Pakistan Likely to seeking duty free exports of textiles

DK Nair, Secretary General Confederation of Indian Textile Industry (CITI), said, “Pakistan is the only country in South Asian Free Trade Area (SAFTA) that does not enjoy duty-free access to Indian market for its textile and garments. There is a proposal by the Department of Commerce to provide zero-duty access for all textile products of Pakistan in the Indian market. The proposal is based on geo-political considerations, and not economic factors.”

Elaborating on the present status of textile exports permitted by respective countries, he said, “As of now, Pakistan has a negative list of over 1,200 products which India is not permitted to export to them. This includes 78 textile products. On the other hand, India has a sensitive list of 878 products for import from Pakistan, which includes 288 textile products.”

“But, the fundamental difference between the two lists is that India only avoids tariff concessions for products in sensitive list, whereas Pakistan prohibits imports of products that are in their negative list. Pakistan has stipulated such a negative list only for India and not for any other country,” he said.

Analysing the competitiveness of Pakistani textile items with Indian products, Nair said, “Pakistan is a competitive producer of textiles, perhaps more competitive than India in products like wide width fabrics, pv/pc fabrics, made-ups and garments. Further, since textiles are largest export item of Pakistan, the government gives certain incentives to this sector that enhance its competitiveness.”

“However, there is still scope for improving textiles trade between India and Pakistan. But measures towards this should be mutual and fully reciprocated by Pakistan, so that both the countries can benefit from competitiveness of each other in various segments of textile value chain,” he opines.

“We have made a request to the Indian Government that no unilateral concessions may be extended to Pakistan in textiles trade, as it would have serious negative implications for our industry, especially the decentralised and SME sectors,” he said.

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4/15/2012 | 0 comments

Duty free access to Bangladesh Textiles

Bangladesh got duty-free access of 46 textile items to Indian market, ushering in a new horizon in Dhaka-Delhi trade.
"India finalised duty-free 46 textile items' access to its market. Bangladesh will benefit enormously as it will help narrow down trade gap between the two countries," Commerce Minister Lt Col (retd) Faruk Khan told BSS.
The decision came from an official meeting between Bangladesh Cabinet members and four chief ministers of Indian states at Sonargaon Hotel Tuesday.
Currently, 480 items are on India's negative list. Last year, Dhaka demanded the removal of 61 products, mostly textile items (46), from the list.
According to Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), India has 3.0 billion US dollars apparel market size in which Bangladesh can easily capture a large portion because of its cheap labour cost benefit.
Indian trade with Bangladesh will also be increased as Bangladesh imports huge amount of raw materials from India for value-addition, according to the country's apex trade body.
India is Bangladesh's single largest trading partner. Bangladesh's imports from India in 2009-10 were 3213.70 million US dollars against its exports of just $304.63m.

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9/07/2011 | 2 comments

Protest against 4% Textile vat in AP

“Andhra Pradesh is the only state in the country that issued a government order (GO) on July 11 to impose VAT on textiles. This will adversely impact the traders once the VAT is implemented,” said Prakash Ammanabolu, twin cities joint action committee convenor, Apfta.

“The government has already imposed VAT on three products — 4 per cent each on yarns, colour and ready-made materials. This extra 4 per cent on textiles will eventually affect the customers as the products will become costlier,” he added.

According to him, the imposition of 4 per cent VAT on textiles and related items by the state could divert 20-30 per cent of the business to neighbouring states.

There are around 50,000 textile traders in the state. The protest, he said, would be carried out across the state in a phased manner. The association on Wednesday also held a traders’ meet here.

He said the agitation would continue till the government withdraws the VAT. It would conduct regional meetings — Telangana regional meet across 5-10 districts next week followed by Rayalaseema regional meet — if the government fails to respond.

The association also plans to conduct a ‘Chalo Assembly’ during the next Assembly session.

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9/07/2011 | 1 comments

Not to collect 4% vat

As per the New Indian express news, The Andhra Pradesh Federation of Textile Associations has decided not to collect or pay 4 per cent of value added tax on cloth as a protest against imposition of VAT on one of the bare essentials. The association feel that the levy is not appropriate since it would increase the cost of essential needs. The government is expected to act on this protest by the textile association.

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8/25/2011 | 0 comments

Tamilnadu Government withdrew 5% VAT on textiles

The Tamil Nadu government withdrew the 5 per cent VAT on textiles with retrospective effect from July 12, providing relief to the industry, The tax had drawn flak from the industry, which had stated that slackness in the international market would make textile industry in Tamil Nadu "uncompetitive" compared to that of other states.

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7/29/2011 | 0 comments

NO VAT on interstate Textile sales from Andhra Pradesh

Andhra Pradesh government has clarified that,

1. NO VAT on interstate Textile sales from Andhra Pradesh
2. Textile dealers with an annual turnover below 5 lakh have been exempted from the tax D
3. Dealers with an annual turnover below `40 lakh will be levied tax at the rate of only 1 percent.
4. There will be no tax on fabrics, textiles, zari and embroidery articles.

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7/26/2011 | 1 comments

Textile Ministry to recommend duty draw back for cotton yarn exports

The Union Minister for Commerce & Industry and Textiles, Shri Anand Sharma has said that he will recommend duty draw back on cotton yarn exports to Finance Ministry w.e.f. 1st April 2011. On cotton exports he said “comprehensive view will be taken on cotton exports after an inter-ministerial consultation over next few days and a close watch will be maintained on cotton arrival data, maintained by Cotton Advisory Board (CAB), whose meeting is scheduled for August.” He was speaking after taking stock of the Textiles Industry at a stakeholder’s consultations with Industry here today. It was a comprehensive review of key stakeholders of textiles industry, including the cotton industry, yarn industry and apparel producers.

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7/15/2011 | 0 comments

Textile ministry backs duty exemption on branded garments

The textile ministry has felt the need for exemption of 10% duty on branded garments which was imposed during this year’s budget. The textile ministry has written to the finance ministry in this. The textile ministry is hoping for exemption in during the next budget.

  According to the Clothing Manufacturers Association of India (CMAI) estimate, in the first quarter of the current fiscal, the organised retailers have taken a hit of around R1,700 crore because of the duty. They have also witnessed an early end of seasonal sales. This could cost them another R2,500 crore. (source: Financial Express)

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7/13/2011 | 0 comments

Clarification With regard to CENVAT on Banded readymade garments and made-up articles of textiles

The central broad of excise and customs has published the clarification by ministry of finance on Branded textiles. In this circular there is an exemption to the below mentioned category,

1. Article bearing the name or logo of a school, security agency, company, hotel or airline etc., shall not be considered as a brand name as there is no nexus between such a name or logo & the product at the time of its sale which is essential ingredient in the definition of the term “brand name”. In case additional brand name to the above mentioned logo would attract excise duty.

2. Adding a Tailors name or manufacturer name would not amount to brand name and there for such products does not fall in purview of cetral excise duty

3. Exemption for small scale industry is, if in the  previous year turn over did not exceed 4 crores an exemption of central excise in current financial year for 1.5 crores of such similar clearance

Circular No. 947/8/2011- CX

F.No.B-1/2/2011-TRU

Government of India

Ministry of Finance

Department of Revenue

Tax Research Unit

*****

New Delhi dated the 21^st June, 2011.

To

All Chief Commissioners of Central Excise

All Chief Commissioners of Customs & Central Excise.

All Commissioners of Central Excise

All Commissioners of Customs & Central Excise.

All Directors General

Subject:  Clarification on issues pertaining to the levy of excise duty on branded readymade garments and made-up articles of textiles– regarding.

Sir / Madam,

Board has received representations from trade and industry seeking clarification on certain issues pertaining to the levy of excise duty on readymade garments/made-ups that either bear or are sold under a brand name. These issues are:-

(i) applicability of the mandatory levy of excise duty on school uniforms, uniforms for private security guards, companies, hotels, airlines etc and made-ups such as linens, towels etc bearing the name or logo of a hotel, restaurant or airlines etc; and

(i) applicability of mandatory levy of excise duty on made-ups such as blankets bearing the name of the manufacturer and supplied to the Ministry of Defence or its organisations

2. The matter has been examined. On the issue of applicability of excise duty on uniforms or made-up articles like quilt, blankets, towels, linen etc bearing the name or logo of a school, security agency, company, hotel or airline etc., it is clarified that such products would not merit treatment as “branded” products merely because the name of the school, institution or company or their logo is either printed, embroidered or etched on them. This is equally true of made ups such as towels, linen etc bearing the name of a hotel, restaurant or airlines. In all these cases, there is no nexus between such a name or logo & the product at the time of its sale which is essential ingredient in the definition of the term “brand name”. Unless such garments/made- ups also bear a brand name in addition to the name or logo of the school, security agency, hotels, airlines and company, such goods would not attract the excise duty. It is also gathered that in some cases, apart from the name or logo of such organisations, the name of the tailor or manufacturer is affixed on such garments. However, mere affixing of name of the tailor or manufacturer would not constitute a brand name. Another related issue is the applicability of the mandatory excise duty to blankets which are supplied to the defence establishment, armed forces, police forces etc against tenders that stipulate that the name of the manufacturer should be clearly indicated or marked on the product. As pointed out above, affixing the name of the manufacturer on such goods would not, by itself, bring them within the ambit of branded goods.

3. Another issue raised by the trade concerns the determination of eligibility of a manufacturer or factory to the benefit of small scale exemption contained in notification no. 8/2003-CE dated 1.3.2003. Under the exemption, a manufacturer or a factory whose aggregate value of clearances for home consumption did not exceed Rs.4 crore in the preceding financial year is eligible for full exemption on similar clearances not exceeding Rs. 1.5 crore in this financial year. It has already been clarified that a certificate from a chartered Accountant about the aggregate value of clearances for home consumption in the preceding financial year may be accepted. It has now been decided that self certification by a manufacturer may also be accepted for this purpose. As regards maintenance of records by such manufacturers, Central Excise law does not prescribe any specific record which is to be maintained by an assessee. Hence records of production, clearance & purchases that are maintained for the purpose of VAT purposes can be accepted for purposes of Central Excise.

(5).    Suitable trade notice / standing order may be issued to guide the trade and industry.

(6).     Difficulty, if any, faced in implementation of these instructions may be brought to the notice of the Board immediately. 

Yours faithfully,

(Yogendra Garg)

Director (TRU)

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7/12/2011 | 0 comments

5% VAT on Textiles and Textile product by Tamilnadu Government

The Tamilnadu government following the footstep of Andhra Pradesh government has brought the textile and textile products under VAT tax net.  The state government has now imposed five per cent tax on textiles and textile products which were earlier exempted from sales tax (but hank yarn and handloom fabrics continue to enjoy exemption) while the central government was collecting additional excise duty (AED). The Centre has already abolished AED and permitted the state to levy sales tax. This move is done to increase the tax revenue of the state as the state is under huge debt of 1 lakh crore rupees.

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7/12/2011 | 3 comments

4% VAT on Textiles and fabrics by Andhra Pradesh Government

The Andhra Pradesh Government has brought textiles and fabrics under Schedule IV of the VAT (value added tax). They are going to be taxed at a rate of 4 per cent. In a GO (No. 932) issued on Friday evening. After the latest order, cotton fabrics, manamade fabrics, textile madeups, curtains, zari, embroidery articles, garments made of handloom and khadi would attract VAT at 4 per cent. The order would come into force with effect from July 11, 2011.

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7/09/2011 | 5 comments

All Orissa Textile Merchants' Association protest against textile VAT

On Tuesday (7/6/11) the All Orissa Textile Merchants' Association had called protest strike by all textile stop. the protest was called for immediate withdrawal of textile VAT. The Union Budget 2011 allowed states to impose tax on sugar and textiles, which were earlier exempted from VAT and were covered under the Additional Duties of Excise (goods of special importance) Act 1957. Over 550 items are covered under VAT. This VAT is said to cause the price of clothes in the state of Orissa  is up by six per cent as the state government is collecting entry tax of two per cent besides VAT. The trader want the tax to be withdrawn immediately by the government.

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6/07/2011 | 0 comments

Tax relief for branded clothing

The government proposes some more relaxations for the branded garments sector, besides enhancement of duty abatement from 40 per cent to 55 per cent. One of the major relaxations proposed for the sector is exemption to job workers who work for brand owners in India. This category may not be required to pay 10 per cent excise duty, which the government imposed on branded garments in the Union Budget 2011-12.

Second, branded school and corporate uniforms and materials may also be exempted from excise duty. "This means any branded uniform or blankets, quilts, etc for schools, colleges, hotels, airlines or for any other industry is likely to be exempted from payment of excise duty,"

Third, documentation and procedures for availing exemption from excise duty for small-scale industries may be simplified. Sources said excise officials might not inspect documents. Rather, mere certification from a chartered accountant or documents submitted for value added tax (VAT) and VAT credit would be sufficient to claim excise exemption.

The finance ministry had imposed 10 per cent excise duty on branded garments in the last Budget but later decided to enhance the cut-off limit of industries for excise payment. This was done by increasing the turnover limit eligible for seeking exemption by allowing duty abatement from 40 per cent to 55 per cent but only for 2011-12. With this relief, a unit would be eligible for SSI exemption in 2011-12 even if it had a turnover based on retail sale of Rs 8.9 crore in 2010-11.

Besides excise duty imposition, the sector, however, received a slew of benefits, from reduction of custom duty on various chemicals used for manufacturing of synthetic textile to reduction of excise duty on textile machinery. Also, basic customs duty on raw silk of all grades had been cut from 30 per cent to five per cent and specific tariff rate of 10 per cent had been prescribed for jute yarn, while it was exempted from excise duty. Textile items have been exempt from additional duties of excise under the Goods of Special Importance Act, 1957.

For raw silk , the ministry has also reduced the basic custom duty from 30 per cent to five per cent ad valorem, for augmenting domestic availability for weavers, both in the handloom and the power loom segments.

In raw silk, the government is also keeping a close watch on import volumes and domestic prices, to take steps in mitigating any adverse impact on the domestic sericulture sector.

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5/11/2011 | 0 comments

Revised Duty Drawback For Textile sector

Below are the revised duty drawback which has caused a big concern for the Indian Textile industry.

(i) Textiles and Textile Articles (Chapters 50-63)

a)   
Silk: In the case of silk, the
drawback rate for higher quality silk fabrics has been decreased from 10.8% with
a drawback cap of Rs. 325/kg to 9.8% with a drawback cap of Rs.295/kg. The rate
for fabrics of noil silk has also been revised downwards.

b)  
Wool: In the case of wool tops,
woollen yarn and fabrics the drawback rates have been decreased by 18% - 21%
approximately. The caps have also been revised downwards.

c)   
Cotton Yarn and Fabrics: The earlier
drawback rate for grey cotton yarn of less than 60 counts was 6% (grey) / 7.1%
(dyed). The rate for cotton yarn of 60 counts and more was 9.5% (grey) /
10.6% (dyed). The new rate now is 4% for cotton yarn (grey) and 5% for cotton
yarn (dyed) irrespective of the counts of the yarn.
As for cotton fabrics, the new rate is 4.6% (grey) / 5.5% (dyed) with a
drawback cap of Rs.14per kg (grey) / Rs.20per kg (dyed).

The new drawback rate
for lungies and Real Madras Handkerchiefs is 5.5% with a cap of Rs.20/kg, the
same as applicable for dyed fabrics.
In the case of denim fabrics the new rate is 5.7% with a
cap of Rs.21.5/kg as against the earlier rate of 8.5% with a cap of Rs.32/kg.

d)    
Man-made Filaments and Man-made Staple
Fibres: In the case of synthetic / artificial filament yarn (Chapter 54),
only customs component of Drawback rates has been prescribed. The drawback rate
for Synthetic Filament Yarn now is 2.2%
(grey) / 2.6% (dyed) and for
artificial filament yarn 2.1% (grey) / 2.5% (dyed) as against the earlier
customs rate of 3% (grey) / 3.5% (dyed) for both types of filament yarn. In the
case of woven fabrics of synthetic filament yarn, the new drawback rate is 8.4%
(grey) / 9.4% (dyed). Insofar as synthetic / artificial fibres (Chapter 55) are
concerned, again only the customs component of drawback rates has been fixed.
The new drawback rate is 2.4% for synthetic staple fibres and 2% for artificial
staple fibres. In the case of yarn of synthetic staple fibres, the rates fixed
are 10.2% (grey) and 12.1% (dyed). In case of woven fabrics of synthetic staple
fibres and/ or man-made filament yarn falling under drawback schedule tariff
item 5515 the new rates are 9.2% (grey)/10.3%(dyed).

e)   
Carpets and Floor Coverings: The new
drawback rate for hand knotted woolen carpets is 11% with a cap of Rs.616 per
sqm. as against the earlier rate of 13.3% with a cap of Rs.745 per sqm. For silk
carpets, the new drawback rate is 14.5% with a cap of Rs.2573 per sqm. as
against the earlier rate of 17.5% with a cap of Rs.3105 per sqm. The drawback
rate on cotton durries is fixed at 10.5% with a cap of Rs.29/kg as against the
earlier rate of 11.5% with a cap of Rs.32/kg.

f)    
Ready Made Garments: In the ready
made garment sector, the new drawback rate for knitted blouses/shirts/tops of
cotton is 8.8% with a cap of Rs.42 per piece as against the earlier rate of 11%
with a cap of Rs.53 per piece. The new rate for knitted blouses/shirts/tops of
man-made fibre is 10.5% with a cap of Rs.44 per piece as against the earlier
rate of 11.5% with a cap of Rs.48 per piece. For knitted blouses/shirts/tops of
cotton and man made fibre blend, the new drawback rate is 9.8% with a cap of
Rs.44 per piece as against the earlier rate of 11.2% with a cap of Rs.50 per
piece. The drawback rates on woven garments have been revised accordingly. As
for ready made garments made up of silk and wool, the rate provided is 8.8% with
varying caps.

g)   
Made Ups: In the made up category,
the new drawback rate for bed linen, table linen, toilet linen, kitchen linen
and curtains of cotton is 8.2% with a cap of Rs.99 per kg as against the earlier
rate of 10.1% with a cap of Rs.122
per kg. The new drawback rates are fixed at 9.5% on made-ups of manmade fibres
and 8.8% on made-ups of silk/wool as against earlier rates of 10.4% and 9.8%.

ii) Leather and Leather Articles (Chapters 41-42 & 64)

a)
The new
drawback rate for finished leather is 6.3% with a cap of Rs.6.7 per sq.ft. as
against the earlier rate of 7.5%
with a cap of Rs.8 per sq.ft. Likewise, the new drawback rate for leather
footwear for adults is 10.5% with a cap of Rs.96 / 142 per pair as against the
earlier rate of 11.5% with a cap of Rs.105/155 per pair. In the case of leather
apparel the rate provided is 9.9% with a cap of

Rs.575
per piece as against the earlier rate of 11.4% with a cap of Rs.650 per piece.
The drawback rates on other leather items viz. suit cases, handbags and gloves
have also been revised downwards.

b)
The new
drawback rate for saddlery and harness made of leather is 9%. The corresponding
rate for saddlery and harness made of non-leather is 8.6%. A new entry has been
incorporated to include parts/components of harness and saddlery made of leather
or non leather including textiles or synthetic materials with a rate of 8.6%
with a cap of Rs.90 per pc.

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9/04/2008 | 0 comments