India Becomes Second Largest Textile Exporter

Overtaking Germany and Italy last year, India has emerged as the world’s second largest textile exporter behind China.



According to new data from the Apparel Export Promotion Council (APEC), India’s textile exports were valued at over US$40 billion in 2013. China, the world’s number one textile exporter, valued its exports at close to US$274 billion – close to seven times that of India



India’s share of global textile trade increased by close to 18 percent in 2013 from the previous year according to the new data, enabling it to capture a significant portion of the global textile market, which is estimated to have grown by 6 percent last year.



India’s readymade garment industry in particular experienced the most significant growth, with a 23 percent increase in the export of shirts, trousers, skirts and other products last year. In readymade garments specifically, India ranked sixth globally last year with exports valued at US$16 billion – accounting for around 40 percent of the country’s total textile exports.



“This growth is phenomenal as the global textiles growth rate is only 4.7 percent compared to India as it has registered the growth rate of 23 percent, beating China and Bangladesh which have registered 11.4 percent and 15.4 percent [growth rates], respectively,” commented Virender Uppal, Chairman of APEC.



“Despite having slow recovery in U.S. and EU, our biggest traditional markets as well as [the] prevailing global slowdown coupled with sustained cost of inflationary inputs, we made the best possible efforts to reach here. The Government policy of diversification of market and product base has helped us and we ventured into the newer markets, which paid huge dividends. We also leveraged our raw material strengths and followed [and] sustained better compliance practices which attracted the buyers and international brands across [the] globe to source from India,” he added.



According to Uppal, the biggest problem currently facing Indian apparel exporters remains bottlenecks and rising interest rates.



“The availability of specialty fabric is a big bottleneck for which we have been aggressively demanding five percent duty scrip for the imports of fabrics. It must be considered favorably by the new government to boost apparel exports,” Uppal explained.



“Rising interest rates is another issue which hampers growth for which we have requested the government for a separate chapter for pre- and post- shipment export credit at a fixed rate of seven percent interest, and to treat readymade garment under priority sector lending,” he added.



In recent years, rising labor costs in traditional textile manufacturing hubs such as China have driven investors and businesses in the textile industry to explore opportunities in other markets such as India and Vietnam.



As the ardently pro-business BJP leader Narendra Modi sails through his first weeks as Prime Minister, many at APEC and in the wider textile industry are hopeful these outstanding issues will be resolved in the near future. Other surprises such as the normalization of trade relations with Pakistan and consolidation of outstanding economic ties with other key markets in the region would provide an additional boost to India’s increasingly-booming textile industry.



Asia Briefing Ltd. is a subsidiary of Dezan Shira & Associates. Dezan Shira is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in China, Hong Kong, India, Vietnam, Singapore and the rest of ASEAN.

Source:- india-briefing.com

Steelmakers Lobbying For Removal Of 2.5% Import Duty On Iron Ore.

Top domestic steelmakers have begun lobbying with the government for an effective raw material policy, including removal of 2.5% import duty on iron ore, in the face of an ongoing mining crisis.



The move comes even as the Federation of Indian Mineral Industries (FIMI), an apex body of 400 private mining firms, has urged the union commerce ministry to withdraw 30% export duty on iron ore.



With Modi government initiating deliberations with various industry bodies ahead of its first budget, key stakeholders in the steel industry seem to be presenting completely divergent demands.



"The industry is operating at 80% capacity utilisation due to constraints in mining. This is also leading to higher domestic prices of iron ore. We should take adequate steps to ensure availability of iron ore. In this context, we should restrict exports of iron ore. The latter only leads to creation more jobs in foreign countries, at the expense of jobs and our manufacturing sector. This is a call we need to take as a nation," Jayant Acharya, director (marketing) JSW Steel, India's leading private steelmaker said.



An official of another private steel major said: "In the present situation of iron ore shortage, government should mull the decision of abolishing the import duty on iron ore. Mining companies are taking undue advantage of scarce supply owing to temporary closure of mines in Odisha due to non-renewal of years-old leases. This has resulted in iron ore prices shooting up by Rs 500 per tonne. Even stateowned mining companies have increased the prices. It has a direct impact on steel making costs which has gone up Rs1,000 per tonne."



Source:- economictimes.indiatimes.com

Exporters Body Asks Finance Minister To Roll Back Mat From Sezs.

Export promotion body for special economic zones has asked the Finance Minister to roll back the minimum alternate tax (MAT) on SEZs saying that the move will boost overseas shipments as well as domestic manufacturing.



In its pre-Budget consultations with Finance Minister Arun Jaitley, the Export Promotion Council for EOUs & SEZs (EPCES) said: "MAT on SEZs should be exempted. If not feasible at least reduce it to 7.5 per cent, exemption may be provided from Dividend Distribution Tax to SEZ developers."



MAT and the dividend distribution tax on SEZs have dented the investor friendly image of these special zones.



In 2011, government had imposed 18.5 per cent MAT on the book profits of special economic zone developers and units. Although government last year announced an incentive package to revive these zones, several developers are surrendering their projects due to the imposition of taxes.



"In order to offer long term and stable economic policy and to attract investment, SEZ Act & Rules should not be altered by any other Act or Rule," EPCES said in a statement today.



EPCES also urged the Finance Minister at the meeting last week to extend the export benefits available to the domestic exporters such as focus product scheme to SEZ units.



For gems and Jewellery trading units situated within the zones, it asked to permit import for distribution to the users within the zone.



"Currently, trading of precious metals or articles is not allowed," it said, adding the government should also exempt SEZs from service tax.



SEZs, which are major export hubs, contribute about one- third to the country's total exports. They provide employment to about 15 lakhs people.



Of 566 formally approved SEZs, only 185 are in operation. Exports from these zones increased from Rs. 22,840 crore in 2005-06 to Rs. 4.94 lakh crore in 2013-14.



Source:- profit.ndtv.com

HC denied to hear an appeal as question of law wasn’t ascertainable in absence of a speaking order b

IT: Where in absence of specific discussion in Tribunal's order in respect of computation of taxable perquisite in hands of assessee, it was impossible to ascertain actual nature of controversy and questions of law sought to be raised were to be returned unanswered

Economic Slowdown In Ems Impact Global Export Demand

The economic slowdown in emerging markets following the tightening of monetary policies by them last year has impacted the global export growth and the recovery in advanced economies, a report has said.



According to the QNB Group report, the growth in emerging markets (EMs) - from Brazil to Indonesia, Russia and South Africa - is slowing down, partly reflecting the tightening of domestic policies by these countries last year to stabilise foreign exchange rates.



This slowdown is impacting global export demand and affecting recovery in advanced economies as well, it added.



Overall, the slowdown in EMs could jeopardise the global recovery, unless advanced economies pick up the pace, the report added.



Since the US Federal Reserve's announcement last year to taper its asset-buying programme Quantitative Easing (QE), global capital flew out of emerging economies, forcing their central banks to tighten monetary policies to stabilise exchange rates.



While the tightening has been relatively successful in reversing the capital outflow in some countries, there has been an impact on the growth of emerging markets.



The last few weeks have seen a series of disappointing data releases in EMs. Brazil's Q1 real GDP growth rate slowed to 0.7 percent (quarter-on-quarter annualised), compared with 2.3 percent for 2013 as a whole.



Indonesia's Q1 growth rate declined to 3.5 percent (5.8 percent in 2013). South Africa's s Q1 GDP contracted 0.6 percent, compared with growth of 1.9 percent in 2013.



The most dramatic fall was in Thailand with an annualised Q1 contraction of 8.2 percent, partly reflecting the current political instability. Against this trend, India saw a jump in Q1 GDP growth, partly due to a record USD 5 billion spending on elections, which added an estimated 2 percentage points to growth in the first quarter.



This generalised slowdown in EMs growth is impacting global trade flows. These economies account for approximately 40 percent of all global trade activities and have been among the largest contributors to the international export growth in recent years.



The slowdown in emerging markets is therefore having an impact on global export growth.



According to the World Trade Organisation, the USD value of global exports grew by a mere 1.7 per cent year-on-year in the first quarter of 2014, compared with 4.3 percent in Q4 2013.



Most of this slowdown can be attributed to lower export demand from EMs. In turn, lower global export demand has contributed to lower Q1 real GDP growth in both the US (-1.0 percent) and the Euro area (0.2 percent).



So far, the slowdown in emerging economies has not yet resulted in a contraction in global trade as witnessed during the Great Recession of 2008-09, the QNB Group Report said.



If advanced economies continue to recover and pick up some pace, the global economy should be able to maintain its growth momentum, it added.



According to the report, the performance of advanced economies critically depends on the normalisation of US monetary policy and the Fed seems to be set on completing QE tapering in late 2014.



If QE tapering results in weaker US growth, long-term US interest rates are likely to remain below 3 percent, thus pushing global capital out in search for higher returns in EMs, it said.



The result could be an uneven global recovery in favour of EMs, just like in the period 2010-13; on the other hand, if the US economy recovers as expected, long-term US interest rates are likely to go up, making EMs less attractive, and in turn, this would imply a further EM slowdown, while advanced economies recover, it added.

Source:- moneycontrol.com

Sugar Export Sop To Be Restored To 3,300/T

The Centre is all set to restore the incentive on raw sugar exports to 3,300 a tonne.



The incentive, technically supposed to defray expenditures on marketing and promotion incurred by mills, was slashed to 2,277 a tonne for shipments during April and May by the previous government.



There was also a move initiated under the then Food Minister KV Thomas to dispense with the incentive scheme totally after September 30, when the current 2013-14 sugar year ends. The Ministry had even prepared a draft note towards this for consideration by the Cabinet Committee on Economic Affairs, which had earlier approved the scheme on February 12.



The new Government has decided to retain the incentive in its original form, covering a total quantity of up to 40 lakh tonnes (lt) to be shipped between February 2014 and September 2015, i.e. until the end of the 2014-05 sugar year. Also the incentive is to be restored to 3,300 for June and July, informed sources told Business Line.



Minister parleys



This follows a meeting that Food Minister Ram Vilas Paswan had with his Cabinet colleagues from Uttar Pradesh (UP) and Maharashtra last Wednesday to look into the problem of cane payments to farmers by sugar mills.



The meeting was attended among others by the Union Agriculture Minister Radha Mohan Singh, Road Transport and Highways Minister Nitin Gadkari (who is also holding charge of Rural Development following Gopinath Munde’s demise), MSME Minister Kalraj Mishra, and Women & Child Development Minister Maneka Gandhi. The Ministers of State for Agriculture and Food, Sanjeev Kumar Balyan and Raosaheb Dadarao Danve, were also present.



There was a clear consensus to create conditions to ensure full discharge of cane arrears at the earliest. This would include promoting exports given the surplus sugar stocks in the country, the sources said.



The 2013-14 sugar season opened with stocks of 92.98 lt. With likely production of 214 lt and imports of one lt, the total availability for the season would work out to 334.98 lt, as against estimated consumption of 240 lt and exports of 20 lt.



The next season will have opening stocks of 75 lt, almost equivalent to four months’ domestic consumption. Without exports, sugar prices will remain depressed, making it difficult for mills to pay off farmers, the sources noted.



Cane politics



In UP, factories had, as on June 5, paid only 10,939.84 crore out of the 19,390.57 crore worth of cane procured from farmers at the State Advised Price of 280 a quintal for the 2013-14 season. That translates into outstanding arrears of over 8,450 crore.



Sugarcane farmers constitute a sizeable votebank in Maharashtra, where assembly elections are due later this year, and UP, where the Bharatiya Janata Party is seeking to build on the momentum from its best-ever performance in the recent Lok Sabha polls.



There are obvious political stakes in being seen to be doing things for cane farmers. The Ministers even favoured raising the import duty on sugar (both white and raws) from the existing 15 per cent to 40 per cent. But that is a call that the Finance Minister (Arun Jaitley) will have to take, the sources said.



The economics of export



Raw sugar of Brazilian origin is currently quoting at around 17 cents a pound or $ 375 a tonne, free on board (fob).



Indian raw sugar fetches a premium over this, both on account of higher polarity (an additional 4.05 per cent of fob value or $15/tonne) and freight advantage of being closer to the main West Asian markets (about $20/tonne).



The fob value of Indian raw sugar at Mumbai, thus, works out to about $410 a tonne or $415 after adding 1.5 per cent duty drawback benefit.



At current exchange rates, that would be roughly 24,500 a tonne. The ex-mill realisation on this in Maharashtra after deducting for transport, port handling and other charges (about 2,200) comes to 22,300 a tonne. “With the export incentive of 3,300, the ex-mill realisation would go up to 25,600 a tonne. Even with this, you cannot cover production costs that would be upwards of 26,000 a tonne even with the 11.5 per cent sugar recovery levels in Maharashtra,” claimed a miller.

Source:- thehindubusinessline.com

Thailand Emerging Threat To Car Exports From India

India, a hub for car exports to developed markets, is seeing serious competition from Thailand as production constraints and quality issues force manufacturers to consider production of critical models in the Southeast Asian nation.



Ford India is looking at shifting production of Fiesta, and Japanese manufacturer Suzuki is planning to move production of its newly launched Celerio from India to Thailand for exporting to developed markets, according to sources.



Ford's India unit is unlikely to export company's new compact sports utility vehicle EcoSport to North American markets, whose production will be moved to unit to the US automaker's Thai plant by 2016, according to recent reports.



Experts said EcoSport and Fiesta will mainly be exported to North American markets while Celerio will be exported to Europe.



Mayuree Chaiyuthanaporn, senior analyst, IHS Automotive Asean, who tracks Thailand automotive market, said, "Manufacturers are looking at Thai plants mainly because of India production constraint coupled with the better quality production in Thailand. Reportedly, Ford EcoSport produced in Thailand provide better noise, vibration, and harshness (NVH) levels. Meanwhile, export orders are likely to utilise Thailand's capacity to its maximum."



Thailand is a production base for pickups and small cars, with total capacity expected to reach three million units by 2019, highest in Southeast Asia. The production cost in Thailand can be reduced because of economies of scale. Completely built units (CBUs) export account for around 60% (2013) of total production output, according to IHS Automotive.



Atul Shahane, general manager, vehicle exports, Nissan Motor India, who has worked in Thailand said, "Manufacturing of pickups and small car segments get supported by the government in a big way. Thailand has better infrastructure and technology, while it also has some challenges in terms of political instability and natural calamities. However, quality of production is definitely better there compared with India."



The country also has the highest number of suppliers among Asean countries. The Thai Board Of Investment offers both fiscal and non-tax incentives for investments. Tax sops include exemption or reduction of import duties on machinery and raw materials, and corporate income tax exemptions and reductions.



Companies like Ford India and Suzuki have capacities in Thailand as well as in India. In fact, both automakers are also in the process of building additional capacities in Gujarat. Hence, production constraint is not an issue for factories in India, experts said. However, Thailand gives logistical and supply advantages as far as exports are concerned.



Maruti Suzuki did not respond to queries.



A Ford India spokesperson said, "We do not comment on speculations. However, it is important to clarify that our operations around the world do not 'compete' with one another. Under the global One Ford plan, our manufacturing strategy is determined by a number of variables like logistics, cost efficiencies, geographies, etc, and is implemented to deliver the success of a single global One Ford plan."



"Export strategy is fundamental to our growing operations in India and we are well on course to establish India as our export hub and a center of excellence for small cars and low displacement engines for both domestic and exports. As part of One Ford plan, Ford is investing significantly to deliver scale and flexibility to reciprocate the increasing demand from both domestic as well as export markets. With upcoming manufacturing facility at Sanand, Gujarat, Ford India will double its manufacturing capability and significantly increase export volumes to several global markets including mature markets."



Exports from India gained momentum with Ford Figo, and have today reached new heights with Ford EcoSport being exported to mature markets like Europe, it added.



V G Ramakrishnan, managing director, South Asia at Frost & Sullivan, said, "Exports form an important strategy for most manufacturers as it helps in keeping pricing competitive for them to sell vehicles in the Indian market. Hence, no company can really ignore exports from India."



Exports of passenger vehicles from India grew 6.09% last fiscal, as per data by Society of Indian Automobile Manufacturers.

Source:- dnaindia.com

Steelmakers Lobbying For Removal Of 2.5% Import Duty On Iron Ore

Top domestic steelmakers have begun lobbying with the government for an effective raw material policy, including removal of 2.5% import duty on iron ore, in the face of an ongoing mining crisis.



The move comes even as the Federation of Indian Mineral Industries (FIMI), an apex body of 400 private mining firms, has urged the union commerce ministry to withdraw 30% export duty on iron ore.



With Modi government initiating deliberations with various industry bodies ahead of its first budget, key stakeholders in the steel industry seem to be presenting completely divergent demands.



"The industry is operating at 80% capacity utilisation due to constraints in mining. This is also leading to higher domestic prices of iron ore. We should take adequate steps to ensure availability of iron ore. In this context, we should restrict exports of iron ore. The latter only leads to creation more jobs in foreign countries, at the expense of jobs and our manufacturing sector. This is a call we need to take as a nation," Jayant Acharya, director (marketing) JSW SteelBSE -0.78 %, India's leading private steelmaker said.



An official of another private steel major said: "In the present situation of iron ore shortage, government should mull the decision of abolishing the import duty on iron ore. Mining companies are taking undue advantage of scarce supply owing to temporary closure of mines in Odisha due to non-renewal of years-old leases. This has resulted in iron ore prices shooting up by Rs 500 per tonne. Even stateowned mining companies have increased the prices. It has a direct impact on steel making costs which has gone up Rs1,000 per tonne."

Source:- economictimes.indiatimes.com

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Excise & Customs : Entry 'free' occurring in column 'rate of duty' of Customs Tariff amounts to a rate of duty (equivalent to 'Nil' or 'Zero' rate) and if Central Government is satisfied such duty should be increased, it may do so by issuing notification under section 8A of Customs Tariff Act, 1975

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Service Tax : Since delivery of sample test report to foreign client is an essential part of testing services, said service must be treated as consumed abroad and not liable to service tax, even if testing is done in India and report is prepared in India