GST RE­FUNDS BE­COME A HUR­DLE FOR EX­PORTERS… IS THE GOV­ERN­MENT RUN­NING OUT OF MONEY?

Perfect Sourcing - - Inside... - Deepti Mar­wah Edi­tor PERFECTSOURCING om SAI RAM Email: edi­tor@perfectsourcing.net

con­fu­sion, anger, cu­rios­ity and an­guish over the new tax­a­tion scheme, mat­ters re­main in a state of chaos. The in­dus­try wel­comed GST af­ter a few hic­cups and filed all GST re­turns as re­quired; how­ever, the prob­lem now is get­ting the IGST re­funds, which have been pend­ing for al­most a year as of date. While big ex­porters are still able to han­dle the sit­u­a­tion, the medium and smaller ones are the worst af­fected. The cash crunch is hit­ting them hard and they are now anx­iously wait­ing for these re­funds to bankroll their busi­ness. The in­dus­try, as a whole, has been sub­jected to un­prece­dented hard­ship. As per an in­ter­nal es­ti­mate, only 30 per­cent of the claims for re­funds have been met so far. Also, there is a fear that as much as Rs. 1,85,000 cr could get stuck with the Gov­ern­ment.

The in­dus­try is al­ready fac­ing chal­lenges due to re­vised duty draw­backs and now the de­layed GST has be­come a ma­jor is­sue, which if not re­solved on an ur­gent ba­sis will cause the re­gret­tably down­cast sit­u­a­tion of the gar­ment in­dus­try to de­te­ri­o­rate. Re­cent data shows that ap­parel ex­ports dropped by 0.3 per­cent be­tween April and De­cem­ber 2017 and eight per­cent in De­cem­ber alone. This it­self is proof of the fact that the sit­u­a­tion of ap­parel ex­ports is not healthy. Ex­porters have al­ready stopped any fur­ther ex­pan­sion and many have de­cided to down­size their busi­ness.

That said, out of all the neg­a­tives there is some good cheer for sup­pli­ers. one of the big­gest re­tail chains, THE WARE­HOUSE, has started its li­ai­son of­fice in In­dia with an in­ten­tion to in­crease sourc­ing of ap­parel and home tex­tile prod­ucts from the coun­try. They see In­dia as an im­por­tant base for sourc­ing gar­ments. But they have added a caveat: our in­dus­try needs to work quickly on pro­duc­tiv­ity and ef­fi­ciency, which is where other coun­tries have re­ally im­proved to our detri­ment.

In this is­sue, you will also read about the bud­get and its in­clu­sions and im­pli­ca­tions for the ap­parel and tex­tile sec­tor.

PER­FECT SOURC­ING al­ways tries to bring sub­stan­tial in­for­ma­tion about gar­ments not only in In­dia, but also in other coun­tries. In this is­sue, we have brought you an in­ter­est­ing com­pi­la­tion of labour wages in In­dia vis-a-vis other coun­tries like Bangladesh, viet­nam, Cam­bo­dia and China. Wages play a very im­por­tant role in di­vert­ing busi­ness to a coun­try as it is the key fac­tor in de­ter­min­ing the cost of sourc­ing gar­ments. As per our anal­y­sis, In­dia has been rais­ing wages on a reg­u­lar ba­sis which is why busi­ness is mov­ing to other low cost coun­tries; how­ever, it can­not be de­nied that the labour class in In­dia is suf­fer­ing even at the ex­ist­ing scale of wages due to high in­fla­tion in the coun­try. Even so, among all coun­tries con­sid­ered, In­dia, Bangladesh, and In­done­sia stand strong and have bright prospects in the fu­ture as far as sourc­ing is con­cerned.

I hope you will en­joy read­ing the is­sue.

Wish­ing you a very happy and colour­ful Holi in ad­vance

The af­ter-ef­fects of GST have still not calmed down as, even af­ter a lot of

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