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MARKET WATCH 12 JUNE, 2019

NATIONAL

INTERNATIONAL

Transition plan to the new GST Return

The GST Council in its 31st meeting decided that a new GST return system will be introduced to facilitate taxpayers. In order to ease transition to the new return system, a transition plan has been worked out. The details of the indicative transition plan are as follows: -

i. In May, 2019 a prototype of the offline tool has already been shared on the common portal to give the look and feel of the tool to the users. The look and feel of the offline tool would be same as that of the online portal. Taxpayers may be aware that there are three main components to the new return – one main return (FORM GST RET-1) and two annexures (FORM GST ANX-1 and FORM GST ANX-2).

ii. From July, 2019, users would be able to upload invoices using the FORM GST ANX-1 offline tool on trial basis for familiarisation. Further, users would also be able to view and download, the inward supply of invoices using the FORM GST ANX-2 offline tool under the trial program. The summary of inward supply invoices would also be available for view on the common portal online. They would also be able to import their purchase register in the Offline Tool and match it with the downloaded inward supply invoices to find mismatches from August 2019.

iii. Between July to September, 2019 (for three months), the new return system (ANX-1 & ANX-2 only) would be available for trial for taxpayers to make themselves familiar. This trial would have no impact at the back end on the tax liability or input tax credit of the taxpayer. In this period, taxpayers shall continue to fulfil their compliances by filing FORM GSTR-1 and FORM GSTR-3B i.e. taxpayers would continue to file their outward supply details in FORM GSTR-1 on monthly / quarterly basis and return in FORM GSTR-3B on monthly basis. Non-filing of these returns shall attract penal provisions under the GST Act.

iv. From October, 2019 onwards, FORM GST ANX-1 shall be made compulsory and FORM GSTR-1 would be replaced by FORM GST ANX-1. The large taxpayers (i.e. those taxpayers whose aggregate annual turnover in the previous financial year was more than Rs. 5 Crore) would upload their monthly FORM GST ANX-1 from October, 2019 onwards. However, the first compulsory quarterly FORM GST ANX-1 to be uploaded by small taxpayers (with aggregate annual turnover in the previous financial year upto Rs. 5 Crore) would be due only in January, 2020 for the quarter October to December, 2019. It may be noted that invoices etc. can be uploaded in FORM GST ANX-1 on a continuous basis both by large and small taxpayers from October, 2019 onwards. FORM GST ANX-2 may be viewed simultaneously during this period but no action shall be allowed on such FORM GST ANX-2.

v. For October and November, 2019, large taxpayers would continue to file FORM GSTR-3B on monthly basis. They would file their first FORM GST RET-01 for the month of December, 2019 by 20th January, 2020.

vi. The small taxpayers would stop filing FORM GSTR-3B and would start filing FORM GST PMT-08 from October, 2019 onwards. They would file their first FORM GST-RET-01 for the quarter October, 2019 to December, 2019 from 20th January, 2020.

vii. From January, 2020 onwards, all taxpayers shall be filing FORM GST RET-01 and FORM GSTR-3B shall be completely phased out.

Separate instructions shall be issued for filing and processing of refund applications between October to December, 2019.

Source: PIB

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ITF urges textiles ministry to organise engagement events

In view of rising textile imports from Bangladesh, Indian Texpreneurs Federation (ITF) has requested the ministry of textiles to facilitate a meeting of key brands and retailers with selective manufacturing industry stakeholders at clusters like Coimbatore and Tiruppur. ITF said it can act as a platform to bring clusters and brands together in Tamil Nadu. In fiscal 2018-19, India’s textile and garment imports from Bangladesh increased by 53 per cent year-on-year to $1.07 billion (₹7,500 crore). If the products were not imported and produced domestically, the ₹7,500 crore business would have created 1.5 lakh job opportunities within the country, the Coimbatore-based organisation said in a letter sent to textiles minister Smriti Irani. As per ITF analysis, based on the data sourced form DGCI&S, cotton based readymade garments falling under HS codes 62034200, 62052000, 62046200, and 61091000 are the top four imported items. “After witnessing a big jump in cotton-based textile product imports, now synthetic-based textile product imports are also catching up with a much faster growth rate. These products (both cotton and synthetic-based textile products) are commonly manufactured in textile clusters like Tiruppur, Chennai, Surat and Ichalkaranji,” the letter said. The letter also mentions that job creation and lower level of participation of women in the workforce are the twin challenges faced by the country. “By developing textile manufacturing sector, we can address these two challenges. For example, ₹500 crore investment in a heavy engineering factory can create 1,000 to 1,500 jobs; whereas textile and apparel sector can create 40,000 jobs for the same investment.” As a starting point, ITF convenor Prabhu Dhamodharan requested the newly formed Narendra Modi-led NDA government and the textiles ministry to facilitate a meeting with the brands and domestic manufacturers so that all clusters can benefit.

Source: Fibre2Fashion

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13 RCEP nations oppose India’s strict country of origin norms

India wants strict rules of origin to prevent Chinese goods from flooding the country through member countries that may have lower or no duty levels. At least 13 countries including Australia, Japan and New Zealand have opposed India’s proposal for strict criteria to determine the source country of a product, based on which they get tariff concessions or duties, in the 16-nation Regional Comprehensive Economic Partnership (RCEP) trade pact. The 10-member ASEAN bloc too has opposed India’s proposal, an official said. India wants strict rules of origin to prevent Chinese goods from flooding the country through member countries that may have lower or no duty levels. Chinese garments are making their way into India through the duty-free route under the South Asia Free Trade Pact and the Duty-Free Quota-Free window from Bangladesh. This was a key issue at the intersessional meeting of RCEP countries in Bangkok last month. “We want clearly defined rules of origin to ensure integrity and sanctity of tariff differentiation. Led by Australia, most others want liberal rules of origin,” said the official familiar with the details. India has said the highest value addition with the help of indigenous inputs must be done in the country from which a product is exported. Globally, the average threshold for domestic content to get originating status for a product is 40-60%. “These countries don’t have the kind of resources and manufacturing like us except Japan, which is into large-scale value addition and exports. So, they want lenient rules,” the official said. Strict origin norms are crucial for India, which had a trade deficit with 11 RCEP members including China, South Korea and Australia in 2018-19. The gap with China alone was $53.6 billion. India’s aluminium and copper industries are worried about China’s presence in the grouping and anticipate widening of the trade deficit due to an “alarming” spike in imports and a potential threat to the Make in India initiative. Niti Aayog said in a study that “if duty is further cut under RCEP, domestic aluminium industry will be severely hit.” “However, China is conservative and not on either side,” the official added. The issue will be taken up again at a meeting in Australia during June 28-July 3, followed by a meeting in China at the end of July. A ministerial meeting is slated in China in August as members try to conclude the mega-trade agreement this year. “RCEP will not benefit us vis-a-vis China...We already have a deficit with most of the member-countries,” said a New Delhi-based expert on trade issues. “The Chinese are already taking advantage of our liberal rules of origin with neighbouring least developed countries including Bangladesh,” said Biswajit Dhar, professor at the Centre for Economic Studies and Planning in the School of Social Sciences at Jawaharlal Nehru University. RCEP is a proposed regional economic integration agreement among the 10 Asean countries and its six free-trade agreement partners—Australia, New Zealand, Japan, China, South Korea and India.

Source: Economic Times

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Indian, Chinese officials hold dialogue to break deadlock in RCEP trade negotiations

In a renewed attempt to break the stalemate in the ongoing Regional Comprehensive Economic Partnership (RCEP) negotiations involving 16 countries, senior officials from India and China met in New Delhi this week to try and reach a common ground on market opening commitments. “We are trying to reduce the gap between the market access being demanded by China and what India has to offer. Till this matter is resolved it will be difficult to make progress in the overall RCEP negotiations,” a government official told BusinessLine. The Indian and Chinese delegations that participated in the meeting on June 10-11 were headed by Commerce Secretary Anup Wadhawan and Chinese Vice-Minister of Commerce Wang Shouwen, respectively. The RCEP, being negotiated between the 10-member ASEAN, India, China, Japan, South Korea, Australia and New Zealand, once implemented, would result in one of the largest free trade bloc accounting for 45 per cent of the world's population, and a combined GDP of about $21.3 trillion and 40 per cent of world trade. India, however, is not comfortable with the steep commitments on opening markets in goods being pushed by most members, especially China. New Delhi wants to offer much lower market access in goods to China compared to other members such as the ASEAN, Japan and South Korea, but Beijing is not willing to accept it. “In the two-day meeting, discussions happened on goods, services as well as investments. While there was some positive movement in services with China paring its demand, a lot more progress needs to be achieved in goods and investments,” the official said. India, which has so far offered to eliminate tariffs for 70-80 per cent of goods for China over an extended period of time, is unwilling to give more as the Indian industry is apprehensive of being adversely hit due to it. “China already runs a trade surplus of over $60 billion with India and the domestic industry is reeling under heavy competition from Chinese goods. The government can't let the situation go out of hand,” the official said. A decision, however, has to be taken by the new Commerce & Industry Minister Piyush Goyal soon on how much more flexible India could get. China is already hinting at going in for a free trade agreement between the ASEAN, China, Japan and South Korea if the RCEP talks take too long. The ASEAN, too, is putting pressure on India to move fast so that the negotiations could be completed by the year-end. “There are a number of technical discussions scheduled in Melbourne at the end of the month. By then, India should be clear on its negotiating flexibilities,” the official said.

Source: The Hindu Business Line

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GDP growth overestimated during 2011-17, says former CEA Arvind Subramanian

In a research paper, Arvind Subramanian attributes the overestimation to a change in methodology for calculating the Gross Domestic Product Former Chief Economic Adviser (CEA) Arvind Subramanian has said India’s GDP growth in the period 2011-12 to 2016-17 is likely to have been over-estimated, and the tag of fastest-growing major economy may not hold. In a research paper, ‘India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications’, published by Harvard University, Mr. Subramanian has argued that GDP growth during that period was actually 4.5% rather than the 7% presented by the official data. “India changed its data sources and methodology for estimating real gross domestic product (GDP) for the period since 2011-12,” he writes in his paper, ‘India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications’, published by the Center for International Development at Harvard University. “This paper shows that this change has led to a significant overestimation of growth,” the paper adds. “Official estimates place annual average GDP growth between 2011-12 and 2016-17 at 7%. We estimate that actual growth may have been about 4.5%, with a 95% confidence interval of 3.5-5.5%.”Responding to Mr Subramanian's paper, the Ministry of Statistics and Programme Implementation late on Tuesday evening reiterated its stance that the methodology adopted was in line with international standards as set by the United Nations and was as such robust.

17 indicators

Mr Subramanian, whose term as CEA from October 2014 to June 2018 coincided in part with this period of "overestimation", stressed that his paper deals with the technical origins of the GDP overestimation and not the political aspects of it. He argued that one of the problems with the new methodology for calculating GDP growth since 2011 was that the growth numbers no longer correlated with other indicators of economic growth such as electricity consumption, two-wheeler sales, airline passenger traffic, index of industrial production, and export figures, to name a few. One of the problems highlighted by the former CEA was that growth numbers no longer correlated with other indicators of economic growth such as electricity consumption, two-wheeler sales, airline passenger traffic, index of industrial production, and export figures, to name a few. In total, Mr Subramanian looked at 17 such indicators and found that “the correlations between most indicators and GDP growth broke down in the post-2011 period”.

Methodological issues

Former Chief Statistician of India and expert on India’s GDP calculations Pronab Sen countered Mr. Subramanian’s thesis, arguing that it is the result largely of the methodology.  “If you think about GDP growth, it can come from three distinct factors,” Dr. Sen explained. “One is growth in volumes, the amount that is produced. The second is growth in productivity, and the third is improvement in product quality. What Arvind has done is that the indicators he has used are all volume indicators, and having done that, he has said they were very strongly correlated prior to 2011 but not after that period.” The reason for this breakdown in correlation, Dr. Sen explained, is precisely because the shift in methodology in 2011 meant that the value of goods and services were now considered to estimate growth and not their volume. “In estimating the growth of the high-frequency indicators pre-2011, he has in a sense replicated the method in which the GDP growth was calculated during that period, and then said that there is a correlation between these indicators and GDP growth,” Dr. Sen said. “Post 2011, when we moved to value indicators from volume indicators, the relationship is weaker because the other two drivers would start getting picked up by the values.” “If he had made the statement that in the post-2011 growth, only 4.5% came from volumes and the remaining 2.5% came from other factors which we don’t know, then that would have been correct,” Dr Sen added.

Impact of prices

Mr Subramanian also argued that the shift in 2011 to using values rather than volumes meant that price changes, especially in important inputs such as oil, would have started to have a big impact on the final growth number. “Under the old, establishment-based GDP estimates, price changes mattered less because real growth numbers were largely based on volumes not values,” Mr. Subramanian says. “Under the new system, however, values had to be deflated by prices to get real magnitudes. And this mattered crucially for the manufacturing sector where the often-dramatic changes in oil prices can heavily influence input costs” Dr Sen also acknowledged that this problem with the new methodology should be addressed. However, he pointed out that while price changes did have an effect now, the direction of that impact was not evident. So, to say that there was only an over-estimation of GDP growth would not be correct. Gauging the effect of price changes on GDP growth using the new methodology would be a different exercise, separate from the one Mr Subramanian has conducted, Dr Sen said. “Earlier, prices didn’t matter, as he said,” Dr. Sen said. “But it’s not obvious that the direction of error is constant. When oil prices are falling, then you would be over-stating GDP, but when they are rising, you would be under-stating GDP.” Mr Subramanian’s paper also points towards the fact that the way the informal sector in India was measured was using formal sector proxies, which was an increasingly inaccurate approach. This, too, is a correct assessment, according to Dr Sen, who said this problem has become even more acute post-demonetisation, when the informal sector’s growth fell away. “But remember that the period Arvind is talking about is pre-demonetisation, so this argument I don’t think applies with as much force then,” Dr. Sen said. Mr. Subramanian derives several implications from the findings of his paper. The first is that growth needed to be restored to high levels. The second that the quality and integrity of data in India needs to be improved, something called for by several other economists. And the third is that “India must restore the reputational damage suffered to data generation in India across the board”. He also called for the creation of a taskforce to revisit the entire methodology and implementation of GDP estimation.

Source: The Hindu

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Sitharaman holds pre-Budget consultation with industry, trade representatives

Union Finance Minister Nirmala Sitharaman on Tuesday started her pre-Budget consultations here with different stakeholder groups in connection with the forthcoming General Budget 2019-20. After her first meeting with the stakeholder groups from agriculture and rural development sectors, Sitharaman met with representatives from industry, trade and services sectors in the second meeting. In her opening remarks, Sitharaman said that the central government has taken several industry specific initiatives since 2014 that had significantly improved the overall business environment, read a statement from the ministry. She said that the emphasis was given to simplification and rationalisation of the existing rules and introduction of Information Technology to make governance more efficient and effective. As a result, the Finance Minister said that India has considerably improved its ranking to 77th position among 190 countries and has kept 23 ranks over its rank of 100 in the Doing Business Report 2018 as per the World Bank Doing Business (DB) Report, 2019, the statement from the ministry added. Sitharaman also mentioned that since 24 per cent of the total work force in India is in the industrial sector, in order to reap the benefits of demographic dividend, industry should be able to accommodate more work force. The meeting was also attended by Anurag Thakur, Minister of State for Finance and Corporate Affairs, Subhash C Garg, Finance Secretary, Girish Chandra Murmu, Expenditure Secretary, Ajay Narayan Pandey, Revenue Secretary, Rajeev Kumar, Secretary, DFS, Atanu Chakraborty, Secretary, DIPAM, Yogendra Tripathi, Secretary, Ministry of Tourism, Amit Khare, Secretary, Ministry of Information and Broadcasting, Ramesh Abhishek, Secretary, Department for Promotion of Industry and Internal Trade, Anup Wadhawan, Secretary, Department of Commerce, Ministry of Commerce and Industry, Pramod Chandra Mody, Chairman, CBDT, PK Das, Chairman, CBIC, KV Subramanian, CEA and other senior officials of the Ministry of Finance. With a view to give boost to the Indian economy, the representatives of industry, services and trade sectors submitted several suggestions concerning industrial sector, land reforms, special economic zones, industrial policy, investment in research and development, simplification of tax regimes, tapping potential in tourism sector, Foreign Direct Investment (FDI), Goods and Services Tax (GST), Capital Gains Tax, Corporate Tax, MSME Sector, e-commerce, skill development, education and healthcare sectors, start-ups, media and entertainment sector and food manufacturing industry. Representatives of industry, services and trade sectors included Vikram S Kirloskar, President, Confederation of Indian Industry (CII), Balkrishan Goenka, President, ASSOCHAM, Sandip Somany, President, FICCI, Pramod Agrawal, chairman, Gem & Jewellery Export Promotion Council, Animesh Saxena, president, Federation of Indian Micro and Small & Medium Enterprises (FISME), Ajit Kumar, Director, Hinduja Group, Rajni Aggarwal, President, Federation of Indian Women Entrepreneurs (FIWE), Panaruna Aqeel Ahmed, Chairman, Council for Leather Exports, Florence Shoe Co. Pvt. Ltd, Rahul Bothra, CFO, Swiggy, Bundl Technologies Pvt. Ltd, Ajay Sahai, Director General and CEO, Federation of Indian Export Organisations, Raj Nair, President, IMC Chamber of Commerce and Industry, Gopal Srinivasan, Chairman, TVS Capital Fund Pvt. Ltd, PR Venketrama Raja, Vice Chairman, MD and CEO, Ramco Systems, Sachin Taparia, Chairman and CEO, local Circles India Pvt Ltd.

Source: Business Standard

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New textile processing cluster with zero-discharge units

A textile processing cluster is all set to be established at a private industrial estate at Thamaraipatti in Virudhunagar district to reduce environmental impact of textile processing. “Everyone loves bright white shirts and coloured fabrics but the environmental impact that comes with the process of manufacturing them is damaging,” Project Director of Southern Districts Textile Processing Cluster K. R. Gnanasambandam told The Hindu. To promote more inclusive and eco-friendly garment production, 36 textile processing units had agreed to be part of the cluster that would spread over 104 acres, he added. The cluster would comprise textile units where 96% of the water used for processing would be recycled. “The remaining water, which is primarily dye-based, will evaporate. Steam will not pollute the environment. Sediments, which contain a large amount of limestone, will be shipped to cement factories,” he said. Primary operations at the processing units would include bleaching, dyeing and spinning different types of yarn. The units would deal with a variety of fabrics, but primarily focus on cotton, silk and jute, he said. A sum of ₹ 200 crore had been allocated for the projected under the Ministry of Textile’s Integrated Processing Development Scheme (IPDS). While the Centre would bear 50% of the cost, the State and private industry promoters would contribute 25% each, he added. Mr. Gnanasambandam said more textile processing industries were moving towards environment-friendly means of conducting business, because the European Union, one of the largest importers of Indian textile, expected a certification stating that the garments were produced without causing environmental damage. The units’ zero waste design also had the approval of researchers at the Indian Institute of Technology – Madras, he said, adding, “The foundation stone for the cluster will be laid in a month.” Office-bearers of different organisations, including Madurai District Tiny and Small-Scale Industries Association president K. P. Murugan, welcomed the project and said such initiatives would lead to more job creation.

Source: The Hindu

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India to cultivate export competitiveness sans US GSP

India will try to independently cultivate export competitiveness without depending on the US generalised system of preferences (GSP) scheme, according to commerce and industry minister Piyush Goyal, who said India graciously accepts that development assistance offered by nations till now has ceased. He addressed media on June 6 for the first time after taking over. “It’s not something that any of the exporters raised as a matter of life and death. It has had an impact on some sectors, some places...1 per cent, 2 per cent...India is no more an underdeveloped or least developed country that we will look at that kind of support,” said Goyal. India will reorient itself to be competitive, he said. Easier availability of credit at cheaper rates to exporters will be resolved expeditiously and customs clearances will be made quicker by installing X-ray scanners at all major ports, he said. A new scheme to rebate state and central taxes and levies will be rolled out in three months and will be implemented in a phased manner for all sectors, the minister added. Goyal, chaired a joint meeting of the Board of Trade and Council of Trade Development & Promotion on June 6 and held interactions with state industry and agriculture ministers, industrialists, export promotion councils and representatives of the central economic and infrastructure ministries to boost exports and domestic manufacturing and to reduce trade deficit. Key decisions taken during the meetings include detailed examination of the top 50 tariff lines, which constitute 60 per cent of India’s imports, for possible ways to reduce import dependence and developing product-specific clusters for 50 sectors with high manufacturing potential, according to an official press release. (DS)

Source: Fibre2Fashion

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Australia urges India to play a greater role in shaping regional trade order

Australia on Tuesday urged India to play a greater role in shaping the economic architecture of the Indo-Pacific region and help successfully conclude talks to forge a new regional trade bloc, the Regional Comprehensive Economic Partnership (RCEP). India and Australia have developed mutual trust over the past decade to work together on strategic issues in the Indo-Pacific region, Australia’s high commissioner to India Harinder Sidhu said on Tuesday. The two countries could now work together to strengthen the economic order in the region, Sidhu told the Indian Association of Foreign Affairs Correspondents. If India plays its part to successfully conclude the RCEP, it would help New Delhi integrate into the economic landscape of the Indo-Pacific, the high commissioner said. “India is a leader and an Asian and Indo-Pacific powerhouse. So, for that reason, I think it’s important that India plays a greater role in shaping the regional trading order," Sidhu said.  “Successfully concluding the RCEP, which includes India, China, and Asean (Association of Southeast Asian Nations) countries, as well as Australia and New Zealand, will help shape the regional rules and the norms governing trade," she said. India has been going slow on RCEP negotiations as it is wary of China’s presence in the grouping, with which New Delhi already has a massive $60 billion trade deficit. Indian industry apprehends greater market access to China could harm key manufacturing sectors such as steel and textiles. It has also been worried about giving greater market access to other non-free trade area partners, including Australia and New Zealand. Another area in which Australia and India could work together was financing the infrastructure in the Indo-Pacific region, Sidhu said. The high commissioner did not mention any country by name, but the statement comes against the backdrop of China unveiling its ambitious Belt and Road Initiative, which looks to connect Asia, Europe and Africa through a series of roads, ports and railway lines. Australia has announced plans to help investment in the Pacific, South-East Asia and South Asia, Sidhu said. This is the result of India and Australia “shaking off our own hesitations of history" and working together in far more forums at the Indo-Pacific level, she added. The quadrilateral grouping of the US, Australia, India, and Japan, known as the “Quad", was a manifestation of this cooperation, she said, pointing to other formats of dialogue such as the Australia-India-Japan talks and the Australia-India-Indonesia talks, besides larger fora such as the East Asia Summit. On the bilateral front, the “tempo" of activity was growing with both countries having concluded a major naval exercise recently, which was the “largest and most complex of its kind". Activities in the defence arena had shown a fourfold rise from 11 events in 2014 to 38 in 2018. One area that was performing below potential though was bilateral trade, Sidhu said. Australian exports to India had doubled between 2013 and 2018 from 11 billion Australian dollars to 22 billion Australian dollars. India is now Australia’s third largest export market after China and the US, she said, but added that despite all these numbers “our two-way trade with India is the same as our two-way trade with New Zealand". “So, that gives you a sense of the scope for expansion." The Australian government had commissioned an India Economic Strategy, which looks at ways to improve trade. It had set up a trade target of $100 billion by 2035, Sidhu said. India, too, on its part, had commissioned an Australia Economic Strategy and this was a welcome move, given that a strong economic relationship forms the “glue" in any relationship, Sidhu said.

Source: Live Mint

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IL&FS case: After auditors, credit rating agencies face govt heat

MCA may invoke Section 447 of Companies Act to slap penalty and suspend some of the rating agencies.The Ministry of Corporate Affairs (MCA) is planning to act tough against some of the top credit rating agencies in relation to the IL&FS case, according to sources in the know. These agencies had rated the debt instruments of IL&FS Financial Services (IFIN), which went bust. The ministry may invoke Section 447 of the Companies Act for imposing penalty and suspending these firms and their executives, one of the sources said. The development follows the government moving the National Company Law Tribunal (NCLT) on Monday to ban the auditors of IFIN for five years over failure in ...

Source: Business Standard

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What’s India’s true growth rate? Govt stands by its estimates as former CEA questions GDP data

In the paper, Subramanian, who quit as the CEA in June last year, seeks to estimate the Indian economy’s growth by posing some basic questions: how often are people buying cars? Are companies and individuals borrowing more or less during a given period? The government on June 11, 2019, stoutly defended India’s official growth estimates, strongly arguing that these were backed by a statistically rigorous method that both the International Monetary Fund (IMF) and the World Bank has validated. “GDP (gross domestic product) growth projections brought out by various national and international agencies are broadly in line with the estimates released by MOSPI (Ministry of Statistics and Programme Implementation). The GDP estimates released by the Ministry are based on accepted procedures, methodologies and available data and objectively measure the contribution of various sectors in the economy,” MOSPI said in a late evening statement. MOSPI’s statement came after former chief economic adviser (CEA) Arvind Subramanian in a new research paper suggested that India’s “real” or inflation-adjusted GDP may have grown at an average 4.5 percent in the years between 2011-12 and 2016-17, instead of about the 7 percent average as shown by official data. These six years are evenly spread between two regimes, with three years each falling between the Manmohan Singh-led UPA 2 government (2009-14) and the Narendra Modi-led NDA 2 government (2014-19). The Indian economy probably grew at an annual average of 4.5 percent during 2011-12 to 2016-17, and not sizzled at 7 percent as the government’s number crunchers had put out. “The results in the paper suggest that the heady narrative of a guns-blazing India must cede to a more realistic one of an economy growing solidly but not spectacularly,” he said in the paper. Hours later, the government, rebutted Subramanian’s claims stating that “the methodology of compilation of macroaggregates has been discussed in detail by the Advisory Committee on National Accounts Statistics (ACNAS) comprising experts from academia, National Statistical Commission, Indian Statistical Institute (ISI), Reserve Bank of India (RBI), Ministries of Finance, Corporate Affairs, Agriculture, NITI Aayog and selected State Governments." The decisions taken by these committees are unanimous and collective after taking into consideration the data availability and methodological aspects before recommending the most appropriate approach, it said. Subramanian’s paper added a fresh round to an ongoing controversy surrounding India’s national income calculations. Gross Domestic Product or GDP, by definition, represents the total value of all the final goods and services that are produced within a country's borders within a particular time period, typically a year or a quarter. It can be calculated by using three methods—the supply or production method, the income method and the demand or expenditure method and by definition the value of GDP should be identical, irrespective of the method used. This is because one person’s or entity’s income is another person’s spending on expenditure. For instance, what households spend in buying provisions at a local store is the shop owner’s income. Likewise, an employee’s salary is what his/her company spends. In the final national income calculations, the income of all individuals will be equivalent to the spending of all. The base year of the national accounts is chosen to enable inter-year comparisons. It gives an idea about changes in purchasing power and allows calculation of inflation-adjusted growth estimates. The new series has changed the base to 2011-12 from 2004-05. Every national accounts dataset gives GDP calculations for two years: 2011-12 and the current year. A decision to change the GDP calculation method was taken during the UPA-II years. The NDA government launched the first set of data, giving out levels of GDP and growth rates from 2011-12. The key points of dispute, including those raised by Subramanian, have arisen only after the new method was adopted effective from 2011-12. In the previous method, the index of industrial production (IIP) or factory output was the main measure to calculate manufacturing and trading activity. The limitation was, that this only counted volume and did not give an idea about value. For instance, in the old method, the number of motorcycles produced in the plant was counted, as opposed to the motorcycles’ value that the plant rolled out. In the communication sector, telecom subscriber base was used in the old sector as compared to minutes of usage in the new formula. Previously, the first GDP estimates were based on IIP data. It was updated every two years factoring in data from the Annual Survey of Industries (ASI). ASI only gave out goods’ value produced by firms registered under the Factories Act. Now, the corporate affairs ministry’s MCA 21 records a wide-ranging compilation of balance sheet data of lakhs of firms. The use of MCA 21 records for national income calculations have brought to light a segment of organised activity, which was earlier, for the most part, invisible. This is the lower end of the corporate segment. These are companies not listed on stock exchanges and virtually left out of national income calculations. The new method adopts a gross value added (GVA)-based approach as compared to a pre-dominantly volume-based calculation previously. GVA, which is GDP minus taxes, serves as a more realistic proxy to measure changes in the aggregate value of goods and services produced in the economy. Earlier, the IIP served as the primary metric to gauge manufacturing and trading activity. The problem was, it only counted the number of units produced and did not distinguish, between, say the value of a luxury car and an entry-level hatchback. It is possible that factory output would have remained stagnant over a period of time, but its value would have multiplied. One can keep selling the same number of cars, but keep improving the quality so the value goes up. An even better example than cars is computers. A purely output-based method would not be able to capture the innovations and the value additions in such products and industrial activity. The GVA method also factors in value addition and economic action carried out by activities such as marketing. Such activity can be of very high value in case of large FMCG companies. Subramanian’s main question is about the correlation between say growth in bank credit and car sales weakening considerably after 2011-12, raising questions about the statistical robustness of the new model. Simply put, Subramanian’s argument raises a basic question: How come India is still growing at 7 percent though bank credit has been growing only at 9 percent since 2014? Subramanian’s view about a weak correlation among proxy indicators such as car sales and bank borrowing after 2011-12, however, runs contrary to some other experts’ opinion who point out evidence to the opposite. Such an argument assumes that India’s growth is highly credit-dependent, almost one for one. In an article in Mint, Apoorva Javadekar, an assistant professor of finance at the Indian School of Business (ISB), has contended such an argument was deeply flawed for several reasons. Javadekar has produced evidence where bank credit and GDP growth diverged during multiple periods even using the older GDP calculation method. “Between the fourth quarter of 2008 and the corresponding quarter of 2009, bank credit growth tumbled from 26 percent year-on-year to 11 percent, but GDP growth rose from around 3 percent in the first quarter of 2009 to 11 percent in the same quarter of 2010,” Javadekar pointed out. Importantly, the correlation between bank credit and corporate and individual finance has been weakening also because of the rise in the shadow banks of non-banking finance companies (NBFCs). According to Javadekar, more than 50 percent of new corporate funding is coming from non-bank sources—either equity, non-banking financial companies (NBFCs) or foreign debt. “Hence, one cannot expect a very strong link between bank lending and corporate investment. The bottom line is that bank credit is not a great variable to smell the level of GDP growth,” he said in the article. The government has responded to Subramanian’s paper by saying that as with any international standard, the data requirements are immense and diverse economies like India take time to evolve the relevant data sources before they can be fully aligned with the System of National Accounts 2008 (SNA) requirements. SNA is the latest version of the international statistical standard for the national accounts, adopted by the United Nations. “In absence of data, alternate proxy sources or statistical surveys are used to estimate the contribution of various sectors to the GDP/GVA,” the MOSPI statement said. The SNA also prescribes that the base year of the estimates may be revised at periodic intervals so that changes in the economic environment, advances in methodological research and the needs of users are appropriately captured. Base year revisions, MOSPI said, not only use latest data from censuses and surveys, but they also incorporate information from administrative data that have become more robust over time.

Source: Money Control

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Gail moves appellate court to challenge Alok Industries resolution plan

Gail has opposed the resolution plan because it did not consider the government-owned gas and petrochemical company’s claims. A joint resolution plan submitted by JM Financial NSE 0.45 % Asset Reconstruction Co Ltd and Reliance Industries NSE 0.76 % to take over distressed textiles company Alok Industries NSE -3.95 % has hit a roadblock after Gail NSE -0.39 % India, an operational creditor to Alok, challenged the plan before an appellate court. In a petition filed before the National Company Law Appellate Tribunal (NCLAT) in Delhi on May 27, Gail has opposed the resolution plan because it did not consider the government-owned gas and petrochemical company’s claims, people familiar with the development said. The appellate tribunal will hear the matter on July 16. The development is likely to further delay the resolution plan for the Mumbai-based fully integrated textile company that was in the Reserve Bank of India’s first list of 12 large corporate debtors to be referred for insolvency proceedings, released in 2017. “Gail was not in the picture when the resolution plan was finalised,” a banker involved in the process said. “It came in late and has filed a petition to be considered. It has claimed outstanding dues of Rs 506 crore, but the total amount that operational creditors got was just Rs 4.3 crore in the approved plan so it remains to be seen whether Gail gets anything.” In March, National Company Law Tribunal (NCLT), Ahmedabad had approved the sole JMRIL joint bid. The bid amount was Rs 5,000 crore, just above the Rs 4,500 crore liquidation value of Alok. The company owes lenders a total of Rs 30,000 crore, which means they are taking a haircut of a whopping 83%. State-run GAIL India has argued that while submitting the revival plan the resolution applicant didn’t give equal weightage to the operational creditors. Bankers however said the amount of recovery is too small to consider anything for non-financial creditors. “The resolution plan submitted by the resolution applicant (JM Financial-RIL) is totally silent towards the operational creditors and that is against the spirit of the law,” said one of the persons privy to the development. “Gail has challenged the resolution plan, approved by the National Company Law Tribunal.” Gail has made Ajay Joshi, resolution professional (RP) of Alok Industries, as one of the respondents of the case. Joshi did not respond to messages on his mobile phone as of press time Monday. The banker quoted earlier said, “Operational creditors below Rs 3 lakh were accommodated in the plan. GAIL was a large supplier and so it wasn’t on the list.” Nishant Awana, partner at law firm NMA Law Chambers, who is advising Gail India in the matter, declined to comment since the matter is sub judice.

Source: Economic Times

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Pakistan: Rs100mn allocated for Commerce, Rs202.828mn for Textile in PSDP

The government has allocated Rs 100 million for one new scheme of the Ministry of Commerce and Rs. 202. 828 million for Textiles Industry Division in one on- going and two new schemes in Public Sector Development Programme (PSDP) 2019-20 for the promotion of trade and commerce in the country. According to the details, the government has allocated Rs 100 million for re modeling and expansion of Karachi Expo Centre, Component -1 to develop and promote the local industry and to attract the foreign and local investment in the country. The total estimated cost of the Karachi Expo Centre, Component -1 Rs 2677.430 million. Meanwhile, Rs 2.828 million has been earmarked for Faisalabad garments city training Centre, Faisalabad and also Rs 100 million for 1000 Industrial stitching Units (All over Pakistan) in two on-going schemes in PSDP-2019-20. The government has also allocated Rs. 202.828 million in PSDP 2019-20 for the establishment of Faisalabad garments city (Phase-II) Faisalabad in one new scheme.

Source: Business Recorder

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Will respond firmly if US raises trade tension: Chinese foreign ministry

On Monday, Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with Xi in Osaka. China will respond firmly if the United States insists on escalating trade tensions, the foreign ministry said on Tuesday after US President Donald Trump said further tariffs were ready to kick in if no deal was reached at a G20 summit this month. Trump has repeatedly said he is getting ready to meet Chinese President Xi Jinping at the Osaka summit at the end of June, but China has not confirmed it. Trump said last week he would decide after the meeting of the leaders of the world's largest economies whether to carry out a threat to impose tariffs on at least $300 billion in Chinese goods. On Monday, Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he cannot make progress in trade talks with Xi in Osaka. Chinese Foreign Ministry spokesman Geng Shuang again would not be drawn on confirming a Xi-Trump meeting at G20, saying information would be released once it was available to the ministry. "China does not want to fight a trade war, but we are not afraid of fighting a trade war," he said, adding China's door was open to talks based on equality. "If the United States only wants to escalate trade frictions, we will resolutely respond and fight to the end." U.S. Commerce Secretary Wilbur Ross on Tuesday downplayed this month's summit in Japan, saying it would not be "a place where anyone makes a definitive deal." "At the G20, at most it will be ... some sort of agreement on a path forward, but certainly it's not going to be a definite agreement," Ross told CNBC in a television interview. Tensions between Washington and Beijing rose sharply in May after the Trump administration accused China of having reneged on promises to make structural economic changes during months of trade talks. The United States is seeking sweeping changes, including an end to forced technology transfers and theft of US trade secrets. It also wants curbs on subsidies for Chinese state-owned enterprises and better access for U.S. firms in Chinese markets. On May 10, Trump raised tariffs on $200 billion of Chinese goods up to 25% and took steps to levy duties on an additional $300 billion in Chinese imports. Beijing retaliated with tariff hikes on a revised list of $60 billion in US goods. The US government has also angered China by putting Huawei Technologies Co Ltd on a blacklist that effectively bans US companies from doing business with the Chinese firm, the world's biggest telecoms equipment maker. Investors worry China will retaliate by putting US companies on a blacklist or banning exports to the United States of rare earth metals, which are used in products such as memory chips, rechargeable batteries and cell phones. President Donald Trump said he’s personally holding up a trade deal with China, and that he won’t complete the agreement unless Beijing returns to terms negotiated earlier in the year. “It’s me right now that’s holding up the deal,” Trump said. “And we’re going to either do a great deal with China or we’re not going to do a deal at all.” Last month, the US accused China of reneging on provisions of a tentative trade deal, bringing talks to a halt. “We had a deal with China and unless they go back to that deal I have no interest,” Trump said. Trump’s comments came a day after he threatened to raise tariffs on China if President Xi Jinping doesn’t meet with him at the upcoming Group of 20 summit in Japan.

Source: Reuters

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Apparel buying houses asked to get registered with DoT

The government has recently directed all the buying houses in the garment and textile sector in Bangladesh to get registered with the Department of Textiles to run business in the country. In a gazette notification issued on May 28, the textiles and jute ministry said that as per the section 14 of Textile Act 2018, all the buying houses must have to be registered with the DoT within 60 days of the issuance of the notification. The ministry also said that if any buying house sought time extension with valid reasons, the registrar could allow 60 more days. If any buying house fails to obtain registration on time, the government will take legal action against the company as per law. According to the Textile Act 2018, the Department of Textiles is the sponsoring authority of all textile and clothing industries. The buying houses will have to get registered with the department for running their business in the country. Earlier, on April 1, the ministry issued a gazette notification detailing what would be the procedure for the registration of buying houses with the DoT. It said that the buying houses would have to file application with the DoT with the documents of updated trade licence, income tax certificate, certificate of incorporation as limited company, estimated yearly turnover and bank solvency certificate. The ministry has set Tk 20,000 as fee for the registration and it would have to be paid through bank draft or pay order. Subject to receiving documents and if necessary, inspection report, the registrar would give registration within 60 days of submitting application and the validity of the registration certificate would be three years. ‘All the buying houses with local and foreign investment and liaison offices of buyers and brands will have to come under registration and it is a good initiative to bring the sector under regulation,’ Bangladesh Garment Buying House Association president Kazi Iftequer Hossain told New Age on Monday. Many of the buying houses are running their business in the country unregulated and the government does not know how many companies are working in the sector, he said. ‘There are some foreign buyers who work with Bangladeshi readymade garment factories through their liaison offices and if they use any unfair means, we cannot take any action against them as they remain outside the purview of regulations,’ Iftequer said. He said that all the companies who were working in the sector would have to comply with the laws of land and the government initiative to bring buying houses under registration would ensure accountability of the companies. According to the Bangladesh Garment Buying House Association, there are more than 1,200 buying houses operating in the country. Of them, around 400 are members of the association. Since April 1 this year, 10 buying houses got registered with the DoT.

Source: New Age Business

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Old bread becomes new textiles

Is it possible to create textiles from old bread? Akram Zamani, senior lecturer in resource recycling at the University of Borås, wants to find out. And she has already come a long way. "We have seen that much of the food waste from grocery storesis from bread and therefore we wanted to see how we could turn it into a new product," says Akram Zamani. Filamentous fungi will be grown on bread waste in bioreactors, and will then be used in two different processes to create yarn and to produce nonwoven textiles (see fact box). "When the bread has become a biomass of fungi, we remove the protein which in turn can be used as food or animal feed. We use the cell wall fibres that remain of the fungi partly to spin a yarn, and partly to create nonwoven fabrics." "We have done a large part of the cultivation already, and it has worked well, so now we are working on a wet spinning process to create yarn, and test different methods to improve the yarn's properties," she says. It is hoped that the fungus will be able to be transformed and used for clothing, medical applications, or furniture textiles. During the first two years, the product will be made on a smaller scale, in order to be scaled up during the third and fourth years.

Unique research

"There is no previous research on this; therefore it is difficult to know what to expect," says Akram Zamani and continues: "We get the bread from a local grocery store, and we are able to collect as much as we need, which gives us the opportunity to test different things and make sure it becomes a good product."

Source: Physics.org

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Tintex Textiles joins United Nations Global Compact

Sharing the responsibility to achieve a better world, Tintex Textiles has joined the United Nations Global Compact initiative. By sharing common conviction with thousands of like-minded companies Tintex – as a business reality constantly striving for a responsible change in textiles – is concretely contributing to a more stable and inclusive global market. The United Nations Global Compact initiative is a voluntary leadership platform for the development, implementation and disclosure of responsible business practices. It is a real demonstration of the 'Naturally Advanced' ongoing commitment to responsible business action. Expertly controlled processing, and advanced dyeing and finishing solutions drive material innovation to create responsible supply chains to transform fashion systems. “Being part of the UN Global Compact means to publically commit with all the principles that are the basis of our business," Ana Silva Tavares, head of sustainability. Tintex's department of sustainability optimises fashion solutions that not only provide high performance nature based textiles, but enable Tintex to rise as a global leader striving towards superior responsible fashion systems that are transparent and fully traceable throughout the supply chain. "We strongly believe that transparency and traceability are paramount in today’s business landscape, indeed, we have established a framework for the entire complex supply chain, products, processes and suppliers. To achieve qualitatively better and less impactful results is crucial to implement a structured strategical plan that foresees innovative approach, smart sourcing and ongoing research and development continuous experimentation, shared and interconnected internal actions and the ability to move and to react faster to the market needs," Tintex said in a press release. “Working and challenging ourselves every day we get to know that a real change can only start from a mindset change – which is clearly the most difficult thing to do for a company but definitely the most important for a long-term success," continued Tavares.

Source: Fibre2Fashion

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