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About 150 workers at Panda textile and garment factory in Hlaing Tharyar township, Yangon Region, held a protest after management threatened not to rehire them if they do not sign an employment contract.
Daw Zar Zar Latt, an official of the factory labour union, said most of the workers refuse to sign the contract because some of its terms and conditions were not discussed first with the union and are unfair to the workers.
“The workers don’t have houses since the factory was transferred from the government to private ownership. According to the contract, we have to move out if we are sacked,” said Daw Zar Zar Latt.
She said they refused to sign the contract because they want the one they signed when the factory was still managed by the government.
The protesters want the factory to re-hire workers who were sacked, to stop the factory owner’s actions that are deemed illegal, and to take action against the owner for breaking the law.
The factory used to be run by the government as Paleik No. 2 Factory, but in 2012, the government privatised it. In March 2016, Panda won a long-term lease for K360 million (US$248,618) a year from the Myanmar Investment Commission.
The factory issued a notice to workers on July 20 that the government instigated the new employment contract not the company, said factory general manager Daw Tin Tin Shwe.
“For nearly six months we have been trying to convince the workers to sign the contract. We want them to have equal rights. The rules were set in cooperation with the factory coordination committee. Out of 1000 workers, about 600 signed the contract, which has 21 terms and conditions,” said Daw Tin Tin Shwe.
She said the workers’ demands are against the law, and any actions by the company were taken after consulting with the government, she said.
“We dismissed four workers only after we warned them many times that they weren’t following the rules. Some of the protesters don’t know the rules so we will explain them patiently,” Daw Tin Tin Shwe said.
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The US on Monday suspended duty-free benefits for apparel from Rwanda due to tariffs imposed by the East African country on used clothing and footwear imports it blames for harming the local textile industry.
The proclamation by US President Donald Trump “suspends the application of duty-free treatment for all apparel products from Rwanda,” the office of the US trade representative said in a statement.
The now-suspended duty-free benefits came under the African Growth and Opportunity Act (AGOA), but “Rwanda remains eligible to receive non-apparel benefits available under” the measure, deputy US trade representative C.J. Mahoney said in the statement.
The Textile Export Promotion Council of India (Texprocil) has urged the government to allow the accumulated input tax credits on fabrics available with the weavers as on July 31 to be adjusted to GST payment on outward supplies in both domestic and export markets.
In its last meeting, the GST Council has allowed refund of unutilised input tax credit to taxpayers in the textiles sector. Subsequently, in a notification issued, the Central Bureau of Indirect Taxes and Customs has said the accumulated credit lying unutilised as on July 31 would lapse.
Ujwal Lahoti, Chairman, the Cotton Textiles Export Promotion Council, said the cancellation of unutilised credits will lead to serious problem in the textiles sector and push up the cost of inventory.
Most of the dyes and chemicals and packing materials used in the textiles sector attract 12 per cent and 18 per cent GST. Further, manmade fibre textiles and yarn attract 18 per cent and 12 per cent GST respectively. Whereas, the GST rate on fabrics is only 5 per cent leading to accumulation of input tax credit due to inverted duty structure.
As per the Central GST Act, Section 54 allows refund of unutilised input tax credit shall be allowed where the accumulation is due to inverted duty structure.
While the intention of the Government is to provide refund of accumulated input tax credit due to inverted duty structure and bring down the cost of products, such bifurcation the input credit accumulated before July 31 and after August 1 for the purpose of refunds has led to serious concern.
Lahoti pointed out that the refund applications for accumulated input tax credits are processed manually by the concerned GST Commissionerates who while scrutinising the applications and the supporting documents can ensure that all the credits for which the refund application have been filed pertain to the period from August 1, 2018.
Fabrics manufacturers have paid the GST on all their inward supplies — both goods & services — and have legitimate input tax credit and therefore it is not proper on Government to let it lapse, he said.
The Southern Gujarat Chamber of Commerce and Industry (SGCCI) members on Monday demanded 50 per cent reduction in the power tariff rates of Surat textile industry. The demand was made before the state industry commissioner officials in a meeting called to discuss the upcoming Textile Policy of Gujarat- 2018.
The SGCCI members shared a chart of the power tariff rates of Maharashtra, where it is between Rs 2 and Rs 2.50 per unit in the textile sector. In Gujarat, it is Rs 7.50 per unit. Head of SGCCI’s representative committee Hemant Desai said that due to less power tariff rates in Maharashtra’s textile sector, clothes woven there are much cheaper than those woven by Surat textile industry.
“We have made strong representations to the government officials at Gandhinagar and they have assured us that they will forward it to the government in framing the new textile policy. We don’t want incentive or subsidy in new schemes, our demand is just clear reduction in power tariff rates. The machines used in the textile industry are old and require a lot of maintenance. The factory owners face many financial problems for their survival and even cannot upgrade the machines. If cheaper power tariff rates are provided to the industry, then the owners can spend money for upgradation of the machines,” Desai told The Indian Express.
He added, “Power tariff is less in the state’s agricultural sector. The textile industry is also important for the state. So, something should be done to give a boost to the industry.”
There are over 6 lakh powerloom machines, more than 350 textile processing houses and 60,000 trading shops in Surat, where around 18 lakh people are directly and indirectly associated with the industry.
As fears of the US-China trade war becoming full-blown took hold, India’s exports started to look up in the first quarter of 2018-19, reflecting recovering GDP growth. This has opened up the possibility of India getting back on to a high export growth trajec The US-China trade war is cause for worry as it could pull down the reviving global trade after years of slow growth.
At the same time, it has opened up a window of opportunity for some countries, including India.
There are some low-hanging fruits, like export of cotton and soya beans to China, which were largely imported from the US. India can also step up exports of textiles and leather to the US, some of which used to go from China. These have to be worked upon on as challenges are many, but can they converted into opportunity.
India’s share in world merchandise exports at the moment is a mere 2%. There is scope to step it up to 5% over the next 4-5 years if some reforms are carried out. Enthused by the good showing of exports, a 20% growth in May and 18% in June the Ministry of Commerce is working on a strategy in consultation with the Federation of Indian Exporter Organisations (FIEO) to sustain a 20% growth in merchandise exports growth so to achieve $400 billion in annual exports in two years.
After clocking near double-digit growth, India’s exports touched $300 billion in 2017-18, following negative growth in the previous year at $275 billion in 2016-17. India’s exports had not been doing well after it touched $313 billion in 2013-14. That was due to global recession. In recent months, it has shown an upward trend. If there are problems now, they are from within and not external. They needs to be tackled immediately to ensure India does not miss the bus yet again.
The problem is not that severe in services exports, which has been growing steadily in double digits to touch $192 billion in 2017-18. One of the reasons why India needs to push merchandise exports is the widening trade deficit which is expected to be close to $200 billion this fiscal. This is because of higher oil, gold and electronics imports.
The depreciating rupee, though good for some exports, is aggravating the situation as oil imports become more expensive Also, the rupee depreciation is due to a weak macroeconomic situation, which could get worse if the trade war turns into a currency war as well.
One realisation that is sinking into government is that it needs to do some handholding for traditional export sectors, which were hit by demonetisation and the hastily implemented GST.
Sectors like textiles, handlooms, handicrafts, leather, gems and jewellery are yet to pick up. Aware of this problem, the government has expedited GST refunds so that they are not starved of working capital. These sectors are mostly in informal sectors, small and medium enterprises, which were starved of working capital.
The government is also seriously looking at reintroducing duty drawback scheme for GST to facilitate MSMEs. With the rollout of GST, the popular duty drawback scheme, which was earlier available for excise and countervailing duties as well, were withdrawn. Duty drawback is now available only for customs It is expected that duty drawback, which is a sort of refund of taxes paid on intermediary items that go into making of export items, will be reintroduced by October
This will ensure that their money does not get stuck in government, making it difficult for MSMEs to rotate money in business.
The GST return forms are crucial for tax authorities as they look to verify input tax credit claims and shore up tax revenues
The government on Monday released the draft of the goods and services tax (GST) return forms as it looks to make the return filing process simpler for taxpayers.
Taxpayers, who are seeking clarity in the tax filing regime, have been eagerly awaiting the tax return forms. The GST return forms are also crucial for tax authorities as they look to verify input tax credit claims and shore up tax revenues.
The new tax return forms are likely to be notified for use starting 1 January 2019, though there may be a trial period in December. These return forms replace the complicated tax return system initially envisaged that required the filing of multiple forms adding to the compliance burden of both small and big taxpayers.
Taxpayers will have to file a single return form monthly, which will be due for every month on the 20th of the next month. The return filing dates for taxpayers will be staggered based on the turnover of 2017-18 to ensure that the GST Network is not overburdened closer to the due date. Taxpayers who have no purchases, no output tax liability and no input tax credit to avail of in any quarter of the financial year can file one nil return for the entire quarter.
As decided by the GST Council, taxpayers having a turnover of up to ?5 crore in the preceding financial year can file a quarterly tax return though tax payments have to be done monthly. This will significantly reduce the compliance burden for small taxpayers.
There will be a facility for continuous uploading of invoices by the supplier any time during the month and this invoice will be continuously visible to the recipient. Only an uploaded invoice would be a valid document for availing input tax credit. In case no invoice is flagged, invoices will be deemed to be accepted by the buyer.
There is a process of reconciliation between the buyer and supplier and taxpayers will need to do credit matching to avail input tax credit.
Invoices uploaded by the supplier by 10th of the next month will be auto-populated in the return of the supplier. This can also be viewed by the buyer.
However, in case an invoice has been uploaded but the return has not been filed, it will be treated as self-admitted liability by the supplier and proceedings will be initiated against him.
Archit Gupta, founder and chief executive officer of ClearTax, a tax and compliance software provider, said that since the monthly GSTR will be due on the 20th of next month, it will give taxpayers time to review invoices uploaded by sellers.
“Since mismatch in invoices will cause credit blockage, taxpayers will choose to continuously review. While an offline tool for matching invoices has been proposed, taxpayers will need robust reconciliation and superior matching to continuously keep track of invoices uploaded and resolve situations of missing invoices. Credit blockages may be costly and impact working capital needs,” he said.
Taxpayers have also been given an option for filing amended returns. Taxpayers can file two amendment returns for each tax period. Further, taxpayers can make payment through the amendment return saving on interest liability. However, invoices once uploaded by the seller and then locked by the buyer cannot be changed.
Also, ineligible input tax credit has to be filed in the annual returns only and not in the monthly returns.
The micro and small-scale units here have sought modifications and relaxations in GST norms to facilitate ease of doing business and better fund flow for the industries.
The industrial associations submitted the demands to Minister for Fisheries and Personnel and Administrative Reforms D. Jayakumar.
According to Coimbatore District Small Industries Association president R. Ramamurthy, there should be time-bound approval of refund applications submitted by the industries through the GST portal and the refund amount should be transferred to the tax payers’ bank accounts directly. The minimum limit of Rs. 1 lakh for exemption from e-way bill should be increased to Rs. 2 lakh and the 10 km limit specified should be reconsidered. It should be fixed based on industrialisation of each city.
‘Biggest challenge’
Mr. Ramamurthy added that the GSTR 2 was the biggest challenge for the MSMEs.
The units should be exempted from matching of invoices in GSTR 2. Similarly, the reverse charge mechanism has been deferred. The Government should stop it completely. On the composition scheme, he said job orders and service industries should be included in it. The MSMEs take up both, manufacturing for direct orders and job work. They will be able to avail of the composition scheme only when the job works are also included.
The Southern India Engineering Manufacturers’ Association president V. Krishnakumar said that in pump industry, several manufacturing processes are outsourced to job workers.
Since it is treated as a service, manufacturers are unable to claim refund of the GST paid for job work.
Nearly 30 % of the refund claim is due to job work in this sector and it cannot be claimed as refund.
This will lead to either reduction in outsourcing of jobs or the price of the pumps will increase. Further, the GST rate for engineering job work should be reduced to 5 % from thr 18 %.
S. Ravikumar, president of Coimbatore Tirupur District Micro and Cottage Entrepreneurs Association, said that though the GST exempts industries with less than Rs. 20 lakh annual turnover from registration, those who give the job orders want the smaller units to register as they are subjected to reverse charge mechanism.
The micro units face 30 % to 40 % production loss for a year now because of this issue.
The micro units should get complete exemption from GST. The micro units get payments for job works after 90 or 120 days. So they face financial constraints and sill have to pay the GST on time. They should be exempted from late payment penalty, he said.
TN has developed a vibrant MSME presence across several key industries
Micro, Small and Medium Enterprises (MSMEs) are the backbone of any country, driving employment generation and GDP growth. In India, MSMEs manufacture over 6,000 products and contribute about 45 per cent to manufacturing and about 40 per cent to exports. This sector can help realise the National Manufacturing Policy target of raising the share of the sector in GDP from the current 16 per cent to 25 per cent by the end of 2022.
Tamil Nadu has a strong and vibrant MSME segment across all the major industries, including textiles and garments, engineering products, auto-ancillaries, leather products and plastics.
According to State government data, around 18 lakh entrepreneurs provide employment opportunities to about 114 lakh persons with a total investment of ?1,93,704 crore.
The State government has also announced a slew of initiatives to reinvigorate MSMEs.
The most important is the Single Window Clearance Committee for the sector, at www.easybusiness.tn.gov.in/msme, launched in May this year.
Entrepreneurs planning to set up a unit can get licences/approvals from various departments via this single window.
These include the Directorate of Town and Country Planning, the Tamil Nadu Pollution Control Board and the Directorate of Industrial Safety and Health. The second most important initiative of the State government to help MSMEs is the Business Facilitation Act/Rules, 2018. This ensures the single-point receipt of applications to secure clearances required to establish or expand an enterprise, and in normal course of business, including renewals, in a time-bound manner.
The Act also provides for an effective grievance redress mechanism and penalties in case the competent authority fails to act within a time frame.
Proactive steps
The Act covers 54 clearances, including pre-establishment, pre-operation, renewals and incentives. It provides for a three-tier institutional structure — District MSME Single Window Committee, State MSME Single Window Committee and MSME Investment Promotion and Monitoring Board — to monitor and review the progress of the single-window mechanism. At the Global Investors Meet in September 2015, an investment of ?16,532 crore by 10,073 MSMEs was announced. As on March 31, 2018, 5,358 enterprises that had signed MoUs had commenced production with an investment of ?6,182.03 crore, creating employment for 71,691 persons.
But Tamil Nadu has a long way to go before it regains its top position at the national level
After a lull, during which Tamil Nadu seemed to have slipped on many fronts mainly due to political uncertainties, things are looking up in the State.
Industry leaders say that stability on the political front, with Chief Minister Edappadi K Palaniswami and Deputy Chief Minister O Panneerselvam working as a team, and the bureaucracy too pulling its weight, are helping pull back things in the State, once known for its industry- and investment-friendly approach.
There is, however, a long way to go before the State regains its position of pre-eminence in the country’s industrial map.
Better infrastructure
A lot more needs to be done, according to industrialists, to improve infrastructure, especially in Chennai.
They say the political leadership is prepared to listen to suggestions and that augurs well for the State’s development. Also, relations with the Centre have improved and that is bound to help Tamil Nadu get a lot of projects off the ground. Although Tamil Nadu was initially opposed to the concept of a Goods and Services Tax, it was among the early adopters of GST, thanks to which tax revenues are buoyant.
Single-window clearance
The single window system for industrial projects clearances is working smoothly and the Industries Department is making sure that problems are redressed at the earliest. Tamil Nadu has been a pioneer in adopting e-governance, and MSMEs have played a major role in the State’s economy.
Large manufacturing and engineering companies are major contributors to the economy and job creation, while private engineering colleges have ensured that there is a steady stream of educated, employable young graduates for various sectors.
Proactive support
Tamil Nadu’s strength has been its diversified industrial base — automobile manufacturing, auto components industry, light engineering and machine tools, textiles and textile machinery, hospitality, healthcare, wind power and information technology.
With proactive government support, things should look up once again for the State.
The pink bollworm has again attacked cotton plants in Maharashtra this year, causing concern among farmers and the State government.
The pest had caused large-scale damage to the cotton crop last year in central and eastern Maharashtra, the State’s main regions producing the commodity.
The pink bollworm attack on cotton has been reported this year from Akola and Washim districts in Vidarbha and Nanded and Parbhani in Marathawada, a senior official in the agriculture department said. “The pest has again shown its presence. It has attacked plants in their early stages of growth. If the pest is not controlled in time, the plants will die and there will be no yield,” he said.
Pink bollworm is an insect which chews through the cotton lint to feed on the seeds. Since cotton is used for both fibre and seed oil, the damage is two-fold.
This year, cotton cultivation has been done on about 37 lakh hectares of land in the State as against the 41 lakh hectares last year, the official said.
The plants are sown from April to July in the State.
Farmers who generally opt for pre-seasonal (April-May) plantation have shifted to other crops, which has brought down the overall cotton plantation figures in the state, the official said.
A farmer from Nanded district said there was no assurance from the State government on controlling the pink bollworm attack or any communication about advanced methods to check its spread. “Therefore, many farmers decided to change the crop as they had lost the cotton yield last year. The financial aid, as announced by the government for the damage to crops, was also not properly disbursed,” he claimed.
The Maharashtra government had last year announced that it would offer financial assistance to farmers for crops damaged by pests.
