Exporters raise concerns at meeting with Textiles and Commerce Ministers. The government is considering extending the scheme to rebate embedded Central and State levies for the garments and made-ups sector to other textile items in the light of the urgency to do away with the popular merchandise export incentive scheme (MEIS) which is against World Trade Organization rules. A number of issues raised by the textiles industry, including possible extension of the Rebate of State and Central Taxes and Levies (RoSCTL) to other sectors, expeditious clearance of TUFS and tackling increased imports of garments from Bangladesh, were discussed at a meeting textile exporters had with Textiles Minister Smriti Irani and Commerce & Industry Minister Piyush Goyal on Monday, a government official said. “The meeting was attended by all officials apart from the two Ministers. Each and every issue raised was immediately looked into. Whatever could be addressed was addressed with deadline while an assurance was given that the rest had been listed and would be looked into later,” said Sanjay K Jain from the Confederation of Indian Textile Industry. An assurance was given to textile exporters that their demand of extending the RoSCTL to other textile sectors, including yarn and fibre, will be addressed soon, another exporter, who did not wish to be identified, said. “Commerce Minister Piyush Goyal had said at the recent Board of Trade meeting that his Ministry was seriously considering the Textiles Ministry’s proposal of extending the RoSCTL to all textiles sectors. The Minister has said that a decision on the matter will be taken soon as the MEIS scheme for textiles needs to be withdrawn,” the exporter said. The Cabinet, in March, approved the RoSCTL scheme to rebate all embedded State and Central Taxes/levies for apparel and made-ups, through an IT-driven scrip system. The scheme replaced the existing Rebate of State Levies (RoSL) scheme that provided rebate of only certain State taxes. The embedded taxes include Central excise duty on fuel used in transportation, embedded CGST paid on inputs such as pesticides and fertilisers used in production of raw cotton, purchases from unregistered dealers, inputs for transport sector and embedded CGST and compensation cess on coal used in the production of electricity. Now that the MEIS scheme, which offers incentives based on the markets the goods are being exported to, has to be withdrawn as Indian textiles have graduated out of the group of items allowed to extend export sops at the WTO, the RoSCTL is a workable alternative.
Clearance of funds
The two Ministers also agreed to the expeditious clearance of funds for exporters under the Technology Upgradation Fund Scheme (TUFS), address GST issues on textiles and clothing ,including inverted duty structure in the man-made fibre sector, and reduce hank yarn obligation from 30 per cent to 15 per cent. The fall out of duty-free imports of garments from Bangladesh on India’s apparel industry and the opportunities arising from Vietnam reaching saturation in textile production were also discussed. According to industry figures, India’s textiles & clothing exports declined from $38.60 billion in 2014 to $37.12 billion in 2018 while imports increased from $5.85 billion to $7.31 during the same period. India slipped to the fifth position amongst garments and textiles exporters in 2018 from the second position it enjoyed in the 2014-17 period. China, Germany, Bangladesh and Vietnam are the top four exporters of garments and textiles.
Source: The Hindu Business Line
The government may impose anti-dumping duty on imports of certain types of filament yarn from China, Korea, Taiwan and Thailand as the commerce ministry has started investigation into alleged dumping of the product following complaints from domestic players. The Directorate General of Trade Remedies (DGTR), under the commerce ministry, has initiated the probe as it has found "sufficient evidence" of dumping of nylon multi-filament yarn from these countries. "The authority hereby initiates an investigation into the alleged dumping, and consequent injury to the domestic industry to determine the existence, degree and effect of alleged dumping," the DGTR said in a notification. If the DGTR will establish that dumping is impacting domestic players, it would recommend imposition of a certain amount of anti-dumping duty, which if levied, would be adequate to remove the injury to the domestic industry. The finance ministry will take final call on imposition of the duty after considering recommendations of the directorate. Two firms, including Century Enka Ltd, have filed application for imposition of anti-dumping duty on the imports. The period of investigation covers 2018-19. However, for the purpose of injury investigation, the period will also cover data for 2015-18 period. Dumping occurs when a foreign company sells an imported product at an artificially low price. Countries carry out anti-dumping probe to determine whether their domestic industries have been hurt because of a surge in cheap imports. As a counter measure, they impose duties under multilateral regime of the World Trade Organisation. The duty is aimed at ensuring fair trade practices and creating a level-playing field for domestic producers with regard to foreign producers and exporters.
Source: Business Standard
Jaitley said that most items of consumer use have been brought in the 18 per cent, 12 per cent and even 5 per cent category. Former finance minister Arun Jaitley said policymakers could merge the 12% and 18% slabs under the goods and services tax going forward as revenue increases, thereby effectively making it a two-tier tax. Jaitley made the suggestion in a Facebook post on the second anniversary of the GST roll out. He had opted out of the new government due to health reasons. The former finance minister, who had led the GST talks with states, said as many as 20 states were already showing more than a 14% increase in their revenue. These states no longer require the Centre to compensate them for revenue loss arising out of the GST implementation, he said. Under the GST framework, most items of consumer use have been brought in the 18%, 12% and even 5% category, Jaitley said. The GST Council, chaired by the union finance minister and comprising finance ministers of states, has reduced tax rates over the last two years, leading to a revenue loss of more than Rs 90,000 crore, he said. “Except on luxury and sin goods, the 28% slab has almost been phased out. Zero and 5% slabs will always remain,” he said. Observing that a sudden reduction of tax rates on all categories of goods could lead to a massive loss of revenue for the government leaving it without resources to spend Jaitley. After the roll out of the tax system in July 2017, the average monthly GST collection in that fiscal year was Rs 89,700 crore. In the next year (2018-19), the monthly average increased by about 10% to Rs 97,100 crore. “The fear of the states today is that for the first five years they get a guaranteed 14% increase. The lurking doubt is as to what will happen after five years? Every state has been paid its share of tax as also from the compensation fund, if necessary. We have just completed two years of GST,” Jaitley said. A single-slab GST is possible only in extremely affluent countries where there are no poor people, he said, adding that it would be inequitable to apply a single rate in countries where there are a large number of people below the poverty line. “In the pre-GST regime, the rich and the poor, on various commodities, paid the same tax. The multiple slab system not only checked inflation, it also ensured that the aam aadmi products are not exorbitantly taxed,” he said, adding: “A hawai chappal and a Mercedes car cannot be taxed at the same rate.” This, however, is not to suggest that the rationalisation of slabs is not needed, he said. “That process is already on.” The GST system currently has four slabs — 5%, 12%, 18% and 28%. On top of the 28% slab, a cess is levied on automobiles, luxury, demerit and sin
Source: Economic Times
The Minister of State for Finance & Corporate Affairs, Shri Anurag Singh Thakur said that Goods & Services Tax (GST) has been a Game Changer for all the stakeholders in the economy. The Minister of State for Finance, Shri Thakur was speaking at the ‘GST Day’ Celebrations organized by the Central Board of Indirect Taxes &Customs (CBIC) on the 2nd Anniversary of GST in New Delhi today. Prior to GST, in the Constitutional Scheme, Shri Thakur said that taxation power with the Central Government on goods was limited-up to the stage of manufacture and production, while the States had the power to tax sale and purchase of goods. On the other hand, the Minister said that the Centre had the exclusive power to tax services. He said that this sort of division of taxing powers created a grey zone which led to legal disputes since determination of what constitutes a goods or service became increasingly difficult to synergise Central, State and Local Area levies. The MOS(Finance) said that in GST, the transition had been to levy taxes on supplies, and mechanisms to be brought in place in such a way that burden of GST does not fall on business but on the end consumption. By subsuming more than a score of indirect taxes under GST, the road to a harmonized system of indirect tax has been paved to make India an economic union, which has also significantly contributed towards higher efficiency and competitiveness, the Minister added. The Minister of State for Finance, Shri Anurag Singh Thakurfurther added that our Prime Mister has rightly called GST as “Good and Simple Tax.’’ He said that it is a shining example of GST having made India a true common market is that the transport time and cost of moving goods across the length and breadth of the country have come down significantly. Shri Thakur said that there are so many other positives that do not need reiteration”. He has stated that all the decisions taken in GST Council are on consensus basis.He called upon all Officers to make GST in India the best GST available in the world. He stated that the CBIC has done very good job for MSME sector. The NACIN has conducted GST training for all Officers apart from the support given to GST Practitioners.He has cautioned about fake invoices in GST bring bad name and urged the leaders of Industry to take corrective steps. Adding his concern over fake invoice menace, the Minister added that “IMANDAR TAXPAYERS SE BAIR NAHIN, FAKE INVOICES WALON KI KHAIR NAHIN”. He summed-up GST to be a WIN-WIN situation for all the stakeholders associated with the best tax GST. Dr. Ajay Bhushan Pandey, Revenue Secretary, Shri P.K. Das, Chairman, CBIC and Shri John Joseph,Member, CBICgraced the occasion. Senior officers of various Ministries of the Government of India, senior officers of CBIC, senior retired officers of CBIC, the representatives of all major Trade and industry Associations were also present on the occasion in large numbers. On this occasion, the Union Minister of State for Finance, Shri Thakur granted Commendation Certificates to 30 CBIC Officers from various formations across the country for their valuable contribution in the administration of GST. He also released a book on “GST for MSME” by CBIC. Earlier, welcoming the dignitaries and the invitees, Shri P.K. Das, Chairman CBIC said that the introduction of GST was a revolutionary step not only for the trade & industry, but also for all CBIC officers as well. GST through dual (Centre & State) administration lays the road map to achieve the goal of ‘One Nation, One Market and One Tax’ for sincerely making Indian economy stronger than before. He further added that CBIC had been releasing SOPs and FAQs about various concerning provisions like TDS, Anti-Profiteering etc. and will continue to take such measures as and when required. Speaking on the occasion, Shri Ajay Bhushan Pandey, Revenue Secretary said thatGST is an excellent example of Federal Cooperation. There are 1.2 Crore tax payers who have registered on GSTN. Around 70 lakh tax payers regularly file returns and an amount of Rs. 1 lakh Crore of tax is paid online.He further stated that the return filing process, refund sanction procedure and multiple ledger etc. havebeen streamlined. The e-invoice is proposed to be released which will streamline Return Filing Process. He called upon the officers that on this Day, we should remember what can be further done for trade facilitation. At the end, proposing Vote of Thanks, Shri John Joseph, Member (Tax Policy),CBIC assured all the Speakers that CBIC aspires to improvise tax administration with the changing requirement of times and further assured that whatever extra mile is required to work to address the challenges, our endeavour would be to keep improving the tax administration to meet these challenges. The event ended with the thanks to all those present at the occasion.
Source: Press Information Bureau
Total gross GST revenue collected in the month of June, 2019 is ₹ 99,939crore of which CGST is ₹ 18,366crore, SGST is ₹ 25,343crore, IGST is ₹ 47,772crore (including ₹ 21,980crorecollected on imports) and Cess is ₹8,457 crore (including ₹ 876crore collected on imports). The total number of GSTR 3B Returns filed for the month of Mayup to 30th June, 2019 is 74.38lakh. The Government has settled ₹ 18,169 crore to CGST and ₹ 13,613 crore to SGST from IGST as regular settlement. The total revenue earned by Central Government and the State Governments after regular settlement in the month of June, 2019 is ₹ 36,535 crore for CGST and ₹ 38,956 crore for the SGST. Revenue in June, 2018 was ₹ 95,610 crore and the revenue during June, 2019 is a growth of 4.52% over the revenue in the same month last year. The revenue in June, 2019 is 1.86% higher than the monthly average of GST revenue in FY 2018-19 (₹ 98,114 crore).
Source: Press Information Bureau
The government should actively engage with the US Congress to resolve the issue of withdrawal of export incentives for Indian exporters, TPCI said Monday. The demand comes in the wake of US decision to roll back export incentives provided under Generalised System of Preferences (GSP) from June 5. Trade Promotion Council of India (TPCI) Chairman Mohit Singla said as the US is a major trading partner of India, the roll back of incentives under GSP programme should be reviewed. He requested the government to engage with the US Congress on the issue of withdrawal of incentives, which is "in the interest of both countries"."We are getting strong industry inputs from our US traders that the issue may be taken to the US Congress," he said in a statement. The rollback of GSP benefits would not make any economic sense to the US, as it would hurt their industry more than that of India, he added. Earlier, several members of the US Congress and companies had urged Donald Trump administration not to withdraw the GSP benefits to India as the move will increase input costs for American producers. India in 2018 exported goods worth about USD 6 billion under the GSP programme.
Source: Business Standard
The government will take immediate steps to arrest the slowdown in economic growth and encourage manufacturing, finance minister Nirmala Sitharaman said in a written reply to questions by lawmakers on Tuesday, just days before she presents the Union budget. Sitharaman’s statement indicates the National Democratic Alliance government is likely to announce measures to boost business confidence and attract private investments that the economy needs to accelerate growth in the budget to be presented on Friday. She may also offer incentives that will encourage job creation, especially in labour-oriented sectors such as textiles and real estate. The Modi administration, which had drawn criticism in its previous term for disruptions in economic activity caused by the 2016 currency ban and the initial glitches in the roll-out of the goods and services tax, is consulting economists and chief ministers before drawing up a road map for economic reforms for the next five years. “Economic growth is high on the agenda of the government. Various reforms are being undertaken by the government in many spheres to improve GDP growth... Further, to give focused attention to issues of growth, government has constituted a five-member cabinet committee on investment and growth chaired by the Prime Minister," Sitharaman said in her written reply to a question in the Rajya Sabha. Sitharaman said the moderation in economic growth momentum in FY19 was primarily on account of slower growth in the farm and allied sectors. She, however, denied that demonetization has had any harmful effect on the Indian economy. Growth in the manufacturing sector has slowed, but it is not attributable to demonetization, news agency PTI said, citing Sitharaman. India’s economy expanded at 5.8% in the March quarter, its slowest pace in nearly five years, according to data from the statistics ministry. The minister said the economy was still growing faster than the US and China. In response to another question on the economy, the minister said the aim was to create a conducive environment for the manufacturing sector by streamlining regulations and processes. India’s businesses are hoping for a cut in the corporate tax rate from the budget and expect banks to pass on the reduction in the Reserve Bank of India’s benchmark policy rates. They are also hoping for easier land and labour policies. According to the latest government data, India’s factory output picked up in April to hit a six-month high. Data released by the National Statistical Office on 12 June showed the index of industrial production expanded at 3.4% in April from 0.3% a month ago. Sitharaman also said in response to another question that state-run banks had classified ₹1.5 trillion worth of loans as “wilful defaults" in FY19, with the biggest lender, State Bank of India (SBI), accounting for nearly a third of the amount. SBI recorded wilful defaults worth ₹46,158 crore, while Punjab National Bank reported ₹25,090 crore and Bank of India₹9,890 crore, Sitharaman said in her reply, Reuters reported.
Source: Live Mint
Sitharaman said economic growth is high on the agenda of the govt and various reforms are being undertaken in many spheres to improve GDP growth. India still continues to be the fastest growing economy and demonetisation has had no effect on the Indian economy, Finance Minister Nirmala Sitharaman told the Rajya Sabha on Tuesday. The minister, while responding to supplementaries during the Question Hour, said the manufacturing sector has had a certain fall, but it is not attributable to demonetisation. She said economic growth is high on the agenda of the Government and various reforms are being undertaken in many spheres to improve GDP growth. Sitharaman said the moderation in growth momentum in 2018-19 is primarily on account of lower growth in 'Agriculture and allied', 'trade, hotel, transport, storage, communication and services related to broadcasting' and 'public administration and defence' sectors," she said. "If the impact of low growth in certain sectors has impacted growth rate, particularly in agriculture and allied activities as also in financial and real estate and professional services, there has been a fall, particularly in agriculture based on third advance estimates, it is believed that there has been a 0.6 per cent decline in the output. "If the impact on the low growth is because of outcomes from these sectors, the manufacturing sector has had a certain fall but which is not attributable to demonetisation," She said in the last quarter, there could have been a fall and steps have been taken to improve the economy. "But, we are still the fastest growing economy," she said. Sitharaman said if the United States' growth has grown between 1.6, 2.2, 2.9 and 2.3 per cent in 2016, 2017, 2018 and 2019, and China's growth has also decelerated from 6.7, 6.8, 6.6 and 6.3 per cent, India is still well above 7 per cent at 7.3 per cent growth. "While the concern of member is well taken about the last quarter's growth having come down, it is still India which is growing at the fastest rate and the figures are before us," she stressed in response to a query from a member. The minister said as regards steps taken, the government has taken several steps in order that more money goes to people and that is why the PM's Kisan Samman Yojna, the Pension Yojna, where money goes directly through DBT in activities through which people are getting the benefit. "Over and above that, in order that institutions will have to extend more credit facilities for industry and for those entrepreneurs in the ground, the credit situation and also taking care of resolutional stressed assets through banks is also happening," she said. In her written reply, the finance minister said, as per estimates available from Central Statistics Office, Growth of Gross Domestic Product (GDP) at constant prices was 6.8 percent in 2018-19, as compared to 7.2 percent in 2017-18 and 8.2 percent in 2016-17. "Economic growth is high on the agenda of the Government. Various reforms are being undertaken by the Government in many spheres to improve GDP growth. The key reforms in Governments new term include expansion to all farmers the cash transfer scheme 'PMKisan' providing an income support of Rs 6000 per year, which was earlier limited to farmers with a land holding of less than 2 hectares," she said. Along with this, the Government has launched voluntary pension scheme for small and marginal farmers and small shopkeepers or retail traders, she claimed. To give focused attention to issues of growth, Government has constituted a five-member cabinet committee on investment and growth chaired by Prime Minister.
Source: Economic Times
The companies are worried because the increasing imports of readymade garments are hurting them in the local market even as they grapple with tepid growth in exports. Concerned about increasing imports from Bangladesh, garment makers from the industrial clusters of Coimbatore and Tirupur in Tamil Nadu have approached the central government, seeking its assistance in getting supply contracts from Indian retailers and brands. The Indian Texpreneurs Federation (ITF), an association of more than 560 textile establishments with a combined turnover of over Rs 40,000 crore, wrote to textile minister Smriti Irani in early June, seeking her ministry’s intervention. The companies are worried because the increasing imports of readymade garments are hurting them in the local market even as they grapple with tepid growth in exports. “Indian clusters can better serve the sourcing needs of both Western and Indian brands than products sourced from Bangladesh, Sri Lanka or Indonesia,” the federation said in the According to data collated by ITF, textile imports from Bangladesh jumped 53% in fiscal year 2018-19 to $1.07 billion (Rs 7,500 crore). Local entrepreneurs fear neighbours like Bangladesh will edge them out in the Indian market due to the advantages they enjoy such as lower manufacturing costs and free-trade agreements (FTAs) that create a duty-free expressway for their products into this country. The challenge from Bangladesh is also affecting India’s prospects in the international market. According to an ITF survey of more than 320 participants in the Indian textile industry, cost ineffectiveness, narrow focus on target countries and labour shortage are top reasons Indian exporters are unable to pip those from the neighbouring country in the export markets. “We are hoping that the Indian government will help us engage with brands, retailers who might look at sourcing from India,” said Prabhu Damodharan, the convenor for ITF and a mill owner in Coimbatore. After the implementation of GST, India had removed a 12% countervailing duty on imports from Bangladesh.
Source: Economic Times
Syed Muazzem pointed out trade, investment, connectivity and energy as the three key areas of immediate focus. Bangladesh high commissioner to India Syed Muazzem Ali listed security, fight against terrorism, energy cooperation, bilateral and sub-regional connectivity, water sharing, trade and investment, lines of credit, defence cooperation and people-to-people contact as key features of India-Bangladesh relations. “We need to combine our synergies in different areas for mutual benefits of both the countries as well as of the region,” he said on Tuesday while speaking at an event. Syed Muazzem said Bangladesh looks forward to taking full advantage of the high growth of the Indian economy to further her own economic development. “A fast developing Bangladesh also offers opportunities to India to further deepen its economic relations,” he said. He pointed out trade, investment, connectivity and energy as the three key areas of immediate focus. Quoting the Indian Prime Minister Narendra Modi, Mr Syed Muazzem said Bangladesh-India relation is passing through a “Golden Chapter” or “Sonali Adhyay” and has presently emerged as a “role model” for “neighborhood diplomacy” and countries in other parts of the world should follow this model of “neighborhood relations”. Referring to the Rohingya refugees in Bangladesh, the ambassador said Bangladesh seeks continuous support of India and international community to put pressure on Myanmar for taking back their citizens. “The ultimate solution to the crisis can come only when Myanmar recognizes Rohingyas as their citizens and takes over a million of refugees back home. We are working on safe repatriation of the Rohingyas,” he said.
Source: Asian Age
A new law is certain to consume precious time and energy for all stakeholders. The Union Budget may be around the corner. But the task force set up by the finance ministry on the new direct taxes code (DTC) is scheduled to submit its draft by July 31. The task force was mandated to draft a new law to bring income tax in line with global best practices, while also addressing India’s economic needs. Recently, the terms of reference was expanded to include faceless tax assessments, introducing amechanism for cross-verification of financial transactions, reduction in compliances, litigation and sharing of information among various economic agencies of the govt. While its stated objective is worth appreciating, the odds against introducing DTC are high, compared to ensuring that the existing income-tax law is administered rationally and with fairness. A new law is certain to consume precious time and energy for all stakeholders — taxpayers, tax authorities, tax advisers, the judiciary — in their need to unlearn the existing law and to learn the new code from scratch. Having said that, the Income-Tax Act has been amended several times to keep up with changing business dynamics. Whether these amendments have been measures to counter base erosion and profit shifting (BEPS), or to instal ‘place of effective management’ (POEM) guidelines in corporate taxation, the legislature has kept pace with the country’s economic needs. But one is left unsure as to what specific change is being sought to be brought in by having a new tax law altogether, instead of bringing it under the existing Income-Tax Act. It is well-known that tax administration has been the biggest litigator in this country. While GoI has taken steps towards doing away with litigation of small tax amounts where cases are in favour of taxpayers at the appellate level, there remains a substantial backlog of cases across all appellate fora and courts. It is unclear whether bringing in DTC will add to or subtract from the present pile-up. Under the Income-Tax Act, several significant provisions have attained some certainty, thanks to judicial adjudication by tax tribunals and courts over time. As was highlighted by the Supreme Court in the Vodafone case in 2012, certainty and stability of law is fundamental for any fiscal statute. If a new tax code is introduced now, it would seem that such ‘certainties’ will need to be redefined all over again. Instead of a new tax code, what is needed is a fair and reasonable administration of existing tax laws as contained in the Income-Tax Act, 1961. With the introduction of the general antiavoidance rule (GAAR) in the Income-Tax Act, ‘aggressive tax planning’ on the part of taxpayers stands sufficiently addressed. Then there’s the matter of treaty abuse by ‘third country’ parties. The terms of reference of the task force are laudable. But these, too, can be made part of the Income-Tax Act and implemented to reduce tax disputes in India. For instance, how does one reduce tax litigation when foreign direct investment into an Indian operating company from a prominent foreign economy is treated as unexplained cash credit (read: black money) in the tax assessment of the Indian company? Once again, fair and reasonable administration of tax laws, coupled with accountability of field officers, needs to be pushed as a solution. It is also not very clear whether the proposed DTC will articulate the provisions of incometax law in a totally different manner, the new law being considered ostensibly to simplify matters and introduce best international practices. One hopes that GoI carefully considers the pros and cons of introducing the new tax code. It should also consider streamlining the existing Income -Tax Act instead of introducing DTC.
Source: Economic Times
Commerce Ministry invites suggestions on formulating new foreign trade policy. The Commerce Ministry has started work on the formulation of a new foreign trade policy (FTP) and has invited stakeholder suggestions for boosting exports and trade. “It has been decided to revise the current foreign trade policy (2015-20). Therefore, suggestions/inputs are invited from all the stakeholders for framing the proposed new FTP,” the Directorate-General of Foreign Trade (DGFT) said in a notice. The new policy will be important as the existing export subsidies, including the popular Merchandise Export from India scheme (MEIS), will be withdrawn as they are no longer compatible with the World Trade Organization (WTO) rules. Export incentives will have to be replaced with incentives that are allowed under the multilateral regime such as rebate of all input taxes paid by exporters at the Central and State levels and subsidies for research & development and modernisation of production process.
Five-year policy
The new five-year foreign trade policy (2020-25), to be applicable from the next fiscal, is expected to be released in September. The US has already challenged a slew of export subsidies given by India at the WTO on the ground that India is no longer eligible to extend these. According to the US complaint, the targeted measures provide producers of steel products, pharmaceuticals, chemicals, information technology products, textiles and apparel with benefits to the tune of around $7 billion a year. “If export subsidies are not replaced soon, more such complaints may be filed at the WTO against the country and the judgements delivered may not be favourable towards the country. Such a situation needs to be avoided,” a government official said.
India’s GNI
Under existing WTO rules, a country can no longer offer export subsidies if its per capita GNI (gross national income) has crossed $1,000 for three years in a row. In 2017, the WTO notified that India’s GNI had crossed $1,000 in 2013, 2014 and 2015.
Source: The Hindu Business Line
US-China trade war is making Taiwanese businesses think about whether to continue in China or move out. Taiwan’s Ambassador to India Tien Chung-Kwang tells Subhayan Chakraborty that his country will continue to discuss a free trade agreement (FTA) with India despite New Delhi’s reluctance to sign new trade deals. Edited excerpts: Taiwanese manufacturers want to move to India. Why is that? The trade war between the United States and China is making Taiwanese businesses think about whether to continue in China or move out. They also want less political interference in their business. India is an obvious choice as such interference is least here, and everything goes ...
Source: Business Standard
The Indian rupee July 2 ended almost flat at 68.95 against the US dollar in a lacklustre trade as participants preferred to sit on the fence ahead of the Union Budget due on July 5. At the interbank foreign exchange, the domestic unit opened at 69.02. During the day, the domestic unit witnessed a high of 68.93 and a low of 69.07 against the US dollar. The domestic currency finally settled at 68.95 against the US dollar, down 1 paisa over its last close. The Indian rupee Monday had closed at 68.94 against the US dollar. "Rupee is trading 1 paisa lower against the US dollar with more focus on domestic factors than global. This week, market participants will be keeping an eye on the Union Budget and that could trigger volatility for the currency," said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities. Steady buying in domestic stocks and easing crude oil prices also supported the domestic unit, forex traders said. Meanwhile, brent crude futures, the global oil benchmark, fell 0.18 per cent to USD 64.94 per barrel. Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 512 crore on Tuesday, as per provisional data. Meanwhile, the 10-year government bond yield was at 6.84 per cent on Tuesday. The 30-share index settled 129.98 points, or 0.33 per cent, higher at 39,816.48. The broader NSE Nifty too rose 44.70 points, or 0.38 per cent, to finish at 11,910.30.
Source: Business Line
Welspun India rose 1.77% to Rs 57.60 at 9:20 IST on BSE after the company announced a joint venture with Sense Organics Import & Trading GmbH, Germany. The announcement was made after market hours yesterday, 26 June 2019. Meanwhile, the S&P BSE Sensex was up by 62.80 points, or 0.16% to 39,654.88. On the BSE, 775 shares were traded in the counter so far compared with average daily volumes of 1 lakh shares in the past two weeks. The stock had hit a high of Rs 57.60 and a low of Rs 57 so far during the day. It hit a 52-week high of Rs 78.20 on 7 September 2018 and a 52-week low of Rs 46.25 on 18 February 2019. Welspun India has entered into joint venture with Sense Organics Import & Trading GmbH, Germany (SOIT). Welspun India has also acquired 51% of the share capital, at, par, of Pure Sense Organics Myanmar (PSOML), a company incorporated under the Myanmar Companies Act 2018 on 24 January 2018. Welspun India will be investing amounts upto US$140,000 during year 2019 as a part of the company's sustainable sourcing strategy. Neither SOIT nor PSOML are related parties of the company. On a consolidated basis, Welspun India reported net loss of Rs 79.29 crore in Q4 March 2019 as compared to net profit of Rs 86.62 crore in Q4 March 2018. Net sales rose 3.4% to Rs 1557.20 crore in Q4 March 2019 over Q4 March 2018. Welspun India, the flagship company of Welspun group, is among largest home textile manufacturers in the world with presence in bed, bath & flooring. It is the largest exporter of home textile products from India.
Source: Business Standard
The index of national factory activity dropped to 51.7 in June, the third straight monthly decline. US manufacturing activity slowed to near a three-year low in June, with a measure of new orders received by factories tumbling, amid growing anxiety over an escalation in trade tensions between the United States and China. Other data on Monday showed construction spending unexpectedly fell in May as investment in private construction projects dropped to its lowest level in nearly two and a half years. The reports were the latest indications that economic growth slowed in the second quarter after getting a temporary boost from exports and an accumulation of inventory. While the slowdown in factory activity was not as steep as had been flagged by some regional factory surveys, a sharp drop in a gauge of prices paid by manufacturers could be yet another reason for the Federal Reserve to consider cutting interest rates this month. The US central bank last month signalled it could ease monetary policy as early as this month, citing low inflation and growing risks to the economy from US-China trade tensions. “Manufacturing is clearly taking it on the chin from the rising trade uncertainty,” said Chris Rupkey, chief economist at MUFG in New York. The Institute for Supply Management (ISM) said its index of national factory activity dropped to 51.7 last month, the lowest reading since October 2016, from 52.1 in May. It was the third straight monthly decline in the index. A reading above 50 indicates expansion in the manufacturing sector, which accounts for about 12 percent of the US economy. Economists polled by Reutershad forecast the ISM index would fall to 51.0 in June.
‘Trade turbulence’
The ISM said businesses “expressed concern about US-China trade turbulence.” They were also spooked by potential tariffs on Mexican imports, which were averted at the eleventh hour. The United States’ bitter trade war with China has hurt business sentiment. That, together with disruptions to supply chains caused by import tariffs, is weighing on manufacturing. US President Donald Trump and Chinese President Xi Jinping on Saturday agreed to a trade truce and a return to talks. But Trump said he was “in no hurry” to cut a deal and Chinese state media warned there was no guarantee an agreement would be reached. Trump in May raised import tariffs on $200 billion in Chinese goods, prompting Beijing to retaliate.
Slowing economy
Manufacturing is also taking a hit from an inventory overhang, which has resulted in businesses placing fewer orders with manufacturers. A reduction in the production of Boeing's MAX 737 aircraft, which was grounded in March after two fatal plane crashes in five months, is also a drag on activity. The weakness in factory activity is in sync with a slowdown in economic growth following a temporary boost from exports and an accumulation of inventory. Consumer spending is rising moderately, while the pace of job and wage growth has slowed. In addition, the housing market is struggling and the goods trade deficit widened in May. The ISM's forward-looking new orders sub-index decreased 2.7 points to a reading of 50.0 last month, the lowest reading since December 2015. A measure of prices paid by manufacturers tumbled 5.3 points to 47.9. Computer and electronic products manufacturers complained that “China tariffs and pending Mexico tariffs are wreaking havoc with supply chains and costs” and described the situation as “crazy.” Transportation equipment manufacturers said “demand for the remainder of 2019 has softened significantly, due to issues in the aerospace industry.” “While manufacturers' worst fears about an all-out trade war with China developing imminently have been allayed, uncertainty about the structure of future trading relations continues to linger,” said Sarah House, a senior economist at Wells Fargo Securities in Charlotte, North Carolina. “We suspect factory activity will continue to struggle in the second half of the year.”
Improving sentiment
However, there were some glimmers of hope for manufacturing. Factories reported hiring more workers, which included replacing retiring workers and adding summer help. The survey's factory employment gauge rose to 54.5 from 53.7 in May. That pointed to a moderate pick-up in manufacturing payrolls in June after they were almost flat in May. It also suggested an improvement in overall job growth last month after non-farm payrolls increased by only 75,000 in May. The government is scheduled to publish June's employment report on Friday. Suppliers' deliveries are improving. While a measure of inventories contracted for the first time since December 2017, with many manufacturers saying they continued to align stocks with softening demand, more customers viewed inventories as too low, which could lead to some increase in orders. Stocks on Wall Street were trading higher, with the S&P 500 index hitting an all-time high, as technology stocks gained on a likely reprieve for Chinese telecoms company Huawei. The dollar rose against a basket of currencies, but US Treasury prices fell. Despite the persistent weakness, US manufacturing is in relatively better shape compared to the rest of the world. Reports on Monday showed factory activity shrinking across much of Europe and Asia. The ISM said 12 industries, including machinery, computer and electronic products, textile mills, furniture and electrical equipment, appliances and components reported growth last month. Apparel and transportation equipment were among the five industries reporting a contraction. A separate report from the Commerce Department on Monday showed construction spending declined 0.8 per cent in May, the biggest drop since last November, after rising 0.4 per cent in April. Construction spending surged in the first quarter, boosted by increased investment in roads and highways by state and local governments.
Source: The Hindu BusinessLine
EURATEX, the European Apparel and Textile Confederation, welcomes the conclusion of negotiations for a comprehensive and ambitious Free Trade Agreement between the European Union and Mercosur (Argentina, Brazil, Paraguay and Uruguay). EURATEX has been actively engaged in the negotiation process to ensure an agreement fit for textile and clothing companies, also preserving social and environmental standards in the manufacturing of high-quality products. “Despite a challenging trade environment, we are glad rules-based trade has prevailed” stated Alberto Paccanelli, EURATEX president. The EU-Mercosur FTA is the largest trade agreement ever concluded by the European Union, covering a population of 780 million. According to the EU, this agreement will save European companies over 4 billion euros in duties. For the textile and clothing industry in particular tariffs have been very high, reaching 35% in Brazil. “In 2018 EU exports of textile and clothing products to Mercosur were 460 million euros and the elimination of tariffs will open further business opportunities for our sector” added Paccanelli, “We look forward to a swift approval by the European Council and the European Parliament.”
Source: Textile World
Members of the All Pakistan Textile Processing Mills Association (APTPMA) in Faisalabad have been observing a complete shutter down strike against imposition of new taxes under a revised formula in the Budget 2019-20 by the government. Moreover, sugar dealers have refused to buy sugar from the sugar mills from Monday in protest against new method of imposition of new taxes on them. Furthermore, cement dealers and distributors have followed the same path by not picking up cement sacks from the factories. The sugar and cement dealers’ associations have demanded the government to withdraw from its decision that the wholesale dealers would only be allowed to purchase the goods on their identity cards. The APTPMA and other traders have halted their works from this week. The shutdown of the textile processing mills means the textile industry has come to a standstill. Sources familiar with the matter told the media that if the deadlock between the traders and the government is not broken, the situation may turn into a crisis, and resultantly there would be severe shortage of sugar and cement in the market. APTPMA secretary Muhammad Ashraf said that following the imposition of new sales taxes, parties have stopped orders of the textile processing. Non-registered have to pay 20 percent tax and must reveal their identity cards before purchasing the goods, whereas thousands of local buyers are still unregistered and even they do not want to get themselves registered. He said that the government was requested multiple times to undo the requirement of identity cards for the dealers, but to no avail. Ashraf stated that thousands of employees will lose their jobs following the closure of the textile processing mills and urged Prime Minister Imran Khan to review the decision of changes in sales taxes.
Source: The Daily Times
US President Donald Trump said Monday that talks on a trade deal with Beijing have resumed following a weekend truce struck with China's Xi Jinping on the sidelines of the Group of 20 summit. Trump and Xi agreed Saturday to hold off on new tariff increases as the world's top two economies negotiate a final agreement to resolve their year-long trade war. Trump also offered to relax some restrictions on US technology exports to Chinese telecoms giant Huawei, triggering a backlash from some US lawmakers. "It's already begun," Trump told reporters at the White House when asked if trade negotiations had restarted. "They're speaking very much on the phone but they're also meeting." But he suggested the deal should be "tilted" toward the United States. "It has to be better for us than for them because they had such a big advantage for so many years," he added, referring to China's soaring US trade surplus, which Trump views as a loss for the United States. "Obviously, we can't make a 50/50 deal. It has to be a deal that is somewhat tilted to our advantage." At the weekend, Trump also offered to relax some restrictions on US technology exports to China's telecoms giant Huawei, which American officials describe as a tool of Chinese espionage. But the Republican leader said any final resolution of the matter would have to come when both sides strike a final bargain. The apparent thaw in US-China trade relations drew a collective sigh of relief from global markets, which staged a relief rally Monday even though major questions about any deal remain unanswered. Trump in May jacked up tariffs on more than USD 200 billion in Chinese imports after accusing Beijing of suddenly reneging on commitments made during extensive negotiations begun last year. Washington has accused Beijing of massive state intervention in markets as well as the forced transfer and outright theft of American technological know-how. But analysts say China is unlikely to accede to US demands, which could undermine the Communist Party's hold on power.
Source: Business Standard
The Adviser to Prime Minister on Commerce, Textiles, Industries and investment, Abdul Razak Dawood on Tuesday underlined the significance of investment opportunities for Chinese investors in textile sector for industrial cooperation and growth. Razak appreciated the role of Chinese Companies in textile sector of Pakistan and urged the Chinese delegation to have more extended cooperation in the textile sector, said a press release issued by Ministry of Finance here. A Chinese delegation of National Textile and Apparel Council (CNTAC) was called on Abdul Razak Dawood to deliberate upon bilateral trade and investment opportunities. CNTAC is the National Federation of all textile-related industries, as it includes the textile industrial associations and the other economic entities as the registered members. Members of the delegation showed interest in technology up gradation in Pakistan by investing in Textile Research Centers and Stitching Labs. Adviser to PM emphasized to enhance know-how regarding Chinese technological advancement in textile sector and urged the delegation to cooperate in the development of textile sector to avail investment opportunities for developing better partnership. He appraised the delegation that China Pakistan Economic Corridor (CPEC) has opened enormous investment and business opportunities in Pakistan. In the first phase of the project investment was only attracted to power sector and infrastructure development, he added. Now “we are entering into second phase of CPEC, as industrial cooperation, which provides enormous opportunities for investment in textile and agriculture. Moreover, in the wake of China-Pakistan Free Trade Agreement (FTA) Phase-II bilateral cooperation between two countries is widening by providing extended market access to Pakistani product in Chinese market which has increased industrial base of Pakistan, adviser highlighted. Razak said Chinese companies should invest in whole value chain of textile, from cotton to garment, for the development of sector and both countries should work for win-win position. He apprised the participant that China has already cooperated in manufacturing of polyester yarn in Pakistan and eying for extended mutual cooperation in finished/value added products of textile sector. Head of CNTAC delegation appreciated the Pakistan’s business friendly environment for better cooperation in industrial development, especially textile industry. The visit of CNTAC aims to observe the existing business environment for future investment in industrial development in Pakistan.
Source: Business Recorder
Insiders have recommended Vietnam pay attention to developing weaving and other production activities supporting the textile-garment sector to make best use of the EVFTA, a freshly-inked free trade agreement with the European Union. In 2018, the textile-garment sector posted year-on-year exports growth of more than 16 percent to surpass 36 billion USD, making Vietnam the world’s third biggest exporter of these products, after China and India. Based on these figures, the Vietnam Textile and Apparel Association (VITAS) believes the export target of 40 billion USD for 2019 is achievable, thanks in part to FTAs, including the one with the EU – the second biggest market for Vietnamese textile and garment products. VITAS Chairman Vu Duc Giang said the EVFTA, signed in Hanoi on June 30, promises apparel export potential of more than 100 billion USD annually. Textiles and garments shipped to the EU are currently subject to export tariffs of 9.6 percent, but when the EVFTA takes effect, the rate will be gradually reduced to zero percent in seven years. He noted most of the countries exporting textiles and garments to the EU don’t have FTAs with the bloc. Therefore, if Vietnamese firms meet origin requirements, the EVFTA will open up enormous opportunities for exports. Managing Director of the Vietnam National Textile and Garment Group Cao Huu Hieu said that to be exempt from tariffs, apparel products must satisfy two conditions: the fabric used to make apparel must hail from Vietnam or the EU, and the production process must be carried out in Vietnam or the EU. However, the EVFTA is also flexible, he said, elaborating that apparel products can also benefit from preferential tariffs under this deal if the material fabric comes from the countries that have FTAs with both the EU and Vietnam, such as the Republic of Korea. VITAS Chairman Giang pointed out that although the rules of origin in the EVFTA are not as strict as in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnamese firms still face several challenges because most of them have just engaged in cutting and sewing steps while not producing fabric and yarn. Additionally, most production materials still come from China, which doesn’t have a trade deal with the EU. To capitalise on the EVFTA, he urged domestic businesses to develop weaving and the supporting industry to provide materials for the sector. They also need to use more fabric from the Republic of Korea to make use of the trade pact pending the supporting industry’s development. Under the EVFTA, companies can also import materials from Europe to improve their products’ quality and value, he added. According to Director General of the Garment 10 Corporation Than Duc Viet, his company has high hopes for the EVFTA, and has made preparations to capitalise on this deal. Exports now account for 80 percent of Garment 10’s total revenue, with 45 percent of export turnover from the US, 35 percent from Europe, and 10 percent from Japan. These figures will change when FTAs come into force as the firm will receive more orders, he noted, adding that the business has made plans to connect its domestic supply chain to satisfy origin requirements
Source: Vietnam Plus
The Ministry of textiles has so far paid Rs 44.5 billion to the local textile industry under Prime Minister’s Exports Enhancement Package since July 2017, with an objective to help boost exports from the country, senior official in the ministry told APP here on Thursday. During the last ten months, the ministry paid Rs 20 billion to the textiles industry, while it intends to pay more Rs 6 billion in coming month of July, the official said. During the upcoming year, the government would pay further Rs30 billion to the textile sector for value addition, which the official said would boost country’s external trade. The Exports Enhancement Package was aimed at bridging gap between exports and imports by encouraging the export-oriented industry and incentivizing the industrial sector for introducing the innovative, modern and cost cutting technologies, particularly in the textile industry. Replying to a question, he said that so far State Bank of Pakistan (SBP) has received Rs 50 billion refund claims under the package, which he said would be processed accordingly. He said in last seven months, the government had paid Rs 20 billion in terms of outstanding claims, adding that pending liabilities of Rs. 6 billion would be paid off in coming months. “The government is committed for the execution of PM export enhancement package for development and growth of the textiles sector for increasing country’s export,” the official added. He further said that increasing country’s exports and creating job opportunities for the people were the top most priorities of the government. The official said the government is also committed for promoting Small and Medium Entrepreneur (SMEs) in the country.
Source: Business Recorder
Garment manufacturers from Asean countries yesterday gathered for a two-day meeting in Phnom Penh to discuss challenges facing the industry and promote region-wide cooperation. The ASEAN Federation of Textile Industries (AFTEX) meeting, organised by Garment Manufacturers Association of Cambodia (GMAC), is aimed at discussing problems such as how to lower production costs and adding value to products. AFTEX is a group of textile and garment associations of the 10 ASEAN member countries. Van Sou Ieng, GMAC and AFTEX Cambodia president, yesterday told Khmer Times that AFTEX has been playing an important role in building collaboration among all garment producing members of Asean to help each other grow in a win-win situation. “One of the important subjects discussed today is the common stance of AFTEX on the Rule of Origin (ROO) for garments for RCEP (regional comprehensive economic partnership), which is a mega Free Trade Agreement between Asean and China, India, South Korea, Japan, Australia and New Zealand,” he said. He said that Asean in the last 10 years has been viewed as a strong regional grouping having performed better economically than any other regions in the world. Mr Sou Ieng said that the region has become an important player in the global textile and apparel industry. However he noted that the garment industry has gone through a lot of changes, particularly recently. “AFTEX is not looking to compete against each other. We are looking to build partnership and collaboration. The good times are not over have only become more challenging,” he said. “It requires smart government policies, innovative ideas of the industry players and collaboration locally and to a larger extent regionally to meet these challenges.” “The industry has long and complex supply chain, so collaboration among various actors locally and regionally is very important. Since Asean, as an economic community, is looking to create a single production base, AFTEX really has a major role to play to realise this goal,” Mr Sou Ieng added. He noted that AFTEX was set up in 1978 and the group been able to maintain the spirit of collaboration and unity through regular meetings organizesd in all countries on a rotation basis. Yuttana Silpsarnvitch, chairman of National Federation of Thai Textile Industries, said while there are differences in each country, textile representatives are working to combine the supply chain among the Asean countries to help reduce costs. “In Singapore they want to focus on branding, trading, and design, but Myanmar, Laos, and Cambodia try to promote productivity and want to transform from CMP [cut-mark-pack] to FOB [free on board],” he said. “In Thailand, Malaysia, Indonesia, and Vietnam we try to promote more value of the products because of increasing minimum wages and the cost of doing business.”
Source : Khmer Times
Egypt's participation in the G20 summit in the Japanese city of Osaka provides a great opportunity to present Cairo's vision aimed at strengthening international efforts to push forward development endeavors in Africa and list the African file on the international agenda, said the Ministry of Trade and Industry. In a statement released on Thursday, the ministry added that the event will provide a chance to discuss a number of key issues between Egypt and Japan, as well as shed light on Cairo's economic reforms and probe means of fostering bilateral relations at the economic, trade, industrial and investment levels during the coming phase. In this regard, the ministry pointed out that trade exchange between Egypt and Japan in 2018 hit $1.26 billion, compared to $969 million in 2017. Japan holds the 31st place on the list of countries investing in Egypt, with total investments amounting to $420 million, the ministry said. Those Japanese investments are distributed in 106 projects in the sectors of industry, agriculture, services, tourism, construction and banking. Around 24 Japanese companies working in the fields of renewable energy, auto industry, transportation, petrochemicals, electronics, machinery, equipment, textiles and food industries will take part in the planned Egyptian-Japanese round-table, which is due to be held on the sidelines of the G-20 summit, the ministry noted. The joint expanded meeting is to address a number of important economic files, notably boosting the automotive industry in Egypt and increasing dependence on local components, in addition to the potential of launching joint industrial ventures in African states, especially in the areas of agriculture, infrastructure and electrical appliances, the ministry said. It will also review a host of economic topics, primarily the economic part of Egypt's 2030 Vision, and the available investment opportunities in the Egyptian market, particularly in the domains of industry, mining, software, infrastructure, agriculture, tourism, petroleum, petrochemicals, communications and information technology, education, financial services, health care, transport, renewable energy and textiles.
Source: Egypt Today
