The lower minimum alternate tax (MAT) rate announced as part of the corporation tax rate cuts in September will be applicable from the current fiscal year (2019-20 or FY20), Finance Minister Nirmala Sitharaman clarified on Monday in the Lok Sabha after an error in the Taxation Amendment Bill spooked companies. For the second time in less than a week, Sitharaman also spoke of the challenges in maintaining fiscal discipline, while comparing the Modi government’s fiscal record with that of the Manmohan Singh government. Sitharaman said a final call on the fiscal deficit will be taken at the Revised Estimate stage. The Taxation Law Amendment Bill, 2019 was introduced and passed in the Lok Sabha on Monday. It had said the lower MAT rate of 15 per cent, down from 18.5 per cent, will be applicable from the next financial year (2020-21 or FY21), while the Ordinance had said the lower rate will be effective from the current financial year. The corrections were made by way of an official amendment, changing FY21 to assessment year 2020-21. “The intention has always been to apply reduced MAT rate from the year 2019-20. That error will be corrected through an official amendment now. The original intent was to apply it from 2019-20, which continues to be the case now,” said Sitharaman. In order to promote growth and investment and attract fresh investment in the manufacturing sector, the government through an Ordinance provided domestic companies with an option to pay tax at the rate of 22 per cent if they do not claim deductions and exemptions. Besides the corporation tax rate was cut to 15 per cent for new manufacturing companies set up after October 1, 2019, without any deduction or exemptions and start manufacturing before April 1, 2023. Finally, the MAT rate was lowered to 15 per cent from 18.5 per cent for companies that continued to claim exemptions. MAT is the minimum amount of tax required to be paid by a company, in case its normal tax liability after claiming deductions falls below a certain limit. MAT credit will also not apply to companies opting for the new rates. “The government has corrected the mismatch in the dates on the applicability of MAT rate and has made it in consonance with the date given in the ordinance” said Rakesh Nangia, managing partner, Nangia Andersen Consulting. “The lower MAT rate will be applicable from April 1, 2019, which is indeed a welcome step. This had caused lot of confusion,” he added. Regarding fiscal deficit, Sitharaman said, “I fully appreciate the concerns that the honourable members have raised regarding the fiscal deficit, that what happens to fiscal deficit as there is revenue foregone of Rs 1.45 trillion because of the corporation tax cuts. Yes, I am aware of those concerns. We will take a final decision on the fiscal deficit at the Revised Estimates stage.” Allaying fears of corporate tax reduction impacting revenue collection, Sitharaman said gross direct tax collection increased by 5 per cent till November. Historically, maximum collection of direct taxes happens in the last quarter of the fiscal, she added. Sitharaman said the average fiscal deficit under the UPA-II government was 5.5 per cent, while during the Modi government’s first term was 3.68 per cent of gross domestic product. “We have managed to keep fiscal discipline completely intact and maintained the average fiscal deficit well under 4 per cent,” she said.
Source: Business Standard
Amid attack by Bharatiya Janata Party (BJP) MPs on industrialist Rahul Bajaj in the Lok Sabha on Monday, Finance Minister Nirmala Sitharaman told the House her government is open to suggestions and criticisms from industrialists. The FM said it was “unfair to say that government is not willing to listen to criticism”. Sitharaman, however, said that she stands by her comment that industrialist Rahul Bajaj should have sought answers from the government rather than spreading his own impressions which, on gaining traction, can hurt national interest. “I have been told that I am the worst finance minister. They are not even waiting for me to finish my term. I ask them to give me more ideas, and we will work on it. If there's a government that listens, it is PM Modi's government,” she said, bemoaning how she started to face criticism even when she was just few months into her current job. During the debate on the Taxation Laws (Amendment) Bill, 2019, opposition MPs, including Nationalist Congress Party (NCP)’s Supriya Sule, flagged the concerns that Bajaj had raised at an event on Saturday. Participating in the debate, BJP MP Ajay Misra ‘Teni’, who represents Kheri in Uttar Pradesh, alleged that a sugar factory that Bajaj runs, which is located in his constituency, owes millions of rupees in unpaid dues to sugarcane farmers. Several opposition MPs, including Sule and BSP’s Danish Ali, pointed out that the two Bajajs, the one who made the comments on Saturday and the one who runs the sugar factory, might be members of the extended Bajaj family, but are not the same. They said Rahul Bajaj, or his business group, does not run the Kheri sugar factory. However, that did not stop Misra from continuing to make allegations and he charged opposition members of doing chamchagiri, or sycophancy, of the industrialist. For the record, Bajaj Hindusthan Sugar Limited is run by Kushagra Bajaj. Earlier in the day, Biocon’s Kiran Mazumdar Shaw came out in support of Bajaj. She tweeted: “Madam we are neither anti-national nor anti-government. We want you to succeed big time as fastest growing economy n rise to the top of the global league of economies. I am a proud apolitical national and only want the government to promote good policies including at state level.” Shaw had earlier said the government treated Indian industry as “pariahs” and doesn't want to hear any criticism of the economy. In her speech, Sitharaman referred to comments by Shaw. The FM did not mention Shaw by name, but said she has read what the businesswoman has had to say on the issue, and that Shaw had attacked her earlier as well. In her speech, Sitharaman rejected allegations that the BJP-led government favours only a few select industrialists in the country. She said that unlike the Congress-led UPA government, the Modi government worked for the people and not just somebody’s jija, or brother-in-law, a reference to Robert Vadra. “There are no jijas in our party, only party workers,” Sitharaman said. The FM slammed Congress MP Adhir Ranjan Chowdhury for saying that it would be more apt to address her as Nirbala Sitharaman. Sitharaman said no woman minister in the Modi cabinet is powerless. “Women have been given good portfolios in this government. I am Nirmala, shall remain Nirmala, and because of my party and the Prime Minister, all of us are sabala,” she said. Meanwhile, the Congress took to social media to ridicule BJP MP Nishikant Dubey for his comments during the debate in the Lok Sabha that GDP as a tool to measure economic growth had not relevance.
Source: Business Standard
The value of India's overall exports rose about 8 per cent to USD 538.07 billion during 2018-19, Parliament was informed on Monday. In a reply to a question in the Lok Sabha, Commerce and Industry Minister Piyush Goyal also said that as per the Foreign Trade Policy 2015-20, the government aims to increase the country's export of merchandise and services to USD 900 billion in 2019-20 and raise India's share in world exports (goods and services) to 3.5 per cent. According to data provided by the minister, India has been registering a growth for the past three years in terms of exports of merchandise and services. In 2013-14, exports valued at USD 466.23 billion. It grew to USD 468.46 billion in 2014-15 and fell to 416.60 billion in 2015-16 and again went up to USD 440.05 billion in 2016-17. The country's overall exports of merchandise and services rose to USD 538.07 billion in 2018-19 from USD 498.63 billion in 2017-18, up 7.90 per cent.
Source: Economic Times
The government has identified over 350 “non-essential” imports — ranging from toys and textile products to footwear and electronic goods — on which it intends to initiate a host of measures, including an increase in customs duty apart from putting in place quality control orders to reduce shipments into the country and encourage domestic manufacturing. In addition, departments are looking into suggestions of waiving the requirement for global tender for government procurement in sectors where it thinks there is sufficient domestic capacity to execute a contract, sources told TOI. Several ministries such as textiles, electronics and IT and commerce and industry have been asked to initiate action on the identified list of products. As part of the initiative, public sector companies may also be asked to list out their requirement for products and specifications for the next five-six years so that domestic industry knows the demand and plan accordingly. So, if the standard changes, Indian manufacturers can tweak their production accordingly, explained an officer. The moves are part of the government’s thrust to ‘Make-in-India’ scheme, for which it has been working on ways to discourage imports. Certain import duty hikes are likely to be announced in Budget So far it has largely depended on an increase in import duty for a host of products, including television sets and mobile phones, which the government believes, has helped push domestic manufacturing. Ministers have repeatedly pointed to the domestic production and assembly of mobile handsets in recent years as a result of this policy. Similarly, it has restricted the import of raw material for agarbattis, although a section of the domestic industry is unhappy with the decision. Going forward, the government intends to pursue the plan vigorously and first up will be a quality control order for toys, such as dolls. Some of the duty hikes are expected to be announced in the budget, although officials are not ruling out midterm correction. Sources said that in segments such as electronics, the list will be drawn up carefully, recognising that imports of certain products need to be discouraged. A large part of India’s trade deficit is now due to the import of electronic goods and the government believes that the decision to sign the World Trade Organisation’s first Information Technology Agreement, allowing duty-free import of several electronic goods, was responsible for it. Officials said the government will simultaneously pursue a strategy to seek investments from international players to locate manufacturing facilities in the country. Several economists have, however, warned against using high import duties as a tool to restrict imports, arguing that it impacts the consumer adversely, who has to shell out more. Besides, inefficient domestic manufacturers get protection.
Source: Times of India
However, the upturn remaining subdued compared to earlier, growth rates for new orders and production remained modest. Manufacturing activity gained pace in November but as firms sharply cut operating costs, jobs losses were reported for the first time in 20 months, said a monthly global survey released on Monday. The widely tracked Nikkei India manufacturing Purchase Managers’ Index (PMI) rose to 51.2 in November from October’s figure of 50.6, which was a two-year low. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction. However, the upturn remained subdued compared to earlier, while growth rates for new orders and production were modest. As a result, more firms reported that they have had to resort to layoffs. “A number of companies indicated that workloads had been managed by existing staff, while others cited the non-replacement of retirees and non-renewal of temporary contracts,” said the PMI survey. To tighten their belts, firms also scaled back on input purchasing — which declined for the fourth month. Subsequently, stocks of purchases continued to fall for the fourth straight month. Rates of contraction for both input buying and inventories were marginal. Holdings of manufactured goods also declined, with the pace of depletion being solid in spite of softening from October. Consumer goods provided the main impetus to overall growth, while the intermediate goods category returned to expansion territory. Conversely, there was a solid deterioration in operating conditions at capital-goods makers. Manufacturing production increased only moderately in November, albeit at a quicker rate than October’s two-year low. Growth was supported by the launch of new products and better demand, though restrained by competitive pressures and unstable market conditions, the survey said. It also pointed out total sales increased for the twenty-fifth month in a row, with growth strengthening from October’s recent low. Some firms were able to secure new work amid successful marketing and strengthening demand, but others struggled in the face of competitive conditions, a challenging economic situation and troubles in the automotive sector. Manufacturers were partly helped by external markets, as signalled by a further expansion in international sales. The increase in exports was slight, however, and among the weakest over the past year-and-a-half. “PMI data continued to show a lack of inflationary pressures in the sector, which, combined with slow economic growth, suggests that the RBI (Reserve Bank of India) will likely extend its accommodative policy stance and further reduce the benchmark interest rate during December,” said Pollyanna de Lima, principal economist at IHS Markit. Business sentiment strengthened in November, with panel members expecting advertising efforts and product diversification to support output growth in the year ahead. That said, the Future Output Index was well below its average, as a number of firms were concerned about the state of the economy. On the prices front, both input cost inflation and output charges saw marginal increases. Both have been moderating in the current fiscal year. In neighbouring China, PMI data for November signalled a “further modest improvement” in the health of its manufacturing sector. This was attributed to “solid increases” in output and new business. Employment in the sector also remained broadly stable, the survey added.
Source: Business Standard
The Lok Sabha on Monday passed a Bill to replace an Ordinance for effecting reduction of corporate tax rates. Taxation Laws (Amendment) Bill, 2019, will amend the Income Tax Act 1961 and the Finance (No 2) Act 2019. It replace the Ordinance which was Promulgated by the President in September. In the biggest reduction in 28 years, the government in September slashed corporate tax rates up to 10 percentage points as it looked to pull the economy out of a six-year low growth with a Rs 1.45 lakh crore tax break. Base corporate tax for existing companies has been reduced to 22 per cent from 30 per cent, and to 15 per cent from 25 per cent for new manufacturing firms incorporated after October 1, 2019, and starting operations before March 31, 2023. The companies opting for lower tax rates, however, will not be entitled to claim any rebate or deductions.
Source: Economic Times
Loan growth has been slowing sharply and remains the biggest problem for Reserve Bank of India (RBI) rather than transmission. Between March end and November 8, loans to companies and individuals have increased by just 0.43% toRs 97.67 lakh crore. That’s despite the fact that liquidity is ample and the surplus has averagedRs 2 lakh crore over the past many months. The RBI will meet on December 5 to review monetary policy measures and while it may cut the repo rate by about 25 basis points to 4.9%, it is slow credit that is stalling the economy. India’s GDP grew at just 4.5% in the three months to September, the slowest in six years. Loan growth measured year-on-year, is at a two-year low. As on November 29, the banking liquidity surplus stood at Rs 2.5 lakh crore, according to the Bloomberg liquidity index. In the fortnight to November, loans to companies and individuals grew at just 7.9% y-o-y. Analysts at Jefferies have noted that system credit growth (with NBFCs) is around 7.2% compared with 15% in November 2018. Given how deposits have been growing at close to 10%, banks have been able to lower the interest rate on deposits; indeed at State Bank of India (SBI) the one-year marginal cost of funds rate (MCLR), which was 8.4% in June, has come down to 8% in November but the interest rate on a one-year fixed deposit has fallen by much more. This is true for several other banks who are taking care to protect their margins. Transmission — of the cut in repo rates to loan rates — has been slow; while the RBI has cut the repo rate by 110 basis points since April banks have cut their marginal cost of funds rate by a much smaller amount. The RBI said in October, monetary transmission has remained staggered and incomplete. “As against the cumulative policy repo rate reduction of 110 bps during February-August 2019, the weighted average lending rate (WALR) on fresh rupee loans of commercial banks declined by 29 bps,” the RBI said. The RBI mandates SLR at 18.5% but banks are holding excess securities; the excess SLR is estimated at 5%. Investments by banks in G-Secs increased byRs 3.72 lakh crore between end-March and November compared withRs 1 lakh crore in the corresponding period in the previous year.
Source: Financial Express
Structural and operational reforms—reducing number of tax slabs and broadening the base, etc—must be undertaken once tax revenues become relatively stable. At last, after four months, the GST revenue has crossed Rs 1 lakh crore in November. That should bring in some cheer in an otherwise gloomy scenario. Of course, this too falls short of the monthly target of Rs 1.18 lakh crore, and immediate measures are needed to improve tax compliance. There are many stories making rounds about the ingenious ways adopted to create a parallel informal economy. Therefore, the time is opportune to identify reform areas to increase revenue productivity and minimise administrative, compliance, and distortion costs. It must be admitted that GST implementation has important positives. The most important gain is from the abolition of inter-state check-posts. It is estimated that the long-distance travel time for goods has reduced by almost 20%. The reform has also helped improve supply chain management by not requiring the creation of branch offices to avoid inter-state sales tax. Also, the abolition of inter-state sales tax has made the tax destination-based, and reduced inequitable inter-state tax exportation. Equally important is the compliance gain due to the exchange of information between the income tax and GST departments. A major gain is the reduced distortion due to cascading. Earlier, the central excise duty, levied at the pre-retail stage, cascaded into the final retail value. Also, the state value-added tax was levied on excise duty paid value. Besides, there was no systematic mechanism for providing input tax credit between excise duty and service taxes. Thus, there was tax on tax, tax on the margins, and margins on the tax, resulting in the consumer paying more than what the governments collected. While these are the real gains, the stagnation of revenues is a major concern. The budget estimate for 2018-19 for the central government was Rs 7.43 lakh crore—the actual collection was 22% lower at `5.81 lakh crore. In 2019-20, while the estimated monthly collection of GST is Rs 1.18 lakh crore, the average monthly collection during the last seven months has been less than Rs 1 lakh crore. The government is, thus, staring at a shortfall of Rs 2 lakh crore for the whole year. Equally notable are the shortcomings in the structure of GST. The problem includes large list of exemptions, multiplicity of rates, and exclusion of several items of consumption from the base. All this has resulted in erosion of the base and continued distortions. The decision to exempt almost 50% of the items in the Consumer Price Index basket has narrowed the base. The exclusion of petroleum products and electricity has rendered the reform only partial as almost 43% of internal indirect taxes at the Centre, and 40% of those at the state level are excluded from input tax relief. The tax is levied at four different rates—5%, 12%, 18%, and 28%—in addition to the special rates on precious metals (0.25%), gold (3%), and job work in the diamond industry (1.5%). A special cess is also levied at varying rates on items in the 28% category and, in the case of some class of automobiles, there is a cess of 22%, resulting in the total incidence of 50%. Multiplicity of tax rates enhances administration and compliance costs, enables misclassification, and, in some cases, causes inverted duty structure. Moreover, high tax rates on automobiles, and building and construction material at a time when demand conditions are compressed have caused further slowdown in these sectors. There are infirmities arising from the rate variations according to use of product, value of product, and lower rates on items considered as inputs as compared to those judged to be outputs. These cause distortions as well as compliance problems. The most important measure needed, at present, is to stabilise revenues. This requires better compliance with the tax, for which the major action needed is to stabilise the technology platform. The originally proposed three forms—GSTR-1, GSTR-2, and GSTR-3B—could not be operationalised. The summary form, GSTR-3B, does not provide the information required for invoice matching. As the filing of the annual returns, too, is being repeatedly postponed, there is no mechanism to match invoices; this has given rise to a fake invoice industry. So far, 9,385 cases of tax fraud by this means have been detected, involving an amount of Rs 45,700 crore. The undetected amount would be much larger. In addition, the dysfunctional technology platform has resulted in integrated GST allocation to states in ad hoc ways, and has caused delays in refunds to exporters; small scale industry has particularly been at the wrong end of this. Firming up the IT platform will be greatly helped if the threshold is kept at Rs 50 lakh. Data for 2017-18 from Karnataka shows that 93% of taxpayers had less than a Rs 50 lakh turnover; they accounted for 6.5% of the turnover and 12% of the tax paid. It is important to focus on the “whales” rather than the “minnows”. Second, 100% invoice matching is not followed anywhere. Korea tried to do this, but had to give up. E-invoicing could be done, but for the immediate purpose, it may be desirable to confine the matching to invoices above a certain value—say Rs 10,000. Once, a measure of stability is brought into the revenues, it is easy to undertake reforms in the structure and operational details. Reducing the number of tax rates is important, and it should begin by getting rid of the 28% category altogether and transferring them to the 18% slab. The revenue from this category, including the cess, is reported to be 22% of the total. At a lower rate, the demand would be higher, and the loss of revenue will be lower. Simultaneously, it is desirable to prune the list of exempted goods and services. Only those that are difficult to tax for administrative reasons should be exempted, and many of the items under 5% should be moved to 12%. In fact, equity is better served through targeted cash transfers, and not by differentiating tax rates. Besides, calibrating tax rates based on consumption pattern alone ignores the employment potential from these sectors. In the next stage, the 12% and 18% categories can also be merged at 15%. This will simplify the tax system into two main rates. As the revenue stabilises, petroleum products and electricity could be brought within the ambit of GST. All these reforms should be sequenced and calibrated over a period of two-three years. At present, the GST Council relies on the analysis done by the “fitment committee”, which consists of the nominated officials of the Tax Research Unit in CBIC, and officials of the commercial taxes department from some states. For a major reform like the GST, it is important to have a strong technical secretariat, with experts in administration, economics, accountancy, and law to present the Council with options to take informed decisions based on rigorous research. Equally important is the need to make all data that is not sensitive to enforcement available in the public domain for independent researchers. Reluctance to share the data is a major constraint for undertaking independent research. The author is Member, Fourteenth Finance Commission & former Director, NIPFP.
Source: Financial Express
For accounting purposes, the depreciation can be worked out as per the Companies Act and for income tax purposes, as per income tax laws. Will inter-unit transfer of goods by one unit to another unit within the same SEZ under Rule 30(15)(v) of SEZ Rules 2006 below the cost price at which such goods were imported/procured, attract Customs duty? I do not find any provision to levy Customs duty on goods transferred by one SEZ unit to another SEZ unit in the same SEZ, whether the price at which the goods imported or procured are the same as the price at which the goods were transferred, or more or less. As per rule 74(5) of SEZ Rules 2006, depreciation norms for capital goods shall be as given in sub-rule (1) of rule 49 of SEZ Rules 2006. Rule 74 deals with exit of units. Will depreciation norms, as per rule 49(1) of SEZ Rules 2006, apply for used capital goods of a continuing SEZ unit also? The prescribed depreciation rates come into play for determining the value when the goods are removed from the SEZ into DTA, either for sale or for any purpose, including the exit of the unit. When the unit continues in the SEZ, the need for determining the value after reckoning depreciation does not normally arise. For determining the NFE, the amortisation is allowed at 10 per cent per year. For accounting purposes, the depreciation can be worked out as per the Companies Act and for income tax purposes, as per income tax laws. The government has brought in Rule 36(4) of the CGST Rules, 2017 restricting the ITC to 20 per cent of the eligible credit for invoices and debit notes not uploaded by the supplier. Can we challenge it on the grounds that once we have paid the supplier for the invoice, including the tax amount, we should not be deprived of the credit? Section 16(1) of the CGST Act, 2017 says that every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services, or both, to him which are used or intended to be used in the course or furtherance of his business. Apparently, the government is of the view that the power to restrict the credit flows from this provision. However, the alternate view is that the conditions and restrictions allowed under the provision can be limited only to procedural and documentation requirements, and not the quantum of credit. In my opinion, it is worth putting the restriction to judicial scrutiny. Can we remit claims of a foreign buyer for our exported goods found defective? Para C.22 of RBI Master Direction no.16/2015-16 dated February 2, 2016, says that banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of the Reserve Bank of India, and the exporter is advised to surrender proportionate export incentives, if any, received by him.
Source: Business Standard
MSMEs contribute 29.7% of GDP and 49.66% of Indian Exports. Government has taken various initiatives to enhance the competitiveness of Micro, Small and Medium Enterprises (MSMEs) through schemes such as Credit Linked Capital Subsidy and Technology Upgradation Scheme (CLCS-TUS), Micro and Small Enterprises – Cluster Development Programme, Procurement and Marketing Support and support for MSMEs to participate in international exhibitions / trade fairs, conferences / summits/ workshops.
This information was given by Shri Nitin Gadkari, Union Minister for Micro, Small and Medium Enterprises in written reply to a question in Rajya Sabha today.
Source: Press Information Bureau
The South India Textile Research Association (SITRA), Coimbatore, with more than 6 decades of research expertise, has developed a breakthrough technology for greener reduction of indigo dye during dyeing process labelled as GRIN – Green Reduction of Indigo Dye. The significance of the technology is that it does not call for any additional capital investments. In most industrial indigo dyeing processes, sodium dithionite (hydrose) is used as an agent since it has a powerful reducing property. However, it leads to generation of non-regenerable oxidation products and results in various problems in the disposal of the dye bath and the washing water. Till date, no commercial green and organic indigo dye reducing technology is available globally for replacing sodium dithionite & sodium hydroxide (caustic) in all areas of vat dye applications. “Indigo denim production is known to consume enormous quantities of water and requires hazardous reducing agents and alkali. No commercial technology has so far been established to replace sodium dithionite as a reducing agent and caustic for dyeing with vat dyes. SITRA’s ‘Green Reduction of Indigo Dye (GRIN)’ denim technology is the first internationally commercial and viable technology for natural or synthetic indigo dyed denim production for ‘zero pollution’, said SITRA in a press release. Under the sponsored project titled, ‘Development of Eco-Clothing by Greener Reduction Process of Natural Indigo Dyes’ by the ministry of textiles, Government of India and with contributions from its industrial partner, K G Fabriks, Sipcot, Perundurai, the research team from the chemistry division of SITRA has developed a process using a 100 per cent greener and biodegradable reducing agent and a green alkali for bulk production in continuous yarn slasher dyeing machines. The biggest advantage of this technology is that it can be used for the manufacture of denims using both synthetic indigo and natural indigo dyes. The new process eliminates hazardous wastewater completely by replacing the sodium dithionite or hydrose and caustic by using a green reducing agent and a green alkali. The process is not only pollution free but prospects for improved process stability, especially for vat dyes. KG Fabriks, in collaboration with SITRA, will be launching ‘Nature's Blue’-True Sustainable Denim at Weaves exhibition at Texvalley, Erode, using natural indigo with GRIN denim technology developed by SITRA. SITRA is in the process of filing a patent for the said development.
Source: Fibre2Fashion
Reliance Brands is in talks to take over the India franchisee rights of luxury fashion label Versace, and the company is signing a deal to sell products of another Italian luxury brand Valentino in India, adding heft to its top-end brands portfolio, according to three persons familiar with the development. Reliance has been in talks with Valentino for more than two years, according to press reports. ET had last month reported that Versace and Roberto Cavalli are looking to change its India partners. Both labels are operated in India by pan masala barons of the Chaurasia Group through its Infinite Luxury Brands. Versace, founded in 1971 by by namesake Gianni Versace, operates one store in New Delhi. Versace is now in talks with Reliance Brands as it is seeking a new partner, two of the people cited above said. If the deal fructifies, it will be third partnership for Versace’s parent company Capri Holdings with Reliance Brands as the two companies already have agreements to sell Capri’s other two labels — Jimmy Choo and Michael Kors — in India.
Source: Economic Times
Textile player Raymond on Monday said ownership of Raymond brand will remain with the demerged new lifestyle company. The company had earlier announced hiving off the consumer and lifestyle businesses into a separate entity. "Raymond consulted with industry and financial experts to arrive at an optimal structure in relation to ownership of brands related to lifestyle businesses. Under the proposed scheme, along with the lifestyle business, 'Raymond' and all other brands currently being used in respect of textiles, readymade garments, retail business related to Lifestyle business, tailoring services and allied accessories will be assigned to and owned by Raymond Lifestyle Business," the company said in a BSE filing. Consequently, once the proposed scheme is approved by the National Company Law Tribunal (NCLT), Raymond lifestyle business will not be required to pay any royalty to Raymond Ltd for its use of the brands. "Raymond' brand ownership for all the other businesses (except for Raymond Lifestyle Businesses) will remain with Raymond Ltd. "I am happy to announce the management's decision of moving brand ownership with usage categories in respective companies...There will be no intercompany brand licencing rights or royalty contracts," Raymond Ltd Chairman & Managing Director Gautam Hari Singhania said. The company had earlier announced the proposed demerger of its core lifestyle business into a separate entity that will be listed through mirror shareholding structure. The new company will be listed and the existing shareholders of residual Raymond will get the shares of the new company on a 1:1 basis. The move will create a clear demarcation of lifestyle and other businesses leading to the simplification of the group structure. The proposed scheme is subject to various regulatory and statutory approvals.
Source: Economic Times
The domestic textile and garment industry was still striving to reach its export revenue target of US$40 billion this year despite facing many difficulties, said Vũ Đức Giang, chairman of the Việt Nam Textile and Apparel Association (VITAS). To achieve this target, the industry needs export value growth of at least 11-12 per cent for the rest of the year, he said. According to the association, growth reached only 9.1 per cent in the third quarter, much lower than the same period in 2018. However, it was higher than other textile producers including China, India and Bangladesh. The association is hoping textile enterprises will be able to deliver big orders to push export value up in December. The most important thing is for textile and garment enterprises to search for markets and alternative partners. Currently, the businesses can take advantage of the Vietnam-EU Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) to promote export expansion to some markets in the EU as well as Canada and Australia. Canada holds a lot of potential for Việt Nam with import value of textiles and garments reaching more than $13 billion each year, while Việt Nam's textile and apparel exports to this market reach only about $550 million per year. Việt Nam does not have a free trade agreement (FTA) with Canada so the CPTPP opens the door for Việt Nam's textile and apparel products. Businesses need to seize this opportunity and seek partners in Canada. Thân Đức Việt, general director of Garment 10 Corporation, said to achieve export success, enterprises needed to be aware of requirements on price, quality, quantity and production time. Moreover, they must also ensure production stability. At the same time, enterprises also needed to cooperate with each other through affiliate programmes and support from the association to meet the rules of origin stated in FTAs. Enterprises, especially small businesses, should build a production chain to meet the demand of large contracts in terms of quantity, quality and time of delivery, as well as to create a name for themselves. In recent years, the textile and garment industry had developed strongly and exports had grown year by year, according to the association. However, it still faced many challenges in production and business, such as low labour productivity, lack of high quality human resources and mainly processing products rather than manufacturing them. In addition, challenges from export markets had also put pressure on them, including increasing protectionism, higher quality demands, and environment and technical tests. According to VITAS, local apparel producers were facing falling export orders. Since mid 2019, some businesses had been able to sign export contracts for small quantities each month. Meanwhile, in the same period last year, many large enterprises had export orders stacked up till the end of the year. Cao Hữu Hiếu, CEO of Việt Nam Textile and Garment Group (Vinatex), said most textile and garment businesses did not have enough orders to keep them operating until the end of the year. Large businesses such as Garment 10 Corporation, Đức Giang Garment Joint Stock Company, Hòa Thọ Textile Garment Joint Stock Corporation, Hà Nội Textile and Garment Joint Stock Corporation (Hanosimex) had export contract to maintain production until November, but only Việt Tiến Garment Joint Stock Company was going to be busy until the year-end. Hiếu said given the current situation, the industry would find it difficult to reach the export target of $40 billion this year.
Source: Vietnam News
The 25th Autumn edition of Intertextile Shanghai Apparel Fabrics round table meeting was held on September25. The event included a keynote speech and panel discussion, threw up many latest figures of Chinese textile industry. China is now world’s biggest textile exporter and market with advanced manufacturing & investments placed by Chinese companies around world. Representatives of high-ranking international associations discussed the topic ‘Sustainability and International Capacity Cooperation in the Textile Industry’. “At each fair we aim to curate a fringe programme that will inform, engage and connect thought leaders from around the world,” said Olaf Schmidt, vice president of textiles and technologies at Messe Frankfurt. The keynote ‘The Current Situation of China’s Textile Industry’ was delivered by Xu Yingxin, vice president of China National Textile and Apparel Council and chairman of CCPIT-TEX (co-organiser of the fair). There were many takeaways from the keynote and the panel discussion that followed. After decades of reform, China’s textile industry has become a key player on a global scale, being one of the country’s first markets to open up. In 2018, China’s chemical fibre production exceeded 50 million tons, making up over two thirds of global production. Textile exports from China reached 37.6 per cent of the world’s total in 2018, a 3.5 per cent increase from the previous year, while apparel exports accounted for 31.3 per cent of the world’s total. Although purchasing power has slowed slightly, as more Chinese consumers become wary of over-spending, the textile industry in China still experienced high demand from its domestic market. Due to the population size, the industry also has a safety net in terms of clothing being, a basic necessity. Domestic retail sales of apparel grew by 8 per cent in 2018, and have continued to grow in 2019, although not as quickly as previous years. Part of the panel discussion focused heavily on the importance of maintaining a strong consumer economy in order to maintain strong domestic purchasing power. Paul Alger (UK Fashion & Textile Association), warned of the social consequences and lack of purchasing power that come as a result of a weak consumer economy, as recently seen in the UK. Similarly, Rosette Carrillo (Confederation of Wearable Exporters of the Philippines) noted that the Philippines had much to learn from China’s domestic market growth. Meanwhile, K V Srinivasan (TEXPROCIL) indicated that India’s consumer economy benefits from their strengths, including a rich textile heritage and skilled technical workforce. Investments in the textile industry have also slowed as US-China trade war frictions knocked confidence. However, there is still growth. China’s textile industry’s investments in fixed assets grew by 5 per cent in 2018, before slowing in the first half of 2019. Investments have focused on technology and innovation, resulting in increased productivity. With its position at the forefront of the world’s textile industry, China is now entering a new era of textile manufacturing and design. Three key missions were noted for China’s plan moving forward: technology and innovation, culture and local talent and sustainability. Sustainability was a key point during the panel discussion. Carol Hanlon (Textile Clothing Footwear Resource Centre, Australia) pointed out China’s capacity, as a leader of textile production, to drive change in circularity. Both Hanlon and Alger acknowledged the demand for sustainability in the future consumer: younger generations who are increasingly associated with climate activism. The Belt & Road initiative was first proposed in 2013, and in 2014 became one of three major national development strategies in China. As of July 2019, the Chinese government has signed co-operation agreements with 136 countries along the route, which runs through three continents. During the initiative’s first five years, the total trade volume between China and countries along the Belt & Road route has exceeded $6 trillion, accounting for nearly a third of China’s total trade in goods during this period. The textile industry deals with a large part of this trade. By 2018, the Chinese textile industry is reported to have invested $6.5 billion in countries along the Belt & Road route. China’s textile industry has steadily placed more investments further overseas, upstream and downstream. These investments, both domestic and overseas, have two main directions. First, to create a worldwide production capacity, by building efficient manufacturing bases in China, Africa and countries along the Belt & Road route. And second, to develop international co-operation to strengthen resources throughout the supply chain (raw materials, design, R&D and even marketing). Between 2015 and 2018, Vietnam received the highest investment volume by far, followed by Ethiopia, Myanmar, Egypt, Cambodia, Malaysia, Pakistan and Tajikistan. An estimated 18 per cent of China’s textile exports go to US, making this China’s largest export market for textiles, valued at around $50 billion. This also makes China the largest exporter of textiles and apparel to the US, accounting for 38 per cent of the nation’s total imports. With ongoing tensions, tariffs and uncertainties, this has opened up opportunities for other countries to step in. Ade Sudrajat (Indonesian Textile Association) noted that Indonesia has experienced a decrease in purchasing power and views the trade war as an opportunity – as seen in Vietnam, whose exports to US more than doubled in 2018. Indonesia is reportedly open to Chinese investment, seeking to develop local e-commerce and start-ups, and recognising a need for efficiency and marketing. Similarly, Yuttana Silpsarnvitch (The National Federation of Thai Textile Industries) sees an opportunity for Thailand amidst trade frictions. He pointed out Thailand’s agricultural strengths, including traditional Thai silk as well as unique products such as pineapple yarns and banana yarns. Intertextile Shanghai Apparel Fabrics – Autumn Edition 2019 was co-organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Textile Information Centre.
Source: Fibre2Fashion
Eurofins Scientific is an international group of laboratories headquartered in Luxembourg, providing testing and support services to the pharmaceutical, food, environmental, agroscience and consumer products industries, among others. The Group is one of the international leaders in the provision of testing services with a network of more than 800 laboratories across 47 countries. Through research and development, in-licensing and acquisitions, the Group draws on the latest developments in every industry it serves, while helping corporations to deliver safe and compliant products through responsible and sustainable sourcing practices. Vice president of Global Consumer Product Testing of Eurofins Group Stephane Barrau discusses the testing landscape for the apparel and textile niches. What do you think is the biggest challenge facing apparel brands and retailers in today's market? The biggest challenge facing brands and retailers now is threefold: they need to stand out in a competitive marketplace characterised by rapidly advancing technology (automation, e-commerce, branding), ensure they are compliant with the regulatory framework, and, at the same time, focus on meeting the industry's sustainability objectives, which were officially launched at the G7 Summit in France in August.
How has the testing landscape changed in the last ten years?
From a customer service perspective, testing remains a commodity. The challenge for laboratories is to offer this basic service alongside added value services like technology, innovation and data management capabilities required by the industry. From the perspective of our internal development, we are adapting our service to meet new and changing regulations, which are increasingly demanding and comprehensive.
What sets your service offer apart from your competitors? We are focused on innovation and the development of new processes and test protocols, which are carried out in our technical competence centres located in the United Kingdom and Spain. Our competence centres are staffed by technical personnel with outstanding experience in the industries they serve, and some of them also sit on the standardisation committees. This positions us at the forefront of both research and development and regulatory awareness and enables us to advise our clients about the latest trends and upcoming regulatory changes and updates before they become legal requirements. Likewise, this enables us to prepare our labs in advance of the implementation of new regulations, so we are always a step ahead. The knowledge our experts possess is a clear competitive advantage. In addition, our technical teams are continually working to develop useful tools for our customers, such as the Chem-map chemical verification system.
What are your customers in apparel and textiles currently most concerned about? The biggest concern for our customers is regulatory compliance, followed by a shift towards developing more sustainable products and the need for greater transparency and traceability in the supply chain.
How have you responded to the increased focus on sustainability? Our global services portfolio ranges from regulatory advice and laboratory testing to inspections and audits. Within our textiles business, we have developed a series of innovative services to help customers improve the transparency of their supply chains. DNA traceability and supply chain mapping are two very interesting solutions that address the need for transparency as well as the problem of counterfeiting. In terms of product sustainability, we have been developing laboratory test methods to verify the sustainability of materials as well as the traceability of these same materials and substances throughout the entire supply chain. Examples include our microfibre test method to quantify microplastic release, or traceability systems such as the Chem-map chemical management system. In terms of the supply chain, we have a network of auditors based in the main production hubs around the world who provide a comprehensive service, including environmental audits and personalised social and technical audits. Eurofins | AQM recently announced that it has become a Provisional Member Firm of the Association of Professional Social Compliance Auditors (APSCA), whose aim is to enhance the professionalism, consistency and credibility of individuals and organisations performing independent social compliance audits.
Source: Fibre2Fashion
SGS, a leading inspection, verification, testing and certification company, has opened a state-of-the-art, apparel and textiles testing laboratory in Ethiopia. Located on the Hawassa Industrial Park, Hawassa in the Southern Nations, Nationalities, and Peoples' Region (SNNPRS) of Ethiopia, SGS’s new laboratory provides fast and efficient tailor-made testing services to local business, assuring compliance with the relevant international regulations and requirements. SGS’s presence in Ethiopia, one of the most important textiles and garment manufacturing sites in East Africa, will contribute to, and strengthen, the local apparel industry’s ability to meet the requirements of global standards and international markets.
Hub for RMG exports
“Ethiopia is becoming a hub for ready-made garment (RMG) exports to Europe and the USA, clearly demonstrating an increase in demand for consumer product testing services in this region,” said Spencer Yeung, Vice President of SGS Global Softlines. “Our new state-of-the-art facility can test against an array of international safety, quality and compliance requirements. In addition, our program of future development and investment ensures that this lab will be the only fully-fledged textile testing laboratory in the region.”
First garment factory
Ethiopia’s long history in textiles began in 1939 when the first garment factory was established. In recent years the country’s textiles and apparel industry has grown at an average at over 50% and more than 65 international textile investment projects have been licensed as foreign investors, during this period. In addition to its testing services, SGS’s quality inspection, compliance audits, factory assessment and loading supervision bring to Ethiopia a one-stop service for the country’s textiles industry. SGS is a leading inspection, verification, testing and certification company. With more than 94,000 employees, it operates a network of over 2,600 offices and laboratories around the world.
Source: Innovation in Textiles
The Textile, Garment and Leather Employees’ Union (TGLEU) has commended the Ghana Standards Authority (GSA) over its decision to clamp down on people selling substandard African wax prints. The Union in a statement said these substandard products which have flooded the markets, pose serious health risks as the quality of chemical used in manufacturing the prints are unknown. “TGLEU pledges absolute support for the GSA in the application of its core mandate to ensure that the manufacture and sale of products comply with the laws of this country. We appeal to the GSA to sustain the operations at the points of sale of these counterfeit textiles across the regions to save the country from imminent calamity,” the union said. The action taken by the GSA should provide a glimmer of hope to textile manufacturers who have lamented the influx of cheap wax prints has led to the near-collapse of the country’s once-vibrant textile industry. The enforcement team of the Ghana Standards Authority (GSA) last week closed down several shops at the Accra Central Market including those that deal in prints and fabrics. The standardization exercise sought to uncover the illegal production of sub-standard or counterfeit products in Ghana, and also ensure that vendors only sell authentic goods to customers. The GSA, while performing the exercise, took samples of some products to ascertain their authenticity, and locked up some shops in cases where it was realized that the vendors sell a lot of substandard fabrics. The GSA said the exercise is to rid the markets of substandard goods. Business Development Manager at the GSA, George Kojo Anti, told Citi Business News the fabrics are hazardous to the skin and as such must not be allowed unto the markets. “The exercise was to go to the markets, sample products and the suspicious fabrics that are actually dominant in the shops. In the interest of public health and safety, in the interest of consumer protection, then we would temporarily have to suspend the sale of such because they are articles that we suspect hold a danger for life. There is no reason why we should allow at a point where we have seen it with our own eyes to be continued to be sold in public. One human life lost can never be regained” he explained. Economy suffers. The statement issued by the Union stated that apart from the health risks, the economy of this country suffers immensely through substantial Revenue losses due to the smuggling of these products into the country. “Consequently, the local textile manufacturing industry which meets statutory tax obligations, applies certified dyestuffs and chemical and employs thousands of workers have been rendered uncompetitive in pricing because of the illicit activities of traders thereby causing the virtual collapse of the industry resulting in massive job losses,” the Union said.
