Around 70 per cent of European Parliament lawmakers recently backed the European Union (EU)-Japan agreement that binds two economies accounting for about a third of global gross domestic product and signals their rejection of protectionism by launching the world’s largest free trade zone early next year. Japan’s parliament also approved it recently.

EU trade commissioner Cecilia Malmstrom said the deal would bring clear benefits to EU companies and farmers.

The EU-Japan agreement will remove EU tariffs of 10 per cent on Japanese cars and 3 per cent for most car parts. It will scrap Japanese duties of around 30 per cent on EU cheese and 15 per cent on wines as well as open access to public tenders in Japan. It will also open up services markets, such as financial services, telecoms, e-commerce and transport.

Critics, however, say the agreement will give too much power to multinationals and could undermine environmental and labour standards, according to a news agency report.
Both Brussels and Tokyo reportedly want it in place before Britain leaves the EU at the end of March

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Scientists have developed thin, flexible wires with silver that could be used to weave comfortable smart fabrics and other wearable electronics.
Researchers from Nanjing University of Posts and Telecommunications in China have developed a simple, scalable and low-cost method to prepare conductive fibres with uniform morphology, high conductivity and good mechanical strength.
Taking advantage of the capillary action of fibres, such as cotton, nylon and polyester yarns, the solution containing silver nanowires is spontaneously absorbed into the capillary tunnels.
Then silver nanowires are evenly coated onto the fibres through evaporation-induced flow and capillary-driven self-assembly process to form conductive fibres, which is in situ observed by the optical microscopic measurement.
The fabricated flexible and stretchable conductor exhibits uniform morphology, high conductivity and good mechanical strength, which is promising for the application in wearable electronics and smart fabrics.
Conventional conductive fibres are metal wires such as stainless steel and copper wires, as well as the metal film coated yarn. These conductive fibres are stiff and brittle, not meeting the demand of flexibility and comfortability for smart textiles.
Smart textiles with electronic devices such as sensor, light emitting diode, transistor, battery and supercapacitors integrated into fabrics have drawn considerable attention.
Conductive fibres and yarns, with the function of connecting various electronic devices, play a key role in smart textiles system.
Recently, conductive nanomaterials such as metal nanomaterials, carbon nanotubes and graphene with high conductivity, good mechanical properties, feasibility of large-scale production and solution-process, have become a new type of fundamental materials for conductive fibres.
Great efforts have been made to engineer conductive nanomaterials into conductive fibres by various technologies such as vapour deposition, electrospinning and spray coating methods.
Despite these promising progresses, the cost-effective fabrication of conductive fibres with high flexibility and good electrical conductivity is still a challenge, researchers said.

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Toray Industries, Inc, has announced a policy to integrate the management of its two textile manufacturing subsidiaries in Thailand –Thai Toray Textile Mills Public Company Limited (TTTM) and Luckytex Public Company Limited (LTX) –at the respective board of directors meetings and approved to convene general shareholders’ meetings for the integration.
Going forward, TTTM and LTX will drive forward the prescribed procedures for management integration including approval by the general shareholders’ meetings and aim to start operations as a new company in July 2019. Toray will announce the name of the new company and the scheduled date of starting operations immediately after the formal procedures are complete, according to a press release by Toray.
The management integration agreed upon by the two companies is aimed at enhancing material lineups in both apparel and industrial applications and strengthening product development capability. The companies also aspire for dramatic growth as a new comprehensive textile manufacturer by strongly driving forward the integrated materials and garments business by further reinforcing the cooperation within the Toray Group.
At the same time, the business environment surrounding the T/R (polyester/rayon) and T/C (polyester/cotton) blended yarns requires strengthening of product development ability and competitiveness due to the intensifying competition.
Established in 1963, TTTM is engaged in spinning, weaving and dyeing of T/R blended fabrics as well as manufacturing of polyester filament and spun knitted fabrics. LTX was established in 1960 and is engaged in spinning, weaving and dyeing of T/C blended fabrics as well as manufacturing of polyester filament fabrics and air-bag fabrics.
The Toray Group entered Southeast Asia ahead of other Japanese companies and built the foundation to expand the business of high-quality T/C and other textiles throughout the world. Among these Southeast Asian countries, Thailand is the first business base of the Group and it boasts a long history of growing its business concurrently the economic development of the Kingdom of Thailand.

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The All Pakistan Textile Mills Association (APTMA) has urged the government to ensure low cost of inputs to cotton farmers, implement a law relating to zoning system to regain cotton are and quickly provide quality cotton seed and extension services to farmers. It also demanded a regulatory regime for quality seed production and elimination of pest adulteration.
Association chairman Syed Ali Ahsan and patron-in-chief Gohar Ejaz have also appreciated Prime Minister Imran Khan for his initiative to achieve 15 million cotton bales by next year.
Ahsan said cotton production, which has declined by 27 per cent, has witnessed by 17 per cent drop in area under cultivation and 12 per cent decrease in per acre yield since 2014-15.
Therefore, the industry had no other option but to import cotton, which pushed the cotton import to 3.59 million bales, worth $1.22 billion, last year, he said.
Gohar said the achieving of $26 billion textile exports, 15 million bales of cotton production, revival of $4 billion closed potential, job creation and further investment in textile sector are all subject to a successful and fast track implementation of prime minister’s initiatives

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The challenge for 2019 is to push up the growth rate from the present seven percent. Economic growth is basically driven by demand. There is demand for cloth and cement in the market if people have the money to buy garments and build houses. This demand leads to an increase in prices of garments and cement and makes it profitable for the businesses to invest in new textile mills and cement factories.
These factories create employment. Workers are paid wages with which they buy more garments and build more houses. In this way, a virtuous cycle of demand and investment is put into motion. This virtuous cycle is presently broken by GST in two ways.
One, the Medium, Small and Micro Enterprises (MSMEs) have come under stress and less employment is being created and there is less demand in the market. Two, the move towards a single rate of GST will increase the tax burden on the poor and lead to a reduction in demand.
According to the annual report of Ministry of MSME, the share of MSME in GDP was 29.6 percent in 2011-12. It declined to 28.8 percent in 2015-16. The MSMEs are creating bulk of the employment in the country.
According to the Ministry of MSME, the employment generated by MSMEs in 2015-16 was 11.2 crore. In comparison, according to the Economic Survey published by the Ministry of Finance, the employment generated by the (Large) Private Sector was only 1.2 crore in 2012-13.
Thus, MSMEs are generating ten times the employment created by large industries. The weakness of MSMEs, therefore, has translated into fewer jobs, lesser demand and broken the virtuous cycle of demand and investment.
The GST appears to have led to a further deterioration in the share of MSMEs in GDP —which was already sliding earlier as above data indicate. This is a global trend. A study by Victoria University found that MSMEs in Australia spent 3 percent of their total revenue in making compliance with the GST—that is about one-third of the profits earned by them.
Five out of six MSMEs said that their condition was worse than earlier. A study by the University of Wellington found that the distributional impact of the GST on MSMEs in New Zealand slightly regressive — meaning a higher tax burden on them.
A study by Monash University in Malaysia found that the some MSMEs “voiced their concerns over the closure of small or traditional businesses, mainly due to their inability to manage the GST requirements, coupled with anxiety and fear (psychological costs) over the costs of non-compliance.” Similar studies are available from Norway, Singapore and the European Union.
Anecdotal evidence suggests that the situation in India is similar, if not worse. There is a need for the government to rescue the MSMEs from this decline otherwise the reduction in employment will become a social disaster in addition to an economic one.
The government must allow the MSMEs to obtain refund of the GST paid on inputs even if they pay only 1 percent GST on the sale under the Composition Scheme. Secondly, the government must allow MSMEs to pay GST when the customer makes the payment, not when the MSME raises the Bill.
The government proposes to merge the multiple GST rates into one single rate so that tax administration becomes simple, businesses have less difficulties in compliance, the economy becomes smooth and growth rate picks up.
A single rate of GST means that Mercedes car and milk will be charged at the same rate. Till now we have taxed the goods consumed by the rich such as Mercedes car at a higher rate, and goods consumed by the poor such as milk at a lower rate. Thinking was that the poor will have more cash left in their hands and their welfare will be protected.
There is also an economic dimension to the different rates of GST. Let us say Ratan Tata loses Rs 1,000 from his wallet. His consumption will hardly be affected. But, if a peanut seller loses Rs 1,000, he will immediately have to cut his consumption of shoes, cloth or milk.
A single rate of GST will lead to a reduction in the tax burden on the rich with no increase in consumption by them, and an increase in tax burden on the poor and a reduction of consumption by them. The total consumption will decline and, once again, break the virtuous cycle of increased demand and investment.
We are caught between two contrary impacts of the single rate of GST. On the one hand it will simplify the tax administration and lead to higher rate of growth. On the other hand, it will lead to increased tax burden on the poor and to lower rate of growth.
This problem has been confronted in many countries that have wanted to move to a single GST rate. A study by the Inland Revenue Department and the New Zealand Treasury says that lower rates of GST on goods consumed by the poor indeed leads to lower tax burden on them but “welfare transfers are generally considered a more targeted and simpler way of addressing distributional concerns.”
A study for the United Kingdom done by Nobel Laureate James Mirrlees concluded that “the poor would be much better supported if the government were to remove the lower tiers of VAT on various items that the poor consumed, and instead help the poor more directly instead.” A study for Bostwana done by Sheridan College, Australia and University of Canterbury, New Zealand suggested that Bostwana should adopt a single rate of GST and “consider introducing income supplements and welfare payments” in order to assist the poor for the increased burden of tax.
These, along with other studies from across the world, suggest that the way to reconcile single rate of GST with equity is to simultaneously introduce direct benefit transfers in cash to the poor. Such transfers would prevent a reduction in demand due to the increased burden of tax on the poor. The Finance Minister is on the right track in moving towards a single rate of GST, but the precondition of its success depends on simultaneously introducing direct cash transfers to the poor.
The challenge for 2019 is to bring the economy back on to a high growth rate. The government should immediately allow MSMEs to get cash refunds of GST paid by them on the inputs and to pay GST when they receive payments. This will revive the MSMEs, create employment and demand.
Two, the government must institute direct cash transfers to the poor and only then move to a single rate of GST. That too will maintain, if not revive, demand and unleash a virtuous cycle of demand and investment leading India to double digit growth rates. Author was formerly Professor of Economics at IIM Bengaluru

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The Centre will spare no effort to push through some key labour reforms in the new year and is expected to get Parliament’s nod on at least two codes on wages as well as industrial relations before going to general elections. The labour ministry is already in the process of seeking the Union Cabinet’s approval on amended wage code bill after its vetting by the parliamentary standing committee, so that it could be pushed for passage in Parliament.
The Code on Wages Bill 2017 was introduced in the Lok Sabha on August 10, 2017 and thereafter referred to the standing committee.
Similarly, the Ministry of Labour and Employment is keen to push the passage of Code on Industrial Relations, in the run-up to the 2019 polls. The ministry, however, has decided to remove certain provisions in the bill, drawing flak from trade unions. In line with the recommendations of the Second National Commission on Labour, the ministry has taken steps for formulating four labour codes on wages; industrial relations; social security and welfare; and occupational safety, health and working conditions by amalgamating, simplifying, and rationalising the relevant provisions of the existing central labour laws.
“Keeping the social security and welfare aspects of workmen better and intact, we are working in the direction of bringing reforms in various labour laws with objective of ease of doing business in new future,” Labour Minister Santosh Gangwar told PTI.
The minister also said that the government has taken several new initiatives in the labour and employment sector this year.
The ministry is also working on Code on Social Security & Welfare. A preliminary draft of the code was placed on the website of the ministry on March 16, 2017, inviting comments of the stakeholders/public. After considering the comments of various stakeholders, the ministry sought comments on a revised draft Code on Social Security and Welfare, 2018 on March 1, 2018.
After tripartite consultations with unions and employers, the ministry has circulated draft labour code on Social Security & Welfare Bill, 2018 for inter-ministerial consultation recently.
The ministry had also sought comments on the Code on Occupational Safety Health and Working Conditions on March 23, 2018. After tripartite consultations, the draft Occupational Safety, Health and Working Conditions Bill, 2018 has been circulated for inter-ministerial consultation recently.
Apart from this, the ministry is also pushing for subsidising paid maternity leave under a new scheme to encourage employers to employ women. The ministry had noted that the employment of women affected after increase paid maternity leave benefit. Maternity Benefit (Amendment) Act, 2017 — which came into force from April 1, 2017 — increased paid maternity leave from 12 weeks to 26 weeks and benefited 18 lakh women employees. In one of the initiatives, the ministry has proposed to bear seven weeks of salary to motivate employers. This policy will be finalised after approval by the competent forum.
The labour ministry also got the Payment of Gratuity (Amendment) Bill, 2018 passed by Parliament this year which provides for hike in upper ceiling on tax free gratuity amount from Rs 10 lakh to Rs 20 lakh.
The government also approved a Memorandum of Understanding (MoU) among Brazil, Russian Federation, India, China, South Africa, regarding Cooperation in the Social and Labour Sphere. The MoU was signed on August 3, 2018 during BRICS Labour and Employment Ministers (LEM) Meeting.
The pact provides a mechanism for cooperation, collaboration and maximum synergy amongst BRICS member countries with the common objective of inclusive growth and shared prosperity in the new industrial revolution. This would facilitate member countries to share knowledge and also implement joint programmes on matter of labour and employment, social security and social dialogue.
Another Memorandum of Understanding (MoU) was signed between India and Italy for training and education in the fields of labour and employment.
The ministry also included the category of ‘Fixed Term Employment Workman’ for all sectors in the Industrial Employment (Standing Orders) Act, 1946 and rules made there this year. The objective of fixed term employment on one hand is to provide flexibility to the employers in order to meet the challenges of globalisation, new practices and methods of doing businesses while on the other, this would be beneficial for workers as it gives the ‘FTE Workman’ the same statutory benefits as that of regular workers in a proportionate manner. This would also substantially decrease exploitation of contract workers as the employer would directly hire the worker without any mediator in the form of contract for a fixed term.
Considering the change in employment pattern and the current scenario of employment in India which has transformed from a long-term employment to short-term engagement in form of contract and tempting, the ESI Corporation has approved a Scheme named “Atal Bimit Vyakti Kalyan Yojana” for insured persons covered under the ESI Act, 1948.
This scheme is a relief payable in cash directly to insured persons’ bank accounts in case of unemployment and while they search for new engagement.

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To invest Rs. 2,838 crore as part of the Global Investors’ Meet
As many as 2,388 micro, small, and medium-scale enterprises in Coimbatore District have so far signed Memorandum of Understanding (MoU) with the State Government to invest Rs. 2,838 crore as part of the Global Investors’ Meet (GIM) to be held in Chennai in January. Coimbatore District is expected to attract Rs. 3,000 crore investment from MSMEs at the GIM. The District Industries Centre organised a road show here on Sunday with focus on MSMEs for the GIM in which the Minister for Municipal Administration and Rural Development S.P. Velumani distributed the MoUs. He also disbursed Rs. 5.01 crore of loans with subsidy to entrepreneurs.
Addressing the meeting, the Minister said that the GIM conducted by the State Government in 2015 attracted huge investments. The second edition will be held in Chennai on January 23 and 24 next year. In the first edition, 98 MoUs were signed and it attracted investments for Rs. 2.42 lakh crore. Of these, 68 companies had commenced work and invested Rs. 62,738 crore.
Of the 15 lakh registered MSMEs in the State, nearly 75,000 are in Coimbatore District. The district is known for production of automobile components, textiles, pumpsets and coir products. The road show is organised to attract investments here in these different sectors. So far, 2,388 MSMEs have signed MoU for investment in the district. In the last eight years, 3,925 MSMEs here have received Rs. 88.95 crore as capital, back ended interest, power and VAT subsidies. Under the NEEDS, 391 beneficiaries have received Rs. 57.07 crore as subsidy. The State Government has introduced single window system to get approvals. The Government will provide all the support required for starting of new businesses in the State, he said.
The Minister added that he has appealed to the Central Government to extend the Mumbai-Bengaluru industrial corridor to Coimbatore and include the city under the list of World Class cities being prepared. He had also sought expedition of works to expand the Coimbatore International Airport.

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At the weekly auction held at Konganapuram branch of the Tiruchengode Agricultural Producers Cooperative Marketing Society near Edappadi on Saturday, as many as 7,500 bags of cotton were marketed for Rs. 1.6 crore.
While PT variety fetched a price between Rs. 5,500 and Rs. 5,960 per quintal, DCH variety fetched a price between Rs. 6,500 and Rs. 7,339 per quintal, society sources said.

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Says services sector, infrastructure activity and better demand conditions will drive economy in 2019
India will continue to be the fastest-growing major economy, with robust GDP growth expected to continue through 2019, the Confederation of Indian Industry said, based on strong drivers from the services sector, infrastructure activity and better demand conditions.
“Better demand conditions, settled GST implementation, capacity expansion resulting from growing investments in infrastructure and continuing positive effects of the reform policies undertaken and improved credit offtake especially in services sector at 24% will sustain the robust GDP growth in the range of 7.5% in 2019,” Chandrajit Banerjee, Director General of CII, said in a statement.CII has identified seven key drivers of growth that need to be encouraged in 2019, including lowering the number of GST rate slabs, bolstering the insolvency and bankruptcy framework, simplifying business procedures, and improving agricultural productivity, among others.
“CII had suggested lowering the number of tax slabs to — a standard rate, a higher rate for demerit goods and a lower rate for some mass consumption items.” “CII also hopes that the Council will also consider extending GST to excluded sectors such as fuels, real estate, electricity and alcohol.”
“While the process of resolution has taken shape…, the government should consider… additional benches of the National Company Law Tribunal to spread geographically… for easier and faster exit of distressed businesses,” it added.
Ease of doing business
On Ease of Doing Business, CII said the government should continue to place high priority on simplifying business procedures in 2019, especially in terms of working with the States for grassroots improvements.
“Going forward, CII suggests that it is important to persuade States to implement the Agriculture Produce and Livestock Marketing Model Act, which has been implemented in just four States, to strengthen agriculture produce marketing,” it said.
The CII also said to spur credit growth and improve liquidity, the RBI should look at revisiting lending restrictions of banks placed under Prompt Corrective Action, and the opening of a limited Special Liquidity Window to meet emergencies of financial institutions.
CII said India can guard against risks of higher oil prices by raising domestic production of oil, providing a special window for oil marketing firms to procure oil and stepping up diplomacy with the U.S. to continue to secure purchases from Iran.

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‘Conflicting rulings by State ARAs remain a sore point’
The Goods and Services Tax (GST) system settled down reasonably well in 2018, with revenue collections stabilising, compliance increasing on account of various anti-evasion measures undertaken by the Centre, and rates being rationalised, according to tax specialists.
“We entered the year when GST was six months old and the initial euphoria had tapered down and the benefits that it offered were seemingly pale in the wake of initial compliance-related challenges,” said Pratik Jain, partner and leader, indirect tax, PwC India. “As the year progressed, the GST Council continued [with] its frequent meetings and came up with several measures to simplify the system.”
GST rates cut
Over the year, the GST Council had reduced rates on about 100 items. By the end of the year, only 30 items remained in the 28% tax slab and most of these were either sin goods such as cigarettes or luxury items such as automobiles. Only one common use item — cement — remained in the top bracket. “GST collections and compliance have improved,” said Abhishek A Rastogi, partner, Khaitan & Co.
“The e-way bill system will further improve compliance. Now, with collections going up, the government has realised that it can go ahead with rate reductions and so, it has done that. More importantly, what it needs to do is to cut down the number of GST rate slabs.”
GST collections have indeed improved this year compared with last year, but have still not consistently crossed the Rs. 1 lakh-crore mark. While the average monthly revenue in financial year 2017-18 was Rs. 89,885 crore, the average revenue in the current year, so far, has been Rs. 97,040 crore. Revenues crossed Rs. 1 lakh crore twice in the year, in April and October.
“Tax collections during the year, though a tad higher than the first six months, were not as buoyant which resulted in the tightening of administration and more frequent notices/investigations,” Mr. Jain added.
Further, there are still pain points in the GST set-up, most notably the Advance Ruling Authority (ARA) framework, analysts say. The fact that these authorities have government officials as members has meant that an overwhelming number of decisions are in favour of the Revenue Department, So fewer companies are approaching ARAs.
Another issue is that various State-level ARAs often deliver contradictory judgments that confuse industry.
“The good thing… is that in the last GST Council meeting, they announced that they would set up a centralised ARA that would take a decision in situations where there are contradictory rulings by State ARAs,” Mr. Rastogi said.

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