Exporters’ body FIEO on Saturday suggested a host of steps such as bringing double tax deduction scheme and setting up of a export development fund to the finance ministry with a view to boosting outbound shipments.
The other recommendations include extending tax deduction on product development, providing deemed export status to Indian industry under the global bidding of procurement, ECGC coverage to the Banks for export finance, and higher budget allocation to the Department of Commerce.
Federation of Indian Export Organisations (FIEO) President Sharad Kumar Saraf suggested these steps during the pre-Budget consultation meeting with Finance Minister Nirmala Sitharaman. He recommended introducing a “Double Tax Deduction Scheme” which can allow exporters to deduct against their taxable income.
“A ceiling of USD 5,00,000 may be put under the scheme so that the investment and tax deduction are limited,” he said in a statement. He added that the marketing support under the Market Access Initiative of the Ministry of Commerce is “very” small and there is a need to create an Export Development Fund with a corpus of 0.5 per cent of the country’s exports for helping the MSME.
He also said that Indian companies winning contracts under global tender may be accorded deemed exports status, since they substitute direct import which would have taken place if the contract had been won by a foreign supplier.
“Deemed export status would enhance the competitiveness of Indian industry vis-?-vis foreign suppliers as the former would enjoy certain tax-related benefits,” Saraf said.
The government may consider introducing a scheme in line with Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 to resolve all disputes relating to customs and DGFT (Directorate General of Foreign Trade).
“There are a large number of cases of exporters pending settlement with customs and DGFT…”The waiver of interest and penalty and may be the duty liability will help the industries which are passing through a rough patch due to lack of demand both domestically and globally,” he said.
Source: The Financial Express
Textiles ministry is bringing to form a structure under which the production linked incentive (PLI) scheme for technical textiles and manmade fibre (MMF) segment will be rolled out, union minister Smriti Irani said at an ASSOCHAM Foundation week Programme on Friday.
“We are currently on the anvil of also bringing to the fore the new Indian textile policy, the last time India had a textile policy was two decades ago,” said Irani, minister for textiles and women and child development while virtually addressing first session on Day 5 of ASSOCHAM Foundation Week 2020: “India’s resilience: Aatmanirbhar roadmap towards a US$5 trillion economy,”
Highlighting the impact of agricultural reforms on Indian industry, Irani said, “The union government in a determined effort has ensured that the MSP operations undergo with the help of technology and those who participate in the MSP operation receive direct benefit transfer of their funds into their bank accounts.”
Sharing her perspective on the session theme - ‘Future lies in the past - Leveraging India’s embedded knowledge to pivot the country’s growth story,’ she informed, “In 2013-14, in the cotton segment, the MSP operations were merely worth Rs 90 crore while last year the MSP operations in the cotton segment alone breached a value in total of Rs 28,500 crore. This season, I am proud to announce that in the cotton segment MSP operations worth Rs 14,659 crore have already been undertaken and 9.63 lakh farmers producing cotton in the country have directly received into their bank accounts an amount of Rs 11,799 crore, this is done in only two months.”
Source: The Times of India
The domestic markets are likely to witness profit-booking at record levels ahead of Christmas. However, in the absence of major domestic triggers, the equity market would turn its focus on global events mainly US financial stimulus update and development related to COVID-19 vaccination in the holiday-shortened week ahead and Brexit, analysts said.
Head of Research at Geojit Financial Services Vinod Nair said, this week, the market will be maintaining its focus on global events, as a decision on the US stimulus package and Brexit deal can be expected.
Adding to that, Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said, "Going ahead, the markets may continue with its positive bias on the back of abundant liquidity, effective vaccine rollout and increasing prospects of a US financial stimulus.
However, intermittent profit-booking cannot be ruled out as the Christmas vacation starts this week. Markets could also be volatile given monthly futures and options (F&O) expiry, he added.
The investment pattern of foreign portfolio investors (FPIs), a major driver of Indian equity markets, will also be tracked by investors.
On Saturday, Kotak Mahindra Asset Managemet MD Nilesh Shah tweeted, markets are seeing an unexpected rise as flows (Retail & FPIs), fundamentals (Sept Results, Advance tax nos) and sentiments (low returns in debt, hope on budget) have come together.
Sumeet Bagadia, Executive Director, Choice Broking said, "Investors will continue to monitor development related to COVID-19 vaccination, stimulus update and Brexit trade deal."
"Currently, indices seem to be in the hands of all-charged bulls and the mighty bear seem to have given up. However, one cannot rule out mild profit-booking on the way up," said Nirali Shah, Senior Research Analyst, Samco Securities.
Over the past week, the BSE benchmark gained 861.68 points or 1.86 per cent.
Financial markets will remain closed on Friday for Christmas
Union minister Anurag Thakur on Saturday said that the economy hit by the COVID -19 outbreak has started coming back on track since the July-September quarter of this fiscal. In the midst of the coronavirus outbreak, the Narendra Modi government took a slew of measures to revive business following which the economy started returning back on the track since the second quarter of this financial year, the Minister of State for Finance and Corporate Affairs told reporters here.
He was speaking on the sidelines of a national event of company secretaries.
The minister said that the Good and Services Tax (GST) collection was more than Rs 1 lakh crore in October and November as well.
He parried a reply on whether the economy would come out of the slowdown in the third quarter (October-December).
The world believes that India has taken up the right steps to tackle the crisis sparked by the pandemic.
The world agencies have predicted that the Indian economy in the next fiscal would grow to 8.5 per cent. This growth would be the best among the developing economies, he added.
Thakur said that a new parliament building which will come up in Delhi would prove to be the emblem of Independent India history, adding it is going to have modern facilities for public representatives to do work with ease.
Source: The Economic Times
Economic affairs secretary Tarun Bajaj on Friday said he expects the Indian economy to be back on track soon with signs of sustained improvement and in FY22 the size of the economy may bounce back to cross the FY20 level by a slight margin.
Speaking at the Partnership Summit organized by industry lobby Confederation of Indian Industry, Bajaj said he sees certain improvement in economic activity and hoping the Indian economy to post small positive growth in the December growth. “From May, when Covid had hit us, to December seems like a long journey. In May we didn't know where we were heading. The revenues were absolutely down. We didn't know how the virus will hit the country with population of 1.3 billion people. For third and fourth quarter, I would not like to quote anybody else but my own central bank. They have recently come out with the projection of slight positive growth both in the third and fourth quarter. I am sure from the parameters that we are monitoring that it should actually be positive," he said.
The pace of contraction in the Indian economy slowed in September quarter to 7.5% from a historic high of 23.9% contraction in June quarter. The Reserve Bank of India expects the economy to post 0.1% growth in December quarter and 0.7% in March quarter to end FY21 with 7.5% contraction.
Bajaj said revenue collections of the government has substantially improved in recent months. “We will know the GST numbers soon. In the last two months, they have been more than ₹1 trillion which is encouraging. We are expecting that for the month of December we would have similar figures. Similarly, the advance taxes on 15 December has also been better than what we had anticipated and now the shortfall of total revenue that we have had actually lessened compared to 15 September when the second advance taxes had come," he added.
SOURCE: The Mint
In Tamil Nadu, many spinning mills have stopped supplying cotton yarn and are not taking up fresh orders. This is creating challenges for the apparel exporters.
Apparel exporters of this leading apparel cluster feel the current decision of mills would certainly impact the garment units, affect exports and incur job losses for greater number of workers.
Raja. M. Shanmugham, President of the Association, has appealed to various textile mill associations, SIMA, TASMA and ITF, to advise their members to supply the yarn continuously so as to protect the Tirupur apparel industry.
“Due to non-commitment of delivery schedule, the foreign buyers will not only cancel the orders, but will also not be ready to place future orders with our exporting units and also noted his concern that if the buyers leave our country, it is very difficult to bring them back at a time when we are in a disadvantageous position in the competitiveness front, thanks to absence of a level playing field,” he said.
SOURCE: Apparel Online
An acute shortage of containers and a sharp spike in freight rates are expected to ease a bit, with the government moving to resolve three key issues cited by exporters, importers and shipping lines for the hurdles that have roiled trade.
On December 17, the Central Board of Indirect Taxes and Customs (CBIC) issued guidelines to smoothen the process of faceless assessment of cargo, including carrying out re-assessment of goods/bill of entry to avoid delays. The export-import (EXIM) trade and container lines had complained that the faceless assessment took as many as seven days, aggravating the shortage of containers for exports.
To speed up the assessment process, the CBIC has raised the monetary limit of assessment of bills of entry only by the appraising officers to ₹5 lakh from the existing ₹1 lakh. This will take effect from Monday.
On December 17, the Directorate General of Shipping lifted the 14-day mandatory quarantine period stipulated for ships arriving from ports of Covid-19 infected countries after maritime trade complained that this was delaying the berthing of vessels with a cascading effect on the container logistics chain. The quarantine had resulted in a wait of up to four days before berthing at ports. This not only delayed the discharge and destuffing of import loads but also the availability of containers for export shipments.
On a continuous basis, this delayed the whole cycle of several sailings and eventually resulted in a reduction in the number of sailings over a period. The removal of the 14-day restriction will lead to quicker turnaround of ships and enable extra trips in a month.
“Vessel slot is a weak area where you cannot do anything immediately,” said TS Ahluwalia, President, Northern India Shippers Association. Sea freight has soared by 100 per cent on an average, he said.
Railway move
On December 16, the Railways decided to waive haulage charges for moving empty containers and flat wagons till December 31, to ease the container shortage and check high logistics costs.
Some exporters say the cost-free movement of empty boxes may not fetch substantial gains as lines prefer to send empties to China and other places.
“From there (China, etc) they will be stuffed with cargo and moved to the US, for which they will get more than $6,000 per container,” an exporter said.
Ahluwalia said the cost savings arising from the haulage waiver should be passed on to the exporters. The container lines should not levy any charges from the exporters on this, he added.
Second, when empty containers are moved free of cost to inland container depots in the hinterland, priority for stuffing them should be given to readily available cargo and railed out to ports within the least possible time, instead of waiting for days for the cargo of companies with which the line has a commitment, he observed.
Source: The Hindu Business Line
India Inc increasingly opting for ECBs amid higher liquidity and lower rates
Lured by higher liquidity and lower rates, and with the RBI relaxing the norms, Indian corporates have increasingly turned to overseas borrowings.
Reliance Industries Ltd (RIL) and its arms been at the forefront in raising external commercial borrowings (ECBs) over the past few years.
According to RBI data, the oils-to-telecom group collectively raised about $23.48 billion through ECBs between FY17 and September FY21.
Based on the RBI’s monthly USD-INR exchange rate at the end of the respective financial years, the total borrowing in rupee terms comes to about ₹1.65-lakh crore. Of the total borrowing by the group, the share of holding company RIL alone stood at $17.27 billion, followed by Reliance Jio Infocomm ($5.25 billion), Reliance Sibur ($669 million) and Reliance Utilities & Power ($300 million).
It may be noted that the RBI's monthly data on ECBs and foreign currency convertible bonds (FCCBs) include both fresh borrowings and refinancing of existing loans.
Also, while its data refer to the amount of overseas loans approved by it, a company may choose to draw the entire loan amount at one go or withdraw it in multiple tranches spread over the years.
Per RIL’s FY20 annual report, its standalone borrowings (in foreign currencies) surged 69 per cent to ₹1.55-lakh crore as of March 2020, from ₹91,328 crore during the same period in the previous year.
However, overseas borrowing is yet to take off in the current fiscal due to anaemic credit demand and the absence of major expansion plans by top corporates due to Covid-led business uncertainty. As of October 2020, Indian corporates had collectively raised $14.52 billion, about half the $28.58 billion raised in the previous-year period.
Source: The Hindu Business Line
Ahead of the Christmas and New Year celebrations, Maharashtra chief minister Uddhav Thackeray cautioned that coronavirus was still prevalent and it would be mandatory for all to wear masks at least for six more months, even if vaccines arrive. He urged people to take care during Christmas, but ruled out a lockdown and night curfew.
Thackeray, addressing the state through social media, said that people responded to his appeal and have followed guidelines, which resulted in controlling of Covid-19 cases.
He said wearing of a mask in public places would be mandatory at least for six months. The chief minister stated that alth ough almost every activity has resumed the virus was still around. “As head of the family, I appeal to everyone to be careful ,” he said.
He mentioned that a strict lockdown had been imposed in United Kingdom and Europe from Sunday as a new strand of the virus was spreading speedily, which could have a more devastating effect. “I have received suggestions from experts on imposing a lockdown again or night curfew ahead of New Year. Though we can impose lockdown or restrictions, I don’t think it is necessary, as we have learned a lot during the pandemic,” he said.
Source: The Times of India
Several importers are going to court to challenge notices issued to them by the Directorate of Revenue Intelligence seeking customs duty payments on goods imported under the advance authorisation scheme or export-oriented units scheme since 2017, lawyers and tax experts said.
The tax notices have been issued under Rule 96 (10) of the Central Goods and Service Tax (CGST) Act introduced in 2017. The rule initially allowed for refund of integrated tax if the supplies of goods or services meant for exports have been cleared on payment of the tax. However, amendments made to the Act in 2018 disallowed refund of Integrated Goods and Services Tax (IGST) paid on exports if advance authorisation license holders avail input tax credit.
“The provisions of rule 96(10) are still subject to judicial review as Gujarat High Court will decide the review petition while other courts will test the constitutionality in the new set of petitions filed recently,” said Abhishek Rastogi, partner at Khaitan & Co, who challenged one of the orders in the Bombay High Court last week.
About a dozen such cases have been filed in High Courts of Delhi, Punjab and Haryana and Gujarat, and more are expected to take legal recourse, lawyers said. “This particular provision has been amended and re-amended numerous times,” said Rajat Mohan, senior partner at AMRG Associates. “Many exporters are expected to…file similar petitions in other high courts seeking relief from DRI notices.”
A senior official said the department was sure to defend its stand since as many as 2,000 notices have been issued. “This is a critical issue, department will continue to go after those fraudulently availing benefits through illegal routes,” he said, asking not to be named.
ET had reported last month that DRI had asked various importers to pay up customs duty on goods imported under advance authorisation or export oriented units (EOU) scheme since 2017. It had sought the payments retrospectively after it found that many have taken double benefit of exemption of IGST and refunds on goods exported.
Source: The Economic Times
China will maintain policy support for its economic recovery, avoiding a sudden shift in policy, to help keep economic growth within a reasonable range in 2021, the Xinhua news agency said on Friday, after a meeting of top leaders ended.
The annual Central Economic Work Conference, a gathering of top leaders and policymakers to chart the economy’s course in 2021, is being watched by investors amid speculation that Beijing would make policy changes amid accelerating growth, following a virus-induced slump earlier this year.
China will maintain its proactive fiscal policy and make monetary policy flexible and targeted, Xinhua said, citing a statement issued after the closed-door meeting, which was held from Dec. 16 to 18.
“Next year, we should maintain continuity, stability and sustainability of macro policies. We should continue to implement a proactive fiscal policy and a prudent monetary policy, and maintain the necessary support for the economic recovery,” Xinhua said. “Policy operations should be more accurate and effective, and there should be no sudden turn.”
The central bank has rolled out a raft of measures since February to support the virus-jolted economy, but analysts say it has shifted to a steadier stance as the economy recovers.
Beijing has been relying heavily on fiscal stimulus to weather the downturn, cutting taxes and allowing local governments to issue more bonds to fund infrastructure projects.
Fiscal policy should become more efficient and sustainable next year, support China’s major strategic projects and tech innovation, and speed up economic restructuring, Xinhua said.
Top leaders also pledged to maintain supply-side reforms while paying attention to demand-side management under the country’s “dual circulation” strategy, according to Xinhua.
China has unveiled a “dual circulation” strategy for the next phase of economic development in which it will rely mainly on “domestic circulation” - the internal cycle of production, distribution, and consumption, supported by innovation and upgrades in the economy.
China’s move to step up its anti-trust efforts will help promote higher quality development, Xinhua said.
While reiterating China will stick to its principle of “homes are for living in, not for speculation”, top leaders pledged to focus on the development of rental housing markets to help solve housing problem in big cities, Xinhua said.
China will explore ways to increase land supply for rental housing and make appropriate adjustment to rentals, according to Xinhua.
China’s economic growth looks to be accelerating in the fourth quarter from 4.9% in the third, driven by stronger demand, credit growth and stimulus measures expected to provide a strong tailwind into 2021.
China’s economy is expected to grow 2.1% this year, the only major economy to expand - although at its slowest since 1976 - then surge by 8.4% in 2021, a Reuters poll showed.
The coming year will be the start of the 14th five-year plan, which is vital for China to bypass the “middle income trap”. It will also be the 100th anniversary of the founding of the Chinese Communist Party.
Source: Reuters India
Japan’s apparel import values have plunged by 16.80 per cent in Jan.-Oct. ’20 period, according to the latest data.
The country imported 2,151.41 billion yen (US $ 20.81 billion) worth of apparels in the period as against 2,585.74 billion yen (US $ 25 billion) in the same period of 2019.
Particularly in October ’20, Japan fell both on Y-o-Y basis and M-o-M basis by 20 per cent and 11 per cent.
Japan’s import valued 238.74 billion yen (US $ 2.31 billion) in October ’20 as compared to 266.25 billion yen (US $ 2.53 billion) in September ’20 and 298.60 billion yen (US $ 2.89 billion) in October ’19.
In terms of weight, Japanese apparel import declined by 8 per cent in October ’20 over September ’20 and 15.94 per cent as compared to October ’19.
The fall in October is not a good sign after picking up in September. This fluctuation in the Japanese import pattern has been prevailing since the markets opened in mid-May, which is one of the causes to derail the expectations of the exporters shipping garments to this country.
As far as unit prices are concerned in the cumulative period in 2020, there has been a sharp decline of 5.31 per cent on Y-o-Y basis. The unit prices of imported garments reduced to 443 yen (US $ 4.28) per kg in Jan.-Oct. ’20 from 467.87 yen (US $ 4.52) per kg in the same period of 2019.
SOURCE: Apparel Online
