivership in 2000, following massive administration and financial mismanagement. The fabric comprised 5.5 million meters of dyed cotton, 7.7 million metres of printed cotton, and 1.17 and 0.55 million metres of dyed and printed polyester/viscose, respectively. Stakeholders want the deal with Moi University reviewed, arguing that it has failed to meet the set targets. “The factory has achieved little success despite the government and development partners pumping colossal sums of money to revive it. The factory has been converted into a training institution, instead of a textile manufacturing firm that could create employment,” said Mr Charles Mose, a former official of the Kenya National Chamber of Commerce and Industry, Uasin Gishu branch. Some the company’s facilities have been converted by Moi University to offer aviation courses. Company workers staged a protest two months ago demanding a pay increase and better working conditions. Rivatex has an estimated 600 workers against 1,500 workers before it was placed under receivership.

Source: Business Daily

Back to top

Grasim Industries gets USDA biobased certification

Grasim Industries Limited, a flagship company of Aditya Birla Group has earned the US Department of Agriculture (USDA) certified biobased product label for its products-Birla Viscose, Birla Modal & Birla Excel. The USDA certified product label displays a product's biobased content, which is the portion of a product that comes from a renewable source. Utilising renewable, bio-based materials displaces the need for non-renewable petroleum based chemicals. Biobased products, through petroleum displacement, have played an increasingly important role in reducing greenhouse gas emissions that exacerbate global climate change. Biobased products are cost-comparative, readily available, and perform as well as or better than their conventional counterparts. "We applaud Grasim Industries Ltd for earning the USDA certified biobased product label," said Kate Lewis, USDA BioPreferred Program. "Products from Grasim Industries Ltd are contributing to an ever expanding marketplace that adds value to renewable agriculture commodities, creates jobs in rural communities, and decreases our reliance on petroleum." Third-party verification for a product's biobased content is administered through the USDA BioPreferred Program. One of the goals of the BioPreferred Program is to increase the development, purchase and use of biobased products. "The USDA biobased certification is another milestone reached in our sustainability journey and strengthening our belief that sustainability is at the core of our business strategy," managing director of Grasim Industries Ltd, Dilip Gaur, said. "This certification reconfirms the natural origin of our products & will enhance the confidence of the value chain players in delivering biobased products," said chief marketing officer of Birla Cellulose Rajeev Gopal.

Source: Fibre2Fashion

Back to top

FCCI chief seeks new airport in Faisalabad

FAISALABAD - New civilian airport is imperative to cater to the future needs of Faisalabad and the incumbent government should immediately approve the project on emergency basis, said Faisalabad Chamber of Commerce and Industry (FCCI) President Engineer Muhammad Saeed Sheikh. In a statement issued here on Sunday, he said that Faisalabad is one of the most important industrial, business and commercial hub of the country. It is exporting textile products worth $6 billion, which are 55 percent of the total textile exports of Pakistan. He said that increase in textile volume had paved the way for export of other non-traditional items which would increase manifold after the completion of China-Pakistan Economic Corridor (CPEC) project. “Presently our textile export is restricted to cotton, fabrics, knitwear bed-sheets and home textiles, but we are expecting that Pakistan would start export of technical textile products within the next couple of years,” he added. He said that Pakistani exporters are regularly visiting different countries of the world. Similarly, a sizeable increase in air cargo is also expected with an increase in the export volume. Moreover, the expatriates working in different countries are also regularly visiting Faisalabad airport. He said that during 2016-17 approximately 299,296 passengers used Faisalabad airport. It is quite insufficient to accommodate further passenger load whereas it is expected to jump to 500,000 within the next 2-3 years. Sheikh further said that the runway of the existing Faisalabad airport is insufficient to accommodate landing of wide-bodied aeroplanes. Similarly, there is no arrangement for the parking of more than 2,3 airplanes at a time. Regarding air cargo, he said that the PIA, Emirates, Gulf Air, Ittehad, Oman Air, Turkish Air and Saudi Air lines are managing a total of 25 flights a week with hardly 40 tons of cargo capacity. He said that increase in export activity would also help these airlines to increase their cargo capacity, which is now 8,320 tons per annum only.

Source: The Nation News

Back to top

Global Textile Raw Material Price 2017-06-18

Item

Price

Unit

Fluctuation

Date

PSF

1113.63

USD/Ton

0%

6/18/2017

VSF

2180.28

USD/Ton

0%

6/18/2017

ASF

2246.35

USD/Ton

0%

6/18/2017

Polyester POY

1130.51

USD/Ton

-0.26%

6/18/2017

Nylon FDY

2672.12

USD/Ton

0%

6/18/2017

40D Spandex

5212.11

USD/Ton

0%

6/18/2017

Polyester DTY

2510.62

USD/Ton

0%

6/18/2017

Nylon POY

2407.85

USD/Ton

0%

6/18/2017

Acrylic Top 3D

1394.79

USD/Ton

0%

6/18/2017

Polyester FDY

2862.99

USD/Ton

1.04%

6/18/2017

Nylon DTY

5814.07

USD/Ton

0%

6/18/2017

Viscose Long Filament

1372.77

USD/Ton

0%

6/18/2017

30S Spun Rayon Yarn

2848.31

USD/Ton

0%

6/18/2017

32S Polyester Yarn

1688.43

USD/Ton

0%

6/18/2017

45S T/C Yarn

2701.49

USD/Ton

0%

6/18/2017

40S Rayon Yarn

2995.13

USD/Ton

0.49%

6/18/2017

T/R Yarn 65/35 32S

2305.07

USD/Ton

0%

6/18/2017

45S Polyester Yarn

1835.25

USD/Ton

0%

6/18/2017

T/C Yarn 65/35 32S

2275.71

USD/Ton

0%

6/18/2017

10S Denim Fabric

1.36

USD/Meter

0%

6/18/2017

32S Twill Fabric

0.85

USD/Meter

0%

6/18/2017

40S Combed Poplin

1.18

USD/Meter

0%

6/18/2017

30S Rayon Fabric

0.66

USD/Meter

0%

6/18/2017

45S T/C Fabric

0.67

USD/Meter

0%

6/18/2017

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14682 USD dtd. 18/06/2017). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

Back to top

China built industrial park in Ethiopia to attract eco friendly investment

Chinese built Hawassa Industrial Park to be Ethiopia’s blue print for Green Economic Zones as it is designed and constructed in an environment-friendly principles, the park applies the latest cutting edge technology to treat and recycle about 90 percent of its water usage, it will be model for other similar industrial park projects throughout the country. The east African country further hoped that the Hawassa Industrial park, once fully operation which is expected as of next week would help its aspiration and commitment to build green economy. The Hawassa Industrial Park to be the first Sustainable Textile and Apparel industrial park in Africa with state-of-the-art infrastructure and facilities. Development of sustainable, world class, specialized export-driven industrial parks is a major target of Ethiopia's vision towards economic development, according to Arkebe Oqubay, Special Advisor to the Ethiopian Prime Minster. Oqubay told reporters on Friday that Ethiopia's rapid economic growth can only be sustained through the realization of a structural transformation, which requires creating a robust and competitive industrial base. According to Oqubay, the Hawassa industrial park would be considered as a model for other industrial parks under construction in the east African country, in which efforts will be exerted to implement the Zero-Liquid Discharge (ZLD) technology to promote environmental protection. The Ethiopian government has planned to construct 10 industrial parks across the country aiming to enhance job opportunities, earn revenue and promote technology transfer, said Sisay Gemechu, Ethiopia's Industrial Parks Development Corporation CEO. After the Hawassa industrial park, the government has further embarked on the development of similar parks in Kombolcha, Mekele, Kilinto, Bole Lemmi II, Dire Dawa and Adama among others, of which Mekele and Kombolcha industrial parks will be inaugurated soon. The Hawassa Industrial Park built by China Civil Engineering Corporation (CCECC) was completed in a record time of nine months.

Source: Yarns and fibres

Back to top

Pakistan : Govt may withdraw zero percent sales tax on five sectors

ISLAMABAD: The federal government is considering withdrawing the facility of zero percent sales tax on inputs of five export oriented sectors, including textiles. Zero percent sales tax had been allowed through the federal budget 2016-17 to address the issue of liquidity faced by export sectors and in anticipation that sales tax refund issue would be addressed once and for all. However, it has been noticed that the position of refunds remains unchanged. The federal government is also considering withdrawal of rebate allowed on the export of yarn as a part of export package announced in January this year. This is being mulled on demand of value addition sectors.

Source: The News International

Back to top

Pakistan : Support textile industry

PERTURBED over government apathy towards textile industry, All Pakistan Textile Mills Association (APTMA) has announced to observe black day on Tuesday by closing down mills across the country to protest against anti-industry, anti-investment and anti-export policies of the present government. The association has voiced dismay over non-implementation of Rs 180 billion package as well as high cost of inputs. At a time when the country is facing burgeoning trade deficit of $32 billion with exports and remittances on the decline, ignoring the important sector of textile which has an overwhelming impact on the economy and contributes almost sixty percent to the exports, will be suicidal for the economy and not help in any manner to reduce the growing trade deficit. The way APTMA has come out with a protest campaign clearly reflects that textile industry is facing a crisis-like situation. If we look towards regional competitors such as Bangladesh, India, China and Vietnam, they are fully backing the industry with all sorts of incentives including low cost of inputs which has given them the edge to multiply their exports. Whilst in case of Pakistan, several factors are impeding the growth of our industry and thereby it is losing its share in the world trade. In today’s highly competitive global environment, textile sector also needs to upgrade its supply chain, improve productivity and maximise value addition to survive. This is only possible if the sector is provided with congenial environment and full support to meet these challenges and attain global competitiveness. We, therefore, will urge finance and commerce ministries to sit with the representatives of APTMA and address their genuine concerns vis-à-vis removal of surcharges on electricity tariff and also provision of gas and LNG on subsidised rates. The government should also deliver on its promises and the package announced by the PM earlier this year with the aim to ensure export led growth be implemented in letter and in spirit. Government must show seriousness for viability and sustainability of the textile industry which accrued over $ 10.29 billion during the first ten months of current fiscal year in exports despite the fact that substantial capacity to produce exportable surplus either remained fully or partially closed due to different factors including high energy cost. This reflects the sector has the capacity to multiply its exports in a matter of no time for which the government will have to pursue an export oriented growth strategy which has become imperative to arrest the growing trade deficit and reap the benefits of socio-economic benefits.

Source: Pakistan Observer

Back to top

Bangladesh : Paramount Textile tops transaction chart

Paramount Textile dominated the Dhaka bourse's transaction chart while top ten traded companies captured more than 28 per cent of the day's total turnover value Sunday. The total transaction on the Dhaka Stock Exchange (DSE) stood at Tk 4.73 billion on the day, which was 11 per cent lower than the previous day. Paramount Textile, Argon Denims, Regent Textile, Nurani Dyeing, Saif Powertec, Bangladesh Finance, United Power, LankaBangla Finance, Tosrifa Industries and Bangladesh Shipping Corporation were the most-active shares in terms of value on the DSE. Of them, share price of five companies advanced up to 3.54 per cent while five companies share price fell up to 2.69 per cent. According to statistics available with the DSE, some 6.13 million Paramount Textile shares were traded, generating a turnover of nearly Tk 232 million, which was 4.90 per cent of the day's total transaction value. The textile maker's share price hovered between Tk 36.90 and Tk 38.40, before closing at Tk 38 on the day, registering an increase of 3.54 per cent over the previous day. Paramount Textile, which was listed on the Dhaka bourse in November 2013, disbursed 10 per cent cash and 7.0 per cent stock dividend for the year ended on June 30, 2016. The company has also reported (un-audited) third quarter earnings per share (EPS) of Tk 0.45 for January-March period of 2017 as against Tk 0.50 for the same quarter in the previous year. In nine months for July, 2016-March, 2017, EPS was Tk 1.20 as against Tk 1.30 for July, 2015-March, 2016. The company's paid-up capital is Tk 1.17 billion and authorised capital is Tk 2.0 billion, while the total number of securities is 117.31 million. Sponsor-directors own 60.75 per cent stake in Paramount Textile, while institutional investors own 6.28 per cent, and general public 32.97 per cent as on May 31, 2017, the DSE data shows. Argon Denims followed next, with shares of Tk 181 million changing hands, capturing 3.82 per cent of the day's total turnover value. The company's share closed at Tk 37.30, advancing 2.47 per cent over the previous session. Regent Textile emerged as third with shares of Tk 169 million changing hands. It was 3.57 per cent of the total turnover value. The company's share price rose 1.08 per cent to close at Tk 27.90 each. Recently listed Nurani Dyeing notched the fourth spot, with shares of Tk 154 million changing hands, contributing 3.25 per cent of the day's total turnover value. The company's share price closed at Tk 21.20, gaining 2.91 per cent. Saif Powertec featured a turnover of Tk 116 million which was 2.45 per cent of the day's total transaction. The company's share price advanced 2.10 per cent to close at Tk 43.70. The turnover of BD Finance was Tk 105 million, capturing 2.22 per cent of the day's total value. The company's share price closed at Tk 21.70, losing 2.69 per cent. United Power featured a turnover of Tk 99 million, which was 2.10 per cent of the day's total value. The power generation company's share price fell 1.37 per cent to close at Tk 180.50. The turnover of LankaBangla was Tk 91 million, capturing 1.92 per cent of the day's total turnover value. The company's share price closed at Tk 51.80, shedding 1.14 per cent. Tosrifa Industries featured a turnover of Tk 87 million, which was 1.84 per cent of the day's total value. The company's share price fell 0.31 per cent to close at Tk 32.50. Bangladesh Shipping Corporation was also included in the top ten turnover chart with shares of Tk 76 million changing hands. The company's share price closed at Tk 51.10 each, losing 1.92 per cent over the previous session.

Source: Financial Express Bangladesh

Back to top

Floryday making a mark with exponential growth

Floryday, the leading women's international e-commerce platform selling the latest fashions, apparel and accessories at competitive prices, is showing exponential growth in business with thousands of commodities having been sold since it was founded in 2015. Presently, the cross-border e-commerce domain has a market scale estimated at over $1 trillion. As Floryday continues to explore new clothing and accessories styles, their overall goal has been to maintain its abundant categories. With countless on-trend styles to choose from, each item has been hand selected by its team of buyers, each with an eye for quality and high-style, balanced with a fashion forward approach. Categories include dresses, blouses, t-shirts, shoes, coats and bags. Each category has been competitively priced within the market and offers the latest fashions at affordable price points. Floryday offers a wide variety of new arrivals, which it constantly updates on its site. Persistent at presenting the latest trends and to keep up with its demand, Floryday has given the option to pre-order styles - a feature that is not widely available on other sites. Those opting for pre-orders receive a generous discount starting at 50 per cent off. Another added feature of shopping with Floryday is its flash sales, where select styles are put on sale for a limited number of days - a feature that has proven to be extremely successful for e-commerce sites. Currently, Floryday's customers shop from all over the world, including Europe, United States, Australia and Africa. Floryday established itself by becoming well-prepared, with a customer service team available twenty-four hours a day, seven days a week, with quick delivery anywhere in the world. For example, if an order is placed by someone in the US on Monday, it would be delivered that Friday. Shipping options include standard and expedited delivery. Floryday also offers a fast and worry-free exchange and return policy. Each item is guaranteed and they pride themselves on offering an excellent shopping experience. As the e-commerce fashion business continues to grow, Floryday expects to see further success along with its expanding customer base and dedication to keeping up with the demands of fashion, on an international scale. As their price points remain affordable to consumers, Floryday expects to see continued growth and recognition within the industry.

Source: Fibre2Fashion

Back to top

Bangladesh-Envoy Textiles to raise Tk 150cr thru' bonds

Envoy Textiles will raise Tk 150 crore by issuing zero coupon bonds to increase its production capacity. The listed company announced the issuance of the bonds through private placement in a posting on the Dhaka Stock Exchange website yesterday. The board of directors has decided to issue the 5-year series zero coupon bonds with a face value of Tk 150 crore and at a discounted value of Tk 122.42 crore. The issuance of the bonds is subject to approval of Bangladesh Securities and Exchange Commission. “Envoy Textiles wants to raise the fund for importing machinery to strengthen its production capacity,” said Abdus Salam Murshedy, managing director of Envoy Group. He said the company has decided to raise the fund by issuing bonds instead of offloading shares because of cost-effectiveness.  The zero coupon bonds will be redeemable and non-convertible in nature with a discount rate of 7.75 percent to be issued in series with maturity periods starting from six months to five years, according to the company. Envoy Textiles' prices closed at Tk 37.80 on the Dhaka bourse yesterday, gaining Tk 0.30 compared to the previous session.  The paid-up capital of the company is Tk 156.61 crore. The company declared 12 percent cash and 3 percent stock dividends for 2016. It made a profit of Tk 22 crore in the nine months from July 2016 to March 2017.  Envoy Textiles is a manufacturer of fashion denim, with annual production capacity of 50 million yards of fabric, according to the company's website.

Source: The Daily Star.

Back to top

 

Subscribe to SRTEPC mailing list

Exchange Rates