Committed to Foster the Growth of the Textile Industry
Archives
Will help make exports of apparels, made-ups zero-rated
The Union Cabinet chaired by Prime Minister Narendra Modi, on Thursday, approved a scheme to rebate State and Central Embedded Taxes for apparels and made-ups exports.
“This will enable the Government to take various measures for making exports of apparels and made-ups zero-rated. The government has a Rebate of State Levies (ROSL) for these two segments. However, some taxes were not covered under the scheme. The Cabinet decision is to rebate all embedded taxes of the Central and State Governments,” said a press release.
An official of the Ministry said that the new scheme would come into effect when the rates are notified. It is applicable for apparel and made-ups now and will be extended to yarn in the future. “This ROSL for apparel and made-ups will amount to Rs. 6,300 crore revenue foregone per annum,” the official said.
Apparel products currently get ROSL of 1.5% to 1.7%. The Apparel Export Promotion Council said that embedded taxes total up to 5%.
“We have been asking for reimbursement of all embedded taxes and it has been considered for the first time. It will help in making exports zero-rated,” said a spokesperson for the council.
The Union Ministry of Textiles also issued a notification reducing the hank yarn obligation to 30% from the existing 40%, with effect from January this year. Mills that pack yarn for the domestic market had to ensure that 40% was in hank form. This is now reduced to 30%.
The Cabinet Committee on Economic Affairs approved two thermal power and two hydro power projects, a hydro power scheme and a revival scheme for stressed assets
The central government has cleared projects and schemes totalling Rs 31,000 crore to boost investment in the languishing power sector. The Cabinet Committee on Economic Affairs (CCEA) approved two thermal power and two hydropower projects, a hydropower scheme and a revival scheme for stressed assets on Thursday, probably the last Cabinet meeting before the Lok Sabha elections.
Hydropower has been devoid of investment for a decade. In this segment, any projects above 25 Mw in capacity would now come under the category of renewable energy. This would entail a hydro power purchase obligation on states and get it priority status. With this, India would achieve one of the targets it has committed to under the global climate change treaty for reducing of emissions — sourcing 40 per cent of its total energy consumption from renewable sources.
R K Singh, minister of state for power and new & renewable energy, said budgetary support would be provided for allied infrastructure of hydro power units, to contain the cost.
Budget support for funding cost of the flood moderation component, enabling infrastructure such as roads and bridges, would be given on case to case. This would be limited to Rs 1.5 crore per Mw for up to 200 Mw projects and Rs 1 crore per Mw for above 200 Mw projects,” he told reporters.
Business Standard reported recently that the Centre was aiming to reduce the cost of hydropower during the construction period through budget support. Also, to promote and incentivise hydro power as ‘peaking power’, to balance the increasing share of solar and wind energy in the national grid.
Among other measures for hydro, the project life has been increased to 40 years, thereby also increasing the debt repayment period to 18 years. The policy also allows for a two per cent yearly escalation in rates.
“We have discussed with all the banks and they have agreed to the extended period of debt payment. We want to reduce the cost of hydro power in the initial years of operation,” said Singh.
New projects
The Cabinet also sanctioned two investment proposals in hydro power units. The Kiru hydro electric project of 624 Mw, at an estimated cost of Rs 4,288 crore, was approved. The project is to be executed by Chenab Valley Power Project, a joint venture company of government-owned NHPC, Jammu and Kashmir State Power Development Corporation and PTC India.
Teesta Stage-VI in Sikkim was also approved, to be bought by NHPC. The project was being developed by Lanco Teesta Hydro Power Ltd, promoted by the Lanco Group. Due to the company’s financial difficulties, the project was not completed and the insolvency law was invoked; NHPC emerged the highest bidder, with Rs 907 crore. The investment proposal for an estimated Rs 5,748 crore was approved by the CCEA.
GoM report
Stressed assets in the power sector are about 40,000 Mw. On these, the recommendations of a Group of Ministers (GoM) constituted to examine the suggestions of a High Level Empowered Committee (HLEC) were approved. The HLEC was chaired by the cabinet secretary, to provide a long-term solution.
Among the HLEC recommendations approved were grant of linkage coal for short-term power purchase agreements (PPAs). And, for allowing the existing coal linkage to be used in case of a PPA termination due to a payment default by the distribution company (discom) concerned. To improve coal availability for power units, an increase in the quantity for special forward e-auction for the sector was allowed. The Cabinet also allowed coal linkage auctions to be held at regular intervals.
Also, for procurement of bulk power by a nodal agency, against pre-declared linkages. The HLEC had recommended NTPC act as an aggregator in procuring, through a transparent and competitive bidding process from stressed power plants. It can then offer that power to discoms against the PPAs of NTPC, till such time its own plants/units are commissioned, went the report.
“Any PPA, fuel supply agreement or regulatory approvals would remain unchanged even after the project changes hands post NCLT (the insolvency process). We hope that with these recommendations, many of the issues of the thermal power sector would get resolved,” Singh said.
UP, Bihar
The CCEA approved a proposal by THDC Ltd to set up a 1,320 Mw super-thermal plant at Khurja, Uttar Pradesh, for about Rs 11,000 crore. And, a 1,320 Mw thermal power projct at Buxar in Bihar, for about Rs 10,400 crore. The plant will be set up by SJVN Thermal, a wholly owned subsidiary of SJVN. Both projects are to be commissioned by 2023-24, to cater for the increased power demand in both states.
In a major relief to manufacturers, distributors, marketers and direct sellers of consumer products, the government on Thursday clarified the extent of tax liability and the eligibility of input tax credit on promotional offers such as free samples and “buy one, get one free”.
Industry players were apprehensive about incre¬ased litigation from tax audit authorities if they marketed their products as free, beca¬use of ambiguity on such offers. Now, the notification by the Central Board of Indirect Taxes and Customs makes it clear that tax would be applicable and input tax credit would be available for the entire package sold, including the free items.
Experts said the clarification will bring ease of marketing and save litigation troubles for the industry, but most importantly for the FMCG and pharma sectors where such offers are common.
n the case of free samples, such as the ones medical representatives of pharma companies provide to doctors, they would not be considered as supply, and would not attract tax.
For offers such as a discount of 10 per cent for a purchase of more than Rs 1,000 and of 20 per cent for a purchase of more than Rs 2,000, the discounted amount would be excluded to determine the value of supply. Such discounts are generally passed on by the supplier through credit notes.
But this is applicable only when the discount is made clear at the time of supply. When it is provided after the sale, it is termed as secondary discount, the discounted value should not be excluded to calculate the value of supply.
“GST would be paid on the price recovered from the customer without reversing the input credit. Input credit will only be reversed in case of ‘free samples’ and ‘gifts’ which is specifically mentioned in the law,” said Pratik Jain, indirect tax partner at PwC India.
Days after the US cut off India’s duty-free access to the American market under its largest preferential trade scheme, the Generalized System of Preferences (GSP), official figures from Washington DC showed that its trade deficit with the country has fallen over the past two years, slipping to $21.3 billion in 2018. In 2017, the US’ trade deficit with India was $22.3 billion, down from $24.4 billion in the previous year.
Prime Minister Narendra Modi is expected to point this out to US President Donald Trump in a letter on the matter soon, Business Standard has learnt.
The latest figure, released by the United States Census Bureau, under the Department of Commerce, on Thursday, comes three days after Trump notified US Congress of his intent to remove India from the list of beneficiaries of the GSP programme for not granting American producers “reasonable access” to its markets. Senior Indian government officials, however, have argued that the dominance of US firms in several sectors showed that India had suitably opened up its market to foreign industry.
The US’ trade deficit with India, an issue raised Trump several times, has also served as the justification for the country imposing a 25 per cent extra levy on steel and 10 per cent on aluminium products, and threatening to arbitrarily increase tariffs on major imports from here.
Despite increased protectionism through higher tariffs on imports and easier export norms, the Trump administration has not been able to rein in the US’ ballooning global trade deficit, that jumped to a record $878 billion in 2018, from $807 billion in 2017. Its global trade deficit has increased for the third consecutive year.
The US’ trade deficit with China also hit a record $419 billion, despite a series of tariffs the administration imposed on Chinese goods to decrease reliance on imports.
The US had record exports to 53 countries in 2018, led by Mexico ($265.0 billion), Japan ($75.0 billion), and the United Kingdom ($66.2 billion), according to the US Federal government. However, it also had record imports from 60 countries in 2018, led by China ($539.5 billion), Mexico ($346.5 billion), and Germany ($125.9 billion).
GSP drama continues
India has been the largest beneficiary under the GSP scheme, the largest and oldest US trade preference programme designed to promote economic development by allowing duty-free entry for thousands of products, mostly from developing nations. India exported goods worth $5.6 billion under the GSP last year. But the Indian government has downplayed the impact of Trump’s decision, saying that the country has received only $190 million worth of benefits under the scheme.
Though India is not keen to engage the US in a tit-for-tat show, the government on April 1 will finally impose higher duties on 29 key imports from the country, senior government officials said. This roll-out has been deferred six times.
“We do not believe that a knee-jerk reaction is the best option. We are internally reviewing our stance and will reply in time. The US has notified that benefits will lapse after a 60-day period,” an official said.
Also, service providers and suppliers of both goods and services with a turnover of up to Rs 50 lakh would be eligible to opt for the GST composition scheme
The government Thursday notified April 1 as the date for the implementation of doubling of GST exemption limit to Rs 40 lakh, which will benefit small and medium enterprises.
Besides, the effective date for availing higher turnover cap of Rs 1.5 crore for availing composition scheme by traders has also been fixed as April 1.
Also, service providers and suppliers of both goods and services with a turnover of up to Rs 50 lakh would be eligible to opt for the GST composition scheme and pay a tax of 6 per cent from the beginning of next fiscal.
These decisions were taken by the GST Council, chaired by Finance Minister Arun Jaitley and comprising his state counterparts, on January 10. These decisions would come into effect from April 1, a finance ministry statement said.
“There would be two threshold limits for exemption from registration and payment of GST for the Suppliers of Goods i.e. Rs 40 lakhs and Rs 20 lakhs. States would have an option to decide about one of the limits.
“The Threshold for Registration for service providers would continue to be Rs 20 lakhs and in case of Special Category States Rs 10 lakhs,” it said.
Also the GST Composition Scheme, under which small traders and businesses pay a 1 per cent tax based on turnover, can be availed by businesses with a turnover of Rs 1.5 crore, against the earlier Rs 1 crore, with effect from April 1.
EY India Tax Partner Abhishek Jain said implementation of these proposals with specifically the higher turnover limit for composition schemes, would aid enhancing the ease of doing business for MSMEs.
The trade deficit between India and the US decreased by $1.6 billion, almost seven per cent, in 2018 as compared to the previous year, according to the latest official figures.
India recorded a decrease in the deficit from $22.9 billion in 2017 to $21.3 billion in 2018, according to the latest figures revealed by the Bureau of Economy Analysis on Wednesday.
The US trade deficit in goods and services increased by $9.5 billion from $50.3 billion in November to $59.8 billion in December, according to the figures.
For 2018, the US goods and services deficit was $621.0 billion, up $68.8 billion from $552.3 billion in 2017. Exports were $2,500.0 billion in 2018, up $148.9 billion from 2017. Imports were $3,121.0 billion, up $217.7 billion from 2017, it said.
The figures showed that the goods deficit hit $891.3 billion in 2018, the largest in US history. America’s goods deficit with China hit a record $419.2 billion last year.
Opposition Democratic party were quick in criticising US President Donald Trump.
“Today’s announcement that the merchandise trade deficit for 2018 topped $891 billion shows that the President has flunked the test he set for himself, said House Majority Leader Steny H Hoyer.
Alliance for American Manufacturing president Scott Paul in a statement criticised President Donald Trump for his polices that has resulted in a record trade deficit.
“Perhaps Donald Trump will now discover that tweets and bluster alone won’t dramatically shrink the trade deficit,” he said.
“The selective interventions of the administration on trade have been helpful to key sectors, but these actions haven’t put a dent in the massive deficit. The administration’s fiscal policies have helped to boost the trade deficit, as has its reluctance to engage more actively in exchange rate misalignment,” he said.
“While the trade deficit results from many factors, the staggering sum represents lost opportunities for American workers and businesses,” Paul said.
“If the president wants to back his words with actions, any trade deal with China will insist on dramatic, structural changes in Beijing’s state-led economy, which have contributed to massive industrial overcapacity in key sectors. The next few weeks of negotiations with China are critical to the future of American manufacturing. We can’t afford a deal that doesn’t deliver real and lasting change,” Paul said.
www.business-standard.com
Beijing’s foremost concern is to freeze the status quo
China on Thursday asked India and Pakistan to dial down tensions through talks.
Both nations should “refrain from aggravating the situation, to uphold regional peace and stability through dialogue at an early date, and China will continue to play a constructive role,” Foreign Ministry spokesman Lu Kang said in his daily briefing.
Asked whether Chinese Vice-Foreign Minister Kong Xuanyou, who has concluded a two-day visit to Pakistan, had discussed elimination of “breeding grounds of terrorism” from Pakistani soil, Mr. Lu said the focus of the Chinese envoy’s visit was on preventing “aggravation” of tensions between India and Pakistan.
“Like I said Vice-Foreign Minister Kong Xuanyou, when in Pakistan, held in-depth talks on the situation and tension between India and Pakistan. So the major concern is the security situation in this region,” Mr. Lu said.
The spokesperson pointed out that China’s foremost concern was to freeze the status quo, and other issues could be tackled along a diplomatic spiral.
“Recently, a lot has happened in this region, and there are many issues. China has stated our position, first the sovereignty and territorial integrity should be upheld, and to specific issue whether we believe we should take positive measures to ease tensions so as to maintain peace and stability in the region, this is a general issue,” Mr. Lu said.
www.thehindu.com
The exports from the world’s biggest cotton producer will help China in augmenting supplies, but could weigh on global prices.
Indian traders have signed contracts to ship 800,000 bales of cotton to China as demand surged from the world’s biggest consumer of the fibre due to a rally in prices in China, industry officials told Reuters.
The exports from the world’s biggest cotton producer will help China in augmenting supplies, but could weigh on global prices.
“Chinese buyers were very active in the market in last few days,” said Atul Ganatra, president of the Cotton Association of India (CAI).
The cotton was sold at around 80 to 81 cents per pound on a cost and freight basis (C&F) to China, for shipments in March and April, he said on the sidelines of a Cotton India conference in Mumbai.
India has already shipped around 600,000 bales to China so far in the 2018/19 marketing year that started on Oct. 1, he said.
The United States, the world’s biggest exporter of the fibre, has cornered the bulk of Chinese imports for at least a decade. But China’s decision to impose a 25 percent import tax on cotton, in retaliation for tariffs enacted by the administration of US President Donald Trump, has allowed India to grab a bigger share of the Chinese market.
“Imports are nearly 10 cents (per lb) cheaper than domestic supplies for Chinese buyers,” said a London-based cotton dealer with a global trading firm.
China has also been buying cotton from Brazil in the last few days due to depleting stocks, he said.
Cotton ending stocks in China are forecast at 6.58 million tonnes in 2018/19, down from 7.43 million tonnes.
BORDER TENSION
India’s cotton sales to neighbouring Pakistan have slowed in the last few days amid rising tensions between the nuclear armed nations, said Mohit Shah, director at Gill& Co., a leading exporter.
“Traders on both sides of the border are waiting for clarity,” Shah said.
Hostilities between the two countries escalated dramatically late last month, after an Indian air strike on what it said was a militant group that carried out a deadly suicide attack in the Pulwama district of Indian-controlled Kashmir on Feb. 14.
A few traders diverted cotton shipments for Pakistan to China due to the uncertainty, and as China was paying around 2 cents per lb more than Pakistan, said CAI’s Ganatra.
Around 100,000 bales of cotton shipments for Pakistan were delayed, but those would be shipped in the next few weeks, said a Mumbai-based dealer with a global trading firm.
Despite good demand from China, India’s cotton exports in 2018/19 could fall 27.5 percent to 5 million bales, the lowest in a decade, due to a drop in production, CAI estimates.
www.moneycontrol.com
He said the country’s merchandise exports have seen high growth in the past six years through sector-specific interventions, focused export promotion initiatives, and quick resolution of issues.
The country’s goods export will touch $330 billion in 2018-19, which will be the highest ever, Commerce and Industry Minister Suresh Prabhu said Thursday.
He said the country’s merchandise exports have seen high growth in the past six years through sector-specific interventions, focused export promotion initiatives, and quick resolution of issues.
With the structural reforms that have been put in place over the past five years by the ministry and action-oriented plans for major sectors, the minister said India is on the path to become the fifth-largest economy this year.
“India’s goods export will peak at $330 billion in 2018-19 which will be the highest ever,” the ministry said in a statement quoting Prabhu.
He also said the Department of Commerce has identified nine sectors – gems and jewellery, leather, textiles, engineering, electronics, chemicals, pharma, agriculture and marine products — to achieve at least 16 per cent growth in exports in 2018-19.
During April-January this fiscal, exports grew 9.5 per cent to $271.8 billion.
www.moneycontrol.com
Now, local bodies can impose fines on those who store, supply, transport or sell the proscribed items
Local bodies in the State can soon start imposing fines on those violating the ban on 14 kinds of single-use plastics, with the government announcing their quantum. The ban, which came into force on January 1, did not have any penal provisions and was enforced using different sections of local body Acts, including “causing malaria.”
The State government has notified the amendments to the by-laws of the respective Acts governing the functioning of local bodies, including municipal corporations and municipalities. Last month, the Governor gave his assent to the amendments under Act 12 of 2019, passed by the Assembly, said sources in the Municipal Administration Department.
Local bodies including the Greater Chennai Corporation have already begun work to set up appellate authorities in case of disputes. Its Commissioner, G. Prakash, said officials including regional commissioners and zonal officers were asked to take up the issue with full vigour.
Storage, supply, transport, sale and distribution of any of the 14 banned items, including carry bags, cups or plates, would attract a fine of ?25,000 the first time, ?50,000 the second and ?1 lakh the third. Similarly, the use and distribution of such plastics in large commercial establishments, including grocery shops and pharmaceutical shops, would attract a fine of ?1,000 the first time, ?2,000 the second and ?5,000 the third. For smaller traders, the fine amounts are nominal and they would be asked to pay ?100 the first time, ?200 the second and ?500 the third. If a person commits the breach for a fourth time, the trade licence shall be cancelled.
Lack of alternative
Following the ban, local bodies had seized the banned items from shops and commercial establishments and manufacturers had stopped production. However, banned plastic carry bags, cups and plates are still found to be in use in many commercial establishments and markets. “No cost-effective alternative has been provided for plastic carry bags. Small vendors, especially those on the road-sides continue to source such bags from the grey market. Unless they are provided with an alternative, the ban will not succeed,” said consumer activist T. Sadagopan.
Source segregation, a key to waste reduction, too is not happening in many places. Bins continue to overflow and canals remain clogged, said a person involved in conservancy operations in the city.
www.thehindu.com
Committed to Foster the Growth of the Textile Industry
CALL US : 
WAPP : 
