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MARKET WATCH 08 MARCH, 2019

NATIONAL

INTERNATIONAL

Government clears scheme to rebate central, state embedded taxes for textiles sector

NEW DELHI: The Union Cabinet Thursday approved a scheme for rebate of all state and central embedded levies for apparel and made-up textile segments, which would make shipments zero-rated, thereby boosting the country's competitiveness in export markets. Addressing a press conference here, Textiles Secretary Raghvendra Singh said the decision was needed as incentives for apparel and made-ups under the Merchandise Exports from India Scheme (MEIS) were not WTO compatible anymore."The MEIS scheme offered 4 per cent support which was not available beyond December 31," Singh told reporters. He said rates under the Remission of State Levies (RoSL) have been revised upwards for garments and made-ups, and centrally embedded levies outside the ambit of GST have been added to the scheme, which will "more than offset" incentives not available under MEIS for apparel and made-ups. The decision assumes significance as shipments from neighbouring countries like Sri Lanka, Bangladesh and Vietnam enjoy zero duty access to the EU, which is the biggest export market for India's apparel sector. "However, our exports to the European Union have to face a tariff disparity of around 9.6 per cent. We were facing acute competition in this business where profitability is quite marginal," Singh said. The made-up segment of textiles includes products like bedsheets, blankets and curtains. "Our endeavour will also be to extend these benefits to exports of fibre, yarn and fabrics. A committee will be set up to examine if similar incentives can be extended to these segments," Singh said. According to him, the revenue foregone estimate due to the decision has been pegged at Rs 6,300 annually. The inter ministerial committee as well as the norms committee of the Department of Commerce shall from time to time assess the impact of this decision and tweak it wherever needed, Singh said. Currently, Remission of State Levies (RoSL), which is to offset indirect taxes levied by states such as stamp duty, petroleum tax, electricity duty and that were embedded in exports, is provided to textiles exporters. "The decision which also extends rebate up to March 31, 2020, will greatly benefit apparel & made-ups manufacturers/exporters," Textiles Minister Smriti Irani said in a tweet. She said the apparel and made-ups have a combined share of 55 per cent (around USD 21 billion) in the total Indian textile export basket and the decision to enhance rebate will have a direct impact on these segments, thereby increasing competitiveness of India's textile exports globally. The decision also entails change in disbursal mechanism whereby the rebate of all embedded state and central levies will be done through the Scrip System. "Fulfilling one of the primary demands of the industry, Rebate of State and Centre Levies/Taxes will be done through IT-driven Scrip System thereby preventing delay & ensuring speedy disbursal," Irani said in another tweet. The decision will enable the government to take various measures for making exports of apparel and made-ups zero rated. "The proposed measures are expected to make the textile sector competitive. Rebate of all embedded state and central taxes/levies for apparel and made-ups segments would make exports zero-rated, thereby boosting India's competitiveness in export markets and ensure equitable and inclusive growth of textile and apparel sector," an official statement said.A senior official said under RoSL, in apparel, previously there was a maximum rate of 1.7 per cent which has been revised to a maximum of 3.6 per cent. The rate of central levies on apparel was a maximum of 2.45 per cent which means effectively the rate on apparel has gone up from 1.7 per cent to 6.05 per cent. The official said for made-ups, previously the maximum RoSL rate was 2.2 per cent which has been revised to 5 per cent, plus central levies with a maximum rate of 3.2 per cent, taking the overall rate from 2.2 per cent to 8.2 per cent.

Source: Economic Times

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India's goods export to hit $330 bn in 2018-19: Suresh Prabhu

NEW DELHI: The country's goods export will touch $330 billion in 2018-19, which will be the highest ever, Commerce and Industry Minister Suresh Prabhu said Thursday. He said the country's merchandise exports have seen high growth in the past six years through sector-specific interventions, focused export promotion initiatives, and quick resolution of issues. With the structural reforms that have been put in place over the past five years by the ministry and action-oriented plans for major sectors, the minister said India is on the path to become the fifth-largest economy this year. "India's goods export will peak at $330 billion in 2018-19 which will be the highest ever," the ministry said in a statement quoting Prabhu. He also said the Department of Commerce has identified nine sectors - gems and jewellery, leather, textiles, engineering, electronics, chemicals, pharma, agriculture and marine products -- to achieve at least 16 per cent growth in exports in 2018-19. During April-January this fiscal, exports grew 9.5% to $271.8 billion.

Source: Live Mint

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Enhanced export benefit for garments and made-ups, reduction in hank yarn obligation hailed

Coimbatore: The proposed rates of Rebate on State Levies (RoSL) has come at a right time, which would benefit the garmenting and made-ups segments, Southern India Mill’ Association (SIMA) said Thursday. This would also increase the demand from the downstream sector, thereby strengthening the entire cotton textiles value chain, SIMA Chairman, P Nataraj said here. In a statement, he said the industry has also been pleading to include spun yarn and fabrics under RoSL benefit for the last two years and the Government should have considered the spinning and weaving / knitting segments as these segments suffer with surplus production capacity for the last few years. The envisaged demand would not meet the excess supply from the spinning and weaving segments, Nataraj said and appealed to consider the genuine demand of the industry to include spun yarn and fabrics under RoSL. Thanking Union Textile Minister, Smriti Irani for considering the long pending demand of the spinning sector and reducing the hank yarn obligation from 40 to 30 per cent with effect from January 2019 to enable ease of doing business. He said that when the hank yarn obligation was reduced from 50 to 40 per cent during 2003, the obligatory quantity was around 930 million kgs and the same had increased over 1,600 million kgs during 2018. On the other hand, the number of handlooms were 31.37 lakhs during 1997-98, which got reduced to 21.46 lakhs during 2009-10, he said. The proportionate reduction in obligation works out to less than 15 per cent and therefore, there is a room to reduce the obligation further by 10 per cent, since as per the Handlooms Census 2009-10, the actual hank yarn requirement works out to less than 10 per cent, Nataraj said. The Union Cabinet chaired by the Prime Minister, Narendra Modi today has approved the Scheme to rebate the State and Central Embedded Taxes to support the textile sector and boost exports.

Source: Coval Post

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Govt amends hank yarn packaging norms

New Delhi: The textiles ministry Thursday amended hank yarn packaging norms whereby yarn packed for civil consumption in each quarter commencing from January-March should be less than 30 per cent of total yarn packed in each quarterly period for civil consumption. The move is expected to benefit spinning industry. Previously, this proportion was 40 per cent of the total yarn packed. "This notification will come into effect from January 1, 2019," an official statement said. "However, not less than 80 per cent of the yarn required to be packed in hank form shall be of counts 80s and below," it added. In the textile industry, a hank is a coiled or wrapped unit of yarn or twine.

Source: Business Standard

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No major impact of US GSP withdrawal seen: Textile industry panel

There are 15 products in RMG category under US GSP, which contributes to $586.58 million RMG imports of US. Some of the products eligible for US GSP include gloves, mittens and mitts. The textile industry has said US’ withdrawal of preferential trade benefits available to India under the Generalized System of Preferences (GSP) will have no major impact on the sector. “The removal of US GSP on India’s apparel exports will have marginal impact, but we still will be taking up the matter with the Union commerce ministry,” said Sanjay K Jain, chairman, Confederation of Indian Textile Industry (CITI). Jain said there are 15 products in the ready-made garments (RMG) (HSN 61 & 62) category under US GSP, which contributes to $586.58 million RMG imports of US. India’s share in the segment is $17.97 million. The most favoured nation (MFN) tariff in 15 products varies from 0.86% to 14.60% in which India gets duty access with 100% margin of preference. It is to be noted that these 15 products contribute only 0.46% of India’s apparel exports, in which bulk of the benefit is concentrated on the product 62044910 (silk woven clothing of women) which comprises 58.5% of India’s total trade under GSP. The figures have been identified on the basis of current trade with the US, and 11 products have negligible impact on India’s apparel exports to the country, Jain pointed out. “Luckily, the GSP preferential items that may lose the status from the US only contributes 0.5% of India’s apparel exports. We are following up with the Centre and hope the status quo is maintained,” he said. Some of the products eligible for US GSP include gloves, mittens and mitts. Shawls, scarves among other items, not knitted or crocheted, containing 70% or more by weight of silk or silk waste will see moderate impact. According to Raja Shanmugam, president, Tirupur Exporters’ Association (TEA), “We don’t see any major impact. The move seems to be a knee-jerk reaction to support major online/e-commerce players, who seek to destabalise Indian economy. It is detrimental to India’s free e-commerce policy. The US always interfere and try to protect its own interest as well its businessmen. India needs to learn and follow the US principles when it matters more to the country.” According to him, the game plan of the multinational companies involved in the business is proving out to be dangerous for the country. India should support domestic exporters and their welfare, he said, adding, “We should not react to pressure tactics by the US as it always has ulterior motive behind it actions. Hence, it is time for the Union government to suitably counter and protect the domestic industry.”

Source: Financial Express

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GSP withdrawal: Trade surplus with US shrinks

The drop in India’s trade surplus is important, given that the US’ overall goods trade deficit zoomed further in 2018 to $878.7 billion from $795.7 billion a year before. India’s surplus with the world’s largest economy stood at .4 billion in 2016. The Trump administration may have cited the absence of ‘equitable and reasonable’ market access from New Delhi to withdraw the duty benefits on annual exports worth $5.6 billion under the so-called Generalized System of Preferences (GSP) by May, but latest data showed India’s goods trade surplus with the US actually shrank for a second straight year through 2018. According to the US government data, New Delhi’s trade surplus with Washington eased to $21.3 billion in 2018 from $22.9 billion in 2017. In contrast, China’s trade surplus with the US widened further to a record $419.2 billion last year from $375.6 billion in 2017, despite the tariff war between the world’s top two economies. The drop in India’s trade surplus is important, given that the US’ overall goods trade deficit zoomed further in 2018 to $878.7 billion from $795.7 billion a year before. India’s surplus with the world’s largest economy stood at $24.4 billion in 2016. In fact, India is among the very few countries whose trade surplus with the US has been falling — something that the Trump administration has been wanting to ensure. Similarly, the American goods exports to India jumped almost 29% to $33.12 billion in 2018 from $25.7 billion in the previous year. “The massive rise in its exports suggests that India has been more than fair in granting market access to the US. In fact, under a trade package that was being negotiated until recently, India had gone more than half the distance to address the American concerns,” said a senior government official. Given the backdrop, the GSP withdrawal is only ‘unfortunate’, said the official. The government, however, won’t resort to any ‘knee-jerk’ reaction but will take an informed decision after taking a holistic view of the matter. India will remain the world’s fastest-growing large economy in the coming years, generating opportunities for US businesses in sectors ranging from defence and retail to oil. The commerce ministry has said India is a thriving market for US services and e-commerce companies like Amazon, Uber, Google and Facebook with billions of dollars of revenue. In fact, despite the price control, American companies like Abbott and Boston Scientific dominate the medical equipment market in India, while Amazon and Uber remain the top players in their segments. Under the GSP, 1,784 products — ranging from certain engineering goods and organic chemicals to textiles — are exported from India to the US at zero duty. However, these products typically attract low duties there (for instance, the engineering goods and textiles covered under the GSP typically attract less than 3%). Nevertheless, some leather products, processed food items and handlooms could see some impact, which will impact small companies and individuals that produce them. Stressing that India responded to the US requests on sticky issues positively, the commerce ministry said on Tuesday that New Delhi had proposed to replace the current price cap policy for coronary stents with a ‘suitable trade margin regime’ to address American concerns. As for the US demand to scrap/cut tariff on ICT products, including mobile phones costing over Rs 10,000, New Delhi had conveyed to the US that any such across-the-board cut would help only third parties (like China and Korea) and was willing to lower duties on those products where it would benefit the US. India had also offered to simplify certain certification procedures for dairy imports from the US. “Acceptability of US market access requests related to products like alfalfa hay, cherries and pork was conveyed…On telecom testing, India was willing to consider discussions for a Mutual Recognition Agreement,” the commerce ministry said.

Source: Financial Express

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India's overall textile & apparel sales up 9% in 9M FY19.

In the first nine months (9M) of financial year 2018-19 (FY19), India’s overall textile and apparel sales increased by 9 per cent, according to the latest Wazir Textile Index (WTI). There has been a revival in the EBITDA with a significant increase of 17 per cent in 9M FY19 as compared to 9M FY18. Raw material cost saw an increase of 8 per cent. While employee cost saw an increase of 7 per cent in 9M FY19, other costs also saw an increase of 10 per cent for the same period, WTI data showed. For the top textile and apparel companies, there was an increase in overall sales and EBITDA margins by 9 per cent and 17 per cent, respectively, as compared to 9M FY18. SRF has shown the highest sales growth of 45 per cent, while Indo Rama Synthetics and RSWM witnessed a decline of 28 per cent and 2 per cent, respectively. India’s overall textile and apparel exports witnessed a growth of 2 per cent, while the apparel exports declined by 8 per cent during the nine-month period, the Index showed. Meanwhile, textile and apparel imports rose 5 per cent with a significant 52 per cent rise in apparel imports.

Source: Just Style

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Coimbatore: Industry upbeat over new Textile Policy

The New Integrated Textile Policy 2019 has been hailed by every section of the textile industry as a unique one and one that would ensure the sustenance of the industry in the long term. P Nataraj, Chairman, the Southern India Mills’Association, thanked the government for extending 2 per cent interest subsidy for modernising spinning machines that are over 15 years old. “Out of the 24 million spindles in the State, around 11 million are over 15 years old. This will, therefore, benefit the spinning sector by enabling them to modernise,” he said. The association has hailed the benefits extended for the weaving and garmenting sector, including the 10 per cent capital subsidy for all new machines. “The 10 per cent capital subsidy for wider width fabric processing, 5 per cent interest subsidy for common effluent treatment plant, 15 per cent capital subsidy for the individual ETP and ₹1 crore R&D assistance for ETP will greatly benefit the processing segments in the State,” he said. He also appreciated the incentives for setting up mini textile parks, such as extending 50 per cent subsidy or ₹2.5 crore per park. “Such incentives will help small-scale units to consolidate their capacity and modernise.” T Rajkumar, Vice-Chairman, Confederation of Indian Textile Industry, while thanking the government for incorporating all the suggestions put forth by the industry in the Comprehensive Textile Policy that was announced today, said, “It is good for the State. It will ensure the long-term sustenance of the industry,” he said, referring to the slew of incentives offered to the different sectors of the industry. “The downstream sectors of the textile value chain would definitely get strengthened, with lots of new investments flowing into the weaving and processing sectors. It is expected to give a boost to Technical textiles, particularly in defence,” Rajkumar said. The policy announcements will give a big boost to all sectors from yarn to finished fabric, said an FIEO spokesperson.

Source: The Hindu Business

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Smriti Irani inaugurates Karanj textile park

SURAT: Union textile minister Smriti Irani has said that country’s largest man-made fabric (MMF) hub in Surat could play a pivotal role in the historic VisionNXT, a trend forecasting initiative of the central government to create an indigenous fashion forecasting service. Speaking at the inauguration of the Rs 300 crore Karanj Textile Park in Mandvi taluka— South Gujarat’s largest textile park developed by the textile entrepreneurs - on Wednesday, Irani said, “Till now, the textile industry was dependent on the international fashion trend forecasting. Thanks to the idea given by a Surti textile entrepreneur, the government has launched the industry’s first fashion forecasting service with the help of NIFT.” Irani added, “The trend forecasting lab has been started in Delhi and that the proposed service is based on the premise that fashion is a dynamic industry which depends on seasonal trends and forecast for future and Surti textile entrepreneurs could contribute hugely to such initiative under VisionNXT.” Irani also appreciated the environment concerns at the textile parks in South Gujarat where the country’s first zero liquid dicahrge (ZLD) has been set up at the Gujarat Eco Textile Park (GETP) at Palsana under the Integrated Power Development Scheme (IPDS) scheme of the Central Government. Irani said, “The waste water from CETP plant in Palsana will be recycled through the ZLD plant project where more than 92% of the quantity will be recycled and sent to park members for process requirement.”

Source: Times of India

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India needs to seize opportunity in RCEP talks

On Saturday, trade ministers from 16 Asia-Pacific countries gathered in the Cambodian city of Siem Reap to resume negotiations over the Regional Comprehensive Economic Partnership (RCEP). The proposed RCEP, which aims to create one of the world's largest trading blocs encompassing 45 percent of the world's population and 40 percent of global trade, is now at a critical moment. While the participating countries generally hope to reach a final deal by the end of this year, uncertainties should not be overlooked. Generally speaking, talks between China and Japan, the largest and second-largest economies in the region, have been progressing smoothly, and negotiations over tariffs between Japan and South Korea do not pose a major obstacle to the RCEP. What's really up in the air is India, whose reluctance has already postponed the target for concluding the talks from last year. The key concern from India over the RCEP is that the free trade deal, once it comes true, will give greater market access to Chinese goods, and that it will be difficult for its domestic market and manufacturing sector to withstand such an impact. Since India's trade deficit with China has surpassed $40 billion and the RCEP will eliminate tariffs on 80 to 85 percent of goods, it seems understandable for the South Asian country to be cautious toward the high-level trade agreement in the short term in order to protect its domestic market. In fact, considering that India already has free trade agreements with ASEAN, Japan and South Korea, the RCEP negotiations for India are more like free trade talks with China, and the trade balance between the two is a big problem that cannot be circumvented. The Chinese side always asserts that its trade imbalance with India is caused by the imbalanced economic structure due to the underdeveloped manufacturing sector in India. But the Indian side believes that the root cause is China limiting access to its markets. In truth, China has been gradually opening up its market to India, especially after the informal meeting between the two countries' top leaders in Wuhan, Central China's Hubei Province last year. China has indeed started importing some pharmaceutical products and agricultural products like non-basmati rice, fruits, cotton and sugar from India, but many of them have yet to really penetrate the Chinese market. This means there is little change to the trade deficit problem and is a cause of the delicate trade relations between the two countries. Of course, China can continue to open its market to India, but it is unlikely to see any obvious effect in the short term, therefore India's reluctance toward the RCEP can hardly be changed. Moreover, the South Asian country's economic policies often tend to be nationalistic, as policymakers need to take care of the interests of all parties. If the political leaders cannot show more determination and political courage, it would be difficult to see a breakthrough either in Sino-India free trade issues or the RCEP talks. Nevertheless, on the other side, India is not willing to be really excluded from the RCEP. In fact, the RCEP is one of the few existing paths for the country to participate in the global value chain, which is mainly Asia-centered or China-centered. Nowadays, amid rising anti-globalization sentiment, regional trade agreements have rapidly emerged as a major tool for promoting trade. The US did not consider India as a member when it advocated the Trans-Pacific Partnership (TPP), and later the TPP-11 also did not invite India in. If the country again misses the regional trade arrangement centered on China, Japan, South Korea and ASEAN, it may end up losing the opportunity to integrate into the globalized trade system forever. Yet, as India is holding elections this year, fear of losing votes is very likely to cause politicians to defer the RCEP conclusion again. The conclusion of the RCEP talks will form a true Asia-Pacific free trade zone, which will generate a development dividend worth hundreds of billions of dollars. For China, a final RCEP deal will be an iconic achievement of the country's participation in multilateral trade, increasing its influence in the multilateral trading system. In this sense, China and Southeast Asian countries are eagerly anticipating concluding the deal by the end of this year. Currently, India is reported to be negotiating with China and Japan on issues such as a longer period to phase out its tariffs on Chinese goods. If China is especially eager to reach an agreement, there may be some room for concessions, but the problem is that there are too many different voices in India and thus too many uncertainties to be sure of a final deal. In short, the RCEP is an opportunity for India, but it is still unknown whether it can seize it or not. While China may make certain concessions, that does not mean India can demand an exorbitant price, as its neighbor will not always give in. The article was compiled by Global Times reporter Wang Jiamei based on an interview with Liu Zongyi, a senior research fellow of the Shanghai Institutes for International Studies, a visiting fellow of the Chongyang Institute for Financial Studies, Renmin University of China, and a fellow of the China (Kunming) South Asia & Southeast Asia Institute.

Source: Global Times

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Rupee Up 21P to 70.28 on Easing Crude Prices.

The rupee rallied by 21 paise to close at 70.28 against the US dollar Wednesday on easing crude oil prices even as the greenback strengthened vis-a-vis other major currencies. Forex traders said heavy buying in domestic equities and robust foreign fund inflows also propped up the rupee. This is the second successive session of gain for the domestic currency, during which it has climbed 64 paise. The rupee opened on a weak note at 70.60. Intra-day, it fluctuated between 70.67 and 70.25. Brent crude, the global oil benchmark, was trading at $ 65.61 per barrel, lower by 0.38%.

Source: Financial Express

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Sri Lanka, Italy review bilateral relations

Sri Lanka's Minister of Foreign Affairs Tilak Marapana visited Italy from 01 - 03 March 2019 and held bilateral discussions with Undersecretary of State for Foreign Affairs and International Cooperation of the Italian Republic, Manlio Di Stefano on 01 March in Rome. The talks allowed to review the status of bilateral relations between the two countries and during discussions Minister Marapana thanked the Italian government for the cooperation and assistance rendered to Sri Lanka. He reiterated that the two countries have maintained excellent relations over the years and that it is time to build and strengthen this relationship. The Foreign Minister stated that Sri Lankan expatriate workers in Italy are required to make a pension contribution amounting to around 9 percent of their salary and that they qualify for a pension after working for 20 years. The Minister observed that they collect this contribution together with the employer

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