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With a share of 57% in Pakistan’s total exports and 8.5% in national economy, the giant textile industry is pressing the government to continue with its zero-rated tax facility and provide the incentives offered in the export package.
“The industry is going through a cash-flow crisis as it has already extended the incentives promised by the government in its export package to overseas buyers in order to ramp up exports,” textile tycoon Zubair Motiwala, who also heads some textile bodies, told The Express Tribune.
Textile manufacturers have been pushing the government to release the huge pending tax refund claims so that they could deal with liquidity challenges. Of the Rs180-billion prime minister’s incentive package for export industries, mainly the textile sector, the State Bank of Pakistan has processed Rs50 billion worth of claims, but the industry has received just Rs18 billion.
In fiscal year 2012-13, when the Pakistan Muslim League-Nawaz government came to power just before the close of the year, total export receipts of Pakistan were recorded at $25.078 billion.
However, exports dropped to $21.977 billion in 2015-16, registering a steep decline of 12.36%. Global exports also fell during the period but by just 1%.
The decline came despite the Generalised Scheme of Preferences (GSP) Plus status the European Union awarded to Pakistan in December 2013 that allowed exports at sharply reduced or zero duty.
The status certainly gave an advantage to the PML-N government as exporters enjoyed greater market access to the 28-nation European bloc.
In an attempt to give a boost to low textile exports and improve the country’s foreign currency reserves, then prime minister Nawaz Sharif announced trade enhancement incentives worth Rs180 billion.
In the budget for fiscal year 2017-18, the export refinance facility was maintained at 3%, export-oriented sectors continued to remain zero-rated and the duty-free regime for machinery imports stood unchanged. A 5% regulatory duty was, however, imposed on the import of polyester filament yarn.
Pak-Kuwait Investment Company AVP Research Adnan Sami Sheikh explained that domestic fibre manufacturers had opposed duty-free import of fibre, claiming the imported fibre was being dumped in the country.
The domestic industry welcomed the imposition of regulatory duty on fibre imports.
Now, the textile exporters expect more incentives in the upcoming budget for 2018-19 that could help boost their earnings.
Proposals
Ahead of the budget announcement, they have asked the government to reduce the cost of doing business by slashing power tariffs in order to enable the industry compete well with regional counterparts. They have sought tariff reduction from Rs11 per kilowatt-hour (kWh) to Rs7.
Industry players have also called for reintroducing the duty-drawback scheme and removing or at least curtailing the duty on the import of synthetic yarn and polyester staple fibre.
They are seeking the removal of Gas Infrastructure Development Cess (GIDC) as well which will reduce the cost of production and improve competitiveness.
Initially, there was no condition in the export package, announced in January 2017, for duty drawback for the first six months from January to June. However for the next fiscal year, the exporters must achieve 10% increase in exports in order to qualify for the incentives.
The target was somewhat achieved as from July to February FY18 exports rose to $8.85 billion compared to $8.18 billion in the same period of previous year. However, some analysts point out that the exporters may have falsely shown the growth in an attempt to get incentives.
According to Motiwala, exports went up after the incentives offered in the export package were extended to the buyers abroad. Lower prices of Pakistan’s products in the international market had been a main factor behind the rise in exports, he said.
However, an analysis indicates that the international textile industry is highly competitive and Pakistan’s major competitors – China, India, Vietnam and Bangladesh – will not let it penetrate their established markets.
These competitors are expected to respond to the price reduction by their Pakistani counterparts.
Cotton output shrinks
The textile sector has had a bad 2015 when cotton production fell 27.8% to 9 million bales – each of which weighs 176 kg. The output was significantly lower than the peak Pakistan hit in 2004 with production of 14.6 million bales.
Experts attributed the cotton shortage to the imported genetically modified seeds that were prone to pest attacks. However, the government rejected the notion, blaming the fall in production on changing weather, excessive rains and insect attacks.
An analyst pointed out that some farmers switched to sugarcane cultivation from cotton, but this year they struggled to sell sugarcane to the sugar mills, most of whom were not willing to offer the support price for sugarcane purchase.
Many of the farmers are expected to return to cotton sowing again and with that the demand-supply deficit will contract.
In the meantime, the textile industry has been pressing the government to remove tax from cotton import which is necessary in the wake of domestic production shortfall. According to experts, the textile manufacturers are also attracted by the long fibre of imported cotton compared to the cotton produced in Pakistan.
The industry is not satisfied with government’s efforts as it has failed to implement the plans.
“Exports didn’t get better due to government’s efforts, but it came because of depreciation of the rupee. This is not the right way to increase exports. It would have been an achievement had exports gone up with a stable rupee,” commented Motiwala.
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Bangladesh will overtake Pakistan in terms of per capita GDP in 2020, but there are risks to the country’s prospects that policymakers will need to factor in
Bangladesh has become one of Asia’s most remarkable and unexpected success stories in recent years. Once one of the poorest regions of Pakistan, Bangladesh remained an economic basket case—wracked by poverty and famine—for many years after independence in 1971. In fact, by 2006, conditions seemed so hopeless that when Bangladesh registered faster growth than Pakistan, it was dismissed as a fluke.
Yet that year would turn out to be an inflection point. Since then, Bangladesh’s annual gross domestic product (GDP) growth has exceeded Pakistan’s by roughly 2.5 percentage points per year. And this year, its growth rate is likely to surpass India’s (though this primarily reflects India’s economic slowdown, which should be reversed barring gross policy mismanagement).
Moreover, at 1.1% per year, Bangladesh’s population growth is well below Pakistan’s 2% rate, which means that its per capita income is growing faster than Pakistan’s by approximately 3.3 percentage points per year. By extrapolation, Bangladesh will overtake Pakistan in terms of per capita GDP in 2020, even with a correction for purchasing power parity.
To what does Bangladesh owe its quiet transformation? As with all large-scale historical phenomena, there can be no certain answers, only clues. Still, in my view, Bangladesh’s economic transformation was driven in large part by social changes, starting with the empowerment of women.
Bangladesh has made significant strides towards educating girls and giving women a greater voice, both in the household and the public sphere. These efforts have translated into improvements in children’s health and education, such that Bangladeshis’ average life expectancy is now 72 years, compared to 68 for Indians and 66 for Pakistanis.
The Bangladesh government also deserves credit for supporting grass-roots initiatives in economic inclusion. Among Bangladeshi adults with bank accounts, 34.1% made digital transactions in 2017, compared to an average rate of 27.8% for South Asia. Moreover, only 10.4% of Bangladeshi bank accounts are “dormant”, compared to 48% of Indian bank accounts.
Another partial explanation for Bangladesh’s progress is the success of its garment manufacturing industry. That is itself driven by a number of factors. One notable point is that the main garment firms in Bangladesh are large—especially compared to those in India, owing largely to different labour laws.
All labour markets need regulation. But, in India, the 1947 Industrial Disputes Act imposes heavy restrictions on firms’ ability to contract workers and expand their labour force, ultimately doing more harm than good. The law was enacted a few months before the August 1947 independence of India and Pakistan from British imperial rule, meaning that both new countries inherited it. But Pakistan’s military regime, impatient with trade unions from the region that would become Bangladesh, repealed it in 1958.
Thus, having been born without the law, Bangladesh offered a better environment for manufacturing firms to achieve economies of scale and create a large number of jobs. And though Bangladesh still needs much stronger regulation to protect workers from occupational hazards, the absence of a law that explicitly curtails labour-market flexibility has been a boon for job creation and manufacturing success.
The question is whether Bangladesh’s strong economic performance can be sustained. As matters stand, the country’s prospects are excellent, but there are risks that policymakers will need to take into account.
For starters, when a country’s economy takes off, corruption, cronyism, and inequality tend to increase, and can even stall the growth process if left unchecked. Bangladesh is no exception.
But there is an even deeper threat posed by orthodox groups and religious fundamentalists who oppose Bangladesh’s early investments in progressive social reforms. A reversal of those investments would cause a severe and prolonged economic setback.
In its early years, Pakistan’s economy performed moderately well, with per capita income well above India’s. And it was no coincidence that during this time, cities like Lahore were multicultural centres of art and literature. But then came military rule, restrictions on individual freedom, and Islamic fundamentalist groups erecting walls against openness. By 2005, India surpassed Pakistan in terms of per capita income, and it has since gained a substantial lead.
But this is not about any particular religion. India is a vibrant, secular democracy that was growing at a remarkable annual rate of over 8% until a few years ago. Today, Hindu fundamentalist groups that discriminate against minorities and women, and that are working to thwart scientific research and higher education, are threatening its gains. Likewise, Portugal’s heyday of global power in the 15th and 16th centuries passed quickly when Christian fanaticism became the empire’s driving political force.
As these examples demonstrate, Bangladesh needs to be vigilant about the risks posed by fundamentalism. Given Prime Minister Sheikh Hasina’s deep commitment to addressing these risks, there is reason to hope for success. In that case, Bangladesh will be on a path that would have been unimaginable just two decades ago: toward becoming an Asian success story.
A review of cotton crop situation for the current year 2017-2018 (till September 2018), carried out by ICF directors here suggested that the monsoon would be a major deciding factor for cotton prices during the period.
Cotton prices are likely to remain steady during June-October 2018 due to very tight financial situation prevailing in the spinning sector and comfortable availability of quality cotton, according to the Indian Cotton Federation here.
A review of cotton crop situation for the current year 2017-2018 (till September 2018), carried out by ICF directors here suggested that the monsoon would be a major deciding factor for cotton prices during the period.
There was total supply of 433 lakh bales as on October one last year, including opening stock of 40 lakh bales, production of 375 lakh bales and imports of 18 lakh bales, ICF president J Thulasidharan said in a release today.
With mill and non-mill consumption estimated at 320 lakh bales and export of 69 bales, the total demand was 389 lakh bales, leaving a closing stock of 44 lakh bales, he said.
France-based scenographer makes carpets made of e-waste and natural materials
Computer circuits weaved together with wires interspersed with carpets made of natural materials hung inside the conference hall of the French Institute of Pondicherry (IFP). Sophie Chandoutis, a scenographer from Lyon in France, who deftly prepared these installations made of e-waste collected in India, is now displaying her works at the ‘E-Waste Weaving Exhibition’ organised at the IFP in Puducherry.
Through her work, Ms.Chandoutis questions the technological obsolescence and the digital globalisation, bringing out the paradox of cultures.
During the inauguration of the exhibition, she said, “From th designing of software to the manufacture of our computers or mobile phones, Asia is the main exporter to Europe and the U.S. All the e-waste from Europe are dumped in India, China and Ghana. These countries are turning into computer cemeteries. This is one of the reasons why I chose to work in India, which is becoming a leader in software technology at the same time fiercely defending its local crafts and traditions.”
She added that she wanted to weave a link between digital culture and the memory of these ancestral crafts based on natural fibre. She used threads of silk, straw and copper to weave natural fibres and interspersed them with punch-cards of Jacquard and printed circuit boards of IBM.
“I began this work a year ago. I planned to weave electronic waste found in India. This journey brought me to Puducherry. I met several craftsmen and discovered almost all the workshops that used the Jacquard looms from Lyon,” she said.
IFP Director Fredric Landy stated that this artistic work was connected with the research work carried out at the institute. “We have programme on handicrafts which are part of heritage that needs to be protected. This exhibition is a reflection of the knowledge exchange that takes place between France and India,” he said.
The exhibition will be held till May 2.
According to data provided by the Confederation of Indian Textile Industry (Citi), of the total commodities exports from India, the textile and apparel exports share has come down by a percentage point to 12% in fiscal 2018 from 13% in the previous fiscal.
New taxation regime, intense competitive pressures in the global market and uncertainty in the neighbouring markets, particularly in the Gulf region, have cast a shadow in the exports of textile and apparel, which saw a marked decline of 4% to Rs 2,27,902 crore in the just ended fiscal 2018 as compared to Rs 2,38,168 crore reported in the previous fiscal.
According to data provided by the Confederation of Indian Textile Industry (Citi), of the total commodities exports from India, the textile and apparel exports share has come down by a percentage point to 12% in fiscal 2018 from 13% in the previous fiscal.
While the textile exports declined marginally by 1% to end the fiscal 2018 at Rs 1,20,223 crore as compared to Rs 1,21,709 crore, and that of apparel exports saw a sharp drop of 8% to Rs 1,07,679 crore as against Rs 1,16,459 crore in the fiscal 2017, the Citi data said. In March 2018 alone, the apparel exports was down 19% to Rs 9,695 crore Rs 11,946 crore in the corresponding period.
Similarly, exports of cotton yarn, fabs, made-ups, handloom products together declined marginally to Rs 65,969 crore as against Rs 66,160 crore in fiscal 2017. Made-made yarn, fabs, made-ups grew 2% to Rs 31,089 crore (Rs 30,559 crore earlier) and that of handicrafts (excluding handmade carpet) declined by 9% to Rs crore in fiscal 2018 as Rs 12,917 crore in the fiscal 2017, the Citi data said further.
In US dollar terms, the textile and apparel exports for fiscal 2018 almost saw a flat growth or 0.4% decline to $35.364 billion as compared to $35.514 billion in fiscal 2017. Here too, the textile exports grew 3% to $18.65 billion ($18.146 billion earlier) and that of apparel exports declined by 4% to $16.714 billion ($17.368 billion), the data said.
During the fiscal 2018, imports of textile yarn, fabric, made-ups grew 17% to Rs 11,838 crore (Rs 10,079 crore earlier) and in dollar terms imports grew 22% to $1.836 billion ($1.502 billion). Some of the reasons for decline in exports were owing to transition to the new taxation regime and intense competition from neighbouring countries such as Bangladesh, Taiwan, Indonesia as well lack of FTAs with major importers.
The decline has been primarily driven by the sharp fall in exports to the UAE market, which had emerged as one of the prominent apparel export destinations for India, with its share increasing to 23% in FY17 from 12% in FY14.
Particularly for the ten-month period ending June 2017, India’s apparel exports to UAE had grown at a sharp pace (56% year-on-year). Thereafter, apparel exports to the UAE have fallen at an equally fast pace, by as much as 45% since June 2017. Excluding the trade with the UAE, India’s apparel exports are estimated to have stood 3-4% higher in the ten months to FY18, the Icra analysis pointed out.
With an objective to develop skills in the youths to help them get gainful and sustainable employment in textile sector, the ministry of textiles launched ‘Samarth’ scheme for them in the organized and traditional textile clusters on Tuesday.
The scheme was launched following the approval of cabinet committee on economic affairs which recently met under the leadership of Prime Minister Narendra Modi.
Synthetic and Rayon Textile Export Promotion Council (SRTEPC) chairman Narain Agarwal said, “The Samarth scheme aims at skilling nearly 10 lakh young Indians in organized plus traditional textile sectors over a period of three years from 2017 to 2020.”
Agarwal stated that the Centre has earmarked an outlay of Rs 1,300 crore covering the entire textile value chain, except spinning and weaving. The objective of achieving $300 billion exports in the textile sector by 2025 will be realized once 10 lakh skilled youths will be employed in the textile sector.
The scheme will have National Skill Qualification Framework (NSQF) compliant training courses with funding norms as per the common norms notified by Ministry of Skill Development and Entrepreneurship (MSDE).
According to Agarwal, the textile committee as resource support agency (RSE) will perform various functions to identify and finalize skill development needs, standardize and develop the course content, specify the training centre’s infrastructure, standardize the admission assessment certification and accreditation processes, empanel assessment agencies, conduct training of trainers and training of assessors etc. The scheme also will ensure 70 per cent placement of successful trainees.
“The scheme will be using biometric processes in selection of candidates to be trained, thus mandating the necessity of having an ‘Aadhaar card’ and an attendance system that will be integrated with a centralized MIS to ensure real-time attendance of all involved,” Agarwal added.
In a bid to bridge the lag in actual revenue accrual, the finance ministry will from this fiscal shift to cash basis accounting for the Goods and Services Tax where monthly collections will be reported on the first working day of the following month.
So far, monthly tax returns under GST, which has amalgamated 17 central and state taxes into one, were allowed to be filed by the 20th of the following month and revenues collected were reported on 26th – almost a month-long lag between collections and their reporting. This had led to a situation wherein the government was able to collect tax revenue for only 11 months in the first year of GST rollout.
To overcome this, GST collections for the month of April will be reported on actual basis on May 1, officials said.
Technically, GST collections for March should have been reported this week. But to enable a switchover to the cash-basis accounting, only the Integrated-GST – which is levied on inter-state movement of goods as well as imports – will be shown in the March tax collection. This amount is about Rs 20,000 crore, an official said.
The March collection of Central GST and State GST would be reflected in April data which would be made public on May 1, he said.
So, the April numbers, which will be released on May 1, would be highly inflated as it would contain the collections made in April as well as CGST and SGST collections of March. From May onwards, the monthly collections of CGST, IGST and SGST would be reported on June 1.
“Moving to cash basis accounting and reporting the amount of tax received in a particular month immediately after the month end will reflect better accounting position for the GST collections,” the official told PTI.
The official said the finance ministry will in a day or two come out with the month-wise GST collection data for the entire 2017-18 fiscal and for the month of March it will only account for IGST revenues of about Rs 20,000 crore collected during the month.
Currently, summary returns GSTR-3B for a particular month is filed by the 20th day of the subsequent month.
“The April GST collections could see a spike over the previous months as along with IGST collections for the same month, and CGST and SGST collections for March, there would be some returns which would filed in the month well in time. The GST proceeds would stabilise from the second month onwards,” the official said.
Since the government had in 2017-18 Budget accounted for only eight months (July-February) revenue, shifting to cash basis accounting will be easier for computing government revenues.
As per official data, GST collection for February was Rs 85,174 crore, while the collection in January was Rs 86,318 crore. In December and November, GST collections were Rs 88,929 crore and Rs 83,716 crore respectively.
The State has achieved another distinction as number one in the country in terms of tax collection under the Goods and Services Tax regime.
The State had successfully brought down the revenue gap in GST collections to 2.4% by the end of the financial year 2018 from 27.8% witnessed during July 2017, the month when the GST regime was put in place.
Union Finance Secretary Hasmukh Adhia addressed a letter to the State government, congratulating it on the achievement. The Union official hoped that the State would soon become revenue-surplus from the present revenue-deficit status.
Mr. Adhia said the performance of GST collection was improving with some ups and downs. The overall revenue gap in the country which was 28.3% in July came down to 17.9% in March. There have been spikes in the revenue gaps in November, December and February. It was important to bring down the revenue gap figure steadily with better compliance and supervision, he said.
‘Agency did not cancel any seed testing lab’s licence’
The seed testing facilities in India are by and large fair and following the International Seed Testing Association (ISTA) guidelines and the agency did not cancel any seed testing lab’s licence in the country in the recent past, secretary general of ISTA Andreas Wais said here on Tuesday.
Speaking to The Hindu after an interaction with the Telangana government officials and seed companies representatives on the arrangements for the International Seed Congress slated here in June-July next year, Mr. Wais said there was need to bring uniformity in seed testing by standardising the methods of seed sampling and application of procedures following the ISTA guidelines.
“Uniformity in seed testing can be brought about by standardising methodologies, assessing the member laboratories’ performance, exchange of scientific research and standardisation of reporting of seed testing results”, the ISTA secretary general said adding that the international congress scheduled for the next year here would help in that direction. On being asked whether the ISTA has an established system to test the genetically modified organisms (GMO), particularly in the backdrop of proliferation of unapproved genetically modified (GM) traits in cotton crop in India during the last few years, Mr. Wais said they had no mechanism but have plans to widely discuss the issue of testing prevalence of GM traits in non-GM varieties of seed at the next year’s congress.
Earlier, Mr. Wais and ISTA in-charge for events, membership and documentation, Olga Stoeckli, interacted with the State government officials including Principal Secretary (Agriculture) C. Parthasarathi, Commissioner of Agriculture M. Jaganmohan and Director of Telangana State Seed and Organic Certification Authority K. Keshavulu, who is also a member of the executive committee of ISTA, on the issue of venue, participation fee and other preparations for the next year’s congress.
Representatives of the seed industry including M. Prabhkar Rao (Nuziveedu Seeds), G.V. Bhaskar Rao (Kaveri Seeds), R. Rajendran (Rasi Seeds) stressed the need for developing standard operating procedures (SOPs) for seed testing in India since the results of testing of same seed lots by different labs were varying. They also suggested developing the advanced seed testing methods to identify GMOs in non-GM seed.
The ISTA team is likely to meet Union Agriculture Secretary S.K. Pattanayak and other officials in the Ministry in Delhi on April 26.
The duty, if imposed, will protect domestic players from cheap imports of ‘saturated fatty alcohols’ from Indonesia, Malaysia, Thailand and Saudi Arabia.
India is likely to impose anti-dumping duty of up to $ 92.23 per tonne, on import of a chemical used in pharmaceutical and agriculture sectors from Indonesia, Malaysia, Thailand and Saudi Arabia, following a DGAD probe.
The duty, if imposed, will protect domestic players from cheap imports of ‘saturated fatty alcohols’ from these four nations.
The chemical is mainly used in sectors like personal care, home care, pharmaceutical, agriculture related end applications. It is also used in processing of articles of leather, textile, fur, paper, petroleum products and rubber items.
The Directorate General of Anti-Dumping and Allied Duties (DGAD) – the investigating arm of the commerce ministry – initiated a probe into the alleged dumping of the chemical on a complaint from the domestic industry.
The probe concluded that the product was exported to India from these nations “below its associated normal value, thus, resulting in dumping of the product,” DGAD said in a notification. It also said some of the imports were causing material injury to the domestic industry.
“The authority recommends imposition of definitive anti-dumping duty equal to the lesser of the margin of dumping and the margin of injury, so as to remove the injury to the domestic industry,” it said.
Anti-dumping duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters.
Imposing such a duty is permissible under the World Trade Organisation (WTO) regime. Both India and China are members of the Geneva-based trade body.
VVF (India) Ltd had filed the application for initiating the anti-dumping investigation, concerning imports of saturated fatty alcohols.
The DGAD has recommended the duty in the range of $92.23-7.10 per tonne.The ministry of finance takes the final call to impose these duties.
Certain companies from the four countries are entering the Indian market at dumped prices, and such imports are causing injury to the similar product being produced by the domestic industry.
