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In the current scheme of things, the GST has caused a shortfall of working capital for SME clients, the Kerala Financial Corporation official said, explaining the circumstances under which the scheme is being launched.
“They are paying taxes on the realised profits and only after that can refunds be applied for. But as deadlines for GST returns get extended, they are made to wait longer for refunds,” the official said. This has constricted the operating capital and has forced many to cut costs. As per the Act, refunds due for a financial year can be applied for only after the closure of the financial year on March 31.
Small and unorganised businesses in the traditional sectors such as textiles, leather and footwear are currently experiencing a supply disruption. Since they are labour-intensive, the situation is threatening the employment situation too. One example is the footwear sector in North Kerala. For footwear with maximum retail price below ?500, the rate at which GST is payable is 5 per cent. Most raw materials required for its manufacture attract GST at rates up to 18 per cent. This differential in rates has resulted in all the units in this sector having excess input credit. While the smaller players have accumulated credit in the range of lakhs of rupees, bigger ones do it in crores in the five months that GST has been in operation.
This accumulated credit can only be funded with the working funds of the enterprise. Consequently regular operations are getting hit with each passing day.
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Minister of State (MoS) for Textiles Ajay Tamta said on Wednesday that India’s apparel industry is going through challenging times and added that the Government has formed a committee to address the concerns and look into the issues raised by the industry.
“Apparel industry is going through a challenging phase and to address the concerns of the Industry, a committee has been formed by the Government to look into the issues raised by the Industry,” the Minister said while inaugurating the 60th edition of India International Garment Fair (IIGF) at Pragati Maidan, New Delhi.
Tamta further said the textile package announced by the Government is benefiting the sector, immensely. In 2016, the Government has announced a Rs.6,000 crore special package for the textile and apparel sector, which aimed to help in creating one crore jobs in 3 years. “Garment sector is one of the largest employment providers and is helping a large number of people to earn their livelihood,” Tamta said. In his address, Tamta said, “IIGF is a big platform which brings together the overseas garment buyers and garment exporters with almost half of the Indian states participating in the fair.”
“During the last IIGF, business worth $200 million was conducted and this time I would like to see more buyers participating in the fair,” he added.
Speaking on the occasion HKL Magu, Chairman, Apparel Export Promotion Council (AEPC), said, “I feel happy to note the huge transformation the Fair and the industry has witnessed in these years. The Fair has grown in scale and scope and emerged as the one of the largest and most popular platforms in Asia where overseas garment buyers can source and forge the business relationship with India’s finest in apparel and fashion accessories domain.”
“This time the fair is happening at a time when industry is facing lot of challenges both domestically and globally. These are challenging times for the industry with global headwinds blowing over us. The post GST transformation for the industry has been challenging, but I am sure the industry will show the resilience it has shown in the past, and emerge stronger,” Magu said.
IIGF, a three-day international fair, is being held from January 17-19, 2018 and will witness the participation of over 294 exporters from 11 states including Gujarat, Haryana, Maharashtra, Madhya Pradesh, New Delhi, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh and West Bengal. These participants will be showcasing women’s wear, accessories, kid’s wear and menswear. International buyers from over 95 countries like Brazil, Spain, Japan, Uruguay, UK, Hong Kong, US etc have also registered to participate in the fair.
Concerned about the recent fall in exports of textiles and garments and rise in imports from countries such as Bangladesh, exporters are looking at the government to come up with more incentives in the forthcoming Union Budget to prop up the domestic industry.
The Textile Ministry has already formed a committee to look into the issues raised by the industry and exporters are hopeful that together with the Finance and Commerce Ministries, some assistance could be extended to the sector. Garments exports have suffered a huge blow with three consecutive months of fall since October 2017 and hopefully the industry’s problems would be looked into seriously and suitably addressed, pointed out HKL Magu,Chairman, Apparel Export Promotion Council (AEPC).
“Under the new GST and drawback rules, the reimbursements of taxes for the sector have gone down to the extent of 7 per cent (of the value of exports), whereas an additional incentive of 2 per cent was given to the sector in the foreign trade policy review in December. There is a shortfall of 5 per cent which has to be addressed in the Budget as it is pulling down exporters,” Magu told BusinessLine.
AEPC has sought a number of interventions from the government in the Budget for 2018-19, which includes more incentives, continuation of duty-free import of speciality fabric up to 1 per cent of export value of garments, round-the-clock customs clearance, withdrawal of GST on air-freight and duty-free import of samples.
Exports of garments and textiles declined 3 per cent in December 2017 to $2.99 billion, although in the April-December 2017 period it posted a growth of 2 per cent at $26.13 billion.
What has rattled the domestic industry more is the rise in imports in the comparable period. According to figures compiled by textile body CITI, India’s imports of garments from Bangladesh increased 66 per cent to $111.3 million during July- December 2017 compared with $66.9 million in the same period last year.
‘At a disadvantage’
“Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty-free and convert them into garments and sell to India duty-free. This is putting the Indian garment industry at a major disadvantage and this figure is expected to go up in coming months,” according to Sanjay Jain, Chairman, CITI.
CITI proposed that by including cotton yarn under the Merchandise Export from India Scheme (MEIS) and providing ROSL (Rebate of State Levies) for fabrics, Indian can retain its competitiveness in the global market.
Magu said that the positive response from foreign buyers at the on-going India International Garment Fair in New Delhi proved that there was still a lot of global interest in Indian garments.
“Despite the fact that we have not provided airfare to our exhibitors this year, we have already had 400 participants from across the globe. We expect about 100 more tomorrow as the Hong Kong fair, happening simultaneously, will end on Thursday. This makes us optimistic about the future,” he said.
The 25th GST Council meeting chaired by Union Finance Minister Arun Jaitley at Delhi on Thursday did not take up the proposal of bringing petroleum products, alcohol and real estate sector under theGST regime.
RIL is the largest producer of polyester fibre and yarn in the world, with a capacity of 2.5 million tonnes per annum more than half of almost half of India’s overall capacity of 4.5 MT
On Wednesday, the United States announced an anti-dumping duty on fine denier polyester staple fiber imports from China and India. Reliance Industries is one of the main polyester exporters from India to the US. “US Secretary of Commerce Wilbur Ross announced the affirmative final determinations in the countervailing duty (CVD) investigations of fine denier polyester staple fibre from the People’s Republic of China (China) and India, finding that exporters from China and India received countervailable subsidies of 41.73 to 47.55 percent and 9.50 to 25.28 percent, respectively,” US Department of Commerce said in its statement.
According to a factsheet shared by the US Department of Commerce, in its investigation on India, the department calculated a preliminary dumping rate of 2.66 per cent for RIL. Bombay Dyeing & Manufacturing Company was the second Indian company which was made a mandatory respondent to the investigations and was assigned a dumping rate of 21.43 percent, the fact sheet stated.“The US will no longer sit back and watch as its domestic businesses are destroyed by unfair foreign government subsidies,” Ross was quoted in the statement.RIL is the largest producer of polyester fibre and yarn in the world, with a capacity of 2.5 million tonnes per annum more than half of almost half of India’s overall capacity of 4.5 MT. RIL earlier in November stated it expects a growth of 5 per cent per annum in this segment in India, higher than the global growth rate of 3 percent per annum. For the financial year 2016-17, demand for polyester in India grew at 3 percent on a year on year basis. Per capita consumption of polyester globally comes to the tune of 6 kilogram (kg) per person, compared to 3 kg per person in India and 11 kg per person in China.An email query sent to RIL remained unanswered. “Demand for polyester has been good in the last few quarters as crude prices were low.
However, with the rise in crude prices, this is likely to change. For RIL, polyester is a small part of its larger petrochemical business, so I do not expect it to be a significant hit for the company at large. In addition, its share of exports to US of its total polyester production may also be lower. Having said that, one needs to look at what exactly is the duty to access the financial hit,” said an analyst.
Inaugurates a concept boutique at Jubilee Hills
It’s not often that spiritual leaders take time to grace a commercial venture. But an enterprise started by 23-year-old Sai Priya Tucker with a vision to support handlooms and sustain the livelihoods, made an exception.
Tridandi Srimannarayana Ramanjua Chinna Jeeyar Swami inaugurated the concept boutique Elementree at Jubilee Hills here on Thursday that would be open to public from January 22. “The time-tested skills of our artisans and craftsmen should be respected and propagated,” Chinna Jeeyar Swami told the select gathering. The handlooms component of the boutique is named ‘She is’ with a tagline Supporting Handlooms . “We enlist every woman to support genuine handlooms and thereby help the artisans and skilled weavers to sustain their craft,” said Sai Priya, who studied in National Institute of Fashion Technology, Hyderabad.Daughter of Raj Kumari and S.P. Tucker, former Chief Secretary of Andhra Pradesh, Sai Priya has set up her own looms at Narayanpet and has positioned master weavers and artisans specialising in various crafts from 20 locations across India there.
The textile industry should come forward with market intelligence and evidence to fight anti-dumping in the apparel segment, Union Textiles Minister Smriti Irani has said. .
Speaking at an event organised by the Chennai Citizens Forum today, Irani said that while dumping of fabrics from China has always been a challenge, the industry should provide the Commerce Ministry with market intelligence and port-wise details of dumping so that the Ministry can prepare a clear case in line with WTO norms.
“It is unfortunate that despite my continuous appeals, I never had the industry come forth with the paper work,” she added. She urged the apparel industry to bring enough evidence and information so that a definitive case of anti-dumping could be filed.
Handloom focus
Irani said handlooms and handicrafts are another focus area for the Centre. “It could be a niche market in the world,” she said. However, the lack of quality in the sector has been a major challenge. “The industry and the government should work together to bring in quality control so that we can create a handloom brand,” Irani said.
CHENNAI: The surge in cotton prices that began late last year has begun to worry yarn and garment manufacturers based in Tamil Nadu who are grappling with inflated raw material costs as they struggle to hold their positions in the international export market. Last year, the state’s textile entrepreneurs had resorted to importing cotton from African nations to circumvent price uncertainty usual during the turn of the year. The current cotton season’s prices have risen in concert with climbing higher international prices since October last year, with the rates touching $85 cents a pound recently. Cotton prices in the country have increased sharply – nearly 14% towards levels around ?43,000 a candy. Holding at a higher level, they have led to need for higher stock for production among garment makers even as observers attempt to prevent panic buying as seen last year.
While the increase at this time of the year is usual, the aid of higher international prices is providing an additional boost,” said K Selvaraju, secretary-general at Southern India Mills’ Association, a Coimbatore-based association of cotton mills. “Farmers are also holding back stocks as a growing majority of them have begun tracking international market rates to adjust prices. Thirdly, Pakistan has begun import of Indian cotton to touch about 7-8 lakh bales this year while last year it was under 2 lakh bales. I would say there is no need to panic.”
An increase in raw material prices impacts manufacturing competitiveness, making Tamil Nadu’s exporters vulnerable in the global market now populated by cheaper goods from Bangladesh, Vietnam and Cambodia. Tirupur’s entrepreneurs have for long tried to cut down price of cotton access, including a tie-up with vessel charterers to ship in cotton from Gujarat instead of road transport.
Tamil Nadu has not had a textile policy for years even as Gujarat and Andhra Pradesh continue to provide subsidies, besides central government schemes for technology upgradation. announcements in the budget regarding a textile policy in preparation for months now. K Phanindra Reddy, Tamil Nadu’s textiles secretary, said there could be some announcements in the budget regarding a textile policy in preparation for months now.
Khadi has finally entered shopping malls in tieup with retail chains, in what is seen as an attempt to tap the middle-class market it has been losing to Patanjali.
Last week, Khadi made a beginning through a tie-up with retailer Globus to launch Khadi Korner, a shopin-shop concept, at an outlet in Noida. The plan is to move to Chennai, Varanasi and Ahmedabad later this month. Next month, Khadi & Village Industries Commission (KVIC) will go for a similar launch in Mumbai in tie-up with Cotton Bazaar. Discussions are underway with Shoppers Stop and Big Bazaar too, sources told TOI.
For years, KVIC had stayed away from shopping malls as it didn’t have the financial muscle to spend anywhere between Rs 2-5 lakh a month on leasing space. So, it came with a different model, where it will have a revenue-share arrangement with retailers, which could range between 10% and 20% of the sales.
Gone are the days when loyal customers travelled long distances to reach khadi bhandars. Today, availability is one key focus area and we want to be available at the doorstep,” said KVIC chairman V K Saxena. The initial experiment in Noida is for a fortnight but, Saxena said, the initial sales numbers are promising. On Sunday, sales were estimated at around Rs 28,000, just a fraction of the over Rs 25 lakh that the flagship store in Delhi’s Regal Building notched. The sales staff at the Noida Khadi Korner, however, said things could be better starting with a more prominent banner at the entrance. In addition, they complained that the space allocated is not too prominent.
Currently, what’s on offer are garment and cosmetics but depending on the feedback more products could be added. Over the last few years, Ramdev’s Patanjali, which was pushing for a tieup with KVIC, has massively ramped up its presence in shopping malls, especially through the franchisee route and has eaten into the government-backed entity’s market for products such as spices and honey.
Buoyed by the 18.2 per cent rise in direct tax collections in the first nine months of fiscal year 2017-18, the Central Board of Direct Taxes (CBDT) is confident about achieving its collection target for the current financial year. The apex body has even set itself a target of crossing the Rs 10-trillion milestone. The Union Budget had estimated direct tax collection at Rs 9.8 trillion for the current financial year, which was internally raised by Rs 200 billion in the last quarter, sources said.
“As things stand now, we will definitely reach the collection target. The collection, under all categories such as personal tax, advance tax, and tax deduction at source (TDS), are showing good results,” said a senior CBDT official. Official data revealed net direct tax collection surged 18.2 per cent year-on-year to Rs 6.56 trillion during the April-December period. This is 67 per cent of the full-year direct tax collection target. Net tax collection stood at Rs 5.54 trillion in the corresponding period the previous year, which represented 65.3 per cent of the total direct tax collections in FY17.
To achieve the Rs 9.8-trillion budgeted target, tax collections need to grow at 10.6 per cent in the March quarter. A confident income tax (I-T) department thinks it is achievable as the 18.2 per cent growth in the first nine months has considerably boosted its morale, the sources said.
The CBDT had a meeting last week with tax sleuths across the country to discuss measures so that the current momentum of collection can be maintained. The CBDT is said to have asked all principal and chief commissioners of 18 jurisdictions to come up with innovative techniques and achieve the target.
Taxmen have been asked to stress on cash collection out of tax arrears and current tax demand raised by the tax department. Data stated that only 25 per cent of tax arrears had been collected so far from the total annual revenue collection.
Similarly, the tax department has achieved only 1.5 per cent of revenue demand raised against the overall target of 20 per cent. The CBDT has categorically directed its tax officials to be aggressive on advance tax and TDS (tax deducted at source) payers and start enquiring about the status of the payments.
Further, tax officials have been asked to dispose of high tax demand cases so that they are confirmed and then enforced collection in a time-bound manner. Tax officials were told to attach property/assets of tax evaders, and fast-track the auction of property, wherever applicable.
On the scrutiny front, the CBDT wants the I-T department to identify and pursue more cases under the Benami Transactions (Prohibition) Act, which could help them catch domestic tax evaders. According to the orders, tax officials will now conduct extensive operations, especially in cases identified after demonetisation.
