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To accede to their demand not good for trading community
The Confederation of Indian Traders on Wednesday urged the government not to heed to the demands by e-commerce companies and agencies from the U.S. to water down or delay the implementation of the recently-announced foreign direct investment (FDI) rules in e-commerce.
“As a body that represents seven crore small businesses and 40,000 trade federation, we strongly oppose any changes,” Praveen Khandelwal, national general secretary of CAIT, said at a press conference. “To accede to their demand is not good for the trading community.”
This comes against the background of reports of intense lobbying by the e-commerce companies to ensure that the FDI rules are amended. The rules mandate that no entity in which an e-commerce company has stake can sell its wares on that e-commerce company’s portal.
Any vendor who receives 25% or more of its inputs from an e-commerce group company cannot sell on that e-commerce portal. These rules, which are to be implemented from February 1, are expected to adversely impact Flipkart and Amazon, who have considerable stake in vendors operating on their respective platforms.
“We want the government to institute a thorough probe into the business activities of these players in the last 2-3 years,” Mr. Khandelwal added. “They should be strictly penalised if any violation found.”
Mr. Khandelwal said that any move to dilute the rules or push back the implementation date would be met with stiff resistance from the trading community and also a nationwide agitation to protest this.
The CAIT also called for the implementation of these FDI norms to apply to domestic players as well in order to ensure a level-playing field and promote competition.
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This will encourage the mill owners to shift their units out of the city and enjoy the benefits provided by the state government.” The textile mill owners are upbeat as the FSI for industrial units in city areas is only 1.2, whereas they will be getting a total of 2.7 FSI in the special nod areas located under the development plan of the Suda.Keeping in mind the future development, provisions has been made to construct wider roads. In these areas, Particulate Matter (PM10) levels is exceedingly higher than the national annual average at 184 per micrograms per cubic meter of air (UG/M3) per annum.President of SGTPA, Jitu Vakharia told TOI, “We are elated that CM Vijay Rupani has accepted our proposal for shifting the textile mills out of the city and providing us with specialised industrial zone with 2.7 FSI. To check the reservations suggested in the Suda DP 2035, a local level consultative committee has been formed under the chairmanship of Suda president and municipal commissioner, M Thennarasan.The SGTPA has urged the state government to allocate 100 hectare land for developing new industrial area to facilitate the shifting of textile mills located in the walled city, Ashwani Kumar Road, Katargam, Varachha, Kadodara and Udhana areas.About 65 textile mills are operating in the city’s residential areas including Khatodara, Udhana, Ashwani Kumar Road, Ved Road, Bombay Market, Puna Kumbharia etc. Surat: The shifting of polluting textile dyeing and printing mills outside the city limits could be a reality with the state government approving specified shifting zones for the industrial units with the addition of few provisions in the General Development Control Regulation (GDCR).While approving the development plan (DP) for the Surat Urban Development Authority (Suda), the Gujarat government has made special provisions for the shifting of the industrial units located within the city to the outskirts in a specified shifting zone.The decision has come following a strong recommendation by the south Gujarat Textile Processors Association (SGTPA) and the state industries minister, Saurabh Patel for shifting the textile mills to the outskirts.The textile mill owners wanting to develop their factories in the special nod areas will get the base floor space index (FSI) of 1.8 free and chargeable 0.9 FSI based on the jantri (annual land rates) rates.
Various startup founders have recently claimed of receiving notices under Section 56(2) (viib) of the Income Tax Act from the I-T department to pay taxes on angel funds raised by them.
New Delhi: The government has eased the procedure for startups to seek income tax exemption on investments from angel funds as part of efforts to address concerns of budding entrepreneurs, official sources said.
Various startup founders have recently claimed of receiving notices under Section 56(2) (viib) of the Income Tax Act from the I-T department to pay taxes on angel funds raised by them.
“Commerce and Industry Minister Suresh Prabhu has approved a notification pertaining to this clause to make allowances for angel investors. A formal notification to this effect would be issued soon by the DIPP,” sources said.
To seek the exemption, a startup will apply, with all the documents, to the department of industrial policy and promotion (DIPP). The application of the recognised startup shall be moved by the department to the Central Board of Direct Taxes (CBDT) with necessary documents.
“CBDT has been mandated to grant exemption approval to the startup for the purposes of this clause or they can decline to grant such approval within a period of 45 days from the date of receipt of application from the DIPP,” they said.
Earlier procedure of applying to an inter ministerial board of certification for approval under this clause has now been done away with.
“Application procedure has been simplified by making application to CBDT through DIPP,” they added.
The earlier requirement of startup to submit report from merchant banker specifying the fair market value of shares has also been removed.
As per the revised procedure, a startup which is recognised by the DIPP would be eligible to seek exemptions, subject to certain conditions.
Startups will have to provide account details and return of income for last three years. Similarly, investors would also have to give its net worth details and return of income.
The government has earlier allowed startups to avail full tax concession on investments up to Rs 10 crore from investors, including angel financiers.
The conditions also include that “investor should have returned income of Rs 50 lakh or more for the financial year preceding the year of investment; and net worth exceeding Rs 2 crore or the amount of investment made/proposed to be made in the startup, whichever is higher, as on the last date of the financial year preceding the year of investment/proposed investment,” they added.
Section 56(2) (viib) of the Income Tax Act provides that the amount raised in excess of a startup’s fair market value is taxed at 30 per cent as income of the firm from other sources.
Prabhu had taken up the issue up with the finance ministry.
Normally, about 300-400 startups get angel funding every year.
The government launched the Startup India initiative in January 2016 to build a strong ecosystem for nurturing innovation and entrepreneurship.
Tax experts say India has kept finding ways to complicate things. The Kerala GST cess takes things from bad to worse
By doubling the goods and services tax (GST) eligibility limit, India’s version of GST has inched closer to the global format. However, tax experts say India has kept finding ways to make things complicated, with the recent introduction of cess for Kerala taking things from bad to worse.
Although for a limited period, the move defeats the purpose of GST, because this mammoth tax change was introduced so that multiple cesses could be done away with.
“Re-introduction of cess sets a bad precedent. It may be for a noble cause, but instead of levying cess, the Centre could have funded the cause directly,” said Anita Rastogi, indirect tax partner at PwC India. The council allowed flood-hit Kerala to levy a calamity cess of 1% on intra-state sales for a maximum period of two years.
A moot question is if this takes us back to the days of VAT, or value added tax, which also started off with noble intentions before getting muddled. Drawing parallels with earlier tax regime, Saloni Roy, senior director at Deloitte India, said, “When VAT was introduced in 2004, its purpose just like GST was to have a unified tax system across the country. But after a while, states started drifting away. For example, some states like Haryana, Uttar Pradesh and Gujarat had additional tax on certain items which others didn’t. My concern with bringing back cess is that, are we going back to where we started from?”
Another important decision taken at the GST Council’s 32nd meeting was the extension of composition scheme to services providers. Services providers with a turnover limit of up to ?50 lakh are now allowed to avail of the composition scheme at a rate of 6%.
While the objective here is to encourage more businesses to come under the GST ambit, tax experts fear that introduction of a new tax rate makes the law more complex and could lead to non-compliance. Currently, businesses under the composition scheme are taxed under various slabs of 1% (manufacturers), 2% (traders) and 5% (restaurants).
“They have extended the composition scheme for service providers, aimed at widening the tax base, but at a new tax rate of 6%. Anyway, we had three different tax rates for goods providers who have opted for this scheme and this complicates the law even further. The more the complex law, more difficult it is to comply. A simple law leads to more compliance and increased revenue to the government—this is tried and tested globally in countries where GST/VAT is practised,” added Rastogi.
At a time when GST revenues are falling behind the required target, there is increasing worry that the added complexity will act as a deterrent for taxpayers. Thanks to the half-hearted approach, India’s GST has miles to go before it becomes a good and simple tax.
Exporters’ body FIEO on Tuesday said slow growth in exports in December was due to uncertain global cues and domestic challenges.
Responding to the December exports data, FIEO President Ganesh Kumar Gupta said that the data yet again have shown a marginal growth due to uncertain global cues and challenges on the domestic front.
China’s exports contracted in December 2018 highlighting fragile global conditions, he added.
However exports during the month was close to USD 28 billion with a growth of just 0.34 per cent, even when the weakening global economic outlook are showing no signs of respite, said the FIEO Chief.
But during the month, the sectors which were showing high growth in the previous months are now witnessing nominal growth or marginal growth such as the Petroleum sector, Organic & Inorganic Chemicals, Plastic & Linoleum, Electronic goods and RMG of all textiles.
All major labour-intensive sectors of exports like Gems & Jewellery, Engineering, Leather & Leather products, Man-made yarns/fabs/made-ups, Handloom products, commodities including most agri products are now in negative territory, viewed Gupta.
17 out of 30 major product groups were negative territory during December, 2018.
However on the imports front, the growth in December, 2018 was on negative side with -2.44 percent mainly due to reduction in gold and pearls, precious & semi- precious stones import.
Spin off effect due to global trade war has also impacted the country’s trade impacting both imports and exports, said Gupta.
The FIEO Chief once again reiterated his demand for urgent and immediate support including augmenting the flow of credit and better fiscal support.
He exuded confidence that despite current growth trends the exporters will manage to do well ending the fiscal with merchandise exports of USD 340-350 billion with the timely and much needed support of the government.
Exporters’ body FIEO on Tuesday said slow growth in exports in December was due to uncertain global cues and domestic challenges.
Responding to the December exports data, FIEO President Ganesh Kumar Gupta said that the data yet again have shown a marginal growth due to uncertain global cues and challenges on the domestic front.
China’s exports contracted in December 2018 highlighting fragile global conditions, he added.
However exports during the month was close to USD 28 billion with a growth of just 0.34 per cent, even when the weakening global economic outlook are showing no signs of respite, said the FIEO Chief.
But during the month, the sectors which were showing high growth in the previous months are now witnessing nominal growth or marginal growth such as the Petroleum sector, Organic & Inorganic Chemicals, Plastic & Linoleum, Electronic goods and RMG of all textiles.
All major labour-intensive sectors of exports like Gems & Jewellery, Engineering, Leather & Leather products, Man-made yarns/fabs/made-ups, Handloom products, commodities including most agri products are now in negative territory, viewed Gupta.
17 out of 30 major product groups were negative territory during December, 2018.
However on the imports front, the growth in December, 2018 was on negative side with -2.44 percent mainly due to reduction in gold and pearls, precious & semi- precious stones import.
Spin off effect due to global trade war has also impacted the country’s trade impacting both imports and exports, said Gupta.
The FIEO Chief once again reiterated his demand for urgent and immediate support including augmenting the flow of credit and better fiscal support.
He exuded confidence that despite current growth trends the exporters will manage to do well ending the fiscal with merchandise exports of USD 340-350 billion with the timely and much needed support of the government.
FRANKFURT, Jan 15 — Malaysia has the potential to increase exports of textiles to the United States (US) in light of its trade war with China.
The textile industry, often described by some experts as a “sunset industry,” began to lose its sheen decades ago following rising costs and fierce competition from China, Bangladesh and Vietnam.
But the ongoing US-China trade war has prompted some western buyers to look for alternative source, and this is where Malaysia can take advantage of the situation.
Hopes of reviving the industry in Malaysia — and other South-east Asian suppliers of home-textiles and other textile products — were visible at Frankfurt’s just-concluded four-day Heimtextil Trade Fair, the world’s largest event for home textiles and accessories.
While an abrupt switch by buyers representing the US and other western importing companies and houses to other supplying countries is not expected, the ongoing dispute between the two economic giants has caused what traders at the Frankfurt show call a “gentle panic.”
“I am pretty sure buyers in the US and elsewhere are aware of the perils of asymmetrical dependency on China as a source of textile products, coupled with the many problems which foreign importers face in that country, particularly in regard to quality and post-sales service, among others.
“Prices of Chinese products have also risen, no thanks to the soaring labour and production costs in that country. So, the ongoing trade war could, in fact, be the proverbial straw that will break the camel’s back,” said one US buyer who preferred to remain anonymous to Bernama at the Heimtextil show.
He said Malaysia could step in to fill the vacuum if US companies decide to quit China, adding Malaysia’s textile quality is definitely a plus, despite prices being slightly higher.
Meanwhile, Malaysian exhibitors offered testimony of the changing scenario in the home-textile trade.
Fernex Sdn Bhd’s marketing director Lee Kheang Lim said the company received many solid business enquiries from both existing and potential new buyers from around the world, including the US.
Wendy Tan, managing director of Nature World Manufacturing Sdn Bhd said the company, which manufactures home textile products, also received numerous enquiries.
“While our buyers have shown a keen interest in our Bio-Active Energy-based products, the increase in the number of enquiries may possibly be due to the ongoing trade war, with buyers trying to establish alternative sources of supply,” she said.
Organised by Messe Frankfurt, the Heimtextil show from January 7-10 boasted 3,025 exhibitors from 65 countries.
Olaf Schmidt, Messe Frankfurt vice-president of textiles and textile technologies said the number of US buyers at the show had increased, implying that the country was exploring opportunities in the international market.
“All the big US stores are here. There is, clearly, a shift to other countries and because of the emotional character of the ongoing problem, we should know in about six months from now what will happen,” he added.
However, he was unsure if other suppliers can quickly replace China as the world’s biggest textile supplier with its huge textile-manufacturing infrastructure.
Schmidt was upbeat about the Asean region’s potential, with Vietnam, Malaysia, Indonesia and Bangladesh expected to become key players in the global textile supply chain.
“I also believe fierce international competition will force suppliers to upgrade their production processes, adopt automation and devising faster and convenient modes of supplies. Technological innovation is the mantra of the industry’s future,” he said.
The textile exhibition saw participation from Asean exhibitors, including eight exhibitors from Indonesia, three from Malaysia, three from Thailand and eight from Vietnam.
The top two textile giants, China and India, had 559 and 394 exhibitors respectively, surpassing the host country Germany at 301. According to the Malaysian trade commissioner in Frankfurt, Badrul Hisham Hilal, Malaysia’s total exports of textiles, apparel and footwear amounted RM13.69 billion in the January-November 2018 period.
The US is the biggest market for such products, accounting for RM1.78 billion (13 per cent) of total exports.
According to the Vietnam Textile and Apparel Association (VITAS), 2018 was a successful year for the textile and garment industry with a total export turnover of over 36 billion USD, up over 16 percent year-on-year, making Vietnam one of the three biggest exporters of textiles and garments in the world.
VITAS Chairman Vu Duc Giang said last year, the world saw complicated developments, rising trade disputes and scientific-technological advances. In that context, the association proposed many measures to the Government, and relevant ministries and sectors to remove policies that cause difficulties for businesses operating in this field, he said.
With the results achieved in 2018, Vietnamese textile firms have witnessed positive signals for orders in 2019.
Many businesses have already received orders for the first six months of 2019 and even the whole year. Vietnam’s products are highly competitive and the country gradually completed the textile supply chain because flows of capital investment in the textile and dyeing industry, and material has been on the rise.
The upcoming enforcement of new generation free trade agreements is a positive factor supporting for production and business activities of the sector in 2019.
On that basis, VITAS has set a target of 40 billion USD in export turnover, up 10.8 percent compared to 2018. The sector is expected to enjoy a trade surplus of 20 billion USD, and create employment and increase income for 2.85 million workers.
Experts said in 2019, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is hoped to create a boost for many industries of Vietnam, including the textile and garment sector. In addition, the textile and garment sector is also waiting for more orders shifted from China to Vietnam due to the US-China trade war.
According to Pham Xuan Hong, Chairman of the Board of Directors of Saigon 3 Garment Joint Stock Company, domestic enterprises will be enabled to choose orders with highs price and easier requirements when a lot of orders are moved from China to Vietnam.
In order to catch up with these opportunities, local businesses need to gradually improve technologies and invest more in new technologies, he said.
However, opportunities will always go with challenges, experts said.
According to the Ministry of Industry and Trade, 2019 will continue to be a challenging year for the sector to integrate into the global textile supply chain.
Especially, the fourth Industrial Revolution will have great impacts on the textile and garment industry in the coming time, forcing it to change and strongly increase investment in equipment and personnel.
Many consumers now require origin certifications and environmentally-friendly products, so textile and garment enterprises need to ensure global standards of materials to ensure health of customers.
Bui Kim Thuy, Chief Representative of the US-ASEAN Business Council (USABC), said Vietnam is participating in 16 free trade agreements (FTAs). Ten out of 12 signed agreements have been enforced, such as the ASEAN Trade in Goods Agreement (ATIGA), the ASEAN-China FTA, the ASEAN-Korea FTA, while the two remainders, the CPTPP and the ASEAN-Hong Kong (China) FTA, have not yet come into force.
The participation in various FTAs helps Vietnamese enterprises to have more choices in exporting goods abroad. However, those are also bringing challenges to the sector, she said.
Thuy stressed that if businesses do not meet regulations on origin of goods, it will be difficult for them to take full advantage of incentives from FTAs.-VNA
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership – popularly known as TPP-11 – is now in effect in seven of the 11 participating countries.
The treaty, which was signed by 11 countries on March 8, 2018 in Santiago, Chile, had to be subsequently ratified by the countries’ respective national assemblies. The treaty became effective in Australia, Japan, Mexico, New Zealand, Canada and Singapore on December 30, 2018. Vietnam was added on January 14.
Vietnam’s entry creates an interesting dynamic in the cotton trade. Vietnam’s textile sector is burgeoning and needs good supplies of cotton.
In the last three seasons, Vietnam is the number one importer of United States cotton, including about 2.98 million bales (480 lbs. each) during the 2017/18 season. That number has more than doubled since 2013/14, when the United States exported about one million bales to Vietnam.
Vietnam is followed by China in terms of U.S. exports, while other major importing countries are Turkey, Indonesia and Pakistan. Bangladesh is also marching closely with Mexico in terms of U.S. cotton imports.
As part of the TPP-11 treaty, free trade between Australia and Vietnam will boost agricultural exports from Australia to Vietnam. This agreement eliminates 98% of tariffs in the TPP-11 region, whose collective GDP is about $13.5 trillion.
According to the Australian Department of Foreign Affairs and Trade, all tariffs on cotton exports will be eliminated under the treaty, providing an additional advantage for Australia’s exports of cotton to Vietnam. Japan has also given more market access to Australian cotton via Vietnam. Tariffs on clothing made from Australian cotton in Vietnam have been eliminated in Japan, giving more market entry for Australian cotton.
In 2017, 15% of Australia’s total cotton exports were to TPP-11 countries. Market access and common rules are expected to enhance the export chances of agricultural products from Australia.
Grady Martin, Director of Sales for Plains Cotton Cooperative Association stated, “Vietnam is a very important market for U.S. cotton. As yarn and garment operations are shifting to Vietnam, the country has growing importance.”
Regarding the impact of the new TPP-11 treaty on exports to Vietnam, Martin replied that it may have an impact, but Vietnam needs cotton. In the long run, what the impact will be is hard to judge right now, he added.
The biggest question to answer is this: Since 80% of U.S. cotton is exported, will the non-participation of United States in the TPP-11 impact agricultural exports – and particularly cotton.
SLAMABAD: The government on Tuesday ordered immediate clearance of about Rs36 billion refund claims of exporters and allowed tax and duty-free import of cotton in addition to mandating the payment of duties and taxes on import of vehicles in foreign exchange.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Asad Umar.
In response to demands of the textile industry, the ECC approved withdrawal of customs duty, additional customs duty and sales tax on import of cotton effective Feb 1-June 30, 2019.
The step is aimed at ensuring sufficient cotton supply for textile industry – especially its export segment.
The decision was based on the plea that Pakistan had been a net cotton importer since 2001 while the domestic cotton was of short-to-medium staple length, leaving local textile manufacturers to import long and extra long staple cotton for finer yarn counts for subsequent transformation into high value-added finished products.
Import of cotton has remained duty free till the slab of 0pc was abolished in 2014-15 and custom duty of 1 per cent was imposed along with the 5pc sales tax. Later on, 1pc slab was increased to 2pc and then 3pc along with the imposition of 2pc additional duty to make it 5pc. Currently, cotton is subject to 3pc customs duty, 2pc additional customs duty and 5pc sales tax.
The prime minister’s export package was announced in Jan 2017 under which the textile sector was provided number of facilitations including withdrawal of custom duty and sales tax on imported cotton effective Jan 16, 2017.
These duties and taxes were re-imposed on July 15, 2017 to facilitate lifting of local cotton. However, these were withdrawn again effective Jan 15, 2018 and then re-imposed effective July 15, 2018.
The textile ministry had once again demanded withdrawal of these taxes and duties now saying the industry consumed around 12-15 million bales per annum while local crop this year was estimated at 10.78m bales of 170kg, showing a decrease of 9.7pc compared to last year and a decrease of 24pc against the initially fixed target of 14.37m bales.
Vehicle imports
The ECC also approved a summary of the Commerce Division seeking payment of duty and taxes on all imported vehicles in new and
used condition under personal baggage or gift scheme, through foreign exchange arranged by Pakistani nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency.
The government, in import policy of 2016, had allowed import of such vehicles under above schemes to facilitate overseas Pakistanis. There had, however, been complaints that the schemes were massively misused by commercial importers. As a result, the ECC on Oct 6, 2017 rationalised import schemes by ordering payment of duties taxes in foreign exchange. The abrupt policy change led to about 6,000 vehicles being stranded at seaports.
The commerce ministry proposed, as a result, that the new schemes should come into force for vehicles arriving after Feb 28, 2018 but the issue remained unsettled. Subsequent meetings between the government and various stakeholders revealed that around 5pc of cars under these schemes were imported by the bona fide overseas Pakistani.
As a result, the commerce division proposed that misuse of schemes should be prevented by introducing a change in import order 2016 that all vehicles imported under such schemes should be subjected to payment of duties in foreign exchange arranged by Pakistani nationals themselves or local recipient supported by bank encashment certificate showing conversion of foreign remittance to local currency.
Export refunds
The meeting also approved another summary to clear outstanding claims of drawback of local taxes and levies (DLTL) under the exports incentive scheme announced by the government under the Finance Act 2014-15. The ECC decided that cases, which were submitted in time but were pending due to want of funds, will be entertained by the government.
The meeting was told that one of the major impediments faced by export-oriented industry was the liquidity crunch due to the held up sales tax refunds and non-release of budget for the DLTL and hence, in continuation of government policy to support export sector, their liquidity should be improved by clearing the backlog of sales tax refunds and duty drawbacks as promised in the government’s 100 day agenda.
The Commerce Division demanded that funds for drawback of local taxes and levies, allowed under the PM’s export package, should be released by the finance ministry within one week. Verified claims worth Rs36bn were pending with the State Bank of Pakistan.
It was also suggested that going forward, sales tax refund claims and customs duty drawback may be paid by the SBP through authorised dealers immediately at the time of realisation of export proceeds.
The ECC also approved regulatory amendments in the Export Policy Order 2016 and Import Policy Order 2016 as proposed by the Commerce Division.
These will be submitted for consideration of the Federal Cabinet. The amendments are aimed at enhancing ease of doing business in the country.
