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The export items that will now enjoy a higher duty drawback include marine and seafood products, automobile tyres and bicycle tyres/tubes, leather and articles made of leather The finance ministry on Thursday increased duty drawback rates on 102 items to make Indian exports more competitive. The ministry, however, seems to have ignored the recommendations of a parliamentary standing committee on commerce to allow exporters to use the duty drawback scheme to take care of all the embedded taxes they have to pay under the Goods and Services Tax (GST) regime. Under the pre-GST regime, government used the duty drawback scheme to refund both excise and customs duties paid on inputs used for exports. However, after GST was introduced, the government reduced the duty drawback rates and allowed them to be used only for customs duty refunds on inputs used.
The export items that will now enjoy a higher duty drawback include marine and seafood products, automobile tyres and bicycle tyres/tubes, leather and articles made of leather, yarn and fabric made of wool, glass handicrafts and bicycles.
“As a step towards more efficient input tax neutralization on exports, after considering various representations from trade and industry, the government of India has enhanced the all industry rates of duty drawback for 102 tariff items. The revised rates of duty drawback will help address the concerns of these export sectors and make India’s exports more competitive in the global economy,” the finance ministry said in a statement.
According to independent trade analyst T.N.C. Rajagopalan, to the extent that exporters get more benefits, the move by the finance ministry is a welcome step.
“However, the problem regarding delay in refund of input tax credit faced by exporters remains,” he added.
The parliamentary standing committee on commerce, in its report on “impact of GST on exports” released last month, said both direct and embedded tax refunds under the new GST system is very complicated for small exporters who do not have adequate back office capability. “The committee recommends that the government provide for a duty drawback rate which would encompass all the taxes including the GST/IGST levied as well as embedded/blocked tax and give a choice to the exporters to either claim the duty drawback or follow the input tax credit route. This will also release the pressure on GST Network,” it said.
The committee said sudden withdrawal of the incentives extended earlier under the duty drawback scheme will lead to the collapse of labour-intensive industries and expressed deep concern over the possibility of job losses.
“This will have a cascading effect on employment and livelihood of poor workers in these industries.”
The committee said it was informed that trimming down of the duty drawback scheme and consequent erosion of export competitiveness had already set in the problem of layoffs. Bipin Sapra, tax partner at EY India, said the revision of drawback rates is a welcome relief to exporters and their cash flow, which had been adversely impacted because of delayed refunds and increased input cost in GST, should now improve.
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The garment sector is playing a great role in development of Bangladesh, but export dependency on a particular sector is not good for the country Garment accessories and packaging manufacturers have called on the government to provide them with long term policy support including cash incentives and equal corporate tax for the backyard linkage industry to enlarge direct export.
They also urged the government to declare garment accessories and packaging products as the product of the year for 2019. Leaders of garment and garment accessories and packaging manufacturers came up with the demands while addressing the inaugural ceremony of the ninth edition of Garments Accessories and Packaging Exposition (GAPEXPO-2018) in the capital on Wednesday.
Finance Minister AMA Muhith inaugurated the four day expo as chief guest, and BGMEA president Siddiqur Rahman was present as special guest. Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) organized the four-day international expo on garment accessories to showcase the latest products, machinery and raw materials to attract buyers.
The show is being held at the International Convention City, Bashundhara (ICCB) in the capital till Saturday. “In the course of time, Bangladesh has turned into a sourcing hub for garments products. These days, garment accessories and packaging manufacturers have also started to export directly,” BGAPMEA President Abdul Kader Khan said.
“Despite having a large contribution to the total export of the country, we are deprived of cash incentives, while the manufacturers have to pay 35% corporate tax even though the RMG exporters pay 12%,” said Kader. Urging the government to provide cash incentives and to cut the corporate tax, Kader said: “If the government provides equal facilities and policy support, we will be able to contribute $12 billion to export earnings by 2021.” The industry has the ability to meet over 95% of local demand, and is now exporting to some other countries, BGAPMEA leaders said. In the last fiscal year, deemed export earnings of garment accessories and packaging stood at $6.70 billion, which is 9.47% higher compared to $6.12 billion in FY16.
“Accessories and packaging goods are the heart of apparel industry,” Exporters Association of Bangladesh President Abdus Salam Murshedy said. The government has given authority to issue Utilisation Permission (UP) to BGAPMEA but it is not implemented, he said. If it is implemented and the sub sector gets policy support, the capacity of the sector will increase manifold and it will help the manufacturers to export more directly, said Salam.
The garment sector is playing a great role in development of Bangladesh, but export dependency on a particular sector is not good for the country, said AMA Muhith. “When the sector started business, the sector was import dependent. Now, the sector produces about 50% to 60% and the credit goes to sector people,” said the minister.
It is good that the manufacturers create markets and export, he added.
In response to the business people call, the minister said, that the government has created a business friendly environment to do business and provide all the support needed. A total of 278 companies from 17 countries including Bangladesh India, Sri Lanka, China, Taiwan, Malaysia, Vietnam, Singapore, Hong Kong, Thailand, Japan, South Korea, Germany, Italy, France, USA and Turkey will participate to display garments accessories and packaging items with machinery, all kinds of garments machinery with boiler and spare parts.
The garment sector is playing a great role in development of Bangladesh, but export dependency on a particular sector is not good for the country Garment accessories and packaging manufacturers have called on the government to provide them with long term policy support including cash incentives and equal corporate tax for the backyard linkage industry to enlarge direct export.
They also urged the government to declare garment accessories and packaging products as the product of the year for 2019. Leaders of garment and garment accessories and packaging manufacturers came up with the demands while addressing the inaugural ceremony of the ninth edition of Garments Accessories and Packaging Exposition (GAPEXPO-2018) in the capital on Wednesday.
Finance Minister AMA Muhith inaugurated the four day expo as chief guest, and BGMEA president Siddiqur Rahman was present as special guest. Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) organized the four-day international expo on garment accessories to showcase the latest products, machinery and raw materials to attract buyers.
The show is being held at the International Convention City, Bashundhara (ICCB) in the capital till Saturday. “In the course of time, Bangladesh has turned into a sourcing hub for garments products. These days, garment accessories and packaging manufacturers have also started to export directly,” BGAPMEA President Abdul Kader Khan said.
“Despite having a large contribution to the total export of the country, we are deprived of cash incentives, while the manufacturers have to pay 35% corporate tax even though the RMG exporters pay 12%,” said Kader. Urging the government to provide cash incentives and to cut the corporate tax, Kader said: “If the government provides equal facilities and policy support, we will be able to contribute $12 billion to export earnings by 2021.” The industry has the ability to meet over 95% of local demand, and is now exporting to some other countries, BGAPMEA leaders said. In the last fiscal year, deemed export earnings of garment accessories and packaging stood at $6.70 billion, which is 9.47% higher compared to $6.12 billion in FY16.
“Accessories and packaging goods are the heart of apparel industry,” Exporters Association of Bangladesh President Abdus Salam Murshedy said. The government has given authority to issue Utilisation Permission (UP) to BGAPMEA but it is not implemented, he said. If it is implemented and the sub sector gets policy support, the capacity of the sector will increase manifold and it will help the manufacturers to export more directly, said Salam.
The garment sector is playing a great role in development of Bangladesh, but export dependency on a particular sector is not good for the country, said AMA Muhith. “When the sector started business, the sector was import dependent. Now, the sector produces about 50% to 60% and the credit goes to sector people,” said the minister.
It is good that the manufacturers create markets and export, he added.
In response to the business people call, the minister said, that the government has created a business friendly environment to do business and provide all the support needed. A total of 278 companies from 17 countries including Bangladesh India, Sri Lanka, China, Taiwan, Malaysia, Vietnam, Singapore, Hong Kong, Thailand, Japan, South Korea, Germany, Italy, France, USA and Turkey will participate to display garments accessories and packaging items with machinery, all kinds of garments machinery with boiler and spare parts.
Upgrade your wardrobe with khadi pants, clothes in pastel shades and shirts with small floral prints, experts suggest for fashion conscious men.
Aditya Singhal, Founder at IML Jeans Co. and Shreyasi Pathak, Stylist at Vajor have listed clothing essentials for men this year:
* Khadi pants, denim/checked shirts and denim jackets in dark shades with boro, shashiko and patchwork are unconventional and uniquely stylish. Designers are experimenting with denims more than ever before. People will find quirky embroidery, floral embroidery, and embroidered patch over no-stretch denims.
* Customised jeans are the one-stop solution for those who are always on the lookout for a perfect fit. In addition to the basic staples, go for darker tones on denim as they are versatile and can be paired easily with crisp white, checked, blue, grey, or pastel shirts.
* Cotton stretch chinos with leather jackets like hood, biker or bomber jackets make for really cool outfit.
They have been in trend for past couple years and they’re not going anywhere anytime soon.
* Invest on henleys, T-shirts, polos, biker jeans, denim shirts and jackets. Balance it out with the right accessories and footwear and you are good to go.
* Use pastel hues on almost every piece of cloth that you are about to own. Pastels are definitely going to be a nice change from bold warmer shades that rocked 2017. Whether it is a shade of lavender, baby pink, powder blue or mint yellow, ice-cream shades of are here to stay the coming season.
* Although most of us think of checks as the winter print, this year will see more of checks throughout the year.
* Floral trend is about to blow up this year. While 2017 was more about smaller floral patterns with complementing colours, 2018 will be categorised by larger floral patterns with dramatic colours denoting the comeback of the 1960s print.
The silence at Jolly Spinning Mills is punctuated by workers’ chatter as they unload bales of cotton from trucks in the courtyard, adding to a giant fluffy white heap. It’s the peak season in Gujarat, India’s largest cotton producer, and unusual for the factory that runs round the clock to be so quiet at noon. The mill now clatters for barely 12 hours a day.
Business is not as usual, said Dilipbhai Umaraniya, chairman, Jolly Group of companies at Chotila, 50 kilometres east of Rajkot in Prime Minister Narendra Modi’s home state. “We don’t have enough working capital after the GST was implemented.” India is the world’s second-largest exporter of cotton—raw and textiles. The 12.3-billion industry, like other export-oriented businesses, is yet to recover from disruption caused by the July rollout of a nationwide sales tax. The biggest tax reform yet in Asia’s third-largest economy subsumed a web of levies to make business easier. But it taxes every level of the supply chain to increase compliance. Companies then claim refunds.
Yarn makers pay 5 percent tax while procuring cotton. Earlier, there was no such levy. Other inputs like dyes and chemicals are taxed at 12 percent and 18 percent. They also pay a 5 percent tax at the time of exports. Together, that blocks working capital as refunds take time. Umaraniya says his Rs 8 crore is blocked. Sureshbhai Patel of Rajkot-based Siddhnath Cotex Mill awaits Rs 4 crore.
The industry won’t exist for long if this continues, Patel said. “Earlier my turnover was Rs 350 crore. Now it looks like it won’t go above Rs 150 crore because I operate only one shift now.” Invoice-matching is a key aspect of GST compliance. Two separate invoices showing sale and purchase of goods uploaded on the GST Network portal must tally for them to be considered. The government was struggling with this, according to Suresh Rohira, partner at Grant Thornton India. Documents were filed but invoices were not matching, he said. Refund applications were rejected for issues like an ‘s’ missing in ‘yarns’ in two returns that needed to match, he said. The government recently allowed exporters to ship products without paying the Integrated GST after submitting a letter of undertaking in lieu of a bond or a guarantee. “Hopefully, that will help us get refunds quickly,” said Vijay Mehta, a manager at Siddhnath Cotex Mill.
The GST also increased paperwork. Businesses have to file three monthly returns—on sales, purchases and a summary of accounts. Accounting work has doubled, said Mehta. “The paperwork needs to be reduced. There are not many educated people in the industry.” Emailed queries to DS Malik, spokesman for the Finance Ministry, on delayed refunds and compliance remained unanswered. November to April is the peak season for ginning, or separating cotton fibre from the seed, as the kharif crop arrives from the fields. The output this year is expected to stay around last time’s 350 lakh bales of 170 kilograms each. And there is demand overseas. “But we need to have capacity to export so much,” said Umaraniya. With mills running for only 12 hours a day, capacity utilisation has also fallen by half.
Mill owners are even sceptical about applying for new loans. Banks are wary of lending more as bad loans are rising, said Umaraniya. “If we don’t have the money, how will we work? The problem is huge.” Patel said a fourth of his loans could sour as he wouldn’t be able to repay on time if the situation doesn’t improve.
Lower Wages For Workers
The textile industry is among the largest job creators in India. But workers at spinning mills are not earning enough during the peak season—the best time of the year for them. Gabru Ganghad, 30, a labourer employed at Siddhnath Cotex Mill, says since the factory runs for half the time and fewer trucks of cotton arrive at the mill, his daily wages have fallen from Rs 200 to Rs 150. That’s not all. Ganghad gets work on 15 days compared to the whole month earlier. “The money is barely enough to buy food.”
The mill laid off half the labourers as it struggles with a cash crunch. “I had no other option,” said Patel. Parab Jhokra, 22, who also works at Patel’s factory, said he has to support a family of eight. “It’s difficult to survive like this.”
A three-day 8th international conference on wild silk was organized by the International Society for Wild Silk Moths, Japan and Central Silk Board, where Union Minister of State for Textiles Ajay Tamta graced the event as the chief guest.
The minister while addressing the gathering said that since the North-East is the only region where all four varieties of silk such as muga, eri, tassar and mulberry are found, the ministry has decided to accord top priority to develop the silk sector as a viable option for livelihood in the Northeast.
The North-East region makes up about 21% of the country’s total silk production.
Assam owns the Geographical Indication (GI) tag for muga, which is known for its golden color and is found only in the Northeast region.
Northeast region so as to make the sector a sustainable source of livelihood for the people of the northeast region.
The main agenda of this conference is to highlight the importance of silk sector in the Northeast. About 15 representatives from different countries participated in this international conference.
Also speaking at the event was Ranjit Dutta, Assam’s Hand loom and Textile Minister who said that nearly 3.1 lakh families in Assam are associated with the silk sector.
A 60, 000-acre area is involved in silk production and plantations for plants for the silkworms.
Anant Kumar Singh, Secretary of the textiles ministry although appreciated Assam for being the third-largest silk producer also encouraged it to harness the potential of wild silk or vanya silk further. He also added that silk production sector can be one of the most effective tools for poverty alleviation in the Northeast region.
The centre has over the years sanctioned about 24 projects in silk sector worth Rs. 809 crore for the Northeast.
India’s Telangana state has requested the central government to set up a mega power loom cluster in Sircilla as part of the Comprehensive Power Loom Cluster Development Scheme. In a letter to textiles minister Smriti Irani, state handlooms minister KT Rama Rao said 36,000 powerlooms in Sircilla are not being upgraded and the power consumption is increasing.
Workers have to rely on traders for raw materials because of lack of investment and shortage of skilled workers and infrastructure is troubling Sircilla, media reports in Telangana reported citing the letter.
Rama Rao said there had been a substantial improvement in the powerloom sector in two other states after clusters were set up.
India’s state of Maharashtra, the country’s second-biggest cotton producing state, has cut its forecast for output of the fibre by 37 percent from its September outlook as a pest infestation has reduced yields, a senior government official told Reuters.
Maharashtra’s output is now forecast to drop to 6 million bales of 170 kg each for the 2017/18 marketing year that started on Oct. 1, the source said. That is down from 10.7 million bales produced in the 2016/17 marketing year.
The forecast is down because of an infestation of the pink bollworm that has cut yields.
The drop in the output could lift local prices and reduce the exports from India, the world’s biggest cotton producer, during the 2017/18 marketing year.
“As harvesting started, farmers realised the impact of the pink boll worm pest on the crop. Yield were substantially lower than normal,” said the official, who declined to be named as the estimate has not been published.
Maharashtra usually accounts for over a quarter of the India’s production, which the government has estimated at 37.7 million bales for the current marketing year.
The reduction in Maharashtra’s production will slash the country’s output and keep prices firm in the local market, said Pradip Jain, owner of cotton trader Mahavir Ginning and Pressing.
Cotton prices have surged 12 percent in the past eight weeks as spot markets were getting lower-than-normal supplies from the new season crop.
India’s cotton exports could fall to 5 million bales, nearly a quarter below earlier estimates, said Atul Ganatra, president of Cotton Association of India.
Pink bollworms consume the cotton fibre and seeds inside the boll, or fruit, of the plant and cut the amount of fibre harvested.
It will be rolled out from February 1, says official
Elucidating on the provisions of the new GST e-way bill, CGST Commissioner K. Engineer has said that the new system will ensure a series of user-friendly measures for trade across the State. Speaking during an interactive session organised by the Tirupati CGST Commissionerate on Wednesday, Mr. Engineer asserted that the new system, which would be rolled out from February 1 on ‘Inter and Intra State Movement of Goods’ (for distance greater than 10 km and value more than Rs. 50,000 per consignment), would reduce the travel time in trade resulting in reduction in cost of goods for customer, less delays, harassments and stoppage of consignments. “One of the main objectives of the system is to enable the government to plug in the leakages with minimum intervention, thereby ensuring transparency. Besides this, entire process of generating the ‘e-way bill’ has been made easy so that it can be done via desktop, smartphone or even as simple message (SMS),” he added. Mr. Engineer further called for sustained hand holding among the stakeholders to ensure more effective implementation of the system and said that they would continue to actively involve in spreading awareness on GST among trade and general public. CGST Joint Commissioner Amaresh Kumar, Central Tax Assistant Commissioners Anand Kumar Savalam, K. Balaji (Tirupati) and more than 200 stakeholders were present.
Says software hitches delayed filing of returns
Though the State has not suffered any loss in income due to the introduction of GST, it has not been able to achieve the 25% projected increase in tax collection.
Replying to questions in the Assembly, Finance Minister T.M. Thomas Isaac said the delay in filing returns on account of hitches in software had hit IGST fund settlement and this had adversely affected tax collection in Kerala. Tax evasion is taking place and only 7% had submitted the returns last month. There were no check-posts and e-way bill had not been fully implemented. The Anti-Profiteering Authority was yet to act on 153 companies that had violated rules, he said.
