Commercial tax commissioner, Gujarat, P D Vaghela has assured the stakeholders in the country’s largest man-made fabric (MMF) sector in the city of strongly representing the issues and demands related to Goods and Service Tax (GST) before the central government and the GST Council.
Vaghela was on a day’s visit to the Diamond City on Tuesday. Vaghela visited power loom units, knitting units, handwork and embroidery units and textile shops in Pandesara, Bamroli, Sachin, Limbayat and Ring Road.

Addressing a meeting of the textile industry stakeholders at Southern Gujarat Chamber of Commerce and Industry (SGCCI), Vaghela said, “I have heard the problems and issues faced by power loom weavers, traders, embroidery unit owners and women doing embroidery handwork. The issues are genuine and the state government will seriously take up the issues with the central government and the GST Council.”

“Most of the issues related to GST come under the purview of the GST Council. However, the issues like inter-state e-way bill provision etc will be sorted out by the state government,” Vaghela added.
Last week, social media was abuzz when CMO tweeted in favour of Surat’s diamond industry after the GST Council reduced the GST rate on polished diamonds from 3 per cent to 0.25 per cent. The chief minister had to face criticism on social media when the textile industry people raised questions whether the government did not consider Surat as the textile city.
Federation of Indian Art Silk Weaving Industry (FIASWI) chairman Bharat Gandhi said, “The industry is getting assurances since the day GST was rolled out. I think the visit of Vaghela in the textile and embroidery units indicates that the state government is serious in taking a stand at the GST Council to see that the issues related to the textile sector are addressed amicably.” Gandhi said we have put forth three demands, including refund of input tax credit, credit on opening stock and implementation of central government notification on increasing basic customs duty (BCD) on imported fabrics from China.
Leader of power loom weaving sector Ashish Gujarati said, “A single demand of input tax credit will solve 10 other issues pertaining to GST. Vaghela was of the opinion that the state government will have to give a stiff fight at the GST Council to press for the refund demand of the textile sector.”

timesofindia.indiatimes.com

The South India Garment Association (SIGA) has voiced its concern over the impact of the implementation of 2 slabs of GST on apparel. In a letter to Krishna Byre Gowda, a minister in the Karnataka cabinet and member of the GST Council, SIGA said that the implementation of two slabs of GST on apparel based on transaction value has been adversely affecting the industry.
The chairman (taxation) at SIGA, Anurag Singhla wrote that garments being made in Bengaluru are now costing more as those fall under the Rs 1,000-plus plus transaction value under 12 per cent GST to end customers. The result is that sales have reduced at retail stores for Bengaluru-made garments. Moreover, under-utilisation of actual production capacity has been leading to unemployment, and cheaper garments made in other parts of country are taking over the market. Pointing out that Bengaluru is the largest manufacturing hub for men’s garment manufacturing which generates employment for the poor, especially women, Singhla wrote, “Such scenario of unemployment especially in the outskirts is not a good sign for the growth of Bengaluru.”
Urging the minister to look into the negative impact on the apparel industry, the SIGA official called for a single slab GST which would remove the ‘discrimination’ based on transaction values. “We suggest that only one slab i.e. 5 per cent be fixed for the garment industry.”Singhla also said that the introduction of the e-way bill was discriminatory, and that this would cause a hindrance in the free movement of goods. He pointed out that under the e-way bill system, a consignment up to Rs 50,000 in value and local movement within 10km have been exempted from the e-way bill system, whereas while small businesses have been given some relaxation in their GSTR filings. “This may lead to great confusion,” he said.

www.fibre2fashion.com
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India’s imports of yarn, fabrics and made-up articles during December last year rose by 20 per cent over the figure in the same month in 2016, according to the ministry of commerce and industry. Apparel exports, however, dropped 0.3 per cent in April-December 2017 and 8 per cent in December, which is being attributed by some to duty drawback rates revision.
However, total export of textile and apparel rose by 2 per cent between April and December 2017 over the first nine months of 2016-17, a leading south Indian English-language daily reported.
The Confederation of Indian Textile Industry (CITI) sees this as a matter of concern as export data of Bangladesh showed India imported garments worth $111.3 million during July-December 2017 from Bangladesh, which was 66 per cent higher as against the same period of the previous year.
Imports of knitted apparel from Bangladesh were worth $20.6 million in July-December 2016 and rose to $36.5 million between July-December last year.
Cotton prices and yarn prices are going up in the domestic market and the government has reduced the duty drawback rates. After the implementation of the goods and services tax, exporters do not know yet what refund will they get on duties paid on exports.
CITI feels there was a need to impose safeguards such as rules of origin, yarn forward and fabric forward rules on nations like Bangladesh and Sri Lanka that had free trade agreements with India and China.
“Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty-free, convert it into garments, and sell to India duty-free,” CITI chairman Sanjay Jain said in a statement.

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Cotton yarn, fabric exports see dismal growth of 0.38% year-on-year in dollar terms in December 2017
A sharp 11 per cent rise in cotton prices during the past two months in India has pushed up raw material costs for mills, making export unviable and uncompetitive. International cotton prices are also up by 17 per cent, but 2.7 per cent appreciation in the Indian rupee has nullified all the gains to be had from global cotton prices.
While cotton yarn and cotton fabric exports have seen a dismal growth of 0.38 per cent year-on-year in dollar terms in December 2017, that for man-made yarn and fabrics grew by 6.77 per cent.As per the central government’s quick estimates of exports for some of the major commodities for December 2017, cotton yarn, cotton fabrics, cotton made-ups and handloom products, among others grew by 0.38 per cent to stand at $938.57 million, up from $935.05 million in December 2016.On the other hand, man-made yarn, man-made fabrics and made-ups, among others saw a decent growth of 6.77 per cent in December 2017 at $416.91 million, from $390.47 million in the corresponding month last year.According to cotton ginning, spinning and textile mills, the trend is predominantly led by a rise in the commodity prices, which now stand at about Rs 42,000 per candy of 356 kg, (Rs 11,670 per quintal) along with dearth of export incentives. In terms of quintals too, cotton prices have grown by 11 per cent from Rs 10,517 in November 2017 to Rs 11,670 per quintal now.”Post Goods and Services Tax (GST) implementation, several important export incentives are not available.
This has led to sluggish demand in the textile value chain for cotton products, leading to marginal growth in both exports and domestic market,” said Paritosh Aggarwal, managing director of Suryalakshmi Cotton Mills Ltd.The rise in cotton prices in recent times have made exports of cotton products more challenging by making Indian exporters uncompetitive against other competing exporting nations such as Bangladesh.
With Bangladesh being able to export on free trade basis, India’s cotton exports have become even more uncompetitive. Hence, price rise as well as dearth of incentives from government post GST has made exports growth difficult,” said Aggarwal.According to Arvind Raichura of Balkrishna Ginning and Pressing Factory, domestic sales and exports in December were also low due to lesser capacity utilisation. “This is owing to festive mood in the latter part of December when capacity utilisation fell. Moreover, with export demand lagging, fabric manufacturing companies reduced demand from spinning and ginning mills,” said Raichura.Lack of export incentives have hit the cotton ready-made garments (RMG) the most, with the vertical posting a decline of 8.08 per cent in December 2017 over December 2016. Cotton-based RMG exports stood at $1,336.63 million in December 2017 as against $1,454.17 million in December 2016.The Apparel Export Promotion Council (AEPC) has also been taking up the matter with the government, having made representation for restoration of duty drawback and other incentives that the industry was dependent on for exports.

www.business-standard.com

The cotton yarn industry is pinning its hopes on a fall in raw material (cotton) prices, after having had its margins squeezed in the past couple of quarters owing to dwindling yarn exports and excess spinning capacity.
According to cotton yarn spinners, margins were hit when the price of cotton went up, leading to lower demand from fabric and garment manufacturers, as well as dwindling yarn exports.
Spinners are hoping that margins will improve in the last quarter of the current fiscal year on the back of an uptick in demand and improved yarn exports.
However, in the interim, the industry is also expected to see a bumper crop, which could bring down cotton prices to some extent.“Raw materials have been high whereas the forward integration value chain has seen sluggish demand.
Hence, margins have been squeezed for cotton spinners,” said Jyotiprasad Chiripal, director at Chiripal Group.
Chiripal said margins had fallen 7-10 per cent recently.
According to CRISIL, margins fell to a 20-quarter low in the second quarter of 2017-18.“The second quarter of fiscal 2018 was the least profitable in five years for spinners, or cotton yarn mills. Margins touched 10.3 per cent, compared with a peak of 18.8 per cent in the corresponding quarter of fiscal 2014,” CRISIL stated in its report recently.
According to CRISIL, among other issues, disruptions stemming from the roll-out of the goods and services tax took a toll on margins.“As such, excess spinning capacity in the past two years (2.5 million spindles added over fiscal years 2016 and 2017) anticipation of expiring textiles policies in Maharashtra and Gujarat had affected the pricing flexibility of mills. Further, a decline in yarn exports, induced by reduced sourcing from China (accounting for 36 per cent of India’s exports), also impacted the margins,” CRISIL said.
Spinning units such as those of Chiripal Group and Balkrishna Textiles are hoping that increased arrivals might bring down cotton prices.
Crisil has pointed towards a sharp increase in cotton production, expected at 37.5 million bales, in cotton season (CS) 2017-18 which would be a shot in the arm for spinners in the last two quarters of this fiscal year.
Crisil says it could “thwart further drop in margins … Also, demand normalisation after demonetisation and goods and services tax- or GST-led disruptions would improve utilisation”.
However, the research firm is of the view that the Ebitda (earnings before interest, taxation, depreciation, and amortisation) margin profile is different for large organised players owing to efficient procurement practices as well as benefits accruing from economies of scale.

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The domestic cotton prices expected to decline to Rs 105-110 per kg in cotton season (CS) 2017-18, from Rs 117 per kg in last season, due to 11 per cent increase expected in cotton production, a report said.
“The 11 per cent jump expected in cotton production at 375 lakh bales may bring down cotton prices to Rs 105-110 per kg in cotton season (CS) 2017-18, from Rs 117 per kg in CS 2016-17. The acreage has also risen as farmers have switched back to cotton following the price surge witnessed in the last season,” Crisil Research said in its report here.According to estimates, the planted area under cottonhas increased 19 per cent to 123 lakh hectares compared with 103 lakh hectares in CS 2016-17.
It is also 7 per cent higher than the 5-year average of 115 lakh hectares.However, overall yield is expected to fall 7 per cent to 520 kg per hectare due to erratic monsoon rains and anticipated pest-related losses, Crisil said.A sharp increase in cotton production in CS 2017-18 will be a shot in the arm for spinners in the last two quarters of this fiscal. Also, demand normalisation after demonetisation and GST-led disruptions will improve utilisation.The rating agency said that the falling cotton prices will also improve prospects for cotton yarn exporters in the second half of this fiscal. India is the largest producer of cotton, which improves competitive advantage of local mills for fibre procurement. Further, rising synthetic fibre prices amid inflationary pressure on crude oil will drive substitution demand towards cotton yarn manufacturers.
The second quarter of fiscal 2018 was the least profitable in five years for cotton yarn mills as their margins touched 10.3 per cent as compared with a peak of 18.8 pe cent in the corresponding quarter of fiscal 2014.Nearly 70 per cent of the cotton produced in CS 2017-18 are expected to be used in the next financial year by spinners, giving confidence that raw material cost would remain low in fiscal 2019, Crisil said.
This, coupled with stabilising cotton yarn prices amid better demand both in the domestic and export markets, and higher crude oil prices on average compared with the past fiscal will widen the differential between cotton yarn and cotton and support EBITDA margin improvement.
While domestic demand will be supported by a consumption recovery for the Indian economy, a better economic outlook for most textile trade partners and restoration of export incentives, though lower than the pre-GST period, would also support higher growth and firm up yarn prices next fiscal, the report said.

www.business-standard.com

In its last meeting, the GST Council deliberated changes in the filing regime for the new tax. The simplified system is expected to be approved by the Council in its next meeting. ET explains the likely scenario:

CURRENT SCENARIO
1. Seller to upload invoice level details in GSTR 1 within prescribed due dates
2. Buyer to download invoice details uploaded by seller (in Form GSTR 2A)
3. Buyer to reconcile the GSTR 2A details with ERP purchase register
4. Buyer to take action (Accept/reject/modify) on GSTR 2A invoices. Buyer also has option to upload invoices if not uploaded by vendor – this activity is done by buyer through filing of monthly GSTR 2 within prescribed due dates

5. Seller and buyer to file monthly GSTR 3/3B to disclose liability, credits and pay taxes
6. GSTN to perform reconciliation of data uploaded by buyer and share mismatch report
7. Seller and buyer to take relevant action on the mismatches
PROPOSED SCENARIO (AS UNDERSTOOD NOW)
1. Seller has option to upload invoices on real time basis
2. Buyer can view the invoices uploaded by multiple sellers on the portal
3. Buyer to accept the invoices to claim credits
4. Seller to disclose output liabilities in GSTR 3B based on invoices uploaded
5. Credit to be restricted for the buyer in GSTR 3B to the extent of invoices accepted
6. Buyer to claim credit/ report transaction w.r.t unregistered suppliers/RCM in GSTR 3B
7. Buyer would not have option to claim credit for any invoice not uploaded by seller
8. GSTN would not perform any reconciliation for the data uploaded as credit restricted to invoices accepted
Concept of invoice matching continues but at the end of buyers and sellers, without it being part of the return process and work flow based system envisaged earlier. This would effectively mean greater onus on businesses to ensure compliance of vendors. It needs to be ensured the new system does not entail more physical scrutiny at the time of assessment or audit and dilute the concept of ‘faceless’ tax administration that we were all hoping for: Pratik Jain, Leader – Indirect Tax, PwC.

economictimes.indiatimes.com

India (Thomson Reuters Foundation) – Often afraid to speak up about abuses that plague south India’s textile and garment industry, workers will now have anonymous access to legal aid through a newly-launched toll-free number. As of Sunday, 30,000 workers across five districts of Tamil Nadu state were able to call in and report issues like harassment, overwork and withholding wages, said Vijaykumar Chinnasamy of the Dindigul district legal services authority.
“The work conditions in these factories are well known but the girls rarely complain because of fear,” Chinnasamy told the Thomson Reuters Foundation by telephone. Lawyers from the legal services authority will follow up on complaints that workers call in, said Chinnasamy, adding that the service will eventually be expanded throughout the state. There are more than 1,500 mills in Tamil Nadu, the biggest hub for textile and manufacturers in India, employing up to 400,000 workers. Drawn from poor, marginalized families, the largely female workforce is underpaid, faces verbal and sexual harassment on a daily basis and is forced to work up to 14 hour shifts, campaigners say.
Very often workers are unaware of their rights, and face repercussions if they do speak up, so most suffer in silence. “Anonymity is the advantage in this system,” said Barathi Palaniammal of Gram Vaani (Village Voice), the social technology company that developed the interactive platform.
People can call in and choose options including hearing messages about subjects like health and legal rights. They may choose to listen to messages left by others on subjects such as new job openings, or they can leave a message themselves. If they choose to report abuses in the workplace, a union representative or a lawyer will contact them to help register a formal complaint and follow through with the process.
The service is being run by the Tamil Nadu Textile and Common Labour Union, one of the largest women workers’ unions in India’s textile hub. Union president Thivyarakhini Sesuraj said volunteers are spreading the word in “every village” throughout the five Tamil Nadu districts where the service is so far being provided.
“Problems that workers face are buried inside the spinning mill or garment factory they work in,” she said. “Now a phone call will give officials outside a glimpse of the challenges workers face.”

www.reuters.com

Shipments may get hit if Democrats, Republicans don’t sort out immigration issue
With the US government shut-down remaining in effect on Monday and efforts on in full swing to reach a temporary truce, Indian exporters are keeping a close watch on the developments. They fear that a failure to reach an agreement on the crucial issue of immigration between lawmakers could affect shipments in the days to come.
While exporters are hopeful that a vote to end the shut-down with a short-term spending bill for three weeks will take place as scheduled on Monday, only a long-term solution would put minds to rest.
“If the disagreement amongst US lawmakers on immigration is not sorted out and a situation similar to the October 2013 shut-down gets replicated, Indian shipments to the US will definitely get affected. Although we are given to understand that about 90 per cent of the workforce in the US customs and border protection will work, there might be disruption in other allied services that would lead to delays of our consignments and possible demurrage charges,” said Ajay Sahai from the Federation of Indian Export Organisations.
The current uncertainty in the US is due to the Democrats not agreeing to support a temporary funding Bill to keep the government open as they are unhappy with the Trump administration’s decision to end the Deferred Action for Childhood Arrivals (DACA), which gives legal protection to a category of young immigrants called the ‘dreamers’.
Senate Majority Leader Mitch McConnell, on Sunday night, promised to bring immigration legislation up for debate after February 8 so long as the government remained open.
The Democrats did not agree to a vote on ending the shut-down on Sunday night leading to the crisis continuing on Monday, but there is a possibility of the short-term funding Bill getting passed on Monday noon (US time).
The situation, however, may be back to square one if the immigration issue does not get handled satisfactorily in the weeks to come.
ENGG GOODS EXPORTS
Engineering goods exporters, who have witnessed a surge in demand from the US recently, are apprehensive that the present situation could act as a dampener to export growth. “We are apprehensive about the developments in the US. If the shut-down continues and essential services including ports get affected, our exports would get hit,” pointed out Suranjan Gupta from the Engineering Export Promotion Council (EEPC).

www.thehindubusinessline.com

Egyptian team arrives to study seed certification process in the country
A team from the Agriculture Ministry of Egypt arrived here on Sunday on a three-day visit to Telangana to study seed certification process in the country. The visitors complimented the State government for exporting 550 tonnes of quality seed of sorghum and fodder to their country last year.
Led by Gamal Al-Azab the Egypt delegation met Agriculture Production Commissioner C. Parthasarathi and Director of Telangana State Seed and Organic Certification Authority (TSSOCA) K. Keshavulu here on Monday. Mr. Al-Azab stated that they had plans to import higher quantity of OECD (Organisation for Economic Cooperation and Development) certified seed from India in the years to come.
Stating that they were here to study the farming practices and quality seed production methods in Telangana, the visiting team leader said some companies used to export seed in the name of reputed brands to Egypt but the export of OECD certified seed from India had helped them overcome the problem. He said Egypt was lagging behind in quality seed production and sought the cooperation of India to improve seed production practices with the help of training. Mr. Parthasarathi made a PowerPoint presentation on the activities of TSSOCA in seed certification in the country, online seed certification process, international seed and organic produce certification. He also explained how Telangana had grown into nodal agency for OECD seed certification for nine States in a short period with the quality processes.
Recollecting his visit to Egypt in 1998 for training on the technology of cotton production, Mr. Parthasarathi said Hyderabad houses about 400 seed companies meeting the 60% seed demand of the country. Telangana was on the path to become the seed bowl of the world in the years to come, he noted. The Director of TSSOCA said they had acquired required infrastructure for quality seed production and testing and ready to export sufficient quantity of OECD certified seed to Egypt and also to train their personnel in quality seed production.

www.thehindu.com