A call centre to address the doubts/queries/questions of exporters and importers has been inaugurated by Director General of Foreign Trade, Shri Alok Vardhan Chaturvedi on his visit to Mumbai today. General information about foreign trade policy and international trade also can be obtained via the call centre. The public can reach this call centre at the numbers 022-20820961, 022-20820962, 022-20820963 and 022-20820927, from 10:00 am to 5:30 pm on all working days. A specially trained dedicated staff is looking after the call centre. The call centre has been set up by the Mumbai office of Directorate General of Foreign Trade, Ministry of Commerce & Industry. During his visit to the office of Additional DGFT, Mumbai, Shri Chaturvedi reviewed the work and chaired a meeting with Regional Chairmen and Directors of several Export Promotion Councils, wherein several issues faced by the exporters-importers were discussed. Shri K L Dhingra, Regional Chairman EEPC (Engineering Export Promotion Council); Shri Ajay Kadakia of CHEMEXCIL (Chemicals Export Promotion Council) and Shri Paresh Mehta of FIEO (Federation of Indian Export Organisation) were present and shared their views. Additionally, inputs from the industry have also been sought for resolving their issues.
Source: PIB
The Ministry of Micro, Small and Medium Enterprisesis striving to increase the number of micro and small industries in the country on a sustainable basis through implementation of various schemes andprogrammes. The Ministry provides better credit facility, technology upgradation and skilling to boost the entire MSME eco-system.
Followings are the major schemes being implemented by Ministry of MSME:
(i) Prime Minister’s Employment Generation Programme (PMEGP): This is a credit-linked subsidy programme aimed at generating self-employment opportunities through establishment of micro-enterprises in the non-farm sector by helping traditional artisans and unemployed youth. The Scheme was launched during 2008-09. A total of 5.45 lakh micro enterprises have been assisted with a margin money subsidy of Rs.12074.04crore, providing employment opportunities to an estimated 45.22 lakh persons since PMEGP’s inception till 31.03.2019. An amount of Rs. 2247.10 crore has been allocated under PMEGP for financial year 2019-20 which is substantially higher with respect to allocation in earlier financial year which would further lead to increased number of units assisted and employment generation.
(ii) Scheme of Fund for Regeneration of Traditional Industries (SFURTI): It is a cluster-based scheme for development of khadi, village industries and coir clusters by providing them with improved equipments, common facilities centers, business development services, training, capacity building and design and marketing support, etc. SFURTI Scheme has been revamped in 2015. A total of 34,791 artisans have benefitted with an assistance ofRs. 143.15 crore during 2018-19.
(iii) A Scheme for Promotion of Innovation, Rural Industry and Entrepreneurship (ASPIRE): was launched on 18.3.2015 to set up a network of technology centres and to set up incubation centres to accelerate entrepreneurship and also to promote start-ups for innovation and entrepreneurship in agro-industry. Under ASPIRE, 74 Livelihood Business Incubation (LBI) centres and 11 Technology Business Incubators have been approved since inception of the scheme.
(iv) Coir Board: Ministry of MSME, through Coir Board, is also implementing various Schemes/programmes to assist entrepreneurs to set up new Micro, Small and Medium Enterprises (MSMEs) in all coconut producing states. Under Coir VikasYojna, 36,30,653 employment opportunities have been created since 2014-15 till 2018-19 in the Coir Sector.
(v) Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE): The scheme facilitates credit to the MSE units by covering collateral- -free credit facility (term loan and /or working capital) extended by eligible lending institutions to new and existing micro and small enterprises. The Scheme has extended guarantee cover to over 35 lakh enterprises leading to approx. 1 crore employment generation. During FY 2018-19, a total of 4,35,520 proposals have been approved providing guarantee to a tune of Rs. 30,168 crore.
(vi) Credit linked Capital Subsidy Scheme (CLCSS): CLCSS facilitates technology upgradation of small scale industries, including agro & rural industrial units by providing 15% upfront capital subsidy (limited to maximum of Rs.15.00 lakhs). Since inception of the scheme in 2000-01 till date, a total of 62,827 MSE units have been assisted utilizing subsidy of Rs.3888.13 crore. During 2018-19, a total of 14,155 MSE units have been assisted utilizing subsidy of Rs. 980.44 crore.
(vii) Micro & Small Enterprises-Cluster Development Programme (MSE-CDP):The Ministry of Micro, Small and Medium Enterprises (MSME), Government of India (GoI) has adopted the Cluster Development approach as a key strategy for enhancing the productivity and competitiveness as well as capacity building of Micro and Small Enterprises (MSEs) and their collectives in the country. A cluster is a group of enterprises located within an identifiable and as far as practicable, contiguous area and producing same / similar products / services. During 2018-19, 17 Common Facility Centres and 11 Infrastructure Development projects have been established. This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and Medium Enterprises in reply to a question in Rajya Sabha today.
Source: PIB
Singapore, June 24 (ANI): Thailand, the current chair of ASEAN, has urged participating countries to rapidly conclude negotiations on an agreement to the Regional Economic Comprehensive Partnership (RCEP). At a business forum in Bangkok ahead of the ASEAN Summit over the June 22nd weekend, Mr Prayut Chan-O-Cha, former junta leader and the new Prime Minister of Thailand said: "Thailand is trying to expedite the conclusion of the RCEP negotiations this year." He added that this is the agreed intention of all the leaders. At the same meeting, Philippines' Trade Secretary Mr Ramon Lopez expressed his belief that the negotiations have reached a point whereby the different negotiating parties can be persuaded to be more realistic and pragmatic. He rationalised that the on-going trade dispute between China and the US which has soured the global economic outlook should be an impetus for all to "fast-track" the RCEP deal. Almost immediately after taking office, President Trump pulled the US out of the TPP (Trans-Pacific Partnership) which was led by the US during the Obama administration. It now exists as the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) but it is less impactful on global trade compared with the TPP. With the US departure, the CPTPP involves 11 nations including Canada, Chile, Peru and Mexico, representing 7 per cent of the world's population and USD10.5 trillion or 12.5 per cent of global gross domestic product (GDP). It came into effect on December 30, 2018, 60 days after the sixth nation, Australia, ratified the agreement on 31 October 2018. The agreement requires ratification from six out of the eleven countries to come into force. The original TPP would have impacted 11 per cent of the world and USD30 trillion or 35 per cent of global GDP and took 7 years to negotiate. The US withdrawal opened the door to the China-led RCEP with the framework endorsed at the ASEAN Summit in November 2012 in Phnom Penh, Cambodia. The first round of negotiations started in May of 2013 in Brunei. RCEP is a free-trade agreement covering goods, services and investments that is being negotiated between the 10 members of ASEAN (Association of Southeast Asian Nations), India, China, Japan, South Korea, Australia and New Zealand. If completed, the RCEP will be the largest such trade agreement since the General Agreements on Tariffs and Trade (GATT) which was implemented in 1948. It will encompass 30 per cent of global GDP of USD25.6 trillion, affecting 45 per cent of the world population which contribute to 30 per cent of global income and 30 per cent of global trade. The pact is seen as vital in securing the region's continued prosperity. The is even more so with China and the US engaged in a trade war that is on the verge of being escalated even further. Although India is involved in the negotiations, it has expressed reservations for several reasons. In general, India is concerned that with RCEP in place, imports from RCEP countries may grow even faster than its exports to the bloc. New Delhi is reluctant to cut tariffs and open its markets in the face of strong opposition from it's farming as well as steel and textiles industries. The dilemma facing India is exacerbated by the fact that strategic rival China is part of the agreement. In particular, it is worried that decreasing tariffs for China would lead to Chinese goods flooding the Indian market widening their trade deficit which in 2018 stood at USD53 billion. India and China do not have an existing free trade agreement. On the other hand, India would like to see better access for its professionals to the services sector in RCEP countries included in the agreement. The RCEP was first conceived as a traditional trade pact which cuts tariffs on tradable goods whereas India's strength is in the services sector. India is the sixth largest trading partner of ASEAN having signed the India-ASEAN FTA (free trade agreement) in 2010 and bilateral trade is valued at USD80 billion, but this is seen by economists as far short of its true potential. Indeed, Singapore's Minister-in-charge of Trade Relations Mr S Iswaran who was speaking in New Delhi last week at the Singapore Symposium co-organised by the Institute of South East Asian Studies and the Confederation of Indian Industry,said that the RCEP can "bring the region together with a farsighted and high ambition agreement" and that it would be a loss if India opted out. He further added that the RCEP can unite the region and create opportunities for businesses and people. With the general elections out of the way, it remains to be seen if the Modi government will be able to look further into the horizon, overlook the short term complains from some sectors of the economy and conclude that joining this trade pact will broadly benefit India in the years to come. The RCEP is a promising vehicle that can help a reluctant India, which traditionally shies away from trade pacts, expands its markets through incorporation into a large regional trading bloc.
Source: Business Standard
Garment exports rose by nearly 14.05 per cent to $1.528 billion in May 2019 compared to $1.339 billion in the same month last year. Readymade garment (RMG) exports are picking up after a slump lasting almost two years, buoyed by the government increasing tax rebate and helping the sector with other measures. Garment exports rose by nearly 14.05 per cent to $1.528 billion in May 2019 compared to $1.339 billion in the same month last year. Experts said Indian products are costlier by 10-15 per cent, but buyers are still interested to source from the country. Exports decreased year-on-year in the last two financial years, but the industry is now expected to grow by 8-10 per cent. In 2016-17, the total garment export was worth $17.361 billion. After the introduction of GST and demonetisation, Made-in-India products became costlier and exports started declining. In 2018-19, exports dropped by 3.43 per cent in to $16.14 billion from $16.71 billion in 2017-18. Identifying issues such as low incentives and cost pressures with the industry, the government increased Rebate of State and Central Taxes and Levies (RoSCTL) by 3.2 per cent for some items and 4.5 per cent for the rest. The government's steps have helped export units, especially MSMEs, come out of downturn, said Raja M. He said in the last six months the average export growth was about 31.15 per cent over the corresponding period in 2017-18 for Tirupur. Government data shows from October 2018, exports increased by 12 per cent. “I feel that we are finally turning the corner after stagnancy or slight de-growth. The government support has gone up. Bangladesh is becoming expensive and Vietnam is showing signs of reaching the peak of its capacity,” said Rahul Mehta, president of Mumbai-based Clothing Manufacturers Association of India. China's decision to exit from textile sector, labour in Bangladesh becoming costly, and Vietnam's industry hitting a plateau have helped Indian exports. Some of the recent reforms including reduction in costs delivered by a refund of the Central and State taxes, new benefits under the Merchandise Exports from India Scheme (MEIS) and renewed 2 per cent duty drawbacks made the industry more competitive. The other advantages for India is design, value added and skill, which no other countries are close to. Mehta agrees that still Made-in-India products are costlier by 10-12 per cent, in addition to duty concessions which other competing countries enjoy to the tune of 10 per cent. "Today it is not about the cost alone, customers looking for quality and speedy delivery, if we can improve this, then we can once again emerge as strong competitor." The government has little scope to give more sops, but reforms in GST, banking and labour can help the industry. If the refunds processes are taken care, it will be great benefit for the industry, as there is a struggle for working capital at present, said Mehta.
Source: Business Standard
The RBI and commerce ministry together with tax authorities and technology experts must define the data localisation issue. Recently, the Reserve Bank of India held a discussion with several payment companies and assured them that it will look into their concerns about data localisation. There is a massive effort to stall the law on data localisation. The RBI as well as the commerce ministry has been inundated by requests by e-commerce companies to relax the localisation rules. These firms have been obfuscating the issue by saying that data localisation is not feasible, and even citing it as a trade barrier. Late last year Mastercard proposed it would delete data of Indian customers from global servers but warned that such a move would weaken “safety and security”. It questioned the Modi government’s push for RuPay and used the might of the US government to put pressure on India. Washington is backing Mastercard which has held talks with the RBI while Walmart, which has acquired e-commerce major Flipkart, has approached the commerce ministry. E-commerce firms are pushing the debate towards privacy of data and security — this could be because it is easier to convince the government about the importance of privacy and security in the West, and thereby swing decisions in its favour. On the data protection argument, e-commerce MNCs find it easier to give the impression that data is more secure in their own data centres based out of the US and Europe. Unfortunately, there are Indian companies that are distorting the debate so that it divides and confuses the policy-makers. It is hoped that RBI and commerce ministry officials do not buy this argument. The real issue is about India having sovereign right over every facet of data generated within the country. Transactions are crucial because they determine taxation. Taxation determines sovereignty of a nation state. Digital transactions will be the single largest source for taxation and innovation in the future. The shift to transaction base taxation has already happened due to the implementation of the Goods and Services Tax (GST). Transactions also define and determine markets. Markets used to be geographical hubs of economic activity. A geographical location determined its tax jurisdiction, but geographical rules do not apply in the digital world. In the digital world, the location of the data determines everything. This gap in India’s laws have been misinterpreted by the international financial services companies for years. Credit and debit card-issuing companies do not pay tax on transaction income generated in India. The switches for these transactions reside in countries that are out of reach of Indian tax authorities. This has been going on for many years which is why China created an alternative sovereign infrastructure. This is also the reason that card transactions did not take off as the cost of transaction levied by these companies was always high. It is only after India created its own public digital infrastructure that digital transactions took off. Which is why the Unified Payments Interface (UPI) is so important as an infrastructure as it reduces dependence on payment infrastructure based outside the country. Moreover, if the data for the transaction does not reside in India then it is easy for the entity to deny taxation on it. There are several non-digital transactions where jurisdiction of the transactions has been used to avoid taxes. Hence the jurisdiction of not just large transactions but even small transactions is important. In the case of e-commerce, it is clear that almost every consumer in the future will do transaction on a platform instead of a physical store. This would effectively mean that the largest transactions in the economy may not happen physically in India if the data is not localised here. This has repercussion on the trade deficit front and also on how companies importing will be treated. The laxity of regulatory bodies and their inability to understand transactions as markets has had its problems. The Singapore Stock Exchange created derivative instruments based on Indian markets. This was nothing but data arbitrage and financial innovation, and it happened because the regulators did not ensure the localisation and ownership of data. Future financial innovation will be based on data and products will be built on it. The ownership and location data cannot be handed over to transnational corporations. This has repercussions on the banking and fin tech sector growth and ownership. Crucial issues such as permanent establishment will be determined by data localisation. Application of every other law — on royalty payment, profit repatriation — will be dependent on the recognition of location. Location for digital firms will be determined by not registration of the company but by data. Indian industry has been facing an onslaught from cheap Chinese suppliers using global supply chains via e-commerce. It is not possible to track these as imports as most of these transactions between the vendor and e-commerce platform happen outside the country in Singapore. This has led to the rise of Chinese e-commerce companies supplying directly into India without setting up a company, all on the basis of an app. Transactions worth billions of dollars have already taken place destroying jobs in small and medium sectors such as garments, manufacturing, textiles and others. The only way that the full extent of the import volume on these products can be gauged is if there is localisation and disclosure of transaction data. Data will only be disclosed if it is localised in India. Otherwise, like social media giants who have been thumbing their noses at Indian regulators, request for data from e-commerce or other transaction platforms will also be ignored. This is not an issue that should be addressed in isolation by the RBI or the commerce ministry. There is a need for the tax authorities and technology experts to be involved in determining India’s approach on this issue.
Source: Money Control
US Secretary of State Mike Pompeo will discuss ways to strengthen strategic and trade relationship with India in a series of meetings lined up with Prime Minister Narendra Modi, Minister of External Affairs S Jaishankar and National Security Advisor Ajit Doval, in his three-day visit beginning Tuesday. “Pompeo is scheduled to have three bilaterals, one each with PM Modi, Jaishankar and Doval. The meetings will focus on addressing current irritants in Indo-US relationships including trade issues and India’s relationship with Iran and Russia, so that bilateral ties can be further strengthened,” an official told BusinessLine. Pompeo will also deliver an address at US Embassy on Wednesday. India-US trade ties are strained at the moment with the Trump regime deciding earlier this month to withdraw the Generalised System of Preferences scheme for exporters offering duty-free entry to over 3,000 Indian items. Two weeks later, India decided to finally implement the retaliatory tariffs on 28 items imported from the US as a quid pro quo for the unilateral tariffs imposed by the US on Indian steel and aluminium last year. To add to the tension, the US announced its plans to tighten H1-B visa rules further and while the State Department clarified that it is not targeted against any specific country, there is a lot of apprehension amongst the Indian IT industry about it. US Commerce Secretary Wilbur Ross recently described India as a high-tariff market and urged the Modi government to carry out reforms that will open up the Indian economy and market. The US Commerce Department has been specifically making a case for lowering of restrictions on import of dairy products and loosening price control on medical devices. “All the unresolved trade issues will definitely be discussed by the two sides as bilateral relations can’t improve without addressing these problems,” the official said. The US is especially interested in improving ties with India as its relationship with China has been worsening and it wants New Delhi not to warm up to its neighbour, the official added. Strategic issues, which have a bearing not only on India’s diplomatic ties but also affect the country’s economy, such as its relationship with Iran and Russia are also likely to be discussed in details. “India has so far gone by US sanctions against Iran and has stopped purchasing oil from the country. But, in the absence of equally viable alternatives, it will hurt India to continue ignoring Iran. This matter is likely to be discussed by Pompeo and Jaishankar. Pompeo is also expected to try and persuade India to stop dealing with Russia and abandon the deal to purchase the S-400 missiles as well,” the official said.
Source:The Hindu Business Line
ET visited eight industrial hubs across India, spanning several sectors, to find out what businesses want. Nirmala Sitharaman’s first budget could well be bold, reformist and decisive. First-time finance ministers have rarely had her luxury: the political vantage of a stable majority government that has returned with a mammoth mandate. So, there’s little chance that when Sitharaman rises to present the budget on July 5, it will be a populist one. She might make allowance for a few doles of gratitude to micro industries, farmers, defence personnel and certain geographies that helped better the ruling party’s victory from good to grand. Apart from that, it’s likely to be a prudent balancing act. The main challenge for Sitharaman is time, or rather the lack of it. She has had about three weeks from the time she took over as FM to the customary halwa ceremony on Saturday to mark the printing of budget documents. She lost no time in between in calling for crowdsourced ideas through social and conventional media — a first. ET Magazine visited eight industrial hubs across the country, spanning several sectors, to figure out the wish lists of businesses and to take stock of their concerns, even those not strictly pertaining to the budget. We travelled to the bicycle town, Ludhiana, in the North and the knitwear capital, Tiruppur, in the South, to diamond city Surat in the West and to tea hub Darjeeling in the East. We also went to Andhra Pradesh’s steel city Visakhapatnam, Uttar Pradesh’s labour-intensive brass city Moradabad, Uttarakhand’s only major industrial town, Rudrapur, and Madhya Pradesh’s mini-Mumbai, Indore. We received wide-ranging inputs. A greater thrust on infrastructure and removing the bottlenecks in GST, even though the latter is not exactly in the budget’s domain, seem to be pan-Indian wishes. Others are specific to regions or sectors. Darjeeling tea producers want an anti-dumping duty on tea imports from Nepal. The Ludhiana bicycle cluster is awaiting a big financial booster. Vizag Steel expects to do better business if Sitharaman takes a generous approach to infrastructure, real estate and automobile. And what do the 4,000-plus namkeen factories of Indore want from the FM? Steel Dreams- Visakhapatnam The steel city of Andhra Pradesh expects an infrastructure and logistics push from the Union budget. By Shantanu Nandan Sharma The massive Sardar Patel statue in Gujarat shares something in common with the Kudankulam Nuclear Power Plant in Tamil Nadu — the sinews of both have been strengthened by steel from Visakhapatnam Steel Plant, also called Vizag Steel, run by a Navratna company, Rashtriya Ispat Nigam Limited (RINL). Other landmarks, including the Tarapur Atomic Power Station, Mumbai’s Bandra-Worli Sea Link and the Yamuna Expressway in Uttar Pradesh, have also used steel produced in this coastal city of Andhra Pradesh. Visakhapatnam, according to the 2011 Census, has a population of 17.2 lakh, with one-fifth of them directly or indirectly dependent on the steel industry. No wonder the financial capital of Andhra Pradesh is now better known as steel city. Other major industries include shipping, petrochemicals and pharmaceuticals. Home to one of India’s busiest cargo ports, Visakhapatnam is also the headquarters of the Eastern Naval Command. ET Magazine interviewed half a dozen senior executives and workers in the city’s steel and shipping sectors on what they expect from the Union budget to be presented by Finance Minister Nirmala Sitharaman on July 5. Their demands are largely a mix of direct budget benefits and sops to other industries which, in turn, will help the steel and shipping industries grow. “The budget must consider incometax exemption for setting up container freight stations, logistics parks et al. A bigger thrust on ease of doing business is the need of the hour,” says G Sambasiva Rao, managing director of Sravan Shipping Services, a city-based company with a turnover of Rs 185 crore (2018-19). He then lists other pressing needs which may not necessarily figure in Sitharaman’s first budget. For example, Rao insists that the arterial road from the port to the industrial park should be decongested by building 40-60-ftwide service roads. Other demands include fine-tuning of the goods and services tax (GST) and some kind of protection from being regularly harassed by income-tax officials. Rao is also president of the Andhra Pradesh Chambers of Commerce and Industry Federation. For the steel industry, the recent string of problems began with China, Japan and South Korea dumping excess steel in India after the US raised import tariff. “The budget must consider income tax exemption for setting up container freight stations, logistics parks et al. A bigger thrust on ease of doing business is the need of the hour” G Sambasiva Rao, 59, MD, Sravan Shipping Services. The concerns are understandable, as imposition of higher import duties on steel may not be possible once India signs the Regional Comprehensive Economic Partnership (RCEP) — a free trade agreement likely to be concluded later this year between the 10 ASEAN nations plus India, China, Japan, South Korea, Australia and New Zealand. The steel industry wants to be kept out of the purview of the forthcoming trade pact. From the budget, the sector is hoping only indirect sops. For example, if Sitharaman decides to extend some incentives to infrastructure, real estate and automobile sectors, the demand for steel will instantly grow. Vizag Steel which produces 5 million tonnes (MT) of saleable steel annually (2018-19), plans to be a 20 MT plant by 2032-33. India presently produces just over 100 MT of steel as against China’s 800 MT. While the company’s target is ambitious, it needs to woo new clients or receive more work from its existing customers such as Larsen and Toubro, Siemens, AFCONS Infrastructure, Tata Motors and Ashok Leyland. That’s why the steel sector will be closely watching the budget. By October, the Vizag Steel will begin a new plant in Uttar Pradesh's Lalganj, near Rae Bareli, which is expected to produce 100,000 train wheels annually. It was recently visited by representatives of South Korean majors Posco and Hyundai Steel, giving rise to speculation that they may invest in the expansion of the plant through a public-private partnership mode. Now, Vizag Steel is sitting on a mammoth 8,100 hectare land bank. "Our plant needs to have its own iron mines. That will minimise production cost and increase profitability. Also, the Centre must give its nod to fill 4,500 existing vacancies," says J Ayodhya Ramu, a trade union leader at Vizag Steel. Population: 17,28,128 (2011 Census) Major Industries: Steel, shipping, petrochemicals Budget Expectations: Steel industry expects budget sops for infrastructure and auto, which will push demand for steel Announcement of the Chennai-Kolkata dedicated rail freight corridor passing through the steel city Surat: Diamond out of rough A year and a half after the Nirav Modi scam cast a shadow, Surat’s diamond industry wants banks to ease lending norms and the government to lower taxes By G Seetharaman Just as we begin talking to Sanjay Chheta, partner of Amrut Gems, about the processing of diamonds, he asks for the blinds in the room to be rolled up. Across a glass partition, we see at least two-dozen young men looking at three-dimensional models of rough diamonds on desktop screens, deciding how these precious stones should be cut. On the floors below, the gems are laser-cut on the basis of these designs and then polished, either manually or with a machine. These young men are among the 450 workers in this unit, which looks like a residential building from outside, owned by Amrut Gems, a diamond processing company. This is one of 7,000 such units in Surat, a south Gujarat city synonymous with diamonds and textiles. Around 90% of the world’s rough diamonds are said to be cut and polished in Surat. Diamond exports from India totalled $23.8 billion or Rs 1.7 lakh crore, in 2018-19. Surat, Gujarat Population: 44,66,826 (2011 Census) Major Industries: Diamond cutting and polishing, textiles Budget Expectations: Reduce GST on job work on diamonds from 5% to 1.5-2% Find ways to increase bank lending to diamond units. There are around 8 lakh people working in diamond companies in Surat, where a diamond ex-change is being built to rival the Bharat Diamond Bourse in Mumbai. The Surat exchange will have a constructed area of 6.6 million sq ft, three times the size of its Mumbai counterpart. However, ever since diamantaire Nirav Modi and his uncle Mehul Choksi of Gitanjali Gems were accused of defrauding Punjab National Bank of Rs 14,350 crore in early 2018, banks have become wary of the diamond industry. “After the scam, we decided to immediately repay 90% of our loans even though we had time. Banks have become a lot stricter in lending,” says Chheta. In January, ET reported that the State Bank of India, the largest lender to diamond companies, had set a cap of Rs 1,000 crore per borrower and imposed restrictions on companies exporting to countries other than the US and in Europe. “After the Nirav Modi scam, we decided to immediately repay 90% of our loans even though we had time. Banks have become a lot stricter in lending to diamond companies” Sanjay Chheta, 42, partner, Amrut Gems. “We don’t ask for land like other sectors and we are a non-polluting industry. The government should do something about bank lending to our industry,” says Babulal Gaudani, a former vice-president of the Surat Diamond Association (SDA). While neither the government nor the Reserve Bank of India can issue explicit directions to banks to lend to the sector, they can informally tell banks to assess the credit risk of borrowers in the industry appropriately. Besides an increase in bank lending, diamond makers are also seeking a cut in the goods and services tax (GST) on work outsourced to a third party in the making of a diamond. It’s now 5% and should be reduced to 1.5-2%, says Babubhai Gujarati, president, SDA. In 2018, the government slashed the GST rate for polished diamonds from 3% to 0.25%. Gaudani says Prime Minister Narendra Modi has a good understanding of the sector and its issues from his time as chief minister of Gujarat between 2001 and 2014. The immediate demands of the sector may not find a place in the upcoming Union budget, but Gaudani is hopeful that the government will attend to the issues sooner than later. “Diamonds are a huge foreign exchange earner for India and it’s important for the government to protect the industry,” he says. Tiruppur, Tamil Nadu: Wear, not tear The apparel sector wants a fillip to garment exports and affordable housing for its workers By Indulekha Aravind
Tiruppur, Tamil Nadu Population: 4,44,352 (2011 Census)
Major Industries: Knitwear and allied industries
Budget Expectations: Increase the Technology Upgradation Fund for textiles Low-cost housing and ESIC hospital for workers. In the garment hub of Tiruppur in Tamil Nadu, which produces more than 55% of the country’s knitwear, June is a time of middling business. The festival rush is still a few months away, when employees have to work longer hours to complete orders that have to be shipped out on time. But the first three months of 2019-20 point to a promising year — the industry is optimistic about clocking growth of over 15%, having recovered from the twin blows of demonetisation and GST. Manufacturers say the revenue target of Rs 1 lakh crore by 2022 that the cluster had set for itself looks achievable. Yet, they sound aggrieved. “The Tiruppur knitwear cluster employs nearly 6 lakh people directly, with people coming to work from as far as Assam. In today’s market scenario, the garment sector is the best bet for employment generation,” says Raja M Shanmugham, president of the Tiruppur Exporters’ Association (TEA) and founder of apparel exporter Warsaw International. “This industry can create millions of jobs but it needs to be promoted and given due attention by the government,” he says at his first-floor office in the leafy neighbourhood of Sheriff Colony. Manufacturers rue that over the years, policymakers have given the industry short shrift. A favourite quip in the city, located 50 km from Coimbatore, is that every time garment industry representatives travel to New Delhi to meet senior bureaucrats, they have to explain that Tiruppur is not the same as Tripura. The Tiruppur cluster is made up of over 20,000 micro, small and medium enterprises in knitwear and allied sectors, which clocked revenue of Rs 26,000 crore in the export market and around Rs 24,000 crore in the domestic market last year, according to TEA. To achieve its target of doubling this by 2022, manufacturers say they need more labour and, importantly, the infrastructure to support them. With at least half the workforce from outside Tamil Nadu, both industrialists and trade unions have been asking the government to provide housing for workers. “There should be proper housing for workers and their families,” says Shanmugham. “Affordable housing is a big problem. It’s something we have been demanding from the government for years,” agrees M Chandran, vice-president of the Tamil Nadu unit of the Centre of Indian Trade Unions (CITU). With countries like Bangladesh and Vietnam overtaking India in the apparel sector, thanks to their free trade agreements with the US and Europe that reduce import duty to zero, Tiruppur’s manufacturers hope that India, too, might be able to hammer out a similar trade deal that would boost its garment exports. “With wages in China increasing, Indian cotton garments are becoming more competitive again,” says CMN Muruganandan, chairman of Gomatha International. Other demands from the industry include R&D units and an ESIC (Employees’ State Insurance Corporation) hospital, which Prime Minister Narendra Modi had announced but on which work is yet to start. “We pay a huge sum as ESI every month, workers need to benefit from that,” says R Senthil Kumar, CEO of Premier Export Corporation. Workers are also seeking higher wages and crèches at units employing over 100 women. “I am happy at my workplace but factories should have crèches for women workers with small kids,” says S Tamilchelvi, a CITU member who works as a garment checker. Kumar says the government should restore the Amended Technology Upgradation Fund Scheme for textiles and the rebate on state levies, which were reduced to Rs 700 crore in the interim budget from Rs 2,300 crore for 2018-19, and to Rs 1,000 crore from Rs 2,164 crore respectively. “The tech upgradation scheme should be restored and the funds disbursed fast,” says Kumar. With India’s share of the global apparel market one-tenth of China’s and with even smaller countries like Vietnam racing ahead, the industry is keen to catch up. “We are struggling to be on a par with global competitors. The orders we are now getting are spillovers. We have to be in a position where we can grab the orders first,” says Shanmugham. Darjeeling: Reading the tea leaves Wants an anti-dumping duty on tea from Nepal, and an infrastructure overhaul to boost tourism By Sruthijith KK Namoshkar,” estate manager Shubashish Roy booms, feigning obsequiousness. “It’s a great pleasure to see you after 72 hours.” The target of his sarcasm and scorn is Arjun Chhetri, his head clerk at the Arya Tea Estate, a spectacular 120-hectare tea plantation on the misty, sun-kissed hills of Darjeeling. Chhetri, who had been absent without leave for three days, scratches his head with the affected sheepishness of the familiar headmastertruant schoolboy routine — both parties know nothing is about to change. This exchange represents a key woe in the Rs 850 crore industry that employs about 57,000 permanent workers and makes one of the world’s great teas. Work in Darjeeling’s Britishera tea plantations is not what it used to be. At Rs 176 per day (before provident fund deductions), wages are so low that more than half of the permanent workers don’t bother showing up, as they can find more remunerative work outside. West Bengal’s minimum wages don’t apply to tea plantations, where the wages are a part of the benefits, which include housing, rations of food supplies and firewood, medical facilities and myriad others stipulated by law. Managements say that the wages plus benefits mix is competitive. Workers say that the benefits exist mostly on paper. They neither receive them fully nor on time. They would rather get the state’s applicable minimum wages in cash, which would be nearly twice what they get now. “Absenteeism in the plantations is now more than 50%. We can’t find people to work in the gardens. It’s a severe crisis,” says Sandeep Mukherjee, principal advisor, Darjeeling Tea Association, whose members are plantation owners of most of the 87 tea gardens protected by the Geographical Indication tag, a trade protection for produce originating in a certain area. The area’s most influential workers’ union leader says this is just the tip of the iceberg. “If you think 50% absenteeism is bad, wait for a couple of years. If minimum wages are not implemented, it will be 100%. Nobody wants to work in the plantations under these conditions,” says Balam Tamang, a local leader of the Darjeeling Terai Dooars Plantation Labour Union, affiliated to the Gorkha Janmukti Morcha, which has been agitating for a separate Gorkhaland state carved out of the districts of North Bengal. Plantation wages are fixed through tripartite negotiations between labour unions, the state labour department and the DTA, which represents the plantation managements. DTA’s Mukherjee says managements are happy to pay the minimum wages if the benefits are taken away. But that would mean amendment of several legacy Central and state laws implemented at various times since 1852, when the first plantations were set up on these verdant hills. If labour issues have been hanging like a dark cloud over the gardens for years, the owners are alarmed by a new threat ¡X the entry of tea from Nepal. The districts of Nepal bordering Darjeeling enjoy roughly the same topography, soil and climate as the vaunted region. This means the difference in taste is discernible only to true connoisseurs. This is being seen as an existential threat. India and Nepal allow for free movement of goods. So tea produced a few kilometres away from Darjeeling can be sold in the domestic market at much lower prices because Nepal's gardens don't have the socio-economic protections for workers that India mandates. Mukherjee of DTA says the market erosion due to the interloper is 15-18%. The domestic market is one thing. For years now, the quantity of ''Darjeeling tea'' sold in India has been many times what is annually produced in Darjeeling ¡X some 9 million kilograms. What the industry is particularly upset about is the muscling in on the lucrative international market. Some 60% of the tea produced in Darjeeling is exported. When production ground to a halt in 2017, due to a threemonth shutdown as part of Gorkhaland agitations, traders overseas started promoting tea from Nepal as Himalayan Tea. This rival is already eroding their negotiating power in the export market. The DTA wants the government to impose an anti-dumping duty on tea from Nepal, along the lines of what was done with jute from Nepal in 2017, to protect domestic industry. If the tea industry exudes a sense of being under siege, Darjeeling's largest employer, the travel and tourism industry, is feeling the pinch as well. An estimated 1,00,000 people find employment in this sector. Like all of India's hill stations, Darjeeling town has become decrepit and overcrowded, with traffic jams, dangling electricity lines, overflowing sewage channels and acute water shortage. Some 600 hotels dot the town. Parking is a nightmare. Taxi hubs are overrun by touts. "The infrastructure dates back to the 1970s. Population has since exploded but the infrastructure has stayed the same. The residents of this place get municipal water for one hour in a week. Tourists are spending too much time stuck in traffic jams,'' says Suresh Periwal, MD of Clubside Tours and Travel, who has been in the business for 40 years. Periwal says that as a destination, Darjeeling and nearby areas are massively underperforming. The place gets about 5-6 lakh domestic tourists each year, but only 30,000 of them are high-spending foreign tourists. "That's less than 0.3% of the foreign tourist arrivals in India.'' He says awareness about Darjeeling is low overseas and the region has been ignored in the government's Incredible India campaign. "We have tremendous potential. But the roads need to improve and the Bagdogra airport needs to become an international airport.''Moradabad: Brass Stroke The cottage brassware industry is gasping for breath; it awaits a budget booster By Prerna Katiyar Moradabad, Uttar Pradesh Population: 8,87,871 (2011 Census) Major Industry: Brassware Budget Expectations: Lower GST; brass manufacturing hub on the city’s outskirts It is 65 degree Celsius inside the room and Arshad Ali, covered in soot, is finishing up a brass pot meant for export. He doesn’t have a face mask or gloves to shield him from the heat of the hissing furnace. Ali makes Rs 300 a day and in May, ahead of Eid, brass workers like him slogged for 20 hours a day to earn a little extra. “We can’t even afford to fall sick,” he says. Here, in the brassware sweatshops of Moradabad, most houses double up as one-room factories — families are busy melting copper, zinc and lead in coal-fired furnaces to produce the shiny alloy used to make utensils and other products. The side effects of running such mini brass factories that emit carbon monoxide and carbon dioxide are all too apparent. “Tuberculosis, asthma, cancer, cough and allergies are common among workers and their families. Children are forced to inhale the toxic fumes,” says ST Hasan, the new MP from Moradabad, who is also a doctor. He says the only solution to check these ailments is to shift the brass factories outside the city. The Uttar Pradesh government did propose to shift all such hazardous, home-based factories to the city’s outskirts. But, as of now, a new arrangement is not yet ready although existing units are being hastily shut down. “We are not opposing the shift. But where is the new facility? Do they want us to die of hunger?” asks Ashok, who runs a brass-making unit. Over 75% of Moradabad’s population depends on making brass. “Work on setting up a Special Economic Zone in Moradabad started many year ago and it was supposed to become a platform for all brassmaking units. But today, the hub is struggling to bring in companies,” Meanwhile, the brassware industry -the economic lifeline of the city - continues to decline. What has stayed constant is the health hazard. Moradabad is one of the 14 cities in India with the worst air quality, according to the Central Pollution Control Board. "We need a good melting system on the outskirts of the city to reduce pollution,"says Hasan. In the Peerzada locality, artisans are waiting outside their home-factories for electricity to return. "There are no fixed hours for power cuts. Electricity rates are also high. We have to use generators to keep the work going,"says Fahim, who runs one such brass unit. "The government should give some power subsidy for our ailing industry." Mohammed Fakir, a daily wager sitting next door, nods in agreement. The missing middle finger on his left hand narrates another story. "I lost the finger on a polishing machine. Don't we have the right to a pension or a free health checkup amid such health hazards?" he asks. Brassware is made in four stages here: moulding-casting, finishing-polishing, engraving and enamelling. But rising production cost due to expensive raw materials is forcing many to leave the profession and try menial jobs. Some blame also goes to the pollution board, says Mohammed Akhlaq, owner of Bharat Handicrafts. The board is closing down homebased units, rendering artisans jobless, he says. "The police raid our houses. Sometimes they take money; sometimes our papers." He also said margins of brass makers have become less due to intense competition, demonetisation and goods and services tax. Shahabuddin, who makes brass gate lamps, still does not understand GST. "Rafta rafta aa rahaa hai samajh (Slowly, it is making sense). What I have understood so far is that we receive input credits quite late." Agarwal of Udyog Bharati, too, has a GST grievance. "If the government spots a mistake in GST functioning, it is covered up under initial technical glitch'. But if a trader makes a mistake while filing returns under the new tax system, he is forced to pay a penalty." Ludhiana Punjab: Pedal on Growth Amid stagnant growth, bicycle manufacturers and parts makers want a plan to promote the use of cycles and sops for tech upgrade By Ishani Duttagupta Ludhiana, Punjab Population: 6,18,879 (2011 Census) Major Industries: Bicycles, garments Budget Expectations: Incentives to help bring down prices of entry-level units Reduce the 18% GST on raw materials, and 12% on finished bicycles Unlike China’s bicycle manufacturing hub Wangqingtuo, there is little on display in Ludhiana to show that the city is India’s bicycle centre, producing an estimated 1.8 crore units every year. However, the flyover on Grand Trunk Road in front of Avon Cycles, India’s second largest bicycle maker, is decorated with paintings of cyclists in lush green parks and on clean roads. The art highlights Avon’s efforts to beautify the city. It also points towards the bicycle industry’s wish list for the government. “Cycles are a mode of transport for economically weaker sections and symbolise social empowerment. And ours is a city of entrepreneurs making cycles and cycle parts, giving employment to thousands not only here but in other cities and towns also where people assemble bikes at selling points,” says SK Rai, managing director of works at Hero Cycles, India’s largest cycle company with a turnover of around Rs 2,100 crore. This is why the All India Cycle Manufacturers’ Association (AICMA), representing all large cycle companies, says it is pushing the Central government to set up a bicycle development council along the lines of similar bodies for shipping and surface transport industries. “Bicycles impact 48% of households, according to the 2011 Census — a lot more than motorised transport. We hope the Finance Ministry will unveil a national plan for the bicycle industry and provide funds to promote this short-distance travel option, as being done in many other countries,” says KB Thakur, AICMA’s secretary general. While companies are not sure whether the Union budget next month will address their concerns, the demand in Ludhiana, which is being developed as a smart city, is that there should be dedicated bicycle tracks here for the safety of riders. “Cities around the world have public bicycle sharing systems and our government should also include this in its smart city project. There are massive health and environmental benefits in promoting the use of bicycles as seen globally,” says Rai of Hero Cycles. His company has signed a deal with the Punjab government to develop a 100-acre industrial park, called Cycle Valley, near Ludhiana. “We are inviting other companies as partners for this project, including some hi-tech players from China. Central schemes to develop the infrastructure for this project will help us scale up,” says Rai. Presently, the biggest buyers of Ludhiana’s cycles are the state governments of West Bengal, Maharashtra, Karnataka, Gujarat and Tamil Nadu, where cycles are given free to school students. Even though a revision of good and services tax rates is not part of the budget, the 2,300 or so small and medium enterprises engaged in making bicycle parts in the city want the 18% tax on raw material and 12% on finished bicycles to be reduced. “We also want credit-linked capital subsidy and a technology upgradation scheme to help us take on cheap import of cycle parts from China, especially for high-end bikes,” says Inderjit Singh, president of United Cycles & Parts Manufacturers Association, and proprietor of Navyug Engineers that makes wheels parts, hubs and chain wheels. Echoing the wish list of the bicycle industry in Ludhiana, Punjab Finance Minister Manpreet Singh Badal hopes Union Finance Minister Nirmala Sitharaman addresses the issue of job creation in the city, also home to a massive garment and hosiery industry. So will incentives for the commoner’s ride find a place in Sitharaman’s first Union budget? Many in Ludhiana certainly hope so. “We have taken up the issue of creating safe and convenient infrastructure for cyclists with government many times. We are willing to fund a bicycle track in Ludhiana if the government unveils a plan” Onkar Singh Pahwa, CMD, Avon Cycles- Rishi Pahwa (L), joint MD, Avon Cycles. Indore: Making GST less taxing Indore’s entrepreneurs want a simplified GST and less red tape in setting up food factories By Malini Goyal Indore, Madhya Pradesh Population: 32,76,697 (2011 Census) Major Industries: Namkeen, textiles, pharma, automobile, agri-trading Budget Expectations: Simplify GST. Multiple slab rates and a complicated compliance system have created a nightmare Boost liquidity. Simplify licensing process for setting up food factories. With its well laid-out roads and visibly good upkeep, Indore, a tier-2 city, may make headlines for being India’s cleanest. But Madhya Pradesh’s most populated city, which is an education hub with an IIT and an IIM, is also a busy commercial and financial hub often called mini Mumbai. The city boasts multiple industrial hubs, including Pithampur and Dewas, which host manufacturing facilities of companies like Tata, Kirloskar, John Deere and Arvind Mills. It now has a smart city tag as well. Indore is known for something lip-smacking as well — street food and snacks. Anurag Bothra, secretary, Namkeen Mithai Association, says there are 4,000-plus small namkeen factories in Indore. “There were many more. But demonetisation and GST forced them to close down,” he says. Over the last decade, some of these household namkeen manufacturing units have undergone a big change. Adhering to the guidelines of the Food Safety and Standards Authority of India, a lot of investment has gone into automating the manufacturing and packaging processes. For example, in 2007-08, Bothra’s Om Namkeen introduced automatic fryers and packaging which have not only improved the production process but also increased the shelf life of its products. Not surprisingly, its turno-ver has grown five-fold to `40-odd crore. It also has contract manufacturing orders from companies like Parle, which have pushed up its material turnover to Rs 100 crore. He has two demands from the upcoming budget. “The government told us one nation, one tax. All I am asking for is one shop, one tax,”says Bothra. For example, he does not get any GST rebate on categories like kachori and samosa that are sold at his retail outlets but his namkeens get the rebate. “GST is so complicated that it has made our lives very difficult,” he adds. Not too far away, Deepak Daryani is the managing director of Asha Confectionery, a Rs 400 crore company with 1,400 employees. Starting from a humble 10 x 14 ft workshopcum-house at Nanda Nagar in 1984, he now has a sprawling factory spread over 6.2 lakh sq ft, equipped with a dental clinic and a beauty parlour for workers. “Personal hygiene of the workers is very important in our line of business. This helps us maintain it,” says Daryani, who also The factory, which is almost fully automated, churns out a range of confectionery that gets sold in markets like Uttar Pradesh and Bihar. Among his many budget wishes, the three big ones are measures to boost liquidity, simplify licencing process to set up food factories and to support employers in rolling out housing for workers. “The Pradhan Mantri Awas Yojana can easily partner with employers to offer housing to workers,” he says. Ramesh Khandelwal, who trades in sugar and dairy products, also represents over 1,000 wholesale kirana merchants as president of the Ahilya Chamber of Commerce and Industry, Indore. After demonetisation and GST, traders are still suffering from poor liquidity which has severely constrained their business. “The government has made GST so complex and compliance so difficult that businessmen, many of them not very educated, are struggling and have been reduced to being clerks. We request the government to make it simple,” he says. distributes over 4,000 sanitary pads among its 600-plus women workers.
Rudrapur, Uttarakhand: Labour Pangs Auto ancillary units say doing away with complexities in labour laws and easing of GST rates can give a spurt to growth By Prerna Katiyar Uniform and simpler labour laws are what automobile ancillary companies in Rudrapur want from the government. “Right now, multiple forms have to be filled,” says Shreekar Sinha, HR and administrative head of Endurance Technologies, which supplies auto parts to Bajaj, Hero, Honda and Yamaha. “A single comprehensive form should be made available covering all labour and other applicable laws for the convenience of the industry. Compilation should be made simpler. Like ‘one nation, one compliance’.” He welcomes the reduction of the rate of contributions under the Employees’ State Insurance Act, 1948, from 6.5% to 4%. The government had in June reduced employers’ contribution from 4.75% to 3.25% and employees’ contribution from 1.75% to 0.75%. Sinha says this would lead to ease of doing business but reiterates the need for a common compliance form under labour laws. Most business executives in this industrial hub about 280 km northeast of Delhi say the government should cut the goods and services tax (GST) on motor vehicles from 28% to 18%. “This will help in bringing down vehicle costs and lead to an increase in demand, which has been at a low in the last one year,” says an executive of Ashok Leyland on condition of anonymity as he is not authorised to speak to journalists. Ashok Leyland’s plant in the vicinity of Rudrapur had recently announced a production cut. The Hinduja Group’s flagship firm said it would close its plant in Pantnagar — an integrated axle machining and assembly facility — for six days from June 24 to adjust production as sales were down. “The auto industry is facing a slump right now,” says Gajendra Singh, HR head of Varroc Engineering, an automotive component manufacturer and supplier for Bajaj, Ashok Leyland and Tata. “Car sales are down. The cost of raw materials and overall GST on the sector must come down to spur growth.” Automobile industry representatives say a discrepancy in the GST regime has been hurting them. “While we pay input cost to our supplier, we have to assume that he has paid his dues. There is no way to check if our vendor has paid the amount to the government or not. If he hasn’t, we are made liable for this non-compliance. This must change,” says Sinha of Endurance Technologies. Rudrapur saw rapid industrial development after the State Infrastructure and Industrial Development Corporation of Uttarakhand Ltd was established in 2000. More than 400 companies — primarily in the sectors of automobiles, fast-moving consumer goods, pharmaceuticals, agriculture and textiles — have units in the region. Parle Agro, an FMCG major that claims to be the market leader in mass product glucose biscuits, says the GST on the product is a high 18%. “Parle G (the glucose biscuit brand) is a mass product. It is not a premium biscuit and is the cheapest product in the segment. 18% GST is too high. No correction has been made since the launch of the new tax regime. The tax rate has gone up by 3-4% from the pre-GST regime. It must be cut down to at least 12%,” says Sandeep Pandey, plant head of Parle Agro at Rudrapur. Referring to the operating margin of pharma companies, a representative of the industry says: “The government ought to fix a profit margin of, say, 10-20% for pharma companies. This will help cut the prices of medicines. Right now their operating margins are very high.” Ajay Tiwari, HR head of Shirdi Industries, which specialises in plywood, laminate boards. and particle boards, says the industry needs special incentives to thrive due to certain geographical factors. “Uttarakhand does not have a port. Raw materials have to be brought in from outside via road or rail. Finished goods, again, have to be transported to other states. This inflates transportation costs. There should be a transport subsidy. Similarly, electricity charges must be brought down.”
Source : Economic Times
FICCI's latest quarterly survey on Manufacturing portrays a moderation of outlook for the manufacturing sector in Q-1 (April-June 2019-20) as the percentage of respondents reporting higher production in first quarter has fallen vis-a-vis the Q-4 of 2018-19. Overall sentiments in manufacturing remains subdued as the proportion of respondents reporting higher output growth during the April-June 2019 has fallen to 41% as compared to Q-4 of 2018-19 (54%). The percentage of respondents expecting low or same production is 59% in Q-1 2019-20 which was 46% in Q-4 of 2018-19. In terms of order books, 36% of the respondents in April-June 2019 are expecting higher number of orders against 44% in January-March 2019. FICCI's latest quarterly survey assessed the sentiments of manufacturers for Q-1 (April-June 2019-20) for twelve major sectors namely automotive, capital goods, cement and ceramics, chemicals, fertilizers and pharmaceuticals, electronics & electricals, leather and footwear, medical devices, metal & metal products, paper products, textiles, textile machinery and miscellaneous. Responses have been drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over 3.5 lakh crore.
Capacity Addition & Utilization
In terms of capacity utilization, FICCI survey noted that the overall capacity utilization in manufacturing has witnessed a slight fall to 78% in Q-1 2019-20 as compared to 80% in the previous quarter. The future investment outlook is slightly subdued than that was perceived in Q-1 of 2018-19. 37% respondents reported plans for capacity additions for the next six months as compared to 40% in Q-4 of 2018-19. High raw material prices, high cost of finance, uncertainty of demand, shortage of skilled labor, high imports, requirement of technology upgradation, low domestic and global demand, excess capacities, delay in disbursements of state and central subsidies and competing countries such as Bangladesh and Vietnam enjoying lower wage cost and export benefits resulting in erosion of competitiveness of Indian exporters are some of the major constraints which are affecting expansion plans of the respondents. In most sectors covered in the survey namely Automotive, Cement and Ceramics, Leather and Footwear, Paper Products and Textiles Machinery average capacity utilization has either decreased or remained almost same in Q-1 of 2019-20 as compared to Q-4 2018-19.
Table: Current Average Capacity Utilization Levels as Reported in Survey (%)
Sector Average Capacity Utilization in Q-1 2019-20 Average Capacity Utilization in Q-4 2018-19 Average Capacity Utilization in Q-3 2018-19 Average Capacity Utilization in Q-2 2018-19Automotive 80 80 80 73Capital Goods 76 74 74 73Cement and Ceramics 80 80 60 70Chemicals, Fertilizers & Pharmaceuticals 76 77 74 82Electronics & Electricals 67 72 68 69Leather & Footwear 60 60 60 60Metals & Metal Products 76 88 74 86Paper Products 95 95 80 88Textiles 84 82 80 83Textiles Machinery 60 60 60 60
Inventories
86% of the respondents are expecting either more or same level of inventory in April-June 2019, which is substantially higher than 69% as was the case in Q-1 of 2018-19. This has been largely due to subdued domestic and export demand.
Exports
The outlook for exports is moderate as per the Survey as 34% of the participants are expecting a rise in exports for Q-1 2019-20 and 27% are expecting exports to continue to be on same path as that of same quarter last year. However, exchange rate fluctuations have not led to any significant change in exports as 79% of the respondents reported that the exports were not affected much by rupee fluctuation. Thereby, emphasizing that there were other global factors that are restricting the growth of our exports.
Hiring
Hiring outlook for the sector shows a bleak picture as 65% of the respondents mentioned that they are not likely to hire additional workforce in the next three months. This shows a slight improvement from the hiring scenario in the previous quarter Q-4 of 2018-19, where 70% of the respondents were not in favor of hiring additional workforce.
Interest Rate
Average interest rate paid by the manufacturers has slightly decreased to 9.9% p.a. as against 10.3% p.a. during last quarter, but the highest rate remains as high as 14%. The recent cut in repo rate by RBI should come as a relief for the industry if banks pass it on and it expects more reduction in the rates in coming months to drive investments.
Sectoral Growth
Based on expectations in different sectors, it is noted that except sectors like Electronics & Electricals which is likely to register strong growth in Q-1 2019-20, whereas most other sectors are likely to have either moderate or low growth.
Table: Growth expectations for Q-1 2019-20 compared with Q-1 2018-19
Sector Growth Expectation: Electronics & Electricals Strong Textiles Moderate Chemicals, Fertilizers & Pharmaceuticals ModerateCapital Goods ModeratePaper Products ModerateTextile Machinery ModerateCement & Ceramics ModerateMiscellaneous ModerateAutomotive LowMetals and Metal Products LowMedical Devices & Technologies LowLeather and Footwear Low
Note: Strong > 10%; 5% < Moderate < 10%; Low < 5%
Production Cost
The cost of production as a percentage of sales for manufacturers in the survey has risen for 63% respondents. This, of course, is significantly lower than 72% for Q-4 of 2018-19. This is primarily due to increased cost of raw materials, wages, power cost, rising crude oil prices and increase in finance cost.
Source: Business Standard
The delegation of various industry associations from Ludhiana met newly appointed Commerce and Industry Minister of Punjab Som Parkash and raised issues related to cheap imports of Chinese goods to India and issues of complications in Employees Provident Fund Procedures. With regard to import of Chinese goods to India, delegation apprised the Minister that during 2018-19 the exports from China to India were around 4.92 Lakh Crores and at the similar time the exports to China were merely 1.17 Lakh Crores. Most of the imports from China are coming under invoicing and through SAFTA & ASEAN Countries to save the custom duties and it is estimated that the total Imports from China must be more than 7 Lakh Crores. If government impose restrictions on these items then such items can be easily manufactured in India and will also provide huge employment opportunities. Not only this, it will save very precious forex, the delegation opined. So there is a dire need to check the trade policy with China and also there is dire need to keep a close watch on imports from SAFTA & ASEAN countries, said the delegation. Besides, Badish Jindal, President of Federation of Punjab Small Industries Association (FOPSIA), Tarun Bawa Jain President Bahadurke Road Knitters and Textile association and Ajit Lakra of Federation of Textile and Knitters association were also present during the meeting. With regard to the issue of complications in Employees Provident Fund Procedures, the delegation apprised him “Due to poverty the employees are reluctant to get their share deducted for depositing the same to their EPF account. This is the reason that they prefer to work in such organizations where the employers don’t deduct their contribution.” For this either the employers are forced to deposit the Employees share from their own pocket or they hide the number of such employees those are not interested to contribute their share. This is the reason that social security compliance ratio in India is very low as compared to other countries. In such condition the social security cover of employee remains uncovered as they also misses the Employers share of contribution. The delegation opined that mechanism requires being form in EPF, where the employers should not be made liable for depositing the Employees contribution. This will give more coverage of EPF and help in providing wider social security network. The minister assured to hold urgent meeting in this regard with concerned officers in his presence.
Source: Money Control
The Finance Ministry has put out a draft circular clarifying the taxability of services provided by head office, located in one State, to the branch office located in another. Technically, it is called cross charges and the issue is how tax can be calculated in such a case. According to the draft, circulated during the GST Council Meeting on June 21, the Ministry said it received various representations seeking clarification on the taxability of activities performed by an office of an organisation in one State to the office of that organisation in other State. According to the law, both are considered as distinct person and the issue here is taxability of the supply of services between such distinct persons. In order to bring uniformity in the implementation of law across the country, the draft circular has been issued. The draft reiterated that where a taxpayer registered in different States is a distinct person, “an employee of a Head Office (registered as a separate entity) does not provide any service to a Branch office, rather the Head Office provides service to the Branch Office.” With this it is clear that it is not just the salary of an employee sitting in Head Office and providing services like accounting, IT, human resource, branch offices in other States that will attract 18 per cent GST, but overall cost incurred by the Head Office in providing the service, which includes salary.
Apportion expenses
The draft said that there is need to apportion expenses incurred by one office for provision of output services to another office by any reasonable means “consistent with the principles of valuation in the GST law and generally accepted accounting principles.” Such apportionment or valuation of supply will be done on the basis of information maintained by the company in its normal course of working. There is no need to maintain additional records of activities undertaken by individual employees. According to the draft, the only exception to this principle would be distribution of Input Tax Credit (ITC) in respect of input services procured by one office and distributed to the others for which Input Service Distributor (ISD) provisions apply as the taxpayer is expected to mandatorily obtain ISD registration. An input service distributor (ISD) is a business which receives invoices for services used by its branches. It distributes the tax paid, to such branches on a proportional basis by issuing an ISD invoice. The branches can have different GSTINs but must have the same PAN as that of ISD. Commenting on the development, Harpreet Singh, Partner at KPMG, said while issuance of circular on transactions between Head Office and Branch Offices is a step in the right direction, it may not serve the intended purpose, where it is clarified that employee cost for activities like HR, admin etc also needs to be cross charged by HO to BO. “Issuance of circular on transactions between HO and BO clearly demonstrates that Government is lending their ears to the industry and is serious about clarifying on all ambiguous issues,” he said.
Source: Business Line
As US-China trade war unfolds, there is likely to be big disruption in flows and a certain manufacturing diversification of risks away from China. Is there an opportunity for India in this upheaval even as the country fights its own battles with the US. Kirtika Suneja takes a look.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1142.49 |
USD/Ton |
2.21% |
6/24/2019 |
|
VSF |
1641.69 |
USD/Ton |
1.62% |
6/24/2019 |
|
ASF |
2532.40 |
USD/Ton |
0% |
6/24/2019 |
|
Polyester POY |
1164.32 |
USD/Ton |
0.31% |
6/24/2019 |
|
Nylon FDY |
2343.19 |
USD/Ton |
0% |
6/24/2019 |
|
40D Spandex |
4337.09 |
USD/Ton |
-0.67% |
6/24/2019 |
|
Nylon POY |
5501.41 |
USD/Ton |
0% |
6/24/2019 |
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Acrylic Top 3D |
1389.91 |
USD/Ton |
0% |
6/24/2019 |
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Polyester FDY |
2212.21 |
USD/Ton |
0% |
6/24/2019 |
|
Nylon DTY |
2692.49 |
USD/Ton |
0% |
6/24/2019 |
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Viscose Long Filament |
1309.86 |
USD/Ton |
0% |
6/24/2019 |
|
Polyester DTY |
2590.61 |
USD/Ton |
0% |
6/24/2019 |
|
30S Spun Rayon Yarn |
2357.75 |
USD/Ton |
0% |
6/24/2019 |
|
32S Polyester Yarn |
1739.20 |
USD/Ton |
0% |
6/24/2019 |
|
45S T/C Yarn |
2605.17 |
USD/Ton |
-1.10% |
6/24/2019 |
|
40S Rayon Yarn |
2386.86 |
USD/Ton |
2.50% |
6/24/2019 |
|
T/R Yarn 65/35 32S |
2677.94 |
USD/Ton |
0% |
6/24/2019 |
|
45S Polyester Yarn |
2197.65 |
USD/Ton |
1.34% |
6/24/2019 |
|
T/C Yarn 65/35 32S |
1906.57 |
USD/Ton |
0.77% |
6/24/2019 |
|
10S Denim Fabric |
1.33 |
USD/Meter |
0% |
6/24/2019 |
|
32S Twill Fabric |
0.77 |
USD/Meter |
0% |
6/24/2019 |
|
40S Combed Poplin |
1.04 |
USD/Meter |
0% |
6/24/2019 |
|
30S Rayon Fabric |
0.61 |
USD/Meter |
0% |
6/24/2019 |
|
45S T/C Fabric |
0.69 |
USD/Meter |
-0.63% |
6/24/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14554USD dtd. 24/06/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
BEIJING (Reuters) - Both China and the United States should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said on Monday, ahead of a much anticipated meeting between the Chinese and U.S. presidents at this week’s G20 summit in Japan. China and the United States last week said they were reviving talks ahead of the meeting between presidents Donald Trump and Xi Jinping. Hopes that it will lead to a de-escalation of a trade war that is damaging the global economy has cheered financial markets. Talks to reach a broad deal broke down last month after U.S. officials accused China of backing away from previously agreed commitments. Speaking at a news briefing on the G20 summit, Wang, who is also part of the trade negotiating team with the United States, said talks between the two countries’ trade teams were underway, though he gave no details. China’s principles are clear, he said - mutual respect, equality and mutual benefit and meeting each other halfway. “Mutual respect means each side must respect the other’s sovereignty,” Wang said. “Equality and mutual benefit means the consultations have to happen on an equal basis, the agreement to be reached has to be beneficial for both sides,” he said. “Meeting each other half way means both sides have to compromise and make concessions, not just one side.” Wang declined to answer a question about what specific compromises Xi may offer to win a trade deal with Trump. Both the Chinese and U.S. teams are making preparations for the Xi-Trump meeting, Assistant Foreign Minister Zhang Jun told the
same briefing, again without offering details. The two countries are in the middle of a costly trade dispute and have slapped increasingly severe tariffs on each other’s imports. China has vowed to not give in on issues of principle nor under U.S. pressure. Trump has threatened to put tariffs on another $325 billion of goods, covering nearly all the remaining Chinese imports into the United States, including consumer products such as cellphones, computers and clothing.
RISING ECONOMIC RISKS
Wang said rising protectionism has dampened global trade and posed a threat to the global economy, while Chen Yulu, a vice governor of China’s central bank, warned that global economic and financial risks are rising significantly. “Signs of reversing monetary policy in major developed countries are becoming more evident,” Chen told the same briefing. “At the same time, policy room of many countries after the crisis has been reduced and room for coping with a sharp economic slowdown is limited.” Last week, the Federal Reserve signaled interest rate cuts beginning as early as July to cope with growing economic risks, which analysts say could increase pressure on China’s central bank to ease policy to support the slowing economy. Another problem is U.S. sanctions on Chinese tech giant Huawei Technologies Co Inc. Wang said that Xi, when speaking by telephone to Trump last week, had said he hopes the United States can fairly treat Chinese companies.“We hope that the U.S. can remove certain unilateral measures inappropriately taken against Chinese companies, in the spirit of free trade and the World Trade Organization.” The Trump administration has accused China of failing to protect intellectual property rights, forced technology transfers and of failing to provide a level playing field for U.S. companies. China has repeatedly promised to open its market wider to foreign investors and provide them with better services and treatment. China has also denied accusations of failing to protect intellectual property rights or of forcing foreign companies to transfer technology.
Source: Returns
More than 100 million textiles carry the Cotton made in Africa (CmiA) label. A total of 580,000 tons of cotton were certified according to the CmiA standard in 2018. All textile companies pay license fees to the initiative to use the certified cotton. CmiA reinvests the money in the farming regions to fund e.g. the costs of certification. Currently, 46 international fashion brands and textile companies purchase CmiA cotton on the international textile production markets. The Otto Group is the largest buyer with Bonprix heading the list. Roughly 93 per cent of the cotton purchased and processed by Bonprix is CmiA-certified. “The close collaboration with Cotton made in Africa is an important leverage for us in achieving our goal of exclusively demanding sustainably produced cotton by 2020,” said Stefanie Sumfleth, head of quality management, corporate responsibility & digital product development at Bonprix. “We are convinced that together with CmiA, we make a valuable contribution to protecting people and the environment.” Other major buyers of the sustainably produced cotton are the REWE Group, Tchibo, Aldi SuD, and Asos as well as Ernsting’s family, Vlisco Group, Engelbert Strauss, and Bestseller. In addition to the big players, smaller fair fashion brands such as Hiitu, Cooee Kids, and Weaverbirds also rely on the sustainability label. Aldi Nord recently joined as new licensing partner. In 2018, around one million smallholder farmers from ten African countries were part of the initiative and trained in sustainable and efficient farming methods. The demand for CmiA cotton on the market also rose by more than 14 per cent compared to 2017. “With Cotton made in Africa, textile companies get more than just cotton. They show that sustainability and profitability go very well hand in hand,” said Tina Stridde, managing director of CmiA. “At the same time, international textile companies and brands are strong partners for smallholder farmers. For each textile piece, they pay licensing fees which finance the work in Africa. We are pleased that we have been able to successfully expand the demand for CmiA in the market thanks to 46 retailers and fashion brands.” CmiA is working with smallholder farmers in Burkina Faso, Cameroon, Côte d’Ivoire, Ethiopia and Ghana, as well as in Mozambique, Tanzania, Uganda, and Zambia. With the addition of new partners in Nigeria and Benin, the initiative expands its network from the 2018-19 season. Whereas more than 100 registered spinning partners and textile producers worldwide work with CmiA in the textile chain now – 85 have been registered in 2018. About 37 per cent of the total cotton production in Africa is CmiA-certified. CmiA-cotton is processed in 19 textile production markets worldwide – thereof seven in Africa. “It is the courage and strength of our partners in Africa and around the world that spurs us on and motivates us every day to continue working with them on the success of our initiative and that allows us to look to the future with great optimism," founder professor Dr Michael Otto concluded.
Source: Fibre2Fashion
Bangladesh received net foreign direct investment (FDI) amounting to $3.61 billion in 2018, its highest yet thanks to the one-off payment of $1.47 billion by Japan Tobacco Inc. to purchase Akij Group’s tobacco business. The inflows are an increase of 67.94 percent from a year earlier, according to the United Nations Conference on Trade and Development (Unctad). The power sector attracted the highest amount of FDI of $1.01 billion, followed by food at $729.69 million, textile and weaving at $408.08 million, banking at $282.54 million, telecommunication at $219.87 million, leather and leather products at $110.55 million and trading at $101.91 million. The other sectors received $748.65 million, according to the Bangladesh Investment Development Authority (BIDA), which unveiled the compiled investment data of the Unctad at a media briefing at the capital’s Pan Pacific Sonargaon hotel yesterday. Of the $3.61 billion that came into Bangladesh last year, $1.12 billion were in the form of equity, $1.30 billion as reinvested earnings, and $1.18 billion as intra-company loan. Country-wise, China was the biggest source for FDI inflows last year at $1.03 billion, followed by the Netherlands at $692 million, the UK at $371 million, the US at $174 million, and Singapore at $171 million. Japan though does not feature in the top five as Japan Tobacco has thus far released $600 million and that too from the Netherlands. FDI flows have declined all over the world, but in Asia they increased, particularly in Bangladesh, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh. Merger and acquisition of big companies is one of the reasons for the higher inflows to Asia. “Such deals indicate that foreign companies’ interest in local assets is growing,” Mansur said. In future, more deals such as Japan Tobacco’s acquisition of Akij’s tobacco business may take place in Bangladesh. “Bangladesh is now a proper place for FDI as every indicator of the country is in favour of business,” Mansur added. The government is working with the BIDA to introduce one-stop service with a view to enhancing the ease of doing of business in Bangladesh, said Salman F Rahman, prime minister’s adviser on private industry and investment. By next year the government wants to improve in the World Bank’s ease of doing business ranking and move below 100. It has set a target to improve the rank to below 50 within the next two years, he said. In the most recent iteration of the ranking, Bangladesh came in 176th out of 190 countries, the lowest amongst South Asian nations. The government is considering withdrawing the proposed 15 percent tax on retained earnings as it is double taxation and investors will feel discouraged, Rahman added. Some $2 billion worth of investment is expected to come to one of the economic zones within the next two years, said Paban Chowdhury, executive chairman of the Bangladesh Economic Zones Authority (BEZA). Some major Japanese companies have already signed agreements with the BEZA for investing in Bangladesh. “I am expecting $5 billion investment from China soon,” he added. Previously, the economy was confined to exports and imports, but now it is expanding to investment, said Abul Kalam Azad, principal coordinator for the SDG affairs at the Prime Minister’s Office. Ample scope to make profit accounted for such a big amount of FDI last year, said Kazi M Aminul Islam, executive chairman of the BIDA. But Bangladesh’s inflows pale in comparison with neighbouring India, up 6 percent to $42.29 billion from the previous year. In South Asia, Pakistan received $2.35 billion, Sri Lanka $1.61 billion, the Maldives $551.8 million, Nepal $160.8 million and Bhutan $5.9 million.
Source: The Daily Star
DiloGroup is showing new innovations in textile machinery at the 18th edition of ITMA 2019 exhibition. The leading textile and garment technology exhibition for effective solutions and collaborative partnerships is being held from June 20-26, 2019, in Barcelona, Spain. DiloGroup is a company in the field of complete staple fibre nonwoven production lines. Needled products can be found in many applications such as floor covering, automotive interior linings, technical needlefelts, filtration media, geotextiles, mattress, bed and upholstery, wipes and papermachine felts. By large investments in research and development, DiloGroup contributes significantly to the exploitation of new applications based on increase in production capacity, improvement of quality features and increased efficiency in the production process. At ITMA in Barcelona, the company is setting a new focus on the further development alongside existing well-known technical components, the company said in a press release. The UniFeed vibration chute principle includes components for a precise fibre distribution in cross and longitudinal direction and requires low space in width and height including the fine opening stage. The cross profile of the web mat before the card ensures a precise matching of the edges in the longitudinal profile of the cross-laid web. In combination with the VQC card with double transfer and double doffer rolls, these components can be seen at the extended Textile Research Centre after the show. The card is followed by the refined crosslapper HyperLayer “NT”, an example of high speed, high precision cross-lapping design. The precision of the laydown even at high speed up to about 190 m/min. and a layering width of about 4 metres makes this extraordinary machine very suited for use in hydroentanglement lines. Currently, there is no comparable cross-lapping technology which can achieve these values in regard to speed and precision and also for viscose fibres. The Dilo crosslapper HyperLayer HLSC 30/40 will be installed and available for trials in a hydroentanglement line in the new Textile Research Centre of Messrs. Trützschler in Egelsbach after the show. A high speed crosslapper needs aprons to compensate for speed differences between cross apron of the lapper and constant infeed of the needleloom. This high-frequency start-stop- adjustment is realised by our new “FC-II apron” with double arrangement. DiloGroup will show at ITMA 2019 several development modules to illustrate the future potential degree of automisation in nonwoven production. The I4.0 modules are meant to facilitate operation and to improve data transparency in production, operation control, quality and maintenance. The solutions offered by Dilo, ‘Bale Timer’, ‘Smart Start’ for a fully automatic starting aid or ‘DI-LOWATT’ for energy savings, are supplemented by Siemens based solutions which can be chosen via app and data cloud ‘MindSphere’.
Source: Fibre2Fashion
