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District may attract investments worth Rs. 1,000 crore
Leading fabric manufacturers Reliance Industries, Raymond Ltd., Siyaram Silk Mills, Wadia Group and Valji Group have expressed interest in investing in garment stitching units in Solapur district of Maharashtra to capitalise on the demand for ready-made uniforms from schools and corporates, an industry official said.
“They all are keen to invest in Solapur,” said Amit Kumar Jain, joint secretary, Solapur Garment Manufacturers’ Association. The association recently organised a fabric manufacturers’ fair to attract investments.
“Of late, Solapur has been gaining prominence as a sourcing hub for ready-made school and corporate uniforms. We expect Solapur to attract investments of Rs. 1,000 crore by 2022,” he said.
Mafatlal Industries had already started a stitching unit with 200 machines to make ready-made uniforms in Solapur, he added.
“Reliance, Raymond, Siyaram Silk Mills, Wadia Group, Valji Group and Mumbai-based Qmax World, Rupam Exports Amber Home, which make shirts for the European market, are next in the line,” he added.
Making uniforms
Currently, Solapur has about 400 stitching units making school and corporate uniforms. The association’s target is to scale it up to 2,000 units by 2022.
According to S.R. Gaikwad, Director of Textiles, Government of India, Solapur has the potential to become the uniform hub of the country.
“The Central government will extend all support in achieving the goal set by the Maharashtra (government),” Mr. Gaikwad said.
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Manufacturing sector expected to get projects to the tune of Rs. 60,000 crore
The second edition of the Global Investors’ Meet (GIM), to be held in Chennai on January 23 and 24, may see the signing of at least 140 memoranda of understanding (MoUs).
“We are still receiving proposals and our target is 200. As of now, there are around 40 MoUs pertaining to the manufacturing sector and about 100 ‘facilitation MoUs’,” a senior official in the Industries Department said.
Apart from manufacturing, deals are expected to be inked in information technology, energy, housing and agro industries.
The ‘facilitation MoU’ is so called because the government is obliged, under the State Business Facilitation Act, to enable project proponents to get clearances from various departments and agencies.
The manufacturing sector is expected to get projects to the tune of Rs. 60,000 crore. As of now, the Cabinet has cleared projects worth Rs. 50,000 crore, which include the Chennai Petroleum Corporation Limited (CPCL)’s Rs. 27,450-crore refinery project in Nagapattinam district. On January 18, the Cabinet is likely to hold a meeting wherein it will accord approval to some more projects, the official said.
Going higher
The official said the CPCL project will be the single largest among the MoU projects in terms of investment value. Its cost may even touch Rs. 33,000 crore eventually. The proposed plant will have a capacity of 9 Million Metric Tonnes Per Annum (MMTPA), and will replace the existing facility, which has a capacity of 1 MMTPA.
During the 2015 GIM, 98 MoUs were signed, envisaging investments of over Rs. 2.40 lakh crore (around $36 billion). This time, the total value of investments is likely to either touch or exceed that of the deals inked during the previous edition of the summit.
Also, the authorities are now engaged in scrutinising the credentials of all the promoters of the projects. They will sign the MoUs only if the promoters pass the test of scrutiny, an official said, adding that the Aerospace and Defence Policy, cleared by the Cabinet last month, will be unveiled on the inaugural day of the summit.
Textile and clothing exporters, especially those in the Micro, Small and Medium-scale Enterprises (MSMEs) category, have welcomed the GST relaxations announced on Thursday.
K.V. Srinivasan, chairman of the Cotton Textiles Export Promotion Council, has said in a press release that the expansion of the Composition Scheme from the turnover threshold of Rs. 1 crore to Rs. 1.5 crore will be a relief to several small-scale tax payers.
They would now have to pay the tax on a quarterly basis and file the returns annually. The small-scale tax payers who were so far unable to file the returns on time would benefit from this. The GST exemption limit had also been increased from Rs. 20 lakh to Rs. 40 lakh. This would help the small or medium scale textile exporters and encourage growth in the textile sector.
According to A. Sakthivel, vice-chairman of the Apparel Export Promotion Council, the increase in GST exemption limit will benefit the knitwear industry and the MSMEs in Tirupur.
Units catering to the domestic or export market and have turnover of less than Rs. 40 lakh will now be exempted. There are many such units in the knitting, embroidery, and stitching activities and these do job work for larger units, he said.
Manufacturing sector contracts in Nov.
Industrial output growth dropped to a 17-month low of 0.5% in November on account of contraction in manufacturing sector, particularly consumer and capital goods.
Factory output, as measured in terms of the Index of Industrial Production (IIP), had grown by 8.5% in November 2017, as per data released by the Central Statistics Office (CSO).
The previous low was in June 2017, when IIP growth contracted by 0.3%. Growth for October 2018 was revised upwards to 8.4% from 8.1%. During April-November period, industrial output grew 5% compared with 3.2% in the same period of the previous fiscal.
The manufacturing sector, which constitutes 77.63% of the index, recorded a contraction of 0.4% in November as against a growth of 10.4% a year ago.
The mining sector posted 2.7% growth during the month as against 1.4% in November 2017.
In terms of industries, 10 out of 23 industry groups in the manufacturing sector showed positive growth during November 2018.
The government has issued a notification to withdraw a condition that restricts claiming of an export incentive under goods and services tax (GST), after various petitions were filed in courts against the curbs.
However, the petitioners say that they will not take back the petitions since the removal happened only prospectively.
Earlier, the Directorate General of Foreign Trade (DGFT) and the customs department had imposed a condition that the advance authorisation scheme would be available to exporters only if imports have been undertaken by them.
This is termed pre-import condition, which was effective from October 13, 2017.
An advance authorisation licence is issued to allow duty-free import of inputs, which are used in exports. There was no such condition imposed on the scheme in the pre-GST period.
Change in the condition meant that imports done after exports cannot avail exemptions from IGST and compensation cess.
This led exporters and importers to move courts, including Delhi High Court, Gujarat High Court and Punjab and Haryana High Court as the directorate of revenue intelligence (DRI) started issuing notices to them.
Advance authorisation is generally used for importing goods after exports are undertaken, as against the pre-import condition imposed, said Abhishek Rastogi, counsel for the petitioners. As such, the condition defeats the purpose of the scheme, he added.
After much hue and cry, the customs department and DGFT on Thursday issued a notification, withdrawing the condition.
However, the condition has been withdrawn from January 10 only. Though the scheme is available till March 31, 2019, sources said it may be extended further like in the past. The petitioners contested this and refused to withdraw their pleas in courts.
“This would not provide relief to imports made between October 13, 2017 and January 9, 2019, thereby the petitions filed will continue to seek relief in respect of such exports,” Rastogi said.
The government will forego revenue of close to Rs 1 trillion on all the items whose rates have revised to lower slabs under the goods and services tax (GST) regime, Finance Minister Arun Jaitley said on Friday. He also said the various income tax benefits given to the middle class during the Narendra Modi government’s existing tenure will lead to revenue foregone of Rs 97,000 crore.
Jaitley gave these numbers in his latest blog, titled “How the Poor and the Middle Class Benefitted Most from the Modi Government Policies?”
“The GST is the single most important ‘consumer friendly measure’ in India. Taxes of most commodities have been brought down. Commodities have been made cheaper, even though the revenue sacrificed now after the rates revision, would be close to rupees one trillion,” Jaitley wrote.
After the last round of rate cuts in the December GST Council meeting, of the 1,216 commodities which are used, broadly 183 are taxed at zero rate, 308 at 5 per cent, 178 at 12 per cent and 517 at 18 per cent. Only 23 items remain in the highest slab of 28 per cent, which includes items like tobacco products, luxury vehicles, molasses, air-conditioners, aerated water, large TVs, dishwashers, cement and auto parts. “Even though the taxation slab is Rs 2.5 lakh, those with an earning upto Rs 3 lakh need not pay any tax. A Rs 40,000 standard deduction has been given to all employees. Similarly, all investments in housing, insurance and other saving instruments, have been increased in the last four years. The cost of this to the exchequer is almost Rs 97,000 crores per annum,” Jaitley said.
On the recently passed 10 per cent reservation for economically weaker sections in government jobs and educational institutions, he said, “The Prime Minister’s decision to force an agenda for poverty based reservation is the single greatest recognition/concern for poor across the general categories and the need to eliminate poverty,” and accused the main opposition party Congress of paying “lip sympathy” and grudgingly supporting the Constitution Amendment Bill, passed by Parliament earlier this week.
“Poverty is a secular criteria” and it cuts across communities and religions,” he said adding that “poverty as criteria for a carve out does not in any way contravene the basic structure of the Constitution”.
Jaitley said that the original Constitution (unamended) in its Preamble mentions equality of opportunity and justice for all whether political, social or economic to be ensured by the state.
He also highlighted other government’s initiatives like housing for every rural poor, universal health scheme – Ayushman Bharat -, and interest subvention, for economic upliftment of the poor.
“This is the first time that during the five-year tenure of a government a Rs 2 trillion annual tax rebate for both direct and indirect taxes is given to the middle class tax payer without a single tax being increased,” Jaitley said.
“There is a method for economically empowering the poor. Their purchasing power has improved. This helps trade and businesses which impacts positively on the economy.
“This is the first five year tenure of a government where India has consistently remained the fastest growing economy in the world,” he said.
Cautioned by spot power prices rising to record levels due to coal shortage at power plants in the last summer, states have started making arrangements to tie up power supply agreements on a short-term basis right from the beginning of the new year.
Four such auctions have already been conducted this year, through which Uttar Pradesh and Maharashtra seek to tie up a cumulative 2,850 MW capacity for May and June, 2019. Stressed power projects, vying for new avenues of electricity sale, were among the lowest bidders.
The tariffs quoted by power producers against such bids range between Rs 5.09/unit-Rs 7.49/unit.
According to sources, stressed power assets such as the 1,320 MW Jaypee Nigrie plant and the 1,200 MW Essar Mahan unit are among the lowest bidders to Uttar Pradesh and Maharashtra’s invitations for bilateral power contracts. Coastal Energen’s 1,200 MW Mutiara plant, another stressed unit, has also been shortlisted for meeting Uttar Pradesh’s requirements.
Chhattisgarh has also invited 500 MW short-term capacity cumulatively for January and February. Adani Power’s Mundra plant is one of the lowest bidders to these tenders, sources added.
Though there are instances where the bids have been cancelled by discoms due higher prices, experts have pointed out that the aforementioned tariffs — though higher than the average electricity rates — would insulate the discoms from the pricing vagaries at electricity exchanges. Last year, spot prices of electricity breached the Rs 10/unit several times in these months due to surge in electricity demand and coal supply issue at a number of power plants.
A court ruling in India this week that upheld a Monsanto patent on genetically modified (GM) cotton seeds has raised hopes among farmers that the company would now launch its next-generation seeds, the application for which it pulled two years ago.
India approved Monsanto’s GM cotton seed trait in 2002 and an upgraded variety in 2006, helping transform the country into the world’s top producer and second-largest exporter of the fibre. But newer traits have not been available since the company withdrew an application in 2016 seeking approval for the latest variety due to a royalty dispute with the government and worries over patent claims.
Nevertheless, the new herbicide-tolerant variety seeped into Indian farms and many cotton growers openly sowed them last year, prompting a government investigation that is ongoing. Monsanto has said local seed companies have illegally attempted to “incorporate unauthorised and unapproved herbicide-tolerant technologies into their seeds”.
“We don’t understand legal issues but we want new technologies,” Shrikant Kale, a cotton grower in Yavatmal district in the western state of Maharashtra, said. “If the court verdict helps seed companies in bringing new technology, then it would be good for us as well.”
Nearly a dozen other farmers in three Maharashtra districts said they planted the illegal cotton variety in June after buying seeds from the grey market, and that they would be happy to use it legally if Monsanto launched it.
READ | Monsanto verdict will bring in crop innovation: industry
“Illegal sales mean that there’s always a risk of buying spurious seeds and we buy such smuggled seeds as there is no alternative,” said Vijay Niwal, another cotton farmer in Maharashtra.
“We don’t mind paying a few hundred rupees more for seeds if they help us in saving thousands of rupees on managing weeds.”
Monsanto owner Bayer welcomed the Supreme Court’s decision, saying it “prima facie validates our patent” and that it was confident of “defending any challenge to our patent by presenting solid scientific evidence”.
Monsanto did not immediately comment on future plans, including any launch of its new seeds.
But two industry sources aware of the company’s plans said that a dispute over royalties paid by local companies that licence its technology remained a hurdle to seeking fresh approval to sell a new variety of cotton seeds. India’s agriculture ministry has twice slashed royalties in the past two years, apart from cutting cotton seed prices.
“The government could step in again to decide the rate of royalty, which could be really miniscule in comparison with the cost of developing a really good product,” said one of the sources, declining to be named as they were not authorised to speak tto the media.
“Biotechnology research is very expensive and if the government arbitrarily fixes the rate for expensive, cutting-edge technologies then that becomes a major hurdle in launching new products.”
The agriculture ministry did not respond to an email seeking comment.
“SELF-RELIANCE” GROUP
The court ruling has been criticised by a nationalist group that has links to Bharatiya Janata Party and favours non-GM technologies and “India first” economic policies. The Swadeshi Jagran Manch, which loosely translates to National Forum for Self-Reliance, said the government needs to amend the country’s patent law to negate the court verdict.
Industry executives say several foreign agrichemical companies had to scale down projects, fire scientists, or pull applications to sell products in India because of government-mandated cuts in royalties and a lower court’s order in April that rejected Monsanto’s patent claim.
They said the Supreme Court verdict overturning the lower court order could set a precedent for any future patent dispute and encourage fresh investments in one of the world’s biggest farm markets, whose seed industry is worth around $3 billion a year.
“The entire biotechnology space has been liberated,” said Ram Kaundinya, director general of the Federation of Seed Industry of India that represents foreign and local seed companies including Monsanto and Syngenta.
“There was uncertainty in this area for the last three to four years, which led to a reduction in investments. There are still some issues regarding price control but those are not as big as validity of patents.”
Many biotechnology companies working on corn and other GM crops will now push hard to get government approvals for their seeds, he said, declining to name the companies.
DowDuPont, which in August last year told the Indian government it was putting off trials needed for approval to sell a GM corn variety, did not respond to a call seeking comment.
A public relations firm for Syngenta directed Reuters to Kaundinya for comment.
But permitting GM food crops is a big call for India, which so far only allows genetically modified cotton seeds.
The country spends tens of billions of dollars in importing food, as dated technologies, poor yields, shrinking farms and unreliable weather patterns afflict the country of 1.3 billion people. But opponents of GM crops say they threaten the country’s biodiversity and are too expensive for Indian farmers.
Annual sales of GM cotton seeds is estimated at $500 million, and Monsanto-developed seeds now control 90 percent of India’s cotton acreage.
The Directorate General of Foreign Trade (DGFT) has removed the pre-import condition to avail exemption from the payment of IGST on imports under Advance Authorization.
This exemption which will be available till March 31, 2019 has also been extended to deemed supplies, said DGFT in a notification.
It said “Para 4.14 of Foreign Trade Policy (FTP) is amended to remove pre-import condition to avail exemption from Integrated Tax and Compensation Cess and exemption from Integrated Tax and Compensation Cess is also extended to deemed supplies.”
Earlier as per para 4.14 of Foreign Trade Policy 2015-20, imports against Advance Authorizations are exempted from the payment of Integrated Tax (IGST). However, this exemption is subject to pre-import condition.
The Cotton Textiles Export Promotion Council (TEXPROCIL) along with other EPCs / Trade bodies had represented to the government to remove the condition of pre-import for IGST exemption against Advance Authorizations.
Joining the debate on farm loan waivers, Asian Development Bank (ADB) Country Director Kenichi Yokoyama Friday said such write-offs were against economic principles and cannot effectively address the agrarian distress.
Yokoyama also advocated for direct transfer of funds to targeted beneficiaries as it would cut down leakages. On farm loan waiver, he said most of the people are sceptical about it as an economic principle and has moral hazards.
“There is a need to address agriculture sector distress…but economic principle wise, farm loan waiver is not an effective means to address farm distress,” he said.
Earlier this week, RBI Governor Shaktikanta Das said any generalised farm loan waiver adversely impacts the credit culture and the behaviour of borrowers, amid various states announcing waivers. He said loan waiver is related to the fiscal space that a particular state government has.
Farm loans totalling around Rs 1.47 lakh crore were waived off by Madhya Pradesh, Rajasthan and Chhattisgarh after the Congress came to power last month.
In 2017, Uttar Pradesh, Maharashtra and Punjab announced to write off unpaid loans. The country’s largest state waived off farm loans worth Rs 36,400 crore.
Appreciating the fact that India has a platform to provide direct benefit transfer through Aadhaar, Yokoyama said analysis has to be done on how the government can launch universal basic income (UBI) scheme in the most efficient way.
Asked if there was a stress on fiscal deficit, Yokoyama said ADB has no doubt about the government meeting the target.
“I think a clear framework is there and mandate given under the Fiscal Responsibility and Budget Management Act. We don’t have any doubt over it,” he said.
The Centre has budgeted to contain fiscal deficit at 3.3 per cent of the GDP in the current fiscal, lower than 3.5 per cent in 2017-18.
Last month, Finance Minister Arun Jaitley had exuded confidence of meeting the fiscal deficit target of 3.3 per cent for the current fiscal.
