Textile companies are expecting a revival in their fortunes in July-September on a rebound in customer footfalls and restocking by traders following GST (goods and services tax) compliance.
Profit margins of textile firms remained under pressure in the first quarter of the current financial year due to traders’ destocking ahead of the GST implementation effective July 1. Primary textile players had stocks returned to them amid fears of the GST’s burden on unsold inventory.
Not only small players but large ones, too, saw profits being squeezed in the quarter ended June. The net profit of Vardhman Textiles and Welspun Industries declined by 7.19 per cent and 38.39 per cent, respectively, during April-June. Grasim Industries reported a 9.48 per cent rise in its net profit, which according to a Motilal Oswal report, was driven by improvement in realisation from the VST segment. Overall volume growth from the textile business remained flat for Grasim Industries, the report said.
“Following the disruption due to demonetisation, the imminent introduction of the GST dampened demand during this quarter. The implementation of the GST has disrupted the unorganised sector, which has been demanding its removal on fabrics and resolution of the inverted duty structure,” said
C S Nopany, chairman, Sutlej Textiles and Industries. The government announced demonetisation of Rs 500 and Rs 1,000 notes in November, which caused the cash business to come to a standstill.
Textile traders, especially those dealing in fabric and yarn, went on a 40-day strike in May after the announcement of a five per cent GST levy on them. With the government firm on the levy, traders resumed business after compliance with the new tax norms in July.
Analysts said business would become normal with a resumption in demand from the domestic and export markets. Apart from that, cotton prices, which remained elevated last year on low output, are expected to decline this year on expectations of a bumper crop.
“Adverse rupee movement against the Chinese yuan is affecting textile players. In addition, high cotton prices have posed a challenge. With supplies likely to rise in the upcoming season, cotton prices are expected to moderate by 5-10 per cent,” Sumant Kumar, an analyst with Emkay Global Financial Services, said in a report.
The Cotton Advisory Board estimated India’s cotton output at 34.5 million bales in 2016-17. The output is likely to be higher in 2017-18 on an increase in acreage. Analysts said textile companies with low debt and a better product mix were likely to perform better.
Source: Business Standard
In a bid to boost exports, India’s export credit guarantee agency ECGC has revived its export-factoring business. This move comes amidst a slump in the country’s export growth due to slowing trade across advanced and emerging economies.
Factoring is a financial transaction whereby a seller (for example, an exporter) gets his accounts receivable (invoice) discounted with a ‘factor’ (such as ECGC). The discounting leads to release of funds (almost 90 per cent of outstanding invoice value) for the seller. The factor, in turn, collects the payment on the invoice from the buyer (for example, an importer) on the due date.
Geetha Muralidhar, Chairperson and Managing Director, ECGC (formerly Export Credit Guarantee Corporation of India Ltd), said leading exporting countries would not have been able to make a mark in global trade without export factoring.
“We now want to consciously work on our factoring product for micro, small and medium enterprises.We had been doing full-fledged factoring for some time. It was going on very well until we got stuck with the gem and jewellery industry…We got hit (in the early part of this decade).
“So immediately there was a knee-jerk reaction. The whole establishment decided not to touch it as it was very risky and we pulled back. I would say that was not a right decision,” said Muralidhar.
The ECGC chief said a sum of ₹60 crore has been set aside for growing the factoring business, currently a departmental activity, and could be hived off as a subsidiary at a later stage when the business gains critical mass.
“We have everything in place: clearance from the insurance regulator as well as the banking regulator, wherewithal in terms of trained people, membership of Factors Chain International (the global body for the open account receivables finance industry) and Electronic Data Interchange (EDI) to conduct the business.”
Giving a boost
To make factoring attractive for exporters, ECGC, among others, has brought down its pricing, cut down on margins and bundled it with export insurance. At present, the corporation is working on approving about half-a-dozen export-factoring proposals.
“We are gung-ho about factoring. But since we got hit in the past, we want to tread cautiously,” said Muralidhar.
Source: Business Line
Indian cotton yarn exports witnessed a fall of 9.79 per cent in the first four months of fiscal 2017-18, according to data compiled by the Cotton Textiles Export Promotion Council (TEXPROCIL). Exporters cite slow pick up by China and Bangladesh, the two big target markets comprising around half of the cotton yarn shipments from India, for the decline.
The country’s cotton yarn exports was worth $916 million between April and July. Exports to China, which accounts for 31 per cent of the overall export figure, have declined by 48.58 per cent during the period.
The export decline has put at risk substantial investments in this sector due to a 60-65 per cent fall in capacity utilisation because of weak demand from domestic and global markets, a leading Indian business daily reported recently.
The report attributes demonetisation and the imposition of 5 per cent goods and services tax (GST) for the tremendous pressure that domestic cotton yarn manufacturers have been reeling under. This is because the majority of the industry falls under the unorganised sector dealing in cash. As cotton yarn manufacturers never paid any taxes in the past, GST compliance brought the entire business to a standstill.
According to TEXPROCIL executive director Siddhartha Rajagopal, Vietnam is gaining market share in China at the cost of India primarily due to zero tariff on imports to China and investment by Chinese textiles mills in Vietnam. Vietnam, with no cotton base, is now the largest supplier of cotton yarn to China, accounting for around 32 per cent of imports into China.(DS)
Source: Fibre2Fashion
VARANASI: The geographical indication (GI) certification that the handloom Benarasi sarees from Varanasi enjoy since 2009 is an advantage that has not been fully tapped, feel many experts.
“The Indian government should proactively promote GI certification for Varanasi handloom to weed out fake products. Besides marginalised weavers, it will also help consumers,” points out Dr Rajnikant Diwedi, a retired BHU professor who runs an NGO Human Welfare Association in Varanasi to support weavers, handicraft artisans and marginal farmers through various developmental initiatives, for over two decades.
Even though there are 115 registered users of the GI certification for Benarasi handloom, so far there have been no cases filed on infringement of intellectual property.
The Uttar Pradesh government, meanwhile, is trying to connect handloom weavers in Varanasi with designers to help them create intellectual property. “We are trying to create linkages with private partners for handloom and khadi and tying up with premier institutions such as NIFT and IIT-Kanpur for design development and product diversification. Curriculum is being developed for vocational education in the areas of design, dyeing and weaving for skill development at the it is,” says Nitesh Dhawan, assistant commissioner, handloom & textile department of Uttar Pradesh. He adds that the goods & services tax (GST) may not have much of an impact on individual weavers but co-operative societies and large traders would come under its net and those with businesses in other states.
“However, the secretary, ministry of textiles visited Varanasi last week and spoke to large sections of handloom weavers and other stakeholders. He has taken note of their concerns on GST including the need for too much paperwork and we can expect some steps to be taken soon.” One of the recent initiatives taken up by the UP government recently that would help handloom weavers in the state was increasing the money amount for weavers’ annual awards and adding other product categories in the list of awardees.
For big businesses such as Jagadish Das & Co, a wholesale dealer of Banarasi sarees based in the Chowk market area of Varanasi, which has been in the business for over 100 years, GST not surprisingly is not having much of an impact. “But for the weavers, who run cottage industry set-ups and operate on cash and carry basis, GST is proving to be cumbersome. Even if they don’t come in its ambit, their product has become more expensive as cost of inputs have gone up with GST,” points out Rajesh Shah, who joined the firm 15 years back and is the fourth generation of the family in the business. He is also concerned over the elimination of middlemen, who, he feels are an intrinsic part of the business model for Benarasi sarees and have worked with small weavers on trust and goodwill for more than a century. “With many handloom weavers shifting to powerlooms and other sectors, there is a big shortage of skills and the rich heritage of this industry is endangered. Banarasi sarees now need well recognised brand ambassadors such as Bollywood stars to come forward and promote them.”
Source: Economic Times
The government has waived late payment fees for delayed filing of GST returns and allowed businesses to correct errors in the initial form while submitting final returns by September 5.
Businesses were required to file the maiden Goods and Services Tax (GST) returns for July and pay taxes by August 25 by filing GSTR 3B. The final returns for sales for July are to be filed by September 5 and returns for purchases by September 10.
In a circular, the finance ministry said late fee for all taxpayers who could not file GSTR 3B for July has been waived, but not the interest on late payment of dues.
As per the CGST and SGST Acts, an interest at the rate of 18 per cent will be levied for delayed payment of tax.
"Since the payment was not made on or before the due date, the registered person shall be liable for payment of interest on delayed payment of tax starting from August 26, till the date of debit in the electronic cash and/or credit ledger, but will not be liable to pay any late fee," the CBEC said.
The GST law provided for a nominal fee of Rs 100 per day on Central GST and an equivalent amount on State GST in case of late filing of returns and payment of taxes.
The Central Board of Excise and Customs (CBEC) also provided for correction of erroneous details furnished in form GSTR-3B.
Now, businesses who intend to make changes or amend the initial return (GSTR 3B) can do so at the time of filing final returns in forms GSTR-1 or GSTR-2, as the case may be.
"This will get reflected in the revised output tax liability or eligible ITC (input tax credit), as the case may be, of the registered person. The details furnished in form GSTR-1 and GSTR-2 will be auto-populated and reflected in the returns in form GSTR-3 for that particular month," the CBEC said.
In cases where the taxes paid as per the initial return filed in GSTR-3B is less than the amount due post reconciliation as per GSTR-1, the additional amount of tax can be paid by debiting the electronic cash or credit ledger.
However, interest on delayed payment of return will be levied on the amount of tax that was due.
Besides, the government has exempted businesses which have not filed GSTR-3B but will file final GST returns in GSTR-1, GSTR-2 and GSTR-3 from payment of late fees.
Interest would, however, be levied for delayed payment of tax.
Of the 59.57 lakh businesses that should file return for July, as many as 38.38 lakh taxpayers accounting for 64.42 per cent of the total businesses registered in July had filed their GST returns.
Taxes worth Rs 92,283 crore were collected in July from just 64.42 per cent of the total taxpayer base.
Source: Business Standard
The 18th Textile Asia International Exhibition, organised by the Pakistan Readymade Garments Manufacturers & Exporters Association (PRGMEA), will highlight the advantages of China Pakistan Economic Corridor (CPEC) for textile industry of both the countries. The biennial show will be held at Karachi Expo Centre & Lahore Expo Centre on September 16-18, 2017.
The exhibition aims to focus on the immense buying selling potential of textile & garment machinery, clothing textiles accessories, textile raw material supplies, textile dyes chemicals, embroidery machines, power & air compressors for textile industry and textile allied services.
Over 50,000 trade and corporate visitors are expected at the textile trade, said Pakistani media reports quoting PRGMEA central chairman Ijaz Khokhar. More than 600 international delegates are also participating in the biennial textile show. It is an effective platform for collaborations to the textile sector’s SMEs, majority of which are located in Punjab, having no financial capacity to attend international exhibitions, said Khokhar.
The three-day event is Pakistan’s biggest trade show of B2B value added textiles, garments, embroidery, digital printing machineries, chemicals and allied services, said PRGMEA vice chairman Jawwad A Chaudhry.
PRGMEA in association with Ecommerce Gateway Pakistan will host the event for the third time in Lahore. (RR)
Source: Fibre2Fashion
XIAMEN, China (Reuters) - The BRICS group of emerging economies must promote trade liberalization and an open world economy, Chinese President Xi Jinping said at a business meeting on Sunday at the start of a three-day summit being held in southeastern China.
The heads of state from Brazil, Russia, India, China and South Africa will gather in the city of Xiamen through Tuesday, giving China as host its latest chance to position itself as a bulwark of globalization in the face of U.S. President Donald Trump’s “America First” agenda.
BRICS leaders will be joined by observer countries Thailand, Mexico, Egypt, Guinea and Tajikistan, and officials will discuss a “BRICS Plus” plan to possibly expand the bloc to new members.
Mexico’s President Enrique Pena Nieto is set to be in China to discuss trade and investment, as Trump has renewed threats to scrap the 23-year-old North American Free Trade Agreement (NAFTA) that he has labeled a killer of U.S. jobs.
“We should push for an open world economy, promote trade liberalization and facilitation, jointly create a new global value chain, and realize a global economic rebalancing,” Xi told BRICS business leaders and senior officials.
Xi said he still had “full confidence” in BRICS countries’ development despite claims that the bloc’s relevance had faded due to slower growth.
“The development of emerging market and developing countries won’t touch anyone’s cheese, but instead will diligently grow the world economic pie,” he said.
Earlier, Chinese vice trade minister, Wang Shouwen, said the BRICS meeting was expected to “reach consensus for actions” to oppose trade protectionism. He added that China was interested in possibly establishing a free trade agreement with Mexico.
In July, Xi called on members of the Group of 20 (G20) nations to champion an open world economy, and at the World Economic Forum in Davos, Switzerland, in January offered a vigorous defense of globalization.
In Xiamen, Xi closed his 45-minute speech by saying that Beijing encouraged Chinese companies to continue going abroad, and “warmly welcomed” other countries’ firms to invest in the world’s second-largest economy.
But those remarks are cold comfort to some critics of China, foreign business groups and governments alike, who say China has done little to remove its discriminatory policies and market barriers that favor Chinese companies.
The BRICS summit comes just a week after China and India agreed to end a more than two-month standoff between hundreds of troops in a Himalayan border area, which had put a sidelines meeting between Xi and Indian Prime Minister Narendra Modi in question.
The standoff was the latest example how BRICS countries, while sharing certain development goals, are far from unified.
Some have questioned the relevance of BRICS and China’s commitment to its New Development Bank (NDB) in light of Xi’s own global Belt and Road development initiative and the China-led Asian Infrastructure Investment Bank.
Set up in 20l5 as an alternative to the World Bank, the Shanghai-headquartered NDB was seen as the first major BRICS achievement after the group came together in 2009 to press for a bigger say in the post-World War Two financial order created by Western powers.
The bank aims to address a massive infrastructure funding gap in the member countries, which account for almost half the world’s population and about a fifth of global economic output.
The NDB’s president on Friday said it aims to make about $4 billion in loans next year. To date, it has invested in 11 projects, lending $1.5 billion in 2016 and $2.5 billion in loans set for this year.
Source: Reuters
The relationship between China and India, as an Indian Ambassador recently pointed out, "Is tangled, complex and fraught." It has been so ever since the Nehru days, with the first prime minister of India expressing faith over India's robust democratic polity, which he considered to be a more significant achievement than the fast pace of economic development in China. While the timbre of India-China bilateral dialogue fluctuated between sombre to shrill over the next 70 years amidst war, recurrent border disputes, and economic competitiveness, the average Indian Joe, however, remained consistently enamoured in Chinese food, played with Chinese toys and flaunted Chinese cell phones.
Though the popularity of spicy hot Hakka noodles remained ubiquitous in all restaurants from Chennai to Kolkata, the lingering coldness between the two countries directly impacted the number of Chinese living in the country. With only 2000 Chinese descendants living in the city, Kolkata is a faint reminiscence of a city with a bustling Chinese community of 20,000. Though the Chinatown still stands with its colourful rooftops, temples and festoons, the ownerships of most Chinese eateries are no more in the hands of Chinese. As the young generations have moved away to Canada, US, and Australia, the mecca of Chinese food in Kolkata - Tengra - lacks both the energy and the capital to boost the social and economic presence of the community in India.
However, though the physical presence of Chinese is dwindling both in Kolkata and Mumbai, which once had a flourishing trade relation with China, the number of Indians in China is rising over the years. Unlike the IT sector, which is drawing increasing number of educated Indians to the foreign shores, in case of China, it is the textile trade.
Keqiao, located in the eastern Zhejiang Province, is called the Chinese textile city. Rising out of poverty and underdevelopment which plagued Keqiao in the 1970s, the city has turned out to be the largest fabrics export centre of China. With the opening up of opportunities that came at the backdrop of China's open policy, more than 5000 Indian middleman traders have come to settle down in the textile town of Keqiao.
It was in 1998 that the first Indian came to open a trading office in Keqiao. The first wave of Indian migrants to the city coincided with its exponential growth of fabric exports in the early 2000s. The enterprising cloth traders from India made full use of the institutional support that the local government gave to make Keqiao, 'a Textile Silicon Valley'. With the moving in of the Indian merchants, Keqiao transformed from a local Chinese textile market to an international textile export centre. Even Chinese traders operating from the region recognise the fact that the arrival of many Indian traders drastically transformed the local trade landscape.
Most of the Indians working as the middleman in the cloth trade are Sindhis. Traditionally a business community, the Sindhis were severely impacted by the partitioning of the sub-continent. In a search for a better fortune, they started spreading across the globe. People in the clothing trade moved to Dubai. When the competition of the fabric middleman business became very keen in the 1990s, they shifted their business base to Taiwan and South Korea. After the South Korean market was badly hit by the Asian Financial Crisis, Sindhi merchants moved to Keqiao in China.
In Keqiao, Sindhis came to know that it was indeed easier to find more kinds of fabrics at cheaper prices than anywhere else as the textile factories and shops are highly centralised. Sindhis, as well as other Indian cloth merchants, started setting up trading offices in Keqiao. Unlike the Pakistani merchants in the region, most Indian businessmen come with start-up capital to start the new venture. They tend to employ their compatriots work for them. Most of these employees are in their late 20s and early 30s but have left their home at a very early age, they have years of work experience.
Currently, there are around 1000 Indian companies located in Kenqiao. The long-term business relationships that they have in place with their buyers and suppliers have helped them to prosper unlike any other business communities operating out of the region. Evidently, the India-run companies outnumber by far the Chinese and Korean-run companies.
It is not only the numbers that give Indian merchants at Kenqiao an edge over others but the negotiation skills and in-depth knowledge that they have acquired in the business through their years of experience. One of the Chinese merchants pointed out to Ka-Kin Cheuk, who has been researching the Indian mercantile community, "Indians are the key middlemen in Keqiao. I don't like to do business with them. They are cunning. But only Indian middlemen can give us big orders. Chinese traders find it 'too risky' to do business directly with overseas buyers. Evidently, the Chinese look at Indian traders with mixed feelings of apprehension and appreciation. So, just the like the relationship between the two states, at the individual level too, the relationship is complex, fraught and tangled.
But just as the Indian traders need China to fulfil their economic aspirations, to build up their social and economic capital, similarly the Chinese need the Indian merchants to sell their products in Europe, North America and the Middle East. Without the Indian network, developed through years of painstaking work during the Cold War, Chinese textiles would not have reached Russia and Eastern European countries. In Dubai too which acts as the entry-point of Chinese goods for the Middle Eastern and African countries, it is the Sindhi mercantile network that carries Chinese textile around.
So, both India and China may take up a jingoistic posture at each other but this small community of Indian merchants along with their Chinese compatriots will together be representing the global south to the world market. This could well be a lesson for BRICS leaders as how to rise above political quibble to build a platform of economic cooperation. This is what the future needs to be, not isolation and acrimony.
Source: WION
The Sokoto State Government says it is collaborating a private company to establish a textile factory to boost employment opportunities and economic activities in the state. A statement signed by the Special Adviser to Gov. Aminu Tambuwal on Media and Public Affairs, Malam Imam Imam in Sokoto said that the factory was sited at Kalambaina in Wamakko Local Government area.
The statement stated that the development was in addition to a successful collaboration with a private company for the establishment of a new fertilizer company in the state. “The textile company will have the capacity to produce 20,000 metric tonnes of finished products and will provide employment opportunity to approximately 2,000 people,’’ the statement stated. Speaking to newsmen on the development, the Special Adviser to the Governor on Public Private Partnerships (PPP), Alhaji Bashir Gidado, said that the project would soon take off. “We are partnering with a company, Hijra Nigeria Ltd, to establish a textile factory in Sokoto and the state government will have a 40 per cent equity share in the company and we expect to start production towards the end of 2017.
“As you may be aware, we have abundant raw materials in the state and large populations of our people are cotton farmers so this company will provide a ready market for their products. “We are also in touch with others from neighbouring states like Katsina, Kebbi and Zamfara. “By the time the company is fully on stream, it will provide employment opportunities, create wealth and enhance the socio-economic well-being of the people,” Gidado said.
He added that the state government would continue to explore the advantages in PPP arrangement because of success history. “In May this year, a new organic fertilizer plant was commissioned here in Sokoto and the state government had stake of 40 per cent. “We have enjoyed the benefit of working closely with private investors. So I am confident this textile initiative will also come on stream as scheduled,” he added. According to him, work on the textile factory project has reached 70 per cent completion.
Source: TIDE
