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The quick estimates data on India's merchandise trade released by the country's Ministry of Commerce & Industry, shows that exports of cotton yarn/fabrics/made-ups, handloom products etc. from India, declined by (-) 19.49 per cent in June 2022 over June 2021. The cumulative exports of cotton yarn/fabrics/made-ups, handloom products etc. from India declined by (-) 6.09 per cent in April - June 2022 over April - June 2021. Overall, since the demand is not seen as robust as it used to be a year back, India’s exports have begun moderating on a sequential basis after touching a record high in FY22.
India’s top export markets, mainly the US and the EU are seeing the inflationary pressures affecting discretionary spending leading to a weak demand for products such as curtains and bedspreads. Also, other reasons such as the high energy costs because of the war in Ukraine, supply-chain disruptions on account of pandemic-related lockdowns in China, surging commodities prices, and rising interest rates are leading the world into a ‘synchronized growth slowdown’.
However, reports do suggest that demand should pick-up from the month of September-October – with the new cotton crop arrivals and fresh orders received from buyers ahead of the festive season.
47th GST Council Meeting
The 47th GST Council Meeting chaired by the Hon’ble Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman was held on June 29, 2022. Some of the decisions that has been taken in the above Meeting included:
a) Continuation of the Present exemption of IGST on import of goods under Advance Authorization, EPCG and EOU Schemes;
b) Amendment in formula prescribed for calculation of refund of unutilized Input Tax Credit on account of inverted rated structure which would help those taxpayers who are availing ITC on input services also;
c) Amendment in CGST Rules for handling of pending IGST refund claims aimed at expeditious disposal of IGST refund claims after due verification by GST officers, thus benefitting such exporters;
d) Re-credit of amount in electronic credit ledger to be provided in those cases where erroneous refund amount sanctioned to a taxpayer on account of accumulated ITC or on account of IGST paid on zero rated supply of goods or services, thus benefitting such exporters to get re-credit of the erroneous amount in their electronic credit ledger.
The changes that come into effect are expected to remove ambiguities and provide for transfer of balance in CGST and IGST cash ledgers between distinct persons, thereby improving liquidity and cash flows of such taxpayers. The recommendations of the GST Council would be given effect through relevant Circulars/ Notifications. The Council shall keep you informed about the Circulars / Notifications immediately after they are issued.
Customs Duty Exemption on Cotton extended
The government has extended the exemption of customs duty and agriculture infrastructure and development cess (AIDC) on the import of cotton for one more month till October 31, 2022. The extension will give relief to the textile industry as sowing of cotton crop was delayed in some regions due to patchy monsoon rainfall.
Central Board of Indirect Taxes and Customs (CBIC) has issued Notification No.38/2022- Customs dated 04.07.2022 to extend the Customs Duty and Agricultural Infrastructure Development Cess (AIDC) on the import of Cotton till 31.10.2022.
Amid rise in cotton and yarn prices, the textiles ministry had been pitching for an extension of the duty waiver beyond September. The exemption from duty would benefit the textile chain -- yarn, fabric, garments and made-ups -- and provide relief to consumers.
International Trade Settlement Mechanism in Rupee
With emphasis on promoting exports from India and to encourage foreign trade in Indian currency, the Reserve Bank of India (RBI) has announced an additional arrangement for invoicing, payment, and settlement of exports / imports in INR. This came on the backdrop of depreciating INR against dollar amidst the widening of trade deficit resulting in India’s forex reserves coming under pressure.
The Reserve Bank of India (RBI) has put in place a mechanism vide Circular No.10 dated July 11, 2022 under which the final settlement of export and import payments by exporters & importers can be made in Rupee.
Accordingly, all exports and imports under the new arrangement can be denominated and invoiced in Indian rupee. Further, the exchange rate between currencies under the new arrangement will be market-determined.
It may be noted that the US dollar’s strong performance has essentially made imports expensive for most countries. So instead of paying more to make purchases in USD, importers can make trade settlements in Indian Rupees and save some money. This also has a potential to become a platform for India to trade with sanction-hit countries such as Russia and Iran bypassing the SWIFT mechanism. We appeal to our members that in case of any further clarification required, they may get in touch with the Council.
Second meeting with the Textile Advisory Group (TAG)
Hon’ble Union Textiles Minister Shri Piyush Goyalji held the second interactive meeting with the Textile Advisory Group (TAG) in Mumbai on July 14, 2022 to review the progress of work. Shri Upendra Prasad Singh, Secretary, Textiles along with renowned veteran cotton man Shri Suresh Bhai Kotak led the discussions at the meeting which was attended by Smt. Prajakta Verma, Joint Secretary, Ministry of Textiles, Shri Sunil Patwari, Vice Chairman, TEXPROCIL, Shri Prem Malik, Past Chairman, TEXPROCIL, and Shri T. Rajkumar, Chairman, CITI amongst other dignitaries.
During the deliberations, the Hon’ble Minister emphasized on the need for the supply of good quality cotton seeds for improving the overall productivity of cotton. He also stressed the need to introduce advanced technologies related to high-yielding cotton seeds and innovative agronomy such as the High-Density Planting System to enhance the productivity of cotton.
The Council has time and again sought the attention of the Government on the need to enhance the productivity of cotton by ensuring supply of high-yielding cotton seeds, introduction of advanced technologies and innovative farming methods. With positive steps being undertaken by the Government, we remain hopeful that the sector gets its due attention and makes progress in the times to come.
TEXPROCIL organises Ind-Texpo 2022
TEXPROCIL is organising 2nd edition of the Council’s Reverse Buyer Seller Meet (RBSM), “Ind-Texpo 2022” from 24th to 26th August 2022 at the Expo Centre, World Trade Centre, Mumbai. In this regard, the Council has started receiving registrations of international buyers for the show.
Buyers who have already confirmed their attendance at the Show are from countries like Brazil, Bangladesh, Guatemala, Dominican Republic, Iran, Dubai, Sri Lanka, Kenya, Egypt, Philippines, Thailand, Algeria, Turkey, Australia, and Russia. With the Council’s ongoing global publicity campaign more buyers are expected to register in the coming weeks.
The enquiries being posed by international buyers include requirements in home textiles (bed linen, kitchen linen), fabrics (including denim), and special items like fireproof, anti-static fabrics, biodegradable inner-wear for ladies, sustainable and recyclable fabrics and yarns and a lot more.
“Ind-Texpo 2022” is a good opportunity for the Indian suppliers to exhibit as they will get the exclusive advantage of meeting each of the overseas buyers in a pre-designated B2B lounge at the venue. I appeal to all our members to support the Council’s endeavour by participating in large numbers at the RBSM event.
Friends, going forward, it is being hoped that the current trend may be transitory in nature. Arrival of new cotton crop, will help to ease the prices across the value chain and support manufacturing with unhindered raw material availability. With expectations of excess inventory being liquidated and the advent of festival season, there are strong signals that buying will revive. In India, the vibrant domestic consumption will help to spur demand along with supporting the revival of volumes in exports.
Efforts are also being undertaken to ease inflation and address the high cost of freight and raw material which can help boost overseas demand for textiles. With the global buyers steadily expanding their sourcing base to India it is expected that the outlook will turn in favour of our textile exports in the near future.
:: TEXPROCIL ::