The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 11 SEPT, 2018

NATIONAL

INTERNATIONAL

'In FOB contract, seller must bear the charges for loading cargo on vessel'

We have a contract on FOB basis and the cargo is to be shipped mainly in break bulk mode. The customer (buyer) will arrange the vessel. In a FOB contract and break bulk mode of transport, who is responsible for stevedoring charges — the buyer or seller? Stevedoring technically means “from the first point in the ship’s or ship’s hold to the first point on the quay or vice versa”. It is therefore the process of loading or discharging/offloading of cargo to/from a ship. In a FOB contract, all the charges relating to the cargo till the goods are placed on board the vessel are to the seller’s account. We have a current account with Bank ‘A’. We received advance payment for exports through ‘A’. We obtained FIRC and submitted it to Bank ‘B’ along with export documents. Now Bank ‘A’ has debited penal charges to our current account for not advising them as to how the payments have been adjusted. Is the bank correct? Each bank has its schedule of charges. If penal charges are not in the schedule or not specifically agreed, the bank cannot levy it. You can contest the debit and take it up with the bank’s ombudsman or consumer courts. I do not know which bank you are dealing with. You may note that State Bank of India charges Rs 1,000 for receiving advance payment of up to $50,000 and Rs 2,000 for higher amounts. For only lodgment of export bills where full advance is received, SBI charges Rs 500 for bills of up to $50,000 and Rs 1,000 for amounts beyond that. SBI does not levy penal charges for not submitting the export documents or not informing the bank. You may look up SBI schedule of charges here. We had imported capital goods under EPCG issued in June 2017 (before GST). Our machine landed in India in late July 2017 (after GST implementation). So, we had paid full 18 per cent GST. Can we take credit of this IGST? How to adjust it through our local/export sales? Yes. You can take credit of the IGST paid on imports on the basis of bill of entry and utilise it for payment of IGST/CGST/SGST on your local sales. If you export, you can either utilise the credit to pay IGST on your export goods and claim a refund of that under Rule 96 of the CGST Rules, 2017, or clear the export goods without IGST payment under letter of undertaking and claim refund of the unutilised credit under Rule 89 of the CGST Rules, 2017. From our SEZ unit, we want to clear imported raw material to DTA. Can we file a bill of entry on behalf of and under authorisation from DTA buyer and clear on payment of normal customs duty? Yes. But, as per first proviso to Rule 47 of SEZ Rules 2006, such DTA sales shall be subject to the provisions of the FTP, as applicable to import of similar goods into India.

Source: Business Standard

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Low GST collections ring alarm

GST collections stood at Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July and Rs 93,960 crore in August. The Union finance ministry is working on a strategy to boost GST revenues and is engaging with states to identify issues. New Delhi: Alarmed by a nearly four-fold rise in the goods and services tax (GST) compensation to states for June-July, the finance ministry is crafting a strategy to shore up tax revenues and engaging with states to identify issues hindering their collections. Finance secretary Hasmukh Adhia has started meeting GST officers, both from central and state tax departments, in the state capitals to understand issues plaguing the GST collections. There has been a spike in the bi-monthly GST compensation paid to the states by the Centre. The Centre paid Rs 14,930 crore to compensate states for revenue loss incurred in June and July, a nearly four-fold jump compared with Rs 3,899 crore paid for the months of April and May. “A strategy is to be devised to shore up GST revenues. The amount of compensation to be paid to each state varies every month and there is no set pattern,” an official said. The reason for increased compensation also varied from state to state. For instance, in one of the cases, a state saw a huge outgo on account of value-added tax (VAT) refund following a court verdict, the official said. A discussion to shore up revenues has already happened with four states – Punjab, Himachal Pradesh, Puducherry and Jammu & Kashmir – while a dialogue with Bihar and Uttarakhand is slated to take place later this month. The official said that one of the options being considered is stepping up anti-evasion measures with a focus on top 30 taxpayers, but added that the central government will ensure that the fix to the problem will not be intrusive on businesses. “Data analytics will be put to use to examine the profile of top 30 taxpayers to study their tax payment pre and after GST implementation,” the official added. The finance ministry has targeted monthly GST collections to be Rs 1 lakh crore for this financial year, but the actual mop up has fallen short of the target month after month. The sole exception was the month of April in which the numbers exceeded Rs 1 lakh crore. The collections stood at Rs 94,016 crore in May, Rs 95,610 crore in June, Rs 96,483 crore in July and Rs 93,960 crore in August. The central government had agreed to compensate the states for revenue loss on account of GST implementation for a period of five years. The loss of revenue to a state is calculated based on the difference between the actual realisation to a state under GST regime and the tax revenue it would have got under the old indirect tax regime after considering a 14 per cent increase over the base year of 2015-16. In 2017-18, the central government had released Rs 41,147 crore to the states as GST compensation to ensure that the revenue of the states is protected at the level of 14 per cent over the base year tax collection in 2015-16. The revenue gap of each state is coming down since July and the average revenue gap of all states for last financial year was around 17 per cent, according to the finance ministry. Under GST, a cess is levied on luxury, demerit and sin goods over and above the highest tax rate of 28 per cent and the proceeds are utilised to compensate states for revenue loss. On an average, about Rs 8,000 crore is collected every month from this cess. The tax came into effect from July 1 2017 through the implementation of 101st amendment of the Constitution of India by the government. The tax replaced existing multiple cascading taxes levied by the central and state governments. The tax rates, rules and regulations are governed by the GST Council, which consists of the finance ministers of Centre and all the states. GST is meant to replace a slew of indirect taxes with a unified tax and is therefore expected to reshape the country’s $2.4 trillion economy, but not without criticism. Trucks’ travel time in interstate movement dro-pped by 20 per cent, because of no interstate check posts.

Source: The Asian Age

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Rupee has depreciated, and appreciated too

Highlights

• The rupee has hit an all-time low against the US dollar after having fallen more than 12 per cent this year

• The currency however, has appreciated against most other currencies

• A weak rupee though, will have an impact on India's trade as most of the international transactions are done in dollar

NEW DELHI: The rupee on Monday plunged to a new low of 72.67 against the US dollar, losing 94 paise from the previous closing mark. Forex dealers said besides strong demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices, and capital outflows, weighed on the domestic currency. Despite the weakening of rupee, it has held fort against most of the currencies. Here is an explainer on how not all is gloom and doom with the Indian currency:

IS RUPEE THE WORLD'S WEAKEST CURRENCY AT PRESENT?

Although the Indian rupee has fallen significantly against the American dollar, it is not the weakest currency. If one compares the exchange rate over a five-year period, it works out that the rupee has appreciated against most currencies. Government attributes rupee fall to external factors, says nothing to worry. Economic affairs secretary Subhash Chandra Garg has said there is nothing to worry about the fall in rupee as long as the depreciation is in line with other currencies. The rupee crashed to record low of 70.09 during the day on global concerns over Turkey's economic woes which have impacted various emerging markets amid the US dollar gaining strength against other currencies. It is, however, to be noted that despite the appreciation against other currencies, a weak rupee against the dollar will have a significant impact on our trade as dollar is the currency in which majority of international transactions are done. The US dollar, on the other hand, has appreciated against most other major currencies.

WHY IS THE DOLLAR APPRECIATING?

There are many reasons linked to the US’ internal matters that have increased the exchange rate of the dollar against other currencies. The American Federal Reserve (central bank) ended its expansive monetary policy after the American economy started recovering from the 2008 financial crisis. This meant that the rate at which the currency in supply was increasing was slowed down. Because of lower supply, the demand went up, increasing the value of the US dollar. Apart from this, the American central bank also increased the interest rate while the European Central Bank did the opposite. That means there will be a higher return on dollar deposits as compared to the euro, which again pushed up the demand for dollars and increased its value.

WHO FIXES THE INTERNATIONAL EXCHANGE RATE?

Mostly the market forces of demand and supply. Nearly all countries follow a floating exchange rate to determine the value of their currency against others. This basically means that a currency is worth the value that a buyer is willing to pay for it. The value is largely decided by market forces and depends on a range of factors like economic stability, inflation, foreign trade and so on.

WHY IS US DOLLAR THE CURRENCY MOST IN DEMAND?

The American dollar is among the most prominent global currencies, meaning it is among the most accepted currencies for international transactions. Because of its role in international trade, most countries maintain a foreign exchange reserve in US dollars, pushing up its exchange rate. According to the latest estimate by IMF, the American dollar constituted 62.5 per cent of global forex reserves. It was followed by euro, yen and British pounds.

WHAT ARE REER AND NEER?

The simplest process of fixing the exchange rate would require a comparison of the purchasing powers of two currencies. Factors like inflation, however, can affect purchasing power. To understand the actual value of currencies, the central banks calculate two exchange rates. The Nominal Effective Exchange Rate, or NEER, is a weighted average of exchange rates of the currencies of all trading partners of a country. NEER determines how much foreign currency may be exchanged for a country’s currency. This, however, doesn’t reflect the actual purchasing power of the two currencies. For instance if India has a higher inflation as compared to US, then the rupee exchanged for dollars will buy fewer goods. To eliminate this, Real Effective Exchange rate – REER is calculated by adjusting NEER to inflation in both India and its trading partners.

Source: The Times of India

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Trade-deficit woes drag rupee to new lows

The free-fall in the Indian rupee continues. The rupee remained under pressure all through the week and tested the psychological level of 72 last Thursday. Though the rupee managed to recover slightly on Friday, it failed to gain momentum. The country’s current account deficit (CAD) data released on Friday came as a spoiler, adding fuel to the fire. The currency tumbled to a new record low of 72.67 on Monday before recovering to close at 72.44, down 1.71 per cent for the week.

Deficit widens

India’s CAD data was released on Friday. The data showed CAD widened the most in five years to $15.83 billion in the first quarter (April to June) of this fiscal. Merchandise trade deficit increasing by 9 per cent (year-on-year) to $45.75 billion in the first quarter of FY19 from $41.93 billion over the same period last year dragged the CAD sharply lower to a five-year low. With crude oil prices continuing to stay at elevated levels, there is a strong likelihood of the trade deficit increasing in the current quarter (September) as well. This, in turn, may see the CAD widening further. As a result, the deficit concern will continue to weigh on the rupee. As such, the rupee’s strength is likely to be limited in the coming months, and the possibility of it tumbling to further fresh lows cannot be ruled out.

FPIs’ sell-off

Foreign Portfolio Investors (FPIs) seem to have resumed their selling. The FPIs, after buying India’s debt securities worth $7 million and $506 million in July and August, are turning net sellers. FPIs sold $648 million in just the first week of September. If their selling intensifies, it will increase the pressure on the rupee and aid in dragging the currency further lower.

Rupee outlook

The rupee falling over 1 per cent each consecutively for two weeks has intensified the downside pressure on the currency. The region between 72.10 and 72 will now be a key near-term support. As long as the rupee trades below 72, it is likely to remain under pressure. The indicators on the charts are also giving negative signals. The 55-week moving average has crossed below the 200-week moving average, and is on the verge of crossing below the 100-week moving average. This is a bearish signal indicating that the upside could be capped in the short term. As such, as long as the rupee remains below 72, a fall to 73 and 73.7 is likely in the short term. Inability to reverse higher from 73.7 will increase the possibility of the rupee extending its fall to even 74.5 in the coming weeks. The currency will get a breather only if it manages to breach 72. Such a break can trigger a short-term relief rally to 71.5 or even 71.

Source: Financial Express

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Govt waives off late fee on GST returns

New Delhi: The government has launched a one-time scheme to waive late fee for delayed furnishing of filing the goods and services tax (GST) return-1 form for the period July 2017 to September 2018, to encourage taxpayers to furnish the returns. The waiver, which will be effective till 31 October 2018, provides a lot of relief to businesses and traders, who have to file a summary of the transactions made every month in the GST return-3B form and a filed a detailed return of the sales in the GST return-1 form. The GST return-1 form is a vital tool for the authorities in combating tax evasion as it gives details about the buyer. However, tax authorities have noticed that filings of the detailed sales return is lower than the summary return filings. “Non-furnishing of GST return-1 is liable to late fee and penalty as per law. In order to encourage taxpayers to furnish GST return-1, a one-time scheme to waive off late fee payable for delayed furnishing of GST return-1 for the period from July 2017 to September 2018 till 31 October 2018 has been launched,” said the finance ministry. Giving more time to businesses to file details of their sales makes sense as information contained in GST return-1 is of immense value to tax officials. It enables officials to find out who the buyer is, the quantum of purchase and whether the buyer has filed his return and paid taxes on subsequent transactions. Giving extra time for filing GST return-1 to businesses will help the authorities take strong anti-evasion measures in the future. “GST return 1 is very intrinsic to the overall scheme of GST and an extension of the timelines would accelerate filings, “ said M.S.Mani, Partner, Deloitte India. The ministry said that the due date for businesses with more than ₹1.5 crore, including those registered in Kerala, to file GST return 1 for the period July 2017 to September 2018, has been extended till 31 October 2018. This extension is also applicable to those entities with their principal place of business in Kodagu in Karnataka and Mahe in Puducherry. Smaller tax payers, with annual sales less of than ₹1.5 crore, too, can also file GST return 1 without fine till the end of October. However, small tax payers in Kerala and those with their principal place of business in Kodagu and Mahe, the deadline will continue to be 15 November as announced last month. The ministry also advised tax payers to file returns on time so that their tax credits do not lapse.

Source: Livemint

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ICICI Bank launches overdraft facility for MSMEs based on GST returns

MUMBAI: Micro, small and medium enterprises will now be able to get quick overdraft of up to Rs 1 crore for working capital requirements, based on their goods and services tax (GST) returns. ICICI Bank announced the facility known as ‘GST Business Loan’ on Monday and said it would be available to any such business, including non-customers of the bank. “This facility brings in the improved convenience of availing of quick OD facility, as it does away with the need for a paper-intensive assessment of financial documents, including balance sheets of previous years,” the bank said in a release on Monday. MSMEs will be sanctioned the overdraft amount within two working days and the bank will assess their GST returns to assess their eligibility for working capital limit. “Since GST takes into account comprehensive business flows, we believe that GST returns will change the lending paradigm for MSMEs with faster and hassle-free access to working capital finance from financial institutions,” said Anup Bagchi, Executive Director, ICICI Bank. The overdraft amount could range between Rs 10 lakh and Rs 1 crore and would be up to 20 per cent of the turnover reported in the GST return. To avail of the facility, MSMEs can give residential, commercial or industrial property as collateral security. The customer will also not have to show any financial statements. It is renewable on an annual basis, depending on the repayment track record of the overdraft facility by the customer, ICICI Bank further said. With over one crore MSMEs registered with the GST Network, the lender is hopeful that the facility will give a boost to their business expansion plans.

Source: Business Line

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No reason for Rupee to slide further: Subhash Garg, Economic Affairs secretary

NEW DELHI: The government pegged the “right” value of the rupee at 68-70 to the dollar, asking foreign currency borrowers and importers not to panic. Economic affairs secretary Subhash Chandra Garg told ETin an interview that there was no reason for further depreciation of the Indian currency and no extraordinary measures were needed as of now. Garg also said crude oil should not cross $80 per barrel and the government was working to ensure that supplies from Iran would continue. The US has been pushing for an embargo on Iranian oil exports over its nuclear programme. He said consumers are bearing the cost of high crude right now, but at some point this might need to be spread wider. “So, the choices you have are either general inflationary effect or spread of cost to a wider group of taxpayers or to specific consumers...the most suitable section to bear this cost will need to be decided.” He added the government would stay the course on fiscal consolidation. The rupee recovered on Friday to close 26 paise up at 71.73 against the dollar, having flirted with the 72 level. “I have maintained that 68-70 perhaps is the right level and I don’t expect it to go beyond. There may be some temporary factors that came into play last week but there is no fundamental justification,” Garg told ET, warning against taking advantage of the sentiment. “Seventy-two to a dollar is perhaps an outer limit or beyond the reasonable outer limit for depreciation and those operators who are trying to take advantage of this contagion feeling in emerging markets may come to grief later,” he said, adding that sentiment may already have turned. He said last week’s turbulence was because of the belief that emerging markets with a current account deficit may face some pressures going forward and the rupee was no exception. CAPITAL ACCOUNTGarg said there was no undue pressure on India’s capital account and no counter measures were required as of now. “The numbers have also come for Q1--the entire deficit on BoP (balance of payments) basis is only $11 billion, which is only $3-4 billion a month. That, in the context of India, is not very large and we can take care of it. That is not to be taken too seriously,” he said, placing the entire external account in context. In July, there was FPI (foreign portfolio investor) outflow but in August there was positive inflow. This month, by and large, FPI flows are on balance, he added. “Therefore, on the capital account, I don’t see any sense of fundamental mismatch and that gives me a sense that extraordinary measures are not required,” he said. “Of course, we have to remain prepared if need be. There is a stage to deal with it, but we have not reached that stage.” Finance minister Arun Jaitley said last week that there was no need for a knee-jerk reaction on the currency.

OIL ISSUE

Garg attributed the rise in crude to events in Venezuela and Libya, and some uncertainty continuing on the Iranian oil front. Brent ended last week down marginally at $76.83 after nearing an almost four-year high. “One can’t really expect crude to average anything over 80,” Garg said, adding that the country can manage prices at these levels, which would translate into a $20-25 billion impact on an annual basis. “So, while crude does impact, right now it does not have that kind of impact, right now it does not have that kind of impact on BoP that we cannot manage with our reserves and with our resources.” On the issue of high consumer prices for fuel, Garg said the government was not making more money because of higher rates. “The government of India excise duty on petrol and diesel is in specific terms–it’s not ad valorem. Therefore, increasing crude prices does not increase government’s budgeted revenue from excise duty,” he said, adding that any reduction in duties would impact the budget. “If there is any reduction in excise revenue, the budgetary deficit either goes up or we have to take other measures--expenditure cut or other revenue measures to make up for loss of revenue,” he said, adding that if the fiscal deficit is allowed to rise, then there would be generalised inflation.

Source: The Economic Times

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Last date for filing GSTR 1 for July 2017 to September 2018 extended till October 31

The Finance Ministry on Monday extended the last date for filing final sales return GSTR-1 for July 2017 to September 2018 period till October 31 and also waived the late fee for the delayed filing of returns. It said that the number of taxpayers who have filed summary sales return GSTR-3B is substantially higher than the number of taxpayers who furnished GSTR-1. "In order to encourage taxpayers to furnish Form GSTR-1, a one-time scheme to waive late fee payable for delayed furnishing of GSTR-1 for the period from July 2017 to September 2018 till October 31, 2018, has been launched," the ministry said. Under the Goods and Services Tax (GST), businesses with a turnover of over Rs 1.5 crore has to file final sales return or GSTR-1 by the 11th of next month. Accordingly, GSTR-1 for the month of September 2018, was required to be filed by October 11, 2018. This date has now been extended to October 31. For taxpayers having aggregate turnover up to Rs 1.5 crore, the due date for furnishing GSTR-1 for the quarters from July 2017 to September 2018, too has been extended till October 31, 2018. Businesses with a turnover of up to Rs 1.5 crore can file returns quarterly with returns for one quarter needed to be filed by the 31st day of next month. "For registered persons having aggregate turnover up to Rs 1.5 crores in Kerala, or whose principal place of business is in Kodagu (Karnataka) and Mahe (Puducherry), the due date for furnishing GSTR-1 for the quarter July 2018 to September 2018 would continue to remain as November 15, 2018," the ministry said. It further said that those taxpayers who will now be migrating to GST the last date for furnishing the details of outward supplies of goods or services or both in GSTR-1 and for filing the return in GSTR-3B for the months of July 2017 to November 2018 has been extended till December 31, 2018. "The registered person shall not be entitled to take input tax credit in respect of any invoice after the due date of furnishing of the return for the month of September following the end of financial year to which such invoice pertains; or furnishing of the relevant annual return, whichever is earlier. The taxpayers are thus, advised to furnish their returns on time to ensure that input tax credit does not become time barred," the ministry added. AMRG & Associates Partner Rajat Mohan said, "This extension would entitle taxpayers to enjoy an additional window to correct their errors in tax filings before the tax credit for the recipients become time-barred for the financial year 2017-2018. Taxpayers should take this additional time to reconcile their books with customers before filing GSTR -1 for the month of September 2018".Goods and Services Tax (GST), which subsumes 17 local taxes, was rolled out on July 1, 2017.

Source: Business Today

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Rupee at new closing low of 72.44; loses 12% since Jan

The rupee on Monday crashed to new lows, hitting 72.67 against the dollar in intra-day trade before staging a mild recovery to close at 72.44. The currency has lost nearly 12% since January. The premium on three-month forward contracts jumped 9 basis points on Monday to around 4.52% over Friday’s close. A month ago, on August 10, the premium on the forward contract was at 4.32%. Currency market experts said demand for dollars had picked up following importer demands over the weekend. The rupee further slipped to yet another record low of 72.67 during intra-day trades and closed the session at 72.44 against the dollar. Dealers found the Reserve Bank of India (RBI) intervening at certain levels but the quantum remained unknown. The fall in the rupee was in sync with other emerging market currencies, which remained volatile owing to fears of trade tariffs and the US Fed’s stance on continuing to hike rates further. The dollar index — dollex fell over Friday’s close to 95.062 levels. In the offshore markets, the three-month non-deliverable forwards (NDF) stood at around 73.07/$ on Friday, but rose to about 73.57/$ by the time Indian markets closed on Monday. A month ago, the NDF was trading at 69.83/$. Further, the perception of foreign investors about rupee assets also plays into NDF betting. The sentiment in the NDF markets coupled with a negative view on rupee assets was the reason behind the rupee’s massive fall to the all-time closing low of 72.44 on September 10, currency dealers said. The linkage between the offshore and onshore dollar/rupee rates is stronger during episodes of depreciation, experts added. Bond yields closed the trading session on a nearly four-year high at 8.16%. Previously, similar levels were seen in November, 2014. Dealers said the rise in yield was primarily because of rupee depreciation that pressurizes the inflation forecast. The crude oil prices remained elevated at $77.66/barrel. AMFI chief executive NS Venkatesh believes this is the right time for the RBI to carry out open market operations (OMOs), primarily to better the liquidity conditions and bring a positive sentiment. “Once money is pumped in through OMOs, there is a likeliness that the yields will stabilise at around 8.10% levels and the rupee too should correct to 71.5 levels.” Venkatesh believes that an NRI bond issue is not required at this point in time given that the RBI has enough reserves and the macros are in favour of the rupee. “The RBI has over $400 billion in reserves, the macro-economic factors are positive, the current account deficit (CAD) can be brought to manageable levels with the crude oil prices stabilizing,” Venkatesh concluded.

Source: Financial Express

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Evolve policy to shield MSMEs from cotton price rise: Spinners

South India Spinners Association (SISPA) on Monday urged the Tamil Nadu government to come out with a policy to protect MSMEs (micro, small, medium enterprises) in the wake of rise in price of cotton. For this purpose, the government should esnure buffer stock of cotton and affordable raw material pricing mechanism, the association said in a press release. The beneficiaries of the increase in prices are multinational companies (MNC) traders and the Cotton Corporation of India, the release quoted the president of SISPA S K Rangarajan as saying. The ones affected were end-users and the farmers as the companies and traders buy cotton at MSP (minimum support price) and hoard them only to inflate the prices later, he said. The SME mills do not have the financial capacity to buy cotton and store it, the SISPA president said. In April, the price of cotton was hovering around Rs 38,000 per candy-level and reached Rs 48,000 in June, he said, adding that the SME sector was unable to repay their bank loan, resulting in NPAs (non-performing assets). (This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

Source: Business Standard

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Chinese textiles entering India via Bangladesh: GCCI

Quoting figures from the Export Promotion Bureau of Bangladesh, the Gujarat Chamber of Commerce and Industry (GCCI) recently pointed out that Bangladesh is facilitating backdoor entry of Chinese textiles into India and sought textiles minister Smriti Irani’s intervention for introducing protectionist measures to safeguard the domestic industry. India imported $87.4 million worth of readymade garments from Bangladesh during July-November last year, a sharp rise of 56 per cent compared to $55.92 million during the same period the previous year. Knitted apparel imports from Bangladesh rose by 69 per cent, while women apparel imports grew by 51 per cent. GCCI representatives recently met Irani and proposed 15 suggestions for the proposed textile policy, according to a report in a top Indian English-language daily. Before goods and services tax (GST) was introduced, garment imports from Bangladesh attracted countervailing duty (CVD) and education cess. Now a unilateral duty-free market access given to Bangladesh is facilitating backdoor entry of Chinese textiles into India, according to GSSI. GCCI also suggested introducing measures to counter China, which is selling organic fibres. (DS)

Source: Fibre2Fashion

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Global Textile Raw Material Price 10-09-2018

Item

Price

Unit

Fluctuation

Date

PSF

1675.77

USD/Ton

0%

9/10/2018

VSF

2206.11

USD/Ton

0%

9/10/2018

ASF

3038.88

USD/Ton

0%

9/10/2018

Polyester POY

1789.73

USD/Ton

-0.20%

9/10/2018

Nylon FDY

3491.79

USD/Ton

0.42%

9/10/2018

40D Spandex

5040.45

USD/Ton

0%

9/10/2018

Nylon POY

3214.20

USD/Ton

0%

9/10/2018

Acrylic Top 3D

1986.96

USD/Ton

0%

9/10/2018

Polyester FDY

3623.28

USD/Ton

0.40%

9/10/2018

Nylon DTY

5519.66

USD/Ton

0%

9/10/2018

Viscose Long Filament

1986.96

USD/Ton

0%

9/10/2018

Polyester DTY

3184.98

USD/Ton

0.46%

9/10/2018

10S OE Cotton Yarn

2126.49

USD/Ton

0%

9/10/2018

30S Spun Rayon Yarn

2914.70

USD/Ton

0.25%

9/10/2018

32S Polyester Yarn

2403.35

USD/Ton

0%

9/10/2018

45S T/C Yarn

3038.88

USD/Ton

0%

9/10/2018

40S Rayon Yarn

2702.85

USD/Ton

2.78%

9/10/2018

T/R Yarn 65/35 32S

2571.36

USD/Ton

0%

9/10/2018

45S Polyester Yarn

2585.97

USD/Ton

0%

9/10/2018

T/C Yarn 65/35 32S

3053.49

USD/Ton

0%

9/10/2018

10S Denim Fabric

1.36

USD/Meter

0%

9/10/2018

32S Twill Fabric

0.84

USD/Meter

0.17%

9/10/2018

40S Combed Poplin

1.17

USD/Meter

0.12%

9/10/2018

30S Rayon Fabric

0.67

USD/Meter

0%

9/10/2018

45S T/C Fabric

0.71

USD/Meter

0%

9/10/2018

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14610 USD dtd. 10/9/2018). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Vietnam : Textile, garment firms lose competiveness

HCM CITY — Vietnamese garment and textile enterprises are losing their competiveness due to high costs of logistics services for exports, experts have said. According to statistics from the Việt Nam Textile and Apparel Association (VITAS), textile and garment export value last year reached US$31 billion, an increase of 19.2 per cent compared to 2016. Of the $31 billion in export value, the industry spent nearly $18 billion to import raw materials, including cloth, fibre and cotton, among others. However, the cost of logistics activities for textile and garment enterprises accounted for 9.1 per cent of total export turnover, around $2.79 billion. According to VITAS, the cost of logistics services in Việt Nam is much higher than that of neighbouring countries and the region. In particular, logistics costs in the country are 6 per cent higher than in Thailand, 7 per cent more than in China, 12 per cent higher than in Malaysia and three times more than in Singapore. Despite reasonable labour costs, competitiveness has been affected by transport costs, surcharges at seaports, and limited seaport infrastructure. Phạm Thị Thúy Vân, deputy director of marketing at the Sài Gòn Newport Corporation, Việt Nam’s leading container port operator, attributed high logistics costs to a number of reasons. “The current regulations on fees and charges for logistics services are high, making transport costs also relatively high, accounting for between 30 and 40 per cent of the cost of the products, compared to some 15 per cent in other countries,” she said. For example, BOT charges on the Hà Nội-Hải Phòng expressway for businesses from Hà Nội and Bắc Ninh are about $75 per trip, accounting for 40-42 per cent of the total trucking fee, while in Malaysia, the BOT fees account for only 6 per cent of trucking costs. In addition, the surcharges of shipping lines also contribute to the cost of logistics operations in the country. Experts said the expanded costs for logistics have significantly affected the garment and textile industry, which employs a large number of labourers and is hugely dependent on input importation, which results in low added value. Nguyễn Xuân Dương, chairman of the board of directors for the Hưng Yên Garment and Textile JSC, said it was difficult for enterprises to be highly competitive because of the high cost of logistics. “The company has to spend around $5 million on logistics services for exports every year,” he said. In the first eight months of the year, exports of the garment and textile sector reached nearly $20 billion. This year, the garment and textile industry has set a target of $34-35 billion worth of exports. If achieved, the costs for logistics services would reach up to $3 billion, reducing competitiveness of businesses. To address the challenges, many firms have applied technology to better manage warehousing as well as optimise supply chains. One of the most commonly used technologies includes backing up bills and contracts, and automatically transferring documents between firms. Experts said that logistics enterprises should work to improve their competitiveness, and consider cooperating in transport services to reduce costs for other enterprises. They also suggested that the Government outline a roadmap to improve the quality of logistics services to meet the demand of many sectors, especially the garment and textile industry. According to the Việt Nam Logistics Business Association, Việt Nam’s logistics costs in 2016 totalled $41.26 billion, equivalent to 20.8 per cent of the country’s GDP. Despite high logistics costs, the logistics sector has contributed a mere 3 per cent to GDP, according to the association. According to the World Bank, in 2016, the country’s logistics sector ranked 64 out of 160 countries, and fourth in the ASEAN region after Singapore, Thailand and Malaysia.

Source: Viet Nam News

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Vietnam : Garment, textile exports likely to exceed US$1b plan

As markets currently showed its positive sign, Vietnam’s exports of garment and textile are predicted to reach US$35 billion in the year, exceeding the plan by US$1 billion, said the Vietnam National Textile and Garment Group (Vinatex). Vietnam's garment, textile exports likely to exceed US$1b plan. The sector’s key markets are the US, EU, South Korea, China, ASEAN and member states of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which have seen the rapid growth compared to the same period last year. The US maintained the biggest market of Vietnamese clothing. Next is Japan, South Korea and China. To achieve the plan, Vinatex has encouraged businesses to invest in technologies and production assembly to increase productivity as well as train workers. Moreover, garment and textile enterprises should spend more on design, increasing the original design manufacturer (ODM) rate to raise the added value of products.

Source: SGGP News

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Bangladesh : Govt reduces tax at source on exports to 0.6%

In the budget for FY19, the government had set the corporate tax at 15% for readymade garment (RMG) manufacturers and at 12% for owners of green factories. In a bid to encourage exports, the Bangladesh government has reduced tax at source on the export of products, except jute goods, from 0.7% to 0.6% for the current fiscal year. In addition, the government has also reduced the corporate tax rate from 15% to 12% for apparel manufacturers in FY19. In the FY17, the government had set tax at source at 1% for garment exports, but later cut the rate to 0.7% through a Statutory Regulatory Order (SRO) due to the demands of exporters. The tax at source rate had risen back to 1% following the expiry of the SRO, but the National Board of Revenue (NBR) issued a new SRO in this regard on Monday. According to the new SRO, 0.6% tax at source on all exports except jute products will be effective from July 1, 2018, to June 30, 2019. Meanwhile, the corporate tax rate for manufacturers and exporters of knitwear and woven products will remain at 12%. Owners of factories which have been internationally certified as green buildings will have to pay 10% corporate tax. In the budget for FY19, the government had set the corporate tax at 15% for readymade garment (RMG) manufacturers and at 12% for owners of green factories. “The government has decided to reduce tax at source as there were strong demands from garment manufacturers. However, the government reduced the rate for all export sectors in order to ensure a level playing field,” an NBR official said, asking to remain anonymous. The official added that the government had also decided to offer better incentives to exporters as it is an election year. He further said the corporate tax rate has been reduced in order to lighten the burden on apparel makers, as the Minimum Wage Board is going to increase wages. “Since the ready-made garments industry is contributing over 83% to national exports and generating employment, especially for the rural women, the government has considered the demands of the sector,” a high official of the Finance Ministry told the Dhaka Tribune, asking not to be named. Issues such as a new wage structure and improvements in compliance and safety were taken into consideration when lowering the corporate tax and tax at source rates, he added. According to data from the Export Promotion Bureau (EPB) released on Wednesday, Bangladesh’s export earnings from the RMG sector stood at $30.61billion, posting 8.76% growth in the last fiscal year. The figure is 1.51% higher than the target of $30.16 million for FY18. Bangladesh’s overall export earnings rose by about 5.8% to $36.66 billion in FY18, as compared to $34.65 billion in FY17. Praising the government decision to reduce the corporate tax and tax at source rates, Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy told the Dhaka Tribune: “This is an admirable and timely decision that will benefit the country’s export oriented business community. It has been a long standing demand of exporters to ensure a level playing field, so the decision will definitely encourage them to move forward.” Salam, also a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), added that the cut in corporate tax would attract more investment, which is badly needed for creating jobs for the next generation and to achieve the government vision of becoming a developing country.

Source: Dhaka Tribune

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Exporting: An Excellent Revenue Stream For The U.S. Textile Industry

U.S. Federal agency EXIM offers financial products that empower U.S. companies to compete with foreign competitors and win more international sales. Textile and apparel companies across the United States are benefiting from exporting; it’s a great means of boosting the bottom line and growing a business. According to the Washington-based National Council of Textile Organizations, the United States’ exports of textiles and apparel accounted for $28.6 billion worth of economic activity in 2017. Exports have played a major role in pulling the U.S. economy out of recession, and it’s not just the major corporations that benefitted. The U.S. Department of Commerce reports small and medium-sized businesses with fewer than 500 employees represent almost 98 percent of U.S. exporters. Exporting offers plenty of benefits and opportunities, including:

 • Accessing more consumers and businesses — If a company is only doing business domestically, it may be limiting its potential profits by not expanding worldwide. It can also help in offloading excess production.

• Lowering unit costs — Exports help to put idle production capacity to work and improve efficiency.

• Spreading risk through geographic diversification — Exporting has parallels to a stock portfolio. When the domestic economy falters, the company may rely on other growing markets. Exporting can also minimize the effect of seasonal sales and prolong the sales cycle.

• Expanding the lifecycle of mature products — If the U.S. market is saturated with a company’s products, they can be sold in other parts of the world.

Savvy and strategic managers in the textile industry are boosting revenue by targeting the 95 percent of world consumers living outside the United States. They sell their wares across the North America Free Trade Agreement (NAFTA) and Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) areas, as well as in Asian and European markets. While exporting is not new, many small businesses and corporate executives are still reluctant to sell overseas, or may be selling to just one or two markets they are comfortable with. Oftentimes, this is because exporting is perceived to be too burdensome or risky. Naturally, there are some complexities that come from exporting, including financial risk. Since there is little recourse for American exporters if overseas customers do not pay for goods already shipped, it is easy to understand why getting paid is the primary concern of U.S. companies selling goods and services into international markets. The good news is that help is available.

Selling On Open Account

There is an excellent solution to this concern of buyer nonpayment: the Export-Import Bank of the United States (EXIM). EXIM, a U.S. federal government agency, offers financial products that empower U.S. companies to compete with foreign competitors —many of whom have similar backing by their home governments — and win more international sales. EXIM’s export credit insurance is a popular product among U.S. exporters. The insurance policy protects foreign accounts receivable generated by the sale of goods and services from U.S.-based companies to international customers. The policy covers up to 95 percent of the sales invoice against nonpayment due to commercial — bankruptcy and protracted default for example — and political — such as war or insurgency — risks. Export credit insurance also improves textile companies’ competitiveness in the world market. While many American exporting companies resort to cash in advance to avoid nonpayment risk, most foreign competitors are able to offer open account credit terms, which are significantly more attractive to potential buyers. They expect credit terms and companies that are unable to extend credit may lose out on valuable opportunities. Export credit insurance empowers U.S. businesses to negotiate credit terms — typically in 30, 60 or 90 days — with foreign buyers up front, which is a powerful marketing tool and can be the competitive edge that wins deals. EXIM can cover a company’s entire portfolio of customers or a single buyer. In addition to reducing the risk of nonpayment and offering open account credit terms to foreign buyers, EXIM’s export credit insurance can enhance a company’s borrowing capacity by assigning now secured foreign receivables to a lender, improving liquidity and easing cash flow constraints.

EXIM Customer Stories

Between 2015 and 2017, EXIM has supported more than $253 million in exports of U.S. textiles and apparel to international markets, ensuring that American textile and apparel products can be worn around the world. The agency’s support is available to businesses of all sizes. In fact, small businesses comprise 91 percent of EXIM’s total authorizations, and no transaction is too small. Textile and apparel companies have used EXIM insurance to a great effect. Above: Marc Cabot (left), founder of Cabot Hosiery, and father of Ric Cabot (right), founder of Darn Tough Vermont — a company using EXIM’s export insurance program. Photograph courtesy of Darn Tough. Northfield, Vt.-based Darn Tough Vermont, a Cabot Hosiery Mills brand, already was exporting and offering its distributors 30-day open account credit terms, but two things were on their minds — inklings of potential problems with payment from one international source, and an upcoming trade conference to discuss deals with new distributors. With the protection of EXIM’s export credit insurance, Darn Tough Vermont representatives were able to negotiate payment terms with new international distributors, secure in the knowledge that the receivables were insured against nonpayment and covered for commercial and political risks. In addition, export credit insurance bought the management team peace of mind, knowing they had decreased the risk of payment problems from a potentially shaky partner. “Thanks to EXIM’s excellent export insurance program, Darn Tough Vermont is well on its way to achieving its goal of worldwide brand recognition and substantial growth in international markets,” said Steve Kelley, Darn Tough CFO. Fashion brands use Supima cotton yarns produced by Buhler Quality Yarns Corp. in their garments. Buhler uses EXIM’s export credit insurance to sell on open account credit terms and protect itself from the risks associated with selling yarns to emerging markets in Central America. Photograph courtesy of Buhler. Jefferson, Ga.-based Buhler Quality Yarns Corp. sells cotton yarns to Central America, and its product can be found in Lacoste™ polo shirts, T-shirts, and other clothing. The company needed to find other avenues of providing payment terms to new companies beyond requiring cash in advance. EXIM export credit insurance allowed the company to sell on open account credit terms and cover the risks in emerging markets. “EXIM allows us flexibility to go after business in international markets,” said David Sasso, International sales manager, Buhler Quality Yarns Corp. “EXIM understands companies and empowers them to have continued growth.” Ben Kaufman Sales Co. a distributor of towels and apparel to Caribbean countries, also has benefitted from EXIM support. With an EXIM export credit insurance policy, Ben Kaufman Sales mitigated the risk of nonpayment and eased the company’s initial concern about expanding into riskier international markets. Its foreign accounts are protected from potential losses that could result from an international business deal gone awry. As a result, exports now account for 20 percent of the company’s sales. EXIM can help companies of all sizes boost sales while protecting financial assets. Contact EXIM to learn more. Editor’s note: James Burrows is EXIM’s senior vice president, Office of Small Business. He has more than 30 years of professional experience in both the public and private sectors of the financial services industry, including commercial banking, retail banking and investment banking.

Source: Textiles World

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Pakistan: More H2O2 for the textile sector

Unarguably, textile is the backbone of Pakistan’s exports. Though smooth supply is essential for its growth in domestic and international markets, running afoul of the chemical sector is one of the myriad challenges it faces. This space has previously highlighted the conflicts between the two sectors. One such battle that waged earlier this year was the higher prices and shortage of hydrogen peroxide, also known by its chemical composition of H2O2. (Read “Textile and chemical conflicts – H2O2”, published on March 13, 2018) Hydrogen Peroxide has a variety of uses but its main customer is the textile sector in which it is used for dyeing and bleaching processes. Currently, the local market is duopolistic with Descon Oxychem holding about 51 percent of the share and Sitara Peroxide having approximately 34 percent of the market. The rest is supplied by imports which are tariffed at 11 percent. On one hand domestic producers argue that the tariffs are essential for import substitution to the tune of about $24 million. Sitara and Descon have over the years approached NTC for anti-dumping duties as well. Textile sector on the other hand argues that since domestic capacity is unable to fulfill local demand by about 10,000 tons, they should have freer access to H2O2. This conundrum is being solved by Engro Polymer & Chemicals that recently account $23 million investment to enter into a greenfield investment of hydrogen peroxide. Its notice to the PSX stated that currently, the hydrogen derived from its caustic manufacturing process was being used as fuel. The company did not consider this the best form of value creation for the gas and hence was entering into the hydrogen peroxide business. This is good news on my levels. Firstly, imports comprise of about 16 percent of the market so EPCL’s investment enhances import substitution. Secondly, as yet hydrogen peroxide is absorbed locally due to supply constraints. Surplus may now be exported, especially since All Pakistan Chemical Manufacturer’s Association (APCMA) has claimed in the past that local manufacturers have option to export at much better prices but are constrained due to domestic demand. Thirdly, and most importantly, the biggest beneficiary of EPCL’s diversification will be the textile sector. Descon is planning expansion by about 25 percent by 2020. With Descon’s enhanced capacity and EPCL’s investment, H2O2 supply will increase significantly ensuring that textile sector’s woes of insufficient availability of hydrogen peroxide are addressed. Increase in supply may also make prices more competitive enabling the textile sector’s margins to improve. Thus, EPCL’s investment should remove one bone of contention between the chemical and textile sector.

Source: Business Recorder

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Cambodia : Local garment industry to benefit from trade war

With the trade war between the world’s two largest economies in full swing, a number of international brands are shifting production away from China, with Cambodia a strong contender to become their next base for the manufacturing of garments and footwear products. The US and China have been involved in a tit-for-tat trade war since early July, with the latest move from Washington being to impose 25 percent duties on $16 billion worth of Chinese imports. Affected products include car tires, furniture, wood products, as well as handbags and suitcases. A study conducted among companies that source goods from China released in July by the US Fashion Industry Association found that 67 percent of participants expected to reduce the amount (in monetary value or volume) they produce in China over the next two years. The same study put US trade protectionism as the number one challenge for the industry. “The shift has been under way,” Steve Lamar, executive vice president of American Apparel & Footwear Association, told Bloomberg. The talk of tariffs has created “a lot of anxiety,” and companies are gauging how fast they can make more changes to their sourcing, he said. Steven Madden CEO Edward Rosenfeld told Bloomberg that his company’s has been shifting production of its handbags from China to Cambodia. 15 percent of Steven Madden’s handbags will come from Cambodia this year, with this percentage likely to double in 2019. “That gives us frankly about a three-year head start on most of our peers, because many folks are just now trying to make that move,” Mr Rosenfeld said. “Our head of handbag sourcing is actually over there right now, working on a plan to ramp that up.” Kaing Monika, deputy secretary general of the Garment Manufacturers Association in Cambodia (GMAC), told Khmer Times that the trade war will impact investors’ confidence in China and will make them consider re-locating to other countries in the region. “You should see more interest in sourcing travel goods from Cambodia now. Travel goods production should continue to exit China and be a growth opportunity for Cambodia,” he said, adding that China still exports almost $5 billion to the US in travel goods. “Aside from the trade war, China rising labour costs and a more stringent enforcement of regulations, such as environment-related laws, will also prompt more and more factories to leave China, and Cambodia stands to benefit from this. “The real question is whether Cambodia would be their first choice for re-location, or if they have other countries in mind. Peace and stability are important but there are other factors that count when gauging national competitiveness,” he added. Tapestry, the luxury company behind Coach and Kate Spade handbags, has also reduced operations in China, while increasing production in Southeast Asia, specifically in Vietnam. The company now does less than 5 percent of its sourcing from China. Vera Bradley, an American luggage and handbag design company, said in December they are also looking at shifting production away from China and into Cambodia and Vietnam, according to Bloomberg. Exports of Cambodian garment and footwear products increased by 9.3 percent during the first half of the year, reaching $3.7 billion in value, according to the Ministry of Commerce. Shipments to the European Union grew by 10.66, achieving a total value of more than 1.6 billion, while those to the US rose by 10.73 percent and were worth $858 million. These two markets jointly accounted for 72 percent of Cambodia’s total exports.

Source: Khmer Times

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Pakistan : Textile Asia-2018 ends with signing of JVs worth $175m

LAHORE - Asia's biggest international trade exhibition, Textile Asia-2018 concluded here on Monday with agreements of joint ventures (JVs) worth $175 million. The exhibition was jointly organised by Pakistan-China Joint Chamber of Commerce and Industry (PCJCCI) and E-commerce Gateway here at Lahore Expo Centre. PCJCCI President SM Naveed and E-Commerce Gateway President Dr Khursheed Nizam were chief guests at the closing ceremony. Addressing the ceremony, Dr Khursheed said that more than 55,000 people visited the trade fair from different sectors of textile industry during the last three days. A number of MoUs worth US$175 million in total had been signed for joint ventures, which would definitely help develop the textile sector in Pakistan on modern lines, he added. On this occasion, PCJCCI President SM Naveed said that Chinese companies from different cities and provinces like Shanghai, Guangzhou, Jiangsu, Fujian and Shandong had shown their interest to relocate their textile, garment and accessories production units to Punjab, having investment of at least US$25 million for each unit. The foreign companies had also agreed to transfer their technologies, besides buying back Pakistani products after value-addition through transfer of the modern technologies, he said, adding that the joint ventures to be concluded through Textile Asia would help enhance local exports, besides lowering down Pakistan's trade deficit with China.

Source: The Nation

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