On a rainy July evening in the busy and sprawling Surat Textile Market, Rangnath Sarda received a call from a client, a distributor in Tamil Nadu, to discuss billing details under the new GST regime. Since Sarda did not have a Goods and Services Tax (GST) number, his client would have to figure out how to bill him, transport the goods and pay agents’ commissions. Business owners across thousands of Surat’s small-scale trading, weaving and dyeing units, which together churn out around 40 million metres of fabric each day, were asking and answering similar questions up and down their supply chains. Ever since the Government of India introduced the GST regime on July 1, 2017, with the aim of creating a one-tax, one-market nation, Surat’s textile traders have been up in arms–they say GST has struck the death knell for their informal business channels that work largely on cash and afford tiny profit margins. The traders fear that GST, with its emphasis on formalising businesses by making them register for a GST number–thereby introducing transparency and widening the tax net–will lead to business going to larger, organised traders. They also believe it will increase paperwork and make it difficult to maintain accounting books without hiring accountants, an additional burden for cash-strapped businesses that work on thin profit margins. Sarda said he had applied for a GST number, grudgingly. With Ganesh Chaturthi round the corner, the festive season would continue well into October and November with Durga Puja, Diwali and Chhath. “Where is the time to protest? We stand to lose business,” Sarda told IndiaSpend, adding that the government was well aware that traders would be in a bind. Surat’s traders had gone on strike on July 1, 2017, but had called it off after 18 days on Finance Minister Arun Jaitley’s assurance that the GST Council would consider their demands at its meeting on August 5, 2017. Jaitley had refused to remove the tax altogether saying that would break the input tax credit chain. The council reduced the tax rate for ‘job work’–third-party services such as stitching and embroidery–to 5% from the earlier 18%, but traders were unhappy that it had not addressed many other concerns. There are rumours they might resume their strike. While there have been protests in textile hubs across the country–in Punjab, Rajasthan, West Bengal and Maharashtra–Surat has become the epicentre of the fight against GST.IndiaSpend set out to the port city to understand why.
A historic trade hub
Located 270 km south of Ahmedabad, the commercial capital of Gujarat, and a similar distance north of Mumbai, India’s financial capital, Surat has a rich history of trade and a long-running tradition of textiles manufacturing. In the 1980s, the city saw a transition from cotton to synthetic fabrics. Today, Surat produces 40% of all manmade fabric made in India, as per data available on the 2017 Vibrant Gujarat Summit website. The communities that dominate the business today are the Kathiawaris, who hail from Gujarat’s seaward Saurashtra region, and the Marwaris who trace their roots to the desert region of Marwar in Rajasthan. The business acumen of these traders is legendary, and the two communities have produced such household names as the Ambanis and the Birlas.
Government support
A supportive policy structure has played a significant role in the success of Surat’s textiles industry. Mahendra Ramoliya, a tall, heavyset Kathiawari who runs a powerloom in Sachin GIDC (Gujarat Industrial Development Corporation) on the outskirts of Surat, credited his success to the subsidies and tax breaks offered between 2004 and 2009 when Gujarat’s Shankersinh Vaghela was the textiles minister in the central government. The 700-hectare Sachin GIDC houses 2,250 industrial units, including 1,750 textile units, 70 dyeing and printing mills, and 40 dyes and chemicals units. It is estimated to employ around 350,000 people. Surat has nine such GIDC estates, where the government provides enabling infrastructure and fiscal support, which Surati traders have been aggressive in safeguarding. Ramoliya told IndiaSpend that in the late 1990s when the powerloom industry went on a strike against rising electricity prices, the government had to capitulate and offer a subsidy. When a central value-added tax (Cenvat) was imposed on the industry in April 2003, textile traders again struck work until, months later, a new government was formed that rolled back Cenvat imposition on powerlooms.Except for this brief period from April 2003 to July 2004, the textiles industry has been largely exempt from taxation.
Enter GST
As with most sectors of the economy, Surat’s textiles businesses are confused about how GST will impact the supply chain, whether it will increase costs and prices, and whether it will complicate or simplify processes. Most of all, there is concern about maintaining accounts. The common refrain in Surat is that most textile traders are uneducated. “Yeh chopre ke chakkar me phass jayenge,” many told IndiaSpend, protesting that they would get entangled in accounting books. Yet, educated or not, everyone understands the language of trade in Surat–no conversation goes without mention of ‘taka’ or percentages. Larger businesses, on the contrary, say small manufacturers and traders are only trying to avoid having to pay tax. “People are worried because there won’t be any tax evasion once they come on this system,” Sanjay Sudrania, who has run Kirtida Silk Mills in Sachin GIDC for a decade, told IndiaSpend. The extent of evaded tax is what many traders claim is their only profit margin, given stiff competition from cheap Chinese imports. “We’re not competing against Indian fabrics only, we need to stand against cheap Chinese fabrics as well. If costs increase we lose that battle,” Kamran Hussain, a mill supervisor, told IndiaSpend. Sudrania said dyeing and printing units have always been taxed, unlike traders and weavers, who were exempted. GST will hit mostly the latter–the approximately 60,000 weaving units, 65,000 traders and 50,000 embroidery units–Sudrania said. Nevertheless, he added, the transition to GST would increase costs only marginally. Ramoliya, the powerloom owner, disagreed. He said the majority of businesses work on cash. “I used to work mostly with RR [rokda, or cash]. Only 20% went on a pucca bill. Now, if we’ll have to pay taxes on all processes, in addition to income tax, we’ll be forced to count our profits only after tax,” he said, adding that this would force businesses to increase prices considerably.
Chinese competition
India imported $2.62 billion worth of textiles and apparels from China in 2014-15, a 60% share of India’s total textiles and apparels imports from its top-10 trading-partner countries, according to data from the Ministry of Textiles. Sudrania said there should be anti-dumping duty on Chinese imports. In May 2016, the Federation of Surat Textile Traders Association (FOSTTA) had written to the central textiles minister seeking an anti-dumping duty on imported Chinese fabrics, complaining that nearly 50% of the manmade fabric sector in Surat had had to shut down for a month due to cheap Chinese imports and lack of demand. Two months later, textiles commissioner Kavita Gupta had rejected the claim that Surat’s powerlooms were losing business to under-invoiced imported Chinese fabrics. A separate petition by Mitsubishi Chemical Corporation and Reliance Industries had led to a government investigation into allegations of dumping of purified terephthalic acid (PTA), a byproduct of petroleum refining used to manufacture polyester fibre, into India. In April 2014, right before the general election, anti-dumping duty was imposed on PTA imports from China, European Union, South Korea and Thailand. In July 2016, the anti-dumping duty order was amended and duty was imposed on China, Iran, Taiwan, Indonesia and Malaysia. This led to allegations that the anti-dumping duty was designed to benefit only “the largest and integrated polyester player”–Reliance Industries–and would hurt competition. In 2013-14, Reliance Industries Ltd accounted for 60-65% of domestic PTA production, with a capacity of 4.4 MMTPA (million metric tonnes per annum). Materials Chemicals and Performance Industries (formerly Mitsubishi Chemical Corporation) and Indian Oil Corporation produce PTA as well. A Reliance spokesperson did not answer queries from IndiaSpend. The duty was extended in 2015 and 2016, and still exists. Targeting small businesses? “I loved Modi. But look what he has done to the people who supported him. No one has backed Modi as we [traders] have,” a powerloom unit owner told IndiaSpend, requesting not to be named. Ramoliya, the powerloom owner, is more dismissive: “Yeh advertise ki sarkar hai.” The trader who did not wish to be named told IndiaSpend that instead of protesting against GST, textile traders should have stopped purchasing Reliance yarns. “They [Reliance] would have sorted the entire issue for us,” he said. Small traders fear GST will encourage vertical integration so that big fish like Reliance will set up more composite units that produce both yarn and sarees, as such units will not have to pay tax for every activity involved at every stage of making a saree.
Informal jobs at stake
Surat’s textiles industry–its powerloom units, dyeing and printing mills, and traders–employ 1 million workers directly or indirectly, in formal as well as informal jobs. Many of these workers had to leave the city during the 18-day strike when there was no work. The value-addition stage of a saree (embroidery, etc.) operates largely in an informal setup. A trader purchases dyed fabric, and sends it to hundreds of embroidery units scattered across the city. There is much back and forth involving middlemen who collect sarees and distribute them among hundreds of women workers who work part-time from their homes. “At completion of every stage the saree comes back to us. In all this back and forth, the government not only wants us to pay for the service but also wants us to make sure everyone files their returns,” said Anil Jain, a trader in the New Textile Market. “Does the government expect all these individual workers to file returns online?” The government has, in fact, exempted businesses with an annual turnover of less than Rs 20 lakh from having to obtain a GST number or file returns. A document on the Ministry of Textiles website clarified the concerns of the textiles industry specifically around input credit and assured payment within 180 days. But traders claim they are confused or unaware. “If I have a GST registration, I will not purchase from a guy who doesn’t have a GST,” Huzefa Nasikwala, founder, Nasikwala Law Office, Mumbai, explained. “There are these input credits that I have to take, so I will insist for a GST number ” According to Nasikwala, the textiles industry in and around Surat is used to dealing only in cash and the value chain, right from weaving onwards to small traders and migrant labour, is unorganised. No tax was being paid all along this chain. “Now, if you impose a tax regime the entire chain gets disturbed. This is the core issue they are facing. Some of the small players will be wiped off,” he said. At the August 5, 2017, GST council meeting—where the tax on job work was placed uniformly at 5%—these issues were not addressed, textile association FOSTTA said. Traders, however, showed a reluctant acceptance of GST as a fait accompli. “Bolenge toh karna hoga, par 50 taka business khatm ho jayega [If the government forces us, we’ll do it. But it’ll kill 50% of the business],” Ramoliya said.
Source: Business Standard
The Telangana government has announced new incentives to attract investments in the textile and apparel sector, in what could be a wake-up call for the Tamil Nadu government to prevent a chunk of investment from shifting. Telangana has offered 1,000 acres of land for a mega textile park, besides a plug-and-play model for easy operation of these units. The state’s capital and operational incentives will be applicable for new as well as existing units for the next five years. It has also warned if the units are not adequately compensating the workers, they would face action. Telangana is the largest producer of cotton in the southern region and has around 17 per cent share in India’s total cotton production. The development comes three months after K T Rama Rao, Telangana Chief Minister K Chandrasekhar Rao’s son, visited Tirupur, the knitwear capital of India, and textile city Coimbatore. Tamil Nadu accounts for one-third of the $120 billion Indian textiles industry. “The Telangana government’s decisions and implementations are in a good speed. It is high time for the Tamil Nadu government to wake up for the situation,” Raja M Shanmugam, president of Tirupur Exporters Association, said, adding that there were few takers for Telangana. In Telangana, the value-added tax (VAT)/state goods and services tax (SGST) reimbursement will be available for tax collected on end product or intermediates within the entire value chain to the extent of 100 per cent for a period of seven years from the date of commencement of commercial production or up to the realisation of 100 per cent fixed capital investment, whichever is earlier. A capital subsidy of 25 per cent will be provided for conventional textile units and 35 per cent for technical ones involved in production of medical textiles, geotextiles, agrotextiles and protective clothing, among others. For units attracting Rs 200 crore or above investment or providing more than 1,000 jobs, the incentives will further be customised. A capital incentive of 20 per cent of cost of plant and machinery up to Rs 5 crore per unit will be provided to existing units for modernisation and adoption of advanced technologies. An operational assistance of up to 75 per cent will be extended towards interest rates, against loans availed for setting up these units over a period of eight years. Power subsidy, ranging from Rs 1-2 per unit, will be provided depending on the size of each industry up to five years. Subsidies will be provided on industrial water supply, environmental conservation infrastructure, and infrastructure like roads, power and water. Under the Telangana State Skills Development Mission, the government will provide subsidies towards capacity building and skill development support to facilitate reputed institutions involved in textiles-related training programmes to set up their permanent centres in the state. Telangana is known for its production of long staple cotton, with an annual production of about 60 lakh bales. However, processing and value addition to cotton in the state is largely limited to ginning and pressing.
Source: Business Standard
GDP growth. The economy is likely to expand in the range 6.1-6.7 per cent in the first quarter (Q1) of the current financial year (FY18), largely on the back of agriculture and government expenditure, against 6.1 per cent in the fourth quarter (Q4) of the previous financial year (FY17). Icra expects gross domestic product (GDP) to rise 6.1 per cent in Q1 of FY18, the same rate as in Q4 of 2016-17, says its Principal Economist Aditi Nayar. However, she expects gross value added (GVA), the summation of agriculture, industry, and services, to grow by 6.3 per cent due to a sharp increase in the government’s subsidies in the just-concluded quarter because of front-.,loading expenditure. GDP is GVA plus indirect taxes minus subsidies. Nayar says she expects modest growth because of the disruption in production schedules and discounts offered ahead of the introduction of the goods and services tax (GST); the impact of the appreciation of the rupee relative to the dollar on export earnings; and issues related to sectors such as banking and telecom. These would offset the impact of upfronting the government’s expenditure and a healthy rabi harvest of several crops. “Icra estimates the growth of GVA at basic prices, excluding agriculture, forestry and fishing, and public administration, defence and other services, at 4.8 per cent in Q1, in line with the modest 4.8 per cent rise in gross corporate income tax collections,” Nayar adds. Madan Sabnavis of CARE Ratings pegs GDP growth in Q1 at 6.5-6.7 per cent, and says industrial production and the financial sector were subdued during the period partly due to GST-related problems. If the industrial sector expanded, he expects the growth rate to rise in the remaining quarters to reach 7.6-7.8 per cent for 2017-18. If the secondary sector remained muted, growth might be 7-7.2 per cent, he said. Volume One of Economic Survey had pegged GDP growth at 6.75-7.5 per cent. However, its recently published Volume Two was not optimistic about reaching the upper end of the band. D K Pant of India Ratings & Research projects GDP to grow by 6.6 per cent in the first quarter of 2017-18. However, unlike Nayar, he expects GDP growth to be higher than GVA rise, which, he says, will be 6.4 per cent. He expects a bit higher consumption in Q1 than in Q4 of 2016-17, high government expenditure, and expected growth in gross capital formation by 2.8 per cent, against the contraction of 2.2 per cent in Q4. The GDP data for the first quarter are expected by the end of this month.
Source: Business Standard
Vijayawada: The imposition of Goods and Services Tax (GST) across the country is having an impact on various sectors. Industries, particularly, the food and textile units, have been facing serious issues after implementation of GST. Sellers at the wholesale textile market are incurring losses as the invoice price of textiles has increased. The biggest retail cloth market in the state Vastralatha witnessed a 50 per cent fall in the sales. Vastralatha, with 413 retail shops selling garments and textiles, is witnessing reverse growth after implementation of GST and traders are searching alternative ways to avoid losses. “GST had a serious impact on traders in market and sales were down despite of Sravana Masam and wedding season. A majority of the sellers are witnessing loss,”said Vastralatha president Chintalapudi Raghuram. The Andhra Pradesh Textile Federation, which agitated for more than one month opposing GST, is now gearing to start another agitation. “Retail textile industry is facing severe hardships with GST. The cloth traders across the nation have agitated opposing it and still the government were forcing us. We have represented Union ministers Arun Jaitley, Smruti Irani and others requesting to exempt us from GST or at least reduce the tax slabs. But our pleas were ignored and we were forced to enrol under GST,” said AP Textile Federation president, Busireddy Malleswara Reddy. The middle-class and middle-aged are our targeted customers and they are now tending to buy readymade textiles with rise in standard of living cost of textiles. Many shops are on the verge of closure and hundreds of staff working there were suffering, he added. He said that All India Textile Association were preparing action plan to continue agitations.
Source: Deccan chronicle
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$ 49.75 per barrel (bbl) on 18.08.2017. This was higher than the price of US$ 49.06 per bbl on previous publishing day of 17.08.2017. In rupee terms, the price of Indian Basket increased to Rs. 3188.96 per bbl on 18.08.2017 as compared to Rs. 3151.91 per bbl on 17.08.2017. Rupee closed stronger at Rs. 64.10 per US$ on 18.08.2017 as compared to Rs. 64.24* per US$ on 17.08.2017. The table below gives details in this regard:
|
Particulars |
Unit |
Price on August 18, 2017 Previous trading day i.e. (17.08.2017) |
|
Crude Oil (Indian Basket) |
($/bbl) |
49.75 (49.06) |
|
(Rs/bbl) |
3188.96 (3151.91) |
|
|
Exchange Rate |
(Rs/$) |
64.10 (64.24*) |
Source: PIB
To overcome the difficulty in dyeing on lycra, Everflow Petrofils Ltd (EPL) has developed an alternate product which is directly fibre dyed lycra yarn and need not be dyed again. This is a very low priced and faster way to get cotton lycra yarn suitable for shirting. EPL has also launched nylon spun dyeing to provide low priced high quality nylon. “We have been constantly doing research in Indian markets and seeking for the qualities which are desired by our buyers but we are unable to get them at desired prices,” says EPL director Pinkesh Jain. “We have moulded ourselves as the provider of alternate yarns of all the high valued qualities available in the world,” he adds. A 15-member EPL team comprising highly skilled professionals, headed by Jain, visited and studied all major textile hubs in India including Ludhiana, Surat, Tiruppur, Bangalore, Delhi, Kolkata, and Ahmedabad. The team found that there is a huge demand of high value qualities such as linen, indigo cotton, nylon blend, etc and these are offered by big apparel brands at very high price. “The team concluded that there is a need in Indian market to convert these high value qualities into affordable qualities. Hence we have set up our own R&D department comprising small sample spinning machine (for new yarns development), sample warping machine, dyeing unit, a loom for woven, knitting machine and a lab equipped with all necessary testing instruments,” informs Jain. “We also have R&D department at our office in China. This team help us to source and develop the new qualities which are yet to be introduced in India,” he adds. With the help of its China R&D department, EPL has developed and introduced unique qualities such as Polycel yarn (also known as poly-mercerized) which is affordable alternate of high quality viscose and cotton, acrylic look-alike 100% polyester which is an alternate of acrylic yarn offering high colour depth and softness as good as acrylic, viscose siro spun yarn which is low priced alternate for high quality Lenzing/Tencel yarns, and cationic viscose which is an affordable alternate of woollen suiting. It has also created low priced look-alike of linen yarn. For the Indian market, EPL team realised the need to immediately develop some new products to fill the gap in the textile market. So, it has introduced fibre dyed lycra yarn, a very low priced cotton lycra yarn suitable for shirting. In view of an increase in demand of sportswear, EPL took responsibility to develop and provide low priced high quality nylon. It has introduced nylon spun dyeing. EPL has also developed 100% polyester dye-able yarn which has its own stretch, soft feel, super dry fit, moisture control and peel free. “Our motive is to provide high quality product at low price without compromising the feel, quality, durability of the product,” concludes Jain.
Source: Fibre2Fashion
The European Commission has published an amended decision which establishes the ecological criteria for the award of the EU Ecolabel for textile products and extends the scope of the criteria and the related assessment requirements for the next 78 months.
The document further specifies to which textile fibres the ecological criteria apply and expands the range to include intermediate textile products. The product group textile fibres, yarn, fabric and knitted panels now to include: intermediate products intended for use in textile clothing and accessories and interior textiles, including upholstery fabric and mattress ticking prior to the application of backings and treatments associated with the final product. In addition, non-fibre elements now comprise intermediate products that are incorporated into textile clothing and accessories and interior textiles, including zips, buttons and other accessories, as well as membranes, coatings and laminates.
The definition of the cleaning products category has been replaced by woven or nonwoven products made from textile fibres and intended for the wet or dry cleaning of surfaces and the drying of kitchenware. The document also outlined the need to improve the wording to clarify the exceptions applying when recycled fibres or organic cotton fibres are used and how the calculation of the percentage of cotton is to be conducted. The document called to harmonise the wording used in the organic cotton, IPM cotton and pesticides restriction requirements across the textiles, footwear and furniture product groups. Further desired improvements concerned chemicals and process criteria, as well as the restrictions applying to all production stages so as to introduce detergents into the coverage of the restriction. The Commission set EU Ecolabel criteria for textiles in June 2014, based on the requirements and assessment rules originally set out in 2009. Under the regulation, EU Ecolabel may be awarded to products which have a reduced environmental impact during their entire life cycle. The criteria aim, in particular, at identifying products that have a lower environmental impact along their life cycle, with specific improvements so that they are: sourced from more sustainable forms of agriculture and forestry, manufactured using resources and energy more efficiently, manufactured using cleaner, less polluting processes, manufactured using less hazardous substances, designed and specified to be of high quality and durable. Continental, Kordsa to establish a new adhesion system for textile reinforcement materials Continental plans application across all segments of its own tire production.
Source: Innovations in Textiles
The Tire division of technology company Continental and Kordsa Global, an international supplier of textile reinforcing materials for the tire industry, are working together on a new, sustainable adhesion system standard for bonding textile reinforcing materials to rubber-based compounds. In the context of their collaboration in the development sector, the two companies have agreed to develop a technology in which the substances resorcinol and formaldehyde are replaced by more eco-friendly chemicals. Continental and Kordsa are planning to introduce a free licensing concept for the new adhesion system. “In Kordsa, we have found a competent development partner for adhesion systems, who can contribute their extensive knowledge in the field of resorcinol- and formaldehyde-free bonding technologies. The high quality of the collaboration between Continental and Kordsa is also reflected in the test results obtained to date, which are very promising both in the laboratory and in test tires,” said Boris Mergell who heads up worldwide research and development of passenger car tires at Continental. Mergell says that the company is planning the progressive introduction of this technology in the production of its tires across all segments. “Being a keen supporter of open innovation practices, we have leveraged our deep knowledge and diverse expertise together with Continental and accomplished to make a change in the formula used in the dipping of tire cord fabrics. The final formulation is an eco-friendly alternative to resorcinol- and formaldehyde-based adhesives widely applied for more than 80 years. Reviewing our massive investments into research in this field and the results obtained, we are absolutely convinced that, in collaboration with Continental, we can make the new technology ready for becoming the new industrial adhesion system standard for textile reinforcing materials,” said İbrahim Özgür Yıldırım, Chief Technology Officer at Kordsa.
Source: Composite World
The new technique replaces garment simulation with garment capture. Capturing and transferring existing garments to new people greatly simplifies the process of virtual try- on. Wondering how you would look wearing your favourite celebrity’s outfits? Scientists have developed a new four-dimensional (4D) scanning system that can capture clothing on moving people, turn it into a 3D digital form and dress your virtual avatars. The virtual ‘try-on’ system, called ClothCap, can see how the fabric moves and how it fits before a person buys an outfit, researchers said. Traditional virtual clothing try-on involves getting the 2D clothing pattern from the manufacturer, sizing this to a body, and simulating how the clothing drapes on the body. The new technique replaces garment simulation with garment capture. Capturing and transferring existing garments to new people greatly simplifies the process of virtual try- on. “Our approach is to scan a person wearing the garment, separate the clothing from the person, and then rendering it on top of a new person,” said Gerard Pons-Moll, research scientist at Max Planck Institute for Intelligent Systems (MPI-IS) in Germany. “This process captures all the detail present in real clothing, including how it moves, which is hard to replicate with simulation,” said Pons-Moll. ClothCap uses 4D movies of people recorded with a unique 4D high-resolution scanner. The system uses 66 cameras and projectors to illuminate the person being scanned. “This scanner captures every wrinkle of clothing at high resolution. It is like having 66 eyes looking at a person from every possible angle. This allows us to study humans in motion like never before,” said Michael Black, director at MPI-IS. ClothCap computes the body shape and motion under clothing while separating and tracking the garments on the body as it moves. “The software turns the captured scans into separate meshes corresponding to the clothing and the body,” said Sergi Pujades, postdoctoral researcher at MPI. ClothCap provides a foundational technology for virtual clothing try-on. “First a retailer needs to scan a professional model in a variety of poses and clothing to create a digital wardrobe of clothing items. Then a user can select an item and visualise how it looks on their virtual avatar,” said Black.
Source: Financial Express
