NEW DELHI: Textiles minister Smriti Irani on Tuesday assumed additional charge of information & broadcasting ministry while rural development minister Narendra Singh Tomar took over additional responsibility of housing and urban affairs (Mo-HUA) ministry, a day after both ministries were vacated by M Venkaiah Naidu after he was picked as the NDA's vice presidential candidate.
With the charge of I&B portfolio, Irani is back in the league of top ministers in the Union cabinet nearly a year after she was moved out of the high-profile HRD ministry. Tomar had first interaction with MoHUA officials on Tuesday evening when he took a briefing of Parliament questions. Sources said he asked ministry officials about recent reports of some private builders misusing the name of Pradhan Mantri Awas Yojna (urban) and what steps have so far been taken by the ministry. Tomar as rural development minister pushed construction of toilets under the Swachh Bharat Mission and PMAY in rural areas. Both the components are two flagship schemes of urban ministry.
Source: Times of India
Finance Minister Arun Jaitley on Tuesday said that organised traders and unorganised sellers in the textiles sector have not been affected by the GST.
“The main demand of the textile traders is not to put any tax on fabrics. However, this cannot be accepted,” he informed the Rajya Sabha, while replying to a question. Pointing out that GST rate structure for the textiles sector enables ease of classification and determination of rate, he said that zero tax on textiles would break the input tax credit chain and the garments manufacturers will not be able to get the credit of tax on previous stages.
“Nil GST on fabrics will result in zero rating of imported fabrics, while domestic fabrics will continue to bear the burden of input taxes,” he said, adding that the new rates are equal or lower than the pre-GST tax incidence. “The price of fabrics is not likely to go up,” he said. The Finance Minister also took on critics who had said that the sector has never been taxed. “It is not correct to say that textiles sector was never taxed in independent India. In fact, during 2003-04, the entire textiles sector was subjected to Central excise duty,” he said. The GST Council had decided to tax cotton fibre and other vegetable fibres at five per cent and manmade fibre at 18 per cent. Similarly, a five per cent tax is levied on all yarns and fabrics under GST, except for manmade yarn that is taxed at 18 per cent.
Readymade garments up to ₹1,000 are taxed at five per cent while those exceeding the cost are taxed at 12 per cent.
However, textile weavers and traders have called for a roll back of the tax on the grounds that their products will become more expensive under GST.
Source: Business Line
The United States on Monday launched the first salvo in the renegotiation of the 23-year-old North American Free Trade Agreement (Nafta), saying its top priority for the talks was shrinking the US trade deficit with Canada and Mexico.
In a much-anticipated document sent to lawmakers, US Trade Representative Robert Lighthizer said he would seek to reduce the trade imbalance by improving access for US goods exported to Canada and Mexico under the three-nation pact.
For the first time in a US trade deal, the administration also said it wants an “appropriate” provision to deter currency manipulation by trading partners. The move appeared aimed at future trade deals rather than specifically at Canada and Mexico, which are not considered currency manipulators.
The 17-page document asserted that no country should manipulate its currency exchange rate to gain an unfair competitive advantage, an often-cited complaint about China in past years.
Shortly before the release of the document, President Donald Trump lashed out against trade deals and unfair trade practices, saying he would take more legal and regulatory steps during the next six months to protect American manufacturers.
Canadian Minister of Foreign Affairs Chrystia Freeland said the US list was “part of its internal process” although a source familiar with the Canadian government’s thinking said the document was “not earth shattering.”
The source said officials from the United States, Mexico and Canada would meet in Washington on Tuesday to discuss logistics of the talks. No date has been announced for the Nafta talks, but they are expected in mid-August.
Mexico’s economy ministry said in a statement it would work “to achieve a constructive negotiation process that will allow trade and investment flows to increase and consolidates cooperation and economic integration to strengthen North American competitiveness.”
Speaking on condition of anonymity, a senior Mexican government official said the list of priorities was “not as bad as I was expecting” and welcomed that the United States was not pushing to impose punitive tariffs, as Trump has threatened.
Trade experts have argued that shrinking the yawning US trade deficit will not be achieved through trade deals but rather by boosting US savings.
“The first bullet point shows their pre-occupation with bilateral trade deficits and that’s unfortunate,” said Chad Bown, a senior fellow and trade expert at the Peterson Institute for International Economics. “There’s not much that trade policy and trade agreements can do to change those. That’s more of a macroeconomic issue.”
Among the priorities, Lighthizer said the administration would seek to eliminate a trade dispute mechanism that has largely prohibited the United States from pursuing anti-dumping and anti-subsidy cases against Canadian and Mexican firms.
Source: Business Standard
NEW DELHI: Sales of fast-fashion and lifestyle brands in India dropped by about a fifth in July despite eye-popping discounts, with industry experts attributing the decline to shoppers having advanced their purchasing to June before the national rollout of the single producer levy. The Goods and Services Tax (GST), which kicked in from July 1, involves a tax incidence of 12% instead of 5%.
“The reason for the drop could be that the industry had advanced the sales (to June),” said Jacob John, deputy chief executive of Lifestyle department stores chain.
At his stores, July sales were only marginally lower at about 5%. “This year, Eid was in June. So, some amount of Eid business also shifted to June and it was a good June for us,” John added.
Even though taxes on branded garments costing more than Rs 1,000 were raised from 5% to 12% after the GST was introduced, retailers from Levi’s to Lifestyle say they still haven’t increased the prices and are currently absorbing the differences in taxes themselves rather than passing them on to the consumers.
Source: Economic Times
Ahmedabad, Jul 18 (PTI) Traders in Surat today called off their two-week-long strike against the imposition of five per cent GST on textiles following the Centres assurance to look into their demand for its roll back.
Thousands of textile merchants in Surat have shut their shops since the last two weeks protesting against the new tax structure.
The announcement to withdraw the protest was made today by the traders who met Finance Minister Arun Jaitley in Delhi yesterday.
"During the meeting, Jaitley assured us that the issue of the GST on cloth will be taken up in the next GST Council meeting to be held on August 5. Thus, we have decided to call off the strike till that date," said Manoj Agrawal, a textile trader.
"If no favourable decision comes in that GST council meeting, we will think of going on strike again to raise our demand for abolishing the five per cent GST," he said.
During their demonstration in the Surat textile market, one of the biggest in the country, earlier this month, the protesters were lathicharged by the police who claimed that they were pelted with stones.
Amid protests staged by textile traders in various pockets of the country over the new Goods and Services Tax (GST), Finance Minister Arun Jaitley clarified that the demand of the textile traders to not levy any tax on fabrics cannot be accepted.
While protesters have highlighted that the new tax regime is complicated and lacks clarity, Jaitley stressed that necessary steps have already been taken to facilitate taxpayers to take GST registration.
"GST Sewa Kendras have been set-up in various centres to handhold the taxpayers and to provide all necessary guidance regarding GST compliance. The GST rate structure for the textiles sector enables ease of classification and determination of rate," Jaitley argued.
Addressing a question posed during the Rajya Sabha session here on Tuesday, Jaitley pointed out that nil GST on fabrics will break the input tax credit chain and then the garment manufacturers will not be able to get the credit of tax on previous stages.
Additionally, on the import front, he said that there will be zero rating of imported fabrics, while domestic fabrics will continue to bear the brunt of input taxes.
Since the GST rates are equal to or lower than the pre-GST tax incidence, Jaitley clarified that the price of fabrics is not likely to go up.
He also pointed out that the organised traders and unorganised sellers in the textile sector have not been affected by the GST.
Textile traders from Surat, Ahmadabad and other states are staging a fortnight-long protest over the implementation of the new tax regime.
The protestors, who lashed out against the Centre over the lack of clarity in the GST, claimed their strike has already caused a loss of Rs 6,000 crore to the government.
In Surat and Ahmadabad, markets remained closed with traders blocking traffic in certain areas, as they feel that the tax is too complicated for their understanding.
Under the new taxation system that was rolled out on July 1, it was decided that garments under Rs 1,000 would attract a five percent charge, while those above Rs 1,000 would attract a tax rate of 12 percent. Also, a five percent tax would be levied on fabrics with no refund of unutilized input tax credit.
Source: Business Standard
Finance Minister Arun Jaitley on Tuesday ruled out exempting the textiles sector from the Good and Services Tax. He said not levying a GST rate on fabrics will make imported items cheaper and disrupt the existing input tax credit chain for the domestic industry, PTI reported.
Yarn and fibres made from silk, wool, cotton or other vegetable fibres are levied a 5% tax under the new GST regime, which came into effect on July 1. Textile traders have been protesting against the 5% GST on fabrics, demanding a rollback.
In a written reply to a query in the Rajya Sabha, Jaitley clarified that the textiles sector had been taxed in the past, as well. “In fact, in 2003-04, the entire textiles sector was subjected to central excise duty,” he said. “Generally, the GST rates are equal or lower than the pre-GST tax incidence. Therefore, the price of fabrics is not likely to go up.”
The finance minister also said that the Centre had taken measures to allow taxpayers to register for the GST, and that GST Sewa Kendras had been set up to familiarise taxpayers with the new indirect tax regime.
Source: Scroll.in
Topping the list of demands of the GST Sangharsh Samiti, the textile traders’ body that is leading the strike that has shut down a four-km stretch of the country’s biggest cloth market on Surat’s Ring Road, is exemption from the Goods and Services Tax (GST) — or at least, an 18-month GST holiday. This what the textile traders asked for at their meeting with Finance Minister Arun Jaitley on Monday — and came away with the assurance that it would be taken up at the next meeting of the GST Council on August 5.
Behind the traders’ indefinite strike, however, is not so much the prospect of higher costs under the “tyrannical” GST regime, as the fear of their business being brought out in the open — of it being subjected to the full glare of financial scrutiny and “mandatory accounting”, say those who are intimately associated with the trade. Surat sends out saris — mostly the cheap, synthetic variety that costs a few hundred rupees per piece — worth nearly Rs 135 crore every day across the country. At least 80% of this massive business is carried out in the dark, say veterans of the trade. GST aims to bring every link in the chain of transactions on record — possibly raising the price of the cheapest saris and dress materials from Rs 70 to Rs 150-200, according to trade experts.
“Between 3.5 crore and 4 crore metres of cloth is woven in Surat every day on average, and sold to other states, cities, and even foreign countries,” Ashok Jirawala, president of the Federation of Gujarat Weavers’ Association, said. While most saris are unbranded local products, Surat is also home to some big brands like Rachna, Prafful, Parag and Garden Vareli.
The textile trade supply chain had so far been exempt from indirect taxation. “Now”, said Pandesara Industrial Association president Ashish Gujarati, “there is 18% GST in place of the combined VAT and excise on yarn. When the weaver sells the bale to the textile trader, the trader is liable to pay 5% GST. As the textile trader sends the bale to a mill for dyeing and printing, he will pay processing charges with 5% GST. After the cloth is dyed, printed and returned to the textile trader, he sells it to the wholesaler, again with 5% GST. The wholesaler adds his profit margin and sells it to the retailer with 5% GST.” According to Gujarati, the pre-GST cost arithmetic was as follows:
Yarn manufacturers, who paid 12.5% VAT and 5% excise duty, sold 1 kg of yarn to weavers for Rs 118. A kg of yarn yields around 15 m of woven grey bale (about two retail saris). The textile trader purchases this bale for Rs 16 per metre on average — or Rs 240 for 15 m of cloth. The mills that process (dye and print) the bale, charge Rs 12 per metre on average — so, for 15 m, the textile trader has to pay Rs 180 to the mill owner. Thus, the total cost of the finished cloth from 1 kg yarn is Rs 420 for the textile trader. “The textile trader sells his material to wholesalers in other states and cities, keeping a profit margin of around 15% on the cost price. The wholesaler sells it to the retailer, again keeping a margin of 15%, and the retailer keeps a margin of between 10% and 15% while selling to the customer,” Gujarati said.
However, GST gives weavers, mill owners and traders input credits at different levels. As per the pre-GST tax structure, a combined excise duty and VAT meant 18.16% tax imposed on yarn manufacturers, which the weavers would pay during purchase of stock. Under GST, weavers stand to receive 12% input credit, thus bringing back benefits.
“This benefit will be passed down the chain. The textile traders and processors also stand to benefit from input credit options as traders get an input credit of 5%, and processors will receive input credit for chemicals and dyes, which form almost 30% of the business, 5% input credit for coal for powerlooms, and so on,” said Jitendra Vakharia, president of the South Gujarat Weavers’ Association.
“Ultimately”, Vakharia said, “the chain of traders will also have to pass on the benefit to the consumers.” Ahmedabad based tax expert Monish Bhalla said tax calculations after GST put a liability of only 0.5% tax on the traders. “So far, only manufacturers and service providers of the industry fell under the purview of taxes, which added up to 18% even pre-GST. In fact, with the input credit system under GST, the chain of textile processors stand to gain at least 5% input credit at various stages. But on traders who were out of the purview of excise and other taxes, GST will impose a liability. This protest is not against GST, but against getting accounted,” Bhalla said.
Traders readily concede most of their business was “unaccounted” in order for them to avoid income-tax. With GST, accounts of the business will also lead to higher income-tax for traders with bigger turnovers. Said a trader who has been supplying saris to south Indian states for over two decades, “We have always showed only a part of the transaction in the books, and the rest of the trade has been trust-based. But with GST, the entire business has to be put on the books. It will be difficult to hide volumes, and we will be liable to pay higher income-tax on our turnovers.” In fact, while the traders’ strike has brought Surat’s sari business to a halt, manufacturers and service providers remain in favour of GST. Said Vakharia, “Since the strike began, I’ve not had even a quarter of my monthly business. The traders’ protest is not against GST, and those who don’t fall in line soon, will not be able to recover at all.”
Industry veterans say losses due to the strike have crossed Rs 5,000 crore. Textile mills in the Sachin, Pandesara and Palsana areas are unsure how the pre-GST stock would be cleared. Traders say they have the same problem: they can’t declare old stock. Bhalla said pre-GST stocks was “a genuine issue, whether accounted or unaccounted”, and the government could perhaps waive the liability on stocks declared until June 30. “They could also have a composition scheme for textile traders, like they have for small businesses. The government should allow them a composition scheme up to Rs 5 crore. But to do this, the Act, which currently has a Rs 1 crore cap, will have to be amended.”
Surat city is famous for its synthetic fibre, and is estimated to produce over 40% of the country’s total. Synthetic saris are cheaper, and therefore, in great demand among the poorer sections. Surat also produces high quality saris for a more affluent clientele. There are over 9 lakh powerloom machines in Surat city and district, and the daily turnover of the factories is estimated at Rs 90 crore. Over 4 lakh labourers from U P, Bihar, Maharashtra, Odisha, West Bengal and Rajasthan work and live in Surat, turning the wheels of a vibrant sub-economy. The strike has impacted their lives, as also the lives of those in businesses such as transportation.
Source: Indian Express
The Chinese and American textile industries are collaborating more closely than ever as the US becomes a "key player in the international strategy" of China's textile companies, said Xu Yingxin, vice-president of the China National Textile and Apparel Council.
"The United States is not just a key trading partner with China in the textile industry; it is also a key player in the international strategy of China's textile industry," Xu said on Monday at the opening ceremony of the 18th annual China Textile and Apparel Trade Show at the Jacob K. Javits Convention Center in New York.
Chinese businesses have made greenfield investments in the US, set up US branches and opened R&D facilities and manufacturing plants for chemical fiber, cotton textiles and original design.
"All these cooperation channels have shown that there is a great potential for practical cooperation and complementarity in China and the United States, and big promises for win-win cooperation in the future," he said.
This year's textile show - organized by the China National Textile and Apparel Council (CNTAC), the China Council for the Promotion of International Trade, Specialized Textile and Apparel and Messe Frankfurt - features nearly 1,000 designers from 14 countries and will run through Wednesday. About 650 Chinese companies attended. Textile companies from Suzhou, at the center of textile and apparel production in China, have their own exhibition area at the Javits Center.
"Today, China is the US' largest trading partner-our bilateral trade, bilateral investment, and people-to-people exchanges have all reached historic highs, and in this connection, I think the textile industry has made big contributions to this growth," said Zhang Qiyue, Chinese consul general in New York.
"The textile cooperation has not just brought tangible benefits to our two peoples, it has also contributed to global economic growth," she said.
Nicholas Zhou, sales representative for Aiyimei, said that the company has participated in the textile show for several years, having secured many of its clients through the trade event.
The company, based in Ningbo, East China's Zhejiang province, designs and manufactures outerwear, dinner jackets and other formal wear for US and Europe-based clients, including Jones New York and Andrew Marc.
"We feel that more Western clients are taking interest in our designs - the newer, trendier and unique designs," he said.
Zhou said that the industry is a tough one to work in now, as it recovers from a worldwide slump the past few years.
"We work with smaller brands now, collaborating with them directly, like with Jones New York and Andrew Marc. The clients may order less product, but the prices of the pieces are higher, and so we're earning more profit," he said.
China Textiles Development Center, based in Beijing, is a new participant to the textile show. It produces formal and athletic wear for mostly European clients, though it is exploring the US market right now.
"We're newcomers to the exhibition, so we haven't received a lot of feedback yet," said Lydia Zhang, vice-president of the center. "Through participating in this exhibition, we want to better understand the US market and to expand from there. In this industry, the big companies have a pretty fixed customer base, so you can't just come in and expect to expand immediately."
China notified the World Trade Organization on Tuesday that by the end of this year it will ban imports of 24 types of rubbish, as part of a campaign against "foreign garbage" and environmental pollution.
"By the end of 2017, China will forbid the import of 4 classes, 24 kinds of solid wastes, including plastics waste from living sources, vanadium slag, unsorted waste paper and waste textile materials," China said in the WTO filing.
U.S. lawmakers are arguing that a one-time-only subsidy to cotton farmers meant to help with low prices should be made permanent, given the aid foreign producers receive in other countries, according to a letter sent to President Donald Trump Tuesday signed by 109 members of Congress.
The so-called Cotton Ginning Cost Share Program gave producers $300 million last year to help them cover fiber-processing costs, with each farmer receiving $8,100 in aid, on average. It was billed as a temporary measure to help producers that were battling lower incomes and receiving less government aid under the 2014 farm bill.
Subsidies to farmers in China, India and other nations make it necessary to maintain U.S. assistance to give domestic growers a chance to compete, according to the letter, an effort led by House Agriculture Chairman Michael Conaway. Bigger crops worldwide are curbing the outlook for American exports just as a move away from corn and toward cotton in the southern U.S. is boosting domestic production of the fiber.
“We can’t continue ignoring the economic turmoil of U.S. cotton farmers.," Conaway, a Texas Republican, said in an emailed statement. "While countries like China and India are pouring billions of dollars into subsidies for fiber production each year, America’s cotton producers have been struggling to scrape by without a safety net to help them."
Farm Aid
U.S. cotton producers aren’t projected to receive any government farm payments in the current fiscal year, according to a Congressional Budget Office estimate last month. That’s tied to changes made in the last farm bill, approved in 2014, that drastically reduced subsidies as part of a settlement with Brazil over a World Trade Organization case the U.S. lost. In contrast, producers of corn, the biggest U.S. crop, may receive $4.2 billion in aid this year.
Globally, the fiber is a heavily subsidized crop, with 71 percent of all world production receiving direct aid, according to a 2016 report from the International Cotton Advisory Committee. Aid worldwide for the 2015-2016 marketing year was estimated at $7.2 billion, down from a record $10.7 billion the previous year, according to the study.
China is the world’s biggest subsidizer, giving $5.3 billion in aid during that time, according to the study.
An industry push to make cottonseed oil, a byproduct of the ginning process that’s used in cooking, eligible for farm aid has foundered over legal concerns from the U.S. Department of Agriculture, which would have to add the designation. Then-Secretary Tom Vilsack refused to do so, citing legal advice. Successor Sonny Perdue, who as governor of Georgia led the second-biggest cotton producing state, has taken the same position.
The cost-share program has fared better. The House Agriculture Appropriations bill approved in committee last week recommends re-instituting that program this year.
The Cotton Ginners Association of Zimbabwe (CGAZ) has welcomed the Reserve Bank of Zimbabwe’s (RBZ) decision to provide $40 cash to seed cotton growers for each bale of cotton they deliver to the Cotton Company of Zimbabwe (Cottco).
BY TATIRA ZWINOIRA
At the weekend, RBZ announced that seed cotton growers would receive $40 in cash per bale they submitted and the remainder through either bank or mobile money transfers.
Cotton costs an average of $100 per bale.
CGAZ representative, Godfrey Buka yesterday said the new framework came into being after farmers complained they were not receiving payments on time.
“There is a limited access to cash and also it is in terms of wanting to include the sector into the banking system, which is the reason,” he explained.
“Essentially, there is no petty cash to use for purchasing the cotton, so the portion of the proceeds will be in cash and part of the money will be electronic transfers through bank deposits.
“It will be convenient to the farmer, because once the famer is used to banking their money, payments will be made into their bank account or maybe through platforms like EcoCash or Telecash.
“So once this is done, during the selling season, farmers will become familiar with such transactions and it will be convenient for people.”
Buka said RBZ’s intervention would also help seed cotton growers when the central bank paid them their 5% export incentive at the end of the season.
The latest industry prices show that on average, the price for A-grade cotton per kilogramme (kg) is 55 cents, B-grade 50 cents and D-Grade 47 cents, with the government expected to buy 98% of cotton by the end of this season.
On average, the price of 1kg of cotton is about 50 cents, with a bale weighing up to 260kg.
RBZ’s move to offer cotton growers part cash comes at a time seed cotton growers were becoming disillusioned as they were failing to access cash due to the liquidity crisis.
This resulted in some seed cotton growers engaging in side marketing in order to get cash.
In this regard, RBZ explained that they hoped the measure would ensure seed cotton growers received timeous payments and keep them from side marketing.
The country is expected to produce 110 000 tonnes of cotton, up from 32 000 last year.
Cotton is a fluffy fiber that is so soft to the touch. It is a wonderful commodity to wear or sleep on or in as it makes us feel comfortable as it brushes against or hugs our skin. Cotton is light, and a ball of the commodity will fall gently to the floor when dropped, and when we try to propel the raw material higher, it moves slowly and majestically. The physical characteristics of cotton are like few other commodities. Cotton is the essence of a soft commodity as unlike sugar, coffee, cocoa, or orange juice; it is truly soft. Cotton is also the embodiment of a luxury commodity as whether it is sheets or garments, wrapping ourselves in cotton provide a one of a kind luxurious feeling.
When it comes to trading cotton, there are long periods where the price gently rises and falls, but they tend to lead to explosive moves on the upside or implosions on the downside. In May, we saw the price explode to over 87 cents per pounds and then fall like a stone. Cotton is anything but soft and fluffy during its periods of price insanity. After all, in 2010-2011, the price moved from under $1 to $2.27 per pound over the course of seven months. The move obliterated almost all market participants in the cotton futures market, even companies that had traded the fiber for decades lost their proverbial shirts. December cotton futures are now trading below 70 cents per pound, and I view the present price level as an opportunity that may require lots of patience.
WASDE and cotton’s response
The USDA’s World Agricultural Supply and Demand Estimates report contained a couple of changes from the June report when it comes to the cotton market. The USDA modified its Indian database, which increased production and carryover from the nation which is a major world producer of the fiber. While WASDE lowered the U.S. cotton crop estimate by 200,000 bales, significant changes for India in both 2016-17 and 2017-18 offset the smaller U.S. crop and resulted in an approximate one million bale increase in world production and carryover for the 2017-18 marketing season. Meanwhile, some analysts believe that the USDA failed to evaluate the current state of the export market for U.S. cotton, waiting another month for the 2016-17 marketing season to end and thereby just using concrete data in their estimate. The USDA chose to not account for the high pace of 2017-18 export sale registrations and left that estimate unchanged at 13.5 million bales. While it is still early in the year, sales are on a pace of 15.5-15.7 million bales for the upcoming marketing year which is not bearish for the price of cotton. The recent price drop in the cotton futures market is likely to increase export sales especially given the weakness in the U.S. dollar which makes U.S. exports more competitive on the world market.
