Surat: Powerloom weavers in the country's largest man-made fabric (MMF) centre in the city are worried as the frontline yarn manufacturing companies have increased polyester yarn (POY) prices by almost seven per cent, effective August 1. Call it a Goods and Services Tax (GST) effect, the yarn spinners announced the increase in yarn prices from Rs 5 per kilogram to Rs10 per kilogram, compared to prices pre-GST. Leaders in powerloom sector stated that the yarn price hike is phenomenal, while the prices of fabric have been unchanged. The increase in raw material price is going to impact the end prices of MMF fabrics by almost 15 per cent. "It seems that the yarn spinners are unhappy with 18 per cent GST. There is no rationale behind increasing the yarn prices, when the companies are well aware of the fact that there is no such movement in the market. The price hike is definitely going to hugely impact powerloom sector," Pandesara Weavers Cooperative Society president Ashish Gujarati said. Gujarati added, "The industry is waiting with a bated breath on the decisions to be taken at the GST Council meeting on August 5. We have put forth demand for refund of accumulated tax credit and removing GST of 5 per cent on weaving job work. Now, the hike in yarn prices, which is basic raw material for powerloom weavers, is a further cause of worry for the very existence of small-time weavers." Federation of Gujarat Weavers Association (FOGWA) president Ashok Jirawala said, "The frontline spinners are always in a hurry to increase the prices. They should think of the industry first and the situation being faced by small weavers. The price hike of Rs 5 to Rs 10 per kilogram will kill the industry post-GST." Sachin Weavers Association president Mahendra Ramoliya said, "The 5 per cent GST on job work and 18 per cent GST on yarn were not enough that the yarn spinners have now increased the prices of polyester yarn. This will adversely affect the industry and that the small weavers will not be able to survive."
Source: The Times of India
The government on Tuesday decided to restore the rate of the remission of state levies (RoSL) under the duty drawback scheme available to garments exporters in the pre-GST period, in a bid to support the labour-intensive sector. Following the introduction of the GST, the government had recently cut the RoSL rate to a uniform 0.39% of the freight-on-board value of products meant for exports (up to September 2017), against the pre-GST levels of 2.9-3.9%. Garment exporters, however, protested against the move and requested the finance ministry to restore the earlier RoSL rate. In a statement on Tuesday, the textile ministry said: “In order to support exporters of garments and made-ups, the government has announced as a transitional arrangement that for the period July 1 to September 30, 2017, the exporter may claim ROSL at the rates prior to introduction of GST.” The government earlier decided to reduce the interim rate, as most of the state levies had been scrapped in the GST regime. Only two state levies (value-added tax on petroleum products and electricity charges) would continue under the GST regime as well, on the basis of which the 0.39% interim refund structure was based, a senior government official had told FE last week. RoSL, under which garment exporters get refunds from the Centre against all the levies they pay at the states’ level, is the most important scheme in the Rs 6,000-crore garments package announced last year. The government has budgetted Rs 1,555 crore for the RoSL scheme in 2017-18. Apparel exports have been registering double-digit growth since the start of the disbursement of RoSL (around December last year). During March and April, garment exporters were able to increase production by around 30% and employed at least 5% more workers during the same period, according to Apparel Exports Promotion Council chairman Ashok G Rajani.
Source: Financial Express
A month after the Goods and Service Tax (GST) came into force, trade and industry here is still grappling to understand the new structure. While some sectors have reported a slow down in sales, the classification of goods, which is yet to be properly understood, has been a bane for the trading community, trade and industry sources say. The crucial foodgrains sector is still struggling to maintain pace even as traders have reported a drop in sales by almost 30%, said president of the Bengaluru Wholesale Foodgrains and Pulses Association Ramesh Chandra Lahoti. “The new classification has been confusing. For example, a trader in pulses has to look out for dry leguminous seed classification, which is causing confusion,” he said, and added that they have been demanding simplification of language that can be understood by the trading community. He said trade had been sluggish after GST, as many traders, unable to understand the new HSN codes stopped trading for a few days after the new tax regime kicked in. “About 50% of the traders in Yeshwantapur APMC, the largest wholesale foodgrain market in the city, do not have computers. They are still generating handwritten bills.” Traders believe that the initial impact of the GST would be known when they file the first returns on August 20. An estimated 6.2 lakh trade and industry bodies have registered under GST in Karnataka so far. Under the earlier VAT regime, 5.6 lakh trade and industries had registered.
Garment sector
For the garment sector, which employs one of the large force, the confusion on the tax over job work seems to have slowed down offtake. The former president of the Karnataka Hosiery and Garments Association Sajjan Raj Mehta said, “Most garment units involve multiple job works, including knitting, dyeing, printing, cutting, and embroidery. Instead of taxing job work, a uniform rate of 5% on readymade garment will result in better understanding and compliance.” Acknowledging that the classification under GST required more clarity, member of the GST Advisory Committee, set up by the Karnataka government, B.T. Manohar said confusion still exists among the trade community and there needs to be clarity in tax rates too. Further, traders also need to understand the input tax credit well, he added. “However, for those who complied with VAT well, the first filing of returns under GST may not be a problem. Though there are problems now, we hope it to settle down in the next two to three months.
Many branded food produce turn unbranded
Many branded food produce have turned unbranded in the last one month. According to president of the Bengaluru Wholesale Foodgrains and Pulses Association Ramesh Chandra Lahoti, at least 75% of the branded products have not been using logo in order to escape from the 5% tax net. “In foodgrain business, a 5% margin is huge. It will be difficult for branded products to compete with unbranded ones that has 0% tax, he said, and added that a ₹5 to ₹7 difference per kg at the wholesale market will make a lot of difference in sale. “So many mills that were selling branded rice, pulses, wheat, aata, maida, and soji have not been using logos,” he said. According to Mr. Lahoti, they are expecting some relief during the next GST Council meeting.
‘Business has been dull’
For some small businesses, the kicking in of GST regime has brought more than expected misery. “In the last one month, I have managed to raise just one bill that too for a few thousands. There has been almost no sale as wholesalers and retailers have refused to lift fresh stock owing to confusion and fear,” said a Bengaluru-based woman entrepreneur, who manufactures soft toys. With the “season” for soft toys starting in mid-August, she is anxious to sell her products that are piling up in her stock. “Wholesalers are scared that I will raise a bill and hence are going slow. Business has never been so dull,” she said on condition of anonymity the entrepreneur, who chose to remain anonymous, said. While she has been in the soft toys manufacturing industry for the past 18 years, she has been an entrepreneur for the past four years. According to her, running her business has become very difficult since she hires people on piece-work basis. “If I do not give work to them, they will move on to other jobs. When business increases in the future, I may not be able to get the workers back. Rotation of money in business is almost not there in the last one month,” she said. Inquiries with others running small businesses revealed that rotation of money that supported continuation of businesses has come down drastically, hurting many in the supply chain. The former president of the Karnataka Hosiery and Garments Association Sajjan Raj Mehta acknowledged that much cash is not available in the supply chain.
Source: The Hindu
Question 1: How are exports treated under the GST Law?
Answer: Under the GST Law, export of goods or services has been treated as:
• inter-State supply and covered under the IGST Act.
• ‘zero rated supply’ i.e. the goods or services exported shall be relieved of GST levied upon them either at the input stage or at the final product stage.
Question 2: What will be the impact of GST on zero rating of export of goods?
Answer: This will make Indian exports competitive in the international market.
Question 3: Have the procedures relating to exports by manufacturer exporters been simplified in GST regime?
Answer: Yes. The procedures relating to export have been simplified so as to do away with the paper work and intervention of the department at various stages of export.
The salient features of the scheme of export under GST regime are as follows:
• The goods and services can be exported either on payment of IGST which can be claimed as refund after the
goods have been exported, or under bond or Letter of Undertaking (LUT) without payment of IGST.
• In case of goods and services exported under bond or LUT, the exporter can claim refund of accumulated ITC on account of export.
• In case of goods the shipping bill is the only document required to be filed with the Customs for making exports. Requirement of filing the ARE 1/ARE 2 has been done away with.
• The supplies made for export are to be made under self-sealing and self-certification without any intervention of the departmental officer.
• The shipping bill filed with the Customs is treated as an application for refund of IGST and shall be deemed to have been filed after submission of export general
manifest and furnishing of a valid return in Form GSTR-3 by the applicant.
Question 4: For merchant exporters, is there any change in the Export Procedure under the GST regime?
Answer: The concept of merchant or manufacturer exporter would become irrelevant under the GST regime. The procedure in respect of the supplies made for export is same for both merchant exporter and a manufacturer exporter.
Question 5: The supplies to a SEZ unit or SEZ developer are treated as zero rated supplies in the GST Law. Then why there is no specific mention in the GST Law about not charging of tax in respect of supplies from DTA unit to a SEZ unit or SEZ developer? Answer: Yes, supplies made to an SEZ unit or a SEZ developer are zero rated. The supplies made to an SEZ unit or a SEZ developer can be made in the same manner as supplies made for export:
• either on payment of IGST under claim of refund;
• or under bond or LUT without payment of any IGST.
Question 6: When a SEZ unit or SEZ developer procures any goods or services from an unregistered supplier, whether the SEZ unit or SEZ developer needs to pay IGST under reverse
charge or these will be zero rated supplies?
Answer: Supplies to SEZ unit or SEZ developer have been accorded the status of inter-State supplies under the IGST Act. Under the GST Law, any supplier making inter-State supplies has to compulsorily get registered under GST. Thus anyone making a supply to a SEZ unit or SEZ developer has to necessarily obtain GST registration.
Question 7: How soon will refund in respect of export of goods or services be granted during the GST regime?
Answer: (a) In case of refund of tax on inputs used in exports:
• Refund of 90% will be granted provisionally within seven days of acknowledgement of refund application.
• Remaining 10% will be paid within a maximum period of 60 days from the date of receipt of application complete in all respects.
• Interest @ 6% is payable if full refund is not granted within 60 days.
(b) In the case of refund of IGST paid on exports: Upon receipt of information regarding furnishing of valid return in Form GSTR-3 by the exporter from the common portal, the Customs shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill shall be credited to the bank account of the exporter.
Question 8: Will export of goods to Nepal and Bhutan treated as zero rated and thereby qualify for all the benefits available to zero rated supplies under the GST regime?
Answer: Export of goods to Nepal or Bhutan fulfils the condition of GST Law regarding taking goods out of India. Hence, export of goods to Nepal and Bhutan will be treated as zero orated and consequently will also qualify for all the benefits available to zero rated supplies under the GST regime. However, the definition of ‘export of services’ in the GST Law requires that the payment for such services should have been received by the supplier of services in convertible foreign exchange.
Question 9: What is deemed export under GST Law? Whether any supply has been categorized as deemed export by the Government?
Answer: Deemed export has been defined under Section 2(39) of CGST Act, 2017 as supplies of goods as may be notified under section 147 of the said Act. Under section 147, the Government may, on the recommendations of the Council, notify certain supplies of goods manufactured in India as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange. However, till date, the government has not notified any supply as deemed export.
Question 10: Whether the EOU scheme will continue to be in operation in the GST regime and whether EOU is required to take registration under the GST Law?
Answer: EOU is like any other supplier under GST and all the provisions of the GST Law will apply. However, the benefit of Basic Customs Duty exemption on imports will continue.
Question 11: What tax benefits will be available to EOU scheme in GST regime?
Answer: The duty free imports under GST regime will be restricted to Basic Customs Duty. Exemption from the additional duties of Customs, if any, under section 3(1), 3(3)
and 3(5) of the Customs Tariff Act, 1975 and exemption from Central Excise duty will be available for goods specified under the fourth Schedule to the Central Excise Act. IGST or CGST plus SGST will be payable by the suppliers who make supplies to the EOU. The EOU will be eligible, like any other registered person, to take Input Tax Credit of the said GST paid by its suppliers.
Question 12: Whether supplies to or from EOU will be exempted from GST?
Answer: No.
• Under the GST Law, IGST or CGST plus SGST will be payable by the suppliers who make supplies to the EOU. The EOU will be eligible to take Input Tax Credit of the said GST paid by its suppliers. The supplies from EOU will not be exempted from GST, except in the case of zero rated supplies defined under section 16 of the IGST Act, i.e. supplies made by EOU in the form of physical export or supplies to a SEZ Unit or SEZ Developer for authorized operations.
Question 13: What procedure will be followed by EOU to import goods without payment of Customs duty in the GST regime?
Answer: To avail such import benefits, EOUs will have to follow the procedure under the Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017.
Question 14: Whether an EOU can clear goods to another EOU (inter-unit transfer)? And whether an EOU can send goods for carrying out job work on such goods? In such situations, how will be the tax liability be discharged?
Answer: Supply of goods from one EOU to another EOU will be treated as any other supply under GST Law. An EOU can send goods for job work as per section 143 of the CGST Act, 2017 and rule 45 of the CGST Rules, 2017 and the tax liability shall be discharged accordingly.
Question 15: M/s XYZ is engaged in export of goods only having exports of approx. Rs. 5 crores and no clearances for home consumption are affected. M/s XYZ was not required to be registered under Central Excise. Whether M/s XYZ would be required to get itself registered under GST?
Answer: Yes, because exports have been treated as inter-State supplies under IGST Law.
Question 16: We are engaged in the manufacture of exempted excisable goods for export. We availed input stage rebate used in the manufacture of exported goods. How would our case be dealt under GST law if our supply remains an exempt supply?
Answer: Under IGST law a person engaged in export of goods which is an exempt supply is eligible to avail input stage credit for zero rated supplies. Once goods are exported, refund of unutilized credit can be availed under Section 16(3)(a) of IGST Act, 2017 and Section 54 of the CGST Act, 2017 and the rules made thereunder.
Question 17: We are merchant exporters dealing in various products.As per current procedure, we purchase goods from a particular factory against CT1/ARE1 so that no excise is levied
on us. After goods are exported, we provide proof of export and Form H (for sales tax exemption) to the concerned factory. How would GST impact us and what will be the process now?
Answer: Taxable event in the GST regime is supply of goods. Exports being inter-State supply, you would be required to obtain GST registration. The manufacturer would be supplying
you the goods on the payment of IGST or CGST and SGST/UTGST as applicable. You may avail of input stage credit of the tax paid on goods and services and export the goods under bond/LUT. Unutilized credit can be availed as refund. Alternatively, you may export the goods on payment of integrated tax and refund of integrated tax would be available to you.
Question 18: I have stock of inputs, semi-finished goods and finished goods on the date on which GST comes into force. But I have no duty paying documents. How am I going to be compensated for the taxes paid on the said inputs, semi-finished goods, and finished goods before GST for the exports made after GST is implemented?
Answer: A transition period of three months has been provided for availing of drawback. For exports during this period, higher rate of duty drawback (composite AIR) shall be available subject to conditions that no ITC of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward.
Question 19: I supply goods to SEZ units and developers. For such supplies, presently drawback is available to the recipient or to me (if recipient gives a disclaimer). What is status of such
drawback under GST regime?
Answer: There is no change except for the fact that if drawback is claimed by DTA supplier, the claim needs to be filed with the jurisdictional Customs Authorities.
Question 20: Whether an EOU can clear goods in DTA?
Answer: Yes, an EOU can clear goods in DTA in accordance with the provisions laid in the Foreign Trade Policy.
Question 21: Will an exporter be required to pay GST in case of goods procured from unregistered persons (including unregistered job workers)?
Answer: In case of supply by an unregistered person (including unregistered job workers), the registered person i.e., exporter shall be liable to pay GST under reverse charge mechanism. However the exporter can avail ITC of such GST paid and either utilise the ITC or claim refund of the same.
Question 22: Is GST payable on Agency Commission earned by buying agents of foreign buyers?
Answer: Yes. Since commission is received by agents in India, and the place of supply of service is in India, GST will be payable.
Transition of Export Promotion Scheme on implementation of GST
Question 1: Will duty Drawback scheme continue under GST regime? If yes, what will be the rates of Drawback?
Answer: Yes. Duty Drawback scheme with certain modifications will continue under the GST regime. The changes in the
said scheme are as follows:
• The Drawback shall be available only of Customs duties on imported inputs and Central Excise duty on items specified in the Fourth Schedule to the Central Excise Act 1944 (specified petroleum products, tobacco etc.) used as inputs or fuel for captive power generation.
• As an export facilitation measure, for the transition period of 3 months, from July to September, 2017, Drawback at higher composite rates will continue to be granted subject to certain safeguards i.e. for claiming the higher rate of drawback, the exporter has to make a declaration and certificate is required that no Input Tax Credit (ITC)
of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward.
• In absence of such certification, drawback will be restricted to the customs portion of drawback.
Question 2: Is Drawback at a higher All Industry Rate (AIR) admissible if an exporter has not availed Input Tax Credit of GST or refund of IGST paid on exported goods ?
Answer: No. After 30th September 2017, drawback will be admissible only at lower rate determined on the basis of the custom duties paid on the goods imported for supplying goods for export.
Question 3: If an exporter has stock of GST paid inputs as well as inputs from pre-GST period and if inputs from both lots are used in export goods, what shall be Drawback on such exports?
Answer: During the transition period upto 30th September 2017, exporters can avail drawback at higher rate subject to the conditions that no Input Tax Credit (ITC) of CGST/IGST is claimed, no refund of IGST paid on export goods is claimed and no CENVAT credit is carried forward.
Question 4: Will brand rate of Drawback be admissible for Central Excise duty and Service Tax in respect of exports made prior to GST implementation, for which application is filed after 1st July 2017?
Answer: For the exports made prior to 1st July 2017, application for fixation of brand rate as per the Drawback scheme under the earlier law (defined as ‘existing law’ in section 2(48) of the CGST Act, 2017) can be filed even after 1st July 2017.
Question 5: Applications for fixation of brand rate used to be filed with jurisdictional Commissioner of Central Excise having jurisdiction over the factory where export goods were manufactured. Under GST regime, will there be any change regarding filing of application for fixation of brand rate?
Answer: With effect from 1st July 2017, applications for fixation of brand rate shall be filed with the Commissioner of Customs having jurisdiction over place of export of goods i.e the port/Airport/ICD etc. where Shipping Bill was filed. This shall be applicable even for exports made prior to 1st July 2017 for which application is yet to be filed. In case exports are from multiple places, application shall be filed with the Commissioner of Customs having jurisdiction over any one of the places of export of goods.
Question 6: Is there also a change under the GST regime in respect of filing of application for fixation of brand rate of Drawback for supplies to SEZ units and SEZ Developers?
Answer: Prior to 1st July 2017, applications for fixation of brand rate for supplies to SEZ units and SEZ Developers used to be filed with the jurisdictional Commissioner of Central Excise. With effect from 1st July 2017, applications for fixation of brand rate will be required to be filed with the Commissioner of Customs having jurisdiction over the principal place of business of the DTA supplier. This shall be applicable even for exports made prior to 1st July 2017 for which application for fixation of brand rate is yet to be filed.
Question 7: On re-export of imported goods, drawback of all duties paid at the time of importation was admissible earlier, as per the rates prescribed in this regard. What will be the position in respect of re-export made after 1st July 2017, of the goods imported prior to 1st July 2017? After 1st July 2017, IGST and Compensation Cess will also be payable on the imported goods. If such imported goods on which IGST and Compensation Cess were paid, are re-exported, whether Drawback of IGST and Compensation Cess will also be granted?
Answer: Drawback under Section 74 of the Customs Act, 1962 is available for duties paid at the time of importation. Therefore, whatever duties / taxes are paid at the time of importation of goods, Drawback of the same will be granted. Drawback of Basic Customs Duty plus Additional Duty of Customs (CVD) plus Special Additional Duty (SAD) paid on the goods imported prior to 1st July 2017 will be paid even if the re-export is made after 1st July 2017. Similarly, in respect of the goods imported after 1st July 2017, Basic Customs Duty plus IGST plus Compensation Cess will be paid and Drawback of all of these would be paid on re-export of such imported goods.
Question 8: Under the GST regime, will benefit of exemption from all duties available under Advance authorization scheme, EPCG scheme and duty credit scrips such as Merchandise Exports from India Scheme (MEIS) & Service Exports from India Scheme (SEIS) will continue?
Answer:• After 1st July 2017, the benefits under all the said schemes shall be restricted only to Basic Customs Duty, Safeguard Duty, Transitional Product Specific Safeguard Duty and Anti-dumping Duty in respect of goods leviable to IGST. For items specified in the Fourth Schedule to the Central Excise Act, 1944 (specified petroleum products, tobacco etc.) exemption from Additional Duty leviable under Sections 3(1), 3(3) and 3(5) of the Customs Tariff Act, 1975 shall be available.
Question 9: Under GST regime, can we get duty free benefit (all duties exempted) if we import capital goods using EPCG authorization?
Answer: Only basic customs duty will be exempted on imports made under EPCG Authorization. The EPCG holder will have to pay IGST on import of capital goods and take Input Tax Credit.
Question 10: Can duty credit scrips such as Merchandise Exports from India Scheme (MEIS) and Service Exports from India Scheme (SEIS) be used for payment of GST?
Answer: No. MEIS and SEIS scrip can be used only for payment of Basic Customs Duty or additional duties of Customs on items not covered under GST for imports under GST regime.
Question 11: What will be exemptions available for various authorizations/ scrips which have been issued prior to 1.7.2017 and remain unutilized on 1.7.2017?
Answer: No exemption under GST Law is provided. The EXIM scrips under the export incentive schemes of chapter 3 of FTP (for example MEIS and SEIS) can be utilised only for payment of Customs duties or additional duties of Customs, on items not covered by GST, at the time of import. The scrips cannot be utilized for payment of Integrated Tax and Compensation Cess. Similarly, scrips cannot be used for payment of CGST, SGST or IGST for domestic procurements.
Note: Reference to CGST Act, 2017 includes reference to SGST Act, 2017 and UTGST Act, 2017 also.
Source: CBEC
MUMBAI/ BENGALURU: The country's factory activity slumped to its lowest level in more than nine years in July, a private survey showed on Tuesday, dragged down by disruptions to business activity following the launch of GST (Goods and Services Tax). The Nikkei/IHS Markit Manufacturing Purchasing Managers' Index (PMI) unexpectedly fell to 47.9 in July from 50.9 a month earlier. It was the first time the reading has dropped below the 50 mark that separates growth from contraction since December and was its lowest reading since February 2009. Analysts polled by Reuters had expected only a marginal easing in the growth rate. July also marked the biggest month-on-month decline since November 2008, just after the collapse of Lehman Brothers triggered the global financial crisis. The figures came a day before the conclusion of the Reserve Bank of India's (RBI) rate setting meeting. The central bank's monetary policy committee is widely expected to cut the policy repo rate by 25 basis points to a more than 6-1/2 year low. Although the monetary policy panel is under pressure from the government and investors to do more to spur economic growth, it is not expected to read too much into Tuesday's PMI findings as the disruption from the nationwide rollout of GST is not expected to last for long. "One month's data alone wouldn't have a significant bearing," said Shilan Shah, India economist with Capital Economics. "We expect conditions to improve as firms get familiar with the new system."
Disruption
The GST came into effect on July 1. It is India's most ambitious tax overhaul in 70 years and is meant to unify the $2 trillion economy into a customs union. Ambiguous rules and a multi-rate tax structure, however, have left firms confused on how to price their products, hurting sales. While some businesses have protested against the new sales tax, many are struggling with the new compliance requirements that require them to file at least three returns every month. Some companies see the disruptions lasting until December, which could dent near-term growth. Asia's third-largest economy grew 6.1 per cent in January-March - fast by global standards but its slowest in over two years. "I would think even August will also show lower than expected PMI because it will take time for businesses to adjust to the change in the tax system," said Larsen & Toubro's chief financial officer, R. Shankar Raman. An output sub-index fell to 46.3, its lowest since early 2009, from 51.7 in June. There was also a contraction in new orders.
Source: Financial Express
The Central Board of Excise and Customs gave clarifications and provided answers to the persistent queries of the textile fraternity, regarding the goods and Services Tax (GST), on different tax slab rates. According to CBEC report, raw jute has been kept at NIL rate of GST and thus there would be no tax on it. The suppliers dealing only in raw jute are not required to register. Jute mills are not required to pay tax under Reverse Charge Mechanism (RCM) because both the goods have been kept at NIL rate of duty. Whereas, the rates for jute handbags and shopping bags are kept at 18 per cent. Similarly, raw silk has also been kept at NIL rate of GST and there would be no tax on it. The suppliers dealing only in raw silk are not required to register. Also, the cotton farmers are not liable to registration, but the buyers of raw cotton (who are registered persons) from the farmers, are required to pay tax on reverse charge basis. As per the rate schedule, all goods of sale value not exceeding Rs.1000 per piece would be taxed at 5 per cent and those exceeding Rs.1000 would be taxed at 12 per cent. It is the same value or the transaction value on which the tax has to be paid and not on MRP. The sarees whether embroidered or not would be taxed at the same rate at which the fabric is taxed. Also, the rate of tax on the dress materials or patterns is similar to the apparels, meaning the sale value not exceeding Rs.1000 will be taxed at 5 per cent whereas apparels exceeding Rs.1000 will be taxed at 12 per cent. No Harmonised System of Nomenclature (HSN) code is required to be mentioned up to Rs. 1.5 crore turnover. For those having turnover of Rs. 1.5 to 5 crore, first 2 digits or the chapter number of the HSN code, is required. Only those who have the turnover above Rs. 5 crore are required to mention 4 digits of the HSN code.
Source: Business World
WASHINGTON — The National Council of Textile Organizations (NCTO) filed public comments late yesterday afternoon in response to President Trump’s executive order directing the federal government to investigate violations and abuses of U.S. trade agreements. “A thorough investigation of trade agreement abuses and violations is long overdue and we appreciate the President Trump’s desire to finally review this important matter,” said NCTO President and CEO Auggie Tantillo. “If America is to fix the systemic problems that plague the international trading structure and stop trade cheats from driving American production offshore, policymakers need a better understanding of the illegal or unfair trade tactics that are being used to hurt U.S. industry, including textiles,” Tantillo finished. A notice for public comments (82 FR 29622) was issued by the U.S. Department of Commerce and the Office of the U.S. Trade Representative (USTR) on June 29, 2017 pursuant to Executive Order 13796 signed by President Trump on April 29, 2017. Documents associated with this matter are archived under Docket USTR-2017-0010. NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers.
• U.S. employment in the textile supply chain was 565,000 in 2016.
• The value of shipments for U.S. textiles and apparel was $74.4 billion last year, a nearly 11% increase since 2009.
• U.S. exports of fiber, textiles and apparel were $26.3 billion in 2016.
• Capital expenditures for textile and apparel production totaled $2 billion in 2015, the last year for which data is available.
Source: Textile World, August 01, 2017)
MORE Chinese are starting to favor Chinese apparel brands now according to a survey, which also pointed out that top international brands are still the frontrunners. The proportion of Chinese consumers who like Chinese apparel brands has more than doubled to 46 percent compared to two years ago, said the survey covering 2,450 respondents in 22 domestic cities by consulting firm OC&C Strategy. China’s apparel market has grown by double digits for decades and overtook the US to be the biggest apparel market in the world in 2015 and is now worth close to US$300 billion, according to market research firm Euromonitor International. Although negativity toward domestic labels has dropped to a record low of 10 percent from 24 percent two years ago, the research also suggests Chinese brands still suffer from a less competitive marketing strategy and product design. Respondents said they chose “value for money” and “Chinese elements” as the top reasons for buying Chinese apparel brands while they focused on “better quality” and “better design” when they bought international apparel brands. But top international brands are disproportionately favored as domestic labels continue to lose out to foreign competitors in terms of business performance. Front runners are predominantly international brands, with Uniqlo, Adidas and Jack & Jones occupying three of the top five spots.
Source: Shanghai Daily
The Economy Ministry, garment and footwear makers, and the International Labour Organisation’s Better Factory Cambodia program are drafting a long-term strategy to maintain high growth and increase high-end production in the garment sector by at least 50 per cent by 2025. According to a draft outline, the 2018-2025 strategy will look at the key challenges of the industry. These are likely to be high input and production costs, industrial relations, productivity and production capabilities, business environment, external environment and competition. Kaing Monika, deputy secretary-general for the Garment Manufacturers Association in Cambodia, welcomed the plan, saying it gave new momentum to the industry. “It is a clear strategy and policy response to maintain growth and improve human resources to make the industry more competitive,” said Mr Monika. “The government is putting in an effort to come up with a sound eight-year strategic plan to sustain and develop the garment and footwear industry. GMAC appreciates the effort,” he added. “Mainly, the policy will help cost-cutting and improve the efficiency of the industry, which includes skills development to move up the value chain and improve productivity. “There will also be a focus on industrial relations improvement to bring about a stable and peaceful production environment.” Hiroshi Suzuki, CEO and chief economist for the Business Research Institute for Cambodia (BRIC), said that the garment sector in Cambodia enjoyed low labour costs and good logistics infrastructure. However, he said foreign businesses controlling the industry had shifted factories from country to country to seek lower labour costs. Mr Suzuki pointed out that China was graduating from this labour-intensive industry and shifted its investment to much higher value-added sectors such as manufacturing cars and smartphones, and services such as IT. “It seems that Cambodia could enjoy returns from the garment industry in the coming 10 to 20 years but competition from rival countries has already started,” he said. “Myanmar, Sri Lanka and African countries such as Ethiopia are becoming strong competitors using lower labour cost and improved infrastructure.” Because of this emerging competition, Mr Suzuki said it was necessary to have a comprehensive strategy that covered the training of workers to improve connectivity within the region and the global supply chain. “At the same time, the gradual improvements in the sector could help construct the base for much higher value-added industries,” he said. Early last month, GMAC’s Cambodia Garment Training Institute opened its first class, providing intensive training to students working in the industry. According to Cambodia’s General Department of Customs and Excise, exports of garments and footwear rose by 7.2 per cent to $7.3 billion in 2016, up from $6.8 billion in 2015. The sector remains the most important component of Cambodia’s exports, with garment and footwear exports accounting for 78 per cent of the country’s total exports in 2016. This ratio edged down slightly from 81 per cent in 2015. “Footwear continues to be dwarfed by garment exports, but footwear is rising as a share of the sector’s total,” the department said. The share of the sector’s exports going to the US market continued to drop from 29 per cent in 2015 to 25 per cent in 2016. The EU remains the most important market destination for Cambodia’s garment and footwear exports, representing 40 per cent of the sector’s exports in 2016, down from 43 per cent in 2015.
Source: Khmer Times
CHENNAI (Thomson Reuters Foundation) – Bangladesh, the second largest garment producing country in the world, will digitally map its entire garment industry in the first such initiative to bring transparency in the supply chain in an effort to stop abuses. The mapping project will collect “credible, comprehensive and accurate data” on factories across Bangladesh and disclose it in a publicly available, online map, said a manufacturers association that launched the project on Saturday. Bangladesh’s garment sector, worth about $28 billion per year and employing 4 million people, came under scrutiny after the collapse of the eight-storey Rana Plaza factory complex in 2013 that killed more than 1,100 workers. The death of 10 workers in a boiler explosion at a garment factory earlier this month renewed calls for more transparency and implementation of labour laws. Garments are a key foreign-exchange earner for the South Asian nation, whose low wages and duty-free access to Western markets have helped make it the world’s second largest apparel exporter after China. “We believe [the project] will empower stakeholders across the industry, including workers, factory authority, brands, government and civil society organisations to create positive changes,” Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association, said in a statement. “This transparency initiative would significantly complement our ongoing efforts towards enhanced, more risk-averse supply chains,” Mr Rahman said. Campaigners have criticised many retailers for failing to improve working conditions in their supply chains. Long hours, low pay, poor safety standards and not being allowed to form trade unions are common complaints from garment workers. Locating sub-contracting suppliers has been the biggest challenge, with many big manufacturers not transparent about the lower ends of their supply chain, campaigners add. The digital mapping project is part of efforts to change that, project head Parveen S Huda said. “The mapping project will fuel Bangladesh’s garment industry advancements, inspire shared responsibility, responsible sourcing, collective action and build upon pre-existing improvement efforts through informed decision-making,” Ms Huda said. The map will provide a detailed industry-wide database of factories, including names, locations, numbers of workers, product type, export country, certifications and brand customers. Verification of information will be crowd sourced from the public to ensure that information remains up-to-date and accurate. The first public map is scheduled to live in 2018 in the Dhaka region. The final version of the map showcasing all 20 Bangladeshi garment producing districts is expected to be completed by 2021. Readymade garments, comprising knitwear and woven items, earned Bangladesh $28.15 billion in the year ended June 30. That was 7.34 percent below the target. Exporters blamed the lacklustre growth on a number of factors, including sluggish demand in the key markets, structural reforms in the garment sector, a weak euro and appreciation of local currency against the US dollar.
Source: Khmer Times
KARACHI: Vice President, Federation of Pakistan Chambers of Commerce and Industry, Saquib Fayyaz Magoon has urged the Federal Government to bring down the present tariff rates on gas and power in the country at par with the regional competitors to make Pakistan's export competitive in the global market. He made such assertion in a meeting with Federal Secretary for Ministry of Textile Industry Hassan Iqbal, here at FPCCI Head Office, says FPCCI release on Tuesday. Saquib Fayyaz Magoon showed concern on allowing rebate to export of yarn which is a basic raw material for weaving industry. He proposed that like textile machinery, the import of spare parts should also be allowed at zero rate as these were ultimately sold to the textile industry. Federal Secretary for Textile, in response to a query, informed that Plastic Technology Center (PTC) Karachi as per Federal Cabinet decision would be affiliated to National Textile University (NTU), Faisalabad as its campus under the administrative control of the Ministry of Textile with the financial help of Higher Education Commission (HEC), Ministry of Finance (MOF) and Ministry of Commerce (EDF). It would be a State-of-Art Centre which would be run under the guidance and in close coordination with Pakistan Plastic Manufacturers' Association, he added. The meeting was attended by a number of senior business leaders.
Source : Business Recorder
The Vietnamese textile and apparel industry attracted more than $750 million in foreign direct investment (FDI) in the first six months of 2017, mostly from investment capital increases in existing projects, despite a reduced number of FDI projects in recent years and the US withdrawal from the Trans-Pacific Partnership (TPP) last January. The years 2014 and 2015 are considered the most successful for FDI in the country's textile industry. But the number of FDI projects in this sector decreased considerably from the beginning of 2016, a state-controlled English-language newspaper in Vietnam reported. Except for the notable $220 million Chinese investment in a polyester synthetic fibre plant in the southern province of Tay Ninh, capital flows comprise mostly capital expansion investments in existing projects. According to the Vietnam Textile and Apparel Association (VITAS), the southern provinces of Dong Nai and Binh Duong attracted the two projects with the largest investment capital increase in the textile industry in 2017. In Binh Duong, Taiwan's Far Eastern Group raised its investment capital by $485.8 million in its polyester and synthetic fibre production project, Far Eastern Polytex (Vietnam) Ltd. The project was initiated in June 2015 with a registered investment capital of $274 million. This capital push makes the project one of the biggest to be certified in 2017 and will push the total registered investment to about $760 million. In the northern province of Bac Ninh, Samsung Display Vietnam registered a $2.5 billion capital increase in its projects. Taiwan's Tainan Spinning Company Ltd, also increased its investment capital by $50 million in Long Thai Tu Spinning Factory at Long Khanh Industrial Zone in Dong Nai. Tainan Spinning began constructing the Long Thai Tu Spinning Factory-Phase 2 at Nhon Trach 2 Industrial Zone in Dong Nai before the capital raise. The project, consisting of a main factory, four finished product warehouses, a garage for workers, and other auxiliary structures, began operation in 2016 end. The company plans to build its factories in Vietnam to take advantage of the country's existing export markets. According to VITAS vice chairman Le Tien Truong, textile projects attracting foreign capital after the United States withdrew from the TPP is a sign of conducive investment environment. The country's textile and apparel industry still benefits from a number of free trade agreement, such as the Vietnam-EU FTA, the Vietnam-South Korea FTA, and the Vietnam-Japan FTA. The value of garment and textile exports in Vietnam, one of the largest textile exporters in Asia, has increased 3.6 times in the last decade, from $7.78 billion in 2007 to $28.02 in 2016, accounting for 16 per cent of total export turnover. The industry is expected to grow by 7 per cent in 2017, reaching $30 billion in total export value. Competitive labour costs and preferential policies have made Vietnam the ideal destination for investors in the textile industry in recent years. FDI in the last decade has helped the country turn one of the five largest textile and apparel exporters in the world. At the moment however, Vietnamese textile and apparel products account for a mere 3 per cent of the EU market. (DS)
Source: Fibre2Fashion
