The commerce ministry has designed an online platform for issuance of a key document required for exports to those countries with which India has trade agreements, with a view to facilitate shipments during the COVID-19 crisis. An exporter has to submit a 'certificate of origin' at the landing port of the importing country. The document is important to claim duty concessions under free-trade agreements (FTAs). This certificate is essential to prove where their goods come from. "The platform has been designed as a single-point access for all FTAs/PTAs, for all designated Certificate of Origin (CoO) issuing agencies and for all export products, and is accessible at - https://coo.dgft.gov.in," the Directorate General of Foreign Trade (DGFT) said on Tuesday in a notice sent to all exporters, members of trade, designated agencies under FTAs/PTAs, and all embassies of FTA/PTAs partner countries. It said that the certificate for exports from India to Chile under a preferential trade agreement (PTA), exports to Nepal under SAFTA and SAPTA and shipments to Korea under India-Korea Comprehensive Economic Partnership Agreement are already being applied and issued through this online platform. "To further this initiative and facilitation, and in the light of current crisis, the preferential certificate of origin for exports to various other countries under following FTAs/PTAs shall also be applied and issued only from this online platform with effect from April 7, 2020," it added. The Directorate has asked all concerned agencies to issue the certificate under the trade agreements through this platform. Under these trade agreement, two or more trading partners significantly reduce or eliminate import duties on maximum number of goods traded between them. India has implemented such agreements with regions including ASEAN, Singapore, South Korea, Japan, Sri Lanka, Thailand, South Asian Free Trade Area, and Asia-Pacific Trade Agreement. The DGFT said that in view of the movement restrictions in place due to the coronavirus pandemic in India, the designated agencies will issue digitally signed electronic certificates of origin only and no hard copy will be provided. "The applicant exporter may download the certificate, so issued, from the online platform and share the e-certificate with the authorities in the FTA partner countries. These online certificates will maintain the same layout, appearance and validity as the paper certificates," it said. Further, it said the electronic copy of the certificate will carry a digital signature of an authorised officer as already agreed to under the FTA/PTA. "As and when the functioning of the issuing agency offices resumes, the Certificate of Origin, so issued on the electronic platform, will also be made available in hard copy with ink-signature of the issuing officer to the applicant exporter besides the e-certificate. The certificate issuance process will continue to remain online," it said. It has also enlisted a procedure for exporters to apply for these.
Source: Economic Times
The ministry has laid down new norms, which require a Unique Certification Code called UCC-Covid19 and a tamper-proof sticker in indelible ink specifying details of the manufacturer. The Union Ministry of Textiles has announced a new regulatory framework for the production of personal protective equipment (PPE) units after reports emerged that Indian manufacturers, who failed laboratory tests, have sold their rejected products to a section of private hospitals. The ministry has laid down new norms, which require a Unique Certification Code called UCC-Covid19 and a tamper-proof sticker in indelible ink specifying details of the manufacturer. The ministry issued a notification to this effect on April 6, saying that the code would apply to both PPE garments and fabric that pass the laboratory tests, as stipulated by the South India Textile Research Association (SITRA) and the Defence Research & Development Establishment (DRDE). The code will record the type of garment, its test procedure and also the date of the test. The certification will be valid for a fixed time frame and both SITRA and DRDE will preserve the sample sent by the manufacturer, said the notification, accessed by HT. The move, ministry officials said, was to tighten the production of PPE units by Indian manufacturers in line with the specifications of the World Health Organisation (WHO) and the Union Ministry of Health and Family Welfare (MoHFW). Approvals have been given by the Coimbatore-based SITRA, an autonomous body under the ministry, and Gwalior-based DRDE. The notification stated that in case of coveralls a manufacturer needs to print in indelible ink or in tamper-proof sticker detail such as the name of the maker, code, test standard, batch number and order details. A ministry official, on condition of anonymity, told HT that the move was prompted by media reports that some manufacturers, whose products were rejected by SITRA and DRDE, were found to be supplying their units to a section of private hospitals. The ministry’s directive has been sent to states as well. Nihar Ranjan Dash, a joint secretary in the ministry, said that the certification primarily concerns coveralls and fabric provided by certain manufacturers of PPEs. “The directive doesn’t concern masks, as they’re certified by the Bureau of Indian Standards. We relied on imports of masks for all this while, and their specifications were of international standards,” said Dash. The tightening of norms would help Indian manufacturers prepare for the global market, he added. The current capacity of the Indian industry is to manufacture 10,000 PPE units per day, but Dash said that in about three months, the country is likely to produce three lakh units. An official of one of the testing agencies told HT on condition of anonymity that the two specific tests that are applied are the synthetic blood penetration for overalls and bacterial efficiency as far as masks are concerned. “A severe shortage of N-95 masks has been a cause for concern, as there are just a handful of manufacturers in the country,” said the official. Since India began domestic production of PPE in March owing to the spread of the coronavirus disease (Covid-19), these two testing agencies have approved 18 manufacturers to produce PPE units with non-woven textiles such as masks and coveralls. Later, the agencies approved 20 more manufacturers of the fabric. Only 50% of the manufacturers passed the test at the outset, the official said. “However, the success rate has come up to 80% now,” he added. M Rajaa of Coimbatore-based Saastha Textiles, one of the approved manufacturers of waterproof, laminated thermoplastic polyurethane and thermoplastic elastomers fabric in knitted, woven and non-woven fabric used in PPE units, told HT that the fabric needs to have a certain type of lamination to ensure that blood and virus do not contaminate a health care worker. “We also need to use only polypropylene virgin material to ensure that the material is protective and some manufacturers are also using reprocessed materials,” said Rajaa. Parag of Sai Synergy, another manufacturer of PPE units, said that the Indian Navy has ordered their products earlier and they always carry a sticker. “The sticker has to be put during the manufacturing process and cannot be put thereafter,” he added.
Source: Hindustan Times
The Centre may need to borrow 2-2.5 per cent of GDP or about Rs 4-5 lakh crore additionally for supporting people and businesses hit hard by the coronavirus outbreak and nationwide lockdown, according to former finance secretary Subhash Chandra Garg. "It seems necessary and advisable that the Government of India borrow this directly from the RBI instead of borrowing from the market. The FRBM (Fiscal Responsibility and Budget Management) Act should be amended to enable this," he said. For the current fiscal, the government plans to borrow Rs 7.8 lakh crore from the market and contain fiscal deficit at 3.5 per cent of the GDP. Of this, the government decided to borrow Rs 4.88 lakh crore during the first half itself. Observing that the unconventional solutions are needed for the unprecedented times, Garg said, the government should make a departure from the past to help the businesses, especially the small and own-account businesses that are likely to fold up if not helped with grant support. "The government should support the small and self-employed businesses by an estimated amount of Rs 2 lakh crore. If the phasing out of the lockdown continues to make some of these businesses inoperative, the fiscal package should build in an additional provision to cover that up as well," he said in a blog. He also suggested that the economic lockdown should be phased out by lifting it up from the vast rural areas and the cities which have no incidence of COVID-19 spread to undertake all economic activities regulating their interactions with outsiders under a safe protocol and subject to taking up certain additional precautions to eliminate the risk of spread. Several low-risk industries like mining, construction, manufacturing, etc should also be opened up with these precautions, he said, adding, hot spots and other areas can be opened up only when there is no more incidence of COVID-19. Services industries would require to readjust their business models to eliminate the risk of passive transmission, Garg, who is currently adviser to Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy, said. With regard to fiscal support to the poor and vulnerable section of the society, Garg said, the fiscal relief package of (Rs 1.7 lakh crore but actually a lot less) announced on March 26 does not address the loss being suffered by these workers. A new fiscal support package of about a Rs 60,000 crore for these workers suffering on account of economic lockdown is most urgently needed." At least 10 crore workers of the mining, construction, manufacturing and services sectors have been rendered jobless on account of economic lockdown ordered to contain the COVID-19 spread risk and they need an immediate fiscal support of Rs 2000 per month for three months, he added. Barring farm sector, essential goods and services and e-commerce businesses where it was feasible to work from home, the rest of the economy is totally shut, he said, adding, 21-day of shutdown of approximately 70 per cent of the economy would cause about Rs 8 lakh crore of loss of value addition/ GDP to businesses. Besides, he said, the Centre should release the held-up amount of approximately Rs 30,000 crore of GST compensation as revenue of states have suffered massively. "The Government of India should also release the instalment of Rs 56000 crores of the states' share in central taxes on due date i.e. 15th April. The states should be provided additional borrowing limits to cover up the shortfall in their tax revenues for the year 2020-21," he said. With regards to liquidity in the system, he said. banks have been provided considerable liquidity by the RBI of about Rs 5 lakh crore. "The banks are, however, unlikely to lend these funds to businesses, except to some high investment grade credits. The banks might actually use this liquidity to invest in Government of India and state government's bonds if the Government of India chooses not to borrow directly from the RBI," he said. It is time the RBI starts assuming some risk and buying corporate bonds and the mortgage backed assets in India, he said, adding, this will help credit flow to the businesses.
Source: Economic Times
Reliance Industries Ltd, which had sought a probe in December, in February asked for the termination of investigations against imports from Saudi Arabia, the order said India has ended an anti-dumping probe against mono ethylene glycol (MEG) imports from Saudi Arabia, while continuing investigations against Kuwait, Oman, the U.A.E. and Singapore, a government order said late on Monday. Reliance Industries Ltd, which had sought a probe in December, in February asked for the termination of investigations against imports from Saudi Arabia, the order said. MEG is a major feedstock for the polyester industry and is used to produce polyester fibres, polyester films, and resins. It is also used in the fibre treatment of textiles, the paper industry, and in adhesives, inks, and cellophane.
Source: Reuters/ Business Today
Seeking intervention of Prime Minister Narendra Modi, exporters on Tuesday demanded a comprehensive package as the exports sector will take an "unprecedented" hit due to lockdowns to contain the COVID-19 pandemic. In a letter to the Prime Minister, Federation of Indian Export Organisations (FIEO) President S K Saraf said that the exports sector is facing over 50 per cent cancellation due to the global lockdown on account spread of the coronavirus in the world. "Our exports will take an unprecedented hit in such challenging times. The worst-hit are lifestyle products like leather, carpets, handicrafts, apparels etc which are having over 75 per cent cancellations. This will also put pressure on current account deficit as overseas remittance will decline so will be FDI/FIIs inflow in the country," he said. Painting a grim picture, he added that there is a high risk of large scale unemployment after lockdown, especially in the labour-intensive sectors, if they are not accorded fiscal relief to ease their cash flow. "Therefore, we request immediate help through rapid policy decisions to mitigate the crisis and prevent further structural damage to both industry and economy," Saraf said. As part of the fiscal package, the organisation has demanded a host of measures including Rs 30,000 crore to exporting companies for easing their working capital liquidity issues, 2 per cent additional incentives under export promotion scheme - MEIS, subsidy on loans till March next year, and 50 per cent cut in GST rates for sectors such as hotels, aviation, and travel for next 12 months. Besides, one-time amnesty for default in export obligations under advance authorisation, EPCG (export promotion for capital goods), and export-oriented units (EOUs) by waiving interest and penalty and charging only basic customs duty. It should also be extended to any other dispute in customs matter. All existing pre and post-shipment finance in Foreign Currency or Indian Rupee should be extended on maturity by additional 90 -180 days on autoroute irrespective of the nature of contract and sanctioned limit. Moreover, no deposit of money be insisted by banks where limit granted in foreign currency is crossed due to rupee depreciation," the president said. He also urged for providing 50 per cent freight subsidy on air freight to encourage exporters to use air freight to compensate for time loss. "All exports related refund and statutory refunds like duty drawback, GST should be paid to exporters, including risky exporters, within 15 days so as to ease liquidity at their end. A bond may be taken from risky exporters so as to recover it, if so warranted," he said. He also said that the directorate general of foreign trade (DGFT) must give one time amnesty to all who could not apply or get MEIS (merchandise export from India scheme) due to system failure or minor lapse in shipping bills. "Indian exporters should be given additional 2 per cent MEIS and labour intensive sector to be provided additional 4 per cent MEIS on exports up to 31st March 2021. The MEIS should be given without realization as it will be delayed in such tight liquidity globally. This scrip should be used for payment of any statutory levy including GST, Income Tax etc," he said. Saraf said that EPF )employee provident fund) and Employees' State Insurance (ESI) should be waived for three months as labourintensive sectors are in "extreme pressure" to pay wages, but do not have liquidity or cash flow to pay these funds. The waiver of these funds for three months will cost the government Rs 18,900 crore, he said adding this can be given to companies with a minimum 50 per cent export turnover. "The loan amount should cover six months gross salary and wages, rent and electricity charges. No additional collateral or paperwork to all industrial units who have a clean record with the bank before lockdown. The repayment should be in 18 equal instalments after 6 months initial moratorium, he said.
Source: Economic Times
India's textile sector employs over 105 million people. Laxmi, who works in residential societies in East Delhi, is clueless how loss of one person's income will play out for her family. "Mujhe to lagbhag sab ne iss mahine ka pagar diya hain. Lekin mere pati ko koi paisa nahi aaya. Karkhana bhi bandh ho gaya, pata nahi kab khulega. Bohot mushkil ho rahi hain chalana (I have been paid this month's salary by most of my employers. But my husband has got no money. The factory is also shut, don't know when will it open. It's very difficult to run the house)," she said. Like million others in India, Laxmi's husband was employed in the textile sector. But a nationwide 21-day lockdown to contain the pandemic has resulted in unprecedented chaos in this sector. After agriculture, India's textile sector is considered to be the next biggest employment generator in the country. It employs over 105 million people. The pandemic came at a time when the sector was battling sluggish growth. "We have wafer thin margins in this business and global implications will affect India. Exports otherwise also for a couple of years now have stagnated at around $37 billion," a senior official working closely with the sector told Moneycontrol on condition of anonymity.
Source: Money Control
Until 24 March, Ratnakala held a job at a garment factory, sewing children’s frocks destined for Europe, at a factory in Sarjapur, a textile hub in Bengaluru. Over the last few weeks, she’s been looking for work as a domestic help, after the factory supervisor said they were shutting operations for the duration of the lockdown. “I’d prefer to work in the factory, but I’m not sure when it will open. I have two children. I need a job and it does not matter where," she said. Nearly 500,000 people, mostly women, work in the garment factories near Bengaluru, including Bidadi, Chikkaballapur, Mysuru, Mandya and Ramangara. Small enterprises near Bengaluru in Karnataka, and in Tirupur and Karur in Tamil Nadu are struggling to meet wages and running costs as payments worth crores are delayed by the global covid-19 outbreak. Prathibha R., president, Garment and Textile Workers Union, Karnataka, said: “The workers have been promised salaries for March. These factories are 100% export-oriented and until business picks up in foreign countries, we won’t have fresh orders. The pending orders can be completed in a fortnight after the lockdown is lifted. After that, no one knows what we will do." With the surge in covid-19 cases in Europe and the US, fresh orders seem unlikely even in June. “The biggest challenge is paying wages, which is almost 30% of our revenue. We want the government to cover wages for three weeks," said Harish Ahuja, managing director, Shahi Exports, which employs 100,000 people in 65 units in Karnataka. He said revenue is expected to fall 40% this year. Tirupur, which is home to 10,000 garment units, is the country’s largest knitwear manufacturing hub. The town’s monthly turnover is ₹2,500 crore from exports, and the credit line they extend is 90 days. This means payments for orders sent out in December should have started coming in from March. “The immediate damages to the cluster are around ₹9,000 crore in terms of pending payments by buyers," said Raja M Shanmugham, President, Tiruppur Exporters’ Association. “Our payments are delayed because buyers, particularly in Europe and the US, have shut operations." Across sectors, SMEs have been asking Union finance minister Nirmala Sitharaman for financial support for three months. Ashok Rao, Convenor, CII Karnataka MSME Panel, said: “We have to see how things unfold once lockdown lifts, which will throw up new challenges like pressure on the supply chain, restarting production and managing funds."
The Association of NIFT Alumni (NIFTA) recently wrote a letter to textile minister Smriti Irani recommending several initiatives to address the problems being faced by micro, small and medium enterprises (MSMEs) in the handicrafts, handloom and apparel sector hit by the COVID-19 crisis. Lakhs of poor artisans and craftsmen are dependent on this sector for their livelihood. NIFTA suggested ameliorating the cash crunch affecting the entire value chain for up to 6 months starting April and stabilising the industry and beginning to build a demand stimulus in the medium term, i.e., by 12 months. It also suggested setting up of an emergency relief fund for apparel, accessories, made-ups and handicrafts; establishing an emergency grant for wages to be paid during the lockdown period by manufacturing units and design workshops; moratorium for loan repayment and waiver of Interest for at least six months; allocation of specific working capital credit lines to increase existing working capital limits by 25 per cent without additional collateral for a period of at least two years; immediate disbursal of pending refunds of goods and services tax credit, taxes and subsidies such businesses; assistance in freeing up due payments from both domestic customers and international buyers; and exempting all raw materials, dyes and chemicals, intermediaries, spares and accessories from anti-dumping duty and basic customs duty.
Source : Fibre2fashion
The coronavirus and lockdown-induced recession have fueled huge distress in India. A third connected problem has been the crash in stock markets. A fourth misfortune, an extension of the third, is now threatened by loan defaults by developing countries that could snowball into a further panicky exit of dollars from all emerging markets, including India. The Sensex is already down from almost 40,000 to 27,000. Foreign portfolio investors (FPIs) today are the biggest shareholders of many Sensex companies. HDFC Bank and ICICI Bank are owned mainly by FPIs, even though they are called Indian banks. But in March alone, FPIs were net sellers of $16.5 billion of shares, against $9 billion in the entire 2008 crisis. Is the crisis about to peak, and will we soon return on the path to normality? Wall Street analysts predict a sharp economic recovery from the current recession in the second half of 2020. Indian optimists hope that FPIs will soon come back and the Sensex will boom again. The optimists argue that bond yields are close to zero in advanced countries. So global money will have to come back to countries like India, which promise higher yields since they will grow faster than the advanced countries. Maybe, but those days may be a long way off. Markets yo-yo with alternate bouts of greed and fear. Some FPI money will doubtless come back for bottom-fishing. But the big risk is another round of massive FPI outflows as part of a panicky exit from all emerging markets induced by a series of defaults. Lebanon has just defaulted for the first time ever. In the 1950s, it seemed the brightest economic star in Asia, but was then devastated by a civil war that still continues in a sort of equilibrium. Despite that, Lebanon never defaulted on its foreign debt -- until now. Covid-19 has finally done what even civil war could not. Argentina has defaulted too, on dollar debt subject to adjudication within the country. It has massive debts running into billions of dollars under international judicial jurisdiction, which presumably will suffer default too. Argentina enjoyed a spell of fast growth in the 2000s that enabled it to look so creditworthy that in 2017 it could actually sell 100-year dollar bonds to global buyers. Today, it is comprehensively bust. Venezuela cannot pay its debts, but is a special case since it has been the target of US sanctions. Ecuador is also on the verge of default. Venezuela and Ecuador are oil exporters, and the collapse of the price of oil from $65 a barrel a few months ago to under $30 a barrel today means their main source of tax revenue and foreign exchange has evaporated. The same story is going to be repeated in other oil-exporting countries, and can devastate smaller exporters in Africa. Mexico, a major oil exporter, has seen its currency sink 20% this year. The world is in a deep recession and could take over a year to revive to pre-crisis levels. The virus has hit Asian countries whose exports depend on global value chains and have suffered from China‘s lockdowns. But a bigger problem has been a fall in all commodity prices, which are the staple exports of many developing countries. These are suffering a double whammy of a crash in exports even as dollars are yanked out of their economies by panicky FPIs. India and China are net commodity importers, and will gain from declining prices. But most developing countries will suffer. Just a few years ago, BRICS -- Brazil, Russia, India, China and South Africa -- were touted as the next major global powers. They even set up a BRICS Bank to finance global projects. Of the five members, three -- Brazil, Russia and South Africa --have seen their currencies sink 20% in recent weeks. They will want to burrow rather than lend through the BRICS Bank. Defaults by emerging markets are set to snowball. United Nations Conference on Trade and Development (Unctad) has just come out with a report saying developing countries urgently need debt cancellation of $1 trillion this year; another clean gift of $1 trillion through a new issue of special drawing rights by the International Monetary Fund (IMF); and an additional $500 billion from rich countries as a new sort of Marshall Aid. Alas, even the richest countries are focusing on reviving their own stricken economies. India is in a relatively good position to withstanding the hurricane about to strike defaulting and other emerging markets. Its current account deficit is very low and may go to zero because of the crash in oil prices (which may, however, be offset partly by a decline in remittances from the Gulf). Inflation is under control, save for vegetable prices. The fiscal deficit is going to shoot up, but that is happening across the world and is not causing inflation. RBI will monetise most of the fiscal deficit, so interest rates will not shoot up and the financial sector should have enough liquidity. But not even all this will give India immunity. Prepare for stormy days ahead.
Source: Economic Times
Representatives from the ports sector have raised concerns over the high operational cost and congestion at ports, shortage of labourers, movement of workers and truck drivers, et al, due to the lockdown. The novel coronavirus, or COVID-19, pandemic is severly impacting the shipping industry with cargo vessels stranded at ports during the 21-day nationwide lockdown. Representatives from the ports sector have raised concerns over the high operational cost and congestion at ports, shortage of labourers, movement of workers and truck drivers, et al, due to the lockdown. "Cargo operations are adversely impacted due to shortage of labour, which in leading to cargo piling up at the docks. Thus, affecting the rate of discharge," said Shiv Halbe, CEO, Maritime Association of Shipowners, Shipmanagers and Agents (MASSA). Total traffic handling at major ports had witnessed a muted rise (0.82 percent) to 705 million tonne (MT) last fiscal. India has 12 major ports at Deendayal (erstwhile Kandla), Mumbai, JNPT, Mormugao, New Mangalore, Cochin, Chennai, Kamarajar (earlier Ennore), V.O. Chidambaranar, Visakhapatnam, Paradip and Kolkata (including Haldia). Since the onset of the COVID- 19 crisis, many industries such as chemicals, dyes and pigments, pharmaceuticals, textiles, electronics and automobiles have been facing short-term supply disruptions due to a production shutdown in China, ratings agency ICRA said in a recent report. Ports that have a significant exposure to the affected cargo categories could see a near term impact on their cargo volumes. The extent of the impact will depend of the duration of slowdown in consumer demand and industrial activities due to COVID-19 and the pace of subsequent recovery. Halbe said outlook for the industry is not positive. Global economies are shrinking and diverting funds for survival rather than development. With oil prices at historic lows and demand sagging due to declining industrial output, the coming months are going to be tough. Shipping Minister Mansukh Lal Mandaviya on April 3 had exhorted port officials and other stakeholders to convert the present crisis into an opportunity by ensuring smooth cargo operations so that supplies are not hit during the lockdown. The government has asked each major ports to ensure that no penalties, demurrage, charges, fee, rentals are levied on any port user (traders, shipping lines, concessionaires, licensees etc) for any delay in berthing or loading and unloading operations or evacuation of cargo caused by the reasons attributable to the lockdown from March 22 to April 14. There is also the issue of seafarers stranded on ships. "Seafarers, like railwaymen or vehicle operators, are essentially transport workers involved in moving essential goods," Halbe said, adding that prolonged stay on board, away from their families, is not only bad for their morale but also detrimental to safe operations of ships.
Source : Economic Times
A bank will not, upon resumption of its business, honour or negotiate under a credit that expired during such interruption of its business
Q. Many of the letters of credit opened by foreign buyers on us for export of goods expire during the lockdown. We have made the shipments but are unable to present the documents to the bank under the letters of credit within the validity period. Can we take the plea that the force majeure situation allows us to present the documents on the first day after the lockdown ends? Please note that no bank holiday has been declared for the duration of the lockdown. In any case, according to Article 36 of the Uniform Customs and Practices for Documentary Credits, International Chamber of Commerce (ICC) Publication number 600, known as UCP 600, “A bank assumes no liability or responsibility for the consequences arising out of the interruption of its business by Acts of God, riots, civil commotions, insurrections, wars, acts of terrorism, or by any strikes or lockouts or any other causes beyond its control. A bank will not, upon resumption of its business, honour or negotiate under a credit that expired during such interruption of its business.” Therefore, you have no option but to seek extension in the period for presentation of documents under the letters of credit.
Q. We are a real estate company and we sell apartments to foreign customers under contractual arrangements. This involves supply of goods and services. Consideration is discharged by our customers in foreign exchange (direct transfer/ transfer from their NRE account maintained in India to our account). Our query is: Will the above transactions be construed as service exports, vide Para 9.51(ii) of FTP2015-20; and if so, are we entitled to SEIS claims for eligible services rendered (Appendix 3D), vide Para 3.10 FTP2015-20? Sale of apartments is not a service, although construction of apartments may involve a service element. I doubt also, whether you invoice only for various services involved. So, I find it difficult to see how sale can be covered under Para 9.54 (ii) of FTP. Also, please note that what services exported during 2019-20 will be eligible for SEIS, and what their rates will be, are not yet notified. For 2020-21, a decision on whether SEIS benefits should be granted is yet to be taken. Q. We export goods under LUT to Nepal. How can we claim input tax paid on the raw material? We also have domestic sales of the same item. Can we adjust this amount against output tax paid on domestic sales? What is the procedure to be followed? Exports are zero-rated and not exempt supply. So, you can take input tax credit in respect of the goods and services used, or to be used for making the zero-rated supplies in accordance with Section 16 of the CGST Act, 2017. You can utilise the credit for payment of tax on your domestic sales in accordance with Section 49 of the said CGST Act. For procedures, you may refer to Chapter V and VIII of the CGST Rules, 2017.
Source : Business Standard
The order, which is withdrawn, also gave permission to have skeletal staff for essential maintenance of all closed industrial units to facilitate their transportation for exports. The Tamil Nadu government has reportedly withdrawn a clarification it has issued earlier on Tuesday on allowing 13 industries to operate under the continuous process industries framework. The order, which is withdrawn, also gave permission to have skeletal staff for essential maintenance of all closed industrial units to facilitate their transportation for exports. The industries department during the day clarified that operations of 13 industries including steel, refineries, cement, chemicals, fertilisers and textiles are permitted in the state, as per notifications issued in March, 2020. However, in a later development, it reportedly issued another letter stating, "The above cited clarification in respect of "continuous process industries" is hereby withdrawn".Industry department officials were immediately not available for a comment. Tamil Nadu, which is one of the major manufacturing states in the country, has seen the facilities suspending operations following the lockdown announced by the central government on March 24, 2020.
Source: Business Standard
That brands may eventually not scrap orders is not necessarily good news since it comes with a rider. Even if orders already placed are not cancelled or postponed, the holding cost involved would greatly impact apparel manufacturers and exporters. The holding cost is the interest incurred on the value of the goods till the order is finally executed. Apparel manufacturers are highly dependent on the US and Europe, the major destinations for Indian exports. "Even if buyers don’t cancel the orders now, it all depends on how Europe and America recover from COVID-19. Unless they recover and even if India re-opens, exporters will find it difficult to start their factories," points out Mumbai-based Creative Garments chairman Vijay Kumar Agarwal. "Most buyers have not cancelled orders, but they are postponing them. But this has no meaning. For example, an order might be postponed to be shipped in May. In May, they might say 'sorry'; ship it in July. In July, they can say there is no footfall in the store. So, the problem will not end until a cure is found to the COVID-19 disease," he told Fibre2Fashion. Seeing the situation from buyers' standpoint, Ashok Rajani, founder-chairman of Midas Touch Export Pvt Ltd and a former chairman of Apparel Exporters Promotion Council (AEPC), says, "If the lockdown continues for one more month in the US, then retailers there would not be able to pay salaries, rents and may need to shut down their shops. Then, how are they going to honour the orders?" Suggesting a way to tackle the situation, he adds, "We have to keep persuading our brand's appeal to them, co-ordinate with them, and negotiate the discount." The Indian government has urged all factories to not to cut wages of workers, but there is no capital flow at all. He cites an example, "Shahi Exports employs over 1.5 lakh people, and their combined salary would be ₹150 crore per month. How is it possible to pay such a huge amount when banks are not getting any payments?" According to TR Vijayakumar of CBC Fashions (Asia) Pvt Ltd, who is also the secretary of Tiruppur Exporters' Association (TEA), 50 per cent of the brands have cancelled the orders, because they cannot take the summer goods and sell them in fall/winter season once they resume their operations. On the holding cost involved, Vijayakumar says, "We do not know whether the buyers will take the goods next season or next summer. So, till that period we have to incur an interest on the goods that we hold at present—this will have a very big impact on manufacturers." TEA, he mentions, has requested all brands not to cancel orders, but postpone and take the delivery later. "It is because cancellation will not let us sell the goods at the price we had fixed with the customers (we will have to sell them in the market at 30-40 per cent less price). We have requested our members to communicate the same to all buyers." Premal Udani, managing director of Kaytee Corporation suggests, "The only step we can take is to engage with our buyers. And also understand their problems and issues. This is something that is to be worked out with close co-ordination of the buyers. Nobody else can do anything about it." "We are talking to our buyers, but not getting satisfactory reverts on cancellation," complains Anil Peshawari, MD of Noida-based Meenu Creation, but quickly adds, "because even they don’t know when they are going to open, i.e. if they are not generating revenue, how will they pay us?" Raising the problem of labour that might crop up when the factories reopen, Rakesh Vaid, director of Gurgaon-based Usha Fabs Pvt Ltd says, "The workers who have gone back to their villages are not going to come back easily. The way they faced hardships while running away from the metros or production centres, our feedback is that they will not come back." Rajani concurs, "I really don’t know how many people will come back to work because most of the workers are migrants from Bihar, Uttar Pradesh, Jharkhand and other places who have gone away. And even if they come back and we start, I don’t know what to produce." In the current crisis situation, these apparel exporters are urging the government to come out with a stimulus package which will enable them to pay wages to their workers for the next 2-3 months. The textiles-apparel industry employees 45 million people directly or indirectly. "The government should look into this factor very seriously, otherwise there will be huge unemployment. For the next 3 months wages, the government should either compensate or should extend an equivalent amount as loan, so employees can get wages," said Agarwal. Making a similar pitch, Udani said: "We expect our factory to remain closed for a substantial period of time. We hope that the government understands the plight of the apparel industry and comes up with a stimulus package which will ensure that we are able to pay our workers for the next 2-3 months." "We are a labour-intensive industry and if this industry is destroyed, then there would be huge amount of unemployment in the country," says Peshawari. "So, the government has to think about it and come out with a package where it should pay at least 50 per cent of the salaries and wages of the sector as most governments of other countries are doing, till the time the situation doesn’t get stable. Elsewhere, governments have declared stimulus packages where majority of the money is going towards payment of the wages of the people." The government should have come up with some kind of reassurance package that won’t allow the industry to die, feels Vaid. "As of now we have no assurance from the government, only the dates of returns and other statutory have been extended."Making an estimate of the amount of the package, Vaid said, "The US is a $22 trillion economy. The government there has come out with a package of 10 per cent of its GDP, i.e. approx $2 trillion. Similarly, we can also take 10 per cent of our GDP and over a period of 7-8 years slowly recover our deficits as every country is doing now. In that case, we will need a package of $300+ billion."
Source : Fibre2fashion
A total of 546 factories, including 98 readymade garments and textile units, that fall under the jurisdiction of Industrial Police remained open until Tuesday amid coronavirus outbreak in the country. According to the Industrial Police, there are some 7,602 industrial units under the jurisdiction of the IP’s six zones: Ashulia in Dhaka, Gazipur, Chattogram, Narayanganj, Mymensingh and Khulna. Out of the 7,602 units, 3,371 are readymade garments and textile factories and the rest are non-RMG factories. Two apparel trade bodies —Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association — on Monday in a statement recommended its members to keep the factories, except those that are producing personal protective equipment and urgent export items, close up to April 14 in line with the government’s general holidays to slow coronavirus outbreak. The trade bodies also requested its members to pay wages of March by April 16 to their workers. Bangladesh Textile Mills Association on Monday also asked all its members to keep their units close till April 14. Commerce minister Tipu Munshi on Tuesday in a statement urged the factory owners not to terminate workers during the closure of factories. He also requested factory owners to pay their workers by April 16. The IP data showed that there were 1,882 member factories of BGMEA in six zones and 54 of them were open until Tuesday. Out of 1,101 factories registered with BKMEA, 10 remained open. A total of 388 factories are registered with the Bangladesh Textile Mills Association and 34 of them remained open until Tuesday, the data showed. The IP data also showed that out of 364 factories under the Bangladesh Export Processing Zones Authority 363 units remained closed on Tuesday. The rest 3,867 factories belong to other sectors and 447 of them remained open on the day. BGMEA sources said that the members of the trade bodies started paying wages of March to their workers and most of the units will pay by April 15. Meanwhile, BGMEA president Rubana Huq on Tuesday sought cooperation from banks so that small and medium factories could pay their workers for the month of March. In a letter to Bangladesh Bank governor Fazle Kabir, the BGMEA president requested to ease the rules to finance small and medium RMG companies so that they could pay their workers. When asked, Rubana said that many of small and medium exporters were facing trouble as their shipment remained halted from March 15 due to the coronavirus outbreak in the world. She said that RMG export declined by nearly 30 per cent in March this year compared to that of same month of last year as most of the buyers halted or cancelled orders. Now if the banks do not allow over draft loan to the exporters many of small and medium companies will not be able to pay their workers, Rubana said. Considering the situation the BGMEA president requested Bangladesh Bank to instruct commercial banks to finance small and medium manufacturers easing the rules for OD.
Source: New Age Business
The German waste textiles sector is increasingly struggling with the effects of the coronavirus crisis. Since business operations are almost impossible to plan right now, companies are forced to proceed with extreme caution, a major player told EUWID in late March. And "nobody knows where this is all heading,” the respondent adds. The measures introduced to stem the spread of the novel coronavirus require new and flexible adaptations to system processes and economic agreements on an almost hourly basis, commented the textiles division of the German recycling industry association bvse. "In these difficult times, waste textiles companies are in close contact with their contractual partners to find solutions," according to the association. Local authorities have reportedly shown willingness to cooperate, for example, by granting waste textiles collection firms temporary payment deferrals on the ground rent charged for bring bank sites. In return, the textiles collection firms have pledged to do their best to maintain the collection and recovery capacity for waste textiles, thereby ensuring that this waste stream will continue to be managed. Market participants were not always agreed about the development of collection volumes. The measures to combat the spread of the virus have meant the cancellation of kerbside textile collections and the closure of many recycling centres. This has resulted in a sharp decline in waste textile volumes in many regions in Germany. Yet at the same time, other market participants say they are seeing slightly higher collection volumes because "people have more time to clear out their wardrobes”.
Collection volumes slump
Overall, however, collection volumes have dropped off markedly. The decline is said to stand at around 20 per cent, especially considering that this is traditionally the time of year with the highest arisings. Charitable organisations that collect waste textiles are seeing the same trend. As a result, sorters have lower inventories of unsorted original stock. On the sales side, things look "even bleaker”, according to Martin Wittmann, chairman of bvse’s textiles recycling division. The pandemic-related measures imposed worldwide, including "stay-at-home" orders and bans on gatherings, have now hampered the ability to generate "any revenues at all”, he said. Due to government directives, second-hand stores everywhere, including in Eastern Europe, have been forced to close. This has put a complete stop to sales of used clothing, which is generally the profitable sales segment for sorting firms which finances the costs of other operations.
Despite being slow, credit growth of the banking system in March recovered compared with the first two months of this year. The State Bank of Việt Nam (SBV) reported credit growth in the first quarter of this year reached 1.1 per cent, slowing significantly against the 2.28 per cent rate in the same period last year, due to adverse impacts of the COVID-19 epidemic. However, the credit growth last month rebounded compared with the first two months of this year, when it was only 0.06 per cent, the lowest level in the past six years. Nguyễn Quốc Hùng, director of the SBV’s Credit Department, said compared with the first two months of the year, the economy now has better access to credit. The credit has begun to recover, Hùng said, expecting that a higher growth rate would be seen this week. Besides State-owned banks, many private banks have recently offered credit packages with preferential interest rates to support firms and individuals that have been affected by the COVID-19 outbreak. The packages will last until the pandemic is over. According to Hùng, the banks’ move shows their liquidity is good and they are ready to provide capital for the economy. Vietnam Prosperity Commercial Joint Stock Bank (VPBank) has also launched the second special support package with interest rate decline of 2 percentage points, applicable to businesses facing difficulties due to the COVID-19 pandemic. Businesses entitled to these incentives must meet some requirements, such as operating in tourism, catering, accommodation, and transportation areas; having export revenue of goods to markets such as China, the US, and the EU accounting for at least 50 per cent of the business revenue in 2019; or facing difficulties in repaying debts. Tien Phong Commercial Joint Stock Bank (TPBank) has recently issued a VNĐ12 trillion preferential interest rate programme for new customers. The interest rate reduction of the loan is 1.5 - 2.5 percentage points per year lower compared to the current interest rates. Kien Long Commercial Joint Stock Bank (Kienlongbank) has decided to cut lending rates by 3 percentage points per year for existing individual and corporate customers in the agricultural and fishery sectors. The time of the interest rate reduction is from April 1 to the end of June 30 this year, applicable to customers in the Mekong Delta region, especially in Kien Giang, Ben Tre, Ca Mau, Tien Giang and Long An, who are heavily affected by drought and saline intrusion. However, experts said banks must ensure efficiency and control risks of the loans, suggesting that firms wishing to receive preferential loans must prove their business cash flow, input and output of their products as well as having collateral. Enterprises in industries that still operate in spite of the COVID-19 pandemic such as electricity and consumer goods would get loans to sustain their production and business, but those such as textiles, transportation and tourism should be considered carefully in the current context, they said.
Source: Vietnam News
All Pakistan Textile Mills Association (APTMA) has called for more supportive steps by the provincial government for textile industry facing serious financial issues due to impact of COVID-19 pandemic.Chairman, APTMA (Sindh and Balochistan Zone) Zahid Mazhar, in a statement here on Tuesday, said that due to drastic slowdown of domestic as well as international markets , and delay in receipt of payment from them in addition to cancellation of export orders even from big organizations, export-oriented textile industry was facing liquidity crisis.Though the government had taken positive steps like deferring loan repayments and speeding up of refunds but more measures were needed to save our export-oriented textile industry from the COVID-19 economic shocks, he said. He requested to Sindh Government to allow running of those textile mills which have labour residences within their premises.APTMA’s Zonal Chief (South),however, appreciated all the positive steps already taken by Federal and provincial governments to control wide spread of COVID-19 pandemic.
Source: The Nation
Masks, medical-grade gowns and other personal protective equipment (PPE) are in high demand, and more home textiles companies are responding. The number of industry players pivoting their operations to produce these and other related goods and donate funds and products toward efforts to curb COVID-19’s spread continues to grow. Natco Home is the second major home textiles company – with Mohawk Home – to partner with Fabric Source International to make medical-grade gowns for working medical professionals. At its Dalton, Ga.-based facility, the company’s “sewing machines normally used to serge area rugs have been converted so they can now be used to sew the fabric to make the gowns,” explained SVP Mark Ferullo. These items are being distributed to local hospitals as well as Atlanta’s Emory University Hospital. Allied Home’s basic bedding factory in Los Angeles is now producing a new allergen barrier cotton face mask. Designed with two layers of allergen blocking and 233-count cotton, the reusable masks add a protective layer from dust and other airborne irritants. Allied has initiated a special give back program; for every mask purchased, it will donate one to a facility in need. Upstairs dorm décor designer LeighDeux has adjusted operations with its partner mill in North Carolina to make masks that are not medical grade but designed with a pocket to accommodate a medical-grade mask in the center, founder Leigh Goodwyn explained to HTT. “I am donating 100% of the profits to the First Responders Children’s Foundation,” she said. “Masks have been very difficult to get, but ours ship within three to five days of order.” Also available for sale on its website, LeighDeux’s masks are priced at $12 each and come in the four colorways of its popular Tanzania animal print pattern as well as the whimsical Lips design and the Indigo Shibori print.” Since launching the mask line via social media on April 3rd, LeighDeux has sold 4,100+ masks and generated more than $50,000 in sales. “And orders continue to roll in by the hour.” Several major fabric design houses are also participating in the effort. Tulsa, OK-based Fabricut is making masks in house as well as providing fabric to Wesley Hall Furniture – the latter of which has recruited a dedicated crew to make several hundred N95 mask covers for use by the medical staffs at various hospitals in New York, Michigan and California. Fabricut’s samples department team – typically busy making memos, showroom sample displays and other product sampling – recently shifted its focus to mask production. They’ve come up with two versions, both entirely made of fabric – a reversible style made of Fabricut fabric; and a medical-grade style (solid-colored in blue or pink) made from fabric provided by local medical centers. Zoffany, home to brands Morris & Co. and Harlequin, among others – is providing fabric to various workrooms and designers making masks. These include: Primo Interiors and Tres Joli Drapery Workroom, both in Illinois; and Meghan De Maria in Connecticut. Additionally, Pollack Fabrics has also donated fabric for masks. Lithuania-based luxury linens house LinenMe is not selling masks. But, as founder Inga Lukauskiene explained to customers in a special email about the business’s operations amid COVID-19, her company will include a free all-linen face mask to each order placed “during these stormy times.” She added: “We are not selling them and they are not available on our online shop. And be aware, they don’t replace the medical masks. But as we’ve been advised by the experts, they are definitely better than nothing in protecting others – especially if you have a cough or sneeze. They are reusable if you wash them at 90 degrees and iron.” In closing, she said: “Stay optimistic. All storms are over one day and the sun will shine!”
Source: Home Textiles Today