MARKET WATCH 01 AUGUST, 2020

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INTERNATIONAL

Cut in export benefits: In talks with finance ministry to resolve MEIS issue early, says Piyush Goyal

The finance ministry, tackling a difficult fiscal situation, is believed to hold the view that while the scope of MEIS continued to widen over the last five years, leading to higher outgo from the exchequer, it hasn’t resulted in any tangible growth in exports. Commerce and industry minister Piyush Goyal on Thursday said he is in talks with the finance ministry for an “early resolution” of the issue of a massive cut in benefits under the Merchandise Export From India scheme (MEIS) by the revenue department. Speaking at a CII webinar, Goyal said: “We are in dialogue with the requisite authorities. MEIS is not going anywhere. It is a cash flow issue. We are trying for an early resolution which is a win-win for everyone.” He was responding to a request by CII presidentdesignate and Tata Steel chief executive TV Narendran to see if “something can be done about it”.   The revenue department has capped the outlay for the MEIS at just Rs 9,000 crore for the April-December period, which means exporters may be deprived of over two-thirds of the benefits they usually get under this scheme. The MEIS outgo was about Rs 40,000 crore in FY19 and Rs 45,000 crore in FY20. For this fiscal, the Budgetary allocation was to the tune of Rs 27,000-30,000 crore, according to industry sources, although there is no official word on it. The finance ministry, tackling a difficult fiscal situation, is believed to hold the view that while the scope of MEIS continued to widen over the last five years, leading to higher outgo from the exchequer, it hasn’t resulted in any tangible growth in exports. For their part, exporters argue that they firm up contracts, factoring in MEIS benefits, and any retrospective suspension or reduction of the incentives will only erode their cash flows at a time when they are battered by the pandemic. As such, any retrospective order adds to policy uncertainties. Also, subdued export growth is a result of the absence of both structural reforms and adequate incentives to improve competitiveness, they contend. Fearing a shortage of funds following the revenue department’s decision, the commerce ministry has, for the time being, blocked the online module for claiming such benefits since July 23. Already, in a letter to finance minister Nirmala Sitharaman on July 21, Goyal sought a review of the revenue department’s decision. Goyal also said exports, so far in July, are down only 12% from a year before and a contraction in imports have narrowed to 25%. However, services exports have more or less held up, despite the pandemic, he added. Merchandise exports witnessed a record 60% crash year-on-year in April, although the contraction narrowed to 37% in May and 12% in June, as lockdown curbs were lifted last month. However, in June, imports were still down by almost 48%. “Business is bouncing back,” Goyal said, adding that the export restrictions on ventilators will soon be done away with. He also highlighted that the Centre is working with states for easier labour law, soft launch of land bank portal and a real single-window clearance for investments. The MEIS would remain valid until December this year and is to be replaced with a more WTO-compatible scheme, RoDTEP, which reimburses all levies (that are not subsumed by GST) paid on inputs consumed in exports.

Source: Financial Express

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Govt mulls big-ticket direct tax reforms; zero contact, GSTN-like backbone on the cards

Under the new regime that is in advance stage of preparation there will be zero physical interface between taxpayers and ofcials, cutting discretion of ofcers, government ofcials said. The government is working on bigticket direct tax reforms and improve ease of compliance to complement the sharp reduction in the rates to make the regime more attractive for investors. Under the new regime that is in advance stage of preparation………

Source:  Economic Times

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Govt notifies e-invoicing for companies with Rs 500-crore turnover

The government has notified an e-invoicing system under the goods and services tax (GST) regime which makes it mandatory for large businesses with turnover of over Rs 500 crore to submit sales invoices electronically. The notification comes as a relief for small businesses as the turnover threshold has been hiked from the earlier proposed Rs 100 crore and above for mandatory e-invoicing. The system is expected to be rolled out from October 1, leaving barely a couple of months for businesses to modify their systems. Units in special economic zones have been exempt from complying with e-invoicing, according to the notification released on July 30. The move comes as the government is looking at ways to plug evasion amid dismal GST collections with the pandemic driving economy towards recession. The e-invoicing mechanism would also help business and taxpayers by pre-populating the returns, resulting in reducing reconciliation problems. There are about 7,500 GST identification numbers for businesses with a turnover of Rs 500 crore and above. M S Mani, partner, Deloitte India, said modifying systems to support e-invoicing in the prevailing working-from-home environment could be challenging for some businesses and hence there was a need to prepare early. Abhishek Jain, tax partner, EY, said with this release, the government reimposes its objective of implementing e-invoicing from October 1 for large businesses. “With only 60 days left for this compliance, businesses would need to quickly evaluate the ERP changes needed and plan implementation well to ensure compliance from October 1,” said Jain. The government plans to roll out e-invoicing in phases. It had earlier planned to make it mandatory from April 1 for businesses with a turnover of Rs 100 crore and above, but the decision was deferred due to lack of IT preparedness. “We will not do it for (businesses with) Rs 100 crore sales but will start with Rs 500 crore and as it stabilises, we will do it for (businesses with) Rs 100 crore sales and more,” Yogendra Garg, principal commissioner, GST policy at the Central Board of Indirect Taxes and Customs, had said last week. The government had said the basic aim behind adopting the system is to facilitate convenience to the taxpayers by further simplifying the GST return system. “E-way bills were implemented to track movement of goods and catch hold of any clandestine movement. Similarly e-invoice would track flow of transactions and identification of revenue leakages on real time basis,” said Rajat Mohan, partner, AMRG Associates.

Source: Business Standard

Covid-19: Govt unlikely to meet Rs 2.1 trillion divestment target for FY21

The FY21 target of Rs 2.1-trillion disinvestment is unlikely to be met because of the the severe economic slowdown caused by the pandemics. However, the Centre is trying to push some big-ticket stake sales as a show of intent. The ones officials are cautiously confident about carrying out in the second half of the year include the initial public offering of Life Insurance Corporation of India and the privatisation of either Bharat Petroleum Corporation (BPCL) or Concor. Before the slowdown and after the Union Budget was presented, officials in Department of Investment and ...

Source: Business Standard

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In talks with RBI to extend moratorium, restructure loans: FM Sitharaman

Union Finance Minister Nirmala Sitharaman on Friday said her ministry was working with the Reserve Bank of India (RBI) on extending the loan moratorium period for the hospitality sector, hit hard by the pandemic. She reiterated the ministry was talking to the RBI on restructuring loans for industry. “I understand the requirements of the hospitality sector on extending the moratorium or (loan) restructuring. We are working with the RBI on this,” she told members of the Federation of Indian Chambers of Commerce and Industry (Ficci).The RBI had extended the moratorium period for three months till August 31. There has been demand from the hospitality sector to extend the date. For instance, the Hotel Association of India (HAI) has said the pandemic has destroyed more than 90 per cent of demand in the tourism and hospitality sectors, which employ nearly 45 million people. The hospitality sector wants a staggered approach to the rate of interest. On the other hand, bankers are against extending the moratorium period. For instance, HDFC Chairman Deepak Parekh recently urged RBI Governor Shaktikanta Das not to do it. Parekh said many entities capable of repaying were taking advantage of the scheme and this was hurting the financial sector, especially non-banking.  The finance minister also said work on setting up a development finance institution (DFI) was on. “What shape it will take we will know shortly,” she added. This assumes importance in the wake of the RBI governor recently saying that industry had to find new ways to fund infrastructure projects because banks, struggling with bad loans, would not be able to give them money. A high-level panel has firmed up investment plans for infrastructure projects worth Rs 111 trillion in five years. A DFI is an entity owned generally by the government to fund projects that are unable to get loans from commercial lenders. There is dearth of such institutions in India. Most of them are sector-specific such as Rural Electrification Corp and the National Bank for Agriculture and Rural Development (Nabard). The finance minister emphasised reciprocity in trading arrangements with countries to which India has opened up. Sitharaman said banks could not refuse credit to micro, small, and medium enterprises (MSMEs) covered under emergency credit facilities. Banks have sanctioned Rs 1.3 trillion to MSMEs under this scheme as of July 23. Of that, Rs 82,065 crore has been disbursed.

Source: Business Standard

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Textile exporters waiting for govt. to release incentive funds : Tamil Nadu

With export incentives getting delayed under various schemes, textile and clothing exporters say they are unable to tap opportunities in the international markets, and revival is taking time.According to industry sources here, the Central government offered incentives under two major schemes last year — the Rebate of State Levies (ROSL) Scheme and the Merchandise Exports from India Scheme (MEIS). In mid-2019, the government replaced ROSL and MEIS with the Rebate of State and Central Taxes and Levies (ROSCTL) Scheme. It also offered an ad hoc, one-time special incentive of 1% till December. With sluggishness in textile and clothing exports and yarn and fabric exports not covered under the new scheme, exporters sought the continuation of MEIS and ROSCTL. The government allocated ₹9,000 crore for ROSCTL. However, reportedly owing to inadequate funds, the portal does not accept applications under the ROSCTL Scheme since April this year, say sources. Recently, the government introduced a new scheme called, Remission of Duties and Taxes on Export Products (RODTEP). This is supposed to be a comprehensive scheme for exporters. But rates are yet to be fixed. Currently, the industry gets only the duty drawback benefit. It should allocate adequate funds for ROSCTL or launch RODTEP at the earliest, says Raja M. Shanmugham, president of Tiruppur Exporters’ Association. The industry has been facing several hardships. Without the export incentives, revival takes time and the exporters are unable to tap into the opportunities, he adds. Ashwin Chandran, Chairman of Southern India Mills’ Association, says the export benefits should be extended to yarn. Pollachi Member of Parliament K. Shanmuga Sundaram said in a release that the government should immediately allocate funds for ROSCTL and continue the ad hoc, one-time incentive. “Textile industry is facing an acute financial crunch owing to the COVID-19 effect. Thereby the industry was forced to diversify its operations and also retain the garment manufacturing operation. The industry requires support from the Central government,” he said.

Source : The Hindu

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Sheikh Hasina at helm, India-Bangladesh economic cooperation sets a new milestone

The start of commercial goods shipments by rail container between India and Bangladesh over the last week is a game changer because it brings speed, scale and sustainability to the bilateral trade and economic relationship, which is all poised for a leap ahead, people familiar with the development said on Friday. The first container train rolled into the railway station in Bangladesh’s border town of Benapole last Sunday. The 50 electronically sealed containers are safer than goods trains; faster and cheaper than transporting goods in trucks. The Sunday train carried fast moving consumer goods such as FMCG products likes soaps and shampoos, and textile fabric. According to diplomats based in Dhaka and New Delhi, container trains will not only help India’s export of essential commodities to Bangladesh, but also facilitate faster movement of Bangladeshi exports at significantly lower freight costs without the delays and overhead costs due to corruption and extortion rackets at the border that have seriously hurt movement of trucks at the Bengal border with Bangladesh. The first container train carrying FMCG products and other items arrived at the Benapole railways station of Bangladesh on Sunday. Indian officials said the importance of the breakthrough on Sunday, along with the proof of concept trans-shipment of goods to Tripura through the port of Chittagong in July, is that it underscores that the partnership between India and Bangladesh is at a level above that of any other country in south Asia. Relations between India and Bangladesh have been on an upswing after Prime Minister Sheikh Hasina came back to power in 2009 and picked up pace after PM Narendra Modi was voted in 2014. The two leaders made history in 2015 when they signed the land swap pact during PM Modi’s maiden visit to Dhaka, resolving a 41-year-old land boundary dispute that had been a major irritant in bilateral ties. Sheikh Hasina also helped PM Modi to hold peace in the northeast by taking strong action against terrorists who would cross the border when Indian forces cracked down on them. During her visit to New Delhi last year, the two leaders spoke of scripting a ‘golden chapter’, or ‘Shonali Adhyaya’, in their partnership. Foreign ministers of the two countries echoed the sentiment at an event on Monday that saw India providing 10 broad gauge railway locomotives to Bangladesh. The gesture was in line with commitments on both sides to improve connectivity and infrastructure initiatives to boost trade and create new supply chains. Over the decade that Sheikh Hasina has been in power for three consecutive terms, Bangladesh’s GDP has recorded Asia’s highest growth rate of 8.2% in 2018-19, shrinking people living in extreme poverty to less than 9% and turning the country into a manufacturing hub of ready-made goods. Along the way, Sheikh Hasina’s determined push to trade and development helped ensure that its per capita income rose sharply, racing ahead of even Pakistan. Its debt per capita is half that for Pakistan. Sheikh Hasina has demonstrated to the region and the world how a country otherwise short of resources can ensure a better quality of life by just keeping its focus straight, said an Indian official, underlining how a country described as a “bottomless basket’ by Henry Kissinger in 1974 had made great strides. He dismissed reports that the Indian high commissioner couldn’t get an appointment to meet the foreign minister for months - this was interpreted to imply relations between the two countries were headed downhill - and pointed to Bangladesh foreign minister AK Abdul Momen’s “clear statement”. On Thursday, Momen had rubbished such claims, pointing that the high commissioner had sought an “appointment on July 22 and gave us ample time”. She will probably leave in late September or early October and wanted a meeting before that, the minister said. On reports that claimed Dhaka had preferred Chinese firms over Indian companies for the Sylhet Osmani Airport, Abdul Momen said the Chinese company had emerged as the lowest bidder during a tender process. “However, some newspapers say that we have given more benefits to China, which is completely absurd,” he added, according to the Dhaka Tribune.

Source: Hindustan Times

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Demand slump to reduce readymade garment makers revenues by 25%-30%

A sharp fall in both domestic and exports demand because of the Covid-19 pandemic, lower profitability, and elongation of working capital cycle are expected to impair the credit profiles of RMG makers this fiscal. The prolonged lockdown and lower discretionary spending are expected to reduce the revenue of readymade garment (RMG) makers by 25% to 30% this fiscal. For exporters, the drop will be bigger because of tepid discretionary spending in the US and European Union which account for 60% of India’s RMG exports, an analysis of over 180 Crisil-rated RMG manufacturers, representing revenue of around Rs 40,000 crore, shows. A sharp fall in both domestic and exports demand because of the Covid-19 pandemic, lower profitability, and elongation of working capital cycle are expected to impair the credit profiles of RMG makers this fiscal. The impact will be felt more by exporters owing to higher revenue de-growth and stretched receivables, it says. Gautam Shahi, director, Crisil Ratings says, “Over the past five fiscals, revenue growth of RMG makers was supported by domestic demand even as exports were muted. This fiscal, with domestic demand also falling significantly, revenues are expected to be materially impacted. Consequently, their operating margins are expected to contract 250-300 basis points (bps) to 7-7.5% for the sample set despite softer cotton prices and cost-reduction initiatives.” Further, their working capital cycle has elongated because of higher inventory and stretched receivables. Last fiscal ended with 20-25% higher inventory as the Covid-19 pandemic took hold and lockdowns began in late March. With demand depressed in the first half of this fiscal, inventories will remain high. Adding to the woes of exporters will be weakening credit profiles of some large global brick & mortar retailers, which will stretch receivables. Kiran Kavala, associate director, Crisil Ratings, says : “A sharp fall in profits means RMG makers will not have sufficient cash accruals to meet repayment obligations in the first half of this fiscal. But they are expected to utilise the cushion available in their working capital facilities, and will be helped by the moratorium on loan repayments, the government relief package to micro, small and medium enterprises, and the Covid-19 emergency credit lines.” Cash flows are likely to improve in the second half of this fiscal due to pick-up in demand from the third quarter as the festive season begins in India and fall / winter season begins in the export markets. That would put RMG makers in a better place to service debt obligations. But given the material impact of weak business performance in the first half, the ratios of net cash accrual to loan repayments, and interest coverage will still be significantly weaker at 1.4-1.7 times and well below 3 times expected this fiscal, compared with 2.4 times and 4 times, respectively, in fiscal 2020. The depreciation of the rupee against the dollar and the euro, and increase in incentive structure for exporters – which can help moderate the fall in profitability – will be the key monitorables, says Crisil Ratings.

Source: Financial Express

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Govt favours diverting MEIS funds to PLI schemes in select sectors

 The revenue department argued against continuing the MEIS, calling it inefficient and wasteful Instead of extending the Merchandise Exports of India Scheme (MEIS), which cost Rs 43,500 crore in 2019-20, the finance ministry and the NITI Aayog have called for putting financial resources into new Production-Linked Incentive (PLI) schemes in select sectors with core competency and potential for global exports. The revenue department argued against continuing the MEIS, calling it inefficient and wasteful. It pointed to the runaway cost of maintaining the scheme, despite exports not growing at all. Senior government sources say public tax liability under the MEIS ballooned from Rs

Source: Business Standard

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Indian Oil board gives nod for Rs 13,805 cr PX-PTA complex

New Delhi: The IndianOil Board has given its go-ahead for the implementation of an Integrated Para-Xylene (PX) and Purified Terephthalic Acid (PTA) complex project at Paradip, Odisha, at an estimated investment of Rs 13,805 crore at the Board meeting held here today. The PX-PTA complex shall be integrated with IndianOil's Paradip Refinery, which is operational since 2015. Speaking on the occasion, SM Vaidya, Chairman, IndianOil, said, "This plant, along with the upcoming MEG (Mono-Ethylene Glycol) plant of 357-KTA (kilo tonnes per annum) capacity at Paradip, would be a ready source of feedstock for IndianOil's upcoming 300-KTA textile yarn manufacturing project at Bhadrak in Odisha, and can similarly facilitate other textile and polyester projects in the region. We are sure that these investments, along with investments in other downstream projects, will boost entrepreneurship not only in Odisha but in the entire Eastern India that would contribute to the 'Atmanirbhar Bharat' and 'Make in India' vision of our nation." Also Read - State Bank's 1st quarter profit surges by 81% to Rs 4,189 crore The PX/PTA project will be completed by early 2024. The petrochemicals complex will have a PX production capacity of 800,000 tonnes per annum, which would be the feedstock for production of PTA. The production capacity of PTA would be 1,200,000 tonnes per annum. PTA is the raw material for the production of polyester along with MEG. IndianOil's MEG production facility is already under implementation at Paradip and will become operational towards the end of 2021. The availability of both PTA and MEG at Paradip will give a boost to polyester manufacturing facilities in the vicinity. Also, 50,000 tonnes per annum of Toluene will be produced. With the commissioning of both PTA and MEG projects, the Petrochemical Intensity Index of Paradip Refinery will increase to 14.7 from the present level of 4.5. Also Read - Reliance Capital reports widening of standalone net loss to `387 cr in June qtr PTA is a major raw material for manufacture of polyester fibre/yarn, PET bottles and polyester film used in packaging applications. PTA and MEG combined are the main feedstocks for polyester manufacture. The Petroleum, Chemical and Petrochemical Investment Region (PCPIR) of Paradip, Odisha, will have both these feedstocks of world-class quality available under one roof. The availability of Toluene, an important chemical used to produce Toluene Di-isocyanate (TDI), Chloro-Toluene, Nitro-Toluene and Cresols, would be an added advantage. Toluene Di-isocyanate is the basic material for the production of flexible polyurethane foams, adhesives, synthetic leathers and coatings, etc. Paramilitary forces to taste Khadi mustard oil now IndianOil has already commissioned a world-class Polypropylene (PP) plant of 680,000 tonnes per year capacity at a cost of Rs 3,150 crore in February 2019. The downstream polymer industry utilises PP to manufacture both commodity products like cement & fertiliser bags, packaging film, household furniture, etc, as well as niche products like containers for food storage, medical applications and so on. Thus the complete ecosystem of bulk petrochemicals would now be available in the PCPIR, which would catapult Odisha's petrochemicals industry to global standards, further attracting large investments in the downstream industry and leading to generation of substantial economic benefits and employment opportunities in the region. The PX-PTA project is estimated to generate approximately five million man-days of employment over the three-year construction period with direct and indirect employment opportunities for more than 2,000 technically skilled, semi-skilled and unskilled manpower in the various areas of operations, maintenance of units and logistics for handling the product value chain.

Source: Millennium Post

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RBI should go for further rate cut to aid growth: Experts

As per government data, retail ination had increased to 6.09 per cent in June, mainly on account of higher prices of food items. RBI mainly factors in the retail ination while deciding its bi-monthly monetary policy. The Reserve Bank OfIndia should go for another rate cut at next week's policy review to revive the economy, despite the surge in headline ination lately, a foreign brokerage said on Thursday. Analysts at Barclays acknowledged that the high ination is adding confusion to the RBI's policy outlook but pitched for a 0.25 per cent cut to generate demand advising the Central Bank to "throw caution to the wind". The Consumer Price Index (CPI) based retail inflation, surpassed the upper end of the RBI's target of 6 per cent in June. As per government data, retail ination had increased to 6.09 per cent in June, mainly on account of higher prices of food items. RBI mainly factors in the retail ination while deciding its bi-monthly monetary policy. The Central Bank has cut rates by a steep 1.15 per cent in two actions since the onset of the COVID-19 pandemic, which has adversely aected the economy. A slew of other measures, especially to ensure greater liquidity, have also been introduced by RBI. We forecast the RBI will continue easing, by cutting the repo rate at least 0.25 per cent at its net policy meeting," the analysts said, ahead of the meeting of the monetary policy committee to be conducted between August 4 and 6. They added that the impact on the activity favours more easing measures rather than less, and for having the cuts faster rather than at a deliberate pace. "We do not believe the argument of saving 'ammunition' for future cuts holds water, given the inherent lags in transmission of policy rates into lending rates," it added. Meanwhile, Singaporean lender DBS Bank said it sees "slightly higher odds" for a pause in the rate cuts at the upcoming review of the monetary policy but added that there will be cuts of 0.50 per cent between October to March 2021. It pointed out that monetary policy committee rejig and a review of the ination mandate will be the aspects to watch out for, but added that it does not anticipate any change from the current practice of headline consumer price ination as the main anchor for the monetary policy. Financial sector health will also be a priority at the monetary policy review, it said, pointing to the grim estimates of a record surge in the stock of dud assets presented by the RBI's financial stability report last week.

Source: Economic Times

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CBDT allows income tax authorities to share information with CCI

The Central Board of Direct Taxes (CBDT) has authorised income tax authorities to share information or details in its possession with the Competition Commission of India (CCI), in a notification issued on Friday. The Board has clarified that only relevant and precise information will be shared by tax authorities with other government departments and that too by maintaining appropriate confidentiality. “It is clarified that income-tax authority shall furnish only relevant and precise information after forming an opinion that furnishing of such information is necessary so as to enable the above notified authority to perform its functions under the law being administered by it; and convey to the authority being specified vide this notification to maintain absolute confidentiality in respect of information being furnished,” the Board said in the notification dated July 30. Recently, similar notifications and memoranda of understanding have been issued for exchange of information between income tax authorities and Securities & Exchange Board of India, Central Board of Indirtect Taxes and Customs, Ministry of Micro, Small and Medium Enterprises, Narcotics Control Bureau, Intelligence Bureau, National Investigation Agency, Cabinet Secretariat, Ministry of Agriculture, among others, Section 138 of Income Tax Act.   CCI generally requires extensive financial information to investigate, whether an entity or group has a dominant position in the market or not and whether any transaction or arrangement would result in a situation eliminating competition from the market. Income tax department can be an authentic source of such financial information required by the CCI, experts said. “This is another step taken by the government for improving coordination and flow of information between different government departments and will ensure that investigations/ proceedings carried out by different government departments are performed smoothly and efficiently,” said Rakesh Nangia, Chairman, Nangia Andersen India.   The word of caution with regards to the scope of sharing information with CCI, appears to be an advisory to avoid information overload and to alleviate concerns of taxpayers regarding unnecessary publicity of their information, he added.

Source: Economic Times

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Textile units told to submit details on migrant workers daily

The state labour department has ordered all the textile units in Surat to submit detailed list of the migrant workers reporting on duty on daily basis. About 20 industrial estates housing powerloom weaving units, embroidery units and textile dyeing and processing units have been asked to prepare daily reports mentioning the name, mobile number, address of the migrant workers with the details on their antibody and antigen tests. According to the labour department’s order, it is mandatory to update the details of   migrant workers on the official email id of the department on daily basis. The unit owners have been told to maintain register of the workers employed in their units. A senior officer in the labour department told TOI, “Violation of the order would invite action under Gujarat State Epidemic Disease Act, 1897 and Disaster Management Act against the unit owner.” Mayur Golwala, leader of powerloom industry told TOI, “Antibody and antigen tests of the migrant workers is going to be a costly affair for the powerloom weavers. The migrant workers, who had gone to their native places, are yet to return. But, once they start coming, there will be a deluge.” Ashish Gujarati, president of Pandesara Weavers Association said, “Less than 10% units have been able to restart postlockdown. Even if the workers arrive in the city, it is going to be a difficult task for the unit owners to maintain their details as the units are yet to start.”

Source: Times of India

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Hosiery exporters seek extension of loan moratorium by 6 months up to March

The Tirupur Exporters Association (TEA) on Friday appealed for extension of the moratorium for term loan repayments by six months up to March next year. In a representation to Prime Minister Narendra Modi, it requested him to advise the Reserve Bank of India (RBI) to extend the moratorium, saying the financial position of the knitwear garment units in Tirupur has not improved and they were not in a position to repay the loan and interest. TEA President Raja M Shanmugham said that in the first quarter of current fiscal, the All India Knitwear Exports clocked Rs. 5,355 crore against Rs.13,570 crore recorded in the corresponding period of last year with a negative growth of 60.54 per cent. This reflected the status of knitwear garment exporting units, he said adding extension of moratorium will not only be beneficial to the industry and banks, but also to the wellbeing of the countrys economy. TEA has sent a copy of the representation to Union Finance Minister Nirmala Sitharaman, Minister of  Corporate Affairs Nitin Gadkari, Minister of Road Transport and Micro, Small and Medium Enterprises and RBI Governor Shaktikanta Das. The RBI initially announced three months moratorium on repayment of term loans from March this year in view of the coronavirus lockdown. Later it was extended by another three months till August 31.

Source: Business Standard

Borrowing by states for GST compensation to be cost inefficient: Punjab FM

Expressing ‘shock’ over the Centre’s stance on compensating states for goods and services tax (GST) shortfall, Punjab has pressed for market borrowing by the Centre to make up for the inadequate cess collection apart from operationalising the dispute resolution mechanism to settle the issue. It has also recommended measures like widening the scope of compensation cess to cover more goods and services. “The recent reports that the central government has informed the parliamentary panel that it has neither the money, nor the obligation to pay the GST compensation to states, has come as a complete shock,” said Punjab's finance minister Manpreet Singh Badal in a letter to his Union counterpart Nirmala Sitharaman. Rejecting the attorney general’s opinion of allowing states to borrow to meet the compensation requirement, Badal pointed out that it will burden states with high cost of borrowing. He has recommended a slew of measures to increase cess collection including bringing those services and goods under compensation kitty that earlier attracted 28 per cent tax. “Any shortfall after these adjustments may be met through central borrowings. This will be both efficient in terms of cost of borrowing as well as equity. States should not be made to bear the burden of borrowing, which in any case is likely to be higher than the rate at which central government will be able to borrow,” said Badal. Punjab is facing a GST deficit of over 45 per cent, the highest in the general category states, Badal said. At the current pace, it is likely to exceed 60 per cent by the time compensation period is over, he added. Punjab received the fifth highest compensation in 2019-20 worth Rs 12,187 crore, behind Maharashtra, Karnataka, Gujarat and Tamil Nadu. K K Venugopal has suggested that the Council can recommend to the Centre to allow states to borrow on the strength of future receipts from the compensation fund. AG has also noted that the Centre has no legal obligation to pay compensation to states. “More than the legal interpretation (which may itself come under judicial challenge at some stage), you must take note of Centre’s innumerable assurances in the run up to the GST to provide for assured and unhindered compensation,” Badal said.He added that some of these assurances are also recorded in the minutes of the meetings of the empowered committee from time-to-time and also in the early meetings of the Council. “This assurance from the Centre was in fact the real edifice on which GST consensus was achieved,” he said. Badal added that the law suggests that the compensation doesn’t have to come from cess alone. He also pressed for operationalisation of the dispute resolution mechanism to arrive at a solution on the vexing issue. “In a federal polity there shall always be some disputes on legal interpretations. Constitution allows their healthy resolution through a mechanism that is yet to be operationalized. Should the Council fail to meet a consesnsus on this issue there may be no harm in resolving it through the dispute resolution process,” said Badal.

Source: Business Standard

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Exporters body EEPC India urges Centre for restoration of incentive scheme benefits

New Delhi: Exporters body EEPC India has urged the Centre for restoration of benefits under the Merchandise Export from India Scheme (MEIS). An Engineering Export Promotion Council of India (EEPC) statement said that the scheme has been stopped by the Revenue Department. Accordingly, the exporters body approached the Commerce and Industry Minister Piyush Goyal seeking his intervention for restoration of the benefits. “Exporters do factor in external volatility and can often sense such changes. What is difficult for them to factor in is sudden internal policy changes and especially those which have retrospective effect," EEPC India Chairman Mahesh K Desai stated in his letter to the Commerce and Industry Minister. "Exporters have priced in their MEIS benefit after the government an nounced that MEIS benefit will be extended till December 31, 2020."According to Desai, sudden stoppage of benefits will have an extremely adverse impact on exporters' ability to "survive in these difficult conditions". Besides, he pointed out that engineering exporters work on long term contracts and "such retrospective changes" have a debilitating impact particularly on MSME exporters. Furthermore, he said: "MEIS scheme has played an invaluable part in not only maintaining our exports globally but also in diversifying our exports market. Furthermore, the MEIS scheme has neutralized some of the taxes and para taxes embedded in the production of exported goods and hence it is in some se nse a legitimate quasi refund of taxes". He said the MEIS should not be stopped without replacing it with the alternative scheme of 'RODTEP'. In addition, he said that MEIS benefit has significantly helped Indian engineering exporters maintain their competitiveness. This is more so, since over 90 per cent of the engineering exports are either low or medium value added products.

Source: Economic Times

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Cotton season may end with high inventory

The 2019-2020 cotton season is expected to end in September with huge stocks, both with traders and the industry. Ashwin Chandran, chairman of Southern India Mills’ Association, said the country has never had such a high inventory at the end of the season in the recent past. Consumption by textile mills should 80 lakh bales to 100 lakh bales less than the estimate because of the lockdown and fall in demand after that. The association estimates the closing stock to be 125 lakh-150 lakh bales. The government should come out with special package to incentivise yarn and fabric exports. Only then will demand pick up and cotton consumption increase, he said. J. Thulasidharan, chairman of Indian Cotton Federation, added that though cotton was a high-risk crop, farmers had increasingly gone in for it in the recent years because of its profitability. With good monsoon this year, cotton production in the next season (October 2020 to September 2021) will also be higher. The current price of cotton is lower than the MSP for several varieties and the Cotton Corporation of India had purchased substantial quantities. The global prices would be subdued next season as availability globally would also be high. In such a situation, the coming cotton year would be challenging to stakeholders in the sector. The government should come out with a different system to support farmers and the prices should move according to market demand, he said. He expects the closing stock to be close to 200 lakh bales. The Cotton Association of India said in a press release that the carry-over stock at the end of the season would be 55.5 lakh bales. The arrivals from last October to June this year are 327 lakh bales. The association expects that production this season would be nearly 335 lakh bales.

Source: The Hindu

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Textile suppliers count cost of ongoing price pressures

ARLINGTON – High-pressure cost negotiations by apparel buyers have the greatest impact on textile suppliers’ business profitability, which then overflows onto workers and the environment, putting all forms of sustainability at risk, says a new industry report. Based on two surveys, pre- and post-COVID-19, the findings released today by US-based NGO Better Buying show which high-pressure cost negotiation strategies are the most damaging for textile suppliers. These are “demanding level prices be maintained from year- to year – with no consideration for inflation,” and the much maligned “take it or leave it” approach from brands and retailers who insist that if a target cost is not met, they cannot win the order. The NGO calls for new negotiating strategies to be implemented within textile supply networks that include minimally acceptable costing practises for buyers – especially in the wake of COVID-19 where order volumes are significantly down, yet pressure on target prices continues.

Source: Eco Textiles

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Vietnam, New Zealand target 1.7 billion USD in trade in 2020

Trade between Vietnam and New Zealand tripled over the last decade, from 320 million USD in 2009 to over 1 billion USD in 2018, and the figure is expected to hit 1.7 billion USD this year, according to the Ministry of Industry and Trade. Trade between Vietnam and New Zealand tripled over the last decade, from 320 million USD in 2009 to over 1 billion USD in 2018, and the figure is expected to hit 1.7 billion USD this year, according to the Ministry of Industry and Trade. Vietnam is currently the 16th-largest trade partner of New Zealand and the two countries boast many advantages from supplementing each other. New Zealand has high demand for importing garments and textiles, footwear, wood, tropical farm produce, and seafood, which are strengths of Vietnam, while Vietnam needs to import milk and dairy products, wine, lamb, fruit, raw wood materials, and materials and accessories for garment-textile and leather-footwear. New Zealand has allowed the import of Vietnamese fresh mangoes, dragon fruit, and rambutan, while Vietnam is proposing it also grant licences for the import of fresh limes and passion fruit. Vietnam has opened door for potatoes, frozen beef, kiwi fruit, and apples from New Zealand, to boost bilateral trade. In the context of COVID-19, Prime Minister Nguyen Xuan Phuc suggested the two countries strive to achieve two-way trade of 2 billion USD each year, during his online high-level talks with his New Zealand counterpart Jacinda Ardern. He asked New Zealand to open its door wider to Vietnamese farm produce as well as share experience in building brands and developing value chains for certain fruit to access other selective markets. Keith Conway, Chargé d’Affaires at the New Zealand Embassy in Vietnam, said two-way trade enjoyed growth of over 7 percent in 2019. Both countries are among the top 20 trade partners of each other, with two-way trade tripling after the agreement to set up the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA) was signed in 2009. According to the official, both nations are making good progress in optimising the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and  there will therefore be many opportunities to expand markets, especially in high-end food, wine, agriculture technology and equipment, education, and tourism. Meanwhile, New Zealand Ambassador to Vietnam Wendy Matthews said 2020 marks the 45th anniversary of diplomatic ties. Vietnam has been one of New Zealand’s fastest-growing trade partners in Southeast Asia over the last five years, she added.

Source: Vietnam Plus

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Open Apparel Registry launches PPE manufacturing map

 The Open Apparel Registry (OAR), a global map of garment factories funded by the Laudes Foundation, has developed a map to track facilities manufacturing personal protective equipment (PPE). The initial set of data launched today (30 July) allows users to upload and search for information on PPE manufacturing. The data has been pooled from a variety of sources including The Nation of Makers and Find the Masks collaboration, BRAC's University's Mapped in Bangladesh Rapid Survey initiative, and The Defence Research & Development Organisation (DRDO) in India. PPE facilities contributed to the database range in size, from small studios to large manufacturing units. Facility profiles include additional information on product type, as well as contact details for users to make an enquiry directly. The OAR team says it has not conducted an assessment of the quality of the PPE products manufactured at each facility – and that users will need to carry out their own due diligence checks. It is now calling for additional datasets to add to the Registry. Contributions can include links to data sources, referrals and introductions to groups compiling this information, and direct outreach from facilities manufacturing PPE.

Source: Just-style

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Maersk launches digital supply chain platform

Global logistics company AP Moller Maersk has launched a digital platform to provide its small and medium sized customers with the ability to take control of their supply chains from factory to market. Maersk Flow will strengthen the company's position as global integrator of container logistics, helping firms connect and simplify their supply chains. The platform provides businesses with everything they need to tackle the complexity of managing their value chains. The solution enables transparency in critical supply chain processes and ensures that the flow of goods and documents is executed as planned. It also reduces manual work and costly mistakes, while empowering logistics professionals with all the current and historical data they need to sustainably improve their supply chain. Martin Holme, global head of SCM & e-commerce logistic at AP Moller Maersk, says the digital supply chain management tool is designed specifically for customers needs. "Maersk Flow will allow our customers to significantly improve their supply chain performance with less time and effort. This lets them focus more resources on their core business and achieve happier customers and higher sales growth." The daily life of small and medium sized businesses is increasingly global, complex and fast-paced. Every day thousands of products are moving through the supply chain, on multiple carriers, coming from and reaching many supply chain partners and customers. And for many of these companies this complexity is managed fully manually via spreadsheets, emails and phone calls, which despite lots of hard work is leading to reduced visibility and control – and ultimately higher costs or lost sales. AP Moller Maersk says Maersk Flow will enable these companies to take control of their supply chains.

Source:   Just-style

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France sinks deeper into recession, with 14% GDP hit in 2Q

France’s economy shrank by nearly 14% in the second quarter when the country was in coronavirus-related lockdown, a third consecutive quarter of negative growth in a worsening recession, the national statistics agency said on July 31. The startling plunge of 13.8% from April-June starkly illustrated the punishing economic cost of the two-month lockdown. The pain was so damaging to jobs and industries that the government is talking down the possibility of another nationwide lockdown as infections tick upward again.France’s economy was already slowing, shrinking by 0.2% in the last quarter of 2019, before the pandemic hit with full force.French GDP shrank by 5.9% in the first quarter of 2020 as COVID-19 patients started to flood and overwhelm hospitals.  That health crisis, with COVID-19 killing more than 30,000 people in France, prompted the government in March to introduce what was one of Europe’s strictest lockdowns, halting much activity in the second-largest economy of the countries that use the euro currency.

Source: The Hindu

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