The Gujarat High Court has cleared the air on rebate denial for exporters under the Advance Authorisation (AA) scheme.
In a recent ruling, a Division Bench of the High Court said rebate denial to AA holders operates prospectively with effect from October 23, 2017. Exporters who have already claimed refund during the intervening period (October 23, 2017 to date of amendment in the rule, September 4, 2018), will not be required to pay back IGST (Integrated Goods & Services Tax) along with interest and avail Input Tax Credit (ITC), it said.
An AA is issued to allow duty-free import of inputs, which are physically incorporated in export products (making normal allowance for wastage). In addition, fuel, oil, energy, and catalysts which are consumed or utilised to produce export products may be allowed.
The petitioner in the matter, Cosmo Films, holds such an AA licence. With the help of this, it imported goods without payment of import duty in line with various notifications under GST laws issued by Central and State governments. The provisions with respect to export goods or services are contained under the IGST Act, 2017. Section 16 of this Act deals with export of goods and services and provides benefits which can be claimed either for supply without payment of IGST and claim refund of unutilised ITC at the end of the period (refund), or supply on payment of IGST and claim refund of such IGST paid (rebate).
For the purpose of procedure for granting refund of IGST on exported goods and services, there is a mechanism provided under Rule 96 of the GST law. There is sub rule (10) of Rule 96 which provides for the exemption for AA licence holders importing goods from levy of custom duties and IGST.
The petitioner was entitled to import raw materials without payment of IGST under AA licences and pay IGST on exports and claim rebate (refund) of the IGST so paid on exports. The petitioner has received the benefits of rebate of IGST at the relevant point of time. Thereafter, sub-rule (10) was amended by a notification dated September 4, 2018 with retrospective effect from October 23, 2017, providing that rebate on exports cannot be availed by the petitioner if the inputs procured by the petitioner have enjoyed AA benefits or deemed export benefits under the said notification.
According to Abhishek Rastogi, lawyer for the petitioner, the amendment put Cosmo Films at a disadvantageous position as compared to regular exporters who are exporting goods without payment of IGST on the output side and at the same time claiming refund of input taxes, thereby effectively incurring no tax cost.
After hearing the arguments, the court took note of a February 2020 notification and explained that claiming refund is not restricted to the exporters who only avail basic custom duty exemption and pay IGST on the raw material. It can also be used by exporters who supply goods/services without payment of IGST and claim refund of unutilised input tax credit, it added.
“The amendment is made retrospectively, thereby avoiding the anomaly during the intervention period and exporters who already claimed refund under second option need to pay back IGST along with interest and avail ITC,” it said.
Source: The Hindu Business Line
According to the Department for Promotion of Industry and Internal Trade (DPIIT), the new circular has come into effect from October 15.
The Commerce and Industry Ministry on Wednesday released the next edition of its consolidated foreign direct investment (FDI) policy document, incorporating all the changes made over the past year.
According to the Department for Promotion of Industry and Internal Trade (DPIIT), the new circular has come into effect from October 15. the consolidated policy is a compilation of various decisions taken by the government with regard to FDI in different sectors.
DPIIT, which deals with FDI related matters, compiles all policies related to foreign investment regime into a single document to make it simple and easy for investors to understand. Investors would otherwise have to go through various press notes issued by the department, and the RBI regulations to understand the policy.
The whole exercise is aimed at providing an investor-friendly climate to foreign players and, in turn, attract more FDI to boost economic growth and create jobs. The government has liberalised FDI policy in several sectors, including coal mining, digital news, contract manufacturing and single-brand retail trading. Foreign direct investment (FDI) in India has increased by 16 per cent year-on-year to USD 27.1 billion during April-August this year.
SOURCE: The Financial Express
Finance Minister Nirmala Sitharaman expects the Indian economy to be among the fastest-growing the next year. Speaking at the India Energy Forum by CERAWeek on Tuesday, Sitharaman said economic growth may be zero or even in the negative this year because of the Covid-19 lockdowns.
“There was a very firm lockdown because we put our lives before livelihood. We wanted to ensure that preparatory work for tending to the pandemic should be done in the first quarter. As a result, there was a contraction which happened during the first quarter and post which the unlocking has been steadily happening. We can see the revival now, particularly in the Purchasing Managers’ Index (PMI), which shows a spurt in the number, the highest after 2012,” she said adding that it is going to be steady and sustainable.
“If this happens within the third and fourth quarter, we expect that the overall GDP growth, notwithstanding the pandemic, should be somewhere in the range predicted by the International Monetary Fund (IMF),” she said.
In its latest World Economic Outlook, the IMF further cut growth forecast by projecting contraction at 10.3 per cent for FY21. This is the second downgrade for India by the IMF after it reversed its forecast of 1.9 per cent growth in April to a 4.5 per cent contraction in June for 2020-21.
“Even if it is going to be in the negative or near zero this time, the next year will very clearly have India as one of the fastest growing economies. We are looking at that kind of a trajectory. Indicators show that primary sector, related sectors of agriculture, rural India are doing well.
On the steps for investments in the energy sector, Sitharaman said, “We are investing in strategic reserves, not just domestic, but also in (oil and gas) fields outside of India. We will be part of the global value chain in such a way that we are able to play a part in the (crude oil and natural gas) price determination… .”
“We have encouraged all the provinces to ensure energy efficiency, adoption of LED in households, distribution of Liquefied Petroleum Gas for cooking, which will reach every household before 2023. And making sure that every village gets electrified so that no fossil fuel is going to be used,” she added.
Sitharaman said the Centre is offering incentives to the States so that the distribution networks are far more efficient, there are no pilferages and no transmission losses. She said old-fashioned thermal units will be shut down and efficient gasification will drive the country’s energy requirements.
Source: The Hindu Business Line
INTERNATIONAL
Finance Minister Nirmala Sitharaman today said that India-UK economic ties are important, as together they are two of the world’s top seven economies with a combined GDP of over $5 trillion. Speaking at the10th India-UK Economic and Financial Dialogue, Nirmala Sitharaman added that financial technology is a key engagement area for cooperation as a sunshine sector where India is number 4 in terms of potential. FM Sitharaman further said that India-UK trade has more than doubled since the first EFD in 2007, with bilateral investment supporting over half a million jobs across both countries.
The minister apprised that India and the UK have a joint investment of up to £8 million between the Department of Biotechnology for research into factors leading to the severity of the coronavirus. In the same discussion, Rishi Sunak, UK’s Chancellor of Exchequer, appreciated India for becoming the second largest PPE manufacturer in the world.
FM Sitharaman further said that the UK-India Capital Markets Working Group has helped in attracting inflows into India’s capital market, which will help the economy. She added that India-UK strategic collaboration has helped to accelerate the development of GIFT City with Standard Chartered and HSBC opening offices in GIFT city, becoming the first foreign banks to be licensed to operate an international banking unit.
The minister remained hopeful that the UK-India Fast-Track Start-Up Fund backed by SIDBI and the UK Government will fund early-stage tech start-ups with technical assistance focused on capacity building, policy advocacy, and deepening entrepreneurial connects with the UK. She underlined that she is looking forward to the start of the Annual India-UK Financial Markets Dialogue next year.
Meanwhile, Economic Enhanced Trade Partnership (ETP) was declared at the 14th Joint Economic and Trade Committee (JETCO) in July 2020. FM Sitharaman highlighted that UK Research and Innovation (UKRI) and the Indian Council of Social Science Research have committed up to £2.6 million for four joint research projects on the future of UK-India trade and investment.
Source: The Financial Express
The commerce ministry of Bangladesh has sought necessary steps from the finance ministry to extend the existing loan repayment tenure to six years with one-year grace period.
The country's apparel owners took out the loan from the government's stimulus package for payment of wages and allowances to their workers.
As per the demand of local RMG makers, the recommendation was made at an inter-ministerial meeting held on October 5with the commerce secretary in the chair, officials said. Representatives from different ministries and trade bodies were present in the meeting.
The meeting has decided to extend the loan repayment period to six years from the existing two years. It has also decided to send the recommendation to the finance ministry for the execution of the tenure.
Earlier, the Bangladesh Bank set the loan repayment period to two years with a six-month grace period at 2.0 per cent service charge. The RMG sector received over Tk 105 billion to pay April to July wages and allowances from the government as soft loan.
The government provided the loan to the apparel makers following their demand to help sustain the competitiveness of the industry hit hard by a coronavirus, a source said. RMG export earnings year-on-year declined by 20.14 per cent to $2.25 billion in March'20, 85.25 per cent to $374.67 million in April, and 62.06 per cent to $1.23 billion in May, according to the official data.
Export earnings have started regaining since June when RMG shipments reached $2.24 billion. In July, the country fetched a record $3.24 billion from apparel exports and in August last RMG exports recorded positive growth of 2.58 per cent to $2.46 billion year-on-year. "We have received a letter from the commerce ministry, seeking the extension of the existing loan repayment tenure," an official told the FE on Friday.
Source: The Financial Express Bangladesh
The central bank has slashed interest rates on loans under the Export Development Fund (EDF) to help exporters weather the pandemic-related disruptions.
The revised rates will allow exporters to borrow from the low-cost fund at a rate of 1.75 per cent instead of the previous 2.0 per cent. Such an interest rate on loans under the EDF will continue until March 31, 2021, according to a notification, issued by the Bangladesh Bank (BB) on Wednesday.
Authorised dealer (AD) banks will also get similar benefits with access to such loans from the central bank at 0.75 per cent interest rate, down from 1.0 per cent. On April 07, the BB cut interest rates on the EDF loans on the same ground.
The BB's latest move came against the backdrop of slower export earnings growth in recent months mainly due to the ongoing Covid-19 pandemic. Bangladesh's export earnings grew by 2.97 per cent to $9.70 billion during the July-September period of the fiscal year (FY), 2020-21, from $9.42 billion in the same period of FY '20.
"We've slashed the interest rates on EDF loans further, aiming to help boost the country's export earnings amid the pandemic," a BB senior official told the FE.
The central bank has also considered a lower London Inter-bank Offered Rate (LIBOR) that was linked to the low-cost fund earlier for re-fixing the interest rate, he noted. In a month, LIBOR came down to 0.15 per cent this week from 1.79 per cent a year ago, according to the international media reports.
The central bank has enhanced allocations for the EDF to $5.0 billion from $3.50 billion in line with the government's efforts to minimise the economic impacts of the coronavirus crisis. Exporters welcomed the BB's latest move, saying that it will help increase export earnings in the coming months defying the challenges posed by the Covid-19 pandemic.
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), said it will help encourage exporters to strengthen their efforts to boost the overall export income despite the pandemic.
Mr Khokon, also managing director of Maksons Spinning Mills Limited, said such low-cost fund is helpful for the country's export sector's survival.
Talking to the FE, Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said it is a timely and positive decision of the central bank, which will help improve the competitiveness of the exporters in the global market.
"Interest expenditure of the exports will be reduced slightly after slashing the interest rate on the EDF loans by the BB further," a senior executive of a leading private commercial bank told the FE. Under the existing provisions, the EDF financing is allowed for input procurements against back-to-back import letters of credit (LCs) or inland back-to-back LCs in foreign exchange by manufactures producing final output for direct exports and also by producers of local deliveries to manufacturers of the final export.
The EDF loans are payable by the banks upon receipt of exports proceeds within 180 days from the date of disbursement, extendable by the BB up to 270 days in case of a longer period for the repatriation of export income.
Source: Financial Express Bangladesh
The third annual Indo-Pacific Business Forum (IPBF 2020) opened on Wednesday's morning October 28 in Hanoi to advance a vision for the Indo-Pacific as a free and open region composed of nations that are independent, strong, and prosperous.
Following the direction of the Vietnam Deputy Prime Minister, Minister of Foreign Affairs Pham Binh Minh, the Vietnam Chamber of Commerce and Industry (VCCI) presided over and in partnership with the Ministry of Foreign Affairs, the Ministry of Industry and Trade, other governmental agencies and the United States Government, the U.S. Chamber of Commerce, the U.S.-ASEAN Business Council are holding IPBF 2020 from October 28-29.
This year, due to the Covid-19 spread leading to travel restrictions, many delegations and participants attending from the United States have to join the virtual conference room in Hanoi.
Addressing the opening speech of IPBF 2020, Vietnam Chamber of Commerce and Industry (VCCI) President Vu Tien Loc said that the forum was an opportunity to strengthen cooperation towards a closer and deeper direction for post-pandemic economic recovery.
The U.S. Chamber of Commerce 's Executive Vice President and Head of International Affairs Myron Brilliant affirmed that regardless of the US presidential election results, Washington's commitment to the Indo-Pacific and especially ASEAN region would not change.
Brilliant welcomed the rise of China's economy, but called for Beijing's commitment to comply with international law and increase transparency towards a secure and prosperous Indo-Pacific for all parts.
At the Forum's opening, Deputy Prime Minister Pham Binh Minh said that IPBF 2020 was welcomed at the right time, providing a valuable opportunity for the parties to fully and thoroughly discuss the issues and challenges during the last time.
The lesson was learnt from the Covid-19 pandemic that no single country could be safe from the pandemic, and it was more necessary than ever for such cooperation as the IPBF 2020 bringing, Deputy Prime Minister Pham Binh Minh emphasized, at the same time, said that Vietnam played an important role in the picture of the regional economy and security.
Speaking online, US Secretary of State Mike Pompeo highly appreciated Vietnam in the role of ASEAN chair, which has steered ASEAN through difficult times this year, and especially remainedly hosted the IPBF 2020 in this context. He wishes the forum reap real successes.
Source: The Vietnam Times
Vietnam's total textile-garment export value in the first nine months of this year dropped 10.3 percent year on year to US$22.06 billion.
Vietnam's total textile-garment export value in the first nine months of this year dropped 10.3 percent year on year to US$22.06 billion, the General Statistics Office unveiled.
Its largest export markets included China, Japan, the Republic of Korea, the European Union, and the United States. In September alone, the country's textile-garment exports fell 1.3 percent year on year to US$2.8 billion.
Textile-garment is among the hardest hit sectors by the COVID-19 pandemic, along with tourism, aviation, leather, and footwear, according to a recent report by Bao Dau Tu (Vietnam Investment Review) newspaper.
At this point of time in previous years, textile-garment businesses would have received orders for the rest of the year. However, due to the decreasing demand amid the coronavirus pandemic, they were receiving orders only on a monthly or weekly basis, the report said.
There have so far been almost no export orders for high-value products like high-end shirts and suits for the fourth quarter, according to the report.
As one of the world's biggest textile-garment exporters and producers, Vietnam recorded an export turnover of roughly US$32.6 billion in 2019, up 6.9 percent from 2018, according to the statistics office.
The Vietnam Textile and Garment Group (Vinatex) forecasts the country’s textile and garment exports will continue to decline during the closing months of this year.
The group also said the total textile and garment export value for this whole year is estimated to hit about US$32.75 billion, a year-on-year decrease of 16 percent.
According to the Vietnam Textile and Apparel Association (VITAS), the second quarter was the most difficult quarter for the textile and garment industry because customers in major export markets such as the US and EU cancelled 30-70 percent of orders because the markets were closed due to the COVID-19 pandemic.
Strong reductions in orders have caused higher inventories and increased pressure to pay workers, bringing more and more difficulties to textile and garment companies.
Meanwhile, face masks and personal protective equipment, which are considered major products for many garment enterprises, have sharply decreased due to global oversupply.
The Ministry of Industry and Trade said nobody knows when the pandemic will end so by this year-end, textile and garment enterprises need to pay attention to demand on the domestic market due to lower export orders. At the same time, they should manage production costs and maintain product quality to minimise the decline in revenue.
In addition, the businesses need to provide jobs and income for workers who have accompanied the enterprises during a difficult period.
At present, 80 percent of enterprises in the textile and garment industry have cut their labour force while most businesses have slashed operation capacity by 50 percent, the association said.
The ministry forecasts Vietnam’s textile and garment export value this year would fall by 10-15 percent to US$33.6-36 billion compared to last year. This value is higher than the Vinatex forecast, Viet Nam News said.
Source: The Vietnam Times
UNCTAD's latest Global Investment Trends Monitor released on Tuesday said that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.
Global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019 due to the economic fallout from COVID-19, new trade data from the UN said.
UNCTAD’s latest Global Investment Trends Monitor released on Tuesday said that in the wake of the pandemic, lockdowns around the world slowed existing investment projects and the prospects of a deep recession led multinational enterprises to reassess new projects.
“The FDI decline is more drastic than we expected, particularly in developed economies. Developing economies weathered the storm relatively better for the first half of the year,” UNCTAD’s investment and enterprise director James Zhan said. “The outlook remains highly uncertain.”
According to the report, developed economies saw the biggest fall, with FDI reaching an estimated USD 98 billion in the six-month period, declining 75 per cent as compared to 2019.
The trend was exacerbated by sharply negative inflows in European economies, mainly in the Netherlands and Switzerland. FDI flows to North America fell by 56 per cent to USD 68 billion.
Meanwhile, the 16 per cent decrease in FDI flows to developing economies was less than expected, due mainly to investment in China. Flows decreased by just 12 per cent in Asia but were 28 per cent lower than in 2019 in Africa and 25 per cent lower in Latin America and the Caribbean.
In the six months to June 2020, developing countries in Asia accounted for more than half of global FDI. Flows to economies in transition were down 81 per cent due to a strong decline in Russia. The decline cut across all major forms of FDI, the report shows.
The report added that cross-border M&A values reached USD 319 billion in the first three quarters of 2020. The 21 per cent decline in developed countries, which account for about 80 per cent of global transactions, was checked by the continuation of M&A activity in digital industries.
The value of greenfield investment project announcements, an indicator of future FDI trends, was USD 358 billion in the first eight months of 2020.
Developing economies saw a much bigger fall (-49%) than developed economies (-17%), reflecting their more limited capacity to roll out economic support packages.
