The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 17 JULY, 2019

NATIONAL

INTERNATIONAL

Many Steps Taken to Resolve Issues of Textile Sector

The stated policy of the Government is to reduce tax burden and increase ease of tax compliance of MSME’s including Textiles MSMEs. For furtherance of this objective, the Government has taken various steps. Some of these steps taken in recent years are:

i. The rate of corporate tax was reduced to 25 per cent for companies with a turnover of uptoRs. 250 crores in Financial Year 2016-17 (covering 99 per cent of domestic companies). This limit is further proposed to be increased to Rs. 400 crores vide Finance (No.2) Bill, 2019.

ii. The threshold limit for applicability of presumptive taxation of business income was increased from Rs. 1 crore to Rs 2 crore.

iii. The threshold for maintaining books of accounts on part of individuals and Hindu undivided family has been increased to income of Rs. 2.5 lakh from Rs. 1.2 lakh earlier or total turnover of Rs. 25 lakh from Rs. 10 lakh earlier.

iv. The rebate provided under the Income-tax Act, 1961 has been increased and now any individuals or Hindu undivided family having a total taxable income upto Rs. 5 lakh do not need to pay any Income-tax.

v. Section 80JJAA of the Act provides for deduction in lieu of employment generation. Considering the seasonal nature of the business of an assessee engaged in manufacturing of apparel, the requirement of 240 days of employment has been relaxed to 150 days.

Ministry of Textiles has taken up the issues raised by the Textiles Industry/Traders Associations regarding reduction of GST rates on various textile items and actively engaged with the Department of Revenue, Ministry of Finance for getting them resolved. As a result, many important changes have been made inter alia, which are as follows:

i. GST rate on job works for entire textile segment i.e. yarn, fabric garments and made-ups was revised from 18% to 5%.

ii. Initially GST rates for a few Handicraft items have been reduced. Subsequently, GST Council in its 28th Meeting held on 21.7.2018 reduced the GST rate to Zero for two handicrafts items, reduced from 12% to 10% for 15 handicraft items and reduced the GST rates from 12% to 5% on 8 items.

iii. GST rates for Corduroy and velvet fabric has been reduced from 12% to 5%.

iv. GST rates for Manmade Filament (MMF) yarn has been reduced from 18% to 12%.

v. GST on Common Effluent Treatment Plants services of effluents has been reduced from 18% to 12%.

vi. The import duty on MMF has been enhanced from 10% to 20% to protect domestic market.

vii. Sari has been included in the classification of fabric with 5% GST.

viii. vii) Refund ITC to fabrics was allowed with prospective effect (i.e. 27.7.2018). The inverted duty structure on MMR (i.e. 18% on fibre, 12% on yarn and 5% on fabric without refund of ITC) led to stranding of 2% tax at the fabric stage and rendering the weavers uncompetitive in domestic and international markets). This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and Medium Enterprises in written reply to a question in Rajya Sabha today.

Source: PIB Delhi

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Exports fall for first time in nine months amid trade tensions

• Exports fell 9.71% in June, while imports declined 9.06% as US-China trade row hurt India’s trade prospects

• DURING June, petroleum exports fell 33% as Jamnagar, Mangalore refineries shut temporarily

India’s merchandise exports contracted for the first time in nine months in June while imports shrank first time in four months, signalling that rising protectionism and trade tensions between the US and China are impacting India’s trade prospects as well.

Data released by the commerce ministry showed exports in June fell 9.71% to $25.01 billion while imports dipped 9.06% to $40.29 billion, leaving behind a trade deficit of $15.28 billion during the month. Comparatively, China’s exports in June fell 1.3%, while imports shrank 7.3%, leading to a trade surplus of $50.98 billion, significantly higher than what analysts projected. Commerce secretary Anup Wadhawan said the temporary shutdown of ONGC Mangalore Petrochemical Ltd and Jamnagar refinery for maintenance in June adversely impacted exports of petroleum products. “The shutdown of Jamnagar refinery is likely to abate by mid-July. The fall in the global Brent price by 15.6% in June is also a factor in the declining value of petroleum product exports," he added. During June, petroleum exports declined 33% while non-oil, non-gems and jewellery exports contracted by 4.86%.

Paras Jain/Mint

Among other major items, exports of gems and jewellery (10.7%), readymade garments (-9.18%), chemicals (-8.17%) and engineering goods (-2.65%) also contracted. “The negative growth in June is also consistent with certain global trends, which have impacted India’s exports in recent months. We expect exports growth to revive to the trend growth rate of 2-3% in coming months," Wadhawan said. The World Bank in its Global Economic Prospects released in June has projected weakening of global trade in 2019. Global trade is projected to grow at 2.6% this year—a full percentage point below its own previous forecast. Aditi Nayar, principal economist at Icra Ltd, said lower crude oil prices explain a portion of the contraction in the absolute level of exports and imports. “Nevertheless, the contraction in imports of items such as transport equipment, machinery and fertilisers should be viewed with caution, as they suggest that the underlying demand dynamics are weak. The increase in customs duty on gold may curtail imports in the next few months, which would modestly shrink the size of the trade deficit," she added. The escalating trade war between the US and China, and rising protectionism have cast a shadow on India’s prospects for higher exports. In March, the World Trade Organization (WTO) projected trade growth to fall from 3.9% in 2018 to 3.7% in 2019. It had cautioned that these estimates could be revised downward if trade conditions continue to deteriorate. The International Monetary Fund also cut the global growth forecast for 2019 by 20 basis points to 3.3%, the lowest since the 2008 financial crisis, blaming the US-China trade tensions, loss of momentum in Europe and the uncertainty surrounding Brexit. The commerce ministry is contemplating an export promotion scheme, along with a production-based support scheme, to boost Make in India as part of its 100-day action plan. The new export promotion scheme may replace the existing Merchandise Export from India Scheme, following the US decision to challenge India’s existing export subsidy schemes at the WTO.

Source : Live Mint

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India and UK set up three new bilateral trade working groups

LONDON: India and the UK have agreed to set up three new bilateral working groups to tackle barriers to trade in specific sectors of food and drink, healthcare and data services as part of the Joint Economic and Trade Committee (JETCO) meeting in London on Monday. The three new business-led working groups will be run by the UK India Business Council (UKIBC) alongside the Confederation of Indian Industry (CII) and Federation of Indian Chambers of Commerce and Industry (FICCI). "What makes JETCO so important is that it is more than just a government to government bilateral, there is the direct involvement of business," UKIBC Chief Operation Officer (COO) Kevin McCole told PTI in an interview. "Today saw the launch of three new bilateral business-led working groups to take deep dive into the issues, from a business perspective, and make recommendations to ministers on how to unlock remaining barriers to trade in food and drink, life sciences and healthcare, and digital and data services," he said. The purpose of JETCO is to identify and find solutions to, non-tariff barriers to trade. "The Joint Trade Review, launched in November 2016, has made good progress - bilateral trade grew 22 per cent in 2018, against the average of 8.8 per cent per annum since 2002," McCole said. The latest JETCO meeting, which included bilateral trade talks between India's commerce and industry minister Piyush Goyal and UK secretary of state for international trade Liam Fox, is the 13th such meeting to take place between the two countries. The UKIBC, a membership-based non-profit body set up to promote the UK-India economic partnership, plays the role of a Secretariat for the JETCO talks and provides a forum for UK companies to enhance their links and develop new partnerships with Indian businesses. "The UKIBC organised what was a fascinating and open meeting for minister Goyal to meet major UK businesses that have invested significantly in India. There was positivity about the Indian economy and a sense of shared ambition that India should be a global economic superpower within the next decade. There was also recognition that reform was needed to achieve this, and a range of ideas were put forward," McCole said. The UKIBC said in reference to the meeting that UK businesses felt encouraged that the Indian government is committed to serious higher education reform focusing on delivering world-class graduates. UK businesses also expressed their support for transforming India's immense data cache into AI solutions, which will revolutionise sectors as diverse as healthcare, education, and agriculture. "Certainty on a sector-agnostic, intuitive, and transparent data protection framework enforced by an independent and tech-savvy Data Protection Authority will maximise trust and lay the ground-work for a UK-India Common Data Agreement," McCole explained. In healthcare, the UKIBC feels that the success of Ayushman Bharat will rapidly increase demand for pharmaceuticals. In order to augment supply, India stands to benefit from building on international best practice to design a new drug pricing framework that enhances pharmaceutical quality, availability and affordability for Indian citizens. "Taking Ease of Doing Business reforms down to the State and District levels will be a major part of transforming the day-to-day manufacturing environment, especially for SMEs. Likewise, strengthening IP enforcement, streamlining customs approvals, delivering globally competitive taxation rates, and reforming the defence offset rules would signal India's national determination to be a global, high-value, manufacturing hub," McCole said. In reference to the prospects of a post-Brexit free trade agreement (FTA) between India and the UK, the UKIBC believes that such an agreement will come in time, but there is a great deal that can be done to address the barriers to trade and investment, including any sticking points around ease of movement for students and professionals. McCole said, "It is often said that India will require more access to UK work visas as part of a trade deal. An important part of today's JETCO was a meeting between Indian businesses and the Home Office officials leading the consultation on the UK's Skills-Based Immigration White Paper. Although India already receives 60 per cent or all work visas the UK issues - more than the rest of the world combined, the UK is determined to engage seriously and deeply with Indian business to make sure the future legislation is right and that it is well-understood in India." According to some latest official statistics, between 2000 and 2018, investments directly from the UK amounted to USD 26.09 billion, representing 7 per cent of total FDI into India, ahead of the US and Germany at 6 per cent and 3 per cent respectively. The UK also prides itself at consistently being one of the top five investing countries in India over the last 18 years and is the fourth largest investor in India, having invested USD 26.09 billion after Mauritius, Singapore and Japan from April 2000 to June 2018. "The UK and India have an incredibly close relationship- Nevertheless, from this position of strength, there is certainly more to be done to grow bilateral trade, investment and partnerships," McCole said. Against the backdrop of the latest JETCO talks, the UKIBC has highlighted the scope to expand tech and innovation collaborations between the two countries. It believes that more UK manufacturers could explore India, with the Indian government's Access India Programme working on helping small and medium enterprise (SME) manufacturers from the UK to the 'Make in India' initiative.

Source: The New Indian Express

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GST collection of states rises to Rs 5.18 trillion in FY19: FM Sitharaman

In a written reply to a question in the Lok Sabha, Sitharaman said concerted efforts have been made to improve tax compliance. GST collection of states and union territories (UTs) increased to Rs 5.18 trillion in the full financial year 2018-19, up from Rs 2.91 trillion collected in nine months of 2017-18, Finance Minister Nirmala Sitharaman said Monday. Besides, Centre has released Rs 81,177 crore compensation to states during 2018-19, as against Rs 48,178 crore during July-March period of 2017-18 fiscal. In a written reply to a question in the Lok Sabha, Sitharaman said concerted efforts have been made to improve tax compliance. "The GST collection of the states/UTs has been showing steady improvement over the period of time. In addition, they are also assured a growth of 14 per cent for a period of five years through payment of compensation by the central government," she said. The total GST collection of the states/UTs for 2018-19 stood at Rs 5,18,447 crore against GST collection of Rs 2,91,100 crore in 2017-18, she added. "Extensive automation of business processes, application of e-way bill mechanism, targeted action on compliance verification, enforcement based on risk assessment and proposed introduction of electronic invoice system are the steps taken for increasing the revenue collection," she said. Goods and Services Tax (GST), which subsumed 17 local taxes, was rolled out from July 1, 2017. The average gross GST collection in 2018-19 fiscal was Rs 98,114 crore, up from Rs 89,885 crore in 2017-18.

Source: Business Standard

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Hopeful of addressing India's concerns in RCEP: Indonesian Trade Minister

NEW DELHI: The Asean troika led by Indonesia had a “fruitful” and “very frank” dialogue with India on the Regional Comprehensive Economic Partnership (RCEP) and efforts are on to address Delhi’s concerns ahead of a meeting on the proposed trade agreement in China later this month, Indonesian trade minister Enggartiasto Lukita has told ET. “Efforts are ongoing to substantially conclude RCEP by end of 2019,” Lukita said after a meeting with commerce and industry minister Piyush Goyal here last Tuesday. “We had very good and very fruitful meeting with the Indian commerce minister. The dialogue was frank, open and positive. We will work towards addressing India’s concerns.” Indonesia is the RCEP coordinator and leads the troika that also comprises Thailand’s trade minister and the Asean secretary general. “It is not India alone that has concerns over elements of RCEP. Indonesia also has some concerns, which we are trying to address,” Lukita pointed out while stating that he remains hopeful that India’s interests can be safeguarded in RCEP. “This meeting helped in developing better understanding of India’s concerns,” the minister noted. RCEP is a proposed regional economic integration agreement among the 10 Asean countries and its six free-trade agreement partners—Australia, New Zealand, Japan, China, South Korea and India. Intense negotiations are slated for this year with a recently-concluded meeting in Australia and another one scheduled for later this month in China. A ministerial meeting in August will take place in China as the members aim to conclude the mega trade agreement this year. Lukita and Goyal also explored robust India-Indonesia bilateral trade partnership following directives from the meeting between Prime Minister Narendra Modi and Indonesian President Joko Widodo in Osaka, Japan last month. Jakarta is considering to import basmati rice and raw sugar from India, indicated the visiting minister. ET has leant that India on Tuesday took a tough stance to secure its interests at the ongoing talks for a mega regional agreement with 15 other Asia Pacific countries including China. The Indian industry is not convinced if the proposed RCEP trade agreement will be a win-win situation for all, Goyal told the troika. He termed duty concession issues with China for Indian goods as “particularly problematic” at the RCEP trade pact, and said India has made “asymmetrical sacrifice” in goods in its previous trade pacts, including the one with Asean, according to a statement issued by his ministry. “The minister was tough when he discussed India’s interests, but he also said the agreement should be balanced overall and everyone must be as constructive as possible,” an official aware of the details of the Asean Troika meeting said. Domestic textile and automobile industries have cautioned the government to not cede space to China while aluminium and copper industry associations have raised concerns at the likely rise in trade deficit with China due to likely “alarming” spike in imports and a potential threat to the ‘Make in India’ initiative. “India too has shown significant flexibility during the negotiations and helped to achieve convergence in few important areas,” the commerce and industry ministry said in the statement, adding that two more chapters are close to conclusion, which will take the number to nine of the total 16 chapters.

Source: ET Bureau

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India open to ideas from all sides to strengthen investors' confidence: Piyush Goyal

Speaking on trade with the UK and the US, the minister said India will sit down across the table and find a common meeting ground with both countries. India is open to ideas from all sides to strengthen investors' confidence so that they can invest and participate in the country's development, Commerce and Industry Minister Piyush Goyal said. "Indian government is looking for ideas from all sides to strengthen and to give confidence to international investors, with the best of technologies, to come to India and invest," he said this while interacting with Indian diaspora in London last night. Speaking on trade with the UK and the US, the minister said India will sit down across the table and find a common meeting ground with both countries. "There are obviously some red lines, which each side may find difficult to compromise, but as long as we can respect that, as one would do in a business transaction or while negotiating a good deal, it will not be impossible to resolve it," he said. He added that every country has to protect its national interest, legal sovereignty and the interests of its citizens. Further on free-trade agreements, he said such pacts implemented by India in 2009-10 had not been good deals and some of them are causing agony "which is why India is looking at the US to put that baggage behind and move forward".On the proposed mega free trade pact RCEP, he said that India is working for a fair deal which protects the country's interests and does not allow unfair market access. "From now, no agreement or trade pact on commerce will be at the cost of India's interests, the country's sovereign requirements and interests of the citizens," Goyal said.

Source: moneycontrol.com

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Global trade war, and poor competitiveness take a toll

A Nomura analysis shows that on a three-month moving average basis, core export volumes dipped sharply in June, with manufacturing, agriculture and non-agri commodity sectors all doing badly. Exports from India have been unexciting for the last 6-7 years now. With no government really able to fix the issues that make India uncompetitive—the latest budget, to cite one example, once again refused to cut corporate taxes for large firms—it is no surprise exports continue to languish; exports in June hit a 41-month low. At just $27.7 billion, that was a near-10% year-on-year (y-o-y) drop. Even if you remove oil exports which were affected by a temporary shutdown of a crude distillation unit in Reliance’s Jamnagar refinery, the near-6% y-o-y contraction in non-oil exports is a clear indication that India hasn’t been able to make much headway in a competitive market. One can make some allowances for listless global growth and dull trade, exacerbated by the US-China trade war. But, the writing has been on the wall for a long time now and the government needed to have been far more responsive. In fact, India’s exports were slowing even when global growth and trade were perking up. A Nomura analysis shows that on a three-month moving average basis, core export volumes dipped sharply in June, with manufacturing, agriculture and non-agri commodity sectors all doing badly. In the absence of specific measures to help labour-intensive sectors—textiles and jewellery—large job losses would not come as a surprise. The stumbling blocks are well-known: HSBC economist Pranjul Bhandari had written, in May 2016, that domestic bottlenecks were the biggest hurdle, and were the cause for 50% of the export slowdown since 2008. The remaining 50% can be explained by sluggish global demand and the currency. If the government is serious about pushing exports, it must raise productivity levels and that requires, among others, changes in labour laws. Not the kind of cosmetic changes being contemplated, but game-changing ones that will give exporting companies confidence to hire. Exporters must be given the flexibility to pay what they feel is a reasonable wage, to enforce a certain number of working hours and be allowed to fire workers who are inefficient. India is already uncompetitive where wages are concerned, which is why its share of the market is being taken away by countries such as Bangladesh or Philippines. Crisil, too, has pointed out that there are deep-rooted structural issues and while GST may have disrupted the sectors—especially due to long delays in tax refunds—the ratings agency has observed that competitiveness in the labour-intensive sectors had begun to erode even before GST. In the decade between 2006 and 2016, the RCA—revealed comparative advantage—declined for three important export areas; demonetisation and GST added to the problem. For instance, the RCA for gems and jewellery dropped from 6.38 in 2006 to 3.96 in 2016, from 3.12 to 1.97 for leather and from 2.43 to 2.22 for readymade garments. So, while slowing global trade is undoubtedly an issue, the government must accept that it is the lack of cost advantages—both in capital and labour—that is hurting exporters. Unless these are tackled, exports will continue to fare badly.

Source: Financial Express

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India, China consuming more, exporting less: McKinsey report

The share of goods traded across boarder in both India and China has dramatically fallen since around 2006 and stood at around 8.5% and 8.3%, respectively, in 2017, as more goods were consumed domestically than exported, McKinsey Global Institute said in a report titled “Asia’s Future Is Now".The Institute said global output, over the past decade, has continued to rise but the share of goods traded across borders has fallen by 5.6 percentage points. “This decline does not reflect trade disputes or hint at an impending slowdown. Instead, it reflects healthy economic development in China, India, and the rest of emerging Asia," it added. As consumption rises, more of what gets made in these countries is now sold locally instead of being exported to the West, the report said. “Over the decade from 2007 to 2017, China almost tripled its production of labour-intensive goods from US$3.1 trillion to US$8.8 trillion. At the same time, the share of gross output China exports has dramatically decreased, from 15.5% to 8.3%. India has similarly been exporting a smaller share of its output over time. This implies that more goods are being consumed domestically rather than exported." According to the report, as wages rose in China and the country moved into higher-value activities, its share of global exports of labor-intensive goods has declined by 3 percentage points. “This has created an opening for other countries to step in. In the past decade, Vietnam, India, and Bangladesh have managed to grow their exports of labor-intensive manufactured goods (particularly textiles) by annual rates of 15%, 8%, and 7%, respectively. This trend can turn unknown cities into new manufacturing hot spots," it added. However, low-cost labour alone will not be enough and infrastructure, workforce skills, and productivity will be critical to competitiveness in the decade ahead, the report cautioned. The institute also studied broadly the 5,000 largest global firms. In 1997, Asia accounted for only 36% of them, but by 2017, that share was up to 43%. The countries represented in this group also drastically changed. China accounts for the biggest increase by far. “But India has also seen significant growth, and countries such as the Philippines, Vietnam, Kazakhstan, and Bangladesh are now represented on the list. By contrast, half of Japan’s largest firms have dropped off," the report said. The number of Indian firms in the top 5,000 global firms list has shot up to 142 from $879 billion revenue in 2015-17 from 25 with $14 billion revenue during 1995-97, according to the report.

Source: Live Mint

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Value addition can further boost apparel export to US: ITF

India witnessed a double-digit growth in apparel export to the US and can grow further with more focus on blended and value-added products, the Indian Texpreneurs Federation (ITF) recently said. Apparel exports to the US were worth $1.764 billion in January-May last year and saw a 10.83 per cent growth to reach $1,955 billion in the same period this year, it said. In a tweet marked to textiles minister Smriti Irani, ITF said an eco-system needs to be created to nurture manufacturing of high value-added apparel as 43 per cent of the top 30 export items in this sector are fetching a revenue of below $6 per piece. Few Indian players are demonstrating their capability in value-added product exports by earning more than $9 per apparel. An alternative is to motivate small and medium enterprises to set up large scale units to compete in low-value apparel, it said. Exporting clusters like the one in Tiruppur should focus more on the US market to grow further, it said. A few ITF member companies are trying to brand their products as sustainable fashion items to command better preference in global markets, ITF said. Whatever space China is vacating in the home textile space will be shared by several countries, but India continues to maintain the second-largest supplier status in this sub-sector, according to ITF. (DS)

Source: Fibre2fashion

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Spinning mills of North India considering cutting back production

The decision to take this extreme step has come as a result of excess spinning capacity in the country and poor demand for yarn from overseas markets leading to the accumulation of yarn stocks and poor liquidity. Textile spinning mills of North India are considering cutting back production and shutting down their mills NSE 2.85 % once a week against the current trend of operating a mill 24x7, according to a release issued by Northern India Textile Mills' Association (NITMA). The decision to take this extreme step has come as a result of excess spinning capacity in the country and poor demand for yarn from overseas markets leading to the accumulation of yarn stocks and poor liquidity. The release issued by Rajiv garg, president NITMA said, "China, which has been a major importer of Indian yarns NSE -8.33 % for the past few years, has cut down imports in the past few months, thus worsening the situation, leading to the accumulation of yarn stocks in Indian spinning mills.” The spinning industry is under crisis and the situation is moving from bad to worse and spinners are making losses. The industry is therefore considering various options to reduce daily production, including closing the plant for one day in a week or more, the release said. The releases added that some textile units are considering of lowering the capacity to even 50% in the wake of unsafe market situation and to have less borrowing/outstanding and stocks. Weather and quality of inputs also seem unfavourable at presentThis downward trend might continue for next 3-4 months with slack demand and market situation will improve as soon as demand and supply balance get restored the release.

Source: Economic Times

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Looking to replace Chinese imports, US turns to Indian products

The US is looking to replace Chinese exports with Indian products in at least seven product lines. Amid rising trade tensions, American importers of sports goods, toys, stationery, cables and electronics parts have reached out to Indian sellers of these goods as Chinese products become expensive due to the US-China trade war. The US is looking to replace Chinese exports with Indian products in at least seven product lines including vulcanised rubber, footwear and kitchen accessories. “Importers in the US have shown keen interest in our products in at least seven tariff lines,” said an official in the know of the details. “We have a five-six month period to make use of this opportunity before Vietnam and Cambodia fill in the space vacated by China.” India exported these items worth $1.5 billion in FY19 to the US, and the industry is keen to ramp up capacity to meet the potential demand. “We are getting enquiries in large numbers from the US to replace Chinese exports of toys, footwear, apparel and engineering goods,” said Federation of Indian Export Organisations president Sharad Kumar Saraf. “There is scope to increase exports of these products by 25%.” He added that the inquiries have increased since the US’ announcement to impose a 25% duty on some Chinese products.

Source: Economic Times

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Margins may improve after a long wait as denim industry sees glut easing

No new capacities likely, so market will be able to absorb current production; however, rising cotton prices could offset the benefits of operating leverage and modest increase in fiscal incentives. After quite a few years of facing a glut in the domestic market due to excess capacity, the Indian denim industry may finally see the demand-supply gap narrowing. In addition, with mass consumption demand also expected improve even as denim players go for more premium products, gross margins in the industry are also expected to improve by 3-4 per cent this year. "There was a mismatch in demand and supply. But in the last couple of years, due to demonetisation and Goods and Services Tax (GST), the denim market has seen a slowdown and the overcapacity is getting adjusted. Also, no new capacities or fresh investments are likely to come up. Hence, the excessive capacity that got accumulated over the years is now getting utilised gradually," says Sharad Jaipuria, CMD, Ginni International told Business Standard. Denim, mostly fabric, capacity in India had suddenly shot up a few years ago and now stands at roughly 1,700-1,800 million metres a year. However, with annual exports being hardly 200-250 million metres, the rest of the capacity was earmarked for the domestic market, creating a glut. This had led to shrinking margins for even some of the top denim makers. However, Jaipuria, who is also the president of Denim Manufacturers' Association, believes that with no new investment in sight and capacity rationalising, gross margins could improve by 3-4 per cent this year. Reiterating Jaipuria's views is a recent report by India Ratings and Research (Fitch Group) as part of its FY20 outlook for textile sector’s denim industry which states that the denim manufacturers may expect operating margins to improve marginally. The rating agency too expects minimal new greenfield investments in the sector as sub-optimal utilisation levels will not entice any players to start investing before FY'22 given that the current capex will require two to three years to stabilise. However, while the sector’s operating margins is expected to improve moderately to 10-11 per cent in FY20, inflation in cotton prices could offset the benefits of operating leverage and modest increase in fiscal incentives. "We believe denim sector margins are on the cusp of gradual improvement owing to focus on premium products and vertical integration. The agency expects return of wholesale and consumer demand for basic denim in domestic market and exports for value-added denim to gradually improve capacity utilisation. While the basic denim overcapacity will persist in FY2020-FY2022, the improved demand outlook will underpin benefits from operating leverage and enable transmission of raw material cost inflation to an extent," says Mahaveer Shankarlal, Associate Director – Corporate Ratings, India Ratings and Research (Fitch Group). On one hand, India Ratings and Research (Fitch Group) expects the credit profile of denim fabric manufacturers to marginally improve in FY20 amid recovery in operating margin, aided by reduction in operating leverage and higher mix of value-added products. However, on the other, it estimates revision of remission of state levies and states’ incentive schemes will underpin margin recovery in FY20.

Capacity Blues

• Margins to improve by 3-4% from current 10-11%

• Total denim capacity at roughly 1.8 bn metres a year

• Denim exports form only 200-250 mn metres a year

• Capacity left for domestic market at 1.5 mn metres a year, creating glut

• Margins in denim industry had fallen from 13% in FY16 to sub-10% later

Source: Business Standard

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'EOUs can import goods from Pakistan without paying customs duty'

The 5/2019 notification grants exemption on goods imported by EOUs from the whole of customs duty leviable thereon under the First Schedule to the Customs Tariff Act, 1975. We are a 100 per cent EOU and manufacturer-exporter of textile readymade garments. We are getting garment orders from our buyer from USA and we have to import fabric from Pakistan. However, as per notification 5/2019-Cus dated February 16, 2019, duty of 200 per cent is applicable under new HS code no. 9806.00 for imports from Pakistan. Can we import fabric from Pakistan under the EOU scheme without paying duty? As mentioned by you the said notification 5/2019 has inserted a new tariff entry at 98060000 for all goods originating in or imported from Pakistan. The 200 per cent duty is levied against that entry 98060000, which becomes part of the First Schedule to the Customs Tariff Act, 1975. As an EOU, you claim exemption on imported goods under notification no. 52/2003-Cus dated March 31, 2003. That notification grants exemption on goods imported by EOUs from the whole of customs duty leviable thereon under the First Schedule to the Customs Tariff Act, 1975 (besides other duties and taxes). Therefore, you can import fabric from Pakistan under the said notification 52/2003 without payment of duty. We are holding an EPCG authorisation. We did some job-work for an exporter by way of embroidery on garments and invoiced to the exporter for the job-work done. Can invoice value in rupees representing job-work charges go towards discharge of export obligation? Is it okay to convert the rupee value of the invoice into US dollars at the exchange rate prevalent on the date of issuance of authorisation? You have performed job-work for a domestic party. The service of job-work is not exported. I doubt if job-work service is mentioned in the authorisation as the service through export of which the export obligation can be fulfilled. So, I do not think such service rendered in India to an exporter can be considered for discharge of export obligation against your EPCG authorisation. I may add that the export obligation can be fulfilled through export or goods or services that require the use of and thus have a nexus with the capital goods imported under the EPCG scheme and mentioned in the authorisation as export product or service. We removed the export goods from our factory under LUT without payment of IGST in March 2018. Since we couldn’t export the goods physically within 90 days, we paid IGST with interest in June 2018. Thereafter, we physically exported the goods under the same invoice in April 2019. Now, we want to claim rebate of IGST on such export. How can we get a refund? As per Section 54(1) of the CGST Act, 2017, any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed. So, you may follow the procedure prescribed under Rule 89 of the CGST Rules, 2019 and claim refund.

Source: Business Standard

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Goyal backs multi-brand FDI policy, says no changes in the offing

Britain's prime ministerial frontrunner Boris Johnson had recently expressed his disappointment at UK retailers like Sainsbury's and Waitrose not being able to set up base in India. India’s foreign direct investment (FDI) norms in the multi-brand retail sector are a very well thought out policy which are unlikely to change any time soon, commerce and industry minister Piyush Goyal said Tuesday. Speaking on the sidelines of an India Day event organised by the UK's Department for International Trade (DIT), the minister said the 49 per cent FDI threshold in multi-brand retail must be respected in letter and spirit by all foreign brands. Britain's prime ministerial frontrunner Boris Johnson had recently expressed his disappointment at UK retailers like Sainsbury's and Waitrose not being able to set up base in India and had said he would like to see India opening up to more of their brands. "On multi-brand retail we are very clear as of now it's a 49 per cent restriction for foreign investment," Goyal said, when Johnson's recent intervention was put to him. "It's a very well thought out policy, recognising that the strength of Indian small retailers to serve the people of India across the length and breadth of the country is very deeply rooted in the culture of the villages of India. So, for the present, we would not like to change that," he said. "I think companies which want to come into India will have to look at restricting the foreign ownership to 49 per cent if they are looking at multi-brand retail. And we would like them to ensure that in letter and in spirit," Goyal said. The minister, however, highlighted the significant concessions and liberalisation planned for the single-brand retail sector so that more international companies can set up stores in India and expand their business. "They can also meet their requirements of 30 per cent domestic sourcing through their export requirements and integrate their global chains so that it's a win-win both for India and the single brand retailer coming into the country," he said. Goyal, who is in the UK on a three-day visit concluding on Tuesday, addressed the India-UK Joint Economic and Trade Committee (JETCO) on Monday to explore growth opportunities and address barriers to trade. In reference to the key outcomes of JETCO, the minister said that he has observed an enthusiastic approach within the UK government to make the best out of the opportunity that will come out of Brexit. "While we recognise that till Brexit happens, the UK is constrained to be able to finalise things or to move forward with any bilateral arrangement with any country," he said. If we can continue this comprehensive dialogue, where the larger gamut of issues are on the table now for the next 12-15 months, we will be well poised before Brexit to be able to make some significant announcements soon after Brexit and to be able to expand this relationship and take it to significantly larger levels. Goyal, who is also minister of railways, addressed the India Day event organised to showcase bilateral investment prospects to highlight the potential India and the UK have to offer an "unbeatable cost competitive" partnership. Asked about some of the missed opportunities in the bilateral ties recently flagged by a UK parliamentary panel, the minister said that he believes that Brexit would result in addressing some of those gaps. "Ultimately, many of these things could not have been done earlier when you look at the EU as a whole, not being able to come to terms with the requirements of India and EU together. But between the UK and India we can certainly resolve many of these issues. I see post-2020 Brexit, many missed opportunities can all become reality," he said.

Source: Business Standard

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NIFT Varanasi to be set up soon, UP Govt to offer land for the campus

The government has been trying its best to make education sector reaches in an improved state. There have been efforts in this direction and it includes the setting up new institutes of higher education. In the same context, a new NIFT campus is going to be started in Varanasi. Soon, this new campus of National Institute of Fashion Technology (NIFT) will be functional in UP as the state government has agreed to allot 25 acres of land for this purpose. It is important to know that Varanasi has been waiting for a dedicated area to start a new NIFT campus as decided in 2016. The state government of UP has approved the land for the development of NIFT campus through the Industrial Development department of the state. With the allotment, the state will be in the way to have the NIFT campus. As per the current numbers, there are a total of 16 NIFT campuses across the country. The NIFT has been developing its 17th campus in Panchkula, Haryana. NIFT Varanasi is likely to be the 18th campus and the construction work will be completed in a couple of years and then it will be made functional. In this regard, the CM of the state Yogi Adityanath has written to Union. Textile Minister Smriti Irani. In this letter, ha has promised her that 25 acres of land will be allotted for the development of the Institute. As per the official sources, the new NIFT campus in Varanasi will be offering courses in fashion technology, communication, management, leather design, knitwear design etc. The state allots the land for the development of the campus and then the institute makes investment for its construction and development of infrastructure. The new campus will provide a lot of courses for the students. Also, it will provide workshops and short courses for local artisans to make them aware of marketing their products and improve the production capacity.

Source: Jagran Josh

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Global Textile Raw Material Price 16-07-2019

Item

Price

Unit

Fluctuation

Date

PSF

1192.12

USD/Ton

-1.38%

7/16/2019

VSF

1732.93

USD/Ton

0%

7/16/2019

ASF

2262.84

USD/Ton

0%

7/16/2019

Polyester    POY

1184.85

USD/Ton

-2.63%

7/16/2019

Nylon    FDY

2449.65

USD/Ton

0%

7/16/2019

40D    Spandex

4303.25

USD/Ton

0%

7/16/2019

Nylon POY

2689.53

USD/Ton

0.82%

7/16/2019

Acrylic    Top 3D

1330.23

USD/Ton

-2.14%

7/16/2019

Polyester    FDY

1388.38

USD/Ton

-2.55%

7/16/2019

Nylon    DTY

2326.08

USD/Ton

0%

7/16/2019

Viscose    Long Filament

2413.31

USD/Ton

0%

7/16/2019

Polyester    DTY

5495.36

USD/Ton

0%

7/16/2019

30S    Spun Rayon Yarn

2420.58

USD/Ton

0%

7/16/2019

32S    Polyester Yarn

1897.21

USD/Ton

-1.51%

7/16/2019

45S    T/C Yarn

2616.84

USD/Ton

-0.55%

7/16/2019

40S    Rayon Yarn

2260.66

USD/Ton

0%

7/16/2019

T/R    Yarn 65/35 32S

2704.07

USD/Ton

0%

7/16/2019

45S    Polyester Yarn

2398.77

USD/Ton

0%

7/16/2019

T/C    Yarn 65/35 32S

2078.93

USD/Ton

-0.69%

7/16/2019

10S    Denim Fabric

1.33

USD/Meter

0%

7/16/2019

32S    Twill Fabric

0.76

USD/Meter

-0.19%

7/16/2019

40S    Combed Poplin

1.03

USD/Meter

-0.14%

7/16/2019

30S    Rayon Fabric

0.62

USD/Meter

0%

7/16/2019

45S    T/C Fabric

0.68

USD/Meter

0%

7/16/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14538 USD dtd. 16/07/2019). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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Textile industry urges govt to end post budget uncertainty

LAHORE - The All Pakistan Textile Mills Association (APTMA) Chairman Syed Ali Ahsan has urged the government to end post budget uncertainty, which is adversely impacting production, employment and exports in the country. He was addressing a press conference on Monday afternoon. Patron-in-Chief APTMA Gohar Ejaz was also present on the occasion. While highlighting the situation on ground in the wake of withdrawal of zero rating (SRO 1125) for five exporting industries, he said sales / transaction in the local market are at halt, supply chain of the industry has disrupted, stocks are being piled up, liquidity crunch is forcing closure of mills that is translating into massive unemployment and export orders are not being finalized. He urged the government to issue notifications effective 1st July, 2019 for energy (gas and electricity) price for the five exporting sectors, ensure rapid refund mechanism for exports (95 % refunds to be paid on filing of Return), remove input tax invalidity condition in case of non-verification of CNIC of buyer, bring down rate of sales tax to 7.5% and withholding tax at 4 % of local sales and 5 ½% on Imports (unjustly increased due to withdrawal of SRO 1125) to 1%, withdraw 3% additional sales tax on machinery imports and ensure level playing field all across textile value chain, whether imports or local sales. He said the textile industry envisages to increase textile and clothing exports from US$ 13.5 billion to US$ 25 billion in next 5 years if enabling environment is ensured by the government. Speaking on the occasion, Patron-in-Chief APTMA Gohar Ejaz said closing down of industrial units means that the economic wheel in the country has come to a halt. What FBR has imposed seems good only in books, but not in practice, he added.

Source: The Nation

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'Smart' textiles boost connectivity between wearable sensors by 1,000 times

Over the past decade, a major trend in electronics has been the development of sensors, displays and smart devices which are seamlessly integrated onto the human body. Most of these wearable devices are singularly connected to a user's smart phone and transmit all data via Bluetooth or Wi-Fi signals. But as consumers wear increasing numbers of wearable devices, and as the data they transmit increases in sophistication, more innovative connection methods are being sought after. Now, researchers from the National University of Singapore (NUS) have invented a completely new way for wearable devices to interconnect. They incorporated conductive textiles into clothing to dynamically connect several wearable devices at once. This 'wireless body sensor network' allows devices to transmit data with 1,000 times stronger signal than conventional technologies, meaning the battery life of all devices is dramatically improved. Wireless networks of these wearable devices on a body have future applications in health monitoring, medical interventions and human-machine interfaces. This technological breakthrough, which took the 10-member team a year to achieve, was published as the cover of Nature Electronics on 17 June 2019.

Better data transmission, greater privacy

Currently, almost all body sensors like smart watches connect to smartphones and other wearable electronics via radio-waves like Bluetooth and Wi-Fi. These waves radiate outwards in all directions, meaning that most of the energy is lost to the surrounding area. This method of connectivity drastically reduces the efficiency of the wearable technology as most of its battery life is consumed in attempting the connection. As such, Assistant Professor John Ho and his team from the Institute for Health Innovation & Technology (NUS iHealthtech) and the NUS Faculty of Engineering wanted to confine the signals between the sensors closer to the body to improve efficiency. Their solution was to enhance regular clothing with conductive textiles known as metamaterials. Rather than sending waves into surrounding space, these metamaterials are able to create 'surface waves' which can glide wirelessly around the body on the clothes. This means that the energy of the signal between devices is held close to the body rather than spread in all directions. Hence, the wearable electronics use much less power than normal, and the devices can detect much weaker signals. "This innovation allows for the perfect transmission of data between devices at power levels that are 1,000 times reduced. Or, alternatively, these metamaterial textiles could boost the received signal by 1,000 times which could give you dramatically higher data rates for the same power," Asst Prof Ho stated. In fact, the signal between devices is so strong that it is possible to wirelessly transmit power from a smartphone to the device itself -- opening the door for battery-free wearable devices. Crucially, this signal boost does not require any changes to either the smartphone or the Bluetooth device -- the metamaterial works with any existing wireless device in the designed frequency band. This inventive way of networking devices also provides more privacy than conventional methods. Currently, radio-waves transmit signals several metres outwards from the person wearing the device, meaning that personal and sensitive information could be vulnerable to potential eavesdroppers. By confining the wireless communication signal to within 10 centimetres of the body, Asst Prof Ho and his team have created a network which is more secure.

Intelligent design, enhanced capabilities

The team has a first-year provisional patent on the metamaterial textile design, which consists of a comb-shaped strip of metamaterial on top of the clothing with an unpatterned conductor layer underneath. These strips can then be arranged on clothing in any pattern necessary to connect all areas of the body. The metamaterial itself is cost-effective, in the range of a few dollars per metre, and can be bought readily in rolls. "We started with a specific metamaterial that was both flat and could support surface waves. We had to redesign the structure so that it could work at the frequencies used for Bluetooth and Wi-Fi, perform well even when close to the human body, and could be mass produced by cutting sheets of conductive textile," Asst Prof Ho explained. The team's particular design was created with the aid of a computer model to ensure successful communication in the radio frequency range and to optimise overall efficacy. The smart clothing is then fabricated by laser-cutting the conductive metamaterial and attaching the strips with fabric adhesive. Once made, the 'smart' clothes are highly robust. They can be folded and bent with minimal loss to the signal strength, and the conductive strips can even be cut or torn, without inhibiting the wireless capabilities. The garments can also be washed, dried, and ironed just like normal clothing.

Next steps

The team is talking to potential partners to commercialise this technology, and in the near future Asst Prof Ho is hoping to test the 'smart' textiles as specialised athletic clothing and for hospital patients to monitor performances and health. Potential applications could range dramatically -- from measuring a patient's vital signs without inhibiting their freedom of motion, to adjusting the volume in an athlete's wireless headphones with a single hand motion.

Source: Science Daily

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US industrial production unchanged in June

U.S. industrial production was flat in June, as a slump in utilities was offset by gains in output by factories and mining. The Federal Reserve said Tuesday that manufacturing production increased 0.4% last month, aided by a nearly 3% surge at auto plants. Still, factory output has been weak over the past 12 months, posting a modest gain of just 0.4%. The manufacturing sector has faced challenges because of President Donald Trump’s tariffs against China and the retaliatory taxes imposed by that country. “With the global backdrop still weak and the survey evidence consistent with manufacturing output declining, we expect the manufacturing sector to remain weak in the second half too,” said Michael Pearce, senior U.S. economist at Capital Economics. Production at the nation’s utilities fell 3.6%, as a milder than usual June led to less demand for air conditioning. Production at mines, a sector that also covers oil and gas drilling, advanced a modest 0.2%.Capacity utilization fell in June to 77.9% from 78.1% in May. The weakness in manufacturing has held back industrial output. During the April-June quarter, industrial production tumbled at an annual rate of 1.2%, the second straight quarterly decline. The April-June quarter saw sharp decreases in the making of machinery, motor vehicles, fabricated metals, textiles, paper and plastics and rubber products, among other goods. The import taxes on roughly $250 billion worth of Chinese goods have increased the costs for manufacturers that rely on foreign components, as well as created uncertainties about a global supply chain that keeps factory output steady. The Trump administration has relied on tariffs as leverage for causing China to trade on more favorable terms with the United States.

Source: Washington Post

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Vietnam garment, footwear firms must wait for EVFTA benefits

Textile, garment and footwear products made in Vietnam will not enjoy immediate tariff cuts after the EU-Vietnam Free Trade Agreement (EVFTA) comes into effect, according to a report from Bao Viet Securities Joint Stock Company (BVSC). After the EVFTA comes into effect, Most Favoured Nation (MFN) tariffs will automatically replace the Generalised System of Preferences (GSP) rates which the EU has applied for developing and underdeveloped countries. This means for the first few years of EVFTA’s implementation, most local garment and footwear products will not benefit from the EVFTA because MFN rates for those products are higher than GSP rates of nine per cent for garment products and three to four per cent for footwear products at present. Specifically, most apparel products that Vietnam has been exporting to the EU will see export tariffs eliminated gradually from the MFN tariffs of 12 per cent to zero in three to seven years after the EVFTA comes into effect. Similarly, footwear products will be exempt from MFN tariffs of 12.4 per cent in three to seven years. Those that will enjoy the immediate tariff cut are products which are not Vietnam’s major exports to the EU such as fibre to make clothes and other materials to produce footwear. In the footwear sector, the EU has pledged to eliminate 37 per cent of tariff lines for local footwear products exported to the EU as soon as the FTA enters into force. They include rubber/plastic waterproof shoes, slippers, raw materials and accessories. However, when the tax cuts take effect, Vietnamese footwear, textile and apparel enterprises will benefit significantly from EVFTA because the tariff preferences under the EVFTA are stable, while GSP tariffs are volatile and can be changed annually, according to the BVSC report. Besides, most countries that export textile and garments to the EU don’t have FTAs with the EU, so if Vietnamese enterprises meet origin requirements, the EVFTA will open a great opportunity for Vietnam’s footwear, textile and garment exports.

Rules of origin

Under the deal, Vietnam’s footwear, textile and garment industries will have to make changes to meet origin conditions and take advantage of preferential tariffs. For the textile and garment industry, fabrics used to make the products must originate from Vietnam or the EU, and the cutting and sewing stages must be performed in either the bloc or Vietnam. Despite this, the EVFTA has some flexibility on product origin. For instance, local garment firms can use fabric imported from countries that have signed free trade agreements (FTAs) with the EU and Vietnam, like South Korea. Vietnam and the EU sign the EU-Vietnam Free Trade Agreement (EVFTA) in Hanoi on June 30 after nine years of negotiation.

Source: Phnom Pehn Post

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