The two Cabinet committees have been constituted to address the twin problems of sluggish economic growth and rising unemployment to address the twin problems of sluggish economic growth and rising unemployment, the government has constituted two Cabinet committees to be chaired by Prime Minister Narendra Modi. The five-member Committee on Investment and Growth consists of Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Minister for Road Transport and Highways and MSME Nitin Gadkari and Railways Minister Piyush Goyal. This committee will be a focussed group to take measures to bring investments and spur growth in the critical sectors including infrastructure, manufacturing and agriculture, as the economy is passing through a highly volatile period. The government also set up a 10-member Cabinet committee for Employment and Skill Development. Employment data for 2017-18, released on May 31 after the Lok Sabha elections, said India’s unemployment rate rose to 6.1% in the period, the highest in 45 years. In addition to the Prime Minister, the committee includes Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, Railway Miinister Piyush Goyal, Minister of Agriculture Narendra Singh Tomar, Human Resource Development Minister Ramesh Pokhriyal ‘Nishank’, Petroleum and Natural Gas Minister Dharmendra Pradhan, Minister Skill and Entrepreneurship Mahendra Nath Pandey and Ministers of State Santosh Kumar Gangwar (Labour) and Hardeep Singh Puri (Housing and Urban Affairs). The panel on employment is one of two Cabinet committees set up to spur economic growth and rackle unemployment. With the GDP falling to 5.8% in the last quarter of 2018-19, lowest in last five years, the committee on economic growth will prepare a road map to bring the economy back on the growth trajectory. The GDP growth for 2018-19 was 6.8 %, against the target of 7.2 %. The fall in growth is result of dip in the performance of the core sectors of the economy, as the eight core sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — recorded a growth of just 2.6 % in April, compared with 4.6% in the same month last year. As per figures released by the government, the country’s economic growth saw the third straight fall in quarterly growth, raising concerns about the slowdown even as the BJP-led NDA government is beginning its second term following a landslide victory in the Lok Sabha polls. Similarly, employment data for 2017-18, released on May 31, brought out that India’s unemployment rate rose to 6.1% in the said period, which is the highest in 45 years.
Source: The Hindu
Commerce and Industry Minister Piyush Goyal will brainstorm on issues such as export promotion, monitoring of infrastructure projects, import substitution, increasing logistics efficiency and leveraging the government e-market place at a joint meeting of the Board of Trade and the Council of Trade Development and Promotion in New Delhi on June 6. “Discussions will be held on various issues relating to promotion of exports and domestic manufacturing and reduction in imports. Issues related to improvement in logistics, agricultural export will also be discussed,” according to an official release. Secretaries of the Departments of Commerce, Revenue, Shipping, Road Transport and Highways, Civil Aviation, Promotion of Industry and Internal Trade, Agriculture, Information Technology and Textiles will participate in the high-level joint meeting along with representatives of export promotion councils and representatives of industry. The Board of Trade includes top corporates including Anand Mahindra from the Mahindra Group, Pawan Munjal from Hero Motocorp, Ramesh Chandra from Unitech, Kiran Mazumdar Shaw from Biocon, K Satish Reddy from Dr Reddy’s, Habil Khorakiwala from Wockhardt, Shiv Nadar from HCL and Sanjay Kirloskar from Kirloskar Brothers. The Board advises the Commerce and Industry Ministry on policy measures related to the Foreign Trade Policy in order to achieve the objectives of boosting India’s trade. The Council for Trade Development and Promotion provides for dialogue with States/UTs on measures for providing an international trade enabling environment.
Source: The Hindu Business Line
The Finance Ministry Tuesday assured trade and industry that input tax credit accrued on import of goods by paying GST in 2017-18 will not lapse even if the taxpayer has not claimed credit in the same financial year. Addressing concerns raised by trade and industry regarding filing of annual returns for the first year (2017-18) of Goods and Services Tax (GST) roll out, the ministry also advised taxpayers to file the correct data about tax payment and other details as reported in monthly sales returns in annual return GSTR-9 by omitting the auto populated data. The ministry said that many taxpayers have raised concern that annual return form GSTR9 does not allow a taxpayer to report details of IGST paid on imports made in 2017-18 but credit for the same was availed in 2018-19. "Due to this, there are apprehensions that credit which was availed between April 2018 to March 2019 but not reported in the annual return may lapse. For this particular entry, taxpayers are advised to fill in their entire credit availed on import of goods from July 2017 to March 2019 in Table 6(E) of Form GSTR-9 itself," it added. Issuing the clarification, the ministry further said many taxpayers have reported a mismatch between auto-populated data and the actual entry in their books of accounts or returns. "It may be noted that auto-population is a functionality provided to taxpayers for facilitation purposes, taxpayers shall report the data as per their books of account or returns filed during the financial year," the ministry said. AMRG & Associates Partner Rajat Mohan said, "Government has said that autopopulation functionality of annual return forms is only for the purposes of taxpayers facilitation, thereby taxpayers need to compute and check all the records before filing of such forms. Government has also clarified that IGST paid at the time of import of goods in financial year 2017-2018 but availed in the returns of April 2018 to March 2019 would not lapse". Goods and Services Tax (GST), which subsumed over a dozen local levies, was rolled out on July 1, 2017. The annual return GSTR-9 for the first year of GST implementation is to be filed by taxpayers by June 30, 2019. The ministry had on December 31, 2018, notified the annual returns forms GSTR-9, GSTR-9A and GSTR-9C. GSTR-9 is the annual return form for normal taxpayers, GSTR-9A is for composition taxpayers, while GSTR-9C is a reconciliation statement. "All the taxpayers are requested to file their Annual Return (FORM GSTR-9) at the earliest to avoid last minute rush," the ministry added.
Source: Economic Times
Finance ministry has indicated that it will retain the interim budget allocations made to ministries and departments, in the final budget for the current financial year, to presented in the Lok Sabha on July 5. In run-up the Lok Sabha elections, the finance ministry came up with an interim budget in February, authorizing government expenditure for a limited period. With the new government in place now, a full-year budget will be presented by the finance minister Nirmala Sitharaman, on July 5. In a circular, the finance ministry also said it will only consider additional allocations towards "unavoidable commitments" for which funds have not been earmarked in the interim budget. "Allocations projected in the Interim Budget 2019-20, will not be altered," said the finance ministry circular. However, if there are any requirement on account of unavoidable commitments that have not been fully provided for in the February budget, "Ministry/Department may propose the same for consideration for inclusion in the Regular Budget 2019-20, with suitable justification" by Friday, it added. Sitharaman's budget team comprises Minister of State for Finance Anurag Singh Thakur and Chief Economic Adviser Krishnamurthy Subramanian. The official team is led by Finance Secretary Subhash Chandra Garg, Expenditure Secretary Girish Chandra Murmu, Revenue Secretary Ajay Bhushan Pandey, DIPAM Secretary Atanu Chakraborty, and Financial Services secretary Rajiv Kumar. In her budget, the 59-year-old JNU alumnus, Sitharaman will have to address slowing economy, financial sector troubles like rising NPAs and liquidity crisis in NBFCs, job creation, private investments, exports revival, agrarian crisis and raise public investment without compromising on fiscal prudence. The first session of the newly elected 17th Lok Sabha will be held from June 17 to July 26. The Economic Survey for 2019-20 will be tabled on July 4, followed by the presentation of the budget on the next day.
Source: Times of India
MUMBAI: Many Indian exporters approached the Delhi High Court last week against the government for not extending the benefits of EPCG (Export Promotion Capital Goods) scheme to goods and services tax (GST) regime. The exporters claimed that some of the services that were earlier allowed under the EPCG scheme were discontinued under the GST regime. According the exporters, the government has set some conditions if exporters were to claim benefits of the scheme. These amendments meant that some exporters were unable to meet export obligations resulting in losing out on the benefits of the EPCG scheme under which an exporter can import certain amount of capital goods without paying any duty for upgrading technology related with exports. “The incentives announced prior to GST have been curtailed in some form and may be unintentional in various cases, thereby raising the situation of court intervention. It is impossible to meet the obligation for the EPCG licence issued prior to GST regime, the principle of supervening public interest will have to be tested,” argued Abhishek A Rastogi, partner at Khaitan & Co. In October, the government, through an EPCG notification, gave some leeway but created some problems for certain section of the exporters. Directorate General of Foreign Trade extended the timeline for availing benefits of the EPCG scheme by six months through a notification. The notification meant that exporters were required to make sure that the average export obligation is maintained during a time. The specified services that qualified to meet export obligation have been removed. “Various issues of notification have been a subject matter of judicial review on various legal parameters,” said Rastogi. This is the second time the exporters moved the court after some benefits available under the earlier tax regime were not transitioned under GST. Giving respite to several exporters issued notices by the tax department, the Madurai bench of the Madras HC held that pre-import conditions led to absurdity and were not relevant when the exporter had already exported the goods. The issue pertained to the tax treatment of transactions where exporters ship the finished products before import of raw material and then claim the benefits. The Directorate of Revenue Intelligence, India’s primary anti-smuggling intelligence agency, started issuing show-cause notices to exporters for wrongfully availing exemptions in cases where exports preceded imports.
Source: Economic Times
Abhishek further said that 1,87,004 jobs have been reported by 16,105 DPIIT-recognised startups or more than 11 direct jobs per startup. The government recognised more than one startup per hour in May, taking the total number of recognised startups to 18,861 since the beginning of the Startup India initiative in 2016. “In May 2019 only, 814 startups have received recognition. This is more than 1 startup every hour!,” Department for Promotion of Industry and Internal Trade (DPIIT) secretary Ramesh Abhishek said in a series of tweets on Tuesday. Recognition of startups is only a formal acknowledgement of their inclusion in the startup system and doesn’t make them eligible for any tax breaks. They need to comply with a series of criteria including proof to the government of cutting edge technology and turnover conditions. “These entities are spread across 513 districts of 29 States and 6 UTs,” he said in the tweet. Abhishek further said that 1,87,004 jobs have been reported by 16,105 DPIIT-recognised startups or more than 11 direct jobs per startup. “With each direct job leading to 3X indirect jobs, total jobs created by these startups are estimated at more than 5.6 lakh,” he tweeted. There were around 16,000 government-recognised startups in February. Startup India is the flagship initiative of the government, launched in January 2016, which intends to build a strong ecosystem for the growth of start-up businesses to drive sustainable economic growth and generate employment opportunities and provides tax and other incentives to eligible startups. Further, the secretary informed that Small Industries Development Bank of India (SIDBI) has committed Rs 2,570 crore from Fund of Funds to 45 venture funds, catalysing investments of more than Rs 25,000 crore. “244 start-ups have received funding of Rs 1,561 crore,” he said. Abhishek further tweeted: “1,862 start-ups have registered, receiving 7,697 orders worth Rs 275 crore till April.” The portal was launched in August 2016 for online purchase of goods and services by all the central government ministries and departments. Start-ups can now get government orders on GeM Startup Runway, while getting exemption from prior turnover, prior experience and earnest money deposits. On the patents front, he said 1,496 enterprises have received 80% rebate in patent filing fees, while 2,761 have got 50% rebate in trademark filing fees. “389 avail expedited examination. 103 patents are granted. The fastest patent was granted in 81 days,” Abhishek said in another tweet.
Source: Economic Times
In a joint communication submitted to the WTO on Tuesday, both the countries have stated that the "General Council needs to revisit" all the issues on the e-commerce moratorium. India and South Africa have asked the World Trade Organization (WTO) to revisit the issues related with moratorium on customs duties on e-commerce trade, which is expiring in December this year. In a joint communication submitted to the WTO on Tuesday, both the countries have stated that the "General Council needs to revisit" all the issues on the e-commerce moratorium with the "utmost urgency and in its entirety".According to industry experts, India wants an end to the moratorium and imposition of import duties to protect domestic industry and revenue. Since 1998, the moratorium is being extended time and again for two years. The communication said the potential tariff revenue loss to developing countries is estimated at $10 billion. It said the moratorium will negatively impact the efforts of many developing countries, which are laggards as far as digital industrialisation is concerned, to industrialise digitally. It could also undermine existing industries and tariffs play an important role in protecting infant domestic industries from more established overseas competitors until they have attained competitiveness and economies of scale. "Customs duty-free imports of digital products may also hinder the growth of the infant digital industry in developing countries," the communication said. It said that with no customs duties on the imports of software, data and computer aided design or CAD files, which are the core resource for 3D printing and which will increasingly be used in almost all manufacturing industries, the dependence of manufacturing sectors in developing countries from the developed nations will considerably increase. This will also negatively impact digital industrialisation, local employment creation and erode trade competitiveness of small and medium enterprises (SMEs) in developing countries, it added. "The objectives included examination afresh of the impact of the moratorium, given that the realities prevailing in 1998, when WTO members agreed for the first time, to the temporary moratorium on customs duties on electronic transmissions, have changed significantly," it said. It added that digital trade has acquired dimensions that were then unimaginable. "The impact of the moratorium needs to be understood from the revenue point of view and, from a development perspective, we need to analyse how the moratorium is impacting the efforts of developing countries and LDCs (least developed countries) to industrialise digitally and otherwise," it said. It said countries also need to understand the ruinous impact of digitisation on SMEs in developing countries and LDCs.
Source: Business Standard
Commerce Minister Piyush Goyal set to face pressure from developed countries. India is likely to oppose attempts by developed countries, including Japan, at the G-20 Ministerial meeting on trade and digital economy at Tsukuba City, Japan, beginning this weekend, to get a consensus on initiating multilateral rule-making for e-commerce. Commerce & Industry Minister Piyush Goyal, who will represent India in the meet, is expected to stick to India’s stance so far of saying no to e-commerce negotiations on rules, a government official told BusinessLine. “The G-20 meeting will be the Minister’s first international engagement after taking charge of his new portfolio. He is expected to argue that it would be premature to go in for multilateral rules on e-commerce as the sector was still evolving,” the official said. Japan, which is one of the countries keen to negotiate on e-commerce rules at the World Trade Organization (WTO) platform, is likely to push for consensus on the matter amongst G-20 members using its role as the host country. G-20 comprises of the EU as a bloc and 19 countries including Argentina, India, Brazil, France, Germany, Italy, the US, China, Australia, South Africa, Turkey and the UK.
Support from S Africa
Amongst all G-20 members, India has the support of South Africa in its opposition to rule-making in e-commerce. “We are sure that South Africa’s position on e-commerce rules is the same as India’s. The two countries are likely to put together a strong opposition,” the official said. India and South Africa are also not party to the plurilateral negotiations on e-commerce launched by over 70 members, including the EU, Switzerland, Australia, China, Korea, Nigeria, Norway, Russia and Panama, at the WTO. The Ministerial meeting in Tsukuba, on June 9-10, will be important as it will set the tone for the meeting of Heads of State at the G-20 meeting in Osaka later this month. “India has to negate attempts of including e-commerce rule-making in the G-20 declaration to be signed by the Heads of State. If this happens, the pressure on India to agree to e-commerce negotiations at the WTO will multiply,” the official said. India has earlier stated at the WTO that multilateral rules and disciplines in e-commerce would be premature at this stage given the asymmetrical nature of the existing global e-commerce space. The UNCTAD’s report on Trade and Development, 2018 also warns developing countries on how they could lose out to digital monopolies, unless they take charge of their trade and investment policies.
Source: The Hindu Business Line
The US decision to end the Generalised System of Preferences (GSP) for India from June 5, has surprisingly, come in for a mild criticism from the Indian government which described the US President Donald Trump's decision as 'unfortunate'. So why is New Delhi playing it so cool at the withdrawal of GSP? The GSP was due to expire next year, in December 2020 — having been in force since 1975. All that Trump's decision does is to end it a year and a half before its deadline. The bilateral trade between the world's oldest and largest democracies was $65.1 billion in FY 19 (April-December) and despite it being heavily tilted in India's favour — exports to US accounted for $38.8 billion while imports from US were $26.3 billion — the benefits from the GSP status due to savings on import tariffs amounted to just $190 million as only $6 billion worth of Indian exports are duty free. The GSP was a preferential programme designed to help the "world's poorest countries to use trade to grow their economies and climb out of poverty" and promotes "economic development by eliminating duties on thousands of products when imported from one of 120 designated beneficiary countries and territories." Indian authorities claim that the country no longer requires preferential trade treatment that a GSP status grants since it was no longer an under-developed economy. Why India isn't ruffled? For one, India has the option of taking the US’ GSP withdrawal to the WTO — it already has a precedent when it won against the EU's withdrawal of GSP in 2002 for being discriminatory against developing countries. Secondly, the US has in the recent past reinstated GSP after withdrawing it — as it did in Argentina's case last year after certain criteria were met.
Mutual need
The US is India's second largest trading partner, after China — which also explains why New Delhi has postponed retaliatory tariffs on $200 million worth of American goods eight times since last year, in response to US tariffs on Indian steel and aluminum. On the other hand, several US companies like Amazon, Walmart, Google and Facebook have invested billions of dollars to expand operations in India — and any major economic retaliation could put these in jeopardy.
Source: Economic Times
New export markets, financial support and lower crude oil prices are likely to offset the impact on trade deficit caused by US ending preferential treatment to various goods supplied from India. The Trump administration had last week announced withdrawal of generalized system of preferences or GSP benefits from June 5, 2019. These non-reciprocal and non-discriminatory export benefits are extended by developed countries to developing countries. Industry observers cite the benefit of only around $200 million as insignificant to cause major worry. However, the move could not have come at a worse time for India's economy which faces a consumption slowdown, slower growth and contraction in core industrial production. Latest figures show that the country's trade deficit during April widened to $15.33 billion as against the deficit of $13.72 billion during the corresponding month of last year. "The withdrawal of GSP benefits to exports will have a one-time impact which will be reflected in the overall trade deficit," Sunil Kumar Sinha, Director, Public Finance and Principal Economist India Ratings and Research (Fitch Group), told IANS. "However, rather than relying upon any export subsidy scheme, exporters should pursue newer markets such as South America and Africa. We should also become globally competitive in terms of manufacturing and cost structures." However, Trade Promotion Council of India's Chairman Mohit Singla said: "The loss is minimal. Besides, the goods exported to the US such as pharmaceuticals, natural or cultured pearls and machinery and mechanical appliances, among others, are difficult to replace due to India's competitiveness in these products." "So, India may not be affected significantly and it can enhance its exports in other countries to cover the minor loss." India's top GSP exports to the United States in 2018 included motor vehicle parts, ferro alloys, precious metal jewellery, building stone, insulated cables and wires. Overall, out of $36 billion exports to the US by India, $5.7 billion worth of exports from India will be impacted. India's trade surplus for merchandise goods with US is almost $18-19 billion. On the other hand, Federation of Indian Export Organisations' President Ganesh Kumar Gupta pointed out that exporters of products having GSP benefits of 3 per cent or more will find it difficult to absorb the loss. According to Gupta, most affected sectors will be imitation jewellery, leather articles other than footwear, pharmaceuticals and surgical products and chemical and plastics. He said government should provide supports to products where GSP loss has been significant so that "the market is not lost".Earlier in March, the US had given a 60-day withdrawal notice to India on the GSP benefits extended by it. The US commenced a review in April 2018 on India's GSP benefits, while both the countries were discussing various trade issues of bilateral interest.
Source: Business Standard
Resolving the TUFS issues would bring huge investments across the country thus creating jobs for millions of people and boost exports. Southern India Mills’ Association (SIMA), the largest spinning mills association in the country, has appealed to the new government at the Centre to resolve the pending issues, including releasing the remaining `9,000-crore subsidies under Technology Upgradation Fund Scheme (TUFS). In a statement, P Nataraj, chairman, Sima, said, the flagship programme of the union ministry of textiles has attracted over `3.75 lakh crore of investments in the textile industry during the last two decades and created jobs of over 10 million apart from enabling the Indian textile industry to become globally competitive and increase its exports by manifolds. The scheme was effective and industry-friendly till 2007 when it was open-ended and later many complications were brought in the guidelines which got further complicated at every stage. This has resulted in a backlog of `9,000 crore of TUF subsidies, severely affecting the financial conditions of the new investors. This has stalled the potential growth, job creation and forex earnings opportunities of the nation, he pointed out. According to him, the textile industry is the single-largest employment provider in the country, next only to agriculture by employing over 110 million people, especially the rural women and people below the poverty line, and enables inclusive growth. Realising the importance of making this sector globally competitive and grabbing the opportunities emerging in the post-WTO era, the NDA government launched the Technology Upgradation Fund Scheme (TUFS) during 1999 and later the same government extended the scheme up to March 31, 2022 by allocating `17,822 crore. This budget allocation included `12,671 crore for committed liabilities of Modified Technology Upgradation Fund Scheme (M-TUFS), Revised Technology Upgradation Fund Scheme (R-TUFS) and `5,151 crore for Amended Technology Upgradation Fund Scheme (A-TUFS). Hence, Sima is sincerely appealing to the new government to resolve TUF issues to boost job creation and exports. Resolving issues in the TUF Scheme and releasing the pending TUF subsidies to the tune of `9,000 crore on a fast track basis would help the industry to create jobs for lakhs of people immediately, Nataraj said. Resolving the TUFS issues would bring huge investments across the country thus creating jobs for millions of people and boost exports. Special export garment package and enhanced RoSTCL benefits would yield the desired results only when the TUFS issues are resolved, he added.
Source: Financial Express
Industries have sought base at 66%, in line with provisions of the Insolvency and Bankruptcy Code The Reserve Bank of India is unlikely to announce special sectoral exceptions in its new circular on stressed assets, contrary to demands of power, sugar, shipping and textile industries. The banking regulator may also seek resolution plans for stressed assets to be approved by 90% lenders in a consortium, as against 100% in the previous notification that Supreme Court had quashed. Industries have sought base at 66%, in line with provisions of the Insolvency and Bankruptcy Code. RBI is also expected to raise the timeline for a project to be categorised as stressed from one-day default in the previous circular to 30 days of default. The new circular will probably be issued in the next 15-20 days as the regulator has started informal consultations with the finance ministry. The circular is likely to provide certain relaxations on timelines vis-à-vis the February 12, 2018 notification, sources “It will be difficult to give special treatment to one sector against the other, as it may lead to discontent and legal challenges. So far, there is no such consideration,” said a government official in know of the development. “Senior RBI officials had met former finance minister Arun Jaitley and senior finance ministry officials soon after the election results. The regulator was waiting for the new government as it is keen to have all stakeholders on board before coming out with a new notification,” the official said. The Supreme Court had on April 2 struck down the controversial circular as ‘ultra vires’ on the premise that the regulator can issue directions to lenders to approach the insolvency court only for specific assets and with authorisation from the government. Most plans are stuck for want of 100% consent from lenders. This was considered the most stringent requirement as it wasn’t possible to get all lenders on board for a resolution scheme. It also required banks to classify projects as stressed assets upon single day of default and mandated them to refer such plants to bankruptcy court in case a resolution was not arrived at in 180 days. A top official at a state-run bank said RBI may now look at incentivising lenders through favourable provisioning norms for winding up resolution processes with new or existing promoters. RBI will announce its second bimonthly monetary policy for 2019-20 on Thursday and is expected to cut benchmark interest rate by about 25 basis points. A statement on the stressed assets circular is also likely to be made. said.
Source: Economic Times
With implementation of Goods and Services Tax (GST) requiring a fundamental change in the way Commercial Tax Department functions, the Tamil Nadu government has prescribed a new approach with elaborate procedures in enforcing tax laws. The emphasis is on intelligence-based enforcement activities in an unobtrusive and efficient manner under proper authorisation and overall supervision and control of the Commissioner. The need for the change is to avoid indiscriminate investigation and to avoid any disrepute to the Department. The new approach took effect on June 1, according to a 19-page circular issued by TV Somanathan, Commissioner of Commercial Taxes. The Enforcement Wing is being renamed as Intelligence Wing with focus on tax evaders on the basis of reports prepared with diligence from relevant data and information gathered in a scientific manner, and without resorting to widespread or random inspection without adequate data. Hitherto, the Department relied on physical interception of goods. This approach can no longer continue in the same manner with the removal of inter-State movement controls and check posts.
Roving squads
On roving squads, there were instances where officers levied maximum penalty even for minor breach of tax regulations and procedural requirements. To avoid this, vehicle checks will be conducted only at places ordered by Joint Commissioners and during hours of duty prescribed for the concerned squad. No e-Way bill is required for commodities or circumstances specified in sub-rule (14) of Rule 138, and in such cases vehicles shall not be detained, the circular says. Potential areas for tax evasion include non-disclosure or suppression of purchases made from unorganised sector and showing lower turnover with meagre profit than the actuals to avoid tax. Consumers in B2C transactions do not insist for proper invoices, if they are not charged with tax. The taxpayer issues an estimation slip in a paper as a proof of having sold the goods. The input tax credit (ITC) accrued in respect of the goods would be transferred to another taxpayer through an invoice to make the other taxpayer claim ITC for certain percentage of commission without actual sale of goods, the circular said.
GST revenue
Tamil Nadu earned GST revenue of ₹36,330 crore in 2018-19 with evasion pegged at around ₹600 crore since GST implementation in July 2017, said industry sources. K Vaitheeswaran, Advocate and an expert on GST, reacting to the Commercial Tax Department circular said that it is a welcome step but what is worrying is that some of the items listed for potential scrutiny is very wide and general. This may open an era of inspections and audits of routine and bonafide transactions. For example outstanding ITC balance in excess of ₹25 lakh with no appreciable corresponding output tax payment is a parametre for conducting inspection or audit. There is no one-to-one correlation in ITC and accumulation could be due expansion ,sluggish demand and many other business reasons.
Source: The Hindu Business Line
As Finance Minister Nirmala Sitharaman prepares her budget, the World Bank reports Indias economy grew by 7.2 per cent in 2018-19 in contrast to the recent Indian Central Statistical Office (CSO) estimate of only 6.8 per cent growth during the period. The Bank's Economic Prospects Report released on Tuesday forecast India's economy to grow by 7.5 per cent during this and the next two fiscal years, retaining its top spot as the fastest growing major economy. It would be helped by a "more accommodative monetary policy" and low inflation, it said. The report retained the forecasts it made in January for India. India's growth forecast is the brightest spot in a grim forecast for the world economy. The report said that the global growth rate was estimated at 3 per cent last year and is forecast to dip steeply to 2.6 per cent this year, before edging up to 2.7 per cent next year and 2.8 per cent in 2021. India "is estimated to have grown 7.2 per cent in fiscal year 2018-19, which ended March 31", the report said. "A slowdown in government consumption was offset by solid investment, which benefited from public infrastructure spending". The Bank said that the cut-off dates for data used in the report was May 23. On May 31, the CSO said that India's gross domestic product (GDP) growth during the 2018-19 fiscal stood at 6.8 per cent, lower than the previous year's 7.2 per cent. The CSO said the Indian economy grew by only 5.8 per cent in the fourth quarter. That dragged down the fiscal year's growth rate. Finance Secretary Subash Garg attributed the slowdown to "temporary factors like stress in non-banking financial company (NBFC) sector affecting consumption finance".The World Bank report said, "Growth in India is projected to accelerate to 7.5 percent in FY 2019-20." "Private consumption and investment will benefit from strengthening credit growth in an environment of more accommodative monetary policy, and with inflation below the Reserve Bank of India's target", it added. Growth projections for India made by different organisations vary a lot. Last month, UN downgraded India's growth rate for the current fiscal year to 7 per cent, a cut of 0.6 per cent from the projection made in January and reduced the forecast for the next fiscal year by 0.4 per cent to 7.1 per cent. It estimated last fiscal year's growth rate to be 7.2 per cent. In April, the IMF cut India's growth projections for this year by 0.2 per cent from the 7.5 per cent made in January to 7.3 per cent. It projected next year's growth at 7.5 per cent, though lower than the earlier 7.7 projection. The Asian Development Bank said in April that India's growth rate would be 7.2 per cent this year and 7.3 per cent next year. China's economy grew by 6.6 per cent last year and is forecast to grow by 6.2 per cent this year and further decelerate to 6.1 per cent next year and 6 per cent in 2021, the World Bank said. Pakistan was estimated to have grown by 5.2 per cent last year, but is forecast to steeply decline to 3.4 per cent this year and 2.7 per cent next year, before recovering to 4 per cent in 2021, according to the report. This despite "financial assistance from Gulf countries and China and an International Monetary Fund programme (that) have helped rebuild confidence", it said. Last year, the report said, Bangladesh recorded a growth rate of 7.9 per cent -- the highest of all nations, regardless of size, although with a GDP of only about $250 billion, or less than a tenth of India's, it is not considered a major economy. Bangladesh's growth is forecast to fall to 7.3 per cent this year, the Bank reported. It is forecast to rise to 7.4 per cent next year and dip to 7.3 per cent in 2021. Commenting on the global economic outlook, World Bank Group President David Malpass said, "Current economic momentum remains weak, while heightened debt levels and subdued investment growth in developing economies are holding countries back from achieving their potential. It's urgent that countries make significant structural reforms that improve the business climate and attract investment".The Bank report added several notes of caution for India and the South Asia region. "Fiscal deficits continue to exceed official targets in India and Pakistan, and supply bottlenecks and business climate obstacles could hold back investment potential in the region," it said. "In addition, non-performing assets in the region remain high. A sharper-than expected deceleration of growth in major economies or an intensification of trade frictions could have spillover effects for the region," the report added. It is also an oil importer at risk from vagaries of the oil market. Brexit also poses another risk to the region, it said: "A number of economies have preferential trade arrangements with the UK, and would be vulnerable to a turbulent UK exit from the European Union."
Source: Business Standard
The Business Confidence Index (BCI) which is an indicator of business sentiments across the Indian industry segments plunged for January to March 31, 2019, on a quarter-on-quarter (q-o-q) basis. India Inc's business confidence has dropped 9.1% to 115.4 points in quarter four (Q4) of the financial year (FY) 2018-19, according to a survey by the National Council of Applied Economic Research (NDAER). The Business Confidence Index (BCI) which is an indicator of business sentiments across the Indian industry segments plunged for January to March 31, 2019, on a quarter-on-quarter (q-o-q) basis. However, the index slumped 12.2% on a year-on-year basis, the think tank's survey showed. The BCI comprises four elements, all of which command equal weightage in computing the index. While there virtually was no change in the business sentiments for the component "the overall economic conditions will be better in next six months", the same deteriorated for the other 3 components- the financial position of the firms will improve in the next six months, the present investment climate is positive, and the present capacity utilisation is close to or above optimal level. The BCI fell across all sectors on a q-o-q basis cuing towards a prevalent deterioration in the sentiments. The BCI of consumer durables and consumer non-durables sectors after manifesting improvement in January 2019, slumped by 12.1% and 15.9%, respectively on a q-o-q basis. Meanwhile, the Political Confidence Index (PCI) of businesses has increased by 12.1% on a quarterly basis in Q4. The PCI assess the business sector's confidence in the political management of economic policies, India Inc's expectations from the ruling dispensation on handling economic growth, pushing economic reforms, sustaining a favourable political environment among other benchmarks.
Source: Business Today
Nomura's findings are based on the study of world's 50 biggest economies from the first quarter of 2018 (Q1CY18) till the first quarter of CY19 (Q1CY19). The ongoing trade war between the United States (US) and China is likely to benefit Vietnam the most, followed by Taiwan and Chile, suggests a report by Nomura titled “Exploring US and China trade diversion”, co-authored by Rob Subbaraman, Sonal Varma and Michael Loo. The findings are based on the study of world's 50 biggest economies from the first quarter of 2018 (Q1CY18) till the first quarter of CY19 (Q1CY19). Besides these three, Malaysia, Argentina, Hong Kong, Mexico, Korea, Singapore and Brazil are the other countries / economies among the top 10 that Nomura believes will benefit the most. Canada, Thailand, South Africa Saudi Arabia, Portugal, Australia, France, India, Egypt and Colombia are ranked as the 11 - 20th world economies that will stand to gain from this trade spat. “US import substitution has benefitted Vietnam, Taiwan and Korea in electronics products; Malaysia in semiconductors; and Korea and Mexico in motor vehicle parts. China’s import substitution, has led to beneficiaries in copper (Chile), soybeans (Argentina, Brazil, Chile and Canada); gold (Singapore, Hong Kong and South Africa); natural gas (Malaysia, Australia); and aircraft (France and Germany),” the report says. The study covers US tariffs on $250 billion worth of imports from China and Chinese tariffs on $110 billion worth of imports from the US. Basis this, Nomura sees evidence of US and China import substitution in 52 per cent of the 1,981 tariffed products. Though the substitution effect may be small in relation to the size of US and China GDP, analysts at Nomura believe that going ahead, the development can give a substantial boost to exports of third-party countries with smaller economies. The report pegs Vietnam as the biggest beneficiary, gaining 7.9 per cent of GDP (gross domestic product) from trade diversion, followed by Taiwan (2.1 per cent of GDP), Chile (1.5 per cent), Malaysia (1.3 per cent) and Argentina (1.2 per cent). For India, the benefit is pegged at 0.2 per cent of 2019 GDP. Petrol, bitumen mineral, articles of cement, concrete or stone, parts and accessories from motor vehicles, taps, valves, pipe tanks carpets and other textile floor coverings are some of the products where India stands to gain.
‘COLD WAR’ IN TECHNOLOGY
A major risk for the US, according to the Nomura, is the likely impact on the electronic products it sources from China. If the US follows through on 25 per cent tariffs on the remainder of $325 billion worth of products and if the US business restrictions on China’s Huawei and ZTE technology companies escalate into a ‘cold war’ (in technology), the impact on US companies could be severe. “A striking statistic is that from US listed companies in the S&P 500, 12 of the top 20 with net sales in China are electronic companies with combined revenue of $144 billion in 2018. That is larger than US total merchandise exports to China of $120 billion in 2018,” the report says. Apple Inc, Intel Corp, Micron Technology, Qualcomm, Texas Instruments, Applied Material and Western Digital are some of the US impacted companies, Nomura says, that had 19 per cent to 45 per cent share of sales to China as a percentage to their total sales in 2018.
Source: Business Standard
The Economic survey is expected to begin by the end of June and reports will be made clear within 6 months. Within Just weeks after forming government for the second time, PM Narendra Modi is ready with yet another master-stroke. The Modi government will conduct a mega Economic Survey that will include street vendors, hawkers, small stalls owners for the first time. The Economic Survey is aimed at taking stock of the unemployment scenario in the country. The government will conduct survey of over 27 crore households and 7 crore establishments to ascertain their economic situation. The Economic Survey will be done in similar pattern of conducting population survey. The survey is expected to begin by the end of June and reports will be made clear within 6 months. Government will also seek data from various states to conduct the survey. Over 12 lakh surveyors will be trained for the purpose who will do the survey based on a set format. NSSO and MSME officials will then evaluate the figures of the survey. Recently a training programme was held in Delhi and 6000 other areas of the country for the purpose. However, crop production , plantation, defence, public administration and compulsory social security services have been kept out of the purview of the survey. As per practice, the Department of Economic Affairs presents the Economic Survey of India in the parliament every year, just before the Union Budget. The Economic Survey is the ministry's view on the annual economic development of the country. Economic Survey is an annual document that reviews the developments in the Indian economy over the previous 12 months. It summarises the performance on major development programs, and highlights the policy initiatives of the government and the prospects of the economy in the short to medium term. This document is presented to both houses of Parliament during the Budget Session.
Source: Zee News
India will need to reshape its foreign policy to deal with changing global dynamics. Prime Minister Narendra Modi’s massive electoral mandate should add to India’s muscle as he strides onto the world stage in his second term. But the world’s a bad-tempered place these days and his — and India’s — diplomatic outreaches face a new set of challenges. India’s going to have to tread a cautious path between the US and China, complicated by the capricious Donald Trump who’s trying to create ‘a my-way-or-the-highway’ unipolar world in which the US rules supreme. With economic growth slackening and unemployment at a 45-year peak, Modi will have to start emphasising trade and business and be India’s top salesman. Already, India’s in the bad books of the US and as of June 5, Washington’s ending India’s preferential trade status over tariffs on US goods like Harley-Davidson motorcycles (a tiny fraction of US exports to India but one on which Trump appears fixated) and price caps on medical devices, of which US is an important supplier. Besides that, the US is unhappy about our e-commerce rule changes and India’s bid to build its own hi-tech national champions that could curb space for companies like Google, Microsoft and Facebook. At another level, the US has also scrapped India’s dispensation to buy Iranian oil and its Iran blockade means the fate of Chabahar port is now uncertain. The fact ex-foreign secretary S Jaishankar’s been parachuted in as external affairs minister suggests India aims to use his experience to mend fences and draw closer to the US. But he’ll have to share the stage with NSA Ajit Doval who’s got cabinet rank and can be expected to lead on ties with Pakistan and even China. On a different front, with Russia too, relations are frayed though we’re still buying their arms. But those arms purchases have riled the US and Moscow is worried the US will put intense pressure on India to buy American arms. The first indication of how Modi’s viewing the future came at his grand inauguration for which Bimstec leaders were invited in a not-so-subtle signal that India has abandoned the almost-defunct SAARC and, particularly, Pakistan. One of Modi’s early forays will be to next month’s Bishkek Shanghai Cooperation Organisation meeting and everyone will be watching attentively to see if Modi and Pakistan Prime Minister Imran Khan meet or ignore each other. Khan caused a stir before the election when he said there’d be a better chance of peace with the BJP in government. Extreme caution, though, will likely surround any Pakistan moves by Modi. One of his greatest initial fiascos was his dramatic detour to Lahore. Since then, we’ve have gone to the other extreme with Balakot. Nonetheless, Pakistan is in a deep financial hole and could come under pressure from the international community to lower its aggressive anti-India posture in exchange for aid. The Chinese, too, know peace is vital for their China-Pakistan Economic Cooperation (CPEC) mega-project. So if that opportunity presents itself, Modi must move boldly to seize it.
Source: The Hindu Business Line
Duty free imports from Bangladesh have been worrying the industry. Despite being a fairly large player in the apparel trade, India's imports of apparels grew more than 30 per cent in FY19 while the exports continued to decline. Duty free imports from Bangladesh have been worrying the industry. Apparel exports by the country were down 3.42 per cent in FY19. However, as per the data available for the 11-month period till February 2019, apparel imports were 32 per cent higher compared to the previous fiscal. Between April and February, the country imported $1,019 million worth apparels against $773 million in FY18. Once March data comes in, the imports are likely to further go up. "Bangladesh is mainly responsible for the increase in imports. Under the free trade agreement with Bangladesh, the country has been increasingly exporting to India. More worrying is the fact that our textile production is coming down while apparel imports are going up. This is affecting the entire value chain. Bangladesh is buying fabric from China to make apparels and sending it to India,' said Chandrima Chatterjee, Adviser, Apparel Export Promotion Council. Despite being a neighbour, time factor is a main impediment in the fabric trade between India and Bangladesh. "It takes almost a month for Indian fabric to travel by land from Surat to Bangladesh apparel units as it gets struck at the border for around 15 days, waiting for clearance. The Chinese goods, on the other hand, reach faster through the sea route. We have asked the ministry to do something about this logistics issue," said Sanjay Jain, Chairman, Confederation of Indian Textile Industry. Further, Chinese fabric is competitive in terms of cost compared to Indian fabric. In fiscal 2017-18, garment exports to India more than doubled to $278.68 million and between July and December 2018 it was up 143 per cent and had already touched $270 million. Bangladesh Commerce ministry had reportedly expressed its confidence to export $2 billion worth of apparel to India in the next two years on the back of duty-free access market and rising demand for garment items at competitive prices.
Source: Asian Age
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1063.77 |
USD/Ton |
-1.47% |
6/5/2019 |
|
VSF |
1667.29 |
USD/Ton |
-0.26% |
6/5/2019 |
|
ASF |
2498.04 |
USD/Ton |
0% |
6/5/2019 |
|
Polyester POY |
1061.59 |
USD/Ton |
-0.68% |
6/5/2019 |
|
Nylon FDY |
2416.99 |
USD/Ton |
0% |
6/5/2019 |
|
40D Spandex |
4414.27 |
USD/Ton |
0% |
6/5/2019 |
|
Nylon POY |
5470.79 |
USD/Ton |
0% |
6/5/2019 |
|
Acrylic Top 3D |
1317.04 |
USD/Ton |
-0.55% |
6/5/2019 |
|
Polyester FDY |
2257.79 |
USD/Ton |
0% |
6/5/2019 |
|
Nylon DTY |
2677.51 |
USD/Ton |
0% |
6/5/2019 |
|
Viscose Long Filament |
1230.21 |
USD/Ton |
0% |
6/5/2019 |
|
Polyester DTY |
2691.98 |
USD/Ton |
0% |
6/5/2019 |
|
30S Spun Rayon Yarn |
2409.75 |
USD/Ton |
-0.30% |
6/5/2019 |
|
32S Polyester Yarn |
1772.94 |
USD/Ton |
-0.41% |
6/5/2019 |
|
45S T/C Yarn |
2691.98 |
USD/Ton |
-0.53% |
6/5/2019 |
|
40S Rayon Yarn |
2706.45 |
USD/Ton |
0% |
6/5/2019 |
|
T/R Yarn 65/35 32S |
2207.13 |
USD/Ton |
-0.33% |
6/5/2019 |
|
45S Polyester Yarn |
1939.38 |
USD/Ton |
0% |
6/5/2019 |
|
T/C Yarn 65/35 32S |
2315.68 |
USD/Ton |
0% |
6/5/2019 |
|
10S Denim Fabric |
1.32 |
USD/Meter |
0% |
6/5/2019 |
|
32S Twill Fabric |
0.77 |
USD/Meter |
0% |
6/5/2019 |
|
40S Combed Poplin |
1.04 |
USD/Meter |
0% |
6/5/2019 |
|
30S Rayon Fabric |
0.61 |
USD/Meter |
0% |
6/5/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
0% |
6/5/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14473 USD dtd. 05/06/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Kenya on Wednesday decried its widening trade imbalance noting that it could affect growth of domestic industries. Chris Kiptoo, principal secretary of the Ministry of Industry, Trade and Cooperatives said in Nairobi that imports are currently three times the level of exports. "We hope to bridge the trade deficit through growing exports by at least 25 percent annually," Kiptoo said during the opening ceremony of the eighth edition of the International Flower Trade Expo. The three-day expo is a platform to bring together flower growers, exporters, breeders, cargo agencies in the flower value chain. Kiptoo said that the horticultural and textiles sectors are one of the best performing industries in the country because they posted double digit growth in exports last year. The official added that Kenya hopes to leverage its existing bilateral and multilateral trade agreements to boost exports.
Source: Xinhua
Việt Nam’s exports and industrial output have increased in recent months as the country is considered a beneficiary of the US-China trade war, according to a VNDrect Securities Corporation (VNDS) report. The report showed that export growth rebounded sharply in April, up 10.4 per cent year-on-year, while May’s industrial production index increased by 10 per cent year-on-year. “Despite the step-up in trade tensions, we maintain our 2019 and 2020 GDP growth forecasts at 6.6 per cent and 6.5 per cent,” the VNDS said. In the first four months of this year, Việt Nam’s export growth remained positive at 6.5 year-on-year compared with negative growth for other Asian countries, thanks to strong domestic exports, particularly textile, wooden products and solid growth in exports of tech products. “In addition, FDI from China into Việt Nam nearly doubled from the same period last year. We see resilient export growth and robust FDI inflows providing the country with a buffer against further escalation in the US-China trade war,” according the report. VNDS said that barring a full-scale trade war, this round of Chinese yuan depreciation would be no different compared to last year because a sharper depreciation could add more uncertainty to the trade negotiation process and was unlikely to help Chinese authorities. “We see less depreciation pressure on the Vietnamese đồng compared to last year, thanks to better guidance from the State Bank of Việt Nam to the foreign exchange market and less funding pressure from strong US dollar given the Fed’s dovishness,” the VNDS added. After Việt Nam was added to the US Treasury’s currency watch list for potential currency manipulation, VNDS said Vietnamese policy makers will be more cautious on currency management or intervention going forward. “The country is becoming more vulnerable to US policy owing to the rising trade surplus with the US because many Chinese businesses have re-routed their goods to the US via Việt Nam to avoid tariffs,” the report read. VNDS said although it expects muted inflation in 2019, it still see upside risks in the longer term due to a rebound in pork prices if African swine fever is contained and China’s growth stimulus measures are likely to boost demand for oil and raise oil prices amidst tighter global supply.
Source: VNS
Importers of India-made home textiles products, take note: Effective today, eligibility for duty free entry into the US for all India-made textiles products was terminated. This latest trade development emerged May 31 when President Trump signed the proclamation ending Generalized System of Preferences (GSP) eligibility for India. Customs attorney Robert Leo, who serves as legal counsel of the Home Fashion Products Association (HFPA) and is a partner at Meeks, Sheppard, Leo & Pillsbury, issued a memo to HFPA members on Monday regarding the status change. “This move by the U.S. was not unexpected,” he noted. “There is no exemption or special treatment indicated for goods in transit.” Since November 1st, a list of 50 Indian-made products — among them hand-loomed textiles and rugs — that were previously duty-free became subject to regular tariffs. “My reaction is that it is disappointing and it is a shame it had to come to this point,” Leo told PBM. “This was obviously done to force India to try to give the US better access to their markets,” he continued. “Overall, it’s more of a trade issue than a specific product-by-product issue.” Petitions on products aren’t really going to help, he warned. As of Tuesday night, no HFPA members had responded to Leo’s memo with comments or questions. But Leo is not surprised. “There may be some home accessory products that are now subject to tariffs. But nothing has really changed for bedding or other fabric textiles products because they are already at that normal duty rate, which for home fashions is usually higher than 3% for pillows and sheets and things like that. It’s closer to 6%, or 8% to 12%, and they’ve been paying that all along for India,” Leo explained. “That is probably why I didn’t get a lot of feedback from my memo.” Kas Rugs’ Hari Tummala, VP, said the impact on the company’s rug imports are expected to be “minimum.” He continued: “We are currently paying 6% duty on tufted rugs from India and it will remain the same. As of now, there is no duty on hand-knotted/hand-loomed products, and we were told it remains the same. Poufs out of India are subjected to a 6% duty.” But on a broader scale, the effects on the American economy could be crippling – “costing American businesses over $300 million in additional tariffs every year,” warned Dan Anthony, executive director of The Coalition for GSP, in a statement he released Friday. “Without GSP benefits American small businesses face a new tax that will mean job losses, canceled investments and cost increases for consumers,” he noted. “There are no winners from [this] decision. American importers will pay more, while some American exporters will continue to face current market access barriers in India and others…In the weeks ahead we urge the Administration to restart negotiations and strike a deal that reinstates GSP eligibility for India. American companies and workers that rely on the GSP savings are depending on it."
Source: Home Textiles Today
Today, the National Council of Textile Organizations (NCTO) and American Apparel & Footwear Association (AAFA) sent a letter to President Donald J. Trump, opposing the proposed escalation in tariffs for all U.S. imports from Mexico. As the representatives of the apparel and textile supply chain, the organizations represent hundreds of thousands of American jobs dependent on duty-free trade in the North American region. Signed by the heads of both organizations, the letter states: “Raising tariffs on U.S. imports from Mexico will hurt U.S. workers. Currently, hundreds of thousands of American workers are deployed in production and other key value chains that depend on the North American trade partnership with Mexico, which is the market for half of all U.S. textile exports.” “NCTO is joining with AAFA today in urging President Trump to refrain from imposing tariffs on U.S. imports from Mexico, an issue that is critically important to our integrated Western Hemisphere supply chains,” said NCTO President and CEO Kim Glas. “Mexico is the top export market for U.S. fiber, yarns, and fabrics and adding tariffs on Mexican imports of apparel and home furnishings will only hurt the U.S. textile industry’s growth and competitiveness and jeopardize jobs in both countries.” “Further, these planned tariffs disrupt and distract congressional passage of the pending U.S.-Mexico-Canada Agreement (USMCA), a key administration priority, which not only strengthens the textile industry’s existing supply chain and our free trade partnership with Mexico, but also helps to expand it,” Glas added. “We urge the administration to support American workers by not imposing tariffs on U.S. imports from Mexico and helping get USMCA over the finish line.” “AAFA and NCTO often have different ideas when it comes to trade policy, however we are totally united in opposition to the proposal to add tariffs on our products,” said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. “Potential tariffs on Mexico are an unwelcome and unnecessary tax on American workers and consumers at a time when we should be focusing on the ratification of the USMCA. Mexico is the eighth largest supplier of apparel and seventh largest supplier of footwear to the U.S. market, with 35 percent of men’s and boy’s jeans and 15 percent of work boots coming from south of the border. This move threatens our trade relationship with Mexico and the competitive advantage that supports hundreds of thousands of American jobs in the apparel, footwear, travel goods, and textile industries. We do not believe that immigration policy and trade policy should be cut from the same cloth.”
Source: Textile World
Some Chinese garment makers want to set up factories under joint venture in Bangladesh as they see the country as a competitive destination to relocate plants amid a raging US-China trade war and rising costs in the world’s second largest economy. Chinese textile and garment industry owners have invested heavily in neighbouring Vietnam and Cambodia in the last two decades, but now they are focusing to shift their factories to Myanmar and Bangladesh. The reasons for the change in focus include a lack of skilled workforce in the Chinese textile and garment industry, rising production costs, a shifting industrial base to industries such as IT and over-investment in Vietnam and Cambodia, where labour costs are lower. “Now they are trying to shift the sunset industries to Myanmar and Bangladesh,” said Faisal Samad, vice-president of the Bangladesh Garment Manufacturers and Exporters Association. The sunset industry refers to an industry that has existed for a long time and that is less successful and making less profit than previously. Samad met with some entrepreneurs of Hong Kong-based Chinese Manufacturers’ Association during their visit to Dhaka from May 22 to May 26. The entrepreneurs came to Bangladesh to explore investment opportunities. “Bangladesh is still a competitive place compared to China, Vietnam and Cambodia for setting up industries because of lower cost of production, and trade privileges granted in major markets such as the EU and China,” he said. “They are interested to set up factories in fabrics, garment, printing and dyeing,” Samad said. So far, Bangladesh hasn’t allowed foreign investment in basic apparels, limiting their presence to high-end and value-added textile and garment items. A Chinese garment manufacturer, Robert Lok, managing director of Merit Tat International Ltd, said he was looking for potential business partners in Bangladesh to make fresh orders for his brand. He was part of the Hong Kong delegation. “I have seen a very young and energetic labour force in Bangladesh in the readymade garment sector. Their skill and the quality of work is really world class,” he told the Daily Star. He believes that his business will be viable if he manufactures in Bangladesh to export to the US and other countries. “If I manufacture here, the price will be cheaper than in China,” he said, adding that the Chinese garment industry might be affected by the ongoing trade war. Lok plans to make fresh orders with potential garment manufacturers in Bangladesh before deciding to relocate his factory. “Of course, I will tie up in joint venture with Bangladeshi partners in the future,” the manufacturer said, adding that some local garment giants have shown interest to team up with him to set up factories. According to Lok, Merit Tat International has offices and owns outlets in New York and Western Europe. Lok said there is a huge population in Bangladesh and it is advantageous for the sector to manage workers. Moreover, the wage of the workers is lower compared to Vietnam and Cambodia. Another Hong Kong-based Chinese garment maker, Francis Man Piu Cheng, said he was impressed with Bangladesh’s garment factories as they have skilled workers and mature management, which will be helpful to relocate his manufacturing plant to Bangladesh. “I have already made some investment in the garment sector in Cambodia, but there is a lack of mature management there. So, I am thinking of establishing a manufacturing plant in Bangladesh with potential partners.” Cheng, also the chairman of fashion apparel group Wing Tai Asia, talked to three garment manufacturers in Bangladesh and his Bangladeshi counterparts have also shown interest. He expressed concern, however, about the higher lead time in the garment sector in Bangladesh. Most garment manufacturers in China are worried about the ongoing US-China trade war, he said.
Source: Asia News Network
Other than the technical cooperation extended to Zambia for training its defense and civilian personnel through Indian Technical and Economic Cooperation Program, India has also deputed armed forces personnel to Zambia to help train the Zambian armed forces. Owing to its strategic location in the center of three Free Trade Agreements (FTAs) that Zambia is a member of – COMESA, SADC and Tripartite FTAs – which eliminates custom duties and quotas on goods and services in the region, Zambia is eyeing big investments from Indian companies. This is something that Judith KK Kan’goma-Kapijampanga, former MP and Minister in the Zambia Government and present High Commissioner of the Republic of Zambia is focusing on as part of her role in New Delhi. Several Indian companies have in recent years invested in Zambia with total investments standing presently at about USD 3 billion. With more Indian companies expressing interest to invest in building multi-specialty hospitals, building roads, railways, metros, air services and setting up satellites for economic use, the High Commissioner estimates that the amount of investment is expected to have an additional increase of USD 8.8 billion, so as to reach a total investment of USD 11.8 billion. “This has been due to Zambia’s competitive advantage as one of the best investment destinations in the world” says the High Commissioner. Several Indian companies have in recent years found Zambia as safe investment grounds in Africa. Prasad Seeds, one of India’s major seed provider, has signed an MoU with Zambia Government for production of seed. Konkola Copper Mines, a subsidiary of the Vedanta Resources Group have invested USD2.2 billion in Konkola Beep Water Copper Mining Project, Sulphuric Acid plant and a new smelter. RJ Corporation, an Indian firm trading as Varun Beverages have invested in the Pepsi plant while Nava Bharat Singapore Ltd., a subsidiary of Nava Bharat Ventures Ltd., has purchased 65% equity shares in Mamba Collieries Ltd. Nava Bharat has also embarked upon a USD 750 million project to develop a coal-fired power plant with a minimum generating capacity of 270 MW. Tarun Manganese Ltd, one of the group companies of Dharni Sampada Pvt. Ltd. In India, has invested in manganese mining and plants to invest another USD 300 mn in construction of a manganese processing plant. Other success stories include Bharti Airtel, which runs Airtel Zambia and has invested in network expansion to provide low tariffs and roll out deep in rural areas with an aim to bridge the digital divide between urban and rural population. Indo-Zambia Bank too is a successful JV between three Indian public sector banks viz. Bank of India, Bank of Baroda and Central Bank of India holding 60% equity and the Zambian government holding 40%. TataInternational too is greatly entrenched through its vehicle and bicycle assembly plant, tannery, and hospitality businesses. Tata is also involved in developing two power projects in the country and Tata Consultancy Engineering (TCE) is providing consultancy services to ZESCO for the Kariba North Power Plant and Zambia Revenue Authority for the development of an integrated tax system. India has played the role of big brother to Zambia in various fields, and this is something that the High Commissioner doesn’t fail to acknowledge and elaborate upon. Other than the technical cooperation extended to Zambia for training its defense and civilian personnel through Indian Technical and Economic Cooperation Program, India has also deputed armed forces personnel to Zambia to help train the Zambian armed forces. In recent years, India has embarked upon a program to support Zambia in the development of its infrastructure, trade, and commerce. Exim Bank of India is financing a project aimed at decongestion of Lusaka roads, wherein flyover bridges and dedicated lanes for public buses will be built, so as to decongest the roads of the Capital. Exim Bank has also provided USD 5 million credit to Indo-Zambia Bank, to be utilized for import and export of goods between the two countries. Exim Bank has also provided a Line of Credit (LoC) of USD 50 million to Government of Zambia for the Itezhi-Tezhi power project and has a 20% equity, after debt settlement agreement, in Development Bank of Zambia (DBZ). The results are forthcoming, resulting in a trade between the two countries reaching USD 1billion. While Indian imports from Zambia include copper & articles; natural or cultured pearls; semi-precious stones; imitation jewellery; lead; cotton; raw hides & skin; whereas India’s exports to Zambia include pharmaceuticals; plastics & articles; nuclear reactors; boilers; machinery & mechanical appliances and parts; electrical machinery and parts; sound recorders & reproducers & vehicles. Copper is the major import that shifts the trade balance in favour of Zambia. Some other areas of investment Zambia may be looking forward to include confectionery, tannery, solar energy, and tourism. Dr. Kenneth Kaunda, the first President of Zambia who served as head of the country from 1964 for a long period of 27 years, ending 1991, and played a vital role in the country’s freedom struggle used to acknowledge he took inspiration from Mahatma Gandhi and the freedom struggle that he built. “The relationship between Indian and Zambia from the time of Kenneth Kaunda and even before our Independence got a lot of inspiration from Late Mahatma Gandhi. We have built upon what President Kaunda left including whichever Government comes into place. Zambia has recognized and still recognizes India as a big brother. Out of about 16-17 million people in Zambia, 10% of that is of Indian origin, who are contributing to different aspects of Zambia’s economy. That goes to show that our relationship is evolving and getting better all the time,” tells the High Commissioner.
Source: Financial Express
