NBFCs with a minimum rating of 'AA' are allowed to participate in the scheme. The government will ask big corporates to expedite clearing dues worth Rs 40,000 crore to micro, small and medium enterprises (MSMEs), Finance Minister Nirmala Sitharaman said on Monday. The government will also tweak a scheme for providing a one-time credit guarantee to public sector banks (PSBs) for purchase of pooled non-banking financial companies’ (NBFC) assets to allow more NBFCs to participate in it. “The corporate affairs ministry has a complete list of companies, which have stated that they owe MSMEs nearly Rs 40,000 crore. We are taking a two-pronged approach so that before Diwali, MSMEs will get the dues,” Sitharaman said. Corporate Affairs Secretary Injeti Srinivas will write to these big corporates, who have reported this information in their returns, to expedite the payment of dues to the MSMEs, Sitharaman said. Finance Secretary Rajiv Kumar said the public sector banks (PSBs) have been requested to reach out to MSMEs to provide bill discounting to them against their dues “since they suffer the most from shortage of cash due to non-receipt of dues”. Banks will compile a list of MSMEs who are willing to avail the bill discounting facility and those who declined it and send it to the finance ministry by October 22. Through the bill discounting facility, banks will provide capital to MSMEs based on the invoices that they have raised. To aid NBFCs, the government will allow NBFCs with “investment grade” to participate in the credit guarantee scheme, under which government provides a one-time partial credit guarantee to PSBs for first loss of up to 10 per cent for purchase of high-rate pooled assets of NBFCs totaling Rs 1 trillion, notified in August. NBFCs with a minimum rating of ‘AA’ are allowed to participate in the scheme. The pool of assets should also have a minimum rating of ‘AA’, through credit rating agencies accredited by the Reserve Bank of India, according to the norms. “There are two types of ratings. One is on the pooled assets and the other one on the NBFCs itself. Some NBFCs have good pooled assets, but do not have ‘AA’ and above rating so that banks have suggested that NBFCs with rating of investment grade be included in the scheme,” Kumar said. Economic Affairs Secretary Atanu Chakraborty said the PSBs demanded the change in the norms since rating agencies tend to be strict in their ratings. The finance ministry will soon issue a clarification to banks to this effect, Chakraborty said. Banks have identified pooled assets worth Rs 15,455 crore under the scheme, according to a press release issued by the finance ministry.
Source: Business Standard
Prime Minister Narendra Modi will take up India’s unresolved issues in the proposed Regional Comprehensive Economic Partnership trade agreement at the leaders’ summit next month if the 16 members are unable to resolve them over the next few days. As per a 10-day work plan of 14 issues compiled by member countries, at least five demands pertain to India specifically. India wants to change the base year to apply reduced tariffs to 2019, from 2013; an auto trigger mechanism to curb sudden surges in imports and decide on which products it doesn’t want to offer the same tariff concessions to all countries; and future domestic policy concessions in investment and services sectors (called ‘ratchet' in trade parlance). “These issues need to be resolved by October 22. Those not closed by then, will be frozen through the leaders’ decision,” said a source aware of the development. Intense bilateral parleys are expected in the next 10 days as Indian negotiators finetune the position on these crucial issues, especially on strict origin norms to keep in check Chinese imports. While no joint statement was planned after the RCEP ministerial meeting in Bangkok on October 11-12, attended by commerce and industry minister Piyush Goyal, a media statement was expected. However, talks were inconclusive. 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. Singapore is learnt to have told India to decide if it wants to stay in the trade pact. “India has said it will remain if its asks are met,” the source said. Ecommerce, tariff differential, policy decisions at municipal and Panchayat levels, and exemption from taxation disputes are the other issues that India needs to resolve for the agreement to get concluded in November and signed next year. India has pushed for these safeguards and caveats in ratchet and concessions given to a trading partner under a bilateral treaty automatically getting extended to RCEP members as it fears Chinese imports flooding the country especially through other RCEP members.
Source: Economic Times
The government last week constituted the panel of officers to suggest steps to expand tax base and check evasion in the backdrop of falling revenue collections under GST. A high-level panel constituted by the government to suggest measures to augment GST revenue collection will hold its first meeting on Tuesday, a senior official said. The government last week constituted the panel of officers to suggest steps to expand tax base and check evasion in the backdrop of falling revenue collections under GST. Goods and Services Tax (GST) collections dropped sharply to a 19-month low in September to Rs 91,916 crore, reflecting the slowdown in the economy. "The first meeting of the committee is scheduled to be held on Tuesday, October 15," GST council special secretary, Rajeev Rajan told PTI. The committee has been given 15 days time to submit its report, he said. This is going to be the first comprehensive review of GST after it was rolled out on July 1, 2017. The 12-member panel, comprising of state-level GST commissioners and cental officials, has been asked to suggest urgent measures to arrest fall in tax revenues and steps to be taken to improve revenue collection."The committee should consider a wide range of reforms so that a comprehensive list of suggestions may emerge," an official order had said. The panel has been asked to look into "systemic changes in GST including checks and balances to prevent misuse." It has also been tasked to suggest measures to improve voluntary compliance as well as policy measures and changes in law needed. Its key mandate is to suggest "measures for expansion of tax base" and make recommendations on "improved compliance monitoring and anti-evasion measures using better data analytics," the order said. The panel comprises state GST commissioners of Maharashtra, Tamil Nadu, Uttar Pradesh, West Bengal and Punjab, besides central government officials including principal commissioner of GST and joint secretary (Revenue). States have been asked to give suggestions in writing as well as join the panel. "The committee may co-opt or seek assistance from such officers from Centre/state as may be deemed necessary," the order said. GST collections dropped sharply to a 19-month low in September, mirroring a widening slowdown in the economy triggered by shrinking consumer demand. This was the second straight month of decline in GST collections, which from July 1, 2017, amalgamated 17 different central and state levies, including excise duty, service tax and VAT. The fall in tax collections is seen as a reflection of economic activity and a decline in collections indicate a downturn. India's GDP growth slowed to more than six-year low of 5 per cent in April-June, prompting the government to take an array of steps to boost the economy, including the steepest cut in corporate tax rate which would cost Rs 1.45 lakh crore.
Source: Economic Times
The GST Council in its 27th meeting discussed that the Government is keen to introduce the simplified return design to reduce compliance burden on the trade in keeping with the philosophy of ease of doing business. The GST Council in its 27th meeting discussed that the Government is keen to introduce the simplified return design to reduce compliance burden on the trade in keeping with the philosophy of ease of doing business. However, the stated objective seems to be diluted by requiring the taxpayer to make daunting adjustment entries. Under this New Return System, there will be one main return GST RET-1 (large taxpayers) and 2 annexures GST ANX-1 and GST ANX-2. ANX-1 primarily contains details of outward supplies. ANX-2 contains details of inward supplies. RET-1 is consolidation of inward and outward supplies including various adjustment entries. The suppliers undertaking B2B transactions will have to fill invoice-wise details of the outward supply made by them in ANX-1, based on which the system will automatically calculate his tax liability. The input tax credit (ITC) will be calculated automatically by the system in ANX-2 based on the details of invoices uploaded by the suppliers upon the acceptance by the recipient. ANX-1 is completely based on user input and ANX-2 is completely automated. This gives a sigh of relief. But let’s not stop here and see what more is in store. The main return RET-1 is not merely consolidation of ANX-1 and ANX-2. In fact, RET-1 requires mammoth exercise to input the details of adjustment entries. Before we proceed to discuss the adjustment entries, it is important to mention that system is designed in a fashion wherein the recipient must take an action namely accept, reject or pending on the details of invoices uploaded by the supplier. Acceptance denotes acceptance of that transaction whether or not eligible for credit. As soon as the invoice is accepted, the tax amount of invoice is automatically credited to electronic credit ledger of the recipient. Thereafter, the recipient is required to reverse the ineligible credit, e.g., restaurant bills in RET-1. Meaning thereby, the business must make a parallel system for recording of the invoices ineligible for ITC under Section 17(5) of the CGST Act for reversals under RET-1. In the current system, business is availing only eligible ITC in GSTR-3B. A miss to report reversal of auto-credited amount may invite interest and penal action. Proceeding further, let’s take an example where a business receives short quantity of goods. On acceptance of the invoice, the entire amount of tax shall be credited to his Credit Ledger. Thereafter, the business will make reversal of ITC on quantity short received in RET-1. Let’s assume that the supplier of goods issues a credit note for short quantity in the next month. The same on acceptance will auto-decrease the ITC of the recipient which was in fact already reversed by the recipient. In such a case, the business has to re-avail the ITC in RET-1. Therefore, the business must keep a track of all credit notes and then make a trail with the past transactions to see whether the credit has already been reversed requiring adjustment entry. Interestingly, all the adjustment entries must be reported at consolidated level without any reference of invoice number or credit note number etc. Therefore, tracing back a transaction is a herculean task. However, the complete chain needs to be recorded and preserved for audit for a period of even more than six years. Moreover, there are manual tables for adjustments of tax and ITC in transitional cases. Business should attempt to minimize the transitional cases by duly reporting the transactions in both GSTR-3B and GSTR-1. Let us proceed to discuss the mismatch reporting. Business should match its purchases register with ANX-2 regularly to accept, reject or keep the invoice pending. In case, the supplier does not upload the invoice details, ITC will not get reflected in ANX-2 and hence, not credited in the electronic credit ledger. In such a case, the recipient can take provisional credit upto 20% of available ITC in RET-1. In case the supplier uploads the invoice in next 2 months, recipient shall accept the same and ITC will be auto-credited in his ledger. Since the provisional credit has already been availed, it would require a reversal. The invoices which are missing even after 2 months need to be reported by the recipient in ANX-1. Regular matching of invoices and their tracking for next 2 months and thereafter, is a voluminous exercise where business deals with thousands or lacs of invoices per day unless and until there is a robust IT system in place. These adjustment entries are very onerous, and the New Return Formats may require undergoing a change to meet the main agenda of the GST Council of simplifying the return filing system. Recently, on 20th September 2019, the GST Council in its 37th meeting has deferred the roll-out of New Simplified GST Return. One will have to wait to see whether the New Return Formats are actually revised to make them simple in this buffer time. Nonetheless, this additional window certainly brings an opportunity for the taxpayers and the system to adapt for the challenges posed by the New Return System.
Source: Financial Express
A majority of the 13,000-odd micro, small and medium enterprises (MSMEs) in Visakhapatnam are in dire straits as the Goods and Services Tax (GST) is being collected the moment they raise invoice whether or not they receive the amount from those who place the orders. The MSMEs are already facing the heat of the economy slowdown and severe cost reduction measures launched by their major clients such as Visakhapatnam Steel Plant, HPCL Visakh Refinery, Hindustan Shipyard Ltd and Heavy Plate and Vessels Plant. And the collection of GST even before the payments are made is adding to their woes. Due to poor placement of orders, the major industries have been delaying the payments to the ancillary, downstream units and the vendors. This has put the MSME entrepreneurs on a sticky wicket.
Bank loan
“Our predicaments have come to such a pass that sometimes the payment is delayed for several months. But GST is collected at 18% from us and import credit is refunded late. If we fail to pay GST after raising the invoice, we have to pay the penalty for every single day,” AP Chambers of Commerce and Industry Federation Director O. Naresh Kumar told The Hindu. The MSME entrepreneurs want waiver of the pre-closure for bank loans. At present, the banks are charging 4% penalty for pre-closure of industrial and vehicle loans. For income tax, 6% interest is paid if refund is delayed. “When we pay late, 12% to 18% penalty is levied on us,” Mr. Naresh Kumar pointed out.
Capital gain tax
Those units which find it difficult to pay the EMIs and mobilise funds by selling their property are being charged with capital gain tax. “Let the capital gain be considered taking into consideration the loan liability which one wants to clear from the proceeds received from the sale of property,” he said. MSME entrepreneurs poured out their woes before Union Minister of State for MSME, Dairy, Animal Husbandry and Fisheries Pratap Chandra Sarangi during his brief visit to the city recently. Mr. Sarangi told The Hindu that he would look into their problems and try to ensure justice as the MSME sector was a major revenue-churner and job-provider.
Source: The Hindu
The Regional Comprehensive Economic Partnership (RCEP) grouping has the put the onus on India to convince 15 other member countries bilaterally on its demands within 10 days, failing which pending issues will be put before the heads of states who will meet on 4 November in Bangkok to announce conclusion of negotiations. RCEP is a proposed free trade agreement (FTA) between the 10 member states of the Association of Southeast Asian Nations (Asean) and its six FTA partners. In the two-day Bangkok ministerial on 11-12 October, trade ministers of 15 other countries failed to issue a joint statement as issues raised by India did not find enough support among other members. Trade minister Piyush Goyal has asked that the base year for tariff cuts be shifted to 2019 instead of the 2014 agreed earlier as negotiations have stretched well beyond the initial 2015 deadline. If agreed to, this will give India five more years to cut tariffs. In the last two years, India’s average tariff rate has increased from 13% to 17% because of a hike in tariffs in sectors such as textiles, auto components, and electronic items. Under the e-commerce chapter, India has asked for allowing data localization and for keeping the moratorium on imposition of import duties on electronically transmitted goods and services temporary as in the case of the World Trade Organization. However, other countries such as Japan want the moratorium to be permanent, which India fears could lead to a loss of revenue. The RCEP grouping has said that India’s demand for an auto-trigger to safeguard against a sudden surge in imports should also be settled bilaterally with China, Australia, and New Zealand, but said that it will be subject to the approval of other member countries. India has requested for a carve-out for certain tariff lines and sectors on which the so-called ratchet principle will not apply. Under the ratchet mechanism, any liberalization measure adopted by a member country cannot be replaced by new measures that are more restrictive. This constrains the policy space for the domestic country. Though RCEP member countries have agreed to postpone for three years any implementation of investor state dispute settlement (ISDS), under which a private investor can sue national governments for any policy changes, RCEP members have proposed that after this period, ISDS will come into play on agreement of a majority of members instead of a consensus. India is opposed to this idea. There is too much domestic pressure on the government to exit RCEP, said a trade expert on condition of anonymity. “The government may be using the fresh demands, which are difficult for other member countries to accept, as a part of the strategy for it to have an honourable exit. It can later claim that while it was willing to be part of the deal, other countries could not accommodate its demands," said the expert. The Swadeshi Jagran Manch (SJM), an affiliate of the Rashtriya Swayamsevak Sangh, is holding a 10-day nationwide protest from 10-20 October against the proposed RCEP deal. “The nation is facing a crisis in both the manufacturing and agriculture sectors, which is resulting in a job losses in the country. The crisis in the manufacturing sector is because of the lack of a comprehensive industrial policy since 1991," Ashwini Mahajan, co-convener of SJM, had said last week. Goyal, however, had last week defended the proposed FTA, holding that India cannot remain isolated in a globalised world. “If India remains out of RCEP, we will be left isolated from this large trading bloc. The trade among RCEP countries is about $2.8 trillion. If India sits outside RCEP, whether it is in our interest or against our interest, it is also the responsibility of the government to see. You will want us to engage to find solutions which is in the national interest," Goyal said on Thursday at an event in Nagpur.
Source: Live Mint
China wants to hold more talks this month to hammer out the details of the “phase one” trade deal touted by Donald Trump before Xi Jinping agrees to sign it, according to people familiar with the matter. Beijing may send a delegation led by Vice Premier Liu He, China’s top negotiator, to finalise a written deal that could be signed by the presidents at the Asia-Pacific Economic Cooperation summit next month in Chile, one of the people said. Another person said China also wants Trump to scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn't yet endorsed. The people asked not to be named discussing the private negotiations. S&P 500 futures extended losses, Europe’s Stoxx 600 fell and the yen rose as investors grew pessimistic on the handshake deal. The yuan pared much of its earlier gains offshore. The US and China have emerged from last week's talks with different takes on what's in the accord and how close they are to signing a document. Trump said “we've come to a deal, pretty much, subject to getting it written” and indicated it might take several more weeks of negotiation. China's Ministry of Commerce merely said that “the two sides have made substantial progress” and “agreed to work together in the direction of a final agreement.” The staterun Xinhua news agency didn't mention a deal either. Treasury Secretary Steven Mnuchin, speaking in an interview Monday on CNBC, said he expects officials to work in coming weeks to get the first stage ready for both sides to sign. If that doesn’t happen, the new US import taxes on Chinese products will be imposed starting Dec. 15, he said. Taoran Notes, a state-affiliated blog that focuses on the trade talks, said that the difference in tone struck by Chinese media was due to “cultural and language” differences and both sides are in consensus over the deal.
Source: Economic Times
The rupee fell by 21 paise to 71.225 against the dollar on Monday, primarily led by a decline in the Chinese yuan after reports indicated that China wants more time to finalise details of the first phase of the trade deal with the US. This is the lowest level seen by the currency in over three weeks. According to Bloomberg, Beijing is likely to send a delegation to finalise a written deal that could be signed by the Presidents of the two countries at the Asia-Pacific Economic Cooperation summit next month in Chile. The report indicated that China wants Trump to scrap a planned tariff hike in December in addition to the hike scheduled for this week, something the administration hasn’t yet endorsed. The rupee, which rose to as high as 70.75 against the greenback on Monday morning, fell to levels of 71.228 during the second half of the session, Bloomberg data showed. It is noteworthy that the closing level of the rupee on Monday was very close to its intraday low.
Rupee, dollar, commodity market
MV Srinivasan, vice-president at Mecklai Financial Services, said the Chinese seem to have cast a bit of doubt on the trade deal following which there was a correction in the yuan. “This pulled down some of the Asian currencies which had an impact on the rupee as well. I expect the currency to remain range bound in the near term between 70.50 and 71.50 against the dollar in the foreseeable future. Going further, situation in the Middle East will also have a crucial effect on the currency as tensions persist between Saudi Arabia and Iran,” Srinivasan said. Oil prices had soared to a four -month high in mid-September after a drone attack on a Saudi Aramco facility. A few days back, Iran blamed Saudi Arabia for an attack on its oil tanker.The rupee has depreciated by about 2% since the beginning of the year. The dollar index, which tracks the strength of the US dollar against a basket of currencies, was trading at 98.475 on Monday evening, having come down from its 16-month-high levels of 99.377 during the end of September. Meanwhile, foreign portfolio investors (FPIs) have remained net sellers of Indian debt and equity in October, according to Bloomberg data. FPIs have sold $655.90 million worth of equities in October while they sold $131 million of Indian debt on a net basis this month.
Source: Financial Express
Locals estimate that over 60% of power looms units have shut down, and the rest are also on the verge of closure. Each time a power loom machine was moved out of TN Textiles, 28-year-old Mahmood Ansari’s anxiety only increased. He had seen the best days of this 50-year-old, 48-machine, well-equipped textile unit, situated in one of the arterial lanes of Bhiwandi, over 30 km from Mumbai. Up until the late 1990s, the industry was booming. He is now witnessing it at its worst. The economic slump had pushed TN Textiles’ owner to sell 24 machines to scrap dealers, downsizing the unit’s production to half. With each machine sold, at least one worker loses his job. This crisis is the biggest issue on the minds of the voters as Bhiwandi, like the rest of Maharashtra, goes to the polls on October 21. Facing closures and joblessness, Bhiwandi’s voters had already been suffering for a few years, has been struggling because of high electricity rates, dumping by China and other factors. But demonetisation and GST have dealt a severe crippling blow for most loom owners and workers here. Bhiwandi’s power loom industry, which once housed over 10 lakh of the total 21 lakh registered power loom machines in India, is facing one of its worst economic crises. Locals estimate that over 60% of power looms units have shut down, and the rest are also on the verge of closure. Mahmood, a resident of Bagdubi village in Jharkhand’s Dumka district, has been working in Bhiwandi for the past eight years. “I came here alone and slowly moved my family here. But in the past few years, things have got so difficult that I am in the process of sending my wife and two daughters back home,” he says. Several others from Dumka village have gone back, Mahmood adds. Most workers here are migrants from Uttar Pradesh and Jharkhand; a few have moved here from the neighbouring Bihar and Odisha. About a decade ago, when the textile business was still stable, workers would manage a decent wage by working 12-hour shifts every day. “Each of them would manage three-four machines. This ensured decent production at a comfortable pace, and workers did not worry much about supporting their families,” says Atif Ansari, who owned over 225 power loom machines until a year ago but today is left with only 100 machines. “Today, each of them is burdened with multiple machines, yet the compensation is much less.” As the business began to suffer, most migrants returned home or moved to other labour work. “We are all skilled labourers with a specific knowledge of yarn and cloth-making. But some among us are pushed to working as construction workers or take up menial jobs in garage or hardware shops,” says Mahmood’s co-worker, Ashraf Ansari. It is not just the migrant workers but also the local loom owners who have slowly shifted to smaller business; some, in a desperate situation, have moved to working in warehouses and industrial units nearby. There have been several reasons for the death of Bhiwandi’s textile business, once known as “India’s Manchester”. But the biggest monsters that nearly killed the once-thriving textile industry in the state are the government’s unprecedented demonetisation move and the Goods and Service Tax (GST) being slapped on every step of procurement and production of grey, a kind of rough-hewn cloth, that is processed into fabric. “These two decisions (demonetisation and GST) broke the backbone of our business,” says 45-year-old Ishtiyaque Ahmed Ansari, who was recently forced to sell 106 power loom machines to a scrap dealer. “One pair of machine costs anywhere between Rs 85,000 and Rs 90,000, and I sold them for Rs 36,000,” Ishtiyaque tells The Wire. Ishtiyaque’s father had come to this 150-year-old town in 1962, from Allahabad district in Uttar Pradesh. Belonging to the traditional Bhunkar (weavers) community, his father was earlier involved in the hand loom business and had come to Bhiwandi in search of “English textiles”, common parlance for power looms. “He started with one loom and over decades of hard work, from his generation to mine, it had grown to over 100. But now I am back to square one,” he says. During its heydays, his unit would produce 700 metres or 70 taaka cloth on a daily basis. Until November 2016, most business transactions here were carried out using cash. Almost 90% of loom owners and workers operated without bank accounts. Locals say it took more than a year for workers to get their bank accounts opened and for the cycle to normalise. Immediately after that, the GST was introduced. “This time we had to just shut our shops,” Atif says. Bhiwandi looks like it is stuck in some kind of time warp. Access to this cluttered power loom centre is only through a maze of muddy roads. There is no direct railway line, and the city suffers from poor infrastructure. Lack of alternative employment opportunities is now forcing workers to travel longer distances in search of jobs. The workforce here mostly comprises men, and women have even fewer employment opportunities to explore. Muslims here look beyond the Hindu-Muslim binary but say it is their caste that has been responsible for their conditions. Ishtiyaque says most secular parties here have picked upper-caste Muslim candidates from the region, who have very little to do with the weavers’ community. Supporting Ishtiyaque’s claims, Abdul Rashid Tahir Momin, an ex-MLA from the region and a senior Congressman, says lack of representation of the weavers’ community in both parliament and the state assembly is one of the primary reasons for Bhiwandi’s fall. “You look at both the Centre and the state, you won’t find a single representative from the weaving community. From Bhiwandi, which is a hub of the textile industry, only three times (of them, Tahir was nominated twice and he won once) an Ansari or a Momin was nominated as a party candidate. It matters a lot who represents us and who is willing to take up our issue in the assembly and parliament,” Tahir says. Tahir, a two-time MLA, was hopeful to secure a Congress ticket this year but the party chose Shoeb Ashfaque (Guddu), an upper-caste Muslim candidate instead. In the Bhiwandi West constituency, of the total 2.7 lakh voters, 1.35 lakh are Muslims, and among them 71,800 are from the Ansari and Momin communities. “You look at the number of times questions from Bhiwandi have been raised in the parliament. Our local MP Kapil Patil says he doesn’t get the textile issue and doesn’t speak of it in the parliament,” says Shafiq Momin, a local. In the last five years, the only questions raised by Patil from the region, so far, have about the direct train connecting Bhiwandi with Mumbai. In assembly, there have not been any concerns raised in the last BJP tenure. In Bhiwandi West and Bhiwandi East seats, incumbent MLAs Mahadeo Chougule of the BJP and Rupesh Mhatre of the Shiv Sena are seeking re-elections. In Bhiwandi (Rural), sitting MLA Shantaram More of the Shiv Sena is trying for another term. The BJP-Shiv Sena combine has relied heavily on non-Muslim voters in the region and managed a marginal win in all three seats. “No one has bothered to come to us in the past five years. They did not come when our businesses collapsed or when our units shut down. And if they come to us for votes, we will chase them off,” Dastagir Ansari, a 75-year-old, small-time mill owner said, without revealing much about his preferred party.
Source: The Wire
India's annual rate of inflation, based on monthly wholesale price index (WPI), for September 2019, stood at 0.33 per cent over September 2018. The index for textiles dipped 0.3 per cent while for apparel it rose 1.9 per cent in September, according to the provisional data released by the Office of the Economic Adviser, ministry of commerce and industry. The official WPI for all commodities (Base: 2011-12 = 100) for the month of September 2019 declined by 0.1 per cent to 121.3 from the previous month’s level of 121.4, the data showed. The index for manufactured products (weight 64.23 per cent) for September 2019 rose by 0.1 per cent to 117.9 from 117.8 for the previous month. The index for ‘Manufacture of Wearing Apparel’ sub-group also increased by 1.9 per cent to 138.9 from 136.3 for the previous month due to higher price of manufacture of woven apparel, except fur apparel, and knitted and crocheted apparel (1 per cent each). The index for ‘Manufacture of Textiles’ sub-group, however, declined by 0.3 per cent to 117.9 from 118.3 for the previous month due to lower price of synthetic yarn (2 per cent), cotton yarn, and knitted and crocheted fabrics (1 per cent each). However, the price of other textiles and made-up textile articles, except apparel (1 per cent each) moved up. The index for primary articles (weight 22.62 per cent) declined by 0.6 per cent to 143.0 from 143.9 for the previous month. The index for fuel and power (weight 13.15 per cent) also declined by 0.5 per cent to 100.2 from 100.7 for the previous month due to lower price of furnace oil, naphtha, petroleum coke, bitumen, ATF and petrol. However, prices of LPG and kerosene moved up.
Source: Fibre2Fashion
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1017.75 |
USD/Ton |
0.91% |
10/14/2019 |
|
VSF |
1514.98 |
USD/Ton |
0.09% |
10/14/2019 |
|
ASF |
2164.57 |
USD/Ton |
0% |
10/14/2019 |
|
Polyester POY |
1048.08 |
USD/Ton |
-0.54% |
10/14/2019 |
|
Nylon FDY |
2341.60 |
USD/Ton |
0% |
10/14/2019 |
|
40D Spandex |
4076.63 |
USD/Ton |
0% |
10/14/2019 |
|
Nylon POY |
2299.28 |
USD/Ton |
0% |
10/14/2019 |
|
Acrylic Top 3D |
1170.80 |
USD/Ton |
0% |
10/14/2019 |
|
Polyester FDY |
2539.08 |
USD/Ton |
-1.37% |
10/14/2019 |
|
Nylon DTY |
5332.07 |
USD/Ton |
0% |
10/14/2019 |
|
Viscose Long Filament |
1283.65 |
USD/Ton |
0% |
10/14/2019 |
|
Polyester DTY |
2186.43 |
USD/Ton |
-0.64% |
10/14/2019 |
|
30S Spun Rayon Yarn |
2158.22 |
USD/Ton |
0% |
10/14/2019 |
|
32S Polyester Yarn |
1636.30 |
USD/Ton |
0% |
10/14/2019 |
|
45S T/C Yarn |
2426.23 |
USD/Ton |
0% |
10/14/2019 |
|
40S Rayon Yarn |
2031.26 |
USD/Ton |
0% |
10/14/2019 |
|
T/R Yarn 65/35 32S |
1777.36 |
USD/Ton |
0% |
10/14/2019 |
|
45S Polyester Yarn |
2271.07 |
USD/Ton |
0% |
10/14/2019 |
|
T/C Yarn 65/35 32S |
2426.23 |
USD/Ton |
0% |
10/14/2019 |
|
10S Denim Fabric |
1.25 |
USD/Meter |
0% |
10/14/2019 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
10/14/2019 |
|
40S Combed Poplin |
0.96 |
USD/Meter |
0% |
10/14/2019 |
|
30S Rayon Fabric |
0.57 |
USD/Meter |
0% |
10/14/2019 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
10/14/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14106 USD dtd. 14/10/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
Sri Lanka’s trade deficit contracted by $ 2.3 billion to $ 4.8 billion during the first eight months of this year, the Central Bank said yesterday, with August seeing an import decline of 16.6% while exports declined by 0.4%.The deficit in the trade account contracted by $ 2,386 million to $ 4,854 million during the first eight months of 2019, in comparison to $ 7,240 million in the corresponding period of 2018, the Central Bank said in its latest External Performance report. The trade deficit contracted in August 2019 as the decline in imports continued while the dip in exports in the previous month has largely recovered. Import expenditure recorded a decline of 16.6% (year-on-year) and export earnings declined fractionally by 0.4% (year-on-year) in August 2019, mainly due to the lower prices of major export categories. The trade deficit fell to $ 540 million in August 2019 compared to the deficit of $ 717 million recorded in July 2019. Meanwhile, the terms of trade, which represents the relative price of imports in terms of exports, improved by 5.2% (year-on-year) as import prices reduced at a faster pace than the reduction in export prices. However, on a cumulative basis, the terms of trade deteriorated marginally by 0.1% during the first eight months of 2019 in comparison to the corresponding period of 2018. Earnings from merchandise exports declined marginally by 0.4% (year-on-year) to $ 1,033 million in August 2019, led by a decline in agricultural exports followed by mineral exports while industrial exports grew, supported by higher earnings from textiles and garments. Earnings from textiles and garments increased by 7%, reflecting the higher demand from all major markets especially from the European Union, which recorded a growth of 12.9%. Export earnings from chemical products, printing industry products, animal fodder and plastics and articles thereof also increased. However, export earnings from rubber products declined due to lower earnings from tyres and surgical and other gloves exports while food, beverages and tobacco exports declined with lower exports of vegetable, fruit and nut preparations as well as manufactured tobacco. Export earnings from machinery and mechanical appliances, petroleum products, transport equipment, base metals and articles and leather, travel goods and footwear also declined during this period. Earnings from agricultural exports decreased in August 2019 due to lower earnings from all sub-categories except tea, seafood and vegetables. Earnings from tea exports increased in August 2019 due to higher export volumes despite the decline in average export prices. However, earnings from spices declined due to poor performance in cinnamon, clove and pepper. In addition, export earnings from coconut declined due to lower export prices in both kernel and non-kernel products. Export earnings from mineral exports also declined in August 2019 in comparison to August 2018 due to a low performance in all sub-categories under mineral exports. The export volume index in August 2019 increased by 2.9% (year-on-year) while the export unit value index declined by 3.2%, indicating that the subdued performance of exports was entirely driven by the reduction in export prices. Expenditure on merchandise imports contracted notably in August 2019 for the tenth consecutive month by 16.6% (year-on-year) to $ 1,574 million, registering a decline across all major categories of imports. Expenditure on consumer goods imports declined in August 2019, reflecting the reduction in both food and beverages and non-food consumer goods imports. Lower imports of spices, dairy products, vegetables and seafood mainly contributed to the decline in imports of food and beverages while lower imports of personal motor vehicles resulted in the contraction in non-food consumer goods imports. “Import expenditure on personal motor vehicles declined by 46.2%, year-on-year, continuing the trend observed since December 2018 despite an increase seen in July 2019 over the preceding months, reflecting the impact of a backlog of concessionary permits being used for importing vehicles.” However, expenditure on sugar and confectionary, medical and pharmaceuticals, cereals and milling industry products imports has increased during August 2019. Expenditure on imports of intermediate goods reduced in August 2019 mainly due to lower expenditure on petroleum products as a result of lower import volumes and prices. Expenditure on textiles and textile articles, chemical products, paper and paperboard and articles thereof and mineral products also declined. However, expenditure on fertiliser imports increased more than twofold on a year-on-year basis in August 2019 due to higher volumes imported targeting the coming Maha season while the import of base metals, wheat and maize also increased. Imports of investment goods declined in August 2019 due to lower imports of machinery and equipment and building material. However, transport equipment increased significantly, driven mainly by the importation of railway equipment. The import volume index dropped by 9.3% while the unit value index dropped by 8%, indicating that the decline in imports was driven by the combined effect of lower volume and prices when compared to August 2018. Foreign investments in government securities recorded a net outflow of $ 156 million in August 2019. On a cumulative basis, net outflows from the government securities market amounted to $ 285 million during the first eight months of the year. Foreign investments in the Colombo Stock Exchange (CSE), including primary and secondary market transactions, recorded a net outflow of $ 12 million during August 2019. Nevertheless, financial flows to the CSE recorded a net inflow of $ 22 million during the first eight months of 2019. Further, long-term loans to the Government recorded a net inflow of $ 83 million during August 2019. There were significant project loan inflows to the Government in August 2019, with a number of social development and infrastructure projects receiving disbursements. Gross official reserves stood at $ 8.5 billion by end August 2019, equivalent to 5.1 months of imports. Meanwhile, total foreign assets, which consist of gross official reserves and foreign assets of the banking sector, amounted to $ 11.3 billion as at end August 2019, which was equivalent to 6.8 months of imports.
Source: Financial Times
Việt Nam’s textile industry faces many difficulties with both export and production on the decrease due to effects of an intensified China-US trade war, said industry experts. “Buyers are concerned with the on-going China-US trade war and it has resulted in fewer and smaller orders,” said a report by the Ministry of Investment and Planning. Vietnamese textile companies were being hit hard as the trade war dragged on, as indicated in a performance review of the Vietnam National Textile and Garment Group (VINATEXT), one of the largest in Việt Nam. Export of raw materials to China, traditionally a major market for Vietnamese products that accounts up to 60 per cent of the country’s total export volume, plummeted as China cut back on imports. Among the most affected was yarn export with the price continuing to fall as fears of further tariffs being slapped on an additional US$250 billion worth of Chinese goods linger. “As the global yarn industry faces worsening prospects due to the on-going trade war, competition among rival countries such as India, Indonesia, Pakistan, Thailand and Việt Nam has intensified,” said the review. In stark contrast to last year when there were more than enough orders to work on until the end of the year by September, companies are scrambling to secure orders to maintain production. A vast majority of orders, if they were signed at all, were of small volume and short-term as customers were constantly on the look-out for new developments of the trade war. In addition, more and more Chinese orders have been shipped to countries with better tax incentives such as Cambodia and Bangladesh. The possibility of Việt Nam’s textile industry hitting its target of $40 billion in exports this year is getting slimmer, said VINATEXT Vice President Trương Văn Cẩm. Along with the trade war’s adverse effects, expectations for trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Việt Nam Free Trade Agreement (EVFTA) were set unrealistically high, Cẩm said, adding such deals will take a while to make a real impact. According to figures released by the General Department of Customs, textile exports during the first three quarters of 2019 reached $29.2 billion, a 9.1 per cent year-on-year increase.
Source: Vietnam News
After weeks of gloom, the last few days have given a glimmer of hope that an agreement can be reached. UK Prime Minister Boris Johnson repeated on Monday that Britain must leave the EU on October 31, as divorce talks resumed in Brussels in a pivotal week that could define how and when Brexit finally happens. In an elaborate ceremony in parliament, Queen Elizabeth II set out Johnson’s legislative programme for the coming year, with leaving the EU top of the agenda. “My government’s priority has always been to secure the UK’s departure from the EU on October 31,” she said in a speech in the upper House of Lords. “My government intends to work towards a new partnership with the EU, based on free trade and friendly cooperation.” But this depends on the outcome of closed-door discussions in Brussels, where officials are racing to reach a deal on Britain's exit terms before a summit of EU leaders starting on Thursday. If he cannot get a deal by Saturday, Johnson will fall foul of a British law demanding he ask the EU to delay Brexit for a third time rather than risk a potentially disastrous "no deal" departure. "A deal is possible and it's possible this month," Irish Deputy Prime Minister Simon Coveney said as he arrived for talks with EU foreign ministers in Luxembourg. "It may even be possible this week but we're not there yet." Michel Barnier, the bloc's chief Brexit negotiator, briefed EU ambassadors late Sunday after a weekend of talks between officials described as "intense" and "constructive".After weeks of gloom, the last few days have given a glimmer of hope that an agreement can be reached but there has so far been no decisive breakthrough. Barnier warned on Sunday that "a lot of work remains to be done".This message echoed by Johnson's spokesman in London, who said on Monday: "The talks are constructive but there is a lot of work still to do." More than three years after the 2016 referendum vote to leave the EU, divorce talks remain stuck on how to avoid customs checks between British Northern Ireland and Ireland. After British MPs rejected a previous plan, Johnson put forward fresh proposals earlier this month -- but they have been met with a cool response in Brussels. Johnson took over from his predecessor Theresa May in July vowing no more delays, after she postponed Brexit twice in a failed attempt to get her own divorce deal through the British parliament. But he has no majority in the House of Commons, leaving him powerless even to call an election without the support of opposition parties. In a statement issued alongside Queen Elizabeth II's speech, Johnson said the British public were "tired of stasis, gridlock and waiting for change".It was time to leave the EU and seize new opportunities, "to tear away that bureaucratic red tape, to set our own rules, and to release the talent, creativity, innovation and chutzpah that exists in every corner of our United Kingdom".
Source: Business Standard
The Oerlikon Manmade Fibers segment presented innovations at the ITMA 2019 to guide the digitalization demands and needs of the spinning industry. The solutions under the Oerlikon Barmag, Oerlikon Neumag and Oerlikon Nonwoven brands have become the focus of interest for textile manufacturers from the global market. Oerlikon shows the ‘future’ to man-made fibre industry. Providing groundbreaking technologies to the textile industry, Oerlikon continued this tradition at ITMA 2019. Oerlikon Manmade Fibers showed the latest technological developments in the man-made fibre industry and technical textiles to visitors at their thousand square meters booth in Hall 7 at the exhibition which took place in Barcelona from June 20 to 26. ITMA visitors also experienced the vision of sustainable and automated man-made fibres production in a virtual 4D showroom located on the booth. Oerlikon launched 4 solutions at ITMA 2019; WINGS FDY PA6 for polyamide yarns, BCF S8 Tricolor for carpet yarn production, eAFK Evo texturizing machine and VacuFil for polyester recycling. André Wissenberg, Vice President Marketing, Corporate Communications and Public Affairs, Oerlikon Manmade Fibers Segment said that they invite all visitors to this year’s ITMA on a journey into the future of manmade fibre production. Wissenberg; “We have shown all our guests our vision of a sustainable and automated manmade fibre production in a spectacular virtual 4D showroom. ‘Clean Technology. Smart Factory’ is the motto of the future. And this was only a stone’s throw away from reality at our booth. We presented four world premieres for efficient machine and plant concepts in a new, innovative industrial design. Together with numerous other innovations, all this forms our new DNA”. Oerlikon shows the ‘future’ to man-made bre industry: BCF S8 Tricolor breaks the mould in carpet yarnAndré Wissenberg provided information about the BCF S8 Tricolor, which is described as a big step forward in carpet yarn production. Wissenberg said that with this technology innovation carpet yarn manufacturers are able to better cater to changing market requirements and can stand out in a highly-competitive industry despite increasing pressure on costs – regardless of whether with standard or niche products. Wissenberg also commented; “Developed as the most efficient BCF solution of Oerlikon Neumag, carpet yarns can now be processed in 3 colours instead of single colours with BCF S8 Tricolor. It is unique in the market with this feature. The new BCF S8 is the first Oerlikon Manmade Fibers segment system equipped with an innovative human-machine interface (HMI) for intelligent controlling and monitoring. To this end, the system offers – by means of a touch screen – direct access to important information, operating statuses and actual and target values at each take-up position”. Oerlikon shows the ‘future’ to man-made bre industry: eAFK EVO sets the new standards in texturing Another innovation that premiered at the Oerlikon booth was the eAFK EVO texturing machine. Offered under the Oerlikon Barmag brand, this solution promises superior speeds, greater productivity and consistently high product quality; along with lower energy consumption and simpler operation vis-à-vis comparable market solutions. There are two important features that define the eAFK EVO; an optimized EvoHeater and an entirely newly developed active cooling unit, the EvoCooler. “We are talking about a truly revolutionary machine,” said André Wissenberg and continued saying; “EvoCooler uses active cooling technology, with which the machine speed can be increased by 10 to 20 percent vis-à-vis comparable systems. The optimized EvoHeater ensures energy savings of up to 25 percent. And the new, patented automatic doffing system EvoTakeup is also proving to be extremely robust and exceedingly low maintenance; while nevertheless achieving efficiency of over 99 percent. It also includes an artificial intelligence. The AIM DTY analysis software is a further step on the digitalization journey at Oerlikon’s Manmade Fibres segment. This learning artificial intelligence system filters thousands of error graphs generated every day by the UNITENS 1 monitoring sensor whenever the yarn tension exceeds the prescribed tolerances”. Wissenberg divulged that they have worked with some of the major textile companies in the development of these solutions; including Korteks from Turkey. Clean technology production philosophy and VacuFil innovation Expressing that polyester and its applications are omnipresent in our everyday lives; André Wissenberg added that another innovation of Oerlikon is the VacuFil recycling series; which was developed together with their subsidiary Engineering. Wissenberg; “With VacuFil we are offering a solution catering to a “clean technology” production philosophy. In a normal spinning process, there are wastes. This means, for example, that a 15 kg package is used as 10 kg due to a yarn break. Yarn wastes can be recycled as fibres with VacuFil. Zero waste in spinning is thus becomes real”. Wissenberg announced that the other innovation they presented at ITMA 2019 was the new WINGS FDY model for polyamide FDY yarns. Reminding that polyamide is mainly used in the automotive industry; Wissenberg emphasized that this solution was developed for the most demanding polyamide 6 process. Stating that WINGS FDY was presented for the first time at ITMA; Wissenberg shared the knowledge that important manufacturers from advanced textile markets made machinery purchases. In his evaluation of ITMA 2019, André Wissenberg said that; big players of the industry attract more attention than small businesses. Stating that Oerlikon has become one of the hangouts of textile manufacturers with their different booth concept, innovations, 4D show and multimedia presentations; Wissenberg said that the exhibition meets their business potential expectations. Stating that Oerlikon’s business calendar was full by 2021 due to new orders, Wissenberg continued; “We are doing very well in terms of business. We have many strategic investments for the man-made fibre industry at hand. When we look at the plans of big companies for 2022 and 2023, we see that they plan to make strategic investments. As an example of large-scale investments in the industry, Wissenberg pointed out to Adanabased SASA; and reminded that the company has made serious investments for a long time. Wissenberg; “SASA has invested to become a major player in the man-made fibre industry and has achieved this position. Now they want to be the biggest player that can compete with Chinese and Indian companies’ products in the Turkish market. They are progressing in this process with new investments. Similarly, the Turkish textile industry continues its development. We provide solutions from a single source to those who want to invest to survive”. Wissenberg added that aside from Turkey they are expecting new investments and growth in Chinese, Indian and Bangladeshi markets
Source: Textilegence
The president of Pakistan recently promulgated ordinances to establish the China-Pakistan Economic Corridor Authority (CPEC Authority) and grant tax concessions to Gwadar Port and its free zone. The aim of the government is to reinitiate the CPEC project and achieve its goal of not only greater economic development in Pakistan but also integrating the national economy into regional and global economies. The purpose of the CPEC Authority and the new tax laws is to oversee and implement CPEC projects and ensure that Gwadar and its free zone are provided with necessary tax and tariff concessions. The authority will have considerable autonomy and vast financial and administrative powers. It will ensure that CPEC projects are completed without major bottlenecks that otherwise plague development projects in the country. However, it is important that the major objective of the authority encompasses an increase in overall exports from Pakistan and improved competitiveness of domestic firms, for which it must be kept insulated from lobbies with a protectionist mindset. Along with the establishment of the CPEC Authority and tax concessions, the government has also realised the importance of fast-pacing the development of Special Economic Zones (SEZs) and providing incentives for small and medium enterprises (SMEs) to widen the industrial base and ramp up exports. The cooperation with China is critical for developing the SEZs across Pakistan as China boasts of over 2,500 SEZs, which constitute approximately 50% of all SEZs around the world. The Chinese are likely to aid the development of SEZs in Pakistan. The World Investment Report 2019 says Pakistan has seven SEZs. They exhibit minimal participation in global value chains. Pakistan is planning an additional 39 SEZs. It is important to improve the existing infrastructure in industrial areas along with developing the new SEZs. Owing to high trade and production costs that are likely to accumulate as a product moves through the value chain, Pakistan is unlikely to produce products that undergo a transformation in different countries, regionally and globally. The recently published World Competitiveness Index of the World Economic Forum indicates further deterioration in Pakistan’s ranking, primarily driven by macroeconomic instability. Therefore, it is essential that the Pakistan government not only undertakes significant reforms in its trade costs but also ensures better economic conditions and facilities to boost production in the SEZs as well as by the SMEs. The World Bank’s World Development Report 2020: Trading for Development in the Age of Global Value Chains emphasises the importance of product fragmentation across country borders or participation in global value chains (GVCs), such that firms within a country specialise in a particular production process rather than manufacturing an entire product. The key message of the report is that a 1% increase in GVCs participation boosts per capita income levels by more than 1%, which is estimated to be twice the benefit from participation in conventional trade. Furthermore, GVCs enhance sustainable and inclusive development in developing countries if such states adopt trade and investment reforms as well as improve connectivity. Unfortunately, Pakistan has been plagued by the lack of participation in GVCs.
Challenges
The World Bank’s report gives certain examples of challenges faced by the exporters. Pakistan’s exporters have faced significant challenges to receiving concessions on imported intermediates that almost eliminate their ability to buy crucial inputs to boost the quality of their products. Although the government has made changes to the duty and tax remission schemes, higher constraints on accessing desired inputs can damage export competitiveness. On the other hand, exporters in Bangladesh are granted approval for duty exemptions within 24 hours and more than 90% of their textile exporters avail the scheme. The report also highlights the fact that Pakistan’s exporters are likely to be the most exposed to automation in production in developed countries, which may eventually result in the displacement of several exporters. Furthermore, the report highlights the importance of robust national certification and testing agencies to ensure that Pakistan’s products comply with international standards. It cites an example of how the fishing industry was able to overcome the ban on fish exports by improving on services of the testing agency in Pakistan.
Trade linkages
The new phase of CPEC can help boost industrial activity and economic development in Pakistan. It is highly recommended that the CPEC Authority does not limit itself to the promotion of trade and investment between Pakistan and China but also ensures increasing export activities with important destinations in the European Union and the United States. Although China as a manufacturing hub of the world is known for its exports of finished goods and products, it is also a major exporter and importer of intermediate goods. China is a major origin country for imports for several of the large exporting powerhouses in the Southeast Asian region. Policies for promoting trade linkages with Chinese firms, which involves increasing exports to other markets, is likely to benefit Pakistan. For instance, an analysis of the data borrowed from the ITC’s Trademap.org shows China is by far the largest exporter of woven fabrics of cotton, manmade filaments, and manmade staple fibers. These inputs can help boost downstream textile production in Pakistan. Furthermore, with the demand for new machinery and appliances likely to increase with the advent of CPEC-related industrialisation, the imports of such equipment may also get a boost. China exported more than $1 trillion worth of machinery and electrical appliances in 2018, more than the combined sum of exports of machinery and electrical appliances from Germany, the US, and South Korea. China exported approximately $100 billion worth of data processing machines. China is also the world’s largest exporter of textile machinery, followed closely by Germany and Japan. China is now the most significant source of textile machinery imports into Pakistan. Germany and Japan, along with China, were the major sources of textile machinery imports in the previous surge between 2004 and 2007. The relocation of Chinese factories in Pakistan can boost textile exports. In essence, another potential game-changer is in the making. However, trade and investment reforms need to be prioritised to ensure success.
Source: The Express Tribune
