India may see a doubling of minimum wage nationally to about `18,000 per month as the labour ministry is set to relook at the formula currently used to determine the floor level. The ministry is expected to take into consideration a proposal to double the units or individuals considered per fa mily to six from three at present by including dependent parents as well as considering each child as one unit. Currently , husband, wife and two children in a family are considered three units, based on which minimum wage is determined for agriculture and non-agriculture workers under the Minimum Wages Act, 1948. The Act is applicable to 47 central sector establishments and includes both agriculture and non-agriculture workers in the country. Labour minister Bandaru Dattatreya on Thursday said that a committee will be constituted to relook at the norms of fixation of minimum wages in the country. A decision to this effect was taken at the first meeting of the minimum wage central advisory board reconstituted recently. The last meeting of the board happened in 2010. “The Minimum Wage Act of 1948 is very old and the norms under the Act are not up to today's requirement of basic living. Hence a new committee will be shortly set up to revise the norms of fixation of minimum wages,“ Dattatreya said, adding that terms of reference of the committee will soon be finalised. According to Dattatreya, the primary issues that will be looked at include number of units per family, inclusion of dependent parents and treatment of women and children on a par with men. The labour ministry has near ly doubled the minimum wage for agriculture labourers including those hired on contract in March this year, six months after a 42% increase in minimum wages for non-agricultural labourers in August 2016 to `350 a day for unskilled workers, translating into a monthly salary of `9,100 per month. Consequently, an unskilled agriculture labourer will be entitled to get a minimum wage of `300 per day in C-category towns, up from `160 now, or `8,658 per month, while those in B and A category towns will get `303 and `333 respectively. Reiterating that labour code on wages will address most of wage issues, Dattatreya said he would table wage code bill in Parliament in the ongoing session.“Besides, I will soon write to chief ministers of all states to constitute the state level minimum wage advisory boards so that no state pays below the universal minimum wage,“ he said.
Source: Economic Times
Government has been implementing various policy initiatives and schemes for the welfare of textile workers in the country, such as Integrated Skill Development Scheme (ISDS), Schemes for Development of Silk and Sericulture sectors, National Handloom Development Programme (NHDP), Comprehensive Handloom Cluster Development Scheme(CHCDS), Yarn supply Scheme and National Handicrafts Development Programme (NHDP). Government is also implementing PowerTex India, a comprehensive scheme for Powerloom Sector Development. Further, Government is implementing social welfare schemes for weavers/ workers, such as Matatma Gandhi Bunkar Bima Yojana for Handloom weavers, the Group Insurance Scheme for Powerloom workers, the Aam Admi Bima Yojana for handicrafts artisans and scholarship for children of jute workers. Government of India had introduced the Textile Workers Rehabilitation Fund Scheme (TWRFS) to provide relief to workers rendered jobless due to permanent closure of Non-SSI Textile Mills in private sector. The TWRFS has now been merged with Rajiv Gandhi Shramik Kalyan Yojana (RGSKY) which provides an unemployment allowance for the employees covered under ESI Scheme, who are rendered unemployed involuntarily due to retrenchment/closure of factory, etc. The Government had also approved a special package for textile sector with an outlay of Rs. 6000 crore to boost employment generation and exports, particularly in Garmenting and Made-ups. The above information was given by the Minister of State, Textiles, Shri Ajay Tamta today, in a written reply to a Lok Sabha question. (This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
Source: Business Standard
The first tax returns under the new goods and services tax (GST) regime can be filed from Saturday and the facility will remain open till August 20, GST Network CEO Navin Kumar said on Thursday. Businesses can start filing their first GST returns and pay taxes for July on the portal of GST Network, beginning August 5, he said. To make compliance easy for firms, the GST Council has allowed businesses to initially file their returns on self-assessment basis in the first two months of rollout.So, the GST returns for July and August will be filed on the Goods and Services Tax Network portal by filling up GSTR 3B form.
Source: Economic Times
The Goods and Services Tax (GST) law came into force one month ago amid lot of opposition and confusion from all quarters. Initially opposition to GST was political with Opposition parties led by the grand old party, the Congress blocking GST in the Rajya Sabha, where the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) doesn’t have a majority. This is nothing new in India, where political parties play such games. It was also about giving the BJP a taste of its medicine because the party had blocked GST when the Congress-led United Progressive Alliance was in power. Now the opposition to the tax regime has started flowing from the trader lobby that is worried and confused with various provisions of GST and its compliance and implementation. After one month of implementation of GST, we now take a stock of how GST is impacting and shaping the country and the way we do business. We also take stock of all the pros and cons of GST, as we see GST being implemented and the teething troubles that arise in the process. The haste with which GST is implemented despite lack of preparedness of the government is a cause for concern. The law was passed without clarity on forms, rules, procedures, and worst – without the technology backbone and interface being ready. Many tax payers have faced problems in migration and registration on Goods and Services Tax Network (GSTN) platform due to technical glitches on the website. However, this is not the first time that traders and businesses have come out on the streets protesting against a path-breaking policy reform. Remember former prime minister Late PV Narasimha Rao ushering India out of the License Raj and pushing for liberalization, and protests by Bombay Club against this move? The GST is BJP’s liberalization moment. There is no doubt that this GST law is half-baked and ill-prepared. Worse, the government has miserably failed in communicating with stakeholders who are responsible for the success of GST. These are tax officials, business community and chartered accountants, tax counsels and lawyers. Various sources have told this writer that the government has failed in communicating and taking constructive suggestions for improvement from trade bodies and professional bodies. This is one of the major reasons for the angst against the reform and the government. However, now that the law has been enforced, there is a need for a middle path. Businesses have been vocal about this. In case of indirect taxes, businesses are nothing more than collection agents of the government. They collect taxes from their customers and deposit that in the treasury. Defaming them with a series of messages floated by the ruling party supporters on social media and messaging apps is an ill-advised tactic to force compliance. The government needs to understand the basic concerns of the business community and engage in a dialogue to address and resolve these concerns. This alternative is better than the government’s current strategy of employing dual approach of using Prime Minister Narendra Modi’s charisma and the propaganda machinery to push the law and force acceptance. Trade bodies and the business community are also aggrieved because the government could have engaged the tax department in orienting them on the law and its compliance. A direct communication by the government would have assuaged their concerns and confusions. However, the government itself was ill-prepared on GST. Until a couple of days before the launch, even tax officials related to excise, service tax, and VAT were not fully informed and trained. On the day of the rollout, VAT officials in some states were still undergoing training. That was when the government set up a helpline in call centres to help tax officials responsible for implementation and enforcement of GST. This should have been done in advance. Certain provisions in the GST law are draconian. This author was on a panel discussion on GST organised by – IBN-Lokmat, and a co-panelist voiced the same concern about return of inspector raj and discretionary powers with tax officials that can result in harassment of businessmen – especially small companies. This concern has aggravated because in the past such discretionary powers have resulted in enforcement officials extorting bribes. Traders are concerned about how to manage their costs and conduct business without fear and harassment. Traders concerned about these problems, have resorted to another extreme of opposing GST entirely. This kind of knee-jerk reaction is unwarranted and ill-advised. This is also happening due to politicisation of trade bodies and involvement of political parties in those associations. In turn, those trade bodies end up furthering the agenda and cause of a political party, instead of solving the issue. The ball is now in the government’s court. It needs to proactively engage in dialogue with trade bodies and work on simplification of compliance and instilling confidence in the minds of the stakeholders. It should sincerely listen to concerns of and suggestions from the business community and work on addressing those concerns by accepting valid suggestions. In order to reform an existing system with a massive overhaul, active engagement and direct communication with the business community is necessary. Only then can it ensure success of its initiative. The business community needs to realise that GST is the best thing to happen to the country. The reform aspires to bring all unorganised and informal businesses within the tax net. This will result in higher tax collection. The byproduct of this initiative of bringing all the unorganised and informal businesses within the tax net is that their revenues would be accounted and captured in the national income calculation. This would translate in gross domestic product (GDP) growth in the medium to long-term. The business community needs to actively support this initiative and objectives of the government. Let us not forget that this is the moment equivalent to liberalisation initiated by the PV Narsimha Rao government in 1991, which eventually led to exponential economic growth, increased business opportunities and eased up processes to do business. To ensure the success of GST, businesses need to work on constructive solution-based criticism and the government needs to engage with an open mind with the business community and address their concerns. The recently launched Goods and Service Tax (GST) has created outrage and protests in the textiles sector. The textiles and garments sector is one of the largest employment generators in the country. India has around 2 million power looms manufacturing around 20 billon meters of cloth. The power looms sector accounts for around 60 percent of the total textiles sector. The sector is largely unorganized with many players having hardly 10–20 looms and weaving on an average around 1,000 meters of cloth per loom per month, depending on quality of cloth and loom used to manufacture. Many run their looms on job-work basis and many buy yarn and manufacture cloth. These units are spread across Bhiwandi, Surat, Ichalkaranji, Erode, Bhilwara, to name a few large centres where power looms industry is operating. Till date this sector has been out of the tax net. The government has in the past tried to impose excise on the power looms sector since 2003. However, after an agitation by the players this was withdrawn. So this sector largely remained out of the tax net, except VAT. Now the sector is being brought into the tax net because of GST. While it is easy to blame the industry for their inertia and lack of desire to come within the tax net, there are practical complications that need consideration from the government also. At the same time, the aversion in the industry is also because many players don’t wish to come within the tax net and that cannot be ignored. Till date significant part of this trade was operating in cash. The traders never paid tax of any kind. Now there are concerns on how they can continue their trade in cash. e-way bills and squads inspecting goods and invoices have sent fear across the sector. There are pros and cons about the same. For this we need to understand manufacturing process. A piece of cloth that we buy in the market goes through various processes and moves in the hands of many intermediaries before we get the final finished piece of cloth. It starts with a textiles manufacturer buying various kinds of yarns. The yarns are sent for intermingling and twisting to get a kind of blended yarn that will be used for weaving. This yarn is then sent for dyeing. After dyeing, the yarn is sent for washing and processing. These yarns are loaded on sticks and beams for warp and weft and then finally it is ready for weaving. Weaving gives us cloth that is called Grey Cotton. This grey cotton is then sent for washing and dyeing and processing. After washing and dyeing we get our finished cloth that is available in the market. If we observe closely, from yarn to finished cloth there are more than half a dozen processes. Most of these weaving units or power looms don’t have the capabilities to execute all processes in its premises. So they have to send yarn out for intermingling, twisting, dyeing and processing, loading on sticks and beams before weaving. Similarly after weaving they have to send Grey Cotton outside for washing and dyeing and processing and again washing. Add to that all transportation involved in moving material from one place to other and back in the factory. This means for every material movement in the job-work, they will have to do all the paper work and then also pay GST on labour charges. If the units doing this job-work are unregistered, then the cloth manufacturer (power loom owner) will have to pay GST under the Reverse Charge Mechanism (RCM). Reverse Charge Mechanism is a method of collecting tax wherein the recipient of goods and service pays tax on material and service he buys from unregistered dealers. The government’s intent to impose RCM is to increase tax compliance resulting in higher tax revenues. The government has not been fully able to collect tax from many unorganized sectors like goods transport and small sector industries (SSIs). According to the government, any exemption on account of backward area benefits or SSI limits is a tax leakage which it is trying to stop. Compliances and tax collections will therefore increase through reverse charge mechanism. This means there will be additional compliance burden on power loom owners. It can be safely assumed that none of the smaller job-work units doing intermingling, twisting, dyeing, etc., will bother to handle all this and the burden of compliance will be on power loom owners. The bigger reason of fear is that now they may not be able to move their material for job-work at various places. Section 19 of GST Act read with Rule 43A is clear on procedure for sending goods out for job-work and availing input tax credit on the same. But smaller players would find this cumbersome. Can there be a better and easier method to handle this compliance? That needs to be deliberated by the government after a detailed dialogue with the industry. If we closely analyze the cost structure of power looms, they hardly make any decent margins. On a higher side, a power loom owner cum fabric manufacturer would make not more than 10 percent margin. Out of that he has to pay for power and electricity, labour and wages, and other expenses, leaving a loom owner with extremely low returns. For a businessman operating on such low margins, the cost of compliance that includes hiring an accountant and tax consultant is definitely a pain. This is one reason we are seeing a resistance against GST. Other contours in GST that has resulted in problems is inverted duty structure and interpretation on where certain fabrics could be placed. This was the issue that created outrage amongst textile manufacturers in Surat and attracted national attention. However, manufacturers were okay with inverted duty structure and loss on account of inability to get full set off of input tax credit. The reason is manufacturers were comfortable in absorbing some losses in order to gain ease in compliance and clarity on how their product would be taxed. The government is now considering reduction of GST on textile job work, which was 18 percent to 5 percent. This is in order to reduce inverted duty structure in textiles sector. Now comes the bigger issue of black money and tax evasion. Most of the trade in this sector is done in cash. Traders and manufacturers are reluctant about moving their trade to non-cash means. There are two big reasons for this. The first concern is, how will traders and manufacturers account for stock of unaccounted inventory that they would now sell through non-cash means? This would mean they will have to incur tax on sales income without any deduction for raw material costs. This translates into a huge tax liability for them on income that they have earned over years and decades but never paid tax. Conservative estimates by industry experts pegs the growth in accounted turnover of these players anywhere from 5 times to 10 times or even more due to GST. The second concern is sharing of information between GST and income tax and how to explain such a massive increase in turnover after GST? The bigger worry amongst traders and manufacturers is of income tax officials issuing notices for reopening of files of previous years in which income was under reported. The government can work on allaying this fear by giving some assurances to trade bodies that cases of previous years’ would not be reopened. Transition and evolution has always been a challenge for every living being. It is an even bigger challenge when it is about changing the way we do business. Here, government needs to be compassionate and understand valid concerns of the industry and work on smoothening rough edges and removing pain points. This is the only way the government can achieve a mutually beneficial solution in which industry is made to accept and comply with GST while allaying valid concerns to ensure success of the largest tax reform after independence.
Source: First Post
The Goods and Services Tax (GST) law came into force one month ago amid lot of opposition and confusion from all quarters. Initially opposition to GST was political with Opposition parties led by the grand old party, the Congress blocking GST in the Rajya Sabha, where the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) doesn’t have a majority. This is nothing new in India, where political parties play such games. It was also about giving the BJP a taste of its medicine because the party had blocked GST when the Congress-led United Progressive Alliance was in power. Now the opposition to the tax regime has started flowing from the trader lobby that is worried and confused with various provisions of GST and its compliance and implementation. After one month of implementation of GST, we now take a stock of how GST is impacting and shaping the country and the way we do business. We also take stock of all the pros and cons of GST, as we see GST being implemented and the teething troubles that arise in the process. The haste with which GST is implemented despite lack of preparedness of the government is a cause for concern. The law was passed without clarity on forms, rules, procedures, and worst – without the technology backbone and interface being ready. Many tax payers have faced problems in migration and registration on Goods and Services Tax Network (GSTN) platform due to technical glitches on the website. However, this is not the first time that traders and businesses have come out on the streets protesting against a path-breaking policy reform. Remember former prime minister Late PV Narasimha Rao ushering India out of the License Raj and pushing for liberalization, and protests by Bombay Club against this move? The GST is BJP’s liberalization moment. There is no doubt that this GST law is half-baked and ill-prepared. Worse, the government has miserably failed in communicating with stakeholders who are responsible for the success of GST. These are tax officials, business community and chartered accountants, tax counsels and lawyers. Various sources have told this writer that the government has failed in communicating and taking constructive suggestions for improvement from trade bodies and professional bodies. This is one of the major reasons for the angst against the reform and the government. However, now that the law has been enforced, there is a need for a middle path. Businesses have been vocal about this. In case of indirect taxes, businesses are nothing more than collection agents of the government. They collect taxes from their customers and deposit that in the treasury. Defaming them with a series of messages floated by the ruling party supporters on social media and messaging apps is an ill-advised tactic to force compliance. The government needs to understand the basic concerns of the business community and engage in a dialogue to address and resolve these concerns. This alternative is better than the government’s current strategy of employing dual approach of using Prime Minister Narendra Modi’s charisma and the propaganda machinery to push the law and force acceptance. Trade bodies and the business community are also aggrieved because the government could have engaged the tax department in orienting them on the law and its compliance. A direct communication by the government would have assuaged their concerns and confusions. However, the government itself was ill-prepared on GST. Until a couple of days before the launch, even tax officials related to excise, service tax, and VAT were not fully informed and trained. On the day of the rollout, VAT officials in some states were still undergoing training. That was when the government set up a helpline in call centres to help tax officials responsible for implementation and enforcement of GST. This should have been done in advance. Certain provisions in the GST law are draconian. This author was on a panel discussion on GST organised by – IBN-Lokmat, and a co-panelist voiced the same concern about return of inspector raj and discretionary powers with tax officials that can result in harassment of businessmen – especially small companies. This concern has aggravated because in the past such discretionary powers have resulted in enforcement officials extorting bribes. Traders are concerned about how to manage their costs and conduct business without fear and harassment. Traders concerned about these problems, have resorted to another extreme of opposing GST entirely. This kind of knee-jerk reaction is unwarranted and ill-advised. This is also happening due to politicisation of trade bodies and involvement of political parties in those associations. In turn, those trade bodies end up furthering the agenda and cause of a political party, instead of solving the issue. The ball is now in the government’s court. It needs to proactively engage in dialogue with trade bodies and work on simplification of compliance and instilling confidence in the minds of the stakeholders. It should sincerely listen to concerns of and suggestions from the business community and work on addressing those concerns by accepting valid suggestions. In order to reform an existing system with a massive overhaul, active engagement and direct communication with the business community is necessary. Only then can it ensure success of its initiative. The business community needs to realise that GST is the best thing to happen to the country. The reform aspires to bring all unorganised and informal businesses within the tax net. This will result in higher tax collection. The byproduct of this initiative of bringing all the unorganised and informal businesses within the tax net is that their revenues would be accounted and captured in the national income calculation. This would translate in gross domestic product (GDP) growth in the medium to long-term. The business community needs to actively support this initiative and objectives of the government. Let us not forget that this is the moment equivalent to liberalisation initiated by the PV Narsimha Rao government in 1991, which eventually led to exponential economic growth, increased business opportunities and eased up processes to do business. To ensure the success of GST, businesses need to work on constructive solution-based criticism and the government needs to engage with an open mind with the business community and address their concerns. The recently launched Goods and Service Tax (GST) has created outrage and protests in the textiles sector. The textiles and garments sector is one of the largest employment generators in the country. India has around 2 million power looms manufacturing around 20 billon meters of cloth. The power looms sector accounts for around 60 percent of the total textiles sector. The sector is largely unorganized with many players having hardly 10–20 looms and weaving on an average around 1,000 meters of cloth per loom per month, depending on quality of cloth and loom used to manufacture. Many run their looms on job-work basis and many buy yarn and manufacture cloth. These units are spread across Bhiwandi, Surat, Ichalkaranji, Erode, Bhilwara, to name a few large centres where power looms industry is operating. Till date this sector has been out of the tax net. The government has in the past tried to impose excise on the power looms sector since 2003. However, after an agitation by the players this was withdrawn. So this sector largely remained out of the tax net, except VAT. Now the sector is being brought into the tax net because of GST. While it is easy to blame the industry for their inertia and lack of desire to come within the tax net, there are practical complications that need consideration from the government also. At the same time, the aversion in the industry is also because many players don’t wish to come within the tax net and that cannot be ignored. Till date significant part of this trade was operating in cash. The traders never paid tax of any kind. Now there are concerns on how they can continue their trade in cash. e-way bills and squads inspecting goods and invoices have sent fear across the sector. There are pros and cons about the same. For this we need to understand manufacturing process. A piece of cloth that we buy in the market goes through various processes and moves in the hands of many intermediaries before we get the final finished piece of cloth. It starts with a textiles manufacturer buying various kinds of yarns. The yarns are sent for intermingling and twisting to get a kind of blended yarn that will be used for weaving. This yarn is then sent for dyeing. After dyeing, the yarn is sent for washing and processing. These yarns are loaded on sticks and beams for warp and weft and then finally it is ready for weaving. Weaving gives us cloth that is called Grey Cotton. This grey cotton is then sent for washing and dyeing and processing. After washing and dyeing we get our finished cloth that is available in the market. If we observe closely, from yarn to finished cloth there are more than half a dozen processes. Most of these weaving units or power looms don’t have the capabilities to execute all processes in its premises. So they have to send yarn out for intermingling, twisting, dyeing and processing, loading on sticks and beams before weaving. Similarly after weaving they have to send Grey Cotton outside for washing and dyeing and processing and again washing. Add to that all transportation involved in moving material from one place to other and back in the factory. This means for every material movement in the job-work, they will have to do all the paper work and then also pay GST on labour charges. If the units doing this job-work are unregistered, then the cloth manufacturer (power loom owner) will have to pay GST under the Reverse Charge Mechanism (RCM). Reverse Charge Mechanism is a method of collecting tax wherein the recipient of goods and service pays tax on material and service he buys from unregistered dealers. The government’s intent to impose RCM is to increase tax compliance resulting in higher tax revenues. The government has not been fully able to collect tax from many unorganized sectors like goods transport and small sector industries (SSIs). According to the government, any exemption on account of backward area benefits or SSI limits is a tax leakage which it is trying to stop. Compliances and tax collections will therefore increase through reverse charge mechanism. This means there will be additional compliance burden on power loom owners. It can be safely assumed that none of the smaller job-work units doing intermingling, twisting, dyeing, etc., will bother to handle all this and the burden of compliance will be on power loom owners. The bigger reason of fear is that now they may not be able to move their material for job-work at various places. Section 19 of GST Act read with Rule 43A is clear on procedure for sending goods out for job-work and availing input tax credit on the same. But smaller players would find this cumbersome. Can there be a better and easier method to handle this compliance? That needs to be deliberated by the government after a detailed dialogue with the industry. If we closely analyze the cost structure of power looms, they hardly make any decent margins. On a higher side, a power loom owner cum fabric manufacturer would make not more than 10 percent margin. Out of that he has to pay for power and electricity, labour and wages, and other expenses, leaving a loom owner with extremely low returns. For a businessman operating on such low margins, the cost of compliance that includes hiring an accountant and tax consultant is definitely a pain. This is one reason we are seeing a resistance against GST. Other contours in GST that has resulted in problems is inverted duty structure and interpretation on where certain fabrics could be placed. This was the issue that created outrage amongst textile manufacturers in Surat and attracted national attention. However, manufacturers were okay with inverted duty structure and loss on account of inability to get full set off of input tax credit. The reason is manufacturers were comfortable in absorbing some losses in order to gain ease in compliance and clarity on how their product would be taxed. The government is now considering reduction of GST on textile job work, which was 18 percent to 5 percent. This is in order to reduce inverted duty structure in textiles sector. Now comes the bigger issue of black money and tax evasion. Most of the trade in this sector is done in cash. Traders and manufacturers are reluctant about moving their trade to non-cash means. There are two big reasons for this. The first concern is, how will traders and manufacturers account for stock of unaccounted inventory that they would now sell through non-cash means? This would mean they will have to incur tax on sales income without any deduction for raw material costs. This translates into a huge tax liability for them on income that they have earned over years and decades but never paid tax. Conservative estimates by industry experts pegs the growth in accounted turnover of these players anywhere from 5 times to 10 times or even more due to GST. The second concern is sharing of information between GST and income tax and how to explain such a massive increase in turnover after GST? The bigger worry amongst traders and manufacturers is of income tax officials issuing notices for reopening of files of previous years in which income was under reported. The government can work on allaying this fear by giving some assurances to trade bodies that cases of previous years’ would not be reopened. Transition and evolution has always been a challenge for every living being. It is an even bigger challenge when it is about changing the way we do business. Here, government needs to be compassionate and understand valid concerns of the industry and work on smoothening rough edges and removing pain points. This is the only way the government can achieve a mutually beneficial solution in which industry is made to accept and comply with GST while allaying valid concerns to ensure success of the largest tax reform after independence.
Source: First Post
The Central Bureau of Investigation arrested a superintendent of the GST Council for allegedly accepting a bribe through one of his close aides, reports Our Bureau . This is arguably the first instance of the arrest of a GST official on charges of accepting illegal gratification.
Source: Economic Times
Exporters earn duty credits through the form of scrips at fixed rates of 2 per cent, 3 per cent, and 5 per cent, depending upon the product and country. The earned scrips can be freely transferred to others or sold. Exporters have continued to maintain that more government help is needed to sustain India’s falling outbound trade. “MEIS etc fall under heading 4907 and attract 12 per cent GST,” the Central Board of Excise and Customs (CBEC) said in its frequently asked questions on the GST. The GST is based on a category of goods and services based on the harmonised system number (HSN) codes. HSN 4907 relates to financial securities such as shares and bond certificates, and bank notes, cheque forms, etc. Exporters are up in arms with the FAQs and demanded that export-incentive scrips such as the MEIS be made a separate category with a different HSN code, and the rate be reduced to 5 per cent. Sources said the GST Council might take up the demand at its meeting on Saturday. “What is the legal sanctity of FAQs? It’s not a notification. It's an interpretation,” Federation of Indian Export Organisation Director General and Chief Executive Officer Ajay Sahai told Business Standard. The CBEC also said in its disclaimer to FAQs that these clarifications were only for educational and guidance purposes and did not have legal validity. Explaining the rationale of exporters’ demand to cut the rate on the MEIS to 5 per cent, he said those buying the scrips would have to wait to utilise the MEIS for tax purposes if the GST on their products is 5 per cent. The premium on the scrips is going to drop as a result of this, the executive director of the Engineering Exports Promotion Council of India said. The largest of such export promotion schemes in the form of scrips, the MEIS, was introduced in April 2015 under the Foreign Trade Policy and currently incentivises merchandise exports along with 7,913 items.
Source: Business Standard
Foreign direct investment (FDI) in textile sector more than doubled to 8.95 million during 2016-17 from 0.13 million in the previous fiscal, Parliament was informed today. Foreign direct investment (FDI) in textile sector more than doubled to $618.95 million during 2016-17 from $230.13 million in the previous fiscal, Parliament was informed today. In a written reply to Lok Sabha, Minister of State for Textiles Ajay Tamta said during the first two months of current fiscal, the sector received $21.41 million foreign inflows. He also said textile exports during 2016-17 too rose to $36 billion from $23.9 billion in the previous financial year. In a separate reply, he said in rupee terms export of textiles and garments increased by 3.2 per cent in 2016-17. With a view to enhance investment, production and export of the textile industry, the government has launched a Rs 6,000-crore package for apparel and made-ups segments, he added.
Source: Financial Express
The DDU Kaushal Kendram, being run under the aegis of the Government of India, at BVK College, has invited applications from eligible candidates for undergoing a free one-year training course in ‘readymade garment making’. There are 40 seats and those who complete the course would be given a diploma and are assured employment, according to College Correspondent Kandarpa Viswanadh. Eligible applicants should have passed Intermediate. Interested candidates can contact at the Kaushal Kendram located at BVK College, or on the mobile numbers 94919 06340 or 94412 56256 for details.
Source: The Hindu
The rupee on Thursday closed at a fresh two-year high of 63.69 against the dollar, Bloomberg data showed, having breached the crucial 64 mark on Wednesday. The Indian currency has been buoyed by strong portfolio inflows into the country’s bond and stock markets as also foreign direct investments. In 2017 so far, the rupee has gained 6.64% against the dollar, the biggest appreciation among peer currencies. While the Brazilian real has put on 4.54%, the Malaysian ringgit has gained 4.84%. In intra-day trade on Thursday the currency hit a high of 63.56 against the greenback — these intra-day highs were last seen in July 2015. On Thursday, the one-month non-deliverable forwards (NDFs) were trading at 63.87 to the dollar while the three-month NDFs were trading at 64.24. Foreign portfolio investors have invested a record $17.70 billion in the debt market and as much as $8.75 billion in equities, latest data from the depositories show. In 2016, the debt market saw outflows of $6.5 billion while flows into the equities market were $2.9 billion. Jayesh Mehta, MD and country treasurer at Bank of America Merrill Lynch, said foreign flows could sustain, especially into the stock markets. “Insurance companies alone are looking to raise around $4 billion in the coming months and even if some part of this is picked up by foreign funds, we can discount any depreciation in the rupee,” Mehta told FE. Meanwhile, the currency markets are keeping a close watch on the Reserve Bank of India’s (RBI) interventions. “The resistance level has shifted from 66 earlier to 64 now. Whether the central bank has given up that line is something to watch out for,” Mehta said. MV Srinivasan, vice-president, Mecklai Financial Services, believes the RBI may not have been able to effectively intervene in the markets due to overhang of liquidity. “There could still be some upside to the rupee which has so far has gained from a positive outlook on the economy and foreign inflows,” Srinivasan said. Dealers attributed Wednesday’s close of the rupee at 63.70 — 38 paise higher than Tuesday’s close — to a couple of banks offloading large dollar supplies. This is believed to have triggered stop-losses at the 64 level. Further inflows into the bond markets would be limited given foreign investors have already bought up the entire quota for corporate bonds of Rs 2.44 lakh crore. Limits in central government securities of Rs 2.42 lakh crore have been full for some time. The quota for state development loans (SDLs) alone is yet to be used even as the current utilisation stands at 6.81% of the permitted Rs 28,500 crore in the general category. The SDL category was opened up to foreign investment more than a year ago.
Source: Financial Express
The international crude oil price of Indian Basket as computed/published today by Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas was US$ 50.83 per barrel (bbl) on 02.08.2017. This was lower than the price of US$ 51.24 per bbl on previous publishing day of 01.08.2017. In rupee terms, the price of Indian Basket decreased to Rs. 3256.36 per bbl on 02.08.2017 as compared to Rs. 3282.97 per bbl on 01.08.2017. Rupee closed unchanged at Rs. 64.07 per US$ on 02.08.2017 as compared to 01.08.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on August 02, 2017 Previous trading day i.e. (01.08.2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
50.83 (51.24) |
|
(Rs/bbl) |
3256.36 (3282.97) |
|
|
Exchange Rate |
(Rs/$) |
64.07 (64.07) |
Source: PIB
Don’t be surprised if you see Patanjali-branded garments the next time you visit Shoppers Stop or Lifestyle. After making its presence felt in the FMCG space, where it crossed a turnover of Rs 10,000 crore in a fairly short span of time, Patanjali is now eyeing the textile market. India’s FMCG heavyweights such as HUL, ITC, and Nestle, among others, bore the brunt of the so-called Patanjali wave, apparent from their falling market share and increased spending on advertisements. With branded apparel next on Patanjali’s radar, what lies in store for its textile peers?
The textile foray
Recently, Patanjali Ayurved announced its plans to launch its clothing line across four categories (knit wear, woven wear, denims, ethnic wear) in the summer of 2018. The garments, manufactured by adopting a combination of its own processes and outsourcing, will span menswear, womenswear, and childrenswear. Retailing of products would be undertaken through company-owned stores and franchise outlets. Preliminary impressions of the ambitious plan suggest that textile companies in the home textile, technical textile, and core yarn/fabric manufacturing may not face issues owing to the move. Since Patanjali is expected to focus more on the domestic market, apparel firms, which derive a significant percentage of their revenue from exports, will not have much to worry about, at least initially. Nonetheless, the possibility of international markets being explored by the Haridwar-headquartered company cannot be ruled out in the long-run. Furthermore, the swadeshi brand, prima facie, will aim to gain market share in the mid to low end of the market by selling its products at competitive price points. Therefore, premium and high-end apparel players, who have large presence in metros, are unlikely to be its direct competitors.
Unorganised players to face the heat
While Patanjali will affect some of the large players (since it has set a top-line target of Rs 5,000 crore in the first year itself), the unorganised textile manufacturers even more, who are already reeling under GST-induced pressure, would be the worst hit. Stiff price competition could force organised players to keep their margins in check too, contrary to our expectation of their margins expanding by virtue of the industry's transition from unorganised units to the organised ones. Additionally, GST will be advantageous to Baba Ramdev’s brand because rates on apparel are more or less tax neutral (at 12 percent for those costing Rs 1,000 or more, at 5 percent on those sold below Rs 1,000) vis-a-vis the pre-GST tax structure. A deeper analytical drilldown of the announcement indicates that manufacturers/dealers, who are predominantly present in the entry level to moderate-tier branded/unbranded garments (a segment where pricing plays a pivotal role in influencing demand), will face the biggest challenge. However, in the beginning, the real impact of Patanjali's entry will be visible in India's tier 3, semi-urban, and rural areas Patanjali's success in the textile domain is not necessarily guaranteed on similar lines as witnessed in the FMCG sector. Nevertheless, given the disruptions that the company has caused so far in the consumer staples realm, it would be a huge mistake for the competition to be complacent.
Source: Money Control
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1200.99 |
USD/Ton |
-0.31% |
8/3/2017 |
|
VSF |
2357.37 |
USD/Ton |
0% |
8/3/2017 |
|
ASF |
2201.20 |
USD/Ton |
0% |
8/3/2017 |
|
Polyester POY |
1214.38 |
USD/Ton |
-1.63% |
8/3/2017 |
|
Nylon FDY |
3123.33 |
USD/Ton |
0% |
8/3/2017 |
|
40D Spandex |
5056.82 |
USD/Ton |
1.49% |
8/3/2017 |
|
Polyester DTY |
5711.23 |
USD/Ton |
0% |
8/3/2017 |
|
Nylon POY |
1427.81 |
USD/Ton |
-0.52% |
8/3/2017 |
|
Acrylic Top 3D |
2840.74 |
USD/Ton |
0% |
8/3/2017 |
|
Polyester FDY |
2379.68 |
USD/Ton |
0% |
8/3/2017 |
|
Nylon DTY |
1554.23 |
USD/Ton |
-0.48% |
8/3/2017 |
|
Viscose Long Filament |
3227.44 |
USD/Ton |
0% |
8/3/2017 |
|
30S Spun Rayon Yarn |
2989.47 |
USD/Ton |
0% |
8/3/2017 |
|
32S Polyester Yarn |
1811.53 |
USD/Ton |
-0.57% |
8/3/2017 |
|
45S T/C Yarn |
2773.81 |
USD/Ton |
0% |
8/3/2017 |
|
40S Rayon Yarn |
3138.20 |
USD/Ton |
0% |
8/3/2017 |
|
T/R Yarn 65/35 32S |
2290.44 |
USD/Ton |
0% |
8/3/2017 |
|
45S Polyester Yarn |
1918.62 |
USD/Ton |
0% |
8/3/2017 |
|
T/C Yarn 65/35 32S |
2305.32 |
USD/Ton |
0% |
8/3/2017 |
|
10S Denim Fabric |
1.38 |
USD/Meter |
0% |
8/3/2017 |
|
32S Twill Fabric |
0.85 |
USD/Meter |
-0.35% |
8/3/2017 |
|
40S Combed Poplin |
1.34 |
USD/Meter |
12.38% |
8/3/2017 |
|
30S Rayon Fabric |
0.67 |
USD/Meter |
-0.22% |
8/3/2017 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
8/3/2017 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14873 USD dtd. 3/8/2017). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The Federation of Pakistan Chambers of Commerce & Industry (FPCCI) has urged the Pakistan Government to reduce the tariff rates on natural gas and power used by the textile industry at par with regional rivals to make the country’s export competitive in global market. At present Pakistan’s cost of production is PKR 3/unit higher than its competitors. FPCCI vice president Saquib Fayyaz Magoon urged Pakistan’s finance minister Muhammad Ishaq Dar and Ministry of Textile Industry (MOTI) secretary Hassan Iqbal for this step at a recent meeting with the latter at the chamber’s headquarters in Karachi, the organisation said in a press release. Magoon said the textile industry is burdened with PKR. 3.63/KWH surcharge on electricity and gas infrastructure development cess (GIDC), which could not be passed on to the international buyers. The PKR 180 billion package announced by the prime minister in January 2017 was a non-starter as it had restricted its monetary incentives to only those exporters that would show a 10 per cent increase in their export revenue with effect from July 1 this year compared to last year, he said. “However, under the present scenario of a long outstanding – sales tax-refund culture, there is a little likelihood of a 10 per cent increase in export as exporters are compelled to borrow to meet their liquidity requirement, which in-turn adds to their input cost,” Magoon added. Expressing concern over the rebate to export of yarn, a basic raw material for the weaving industry, he said spare parts of textile machinery should also be allowed to be imported at zero rate just like the machinery as these parts are finally sold to the textile industry. Former FPCCI vice president Waseem Vohra said gas tariff in Pakistan is $7.65/unit compared to $4.5/unit in India, $4.20/unit in Vietnam, and $3.10/unit in Bangladesh. The tax on exports in Bangladesh is levied at 0.25 per cent whereas in Pakistan, the rate is 1 per cent, which, after including indirect taxes and other levies, comes to 11 per cent of cost of exports, he said. Vohra reiterated that the higher cost of production in Pakistan is one of the main causes of export slide.
Source: Fibre2fashion
ISLAMABAD: Textile sector would receive Rs15 billion as incentives under the Rs180 billion worth of export package by August 15, 2017, an official said on Thursday. “With the complete implementation of the package, incentives worth Rs162 billion will be extended for the modernisation and development of the textile sector,” a senior official of ministry of textile told APP. “Textile industry will be paid Rs162 billion out of the Rs180 billion package, which is effective for 18 months starting from January 2017 to June 2018.” The official said the ministry is committed to the revival of the textile industry by providing it enabling environment. “To enhance the capacity of the textile sector, the government has also relaxed the import of textile machinery,” he added. The official said through this package, the cost of doing business would come down, leading to a further boost in trade and commercial activities. “We are working on the implementation of textile policy 2014/15 in true spirit with an aim to provide maximum benefit to the industrial sector,” added he. The official, replying to a question, said the ministry had introduced 16 new varieties of cotton for better production. Our correspondent adds: Meanwhile, textile mills urged the government to ensure settlement of outstanding sales tax refund of more than Rs200 billion till 14th August to fulfill its promise. “The industry is facing severe liquidity crunch due to delay in payment of their sales tax refunds and further delay will lead to disastrous consequences,” Zahid Mazhar, acting chairman of All Pakistan Textile Mills Association (Aptma) said in a statement. Government vowed to make payments against refund pay orders (RPOs) with amount more than Rs1 million by August 14. It cleared RPOs of up to one million rupees against 6,853 RPOs issued by April 30. Mazhar said high cost of energy has hit the textile industry as gas and electricity tariffs in Pakistan are around 30 percent higher compared with regional countries, rendering Pakistan’s exports uncompetitive in the global market. “The government should remove the levy of gas infrastructure development cess,” he added. Aptma chief said textile industry of Pakistan is capable enough to bring the economy out of the current disastrous condition. He said the industry can help the country achieve $36 billion annual exports revenue if policies are made to support it. Mazhar congratulated Shahid Khaqan Abbasi on assuming the prime minister’s office. He hoped that the new government would support revival of the industry in a short span. He said trade deficit for the last financial year was recorded at an all-time high of $32.58 billion with exports of $20.45 billion, the lowest since 2009/10. Acting chairman Aptma requested the newly-elect prime minister to place the revival of the economy and the textile industry on the top of his agenda. He also advised him to remain engaged with Aptma to resolve the problems being faced by the textile industry.
Source: The News International
Most trades in the Brazilian cotton market were limited to small volumes in July. Although sellers were more flexible regarding asking prices, purchasers were not interested in trading in the spot market, bidding prices lower than those asked by sellers. Besides, active processors were complaining about the quality of the available cotton. Between June 30 and July 31, the CEPEA/ESALQ Index, 8-day payment terms, for cotton type 41-4, delivered in São Paulo, dropped 7.3 per cent, closing at 2.4665 BRL ($0.7915) per pound on July 31, Center for Advanced Studies on Applied Economics (Cepea-Brazil) said in its latest fortnightly report on cotton trade. During the second fortnight of July, most Brazilian companies were found working with cotton previously purchased, and the interest in new acquisitions was only for shipment in the coming months. In the coming months, cotton prices are expected to drop even more due to the increase in volume of the 2016-17 crop in the market. With prices dropping, most growers allocated their higher quality cotton to fulfil the previously closed contracts. Trading companies based on international prices and dollar, however, were more flexible regarding asking prices in the spot market, mainly for shipment in the coming months, Cepea-Brazil said.
Source: YNFX.
Garment makers yesterday sought to allay fears Cambodia could lose out on international trade preferences and tax breaks once it graduates into a lower-middle income country in the next few years. The reassurance from the Garment Manufacturers Association in Cambodia came one day after Khmer Times and other local media reported that Cambodia could lose out on Generalised System of Preferences (GSP) tariff systems when the country becomes a “developing economy” within the next three years. GMAC secretary-general Ken Loo said the country’s graduation will only affect the level of development aid it receives, insisting the move will not affect any trade preferences and seeking to play down concerns the country’s garment industry could be damaged by the change. “The World Bank has their own classification for countries. But this only pertains to the level of development aid or money the World Bank allocates to poor countries,” he said. “When Cambodia graduates, less money will come in for development aid. However, recent news reports that this might affect Cambodia’s preference status with duty free exports to different markets are not true.” Mr Loo said preference status for Cambodia is dependent on the GSP schemes of individual countries, adding that is it not based on the World Bank’s classification, but on the United Nations. Garments and footwear account for 78 percent of Cambodia’s exports. KT/Chor Sokunthea “The United Nations’ classification of countries into Least Developed Countries (LDC), Developing Countries and Developed Economies happens once every three years, with the next round of classification to happen in 2018,” he said. “Personally, I feel that Cambodia will remain as a LDC for this round of classification.” In July last year, the World Bank revised Cambodia’s gross national income (GNI) per capita from a low-income country to lower-middle income status. The United Nations’ Committee for Development Policy separately reviews the list of LDCs every three years and makes recommendations on the inclusion and graduation of eligible countries based on income, human assets, and economic vulnerability. Mr Loo said Cambodia should remain as an LDC until 2021 because there are many factors other than the per capita gross domestic product of the country, such as the level of infrastructure development and development of the financial sector. “If we were to only consider Phnom Penh, we would have graduated a long time ago but we have to look at the whole country as an average and we know parts of Cambodia are still severely underdeveloped,” he said. “I want to reassure buyers and investors that even though the World Bank will graduate Cambodia into a developing economy soon, we will not lose our preference status. “We have to make full use of this time to improve our competitiveness in preparation for the time when we do eventually lose such trade preferences. It is critical for the government, trade unions, civil society, workers and employers to recognise this and to work together.” Victoria Kwakwa, World Bank vice-president for East Asia and the Pacific, earlier said that Cambodia still faces many challenges, despite its changing status in the eyes of the bank. “Development challenges continue to exist. There is work to be done on water sanitation, healthcare and education, so Cambodia will continue to need grants and concessional resources from bilateral partners and the World Bank,” Ms Kwakwa said. According to Cambodia’s General Department of Customs and Excise, exports from the garment and footwear sector, which account for 78 percent of the country’s total exports, rose by 7.2 percent to $7.3 billion in 2016, up from $6.8 billion in 2015.
Source: Khmer Times
Vietnamese trade experts feel the benefits of free trade agreements (FTAs) that the country has signed has mostly evaded domestic garment and textile firms because of several reasons, including inability to diversify export markets and not meeting rule-of-origin requirements due to ignorance and weak materials supply and supporting industries. At a recent seminar in Ho Chi Minh City, the experts observed that the firms in the country that have taken advantage of FTA breaks belong to the FDI sector. Garments and textiles comprise Vietnam’s key exports. Vietnam has signed 12 FTAs, of which 10 have come into force: Vietnam-ASEAN, ASEAN-India, ASEAN-Australia-New Zealand, ASEAN-South Korea, ASEAN-China, ASEAN-Japan, Vietnam-Chile, Vietnam-Japan, Vietnam -South Korea and Vietnam-Eurasian Economic Union, Nguyen Ng?c Hoa, deputy director of the Ho Chi Minh City department of industry and trade, told the seminar. The seminar was organised by the department in collaboration with the Ministry of Industry and Trade to help garment and textile businesses get updated information on rules of origin so that they can capitalise on preferential treatments under FTAs to boost exports. Hoa urged exporters to diversify export markets to avoid or minimise risks. Between 2016 and 2020, most tariff lines under the FTAs have entered a period of being deeply cut or completely removed, he said, adding that the country can increase export revenues and expand markets if firms can exploit FTA opportunities. Trinh Thi Thu Hien, head of the origin of goods division under the Ministry’s export-import department, said the Ministry has negotiated to apply more flexible rules of origin under the EU-Vietnam FTA. While this FTA also requires rules of origin to apply from fabric onwards, which implies exports to the EU must use fabric produced in Vietnam or the EU, the agreement also allows companies to use fabric from a third nation having FTAs with both Vietnam and the EU. Pham Xuan Hong, chairman of the Garment Textile Embroidery Knitting Association in Ho Chi Minh City, said the garment and textile industry has to import around 70 per cent of its materials for production, mainly from China. Vietnam’s garment and textile exports reached over $14 billion in the first half of 2017, a year-on-year increase of 11 per cent. The industry is confident of achieving its 2017 export target of $30-31 billion, an increase of 10 per cent over last year, Hong added.
Source: Fibre2fashion
According to a coalition of trade industry groups, NGOs and academics, Bangladesh will soon have the world’s most transparent garment industry. Over the weekend, Dhaka-based BRAC University’s Center for Entrepreneurship Development (CED) expanded on this point with its announcement of a mapping tool that will include factory names and locations, the numbers of workers, export countries, certifications and fashion brand customers. This online tool, DRFM-B, builds upon BRAC’s efforts to map as many of Bangladesh’s garment factories as possible. When TriplePundit spoke with a BRAC professor last year, the university had started a pilot project that covered 450 factories in the greater Dhaka region. That pilot proved to be widely successful and popular. Now the mapping tool aims to be much more comprehensive, as verification will be crowdsourced from the public to ensure that all data remains as updated and accurate as possible. Supporters of this digital mapping project include the large national trade groups, with much of the funding provided by the C&A Foundation. DRFM-B’s progress will be monitored by a multi-stakeholder advisory committee, which includes representatives of labor groups, NGOs, employers, and trade associations. In a public statement, the C&A Foundation said the tool will launch online in mid-2018, with the mapping of all 20 garment districts in Bangladesh to be included by 2021. As a result, the stakeholders involved in the development of this tool say it will make Bangladesh’s apparel sector the most transparent one on the planet. Bangladesh’s apparel industry has grown at a voracious rate since its origins 30 years ago, and has since become one of the country’s most important cash generators with an estimated value approaching $30 billion annually. The sector’s growth has resulted in more jobs while boosting the country’s exports, but it has also festered a bevy of social and environmental problems. Accusations of child labor have long rocked the country’s apparel sector, and complaints about worker safety were endemic across many factories. Never mind emerging competition from upstart economies in Africa, as well as the strength of apparel sectors in mainstays such as China, Vietnam and India. The sector can forget about its goals to become a $50 billion juggernaut if brands and consumers become more repelled by any perception that Bangladesh is prioritizing export statistics over workers’ rights. The Rana Plaza factory collapse four years ago symbolized everything that had gone wrong with this industry and how its factories too frequently treated employees. Many companies pledged to clean up their supply chains after what happened at Rana Plaza; others delayed making any changes until the public outcry became too loud to ignore. The DRFM-B mapping tool builds upon promises by more companies to increase the sector’s transparency and traceability. The UK retailer Marks & Spencer is one example of a company that allowed stakeholders to view online the factories from which it sourced garments. After criticism and accusations that some of Bangladeshi workers endured 100-hour weeks to sew and stitch its branded garments, Gap Inc. announced last year it would publicly disclose its suppliers within the country. Earlier this year, H&M said it would instruct manufacturers within its supply chain to pay their employees via digital technology instead of dispersing their salaries in cash. Nevertheless, the Bangladeshi garment sector is still plagued by several problems. Observers pointed to a blast last month in an apparel factory outside of Dhaka, which killed 10 people and injured dozens more. But worker safety goes beyond factory inspections and compliance measures. As a report issued two weeks ago by the Global Fund for Women outlines, gender-based violence is rampant across within the industry, and two-thirds of the workforce is staffed by women. More transparency about all working conditions is about more than ensuring physical safety – the sector also has a long road ahead to prove that at a minimum, employment at a Bangladeshi garment factory can be tolerable.
Source: PTI
