The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 11 OCT, 2019

NATIONAL

INTERNATIONAL

Input tax credit under GST regime restricted to 20% of claims: CBIC

Experts said it would block cash flow of businesses and increase their compliance burden. Businesses will have to pursue their vendors on a monthly basis to upload their invoices to enable them to take the entire input tax credit (ITC) after the indirect tax board came out with a notification to restrict these credits to 20 per cent of the claims. Concerned at dwindling revenues, the Central Board of Indirect Taxes and Customs (CBIC) put this condition on the claims where vendors have not uploaded their invoices within a month. Experts said it would block cash flow of businesses and increase their compliance burden. Though theoretically, businesses have to reconcile their ITC within 60 days, this clause was never implemented since the auto-populated form of purchases by suppliers — GSTR2 — has been suspended. As such, businesses are supposed to reconcile their input tax credit at the time of annual returns. However, the deadline of annual returns even for the first year of the GST rollout — 2017-18 — have been deferred a number of times. This means that there was no restriction on the businesses to claim their input tax credit, provided they have the invoices to support their claims. Now, businesses have to follow-up with non-compliant vendors on a monthly basis to upload their invoices in the form GSTR 2A. Harpreet Singh, partner at KPMG, said, “Restriction of mismatched ITC by 20 per cent would necessitate undertaking monthly reconciliation of purchase, credit register with GSTR 2A, and hence may increase the monthly compliance burden.” He said the move would also restrict credit, which was rightly availed of but did not get reflected in the GSTR 2A form, on account of default by vendors may result in adverse cash flow impact. The GST collections fell to a 19-month low of Rs 91,916 crore in September, pointing towards deepening economic slowdown. It was the second straight month of revenue collections falling below the Rs 1-trillion mark, compounding the government’s revenue woes amid steep collection target for the fiscal. The target is over Rs 1.1 trillion a month. In the first six months till September, GST grew by 4.9 per cent year-on-year. The government in August had extended the date for filing annual GST returns for 2017-18 and 20018-19 by three months to November 30, as taxpayers were facing technical problems in furnishing returns. In fact, the government postponed the deadline a number of times. The original deadline of filing these returns were December 31, 2018. GSTR-9 is an annual return to be filed yearly by taxpayers registered under the GST. It consists of details regarding the outward and inward supplies made or received under different tax heads. The form GSTR-9C is filed by those with an annual turnover of above Rs 2 crore. It is a statement of reconciliation between GSTR-9 and the audited annual financial statement, while GSTR-9A is the annual return to be filed those who have opted for the Composition Scheme under GST. The deadlines were extended after the businesses and experts complained about the complex nature of filing these returns and reconciliation of audited accounts with these returns. For instance, tax and legal consultants had said hundreds of amendments, notifications and circulars have made the GST Act very complex. Officials of the Tax Bar Association, a body of over 400 members of chartered accountants, company secretaries, cost advocates and tax consultants, had said that the government has made the entire GST procedure and filing of returns very “confusing with hundreds of changes in the rules and taxes”.

Source: Business Standard

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Trade, border dispute likely to dominate Narendra Modi-Xi Jinping talks

No joint statement, MoUs or agreements are expected after informal summit. Trade issues, boundary disputes and multilateral cooperation are expected to dominate the “informal summit” at Mamallapuram as the seaside resort on the outskirts of Chennai prepares to host Prime Minister Narendra Modi and Chinese President Xi Jinping on Friday and Saturday. Mr. Xi will land in Chennai past 2 p.m. — about two hours after Mr. Modi. He will head to the Mamallapuram temple complex for an evening with Mr. Modi, which will include a tour of the monuments and a dance performance at the Shore Temple at sunset, followed by dinner. On Saturday, the talks will be more structured and will include time for a “one-on-one” meeting, followed by delegation-level talks.

Beyond formalities

“The objective is to ensure that the communication between the leaders is one which is routinised, easy going and indicates that President Xi Jinping and PM Modi are getting down to business in an informal way, not simply at a structured meeting of a [limited time] where prepared statements are read out in a much more practical way,” a senior official briefing the media about the expectations from the summit had said.

Source: The Hindu

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Powerloom workers ask PM to keep textile sector out of RCEP scheme

After women dairy workers of south Gujarat, powerloom weavers and textile workers from Surat and Bhiwandi in Maharashtra have started sending postcards to Prime Minister Narendra Modi asking him to keep textile sector out of the purview of Regional Comprehensive Economic Partnership (RCEP) scheme.Federation of Gujarat Weavers’ Welfare Association (FOGWA) office-bearers stated that more than 50,000 weavers and workers from Bhiwandi and Surat have started sending postcards to Modi for exclusion of textile sector from RCEP scheme. The postcards state that the RCEP scheme will bring powerloom weaving sector on the deathbed and render thousands of workers jobless. Cheap fabrics from China, Vietnam and Bangladesh would be dumped in the country, resulting in closure of small and medium weaving units. Central government has proposed inclusion of textile industry under RCEP scheme allowing for free import of polyester fabrics from China, Bangladesh and Vietnam along with other countries in South East Asia. Last month, FOGWA and Federation of Indian Art Silk Weaving Industry (FIASWI) had represented to commerce ministry demanding imposition of import duty on Chinese fabrics to protect SME sector in Surat. FOGWA stated that import of heavily under-invoiced fabrics from China has crossed Rs5,500 crore mark in the last one year. The imported fabrics are heavily under-invoiced and could be worth Rs10,000 crore. FOGWA president Ashok Jirawala said, “After various representations, we feel that only Prime Minister Modi will understand the problems of the sector. However, we are writing postcards to the PM, praying to him to keep the sector out of RCEP scheme’s purview.” Bhiwandi Weaving Association leader Punit Khimasia said, “Our textile workers have started writing postcards to Prime Minister. We intend to send more than 20,000 postcards with regard to RCEP scheme.”

Source: Times of India

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India, China private sector inks 129 MoUs ahead of Modi-Xi Jinping meet

India has time and again raised the issue of widening trade deficit with China, which stood at over $50 billion in 2018-19. A day ahead of the meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping, 129 memoranda of understanding were signed between the private sector of both the countries for exports of various products such as chemicals, plastics, pharma, and fertiliser. At Ficci’s India-China Meeting and Signing Ceremony, Zhu Xiaohong, counsellor, Embassy of China, said the imbalance in trade in goods between the countries has been one of the factors troubling economic cooperation. “To make it clear, China has never deliberately pursued trade surplus. China is fully aware that balanced trade is sustainable and beneficial to both sides,” she said. India has time and again raised the issue of widening trade deficit with China, which stood at over $50 billion in 2018-19. It has also raised concerns that domestic sectors like information technology, agri, and pharma do not get fair market access in China. The counsellor added that China’s trade surplus with India reduced by 1.6 per cent to $37.9 billion during the first eight months of 2019.

Source:  Times of India

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Goyal to attend RCEP meet in Bangkok as talks move towards scheduled conclusion

To hold bilaterals with China, South Korea, Japan, Australia and New Zealand to smooth out rough edges. Commerce and Industry Minister Piyush Goyal is leaving on Friday for Bangkok to give a final shape to the proposed Regional Comprehensive Economic Partnership (RCEP) pact India is negotiating with the ASEAN, China and four other nations before the scheduled announcement of its conclusion next month. “Commerce and Industry Minister will hold a series of bilateral meetings with his counterparts from Japan, Singapore, China, Australia and New Zealand during the Bangkok Ministerial,” according to an official release circulated by the Commerce Ministry on Thursday. The bilaterals will be important as they could be the last opportunity for Ministers from participating countries to smooth out the rough edges before the scheduled conclusion of the negotiations by November 2019. For Goyal, the bilateral meetings are especially significant as a large number of industrial sectors, the farm sector and the dairy sector have raised strong objections to the proposed tariff elimination under the RCEP as they fear a surge in imports after the pact is implemented. While the industrial sector, which includes metals, engineering goods, textiles and heavy industry, is apprehensive of large scale imports from China once the tariff barriers are down, farmers and the dairy sector are equally concerned about increased inflows from Australia and New Zealand. The 9th RCEP Inter-sessional Ministerial meeting, on October 11-12, will be the last Ministerial before the 3rd Leaders Summit to be held on November 4 in Bangkok to be attended by Prime Minister Narendra Modi. New Delhi is finding it difficult to accommodate all sensitive sectors under the sensitive list of goods to be insulated from tariff cuts as it is under pressure to eliminate import duties on more than 90 per cent of traded goods for the 10-member ASEAN, Japan and South Korea and more than 80 per cent of items for China, Australia and New Zealand, according to officials closely following the negotiations. Out of the 25 chapters of RCEP, 21 chapters have been concluded, the release stated. “The crucial chapters of investment, electronic commerce, rules of origin and trade remedies are yet to be settled, the release said. “Ministerial guidance will be sought on these issues during the Bangkok Ministerial round. The Ministers of participating countries will also be discussing preparations for the 3rd Leaders Summit,” the release added.

Source: The Hindu Business Line

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Trade seeks greater access to China market

Exporters look for positive outcome from Modi-Xi meet. The exporters are looking forward for some positive development from the meeting between Prime Minister Narendra Modi and Chinese President Xi Jinping, which is happening at a time when Regional Comprehensive Economic Partnership (RCEP) negotiations are going on. While there are a lot of reservations about opening up the Indian market for China, exporters want removal of trade barriers for products they ship to China. While the US-China trade war presents an opportunity for India to grow exports, China too sees India as a potential market. “We largely export raw materials like steel and cotton, while China sends finished products to India. We want to protect our manufacturing sector from cheaper Chinese goods and want to export more value-added products,’ said Israr Ahmed, Regional Chairman, South, Federation of Indian Export Organisations. “India has a trade deficit of $53 billion with China and hence that country should provide more easier access to our products,’ said Sanjay Jain, former Chairman, Confederation of Indian Textile Industry. According to him, China is a buyer of Indian cotton yarn and fabric. “Due to preferential tariffs, exports from Vietnam, Pakistan and Indonesia to China have been growing. From being the largest yarn exporter a few years back, we have lost almost 50 per cent of the exports this year. Similarly, China can buy more fabric from India as it will not affect its domestic production,’ he said. However, a free trade agreement in textiles presents a threat of increased synthetic textile imports from China. Similarly, agri exports present an opportunity as well as a challenge. India can grow its leather footwear exports to China, but China is a large producer of cheaper non-leather footwear. According to Sharad Kumar Saraf, President FIEO, manufacturing costs have to be competitive to increase exports to China. “The important sectors that need to be focused are bulk drugs, engineering products, chemical products, etc, he said. Even in gems and jewellery, India has a trade deficit of over $300 million as China exports silver bars, gold bars, rough coloured gem stones, rough pearls and buys lesser quantum of cut and polished diamonds, gold jewellery and polished coloured gem stones. The trade is also expecting increased investments from China into the manufacturing sector. ‘China is exiting production of several goods due to higher labour costs and pollution concerns and it is shifting base to neighbouring countries. This presents an opportunity for India as we have a large domestic market as well,” said Ahmed. In order to attract investments, plug-and-play policy should be in place in the manufacturing sector. Pre-approved facilities for manufacturing can tap the opportunity that arises when Chinese companies shift production bases.

Source: Deccan Herald

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GST Sahaj, Sugam forms not simple for claiming tax credit

Small GST payers are discovering that the proposed GST forms — Sahaj and Sugam — may create a new pain point in obtaining input tax credit (credit for taxes paid on inputs used). As of now, GST payers are grappling with the inability to rectify GSTR-1. It remains to be seen whether this problem will continue in the proposed forms (see graphic). The annual GST return (GSTR-9), in its current avatar, is seen as complex for small GST payers. There is some temporary respite available here. As reported earlier by TOI, the GST Council in its 37th meeting held on September 20 made it optional for taxpayers having an aggregate turnover of Rs 2 crore or less to file the annual returns for the financial year 2017-18 and 2018- 19. For the current financial year, no such option is available. However, a committee is likely to be set up to suggest simplifications. The due date of filing the annual GST return for the financial year 2019-20 is December 31, 2020. Tax professionals are hopeful that the annual return form will be simplified by then. “At present, the GST rules specify one format of returns for all taxpayers. They are required to file GSTR-1 for outward supplies and GSTR-3B, which is the summary return for sales and input tax credit. The only concession is regards the periodicity. For instance, taxpayers having a turnover of up to Rs. 1.5 crore can file GSTR-1 on a quarterly basis. There is no such leeway available for the summary return, which has to be filed monthly. These returns are cumbersome for small taxpayers,” explains Manoj Malpani, senior adviser with Bizsolindia Services, a consultancy company. Sunil Gabhawalla, indirect tax expert, says, “The basic difficulty in the current filing process is the inability to revise the returns immediately. The only choice is to rectify the mistakes in subsequent returns. Thus, a simple data entry error can result in “Further, there is a restricted ability to amend outward supply transactions in GSTR-1. It can be done only once. Practically, we have seen small taxpayers making genuine errors in uploading details of invoices issued to customers. For instance, a taxpayer made an error in the GSTIN of a customer and the date of invoice in the original return. Realising his error, the GSTIN was corrected. Subsequently, he noticed the date-related error. However, the GSTN portal doesn’t permit a second rectification,” illustrates Yusuf Hakim, indirect tax partner with CNK & Associates. “The other issue which arises is that goods rejected or discounts offered cannot be shown as a negative amount on a net basis. This results in funds being blocked with the government for a prolonged period,” adds Gabhawalla. Proposed GST return system The GST Council has postponed the new system to April 2020. It proposes simpler returns which will require fewer details. Sahaj and Sugam can be filed by small taxpayers, having a turnover of Rs 5 crore or less, depending on whether they have B2C or B2B transactions (or a mix of both). Apart from simplification, the fact that the threshold is pegged at a high Rs 5 crore is a major advantage, say tax experts. However, the mechanism of monthly payment of GST will continue. “Currently, the process of availing input tax credit (ITC) is not linked with the uploading of invoices done by suppliers. Going forward, taxpayers opting for Sahaj and Sugam returns will not be allowed to take ITC on missing invoices (which are invoices that have not been uploaded by their suppliers). However, they do have an option to opt for filing of the regular quarterly return form, which permits ITC on missing invoices,” says Hakim. Malpani agrees that challenges relating to ITC will be an issue. He also states that taxpayers are required to act on the invoices uploaded by the suppliers. As and when the invoices are accepted, the ITC is automatically captured in the returns. In case no action is taken, this happens by default. Thus, it will be important to check inward details to avoid any penal action for wrong availment of ITC. “Taxpayers having supplies through e-commerce platforms or zero-rated supplies, or those importing goods from outside India on which ITC is to be availed, also cannot opt for the Sahaj and Sugam forms,” says Hakim.

Source: Times of India

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Powerloom workers ask PM to keep textile sector out of RCEP scheme

After women dairy workers of south Gujarat, powerloom weavers and textile workers from Surat and Bhiwandi in Maharashtra have started sending postcards to Prime Minister Narendra Modi asking him to keep textile sector out of the purview of Regional Comprehensive Economic Partnership (RCEP) scheme. Federation of Gujarat Weavers’ Welfare Association (FOGWA) office-bearers stated that more than 50,000 weavers and workers from Bhiwandi and Surat have started sending postcards to Modi for exclusion of textile sector from RCEP scheme. The postcards state that the RCEP scheme will bring powerloom weaving sector on the deathbed and render thousands of workers jobless. Cheap fabrics from China, Vietnam and Bangladesh would be dumped in the country, resulting in closure of small and medium weaving units. Central government has proposed inclusion of textile industry under RCEP scheme allowing for free import of polyester fabrics from China, Bangladesh and Vietnam along with other countries in South East Asia. Last month, FOGWA and Federation of Indian Art Silk Weaving Industry (FIASWI) had represented to commerce ministry demanding imposition of import duty on Chinese fabrics to protect SME sector in Surat. FOGWA stated that import of heavily under-invoiced fabrics from China has crossed Rs5,500 crore mark in the last one year. The imported fabrics are heavily under-invoiced and could be worth Rs10,000 crore. FOGWA president Ashok Jirawala said, “After various representations, we feel that only Prime Minister Modi will understand the problems of the sector. However, we are writing postcards to the PM, praying to him to keep the sector out of RCEP scheme’s purview.” Bhiwandi Weaving Association leader Punit Khimasia said, “Our textile workers have started writing postcards to Prime Minister. We intend to send more than 20,000 postcards with regard to RCEP scheme.”

Source : Business Line

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Moody's slashes India's GDP growth forecast for fiscal 2020 to 5.8%

Moody's attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation. Moody's Investors Service on Thursday slashed its 2019-20 GDP growth forecast for India to 5.8 per cent from 6.2 per cent earlier, saying the economy was experiencing a pronounced slowdown which is partly related to long-lasting factors. The projection is lower than 6.1 per cent that the Reserve Bank of India (RBI) had forecast just last week. Moody's attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation. "The drivers of the deceleration are multiple, mainly domestic and in part long-lasting," Moody's said in a report. It expected the growth to pick up to 6.6 per cent in 2020-21 and to around 7 per cent over the medium term. "Although we expect a moderate pick-up in real GDP growth and inflation in the next two years, we have revised down our projections for both. Compared with two years ago, the probability of sustained real GDP growth at or above 8 per cent has significantly diminished," it said. Last month, the Asian Development Bank and the Organisation of Economic Cooperation and Development lowered 2019-20 growth forecast for India by 50 basis points and 1.3 percentage points to 6.5 per cent and 5.9 per cent, respectively. Last week, the RBI also slashed its growth projection for the economy to 6.1 per cent from an earlier estimate of 6.9 per cent. Rating agency Standard & Poor's has also lowered its India growth forecast to 6.3 per cent from 7.1 per cent. In June, Fitch cut India's growth forecast for the current fiscal for a second time in a row to 6.6 per cent. It had earlier in March lowered the growth estimate for 2019-20 to 6.8 per cent, from 7 per cent projected earlier, on weak momentum of the economy. Moody's said the drivers of the deceleration are multiple, mainly domestic and in part long-lasting. "What was an investment-led slowdown has broadened into consumption, driven by financial stress among rural households and weak job creation," it said adding a credit crunch among non-bank financial institutions (NBFIs), major providers of retail loans in recent years, has compounded the problem. "While we expect a moderate pick-up in real GDP growth and inflation over the next two years supported by monetary and fiscal stimulus, we have revised down our projections for both. We forecast real GDP growth to decline to 5.8 per cent in the current fiscal from 6.8 per cent in 2018-19, and to pick up to 6.6 per cent in 2020-21 and around 7 per cent over the medium term."Moody's expected a 0.4 percentage point slippage in the fiscal deficit target of the government to 3.7 per cent of the GDP in the current fiscal due to the corporate tax cut and lower nominal GDP growth. "A prolonged period of slower nominal GDP growth not only constrains the scope for fiscal consolidation but also keeps the government debt burden higher for longer compared with our previous expectations," it said. It, however, saw "low probability" of a significant and rapid deterioration in fiscal strength, India's main credit constraint, given the resilience to financing shocks offered by the composition of government debt. India's real GDP growth has declined in each of the past five quarters, falling to 5 per cent year-on-year in April-June 2019 from 8.1 per cent in January-March 2018. "By international standards, 5 per cent real GDP growth remains relatively high, but it marks a low rate for India. Combined with a marked decrease in inflation in recent years, this has resulted in a material decline in nominal GDP growth from typical annual rates of 11 per cent or higher over the past decade, to around 8 per cent in the second quarter of 2019," it said. While private investment has been relatively weak since 2012, consumption -- which makes up about 55 per cent of GDP -- had remained robust. "However, private consumption growth has now also fallen quite sharply, to 3.1 per cent in the second quarter from 7.3 per cent in the first. This was the lowest rate of quarterly consumption growth since October-December 2014, and high-frequency consumption demand indicators (such as automobile, truck, two-wheeler and tractor sales) point to continued weakness," it said. The government has estimated that the corporate tax cut will reduce revenue by around Rs 1.45 lakh crore or about 0.7 per cent of GDP in 2019-20. "After factoring in exclusions for tax exemptions and the recent 0.3 per cent of GDP transfer of capital from the RBI, we expect a central government fiscal deficit of about 3.7 per cent of GDP in 2019-20, resulting in a slippage of 0.4 percentage points of GDP from the government's target of 3.3 per cent," Moody's said. As a result, the general government deficit, which at about 6.4 per cent in fiscal 2018 is already much larger than those of Baa-rated peers (median of 2.5 per cent), is likely to remain wider than Moody's previously expected, it added.

India-Ratings cuts GDP growth to 6.1%

India Ratings (Ind-Ra) has lowered its projection for India’s economic growth rate to 6.1 per cent for 2019-20 from earlier estimate of 6.7 per cent. This was the second revision by India Ratings. It had earlier scaled down projection from 7.3 per cent. The rating agency attributed its decision to over six-year low economic growth at five per cent during the first quarter of the current financial year. Ind-Ra had estimated it to be 5.7 per cent earlier.

Source: Business Standard

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Govt orders biggest review of GST since its launch

Two years after its launch, the government has begun the biggest review of GST-including a possible of resetting of rates along with a scrutiny of the slabs-to tone up collections and plug leakages. The task has been assigned to a 12-member committee of state and central government officials to "augment GST collection and administration", set up a day before the PMO leads consultations with state chief secretaries on Friday, where it is expected to urge them to push for improved collections. The terms of reference indicate the panel should suggest systemic changes to prevent misuse, improve voluntary compliance, boost overall compliance monitoring and suggest anti-evasion measures. With inverted duty structure proving to be a source of leakage in sectors like restaurants, sources told TOI that the rates may be reviewed. The GST review committee can co-opt other state government representatives to look at fitting some of the products in other slabs. There are several sectors where the problem persists. In case of restaurants, for instance, the withdrawal of tax credit on payment for goods and services such as rent has prompted many players to rework the lease agreement in a way that tax payment is avoided and the rent is lowered. GST collections have slowed down in recent months and have grown at a shade under 5% during the first half of the current financial year, against the target of 13%. While a part of the slowdown is attributed to the state of the economy, especially the sharp fall in auto sales and floods, officials are also worried over weak enforcement in the states, who have been assured compensation by the Centre in case collections grow at under 14% during the year. In recent weeks, Opposition-ruled states have attacked the Centre on GST collections and said that tax collections have been hit due to a faulty design and not necessarily due to a slowdown. They have blamed the tax cuts for lower collections, a charge that has been rubbished by the Centre, which has said that states were party to all the "unanimous decisions" taken by the GST Council.  At last month's meeting of the GST Council, Finance Commission chairman NK Singh had flagged the need to review the slabs, which currently stand at 5%, 12%, 18% and 28%. When GST was launched in July 2017, the idea was to merge the 12% and 18% slabs and reduce the number of items in the top bracket. While there are fewer items facing 28% levy than two years ago, officials have said that given the poor revenue realisation the revenue-neutral rate will be 16-17% if the 12% and 18% brackets are merged, which may be politically difficult since there will be a larger number of items where the tax burden will go up. States have petitioned the Finance Commission to increase the compensation period by another three years, which many believe makes the system leaky as states are assured of revenue. For instance, often states are accused of not following up on leads that are generated every month through a system of data analytics.

Source: Times of India

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Going down together: On IMF’s slowdown warning

The world must heed the IMF warning that everyone loses in a trade war. The International Monetary Fund has some words of advice for global leaders on how to resuscitate the faltering global economy. On Tuesday, its new managing director Kristalina Georgieva singled out India, along with Brazil, as witnessing a “pronounced” growth slowdown as global growth experiences a “synchronised” downswing. The IMF expects growth to slow down in nearly 90% of the world this year, in contrast to two years ago when nearly 75% of the world witnessed accelerated growth. In fact, global growth is expected to hit its lowest rate since the beginning of the current decade. In July, the IMF cut its FY 2020 growth forecast for the Indian economy by 30 basis points to 7%. It would not be a surprise if, given the further deterioration in growth since then, the IMF cuts its India forecast once again. Ms. Georgieva’s maiden speech had the usual elements where slowing growth was blamed on various factors including the trade war between the United States and China, which is expected to shave off 0.8% from global GDP by 2020. She made the right noises about how “everyone loses” in a trade war and how synchronised global policy action can help everyone. What the IMF chief did not get into during her speech, however, was the failure of even the prolonged period of extremely loose monetary policy to sustain global growth. The global economy has been helped by a whole decade of historically low interest rates, yet the recovery that ensued after the global financial crisis was the slowest in history and seems to be in trouble already. Even worse, this time around, as the global economy slows, interest rates are near or below zero in much of the developed world and corporations and governments are burdened with unsustainable amounts of debt. While she did warn about the risks posed by the sudden reversal of capital flows and high global debt, she still did not refrain from calling for more monetary and fiscal policy actions. From an Indian point of view, what is worth noting is the IMF chief’s emphasis on the need for structural reforms to boost growth, particularly in the emerging market economies. She cited the forthcoming “World Economic Outlook” report which estimates that the right structural reforms can double the speed at which emerging market economies such as India can catch up with the living standards of people in advanced countries by raising their productivity. The government at the centre, which came to power on the promise of delivering big-bang structural economic reforms, will do well to heed such advice.

Source: The Hindu

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Labourers from other states may be recruited through licensed agents

Soon, factories may have to recruit labourers brought only by licensed or registered ‘HR agents’ and maintain a registry of every interstate migrant labourer they employ. Though these rules already exist in the Interstate Migrant Workmen Act, 1979, the state commission for women plans to ensure that the government implements these rules. They also plan to make it mandatory for factories to issue photo identity cards to every labourer they employ. The Tamil Nadu State Commission for Women has begun working on drafting a policy for workplace safety, security and dignity of women and girls in spinning mills. The commission led by retired IAS officer Kannagi Packianathan and a few experts including advocate P Selvi met with women workers from mills across the district on Wednesday in the city. The committee also met supervisors, HR personnel and mill owners. While we have laws like the Factories Act 1948 and the Interstate Migrant Workmen Act 1979 to protect labourers, many are not implemented. We hope to address the gaps in these acts and improve monitoring the implementation of rules with our policy,” Selvi said. The new draft policy is likely to have four main broad codes—minimum wages, industrial relations, social security and occupational health and safety. While these will include broad issues like wages, bonus, overtime, ESI, PF and provision of safety equipment, we want to focus on smaller issues like recording overtime correctly and paying for it, giving wage slips every time wages are paid, issuing a job appointment order in a language that the worker understands with details of working hours, holidays and wages for overtime,” “The state government needs to notify a department or agency to ensure the above,” she said. However, recruitment is one of the main issues the committee plans to address because they believe many issues of workers’ rights stems from there. “We request workers to only take up jobs and mills to recruit only from agents who are registered with the state and have obtained a license from notified authorities,” Selvi said. The state government at any point should have a database of every interstate and ‘intrastate’ migrant employed, submitted by mills. “This is the only way to hold mills responsible if a worker commits suicide or disappears,” she said.

Source: Times of India

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Welspun India expects to be debt-free in five years

Welspun India, one of the largest suppliers of home textiles globally to retailers like Walmart, Costco and others, is looking to be debt-free over the next five years. As per its latest annual report, Welspun India’s net debt stands at ₹3,028 crore. It has short term loans of ₹1,408 crore and long term debts of ₹1,902 crore. Cash and cash equivalents stand at ₹282 crore (as on March 31, 2019). Its net worth stands at ₹2,780 crore. The net debt to equity stands at 1.09 times for FY19 (as against 1.16 times in FY18). The net debt to EBITDA stands at 2.64 times. Net debt to EBITDA ratio is a debt ratio that shows how many years it would take for a company to pay back its debt if net debt and EBITDA are held constant. Altaf Jiwani, CFO, Welspun India, said the company prepaid ₹284 crore on September 30, and is expected to repay another ₹100 crore by this fiscal end as its “capex cycle has come to an end with the investment in the flooring solutions” . The cashflow generated from the existing business will be utilised to retire the debt after dividend payout in the coming years. Welspun India reported net sales of about ₹6,608 crore with a profit before tax and exceptional item of ₹552 crore in FY19. Exports to markets like US, Europe and the Middle East account for over 90 per cent of its turnover. “In five years we will become nil debt. Moreover, as the capex cycle gets over and as the ecosystem for growth in home textile business gets into place, and we will not have to borrow much. As of the June quarter, our net debt was in the range of ₹2,800 crore and by March 2020 we should have a net debt of ₹2,700 crore in our books,” he told BusinessLine. “Economic slowdown will have some impact on demand. But, our three pronged strategy for growth, that is to look for new market (India), new channels (hospitality/e-commerce) and new products (flooring and advance textile) will help us mitigate the impact,” said the CFO. Jiwani said that almost one-tenth or around ₹280 crore of the debt accrued after the company decided to set up the flooring unit in Hyderabad. “We had to make some borrowings for the flooring business. However, as the business starts generating cash flows, we will recover the capex and pay-off debts too,” he said.

Source: The Hindu Businessline

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Global Textile Raw Material Price 11-10-2019

Item

Price

Unit

Fluctuation

Date

PSF

1004.15

USD/Ton

0%

10/11/2019

VSF

1506.92

USD/Ton

0%

10/11/2019

ASF

2155.05

USD/Ton

0%

10/11/2019

Polyester    POY

1037.15

USD/Ton

-1.27%

10/11/2019

Nylon    FDY

2345.35

USD/Ton

0%

10/11/2019

40D    Spandex

4058.72

USD/Ton

0%

10/11/2019

Nylon    POY

5308.63

USD/Ton

0%

10/11/2019

Acrylic    Top 3D

1278.00

USD/Ton

-0.55%

10/11/2019

Polyester    FDY

2190.86

USD/Ton

-0.64%

10/11/2019

Nylon    DTY

2289.17

USD/Ton

0%

10/11/2019

Viscose    Long Filament

1165.65

USD/Ton

-1.19%

10/11/2019

Polyester    DTY

2570.05

USD/Ton

0%

10/11/2019

30S    Spun Rayon Yarn

2148.73

USD/Ton

0%

10/11/2019

32S    Polyester Yarn

1629.10

USD/Ton

0%

10/11/2019

45S    T/C Yarn

2415.57

USD/Ton

0%

10/11/2019

40S    Rayon Yarn

2415.57

USD/Ton

0%

10/11/2019

T/R    Yarn 65/35 32S

2022.34

USD/Ton

0%

10/11/2019

45S    Polyester Yarn

1769.54

USD/Ton

0%

10/11/2019

T/C    Yarn 65/35 32S

2261.08

USD/Ton

0%

10/11/2019

10S    Denim Fabric

1.24

USD/Meter

0%

10/11/2019

32S    Twill Fabric

0.69

USD/Meter

0%

10/11/2019

40S    Combed Poplin

0.96

USD/Meter

0%

10/11/2019

30S    Rayon Fabric

0.57

USD/Meter

0%

10/11/2019

45S    T/C Fabric

0.66

USD/Meter

0%

10/11/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14044 USD dtd. 11/10/2019). 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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EAEU, Iran to launch interim free trade zone

The interim free trade agreement between the Eurasian Economic Union and Iran will come into force on 27 October, Veronika Nikishina, Member of the Board (Minister) for Trade of the Eurasian Economic Commission, said at a press conference in Moscow, BelTA learned. According to Veronika Nikishina, reduced export duties and zero customs barriers will apply to a narrow specific group of commodities. Food, textiles, building materials, and also Iranian vegetables and fruits will be subject to preferential trade, BelTA reports. The EEC minister stressed that the free trade regime will apply exclusively to civilian goods, and that the Iranian market is of great interest to business of the EAEU countries. Currently, the Eurasian Economic Union has the FTA with Vietnam only. An agreement to establish preferential trade relations with Singapore was signed on 1 October. Similar agreement with Serbia is scheduled to be signed on 25 October. The negotiations on free trade zones with Israel and Egypt have entered an active phase: the agreements with these states are expected to be signed in 2020, Veronika Nikishina informed.

Source: Inform KZ

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Chinese apparel textile brands showcased in Philippines

The three-day Philippines Apparel Textile Show and Sport Show kicked off here on Thursday, showcasing some 100 Chinese apparel brands and the latest trends and achievements of China in the textile industry. During the expo, the China Textiles and Garment Brand Show (Philippines) was held for the first time in Manila's SMX Convention Center. Exhibitors from China's Fujian, Jiangsu, Zhejiang and Jiangxi provinces showcased different kinds of apparels and garments including bags, sports-wears, foot-wears, swimsuits, outdoor equipment, and fitness equipment, among others. The show aims to provide a platform for forging partnership among Chinese and Philippine businesses as well as exploring the most advanced textile technologies, according to the organizer. "We value the apparel textile market in the Philippines very much. This time, the number of 100 Chinese textile and garment manufacturers step foot on Philippine soil to bring samples of their goods, seeking more opportunities in the country," said Cao Jiachang, chairman of China Chamber of Commerce for Import and Export of Textile and Apparel. "This expo is also a perfect venue for stakeholders to meet prospective business partners from China and vice versa and be updated on the latest trends in the industry," he added. Equipped with favorable export policy and emerging domestic market, the Philippines is in need for incremental material, semi-product, finished textile and garment, and manufacture technology investment, Chairman of Philippine Retailers Association Paul Santos told Xinhua in an interview. "For a long time, there has been a lot of cooperations between China and the Philippines with regard to the apparel and footwear trade. For Filipinos, Chinese textiles is both of good quality and is yet affordable to their budgets," Santos said. "We see the importance of creating more business-to-business event like this to gather the industry and create a synergistic community for those engaged in retailing and parallel industries, such as manufacturers, distributors, and even tech-suppliers within Asia and the Pacific, and at the same time draw more attention from those outside the region," he added. The organizer will also hold several events like business match-making conference, fashion show, dance performance, combat arts demonstration in the three-day expo, to help Filipinos better understand the Chinese traditional and modern apparels as well as the industry.

Source: Xinhua

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Is Turkey Ready To Claim The Title As A Powerhouse In The Performance-Based Textile Industry?

The Turkish textile industry has been around for centuries with export textile sales being a part of the country’s GDP for decades. Yet, over the past several years, Turkey’s performance-based textile exports have increased significantly due to the thriving sportswear industry in the European and U.S. markets. After showcasing its industry achievements at the Première Vision (PV) Sport Show and the 53rd NW Materials Show in Portland, Oregon earlier this month, there’s no doubt that Turkey has established itself as a powerhouse among international textile exporting countries, now boasting over 42,000 Turkey-based textile and clothing companies. Why are the world’s top sportswear brands taking notice of Turkey’s thriving textile industry? Performance-based wear must be made to withstand high stress activities and extreme weather elements. Sportswear lines prefer Turkey as a business partner because its raw textile suppliers and manufactures produce strong, quality products.

Turkey’s Success Is Rooted in Its Past

The Turkish textile industry has a rich history dating back to when Turkey was part of the Ottoman Empire. During this time, the textile industry was birthed from the hands of true artisans and the goods were delivered to the world’s wealthiest consumers. Between the years of 1299-1922, any textile sold became part of the Empire’s treasury, more specifically the Sultan and the royal family. Wealth and textiles intersected, demanding that the materials be nothing short of excellent. In recent years, advances in polymer and fiber science in the country has allowed Turkey to meet modern-day performance demands, boosting overall market sales by 37% since 2011. Although sophisticated fabric, yarn, and fiber production methods make it possible for the industry to meet production expectations, brands and consumers also get the heart and history of the Turkey’s original textile artisans are in every fiber and thread.

Turkish Textile Industry Exports Are Worth Billions

In the past, China dominated the textile industry with little competition. However, since 2011, Turkish textiles exports to EU countries have gained traction. Today, Turkey is the biggest textile producing country on the European continent. The third largest textile exporter of Europe, The seventh largest apparel exporter in the world, the fourth largest apparel supplier of Europe, and the fourth interior textiles exporter in the world. Turkey is also the world’s seventh largest cotton producer. Turkey’s share in world textile exports is 3%, and 4.5% in home and interior textiles; its share in technical textiles is 1.5% (2018). Last year, Turkey saw approximately $17 billion in apparel export around the world, with its numbers only continuing to rise. The Turkish textile export industry has also found emerging success in the U.S. market, a market where consumers don’t just want clothing that looks good. They want sportswear that performs no matter the conditions. Textile manufacturers unable to meet these demands fall short and lose their footing in this prime market. Thanks to Turkey’s design-oriented approach and innovation, the industry not only meets the demand, but exceeds expectations.Turkish exports have continued to rise across the board and clothing such as t-shirts, jerseys, pullovers and special sportswear have seen the greatest gain, especially in the U.S. market. Some may argue that dominating the EU market isn’t going to be Turkey’s greatest achievement. The country’s greatest success may come from Turkish exports to the United States, a market with the potential to boost Turkey into the top spot. Performance-wear isn’t like everyday clothing. Sport textiles are fashioned from different fabrics and fibers designed to perform well against the elements. Top brands in the sportswear industry know their consumers want stylish clothing, but that performance always trumps style in the long run. Consumers in EU countries and the United States won’t tolerate materials that don’t hold up well in the worst conditions. Turkish manufacturers create performance-wear that protects against wind, rain, snow, extreme cold and heat, and high stress situations. Consumers wearing Turkish-manufactured sportswear get high-quality, comfortable clothing that doesn’t restrict movement and still looks great. Turkey has several advantages in textile production as well as the supply of raw materials based on the following points:

  • In terms of logistics, Turkey is considered an important country because of its geographic location between Europe, the Middle East and Asia, which gives it easy access to strategically important regions and major energy resources, making it a gateway country to European markets.
  • The county is a rich source of the raw materials that are used for the production. Turkey ranks number 7 in global cotton production.
  • With its liberal trade policies equipped with the highly skilled labor force, the country is able to have a well-developed industry that can produce quality products.
  • The country has entered customs union agreement with EU and free trade agreements with other countries.
  • Turkey is also noted for giving importance and priority to the working conditions of their labor force.
  • Turkey continues to invest in utilizing advanced technologies to grow their industry.

The Future of the Turkish Textile Industry

With its superior manufacturing processes and growth strategies, Turkey is set to become the world’s leading performance-based textiles exporter. One-way Turkish manufacturers are achieving this is by promoting their goods in key markets in EU countries and the Unites States. Turkey’s attendance at the NW Materials Show and the PV Sport Show in the U.S. opened the door to the global market, creating opportunities for manufacturers to show these key markets why they’re the future of the sportswear textile industry.

To expand its textiles export industry, Turkey is taking the following approaches:

  • Increase brand exposure overseas
  • Promote their textiles overseas to top brands
  • Increase shares in existing markets
  • Create strategies to strengthen the textile industry worldwide
  • Encourage industry best practices

As mentioned previously, Turkey ranks as the seventh largest apparel exporter in the world worldwide with a 3.5% share in the global market, but that is steadily changing as its sportswear export values have risen since 2016 (Source: Trade Map). This rise is contributed to the world’s top active-wear brands taking notice and positioning Turkey to assume the role of a major global exporter and not just with European borders. Turkish manufacturers are a powerhouse in the textile industry because the quality of their raw materials meet the demands of the industry’s most discerning customers. Attending trade shows in key worldwide markets that draw in buyers from major global brands is only the beginning for Turkey’s textiles industry. As Turkey continues to showcase its high-performance sportswear and associated materials worldwide, more and more top brands will take notice and enjoy the craftsmanship, history, and reliability of the Turkish textile industry.

Source: CEO World

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Government's business readiness fund approves £10.1 million in grants to 124 business organisations

The Business Readiness Fund helps business representative organisations and trade associations support members and non-members get ready for Britain leaving the EU.124 business organisations of a variety of sizes across the UK have now had grants approved to help get companies ready for Brexit on 31 October. The Business Readiness Fund was launched to help business representative organisations and trade associations to support members and non-members alike to get ready for Britain leaving the European Union on 31 October. It closed for applications on 7 October. Business Secretary Andrea Leadsom has today confirmed that 69 grants have already been awarded to a range of groups, making up £6.3 million of the fund so far, including:

  • the Federation of Small Businesses, which is planning interactive webinars, digital engagement and marketing to reach 1 million businesses
  • the British Chambers of Commerce, which will use funds to produce expert guidance for businesses about the implications of leaving the EU without a deal on 31 October, specifically around customs declarations, rules of origin and tariffs
  • the Institute of Directors, which will be disseminating accessible guidance, providing a range of workshops and information sessions, and facilitating one-to-one advice for business leaders
  • the Institute of Chartered Accountants in England and Wales, which will undertake targeted communications to members, the businesses they advise and firms in general. Funding from the grant will provide for printed and digital resources for chartered accountants, as well as non-members, focusing on ten key questions businesses need to consider in order to prepare as thoroughly as possible in the event of the UK leaving the European Union on 31 October without a deal
  • the Shellfish Association of Great Britain, which will help prepare the shellfish industry for Brexit on 31 October across the UK via 3 projects; providing an information pack, an information event on 18 October in London and tailored advice to individual businesses
  • the UK Fashion & Textile Association (UKFT), which is holding a series of free events across England, Wales, Scotland and Northern Ireland over the coming weeks to provide practical advice and support for UK fashion and textile businesses in the lead up to the UK’s exit from the European Union. The association has prepared a free Brexit Checklist, a comprehensive guide to Brexit readiness for the UK fashion and textile industry and will be operating a dedicated Brexit helpline to help minimise disruption to trade
  • The Fund is also supporting business groups across the United Kingdom:
  • Aerospace Wales Forum Ltd
  • West Cheshire and North Wales Chamber of Commerce the Law Society of Northern Ireland
  • Manufacturing NI
  • Newry Chamber of Commerce and Trade
  • the Institute of Directors (NI)
  • Scottish Engineering and The Scottish Council for Development & Industry are among those receiving grants.

Business Secretary Andrea Leadsom, said:

I’m delighted that this Fund has been able to support such a large and diverse wide range of business groups right across the United Kingdom as we get ready to leave the EU on 31 October. The funding has to be used to support both members and non-members, so I urge all businesses to get in touch with organisations in their local area so they can take advantage of the support on offer.

FSB’s Director of External Affairs and Advocacy, Craig Beaumont, said:

It is important in the time that we have left before 31 October, we do everything we can to support small businesses and the self-employed to plan and prepare for Brexit. We are focused on giving small firms the information they need to prepare in the most small business friendly language possible through interactive webinars, digital engagement and marketing to reach 1 million businesses.

IoD Director General Jonathan Geldart, said:

The IoD is ready to play its part supporting all directors to be better equipped in dealing with the risks of a no deal. Obviously this isn’t easy, but directors can only use their best judgement, and the more information they have, the better they can respond with agility to whatever happens.

Iain Wright, ICAEW Director for Business and Industrial Strategy, said:

Many smaller businesses are less prepared for a no deal Brexit and are turning to Chartered Accountants, in their capacity as trusted business advisors, for assistance. In addition to work we’ve already undertaken to help our members - and the 3 million UK businesses they advise and run - to prepare, this funding will enable us to provide targeted information where it’s needed in the run-up to 31 October.

Adam Mansell, CEO of UKFT, said:

This fund has allowed us to deliver industry-specific information at key centres across the UK, and will ensure our guidance can reach as many firms as possible. We have also developed a suite of resources encompassing the most important things our businesses need to know.

Sarah Horsfall, Assistant Director of the Shellfish Association of Great Britain, said:

This funding is enabling SAGB, a small association, to have the resource to help the shellfish industry prepare for the changes Brexit will bring. Over 1,000 people from across the UK have already attended one of the free Brexit Business Readiness Events organised by government. The government has also announced that it will host a bespoke online event for up to 10,000 businesses on 16 October, covering everything they need to know to get ready for Brexit. This will include:

  • sessions from the Department for Business, Energy and Industrial Strategy on practical steps all businesses need to take
  • advice from the Department for Culture, Media and Sport on handling personal data
  • Department for Environment, Food and Rural Affairs on essential actions to ensure continuity of trade for the food and drink, farming, fisheries, waste and chemicals sectors
  • HMRC on Import, Export and customs for business
  • the Department for International Trade on future trade with the rest of the world
  • the Home Office on the settled status scheme

Each session will include an interactive panel so viewers will be able to ask questions of policy experts. Material will stay online until 31 October so people can continue to refer to videos. Sign up to the online event through the Brexit Business Readiness Events website.

Source: Energy & Industrial Strategy

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Texfusion to host 150 international companies this year

The 10th edition of Texfusion is set to host 150 international manufacturers at the Business Design Centre in UK this year. The first trade show completely dedicated to world textile manufacturers in the UK will be held on November 20-21, 2019. Texfusion now includes three new hall completely dedicated to technical fabrics, denim, and garment manufacturers. Texfusion is the first UK fair of its kind and responds to an increasing demand of international textiles by European fashion brands, retailers, and manufacturers. The products presented are fashion fabrics, apparel accessories, technical textile, denim, and a large garment section. The show attracts around 2000 buyers who travel predominantly from the UK (90 per cent), Central and Northern Europe, Russia, and the Middle East, according to a press release on the show. Textile Events promotes an eco-friendly culture which aims to reduce the impact of the fashion industry on the global environment. There is increasing attention on the industrial impact on the planet and fashion brands are sourcing for eco-friendly alternatives. More than 60 per cent of the visitors declare to source primarily for sustainable/eco-friendly products. For these reasons, Texfusion will have a trend forum dedicated to sustainability, which will help the visitors in their responsible sourcing. A large group of Chinese manufacturers will attend Texfusion this November, forming a pavilion of more than 60 fabric and garment manufacturers. The China Pavilion is coordinated by Tenga exhibition which collaborates with Texfusion since 2018. The pavilion includes a large selection of fashion fabrics, garments, and technical collections from the finest Chinese manufacturers. Responding to initiatives taken in the Sustainable Sourcing Forum in The London Textile Fair earlier this year, Taiwan Textile Federation (TTF) deepens the partnership with Texfusion by joining the show with ten companies that offers a wide library of fabrics that not only delivers on high quality functionality, but also takes the market’s demand for sustainability to heart.

Source: Fibre2Fashion

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