Export volume of spun yarns from India continue to grow in March 2015, while prices retreated compared to their year ago levels. At this price level, it appears that spun yarns made in India have become globally competitive, particularly of cotton. The fall in prices reflect the decline in raw fibre cost in India. In March 2015, Cotlook ‘A’ index fell 29 per cent YoY, while global benchmark the US Cotton futures declined 33 per cent. Cotton was 24% cheaper in Pakistan and 30 per cent down in China. Indian cotton too was cheaper in similar comparison. Shankar-6 prices were down 25 per cent in March while the coarser variety, Bengal Deshi was cheaper by 20 per cent. However, this kind of fall is not seen in prices of cotton or cotton blended yarn which leaves room for further fall, thus making Indian yarn more competitive. Even manmade fibre prices mirrored similar trend. Polyester fibre was 19 per cent cheaper in March 2015 at INR79.60 per kg compared to a year ago, while acrylic staple fibre prices at INR149 a kg were down 17 per cent. However, viscose fibre prices were stubbornly pegged at INR141.50 a kg. Thus, raw material cost for making blended yarns declined sharply.
All kinds of spun yarn exported were up in March with volumes at over 130 million kg worth US$380 million or Rs 2,340 crore, implying per unit value realisation of US$2.91 per kg. This was US cent 1 up from previous month but down US cents 48 from March 2014. Compared to last year, volumes were up 1.5 per cent while earnings in US$ term fell 13 per cent implying a 14 per cent fall in unit price realization. Meanwhile, the Rupee appreciated 0.4 per cent against the US$ in the comparable months. Eighty eight countries imported spun yarn from India with China on the top accounting for 37 per cent of India’s total spun yarn exported in March. This was 11 per cent higher than the value of export last year while shipment volume increased 29 per cent YoY. Bangladesh was the second largest importer of Indian spun yarns, accounting for 13 per cent of all spun yarn exported from India. It reduced its imports from India by 6 per cent in value and 8 per cent in terms of volumes. Egypt continued to remain the third largest importer of spun yarns, ahead of Turkey and South Korea which have also reduced imports from India.
Taiwan, Dominican Republic, Chile, Ecuador and Mexico were the fastest growing markets in March for Indian spun yarn exports. However, they together accounted for only 2.3 per cent of total exports. Countries which did not import any yarn from India in March were Honduras, Estonia, Malawi, Zambia and Iraq while Djibouti, Israel, Croatia, Bulgaria and Bahrain significantly reduced their imports from India this March compared to their levels a year ago. Panama, Botswana, Paraguay, Cuba and Slovakia were the major new destinations for Indian spun yarns in March, which together imported US$0.50 million worth of spun yarns.
SOURCE: Yarns&Fibers
A European currency freefall is bringing the dollar into contracts in Tirupur, Tamil Nadu. Garment exporters from southern textile belt are negotiating with their European buyers for dollar-denominated contracts. Reason - the sudden 20 per cent slide in the euro down from 80 levels last December wiped profits in lakhs for Tirupur's entrepreneurs, forcing them to transact in the more stable dollar. As the euro fall takes effect on revenue, entrepreneurs are relying on the greenback, which has been fairly range-bound against the rupee around 63 levels with a prediction of marginal appreciation. "Many small businesses are having trouble in signing deals.A 20 per cent slide in currency is too much to take for a capital-intensive sector like ours. But, the larger ones, which can take some impact, are pushing the buyers for dollar deals, because the currency is holding relatively steady against the rupee," said P Mohan, MD of Anugraha Fashion Mill, a Rs 150-crore turnover company in Tirupur. Nearly 90 per cent of his company's exports are focussed on the euro region.
For Mohan, also the treasurer of the industry body Tirupur Exporters association, the larger worry is about small exporters whose revenues do not exceed Rs 10 crore, for whom banks are still hesitant to extend forward covers. They number 2,000 of the 2,500 garment makers in Tirupur.Forward covers are hedging instruments banks provide exporters to guard against adverse currency fluctuations. Without the backing of currency protection, smaller firms are holding back successive orders and watching the euro as it vacillates around 70 levels. Tirupur exporters are aware of the structural problems of the euro zone, which has just flagged off a 1.1-trillion stimulus programme to bolster the sentiment and help struggling economies such as Greece. With garment importers in Europe operating in such a weak economy, their inclination to listen to supplier issues is also limited, says a KN Subramanian, who is a knitwear exporter. "This is a buyer's market," he says. Among others, he is in negotiations with European buyers, urging them to take a part of the blow by raising the value of contracts. "Say, the loss due to currency erosion is about Rs 40 a piece of garment, we would want them to chip in with Rs 20 and we'd bear the rest.But these negotiations usually take six months." Switching to dollar contracts may appear possible for the large firms in Tirupur, who enjoy a favourable bargaining position with buyers as their technical expertise would be hard to replace in other emerging markets. But, it is tough for those with replaceable business offerings.
SOURCE: The Economic Times
Formation of five mini-clusters begins in Tirupur knitwear cluster to improve profitability and competitiveness. Four of the mini-clusters formed comprise garment production units and the remaining cluster has textile printing units, said T. R. Vijayakumar, coordinator of Tirupur Thozhil Pathukappu Kuzhu which is facilitating the implementation of the project. A few more mini-clusters comprising knitting units would soon be constituted. Each of the clusters now had signed a Memorandum of Understanding with the Quality Council of India and MSME Ministry to get the employees of the units trained for lean manufacturing practices that were followed in industrial units in Japan. Each mini-cluster had 10 homogeneous units involved in identical activities of the garment production processes. The mini-clusters have the privilege to select the trainers from among the approved list of people published by the Quality Council of India for such purposes, said Mr. Vijayakumar.
Of the total cost for training needy on how to reduce wastages and improve the manufacturing skills, 80 percent would be borne by the Union MSME Ministry subjected to a ceiling of Rs. 29 lakh. The training would be spread over 18 months. Once the training cycle is over, the profitability of the units involved in the scheme will go up considerably through minimization of material wastes and reducing the unwanted procedures in the manufacturing process, Mr. Vijayakumar pointed out. The ambitious project of mini cluster and availing of Government funds to implement some of the progressive industrial practices followed in Japan.
SOURCE: Yarns&Fibers
Trade unions have slammed the officials of Labour Department and Inspectorate of Factories for not taking stringent action against the units which functioned on May Day without following the guidelines in letter and spirit. Labour Department officials told The Hindu that the units could function on the day provided they submit Form 5 A with the labourers’ signature and submit the same to the concerned officials besides paying the workers double wages for the day. M. Chandran, state secretary of CITU, said that textile sector entrepreneurs were mostly interested in getting their works completed without looking at the rights of the labourers even on the May Day. “Workers are usually asked to be present at the units rather in a forceful tone and exact double wages are not paid to many of the workers,” he alleged. In the last few years, the trade unions have made complaints against host of units for not following the rules in its letter and spirit. “However, only token actions have been taken sometimes as an eye-wash but most of the units that violates the rules meant for the May Day escaped action,” N. Sekar, the district president of AITUC, said.
SOURCE: The Hindu
A sharp drop in the production of steel, cement and refinery products resulted in a 0.1 per cent fall in the growth of the eight core industries in March, to its lowest rate in 17 months. Production growth in the eight sectors in fiscal year 2014-15 was at 3.5 per cent, which was lower than the 4.2 per cent growth posted in the previous fiscal year, according to figures released by the Commerce & Industry Ministry on Thursday. The eight core sectors are coal, crude oil, natural gas, refinery products, fertiliser, electricity, steel and cement and account for 38 per cent of the overall Index of Industrial Production. Industry representatives are concerned that the fall in production in the core sectors indicates a slowdown in economic activity.
Industry concern
“It is worrisome as growth has been witnessing a subsiding trend since November 2014. The lead indicators for the construction sector, such as cement and steel, are decelerating significantly, indicating a slowdown,” said Alok B Shriram, President, PHD Chamber, in a press statement. In March 2015, steel production declined by 4.4 per cent, cement by 4.2 per cent and refinery products by 1.3 per cent. Coal production and fertiliser output, on the other hand, posted growth of 6 per cent and 5.2 per cent, respectively. Production in the remaining three sectors also posted a rise in March, albeit at lower rates. While natural gas production posted an increase of 1.5 per cent, both crude oil and electricity grew by 1.7 per cent each. The previous low in the performance of core industries was a 0.6 per cent fall in production in October 2013.
In 2014-15, coal posted a growth of 8.2 per cent, electricity grew at 8 per cent, cement increased by 5.6 per cent, steel rose by 0.5 per cent and refinery products increased by 0.4 per cent. Production of natural gas fell by 5.2 per cent, crude oil by 0.9 per cent and production of fertilisers by 0.1 per cent.
SOURCE: The Hindu Business Line
The government on Thursday listed the goods and services tax (GST) constitutional amendment Bill as part of its legislative agenda for the Lok Sabha when the House meets on Tuesday, after a four-day break. It also listed the land acquisition Bill and the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill as part of its agenda for the Lok Sabha next week. The fate of the GST constitutional amendment Bill seems uncertain, with the Congress and some other parties, including the All India Anna Dravida Munnetra Kazhagam, the Left parties, the Biju Janata Dal and the Trinamool Congress, likely to insist it be referred to a parliamentary standing committee. Together, these parties have 146 members in the Lok Sabha. The government is, however, confident of mustering two-thirds majority to ensure passage of the Bill in the Lower House. It needs 361 votes to ensure the Bill is passed, if all 542 MPs (excluding the Speaker) vote. A constitutional amendment needs two-thirds majority, as well as the presence of more than half of the current strength of a House.
BJP president Amit Shah on Thursday said he was confident Opposition parties would vote for the Bill. Senior ministers say the government will be able to persuade the Congress to support the Bill in the Rajya Sabha, given the United Progressive Alliance (UPA) government had pushed for it. When the Bill is taken up by the Upper House, the government might even agree to a time-bound select committee to study the Bill, as in the case of the insurance and mines and minerals Bills. The Lok Sabha is scheduled to function until May 8, while the Rajya Sabha will be in session till May 13. The government believes it will meet little resistance in ensuring the passage of the Undisclosed Foreign Income and Assets (Imposition of Tax) Bill in the two Houses. The land Bill, though listed by the government, looks unlikely to be passed during this session, as nearly all Opposition parties are opposed to it. The government is banking on the Rajya Sabha rejecting the Bill so that it can convene a joint session of Parliament. But the Opposition is set to demand it be referred to a select committee. The Rajya Sabha is also slated to take up a Bill to ratify the land boundary agreement that the UPA government had reached with Bangladesh in 2011.
SOURCE: The Business Standard
Initiatives being taken by the government to boost investments and introduce tax reforms will lead to 9-10 per cent economic growth in the coming years, Union Finance Minister Arun Jaitley said on Friday. "The cumulative impact of these (initiatives), I believe, will increase our capacity to grow more than nine per cent," he said in an interview to Doordarshan. Significant work is being done in the infrastructure as well as agriculture sectors and the government is making special efforts to tackle farmers issues, particularly irrigation, he added.
Jaitley said the government has created a transparent environment and has given up discretionary powers to dole out incentives to corporates. "We do not hear the word corruption in this government. If you have spectrum, coal, mine reserves, auction them... The money that comes from auctioning of coal and mines go to the states from where the reserves were generated." Indian economy is expected to grow at 8-8.5 per cent in the current financial year, up from the estimated 7.4 per cent for the previous financial year.
SOURCE: The Business Standard
The government is confident of pulling off the USD 900 billion export target for 2020 despite missing it last fiscal, a senior official said. "We have missed export target, but did better last year. We are confident of achieving the USD 900 billion export target by 2020 as envisaged in the foreign trade policy," joint secretary (commerce) Sudhanshu Pandey told reporters on the sidelines of a CII event here. Exports slumped into the negative zone, recording a decline of 21 per cent in March, the biggest fall in the past six years, pulling down the total shipment for 2014-15 to USD 310.5 billion and missing the target by 1.23 per cent. The government had set an exports target of USD 340 billion for 2014-15. The exports have been in slow lane across the globe, including China, Pandey pointed out. The current initiatives taken by the government will yield results in a year, he added.
The government is also working to create a national ecosystem for product standards, he said and asked the industry to provide critical and clear inputs on standards so that the Centre and states can help build exports. "The country needs to restore the national ecosystem and then only, the compliance cost of regulation will go down," he asserted. Amit Singla, deputy secretary in the commerce ministry, too echoed his view. He said even though developing countries get preferential tariff treatment in developed countries, the advantage is lost due to stringent import requirements and sometimes exports are rejected. The government has identified 25 sectors under the Make-in-India initiative where standards are harmonised with international ones.
SOURCE: The Economic Times
India and Japan today pledged to fast-track negotiations for the Regional Comprehensive Economic Partnership (RCEP), a mega free trade deal, and wrap it up by the end of 2015. They also announced to make it a "high quality and mutually beneficial" agreement. RCEP came up for discussion during the meeting of Commerce and Industry Minister Nirmala Sitharaman and her Japanese counterpart, Yoichi Miyazawa, here. "The two ministers reaffirmed the commitment of both countries to actively engage in the RCEP negotiations and make it a modern, comprehensive, high quality and mutually beneficial economic partnership agreement... They shared their intention to accelerate the negotiations towards conclusion by the end of 2015," the Department of Industrial Policy and Promotion (DIPP) said.
The 16-member RCEP comprises 10 ASEAN members and its six FTA partners, namely India, China, Japan, Korea, Australia and New Zealand. The 16 economies account for over a quarter of the world economy. The RCEP negotiations were launched in Phnom Penh in November 2012. RCEP is an extremely important institutional process which could lead to a plurilateral agreement that will have wider implications for partners. Both the countries today signed a 5-point action plan to boost bilateral trade and investment. As part of the broader efforts, the trade ministers also agreed on developing select clusters -- the Delhi Mumbai Industrial Corridor (DMIC) and Chennai Bengaluru Industrial Corridor (CBIC) -- as 'Japan Industrial Townships' in order to facilitate Japanese investment to India. They also identified 11 sites for this purpose, which include Tumkur, Ponneri, Jhajjar, Supa, Neemrana and Mandal. "They stressed the importance of collaborative steps between Indian and Japanese sides for the improvement of business environment," DIPP added.
SOURCE: The Economic Times
The governments of India and Japan signed an agreement on Thursday for doubling of Japanese investment into Indian firms in the next five years, and boosting two-way trade. The signatories were Commerce and Industry Minister Nirmala Sitharaman and Japan’s minister for economy, trade and industry, Yoichi Miyazawa. The plan was categorised into five broad areas: development of selected townships in India, promotion of investment and infrastructure development, further development and cooperation in information technology, enhancing cooperation in strategic sectors and Asia-Pacific economic integration.
Signing of the action plan is seen "as a step further in improving the trade relationship between India and Japan as a follow-up of Prime Minister Narendra Modi's visit to Japan last year," stated a release quoting Miyazawa. According to Sitharaman, the agenda was in line with PM's Make in India plan that will further investments from Japan into the country's manufacturing sector. Last year, the Department of Industrial Policy and Promotion under the ministry of commerce and industry had set up a mechanism to fast-track Japanese investments named 'Japan Plus.'
During Modi's visit, Japanese Prime Minister Shinzo Abe had set a target of 3.5 trillion yen ($33.5 billion) of public and private investment and financing from Japan including official development assistance to India to be made over five years. There are already 1,209 Japanese firms operating in India out of which 137 have started their operations after October 2013. Japan is the fourth largest foreign direct investment (FDI) contributor to India, with major interests in pharmaceuticals, automobiles, and services sectors accounting for 7.46 per cent of total FDI equity inflows into India. During April 2000-November 2014, FDI from Japan into India stood at $17.55 billion. Under the Tokyo Declaration for Japan-India Special Strategic and Global Partnership, Modi and Abe have set a target of doubling Japanese FDI and the number of Japanese firms in India by 2019.
‘MAKE IN INDIA’ WITH HELP FROM JAPAN
SOURCE: The Business Standard
Danish fashion company Bestseller will soon bring in its premium brand — Selected — to expand its India portfolio to four brands. The privately-held company, which owns around 15 brands, currently operates menswear brand Jack and Jones, and women's brands Vero Moda and Only in the country. "We have added one more brand, Selected, to our portfolio which we plan to launch in a couple of months," said Ranjan Sharma, chief information officer at Bestseller India.
The company will launch only the menswear collection under the Selected brand in the country to begin with. It will cater to a slightly premium category than Jack and Jones, Sharma said. Bestseller, which runs 120 exclusive stores in India, will launch Selected on one of the online marketplaces initially before taking it to the brick-and-mortar format at a later stage, he added. One reason for the online-first strategy is that most Bestseller's customers in the country are young people who are increasingly getting accustomed to online shopping. "Across all three brands, our customers will range from 18 to 28 years and they are always online," Sharma said. "On ecommerce, we have grown from 1% -10% in the course of one year," he said.
SOURCE: The Economic Times
Low wages, plentiful labour and an image problem in neighbouring Bangladesh have all boosted Myanmar’s chances. The international textile sector has discovered Myanmar as next best destination as there are currently 200,000 workers in more than 300 factories. Neighbouring Bangladesh has around 4,000 textile factories. Khine Khine Nwe, the secretary of the Myanmar Garment Makers Association (MGMA), said that one new factory opened every week in 2014. In 10 years they want to have 3,000 factories. The aim is to increase exports from the current US$1 billion a year 10 times over and to provide a million jobs. And investors are answering the call. Chinese, Taiwanese and South Korean companies are flooding into the country. Aye Aye Han boss of Shweyi Zabe textile plant on the outskirts of Yangon complains that the competition is luring her workers away by offering a couple of dollars more. The country is benefiting from the waning star of neighbouring Bangladesh, where the collapse of the Rana Plaza textile factory with more than 1,000 fatalities two years ago drew attention to poor working conditions in garment factories.
The timing is also good in the politics of Myanmar, which is opening up after decades under a closed military dictatorship. There is a sense of opportunity since a nominally civilian government came to power in 2011. Garment makers in Myanmar are evidently in the starting blocks, said Thomas Ballweg of a German fashion association. He notes that factories have apparently been well built, with only one or two floors - unlike Rana Plaza with its eight floors. The workrooms are clean and the supervisors open to ideas. He sees real potential. Christian Maag, who heads the German underwear company ESGE, with plants in Romania, Bulgaria, Greece and India, is helping Shweyi Zabeto modernize production in Myanmar. ESGE has provided software for production planning and assisted with computer programmes to help cutting to reduce fabric waste.
But there is a long way to go. Estimates put Myanmar productivity at half that of China, where production rates are high, but so are wages. According to the Verisk Maplecroft consultancy, labour costs are lower in Myanmar than anywhere else in the world. Clothing companies like Gap, H&M and Adidas are already producing here. It’s a kind of development aid, but with a business motivation, Maag said. If things go well, they will place orders. A trial run has proved reasonably successful, with scope for expansion, and Maag is convinced that the textile sector has a future here. Smart Myanmar, an EU project, is helping to build up a sustainable textile industry in Myanmar with the aim of secure jobs and good working conditions, along with conserving energy, recycling waste and cutting water consumption.
The head of the project is Simone Lehmann of Sequa, an organisation of German industrial associations with the German GIZ development aid agency. Their focus is on small and medium-sized enterprises. They are supporting 16 of the 80 factories with local management. Lars Droemer, sustainability manager at Swedish fashion company Lindex, is also optimistic on Myanmar. Praising the code of conduct agreed by the textile sector, which bans employing children younger than 15, guarantees a minimum wage, restricts working hours to a maximum of 60 hours a week and allows trade unions. They are interested in Myanmar, because they were able to help set up the standards from the start. Lindex operates according to the principal "People - Planet - Profit," in that order.
Promoting local industry is part of the sustainability drive. Foreign companies take down their factories (and relocate) when operations become cheaper somewhere else, but local employers do not, Droemer said. The smaller Myanmar companies have yet to master the full production chain. At present they sew and package, but the big clients want a complete service, from supplying fabric and thread to dealing with customs and loading for shipment. According to Aye Aye Han, the MGMA is working in this direction. They need textile weaving plants in Myanmar, and their companies need financing, duty-free imports of goods for re-export and they need more trained seamstresses. Myanmar is today where Bangladesh was 10 years ago, but things have developed three times more quickly today.
SOURCE: Yarns&Fibers
Turkey is known as Europe's largest textile manufacturing and supplying hub. Many of the ma-jor textile brands such as S Oliver, Adidas, Nike Esprit, H&M, Hugo Boss, and Zara source their clothing from Turkey. These textile exports have propelled Turkey to become the fourth largest clothing manufacturer in the world and number one in Europe. The exports of Turkish textile and clothing goods have been on the rise in the recent years, however, its share in the country's total exports is decreasing. In 2014, textiles exports rose 6.3 per cent to US$18.4 billion. With the removal of international trade barriers for China, Turkish textile sector started losing its labour cost advantage and in order to maintain its competitiveness, producers moved to-ward new designs, fashions and quality labels, targeting higher income clients. European Un-ion’s FTAs with supplying countries, like India and South Korea, also affected the domestic textile industry.
Cotton is the essential raw material for the Turkey’s textile and clothing industry, and Turkey is one of the important cotton growers in the world ranking eighth in the production of cotton. As one of the results of the South eastern Anatolia Project (GAP), which is the largest project ever attempted in Turkey, cotton production in Turkey has begun to increase. Due to the availability of huge amounts of raw cotton in Turkey, the cotton textile industry has progressed like the Turkish cotton yarns industry. Turkey is one of the largest countries in the world in terms of its cotton yarn production capacity. Similarly, the Turkish man-made textile sector is also well-developed industry with very strong presence in all kinds of synthetic fibers and yarns production and processing. In overall exports, Turkey is net exporter in 10 sectors with apparel sector constituting nearly 30 percent of the net exports while textile has a share of nearly 23 percent. Thus, these two sub-sectors that are complementing each other have a share of 53 percent in net exports.
Of late, Turkey’s yarn imports from India have been sluggish and have started declining since January 2015. India exported just US$12 million worth of spun yarns in March 2015, down 46 per cent year on year with volumes at 4.35 million kg. Between September to December, the volumes of export to Turkey hovered above 5 million kg a month which fell to just over 4 million kg in January. It was almost stagnant in February. However, Turkey remains dominant buyer of polyester/viscose and polyester/wool yarns, topping the list while ranked as third largest market for polyester/cotton, 100% polyester and polyester/acrylic yarns. It was fifth largest buyers of Indian viscose yarn and ranked as 11th largest market for cotton yarn. In March 2015, only polyester/viscose spun yarn registered increase in export to Turkey while all other types of yarns were significantly lower than last year.
SOURCE: Yarns&Fibers
The Philippines Department of Labour and Employment (DOLE) has signed an agreement with the country’s Foreign Buyers’ Association of the Philippines (FOBAP) in a drive to implement the government’s the new Labor Laws Compliance System, or LLCS, according to a report on the DOLE’s website. The FOBAP is an association that serves as watchdog of local export producers in terms of labor and social compliance.
Labour and employment secretary Rosalinda Dimapilis-Baldoz was elated that one of DOLE’s major reforms, the new Labor Laws Compliance System, or LLCS, is gaining more adherents and advocates, the latest of which is the powerful FOBAP. “I am very pleased that the FOBAP is one with the DOLE in ensuring that exported products from the Philippines are produced not only according to global quality standards, but also in responsible and socially-compliant factories that meets the basic standards for human rights as required by major importing countries,” said Baldoz after the signing ceremony in Manila.
The memorandum of agreement spells out the mechanics of cooperation between the DOLE and the FOBAP in attaining the two organization’s shared goals of increased awareness of the export sector on general labor standards, with emphasis on minimum wage and other wage-related benefits; and occupational safety and health. “Our view in signing this memorandum of agreement is to improve compliance rate; develop industry-specific GLS and OSHS; build within the export sector a culture of voluntary compliance with GLS and OSHS; and ensure that Philippine export products are manufactured in socially-compliant factories,” said Baldoz. “Through this agreement, we resolve to cooperate with strong synergy to increase awareness and understanding of the export sector of labor laws compliance,” said FOBAP President Robert Young, who signed the agreement on behalf of his organization. Under the deal, the DOLE and FOBAP will create a technical working committee that will adopt measures and conduct activities necessary to ensure the effective implementation of the partnership agreement.
SOURCE: Fibre2fashion
A group of textile manufacturers has warned that they may close up shop and lay off workers if the government cannot pay their tax credits. In an open letter published on Wednesday and addressed to Finance Secretary Cesar V. Purisima, Trade Secretary Gregory L. Domingo and five other officials of the Department of Finance (DOF), Bureau of Internal Revenue, Bureau of Customs and Board of Investments (BOI), a group which said they “represent an informal association of BOI-registered textile mills” claimed that their tax credit incentives have been withheld from them “since July 2014 by the DOF One-Stop [OSS] Shop Center.” Tax credits are refund payments that companies can claim as incentives for the taxes and duties they earlier paid on their imported raw materials. Instead of granting cash refunds, the government issues tax credit certificates, which firms can use as a form of payment to settle tax obligations.
According to the group’s legal counsel, Gerard P. S. Algarra, “the pitiful and unacceptable” reason being cited by the OSS Center was that “the processing of all applications for tax credits, tax debit memos and transfers have been held in abeyance ‘pending final resolution by the executive committee on the issues related to the granting of tax credits and utilization.’” “It has been nine months since you have unilaterally and without basis suspended our rights and we see no solution in sight,” they said.
In this regard, the group said they were “so disappointed and exasperated that despite repeated appeals, the executive committee chairman of OSS Center has not yet set any date for the [committee] to convene.” The officer in charge of OSS Center is Sheila N. Castaloni, who was also recently appointed by President Aquino as acting director of the DOF’s revenue office.
SOURCE: The Business Inquirer
As trade figures for March rolled in, the textile industry, Pakistan’s largest export-oriented sector, depicted a decline of 16.23%. Countless reasons could explain the decline with the industry not shying away from voicing its concern. For textile exporters in Faisalabad, the government is responsible for the industry’s negative growth, in addition to withholding Rs50 billion refunds. Rana Textile Mills Chief Executive Officer Rana Arif Tauseef said that cash flow problems of the industry have worsened due to the withholding of Rs50 billion tax refunds by the Federal Board of Revenue.
Tauseef added that the increasing hours of electricity load shedding were further compounding the industry’s problems. “Faisalabad is subjected to eight-to-10 hours of load-shedding per day,” he said. “The cost of electricity for industrial consumer is Rs12 per unit as compared to India where the price of electricity is Rs. 6.”He said due to the blockage of genuine refunds in the last three years, industrialists were facing working capital shortage and were borrowing from banks to meet the shortfall. Tauseef added that this has increased the cost of doing business, making it difficult for the industry to compete with regional rivals in the international markets.
Giving details, he said that exports of cotton declined by 29.36% in value terms and 12.99% in quantity. Similarly, cotton cloth exports also declined by 14.45% in value and 37.57% in quantity, exports of bed wear stooped by 16.94% in value and 15.15% in quantity. “Exports of towels went down by 19.03% in value and 23.51% in quantity, exports of garments slid by 5.20% in value and 12.57% in quantity.” The only item showing positive increase was the knitting sector with 28.53% increase but a 7.41% decrease in value, said Tauseef. The decline in textile exports occurred despite the European Union granting Pakistan the GSP Plus status. In Faisalabad, there are approximately 2,000 weaving industries comprising of 250,000 power looms. Most of them are cottage industry and lack resources to run factories on generators, said Waheed Khaliq, a weaving industry player. Roughly, 20% of units in the city have shutdown, causing massive layoffs, he claimed. “We have to run our factories on heavy generators and steam from coal or wood which is expensive than the steam received by gas,” said Arif Tausif, a former chairman of Pakistan Textile Exporters Association. Faisalabad Chamber of Commerce and Industry President Rizwan Ashraf said that the government should expedite the process of importing LNG so that it could be supplied to the value-added textile sector.
SOURCE: The Tribune
