MARKET WATCH 09 OCT, 2019

NATIONAL

INTERNATIONAL

 

With GST compensation cess falling short, states may agree to raise rates at the lower end

With the compensation cess falling short, states may now have no option but to agree to raise GST rates at the lower end. Despite his credentials as an economist and a former secretary general of Ficci, most tend to dismiss West Bengal finance minister Amit Mitra’s warning on the stagnant GST revenues as pure politics. At an Express Group event, Mitra spoke of India’s federal polity being at risk if the Centre didn’t extend the guarantee of a 14% growth in the states’ revenue from GST; right now, if the state GST revenues don’t rise by 14%, they are to be compensated for the shortfall. The states would fall off a cliff, Mitra said, if this guarantee wasn’t extended for another five years after 2022. While the situation may be more serious, in one critical aspect, than Mitra pointed out, the good news is that this may also result in much-needed GST reform. Many reasons are given for GST revenues not being as buoyant as originally envisaged, ranging from the fact that important sectors have been kept outside the GST net to large-scale tax-theft, or even the fact that, as many say, the system was never robust enough to deliver… Whatever the reason, from Rs 92,581 crore in FY18, monthly GST revenues rose to just Rs 101,049 crore in April-September FY20 (see graphic). As a result, compensation-cess collections have averaged around Rs 7,500-8,000 crore per month while, thanks to sluggish overall GST revenues—revenues need to grow at 14% every year for the states’ share to grow at the same rate—the amount that needed to be paid as compensation has skyrocketed; from Rs 6,000 crore per month in FY18 to Rs 11,500 crore so far in FY20. This means the compensation cess will fall short by November. While Mitra and many others are hoping that the Centre will dip into its tax kitty to make good the shortfall, the GST law doesn’t say the compensation has to be paid by the Centre if cess collections fall short. So, even if the Centre guarantees a 14% growth in state GST revenues for another five years, in case the compensation cess falls short, the states get nothing. In which case, while the states can blame the central government for not implementing a perfect GST—since GST is a joint responsibility of the GST Council in which all states are members, of course, a blame game may not even fly—this won’t really help. In all probability, the GST Council will have to agree to raise tax rates on items that are either taxed at very low rates or not taxed at all. The 5% tax slab, for instance, fetches the government Rs 120,000 crore (see graphic); doubling this rate will give a big boost to GST revenues and, at a time when inflation is so low, the consumer impact of a tax hike may not be as high as imagined. Similarly, the 12% bracket fetches Rs 70,000 crore, and an increase in this rate will add to GST revenues. There are additional benefits of such rate-rationalisation. One, as GST rates are raised, and the gaps between tax slabs narrow, the incentive to cheat by using fake invoices falls. Two, as rates rise, the government will lose less from input tax credits. Mobile phones, for instance, are taxed at 12%, but their inputs at 18%, so the government ends up giving GST refunds to the industry. In textiles, the fact that the final cloth is taxed at 5% while inputs are taxed at 18% means an input-credit loss of Rs 30,000 crore a year; this loss is Rs 7,000 crore in the case of fertilisers where the final product has a 5% tax rate versus 18% for the inputs. Once GST rates are raised for the final product, such input-credit losses will reduce. Faced with the need to hike rates on items of so-called mass consumption, most states will argue a rate-hike wouldn’t be needed if tax theft was less rampant. Junior finance minister Anurag Thakur spoke of a Rs 45,600 crore tax loss due to fraud, but this was the figure for all indirect taxes; the government caught input tax fraud of around Rs 11,500 crore last year, so it is possible GST evasion levels could even be over Rs 100,000 crore a year. While a part of this will get fixed once rates are rationalised, a basic level of invoice-matching—the heart of the GST system—takes place even today. Everyone has to file their invoice-level returns as part of GSTR-1, so when firms pay their GST dues and file the GSTR-3B summary return while doing so, a basic check takes place automatically. If firm A gives invoice-level details of Rs 100 crore of supplies to firm X, and firm B shows it is supplying Rs 350 crore to firm X, but X shows a turnover of only Rs 300 crore, this problem gets caught even now. A more detailed level of automatic checks is being designed as the earlier one didn’t work. The new system, where all invoices are uploaded without filing an actual return, is supposed to take off by next April; a huge delay from the original schedule. And, once every business files its detailed annual returns, this will also help catch tax-theft since all supplier invoices have to be accounted for, but this requires considerable speeding up. Annual returns for FY18 were to be filed by December 2018, but this has been extended to November 2019; no dates have been fixed so far for FY19 and FY20; similarly, it is to be hoped that the new system’s invoice-matching will be more rigorous to catch tax theft. But, catching tax evasion takes time, and the government can’t wait for this to succeed if it needs higher revenues fast; catching evaders and tax-rate hikes will need to happen side by side, and both will reinforce one another.

Source: Financial Express

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'Drawback claims do not get time-barred'

The Customs had raised some queries against our drawback claim. By mistake, the queries were not replied to. As a lot of time had passed, the Customs, we believe, had archived the shipping bill. Now, the Customs site shows the claim as history. For revival of the Drawback claim, the Customs have advised us to lodge a supplementary claim. Is it a fit case for supplementary claim under rule 15 or 16? Or are there any other procedures for obtaining the drawback claim? Can drawback claims be time-barred?

In case of exports under electronic shipping bill, the shipping bill itself is treated as the claim for drawback. In case of manual export, triplicate copy of the shipping bill is treated as claim for drawback. The claim is complete only when accompanied by prescribed documents described in Rule 14(2) of the Customs and Central Excise Duties Drawback Rules, 2017. If the requisite documents are not furnished or there is any deficiency, the claim may be returned for furnishing requisite information/documents. As per Section 14(3)(b) of the said Rules, where the exporter re-submits the claim for drawback after complying with the requirements specified in the deficiency memo, the same will be treated as a claim filed under sub-rule (1) for the purpose of section 75A i.e. for the purpose of payment of interest. No time limit is laid down in the said Rules for complying with the said requirements. So, you can restore the drawback claim by filing your reply to the deficiency letter. Your drawback claim does not get time-barred. A supplementary claim in accordance with Rule 16 of the said Rules can be filed where any exporter finds that the amount of drawback paid to him is less than what he is entitled to on the basis of the amount or rate of drawback determined by the Central Government or Principal Commissioner of Customs or Commissioner of Customs. That situation does not arise when your original drawback claim is not disbursed. What is the difference between public notice and notification? What are the characteristics which differentiate public notice from notification? Generally speaking, the notifications are issued by the government in exercise of the powers conferred under a law mainly to bring in or amend some legal provisions, whereas public notices are issued by statutory authorities to prescribe procedures or disseminate information to the public. Under the Customs Act, 1962, the Central government is given powers to notify Rules or Regulations. Section 28(5)(B) however talks of a public notice to be issued by the Assistant Commissioner of Customs. Under the Foreign Trade (Development and Regulation) Act, 1992, the Central government gets the powers to notify the Export and Import Policy. That Policy gives the powers to the Director General of Foreign Trade to prescribe procedures through a public notice. Similar provisions may be there in other laws. All laws require most notifications to be published in the official Gazette and placed before the legislature for ratification. Usually, that is not necessary for public notices.

Source: Business Standard

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PM takes stock of RCEP trade pact amid concerns

Prime Minister Narendra Modi on Monday took stock of the proposed Regional Comprehensive Economic Partnership (RCEP) trade agreement whose negotiations are in the final stages. Officials said India is likely to remain in the pact but with some safeguards and caveats in order to protect its interests. These carve outs could pertain to future domestic policy concessions in investment and services sectors (called ‘ratchet’ in trade parlance) along with such concessions given to a trading partner under a bilateral treaty automatically getting extended to RCEP members. While there was no briefing or statement after the meeting which lasted more than four hours, it was a crucial discussion with key economic ministries amid various ministries and industries including textiles and dairy opposing the pact due to China’s presence in it. Excluding dairy imports from the pact, protecting sensitive sectors from Chinese imports and investment are the key areas of concern. The meeting was preceded by a spate of discussions among various ministries the entire day on the trade pact. Home minister Amit Shah met commerce and industry minister Piyush Goyal, finance minister Nirmala Sitharaman, external affairs minister Subrahmanyam Jaishankar and minister of state for commerce and industry Hardeep Singh Puri on the issue earlier in the day. “It was a divided house with two ministers against India joining the trade bloc. The home minister tried to bring in synergies,” said an official aware of the details. Separately, the Bharatiya Janata Party met industry and other stakeholders to gauge the status of the pact which is expected to conclude next month when Modi participates in the Asean summit. However, the actual agreement is likely to be signed in June 2020. The BJP has called the meeting as “RCEP and Free Trade Agreement (FTA) have acquired immense importance for India’s trade relation with South Asian Co-untries” and the region is a “focal area” of Modi’s Look East policy. BL Santosh, general secretary (organisation) of the BJP was present at the meeting. “While it was a mixed group, everyone aired their fears on China and allowing dairy imports. Those who supported India’s participation insisted that it should be done on the country’s own conditions,” said one person who attended the meeting. “The feeling is that India will go ahead with the agreement with adequate safeguards and exclusion of dairy. We were told that the PM is aware of these concerns and the political and dairy interest would be protected,” said the person. The marathon meetings come ahead of Goyal’s visit to Bangkok later this week for the RCEP ministerial. The RCEP is a proposed FTA between the 10 member states of the Association of Southeast Asian Nations (Asean) and its six FTA partners — China, India, Japan, South Korea, Australia and New Zealand. RCEP negotiations began in November 2012 and have been under the scanner as industry fears cheap Chinese goods flooding the country once the agreement is signed. “Conclusion of the talks is a legal term meaning that Parliament will have to be informed about the pact,” said the first official.

Fears, solutions

ET had earlier reported that India has offered to cut or eliminate tariffs on 80% of products imported from China but the offer is yet to be exchanged as there are talks of China offering steeper concessions in return. India plans to cut duties on 86-88% of imports from Australia and New Zealand, and 90% for products coming in from Asean, Japan and South Korea. India may have to draw up a list of products on which it wants to use an auto trigger mechanism to raise duties if it sees a sudden surge in imports on particular items from a partner country and protect itself. The commerce department is also grappling with concerns on many products, the concessions on which would vary among countries, called tariff differential in trade parlance. “Tariff differential is an area of concern as long staging period and entry into effect are being deliberated,” said another official. Moreover, the controversial investor-state dispute settlement (ISDS), which is out of the trade agreement for now but negotiations on the contentious issue will begin after three years. “There are talks that ISDS may come in later and the finance ministry is concerned about that,” the second official said. India had advocated that local remedies should be exhausted before an investor can ask for third-party arbitration to resolve a dispute. The country had opposed this mechanism fearing loss of sovereignty that comes with such arbitration, as had happened in the case of tax disputes with oil and gas explorer Cairn and telecom operator Vodafone. RSS-affiliate Swadeshi Jagran Manch (SJM) has termed the investment provisions “a meek surrender of the sovereign rights of any country to seek the transfer of technology from the investing companies, training to their domestic partners, and removing the cap on the quantum of royalties which domestic companies can pay to their foreign partners”. It has also said that import of cheaper milk and milk products would adversely hit the livelihood of 50 million milk producers in the country and shot down the auto trigger mechanism as it would require major calculations before being put into place.

Source: Economic Times

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BJP discusses RCEP deal with stakeholders, will submit report to govt

As India prepares for the final phase of negotiations on the RCEP (Regional Comprehensive Economic Partnership) free-trade agreement, the Bharatiya Janata Party (BJP) on Monday held a consultation with sundry stakeholders on the issue. Party sources said it was a first-of-its-kind exercise by the BJP. The meeting, with nearly 20 stakeholders, was held at the BJP national headquarters in the national capital. From the BJP, its national general secretary (organisation) B L Santhosh and spokesperson on economic affairs Gopal Agarwal attended. Representatives of the PHD Chamber of Commerce, exporters, activists and experts attended the meeting. Swadeshi Jagran Manch, the Rashtriya Swayamsevak-affiliated think thank on economic affairs, also attended the meeting. The BJP will now submit its report on the meeting to the government. The BJP’s effort comes in the wake of Commerce and Industry Minister Piyush Goyal set to attend the eighth RCEP ministerial meeting in Bangkok from October 10 to 12. On Friday, Home Minister Amit Shah, External Affairs Minister S Jaishankar, Finance Minister Nirmala Sitharaman, Goyal and Minister of State for Commerce and Industry Hardeep Singh Puri had met here to discuss RCEP. Sources said the meeting on Monday had those who voiced concerns about the fallout of the trade deal on Indian domestic industry, particularly on agriculture and dairy industries, while some others said it could benefit Indian industry by making it more competitive and help exports. In recent days, Swadeshi Jagran Manch’s Ashwani Mahajan has cautioned against New Delhi joining RCEP, which could have “disastrous impact” on Indian manufacturing, dairy and agriculture. The Manch has warned joining the trade deal would cause job losses to the tune of 50 million in rural areas, and Prime Minister Narendra Modi’s promise of doubling farmers' incomes will remain a pipe dream. "Indian dairy farmers' income will actually be halved. India's $100 billion dairy industry is a prized market for New Zealand and Australia," Mahajan has said.

Source: Business Standard

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Index to measure logistics costs of key export sectors on the cards

India will soon have its own index to estimate the costs of logistics in its top nine export sectors including agriculture, leather, apparel and, gems and jewellery. The department of commerce has begun an exercise to develop sector-specific indices to estimate the logistics costs and bring them down to 10% of the gross domestic product (GDP) from 14% at present as they are higher than those in developed countries. The government also aims to break into the list of top 30 countries in the World Bank Logistics Performance Index which ranked India 44 in 2018 from 54 in 2014. “Internationally, no one has made sector-specific indices to estimate logistics costs. We have taken the top exporting sectors and will move on to domestic trade later,” said Manoj Pant, director, Indian Institute of Foreign Trade (IIFT). The institute, an autonomous body under the ministry of commerce and industry, is developing the index which is likely to be released early next year. Data collection for the index started three months ago and is being done through perception based surveys through the respective export promotion councils. “We are getting to know about their problems such as biggest constraints in transportation and warehousing,” Pant said. The index would also look at the logistics issues of electronics, marine, chemical and engineering goods and serve as a common measure of logistics performance for various industries in India. At 14%, logistics cost in India is much higher than Japan’s 11% and the US’ 9-10%. Of this, transportation and warehousing make the bulk. “While movement of goods is a major problem in most exports, temperature-controlled facilities are key for agricultural goods and pharmaceuticals. So, by and large, the issues are same for most exports,” said Ajay Sahai, director general, Federation of Indian Export Organisations. Globally, coastal transportation is the most favoured way followed by railways and then roads. But the trend is reverse in India where nearly 60% of the cargo is moved by road, 32% by rail and rest by the coastal shipping, airways and inland waterways. The index will help identify the cost efficient way of transporting inputs and finished goods.

Source: Economic Times

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India in no shape to benefit from RCEP

Joining the RCEP could be counter-productive given the existing inefficiencies of Indian producers. These need to be fixed first. To be or not to be, that is the question. This seems to be the best way of describing India’s engagement in the negotiations for adopting the Regional Comprehensive Economic Partnership (RCEP), the mega regional trade agreement of 16 East Asian countries. When the Bangkok round of the RCEP participating countries (RPCs) was held about six weeks ago, there were indications that the government had serious doubts about joining the RCEP. More recently, it has shown signs of a re-think; it appears that the government would continue to engage in the RCEP negotiations. This is a critical phase for the RCEP, as almost all countries are pushing to conclude the negotiations before the end of 2019. The government’s changed stance on the RCEP comes even as a large segment of India’s manufacturing and diary sectors has consistently spoken against joining this agreement, arguing that import competition would adversely affect them. It is difficult to objectively assess the claims of Indian enterprises, especially because the negotiations are held in complete secrecy and the terms of engagement in the RCEP are not known. This is the most confounding aspect of all FTAs, including the RCEP. Each participating government claims, without exception, that these agreements enhance the economic welfare of its citizens; and yet, the citizens are deprived of an opportunity to independently assess benefits of FTAs.

Import surge

However, the likely outcomes of the RCEP can be assessed in two indirect ways. These assessments would rely on information provided by the government. The first of these considers India’s initial negotiating position on eliminating import tariffs on goods prepared by the present government in 2015. A second assessment takes a cue from a NITI Aayog note, which pointed to the disquieting trend of growing trade deficit with the ASEAN after India began implementing the India-ASEAN FTA. In fact, India signed Comprehensive Economic Partnership Agreements (CEPAs) with Korea and Japan, and with both these countries, too, India’s trade balance has steadily deteriorated. India’s initial tariff offers in the RCEP negotiations showed that the government was unwilling to offer the same levels of market access to all RPCs. Thus, while India was willing to eliminate tariffs on nearly 80 per cent of its products imported from the ASEAN and Australia (over 10 years), for China, the corresponding figure was only 42.5 per cent. This conservative stance vis-a-vis China reflected India’s growing trade deficit with its northern neighbour, which increased from about $1.5 billion in 2004-05 to nearly $49 billion a decade later. This trade deficit was caused by a steep increase in India’s imports from about $4 billion in 2003-04 to $60.4 billion in 2014-15. Since then, imports from China increased to a record level of $76 billion in 2017-18, before declining to $70 billion in 2018-19. Thus, while making initial tariff offers in RCEP negotiations, the Government of India seemed to have expressed its concern about the steep increase in imports from China and, perhaps more importantly, about protecting domestic firms from further import surges resulting from substantial tariff elimination on Chinese imports. However, India’s initial offers were not accepted by the RPCs, and although the revised offers were not made public, it is now well-known that most RPCs are seeking substantial higher levels of tariff elimination than what India had initially proposed. This implies that India could eventually eliminate a much larger share of import tariffs than it was originally intending to, especially on imports from China.

Trade deficit

The government has recently expressed its concern about the rising trade deficit with ASEAN and is now seeking to review its FTA with the 10-member group. But, the trade deficit with ASEAN is only a part of the problem; in the two other agreements, with Korea and Japan, India finds itself in an equally acutely adverse situation. While trade deficit with ASEAN has grown four-fold during the implementation of ASEAN-India FTA, deficits with Japan and Korea have roughly doubled after the two CEPAs were implemented. When India’s trade deficits with 13 of its 15 potential RCEP partners have growing by such magnitudes, the consequences of eliminating tariffs further can well be imagined. In fact, since 2018, the government has recognised that low levels of tariffs are hurting India’s manufacturing in two ways: one, they are discouraging domestic manufacturing and hurting the ‘Make in India’ initiative, and two, major industries, including textiles and clothing, have struggled to face import competition. Consequently, tariffs have been increased on a range of manufacturing sectors, resulting in an increase in average tariffs on industrial products from 10.8 per cent in 2017 to 13.6 per cent in 2018. Thus, trade liberalisation via the RCEP militates against the government’s policies of promoting and protecting manufacturing industries. Does this mean that India should turn its back from the global markets completely? This scenario can be avoided, provided the government takes proactive steps to make domestic producers globally competitive. The government has been aware that the competitiveness of the manufacturing sector had to be improved at least since the middle of the previous decade and that the share of the sector in the GDP should be increased from about 17 per cent to about 25 per cent. However, even after several policy pronouncements, including the National Manufacturing Policy in 2011 and the Make in India in 2014, the share of the sector slipped to 16 per cent in 2018-19. For decades, Indian agriculture has been burdened by mounting inefficiencies and instead of addressing this problem, every government opted for the low hanging fruit to compensate the farmers, namely, by increasing the volume of subsidies. India’s policymakers never paused to think that growing inefficiencies would not allow a sector as important as agriculture to survive in an open economy, which the RCEP promises to usher in.

Improving competitiveness

The government must recognise that unless Indian agriculture and manufacturing sectors emerge strong and efficient, participation in the RCEP process could be regressive for the economy. The ASEAN-India FTA, and the CEPAs with Korea and Japan did not work in India’s favour almost entirely because lack of competitiveness of Indian products have held India’s exports back. Thus, joining the RCEP could result in far worse outcomes if the government does not take prompt measures to reverse the existing inefficiencies of Indian producers. Finally, it may be pointed out that proactive governments, especially in countries that are driving the RCEP process, have consistently adopted effective policy instruments to improve competitiveness of their domestic enterprises. India’s policymakers need to take a cue from these forward-looking policies and adopt them for preparing the domestic producers to take up the RCEP challenge.

Source: The Hindu Business Line

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Textiles get their moment in the art world spotlight

The prestigious annual showcase, held this year in Regents Park from Thursday to Sunday, has organised a new section called ‘Woven’ devoted entirely to textile fibres. From weaving to embroidery, the world of textiles - often largely ignored at Western contemporary art showcases - is taking centre stage this weekend at the Frieze London art fair. The prestigious annual showcase, held this year in Regents Park from Thursday to Sunday, has organised a new section called ‘Woven’ devoted entirely to textile fibres. It features eight solo artists of different generations from a host of countries, including Brazil, the Philippines, China, India and Madagascar, who tackle perhaps surprisingly topical themes. “(Weaving) had always been a central part of artistic practice everywhere in the world,” curator Cosmin Costinas told AFP, explaining the exhibition’s name. “But indeed it was marginalised because it was associated with women,” he added, noting “eurocentric” perspectives that the craft was largely non-Western had also fueled its sidelining. For Cosmin, it was a chance to celebrate textile arts while weaving issues like Britain’s “unsolved colonial legacy”, with other contemporary matters such as sexism and ethnocentrism. “There was a strong intention to do something that responds to the current moment, the current mess the UK finds itself,” he said, referring to the political turmoil engulfing Britain over Brexit.

It’s been changing

‘Woven’ brings together artists like Mrinalini Mukherjee (1949-2015), an Indian sculptor who used dyed and woven hemp, and Pacita Abad (1946-2004), an American-Filipino artist renowned for merging traditional textiles with contemporary painting. Abad’s ‘Trapunto’ canvases, festooned with sequins, shells and swatches of precious textiles, among other things, take on a three dimensional quality. “For many people it was considered craft versus art,” said Amrita Jhaveri, owner of the Jhaveri Contemporary gallery in Mumbia, which presents the weavings of Monika Correa at the Frieze.“But it’s been changing for some time now. “The art world is looking outside the kind of formal art practice to other areas for instance ceramics, or textiles,” she added. Their increasing recognition on the international art stage has also coincided with ongoing reinvention. Chitra Ganesh, a 44-year-old Indian-American visual artist, noted “a larger conceptual approach to bringing together disparate iconographies, histories, looking for way to connect the very old and the very new.” Her feminist works are full of mythological connotations while incorporating “mass produced materials” such as industrial bags of potatoes, fur falls and animal skins.

A form of protest

Angela Su, a Hong Kong artist known for her scientific drawings and performance works, showcases a series of works inspired by the months of pro-democracy protests sweeping her home city and former British colony. The central painting depicts a brain to evoke “the schizophrenic identity of Hong Kong”. “We don’t know if we’re Chinese or Hong Kong or British, we’re this mix of everything,” Su said. The artists was also eager to show that sewing could be modern and “a form of protest” as well as a traditional craft. One of her pieces exhibits lips sewn together with hair to show “the suppression of freedom of speech”. Cian Dayrit, a 30-year-old Filipino multimedia artist, also tackled contemporary themes in his works, using embroidery to comment on colonialism and its present day legacies. He created idealist political messages and maps of modern cities with textiles and colourful threads, based on archival photographs of Filipinos taken in the early 19th century by an American settler. “This whole aspirational project of development and the future is actually depossessing marginalised communities,” he told AFP on his motives behind the works. “The intervention is also exposing the ills of the neo-colonial present.”

Source: Agence France-Presse

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Index to measure logistics costs of key export sectors on the cards

India will soon have its own index to estimate the costs of logistics in its top nine export sectors including agriculture, leather, apparel and, gems and jewellery. The department of commerce has begun an exercise to develop sector-specific indices to estimate the logistics costs and bring them down to 10% of the gross domestic product (GDP) from 14% at present as they are higher than those in developed countries. The government also aims to break into the list of top 30 countries in the World Bank Logistics Performance Index which ranked India 44 in 2018 from 54 in 2014. “Internationally, no one has made sector-specific indices to estimate logistics costs. We have taken the top exporting sectors and will move on to domestic trade later,” said Manoj Pant, director, Indian Institute of Foreign Trade (IIFT). The institute, an autonomous body under the ministry of commerce and industry, is developing the index which is likely to be released early next year. Data collection for the index started three months ago and is being done through perception based surveys through the respective export promotion councils. “We are getting to know about their problems such as biggest constraints in transportation and warehousing,” Pant said. The index would also look at the logistics issues of electronics, marine, chemical and engineering goods and serve as a common measure of logistics performance for various industries in India. At 14%, logistics cost in India is much higher than Japan’s 11% and the US’ 9-10%. Of this, transportation and warehousing make the bulk. “While movement of goods is a major problem in most exports, temperature-controlled facilities are key for agricultural goods and pharmaceuticals. So, by and large, the issues are same for most exports,” said Ajay Sahai, director general, Federation of Indian Export Organisations. Globally, coastal transportation is the most favoured way followed by railways and then roads. But the trend is reverse in India where nearly 60% of the cargo is moved by road, 32% by rail and rest by the coastal shipping, airways and inland waterways. The index will help identify the cost efficient way of transporting inputs and finished goods.

Source: Economic Times

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Visakhapatnam Special Economic Zone tops in exports among all seven zones

Reddy hoped the SEZs in the zone will achieve `85,000 crore target this fiscal year in exports. As many as 53 developers located in Visakhapatnam Special Economic Zone (VSEZ) achieved highest growth in exports (Rs 44,571 crore) from April 1 to September 30 in the current financial year against Rs 34,459 crore during the last fiscal year. Addressing media persons here on Monday, VSEZ Zonal Development Commissioner ARM Reddy said the zone recorded 29.35 per cent growth, highest among all seven SEZs—Cochin, Mumbai, Falta, Kandla, Chennai and Noida—in the country. He praised the efforts of all developers and 472 units in VSEZ for achieving the highest exports in merchandise and services despite the slowdown in the automobile sector. He said there are 351 notified SEZs in the country and out of the 232 are operational. The investment made by these SEZs so far is Rs 5.07 lakh crore and providing employment to 20.61 lakh compared to 1.34 lakh in 2006. Exports from 5,109 SEZ units in the country during 2018-19 are to the tune of Rs 7.01 lakh crore. Reddy said VSEZ, which was set up in 1989 as VEPZ, has its jurisdiction over Andhra Pradesh, Chhattisgarh, Telangana and Yanam, though its activity is prominent in the State and Telangana. VSEZ’s contribution to the country’s exports is pegged at Rs 74,747.61 crore during 2018-19 and attracted investment worth Rs 55,452.40 crore and providing jobs to more than 3,45,134 persons apart from support to infrastructure, domestic industries, domestic service providers and local economy, he added. The SEZs, which have achieved the highest growth rate this fiscal year in exports are APIIC Ltd, Naidupeta, Sricity SEZ e, FAB City SPV (India) Limited, Brandix India Apparel City Pvt Ltd, and Bharatiya International SEZ Ltd. He said, “We have approved 46 units in multiple sectors in the zone in the past six months with an estimated investment of Rs 2,944 crore and estimated export worth Rs 26,654 crore and employment of 25,329 people in five years. Investment in software sector was the highest at Rs 23,239.67 crore, followed by pharma sector with Rs 8,428.60 crore, non-conventional energy with Rs 2,057.00 crore and textiles and garments with Rs 1,055.30 crore, he said. The overall employment generation in SEZs of Andhra Pradesh and Telangana has touched 3,45,134 till June this year with the software sector leading in employment generation with 2,79,065. Reddy hoped the SEZs in the zone will achieve Rs 85,000 crore target this fiscal year in exports.

Chambers lauds VSEZ

Meanwhile, Andhra Pradesh Chambers of Commerce and Industry Federation former president G Sambasiva Rao along with core committee members BSSV Narayana, KVSVarma and G Raghu met Reddy and congratulated him for achieving the highest growth among seven zones in the country. They lauded him for his pro-active and industry-friendly attitude.

Source: Indian Express

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Karur sets the ball rolling on setting up mini textile parks

The Department of Handloom and Textile has convened a meeting of entrepreneurs to discuss on setting up mini textile parks in Karur. Besides Collector T. Anbagalan, senior officials of Department of Handloom and Textiles will participate in the meeting to be held at the Collectorate on October 15. V. Vijayalakshmi, Assistant Director, Handlooms and Textiles, said here on Sunday that the State government had issued a fresh Government Order on providing subsidy of ₹2.5 crore to set up mini textile parks in Karur. The Government would either bear 50% of the cost for building basic infrastructure in the park such as laying of roads, setting up of sewage treatment plant and captive power plant, training centre or offer subsidy to the maximum of ₹2.5 crore to the manufacturers. She said that it was aimed at motivating the apparel manufacturers to set up new units, thereby increasing job opportunities in various process of textile making including spinning, weaving and marketing. Apparel manufactures by launching a Special Purpose Vehicle (SPV) could come forward to set up mini textile parks in Karur. The park should be established on at least 2 acres of land. If they fulfil the conditions, they could get a subsidy to the maximum of ₹2.5 crore per park. Ms. Vijayalakshmi said mini textile parks would enable the garment manufacturers to set up various units at the same place. It would reduce overhead and transportation cost. Moreover, 50 % subsidy on building infrastructural facilities in the textile park would offer a great support to the entrepreneurs. She said that the Department had received a number of enquiries from entrepreneurs on setting up of mini textile parks. They could attend the meeting on October 15. A detailed presentation would be made on availing 50% subsidy.

Source: The Hindu Business Line

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Diwali onwards, we expect consumption to go up: Dipali Goenka, Welspun India

For India, the cotton crop has been one of the best so far for us and that is a good news, says Dipali Goenka, Jt MD & CEO, Welspun India. Excerpts from an interview with Ashna Mishra of ETNOW. How has the textile industry been faring? How has the cut in corporate tax rate benefitted the industry? Right now, the situation in the market is a little dynamic. It has been absolutely wonderful that the government has announced the corporate tax but lots more needs to be done and I think the government is looking into it as well. In August, it completely bottomed out for the industry as well but now is the time to wait and watch. Things look positive post Diwali. Most critics of the government have said that right now, the problem is on the consumption side and a cut in the personal income tax could give a boost to that. Is a step like that required right now? I would say that the government is taking the necessary initiatives and they are going to be doing a lot of things, some of which are being announced and some are being kept for a Diwali bumper announcement by the government. So, let us wait and watch. From domestic consumption perspective, Diwali onwards, we expect consumption to go up. We have bottomed out as of now. How is the textile sector faring right now? How do you see the situation panning out in the days to come? We have been experiencing a global turmoil, with the tariff war, Brexit and other issues. For India, the cotton crop has been one of the best so far for us and that is a good news. India as a country stands to gain because it is not only the largest producer of cotton but also the largest exporter of cotton. For us as manufacturers also, India is in a good place. It has the largest vertically composite industries and textiles.

Source: Economic Times

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Global Textile Raw Material Price 08-10-2019

Item

Price

Unit

Fluctuation

Date

PSF

1004.27

USD/Ton

0%

10/8/2019

VSF

1500.81

USD/Ton

0%

10/8/2019

ASF

2146.31

USD/Ton

0%

10/8/2019

Polyester    POY

1057.42

USD/Ton

-2.07%

10/8/2019

Nylon    FDY

2342.82

USD/Ton

0%

10/8/2019

40D    Spandex

4042.24

USD/Ton

0%

10/8/2019

Nylon    POY

5287.09

USD/Ton

0%

10/8/2019

Acrylic    Top 3D

1286.80

USD/Ton

0%

10/8/2019

Polyester    FDY

2195.96

USD/Ton

0%

10/8/2019

Nylon    DTY

2279.88

USD/Ton

0%

10/8/2019

Viscose    Long Filament

1181.90

USD/Ton

-0.59%

10/8/2019

Polyester    DTY

2573.61

USD/Ton

0%

10/8/2019

30S    Spun Rayon Yarn

2140.01

USD/Ton

0%

10/8/2019

32S    Polyester Yarn

1622.49

USD/Ton

-1.28%

10/8/2019

45S    T/C Yarn

2405.76

USD/Ton

0%

10/8/2019

40S    Rayon Yarn

2405.76

USD/Ton

0%

10/8/2019

T/R    Yarn 65/35 32S

2021.12

USD/Ton

0%

10/8/2019

45S    Polyester Yarn

1776.35

USD/Ton

-0.78%

10/8/2019

T/C    Yarn 65/35 32S

2251.91

USD/Ton

0%

10/8/2019

10S    Denim Fabric

1.24

USD/Meter

0%

10/8/2019

32S    Twill Fabric

0.68

USD/Meter

0%

10/8/2019

40S    Combed Poplin

0.96

USD/Meter

0%

10/8/2019

30S    Rayon Fabric

0.57

USD/Meter

0%

10/8/2019

45S    T/C Fabric

0.66

USD/Meter

0%

10/8/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.13987 USD dtd. 08/10/2019). 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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Nigeria: Textile workers beckon FG to reform labour market

The National Union of Textile Garment and Tailoring Workers of Nigeria (NUTGTWN) has called on the Federal Government to urgently reform the labour market by enforcing the existing progressive labour laws to protect workers from exploitation and abuse. General Secretary of the Union, Comrade Issa Aremu, made the call in his speech during the Global Day of Mass Action for Decent Work on Monday at the Kaduna Textiles Limited in Kaduna. He said trade unions must rise up to defend the dignity of labour, fight precarious work and promote, protect and defend quality and secured employment. According to Aremu, the Union must work to convert precarious work to regular employment with improved working condition. “Precarious work or casual work is work done under inhuman conditions, low pay, unsecured, work that violates fundamental rights at work, reduce the dignity of workers. The most vulnerable are the women and young workers. “Some bad employers engage in casualization, paying peanuts and engaging workers for 12 hours on daily basis. In many homes child labour is the order of the day, where children are kept out of school to engage in menial jobs.” He said. The Nigerian Labour Congress NEC member lamented the condition of staff of closed Kaduna Textile Limited and other closed textile companies in the country, where the workers have suffered untold hardship due to long lay off without pay. He explained that the urgent settlement of their entitlement will go a long way to reduce their burden and alleviate their increasing poverty. “The total entitlement of workers amount to N687,073,346. The union is using this occasion to once again call on the 19 Northern governors to address the plights of these workers. We also want this factory reopened to create jobs for the teeming population of unemployed youth in the state. Arewa Textile Limited, one of the biggest players in the industry closed down in 2005 with about 3,000 workers out of employment. “The total entitlement amount to N640,000,000. The union is committed to getting justice for these workers the road to decent work is long but we are determined. It is heartwarming to inform you that the union was able to deliver as promised. “The entitlement of Gaskiya Textile Limited workers amounting to N170,000,000 has been secured and will be paid soonest the same way we expect to secure others Gods willing. “If there is the will there will be a way. Let’s join hands to stamp out precarious jobs. Let’s fight for the right to join the union, right to collective bargaining. Fighting forward decent work,” Aremu said.

Source: Blue Print

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World Bank warns of weaker global growth amid Brexit, trade uncertainty

The IMF has also indicated it may lower its 2019 outlook from after the fund in July projected 3.2 per cent growth -- the lowest since the financial crisis. World Bank President David Malpass said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe. “Global growth is slowing,” Malpass said in Montreal on Monday in a speech ahead of the the IMF and World Bank annual meetings. The world economy now looks even weaker than the bank’s June forecast for 2.6 per cent growth in 2019, “hurt by Brexit, Europe’s recession and trade uncertainty,” he added. Malpass renewed his global growth warning as investors are keeping an eye on several major issues that could come to a head this month. High-level U.S.-China trade talks resume this week -- before the next planned tariff escalation October 15 -- and U.K. Prime Minister Boris Johnson has pledged to take Britain out of the European Union on October 31 without a deal if necessary. Meanwhile, economic indicators from Europe are flashing red as a slump in manufacturing increasingly affects domestic demand. Malpass repeated his criticism of the roughly $15 trillion of bonds with zero or negative yields, describing it as “frozen capital” that’s diverting resources from growth and benefiting bondholders and issuers of the debt. The heads of the global institutions are gathering amid growing concern about how threats from U.S. President Donald Trump’s trade wars to Brexit are weighing on world expansion. There are also fresh faces in place after IMF chief Christine Lagarde left to lead the European Central Bank and was succeeded by Bulgarian economist Kristalina Georgieva, formerly chief executive of the World Bank. The IMF has also indicated it may lower its 2019 outlook from after the fund in July projected 3.2 per cent growth -- the lowest since the financial crisis. The IMF is preparing to release its updated forecast next week. Trump nominated Malpass in February, choosing a supporter who’d criticized China and backed a shakeup of the global economic order. Malpass, who previously portrayed the lender as inefficient and reluctant to cut funding for developing countries that grow into dynamic emerging markets, was selected in April to serve a five-year term.

Source: Bloomberg

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Dutch move enabling sustainable purchasing practices

Dutch Agreement on Sustainable Garments and Textile (AGT) is helping to promote sustainable purchasing practices in collaboration with the German Textile Partnership and ACT on Living Wage. The AGT gives value to purchasing practices of signatory companies. Sustainable purchasing practices should enable suppliers work towards pay workers a living wage. In contrast, conventional purchasing practices, including aggressive price negotiation, inaccurate forecasting, late orders, short lead times, last minute changes and late order payments, put suppliers under intense pressure and lead directly to poor working conditions and low pay for workers. Therefore, purchasing practices play an integral role in the quest to reach living wages. Recently, the German Textile Partnership has launched an online tool for garment brands to assess their purchasing practices, based on the content of the Purchasing Practices Self-Assessment (PPSA) tool developed by ACT on Living Wage. ACT is a ground-breaking agreement between global brands and retailers and trade unions to transform the garment, textile and footwear industry and achieve living wages for workers through collective bargaining at industry level linked to purchasing practices. A significant amount of AGT brands have recently started to use the online PPSA-tool, courtesy of the German Textile Partnership. With this tool AGT signatories can now analyse their own purchasing practices, benchmark with other companies, raise awareness internally and discuss the results. The aim is for brands to utilise innovative insights for defining next-steps in adapting purchasing practices, making them more sustainable and enabling progress towards living wages. Part of the AGT living wage strategy is alignment and collaboration with other initiatives sharing the same objective, such as the German Textile Partnership (TP) and ACT on Living Wages. Through collaboration on the use of the online PPSA-tool, the agreement hopes to jointly establish the conditions for fair purchasing practices within the industry, and be able to change the way business is done in the sector. The five ACT Global Purchasing Practices Commitments and implementation measures should provide guidance to define these steps. Galya Parmenter, project manager- Global Sustainability of C&A (member of ACT and Signatory to the AGT) is positive that a shared agenda on purchasing practices will set a level playing field in the sector: “By making the ACT PPSA-tool available for AGT and Textilbundnis members, we hope that more brands will take up a proactive role in analysing their internal buying processes and improve them to contribute to the prevention of negative impact on wages and working conditions. I would recommend to other brands to endorse and adopt the ACT Purchasing Practices Commitments which are the only joint public commitments in this area in the garment industry. We can set up a level playing field only through having common objectives such as stated in those commitments.”

Source: Fibre2Fashion

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7 Apparel Innovations & Innovators Driving the ‘Waste Not, Want Not’ Movement Forward

Each day we learn more and more about how wasteful the fashion industry really is. Headlines reveal “x” brand incinerates “x” tons of their unsold stock a year. The Ellen MacArthur Foundation confirms that the equivalent of one garbage truck of textiles is sent to landfills or incinerated every second. Fashion Revolution states that 60 billion square meters of unused fabric immediately meet their fate as cutting-room floor waste. Starting from the raw material, this concept of wastefulness can be traced all the way up the value chain. Cotton—one of the most important ingredients in the fashion industry—is a prime example. Every year, approximately 28.5 million metric tons of cotton is grown by 100 million farmers around the world, according to Paulina Szmydke-Cacciapalle’s “Making Jeans Green.” Cotton cultivation has long been identified for its harmful impacts and wasteful tendencies. Szmydke-Cacciapalle concludes that roughly 5 percent of pesticide and between 16 percent to 18 percent of insecticide use globally is dedicated to cotton crops, much of which ends up as runoff ultimately impacting waterways. Likewise, she writes that cotton is actually quite drought resistant and has only been pegged as a “thirsty crop” due to inefficient water-management practices. Meanwhile, the byproducts of cotton harvesting and ginning (straw, sticks, leaves, burs, immature bolls) can equal up to 3 million tons annually across the globe. Then there is the cotton waste associated with fabric and garment manufacturing. Take denim production, for example: The waste collected from the spinning, dyeing, weaving and finishing departments can add up to approximately 10 percent of the total production. This may not seem like much, but for a company producing millions of meters of fabric a year, it can add up. During garment production, the pattern-cutting stage results in immense amounts of waste in the form of fabric scraps and defects. Beyond reducing the perpetual waste generated by the fashion industry, it is imperative to find a new life for waste too—if not from a moral perspective, then at the very least for efficiency’s sake. Luckily, there are many who are outraged at the throw-away society in which we live and they are doing something about it. Here are a few examples from a typical denim supply chain.

1. At farm level, there are interventions and innovations helping to make a difference. For example, starting with the seed, some hybrid varieties are offering real solutions to reducing water needs while offering greater yields and superior fiber quality. Unlike GMO varieties, hybrids are cross-bred in a controlled setting as opposed to direct modification to the plant’s DNA in a laboratory. Hazera cotton is an example of a hybrid which, when trialed, showed a 15 percent reduction in water use with no impact on yields.

2. For an example of finding an innovative use for materials that would otherwise be discarded, one can look to Archroma’s EarthColors. EarthColors is dyestuff made from elements found in nature. These high-performance dyes are extracted from unused natural waste such as nutshells, orange peels, rosemary and even cotton scraps. Just think: dyeing cotton with cotton scraps—ingenious!

3. Looking closer at the fabric-production processes, a straightforward way to eliminate waste is to simply collect it and use it for something new. This suggestion might seem like a no-brainer, but these measures haven’t always been standard practice. For example, at Candiani Denim, cotton waste from the spinning is recovered and re-spun while waste from the dyeing and weaving processes are turned into insulation materials for the housing and automobile industries.

4. Another waste-reducing measure is known as the Selvedge Saver. When weaving fabrics on a full-width loom, this technology allows for the elimination of the auxiliary selvedge. Typically, this longer selvedge edge is necessary to keep the fabric tense while cutting the weft yarns during the weaving process. However, the Selvedge Saver allows for the selvedge to be significantly reduced while still maintaining the fabric tension by using a vacuum technology. Approximately, 967 kg of cotton yarn per machine can be reduced annually thanks to this innovation.

5. An interesting innovation looking to address cutting-room waste is a technology engineered by Lenzing. The cellulosic fiber producer’s TENCEL™ x REFIBRA™ Lyocell fibers use a circular approach to upcycle scraps of cotton fabric into new Lyocell cellulosic fibers. Their closed-loop production process allows for the recycling of water and the recovery of 99 percent of chemical components used. Quite revolutionary indeed!

6. An increasing number of innovative business models focusing on re-use are popping up in an attempt to decrease the appalling amount of perfectly good clothing ending up in landfills or burned in incinerators around the world. Los Angeles-based company Atelier & Repairs is founded on the commitment to “re-imagine what already exists” through the re-engineering and re-design of reclaimed textiles, clothing and trims, with a focus on denim and other natural fibered textiles. Its ultimate aim is moving the industry closer toward circularity.

7. Blue of a Kind, also with a focus on denim, is another innovative brand with a similar approach. Based outside Milan, Blue of a Kind is (re)made in Italy by tapping into the rich sartorial heritage of Italian design and craftsmanship by teaming with local artisans to re-craft vintage garments. These pieces are completely deconstructed at the seams and then fitted and re-sewn with a contemporary twist. These initiatives are just a snippet of the creative and innovative energy taking the fashion industry by storm. They are each playing their part in the greater revolution toward a more sustainable and circular industry, leading by example to make waste something of the past

Source: Sourcing Journal

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Developing nations importing more metallised yarn

A trend of increasing import of metallised yarn by developing nations like Pakistan, India, Sri Lanka and Turkey is being observed, according to data of last two years. Global metallised yarn import increased from $197.39 million in 2017 to $203.58 million in 2018 with a CAGR of 3.13 per cent, and is anticipated to reach $219.55 million in 2021. In terms of volume, the global metallised yarn import was 20.65 thousand tonnes in 2017 and increased to 21.60 thousand tonnes in 2018 with the growth rate of 4.62 per cent. It is expected to stand at 21.18 thousand tonnes in 2021 with a drop of 1.96 per cent from 2018, according to Fibre2Fashion's market analysis tool TexPro. In 2018, Pakistan (10.88 thousand tonnes), Italy (1.48 thousand tonnes), Morocco (1.08 thousand tonnes) and Turkey (0.86 thousand tonnes) were the key importers of metallised yarn across the globe, together comprising 66.26 per cent of total imports. From 2013 to 2018, the most notable rate of growth in terms of volume of import, amongst the main importing countries, was attained by Pakistan (537.61 per cent). In value terms, Pakistan ($1.195 billion), Italy ($557.19 million), France ($551.68 million), India ($473.08 million) and Sri Lanka ($357.40 million) were the key importers of metallised yarn across the globe in 2018, together comprising 45.09 per cent of total import. These were followed by China ($9.62 million), US ($8.15 million), Germany ($7.13 million) and Morocco (US$ 6.70 million). From 2013 to 2018, the most notable rate of growth in terms of value of import, amongst the main importing countries, was attained by Pakistan (241.49 per cent), India (226.75 per cent), Sri Lanka (184.77 per cent) and Italy (per cent 34.59).

Source: Fibre2Fashion

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