Thai delegation explores business opportunities in Gujarat

VADODARA: A trade delegation of Thai representatives led by ambassador Pisan Manawapat visited the city on Tuesday to gauge industrial and infrastructure development in and around it.

Manawapat with around half-a-dozen other officials from Thailand met officials at Vadodara Municipal Corporation (VMC), Vadodara Chamber of Commerce and Industry (Vand are scheduled to visit key industrial units around the city on Wednesday.

VMC commissioner Ashwini Kumar said the delegation was on a visit to familiarize itself with the business environment in the state. “They discussed urban and industrial development in and around Vadodara extensively with us. They were keen to know how the city would develop in the coming years and what opportunities would emerge here,” he added.

Manawapat said the delegation was there to see the potential for business in the state. “So far, business houses from Thailand have had a good presence in south India. We will introduce Gujarat as a destination for business to them,” he said. The ambassador said that he had also been briefed regarding the Delhi-Mumbai Industrial Corridor. “We will look into the opportunities available on this front too,” he said. He added that prominent Thai construction companies had presence in India and were involved in infrastructure projects.

At VCCI, the delegation met industrialists across a broad spectrum of industrial sectors. Even representatives of education institutes and NGOs were present. “Thai prime minister Yingluck Shinawatra has announced a Free Trade Agreement with India. Once this is signed, we expect the trade between the two nations to multiply and bilateral trade may exceed 10 billion USD,” Nilesh Shukla, senior vice-president, VCCI, said.

Former VCCI president Jatin Bhatt said the Thai delegation was particularly impressed by the power situation in the state. “They are eyeing sectors like power, textiles, automobiles and electronics,” he added.


Tripura govt announces steps to boost silk production

In view of soaring demand for its silk in local as well as international markets, the government of Tripura, a state in North-eastern India, has decided to introduce powerlooms at the state-owned silk producing units to enhance their productivity, Handloom and Industries Minister Jitendra Chowdhury said.

Earlier, only the neighbouring states sought Tripura silk, but now there is demand even in foreign countries, the Minister said. He added that the government is emphasizing on increasing the production of silk moth and upgrading state-run production units with powerlooms in place of hand looms.

The state’s silk turnover has increased almost 100 percent this year compared to last year, which enabled the state government to earn Rs. 10 million in revenues, the Minister said.

Mr. Chowdhury stated that mulberry cultivation is undertaken on around 3,352 acres of land in the state by around 7,000 cultivators, and the state is actively trying to increase this area.

The government intends to raise production of silk sarees in government-run units from 3,969 pieces to 8,750 pieces, this year, and has also decided to boost value addition through introduction of new designs, the Minister said.

According to an expert in textile designing, increased value addition calls for preparation and application of more beautiful designs, and local entrepreneurs should be motivated on this front.

Maharashtra unveils website for new textile policy

The recently announced Textile Policy will attract investments of around Rs 400 billion in the next five years and generate jobs for around 1.1 million people, said the Chief Minister of Maharashtra – Prithviraj Chavan.

Mr Chavan said this after inaugurating the website of the new textile policy. Mr Mohammed Arif Naseem Khan – Maharashtra Textile Minister said the website will provide all information related to the policy to potential investors. 

Mr Chavan further said, “80 percent of the cotton grown in the state is sold and processed further in other states. The policy will help in adding new cotton processing capacity, particularly in the cotton belts of Vidharbha, North Maharashtra and Marathawada”. 

He also added by saying, “The investors will be provided various incentives, uninterrupted water and electricity supply”. 

Highlights in Union Budget 2012-13 for textile industry

A. For Modernisation of Mill
1. Financial package of Rs 3,884 crore for waiver of loans for handloom weavers and their cooperative societies.
2. Textile mills planning modernisation will benefit from customs duty exemption (five per cent earlier) on automatic shuttleless looms. The import duty on second hand automatic looms will also come down to 9.33% from the present 14.33%.

B. Branded Garment
1. The excise duty on branded garment has been increased from 10% to 12%, the abatement of 55% from the maximum retail price (MRP) has also been raised to 70%. This would bring down the incidence of duty as a percentage of MRP from 4.5% to 3.6%.

C. Custom Duty
1. Customs duty exemption of shuttleless looms from 5% to 0%.
2. Full exemption from basic duty is being accorded to automatic silk reeling and processing machinery as well as its parts.
3. Exemptions and the existing concessional rate of basic customs duty of 5% only to new textile machinery. Also, second-hand machinery would now attract basic duty of 7.5%.
4. The basic customs duty on wool waste and wool tops would be reduced to 5% from 15% and wool tops from 15% to 5%.
5. Basic Customs duty on Aramid thread/ Yarn/ fabric for manufacture of Bullet proof helmets for Defence and Police personnel is being reduced from 10% to Nil with Nil CVD and Nil SAD.
6. Basic customs duty on Titanium dioxide classified under CTH 2823 00 10 is being reduced from 10% to 7.5%.
7. Basic customs duty on Sintered natural uranium dioxide/ Sintered uranium dioxide pellets (U-235) classified under CTH 2844 20 00 for use in the production of nuclear power is being reduced from 7.5% to Nil.
8. Basic customs duty on Super Absorbent Polymer (SAP) classified under 3906 90 90 imported for use in the manufacture of Adult Diapers is being reduced from 7.5% to 5% alongwith Nil SAD on actual user basis.
9. The benefit of existing exemption from Customs duty on Road Construction equipment is being extended to projects awarded by Metropolitan Development Authority also.
10. Full exemption from basic customs duty is being provided to shuttle less looms, parts/components of shuttle less looms by actual users for manufacture, specified silk machinery viz. Automatic reeling silk reeling and processing machinery and their accessories including cocoon assorting machines, cocoon peeling machines, vacuum permeation machine, cocoon cooking machine, reeled silk humidifier, bale press and raw silk testing equipment.[S. No. 406 of notification No. 12/2012-Customs dated 17.03.2012 refers]. The existing concessional duty rate extended to specified textile machinery is being restricted only to new textile machinery. (The concessional rate is 5%. For used machines, the duty will be 7.5%).

D. Excise Duty & Service Tax
1. Standard rate of excise duty raised from 10% to 12%.
2. Service tax rates raised from 10% to 12%.

E. The government also plans to set up a powerloom mega cluster in Ichalkaranji, Maharashtra, with a budget allocation of Rs 70 crore. Ichalkaranji is the only place in India which produces yarn of all counts.

F. Setting up of two more mega clusters, one to cover Prakasam and Guntur districts in Andhra Pradesh and other for Godda and neighboring districts in Jharkhand in addition to 4 mega handloom clusters already operationalised. He also proposed setting up of three Weavers Service Centres, one each in Mizoram, Nagaland and Jharkhand. The Minister proposed a Rs 500 crore pilot scheme in twelfth plan for promotion and application of Geo-textiles in the North East. A powerloom Mega Cluster will be set up in Ichalkaranji in Maharashtra.

G. Basic customs duty on Hydrophilic Nonwoven, Hydrophobic Nonwoven ( CTH 56031100) imported for use in the manufacture of Adult Diapers is being reduced from 10% to 5%, With 5% CVD and Nil SAD on actual user basis.

H. Project import status is being granted for Green Houses set up for protected cultivation of Horticulture and Floriculture produce – will hurt domestic Agro Textile companies.

I. JV Defence Production will help support the modernisation of textiles used in Defence Production.

J. NHAI and Infrastructure Growth focus in the budget– will help geotextiles usage.

K. SIDBI funding for SME will help in the entrepreneur development programme in Technical Textile.

L. 200% weightage reduction in R and D in house activity.

M. Peak rate of Cenvat has been increased from 10% to 12%.

Indirect Benefits

1. One of the 5 core objectives of the budget is GROWTH IN DOMESTIC DEMAND- offers opportunities for Technical textile sector to push for non budget measures which can help domestic demand.
2. The strong emphasis on Agro growth, Horticulture, and improvement on Food yield offers opportunity for increase usage of Agro textiles.
3. National Skill development mission increase in budget can help the sector to fund its skill shortage issues too.
4. Rural infra development fund – Rs 20,000 Cr and more 8,000 kms of road network to be done.. . Can be used by geotextiles companies.
5. National urban health mission to set up – can be used to increase the usage of Medical Textiles.
6. Govt to fund Rs 5,000 Crores as India Opportunity Venture fund – to help SME companies In Technical Textiles for equity.

B’desh garment exporters hit by Indian payment crisis

Bangladesh’s readymade garment (RMG) exports to India has hit a hurdle as more than 20 apparel firms have failed to receive timely payment from an Indian company to which they had supplied goods, according to exporters.

In September last year, the Indian Government extended duty-free access for Bangladeshi clothing item exports to India. This step was welcomed by Bangladesh’s RMG exporters and generated a lot of enthusiasm among them to explore the Indian market.

However, with one of the Indian companies failing to timely pay for its clothing item imports from Bangladesh, it is now being feared that it might affect Bangladeshi garment firms.

Speaking on the issue to fibre2fashion, Mr. Md Siddiqur Rahman, second Vice President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, “A well-known Indian kidswear retailer, which is now facing financial trouble, has not paid its dues, which is severely affecting the Bangladeshi garment industry.”

Informing about the number of units that are affected due to non-payment of dues by the Indian retailer, he says, “There are 23 RMG factories in Bangladesh whose payments have been stuck up. Some of them have not received their payments since more than a year. The payment due is more than Tk 500 million. The 23 apparel units are now on the verge of collapse.”

Talking about steps that are being taken to resolve the issue, he mentions, “We have complained to the Governor of Bangladesh Bank, who has raised the issue with the Deputy Governor of the Reserve Bank of India. We have also complained to Centre for Policy Dialogue (CPD), our Foreign Ministry, the Ministry of Commerce, Bangladesh Embassy in India as well as the Indian Embassy in Bangladesh. So, everybody is aware about the issue.”

“Our Commerce Secretary, who is currently in India, is also expected to raise the matter during his discussion with Indian officials on bilateral issues,” he adds.

Mr. Rahman winded up by saying, “The Indian retailer has given commitment to make the payment by 30th June, 2012.”

Restructure Indian textile sector loans, says Committee


Smt. Panabaaka Lakshmi, Minister of State for Textiles has informed that The Confederation of Indian textiles Industry (CITI) has reported that out of 287 companies listed in the Bombay stock exchange 122 companies have reported net losses in Q1 of 2011-12 and 166 companies have shown poorer results compared to previous year. Many companies are reported to be finding it extraordinarily difficult to repay term loans and finance working capital and have reported that they may default on loan repayment.

The highest price volatility in cotton prices in the past 150 years followed by a collapse in April, 2011, had immediate repercussions in the domestic market. Cotton yarn production is down by15 per cent and fabric production is down by 19 per cent in the April-October, 2011 period over the previous year. Textile Mills faced with high priced cotton inventories could not pass through the prices into yarn and fabrics as the price decline came suddenly in the month of April, 2011. This led to a slowdown in production and reduced utilization capacity.

The Ministry of Finance constituted a Committee under the Chairmanship of Shri M.D. Mallya, Chairman Bank of Baroda for examining the textile restructuring proposals. The Committee identified a sizable exposure to the textiles sector of Rs. 146885 crores.

The Report of the Committee recommended a restructuring package that sought relaxation in prudential norms by RBI for banks to restructure working capital and term loans. Government has not sought international collaboration for investments; foreign investments are on automaticroute for textile sector.

The proposal was submitted to and examined by Reserve Bank of India (RBI).

RBI advised that banks are free to restructure any account, whether standard, sub-standard or doubtful as also more than once, provided the financial viability is established and there is a reasonable certainty of repayment as per the terms of the restructuring package but clarified that it was in favour of relaxing its prudential guidelines on restructuring of advances, provisioning norms, risk weights etc. for any specific sector or industry.

RBI has recommended to the Government to undertake a stress study of the textile sector.

Reduce excise on textile machinery, TMMA tells FinMin

Excise duty on all items of textile machinery, all parts, components and accessories should be 8%, instead of 10% and second-hand textile machinery should not be allowed duty-free access, says the Textile Machinery Manufacturers Association (TMMA).

Among its many pre-budget recommendations, TMMA has recommended that imports of dedicated parts, components and accessories of shuttle-less looms, compact ring spinning machines and cone winding machines which are not made in India so far, should attract zero percent duty, to facilitate manufacturing of high tech machinery to bridge the technology gap.

It has also suggested to the Finance Minister that, floor level of customs duty on all items of textile machinery in general should be 7.5% and that the rate of duty on raw-materials, parts, components & accessories should be less than that on complete machinery and should be 5% instead of 7.5 percent.

It also wants the supply of local textile machinery under EPCG and EOU status to be treated at par and 200% weighted deduction on R&D expenditure incurred by all companies and partnership/ proprietary units.

Free import of textile machinery in second hand machines should be prohibited or restricted by stipulating a specified minimum residual life of 10 years and further subject to the condition that the second hand machinery should not be older than 5 years.

Imported second-hand textile machinery should not be given subsidy under the Technology Up-gradation Fund Scheme (TUFS) and its derivatives namely 20% CLCS and 15% CLCS Scheme, in the name of modernization. The Government should not be a party to the technological obsolescence as technology changes in a 3 to 5 year period.

Government should put ban on import of second-hand shuttle-less looms with weft insertion rate less than 700 meters per minute. Tax break for a period of 5 years for any unit manufacturing hi-tech item of textile machinery with or without foreign collaboration.

TMMA has also recommended launching a TUFS dedicated to the Indian textile machinery industry. The fund should have an interest reimbursement outlay of Rs. 250 crores for the 12th Five-Year-Plan and should be based on similar principles as the existing TUFS.

TUFS benefits should be given for expansion and modernization of existing textile machinery manufacturing companies, acquisition of technical know-how from overseas countries.

Industry segments regarded as weak or non-existing (rotors spinning, automatic winding, weaving, processing, knitting and industrial sewing equipment) should be eligible for 10% capital subsidy in addition to interest reimbursement.