The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 05 FEB 2021

NATIONAL

INTERNATIONAL

 

A.T.E. partners W+D Bicma to expand medical & hygiene segment

The ongoing pandemic has brought renewed focus on medical and hygiene segment. To help Indian textile industry meet this rising demand, A.T.E, a manufacturer of textile machines, has tied-up with leading hygiene textile machine manufacturers W+D Bicma Hygiene Technologie, which supplies machines for manufacturing baby diapers, feminine care products, etc.

W+D BICMA also supplies machines for specialised products such as surgical face masks and FFP2/N95 masks. Its portfolio comprises of compact high-speed multi-functional machines for high-capacity production and economical medium-speed machines for start-up businesses. Besides complete machines, W+D Bicma is a specialist in upgrading existing machines with new features to enhance machine efficiency and product design. W+D Bicma has successful installations at some of the world’s most well-known brands.

During the pandemic, W+D Bicma designed a new high-speed machine in a short span of time which has the capability to produce 1 million face masks per day, called the Auxilium FM. Bicma also offers a high-speed machine that produces FFP2/N95 face masks.

This tie-up of A.T.E with W+D Bicma will help the Indian textile industry in a big way to expand its product offerings and ensure its due share in the growing medical and hygiene textile market.

Source: Fibre2Fashion

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Budget 2021-22: How sustainable is push for nylon?

Union finance minister Nirmala Sitharaman in her budget speech February 1, 2021 emphasised the need to rationalise customs duty on raw material input to ease the domestic production of man-made fibres.

The aim is to give the textile industry, micro, small and medium enterprises as well as exports of textiles a boost. The minister announced a uniform deduction of the basic customs duty rates on caprolactam, nylon chips, nylon fiber and yarn to five per cent from 10 per cent.

The Union government’s push to bring nylon production on a par with that of polyester, however, may not have a good bearing on the environment and climate change at large.

Nylon and its environmental impacts

Known for its strength, durability and elasticity, nylon was the world’s first entirely synthetic polymer fibre marketed to women in 1938. Its unique selling point was the longevity of stockings as compared to that of silk and rayon.

Nylon is not a natural fibre, unlike the traditional ones. Nylon is a polymer — a plastic with super-long, heavy molecules made of short, repetitive units of diamines and dicarboxylic acids. Contemporary nylon is made from petrochemical monomers (the chemical building blocks making up polymers), combined to form a long chain through a condensation polymerisation reaction.

The resulting mixture can be cooled and the filaments stretched into an elastic thread. Therefore, nylon production is inevitably tied to oil and gas production (plus chemical additives) and has the same negative environmental impacts as fossil fuels. This only exacerbates the global climate crisis.

Nylon tops the list of synthetic materials that have the highest impact on the environment, according to the Pulse of Fashion Report, 2017. Compared to other plastic-based fibres, manufacturing and processing of nylon is energy-intensive, which causes emission of greenhouse gases leading to global warming.

Moreover, the process releases nitrous oxide, a greenhouse gas 300 times more potent than carbon dioxide, and which depletes the ozone. Waste water generated during the production of nylon contains the unreacted monomer, caprolactam, which is polluting. Its untreated discharge through factory wastewater causes harm to a range of aquatic organisms.

Hence, as far as production is concerned, nylon is not a sustainable fabric.

Post production usage of nylon is not sustainable either. Washing of plastic-based textiles has been identified as a major contributor to the release of plastic microfibres into oceans, which causes marine pollution. According to Ellen Macarthur Foundation, around half-a-million tonnes of plastic microfibres resulting from the washing of textiles, equivalent to more than 50 billion plastic bottles, are released into the ocean every year.

Improper disposal of nylon products also leads to accumulation of microplastic in the aquatic ecosystem. Even if properly disposed, microscopic pieces of fiber slowly break down and contribute to marine pollution.

Conventional nylon is non-biodegradable; it remains on the earth for hundreds of years, either in a landfill or an ocean.

Alternatives to nylon

Plastic-based fibres or synthetic fibres account for two-third of the material input for textiles production globally. The most common materials are polyester (55 per cent), followed by nylon (5 per cent).

Also known as polyamide, nylon has a variety of pharmaceutical and industrial applications, with a global market of more than 6.6 million tonnes a year. Owing to the widespread use and negative environmental impacts, it is imperative to find alternatives for it.

There is a small but perceptible shift toward broader use of sustainably sourced materials. Scientists have had promising results replacing well-established petrochemical polymers with bio-polyamides from amino acids for production of nylon.

Researchers at National Renewable Energy Lab (NREL), the United States, have discovered a novel process of converting biomass to nylon wherein nylon can be produced renewably via the biological conversion of sugars, thereby eliminating the need for petroleum.

Bio-based Nylon 6.6 (RENNLON), which comes from glucose and other renewable feedstock, is already in the early stages of commercialisation, according to the Pulse of Fashion Report, 2017.

With technological innovations and efforts to move towards a new circular textile economy, recycling is the way forward. Today, chemical recycling exists for plastic-based fibres. This process can produce fibers of a quality comparable to that of virgin materials.

Polymers such as nylon and polyester can be depolymerised to extract monomers from which they have been produced. These can then be used as building blocks for the production of new polymers.

In 2011, leading manufacturer Aquafil created a Nylon-6 yarn, ECONYL, from 100 per cent recycled materials. The yarn is created from post-use materials from carpets and factory offcuts from the production of various textiles, including clothing.

The recycled fibre is then used in apparel, for example for swimwear or stockings. According to Ellen Macarthur Foundation, recycling technologies are mature and proven for both polyester and nylon, but not yet widely adopted for clothing as the economics of recycling is currently unappealing.

Merely promoting industry without any regard for the global climate crisis should not be India’s way forward. Technological innovation, industry-wide collaboration and unfettered support of the government can help India lead the fight against climate change.

Source: DownToEarth

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Synthetics to be 3/4th of fibre production in 2030: report

The global fashion industry has cultivated a dangerous addiction to synthetic fibres, made from climate-destroying fossil fuels like oil and gas, to power its fast fashion business model, says a new report released by a group of organisations that charts how the use of synthetic fibres, especially polyester, has doubled in textiles in the last 20 years.

Use of synthetic fibres is likely to continue growing to reach nearly three quarters of total global fibre production in 2030, with polyester accounting for 85 per cent of this share, it says.

The report, titled ‘Fossil Fashion: The Hidden Reliance of Fashion on Fossil Fuels’, was released by the Changing Markets Foundation, the Plastic Soup Foundation, the Clean Clothes Campaign, Zero Waste Alliance Ukraine, No Plastic in my Sea and WeMove.EU.

The fashion sector is the largest consumer of textiles, accounting for more than 70 per cent of the global textiles market as of 2019.

Polyester today is already found in more than half of all textiles. The oil and gas industry is betting big on plastics, from which polyester and synthetic fibres are made, as revenue from other sectors like transport and energy declines, a press release from the organisations said.

Much of the future growth in demand for oil is projected to come from the production of plastics. Production of synthetic fibres is also getting dirtier, with feedstock coming from fracked gas and multi-billion-dollar investments from a major Chinese polyester producer to convert coal into polyester yarn, the press release said.

The report also finds a striking correlation between the rise of polyester and the explosion of cheap, low-quality clothing that is causing a mounting waste crisis. Some brands are now churning out as many as 20 collections per year, and people are buying 60 per cent more clothes than 15 years ago, yet wearing them for half as long.

This trend is projected to worsen as global fashion production leaps from 62 million tonnes in 2015 to 102 million tonnes in 2030.

Surveys show that these trends are at odds with what Europeans want from the sector. One survey from 2019 found 88 per cent of Europeans wanted longer-lasting clothes.

Mountains of waste and oceans of microfibers Fashion’s addiction to synthetic fibres and runaway consumption of cheap clothes is leading to untenable quantities of clothing waste, with 87 per cent of clothing material either incinerated, landfilled or dumped in nature.

During use, washing and disposal, synthetic clothes also leach tiny fibres that are invisible to the eye. These ‘microfibres’ do not biodegrade, meaning they stay in the environment forever.

As a result, microfibres are now found everywhere, from the Arctic oceans to our food chains, lungs and stomachs. Microfibres are also present in 80 per cent of our tap water and have even been found in the placentas of unborn babies. The health consequences are still emerging, but microfibres are known to harm sea creatures and preliminary studies show they could disrupt lung development.

Despite the grand statements, pledges and a multitude of ‘misleading’ green labels and initiatives, the fashion industry has failed to make headway in reversing its catastrophic impact on the environment, or in reducing its dependence on fossil fuels, the report adds.

With the European Commission currently preparing its textile strategy, due later this year, the Changing Markets Foundation urged it to lay out a comprehensive plan to slow down the rate of consumption of clothes.

This can be done by decoupling the fashion industry from fossil fuels, increasing the quality of materials, for example through eco-design measures, and by requiring that the textile industry be responsible for the end-of-life of their products. In this way clothes must be separately collected, reused, repaired, and the industry should start investing into viable fibre-to-fibre recycling technologies.

The Changing Markets Foundation partners with non-governmental organisations (NGOs) on market-focused campaigns to expose irresponsible corporate practices and drive change towards a more sustainable economy. Plastic Soup Foundation is an Amsterdam-based NGO focused on stopping plastic pollution at the source.

Zero Waste Alliance Ukraine is a public association that unites Ukrainian zero waste initiatives, created by Zero Waste Lviv, Zero Waste Kharkiv and Zero Waste Society (Kyiv) in 2019. Clean Clothes Campaign is a global network dedicated to improving working conditions and empowering workers in the global garment and sportswear industries.

WeMove.EU is an independent and values-based organisation that seeks to build people power to transform Europe in the name of community, future generations and the planet. No Plastic in my Sea aims to fight against plastic pollution and its consequences on the marine ecosystem.

Source: Fibre2Fashion

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‘India lost more than a year’s worth of growth; can’t afford to go on a debt binge’

India’s economy has suffered more than most from the pandemic and so have its people. The country has lost more than a year’s worth of growth and perhaps a decade’s progress in its efforts to reduce poverty. The economic contraction — the first in India since the 1970s — has put pressure on its government like so many others to respond.

Until this week, that response had been relatively restrained. Prime Minister Narendra Modi’s government seemed to recognize that there was only so much it could do to address the economic contraction, especially while the pandemic is still raging. By its actions, the government implied that any welfare-promoting and growth-enhancing measures had to stand on a solid macro-economic foundation.

The federal budget for the next financial year, which starts in April, has poked a hole in this optimistic narrative. Not only has the fiscal deficit for the current year exploded to 9.5% of GDP — two percentage points higher than the consensus estimate, but still defensible for a pandemic year — next year’s deficit is now forecast to reach almost 7%. The government has effectively abandoned its long-term commitment to bring the deficit down to close to 3% of GDP, pitching instead for a gentle descent to 4.5% — six years from now.

Once the pandemic retreats, India might end up with a debt-to-GDP ratio north of 90%, compared to the low seventies at present. It would be saddled with a permanently elevated fiscal deficit and a financial system bogged down by unknown levels of bad debt. Consumer price inflation has topped the Reserve Bank of India’s target zone of 2%-6% since the Covid-19 lockdown began last year. These are, I am afraid, numbers more associated with Latin American stagnation than your typical Asian tiger.

The government is obviously hoping that increased spending will help India grow out of this predicament. Unfortunately, actual growth before the pandemic was already just 4% a year. Fitch Ratings thinks India’s potential growth is at best 5.1%. That won’t be enough to deal with the macro-economic predicament India’s in.

The only way India can pull itself out of this jam is if private investment pours into the country, financing projects that push up the country’s potential growth rate. Yet the government, already monopolizing domestic financial savings, seems to want to go to war with the global markets as well.

In his pre-budget survey of the economy, the government’s seniormost economist spent an entire chapter attacking the ratings agencies — a pre-emptive salvo against a possible sovereign downgrade. Print money without fear, he urged, saying that doing so would “not necessarily lead to inflation and a debasement of the currency” if the extra money is invested in the right projects.

To paraphrase “Tropic Thunder,” never go full MMT. Unlike the U.S. or China, countries in India’s position — which have neither a reserve currency nor strong growth momentum — can’t grow while exploding their debt. They can’t afford to ignore ratings agencies because of their supposed bias or cock a snook at the bond markets and just run the currency presses instead. They need to grow in order to reduce their debt. That’s a very different dynamic.

India isn’t so attractive that it can expect vast sums of investment to arrive even if the macro-economic numbers look bad and the sovereign rating is junk. We don’t have a history of deflation, we aren’t hitting the zero lower bound — quite the opposite, we have an economy prone to sustained high inflation.

And, finally, if there’s a country somewhere with a government bureaucracy efficient enough to build really productive assets using sustained deficits, that country definitely isn’t India. This is still a developing economy, which especially in bad times should tread carefully rather than throw caution to the winds.

Modi’s greatest strength as an economic manager had been his commitment to fiscal responsibility. Some of that was visible in this year’s budget as well — which, for example, boasted a welcome return to transparency about how much the government is borrowing, ending a tradition of fudging that has persisted since the last financial crisis.

Yet, with this new willingness to binge on debt, Modi now faces the prospect of leaving India’s macro-economy far less secure than when he inherited it. That would be a dire legacy indeed.

Source: The Financial Express

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10% duty will make ELS cotton costly: Industry

The Government of India has imposed a 10 per cent duty (5 per cent basic customs duty and another 5 per cent Agriculture Infrastructure and Development Cess) on raw cotton with effect from February 2, 2021. This will make imports of Extra-Long Staple (ELS) cotton costly, and may also lead to increase in prices of cotton in domestic market.

India imports ELS cotton, especially Giza cotton from Egypt and Supima cotton from the US, to the tune of 10 to 12 lakhs bales per year to meet the demands of the global customers and also the value added made-ups and apparel segments of the domestic market.

"The imposition of customs duty on import of cotton would directly influence and increase the domestic cotton prices and would be a challenging time across the entire value addition chain. The 10 per cent duty on raw cotton shall make imports of ELS cotton costly and thereby perhaps an increase in price or reduced supply of these items," Rajendra Agarwal, managing director, Donear Industries Ltd, told Fibre2Fashion.

Agreeing with him, RS Jalan, managing director of GHCL Ltd, said the increase in duty on imported cotton is "quite a dampener for the textile industry. I would have rather suggested a greater focus on increasing exports of value-added products for natural textiles along with manmade textiles."

There is also an apprehension that the latest step will contribute to the shoot-up of domestic cotton prices. This might result in weakening the competitiveness and sustainability of cotton textile and export, according to Ashok Juneja, national president, The Textile Association (India).

He, however, also shares a different viewpoint. "The levy of 10 per cent duty will not benefit cotton farmers as the normal import of 12 to 14 lakh bales per year accounts for only around 3 per cent of Indian cotton production and consumption and that also for such cotton (ELS cotton) which is not produced in India. No doubt, the import of cotton by Indian spinners is expected to decline by this measure."

Gaurav Davda, head-Corporate Affairs and Strategic Initiatives, Jindal Worldwide Ltd, feels the measure will "incentivise local production and lead to optimal utilisation of raw materials. This will also help in rationalisation of input costs."

Source: Fibre2Fashion

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Industry hopeful that RoDTEP will eliminate all undesired tax costs for exporters: ET-ILC Members

Government of India’s proposal to replace the Merchandise Export Incentive Scheme (MEIS) with the Remission of Duties or Taxes on Export Product (RoDTEP), as the former was not WTO compliant, seems to have gone down well with most industry players. Now, in a recent statement released, the finance ministry has said that the RoDTEP scheme will be extended to all export goods from Jan 1, 2021. The RoDTEP rates, conditions and exclusions under which it can be availed will be detailed by the department of commerce, based on recommendation of the GK Pillai committee that are expected soon. The industry is hopeful that the duty remission scheme will cover all the actual expenses pertaining to unrebated central and state taxes - electricity duty, mining taxes, levies imposed on fuel, transportation, etc.

The aluminium industry is operating at 90% capacity and is depending heavily on quick RoDTEP implementation since currently 15% of cost of aluminium production is due to unrebated central and state excise duties, the highest in the world. For the automotive industry, the question of global competitiveness is key as the sector exports to over 160 countries with an approximate turnover of USD 27 billion but has less than 2% of the global automotive trade in value terms. This is because of infrastructure inefficiencies and tax costs which are currently in 3-4% range. Even for the auto sector, RoDTEP will have a great positive impact as it is aimed at refunding all the taxes to auto manufacturers such as - fuel, electricity duty, road tax, temporary registration changes and non-creditable input on GST, ARAI certification changes etc.

The aim of RoDTEP is to refund non-creditable taxes embedded in the export product and the genesis of GST was to create a robust Input Tax Credit mechanism. “However, there are certain products which are out of the purview of GST and few GST payments are not available as ITC. Few of these examples include Excise duty and VAT paid on fuel, GST and Compensation cess paid on coal (which is used in manufacture of electricity), taxes paid to local authorities/state authorities, road tax, toll tax, octroi. All of such taxes should be reimbursed under a RODTEP Scheme,” says Rohit Jain, Partner, Economic Laws Practice.

The RoDTEP committee is undertaking a factual data collation exercise in consultation with industry players and the format prepared by the committee is quite comprehensive. “However, in this context, certain tax costs have to be considered based on certain assumptions e.g., embedded tax cost in the logistics cost incurred by the exporters, or embedded tax cost in the electricity/power consumption charges. One may not be able to calculate such embedded tax costs easily and therefore, the practical difficulty should be considered and reasonable assumptions should be allowed based on industry research reports,” says Satyakam Arya, MD& CEO, Daimler India.

Currently the issue that some companies are facing is in collating data with respect to the tax cost pertaining to raw materials, consumables, etc. This issue needs to be solved through consultations. Industry players are hoping that the RoDTEP committee follows a pragmatic approach while determining a benign rate that is reflective of industry average and without any ceiling rate. They’d like the committee to consider all kinds of taxes and duties incurred by the exporter or its suppliers - procurement, production, sale, distribution or even general administration. A liberal approach would be most welcome with the motto to eliminate any direct or indirect cost that hinders competitiveness of Indian products.

Source: The Economic Times

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Deficit slippage not to stoke inflation: DEA secretary

The Centre’s decision to keep its fiscal deficit at an elevated level of 6.8% of GDP in FY22 is unlikely to stoke much inflationary pressure, as the government will deploy much of the additional resources in creating productive assets, economic affairs secretary Tarun Bajaj told FE.

Moreover, with capacity utilisation trailing the trend level in the wake of Covid-induced disruptions, even the supply side is unlikely to react negatively to this fiscal push, he said in an interview on Wednesday.

The Reserve Bank of India (RBI) will announce on Friday the outcome of its latest monetary policy committee (MPC) meeting, amid expectations that it may discount the inflation fears for now and hold key rates to brighten growth prospects.

Asked if the fresh deficit road map will warrant a revision of the inflation-targetting framework, Bajaj said the government is in talks with the RBI and a decision will be taken in March. The Centre intends to cut fiscal deficit to 4.5% by FY26, against the pre-Covid goal of containing it at 3.1% by FY23. The RBI’s current retail inflation target of 4% within a (+/-2)% band is coming up for review in March.

As such, the inflation gauges have given conflicting signals over the past one year. Retail inflation plunged to a 15-month low of 4.59% in December, as moderating food inflation and a conducive base. But prior to this, it had remained above the MPC’s tolerance band of 4 (+/-2)% for 10 of the 11 months. In contrast, wholesale price inflation remained subdued, having moved in the range of -3.4% to 3.5% during this period, complicating the job of assessing the actual price pressure in the economy.

Citing the preliminary findings of its survey of manufacturing companies, the central bank had in December said capacity utilisation (seasonally-adjusted) improved from 47.9% in Q1, when lockdown was in force, to 62.6% in Q2, but still remained well below the long-term average of 74%. This was “either because of supply constraints or lack of demand”, it had said.

The government’s fiscal deficit shot up to 9.5% of GDP in FY21, as it was forced to offer relief packages despite a plunge in revenue collections due to the pandemic. Even though the nominal GDP is expected to reverse a contraction and expand at 14.4% in FY22, the indispensability of continued spending to spur growth and save both lives and livelihood has forced the Centre to keep the deficit elevated in the current fiscal as well.

Bajaj highlighted the government’s commitment to stepping up capital expenditure, with focus on creating large-scale physical infrastructure. This sort of spending is not inflation-inducing, he said, highlighting the quality of the proposed expenditure. According to a study by NIPFP, the multiplier of funds deployed in physical infrastructure in India is as high as 2.5 in the year of investment and 4.5 over a few years.

The government has budgetted capital expenditure at Rs 5.45 lakh crore for FY22, which is 26.2% higher than the RE of FY21 and 34.5% larger than the BE level for this fiscal. In contrast, at Rs 29.3 lakh crore, the budget estimate (BE) of revenue expenditure for FY22 is 3% lower than the revised estimate for this fiscal and 11.4% higher than the BE of FY21.

As such, the low tax buoyancy in the wake of Covid-19 has served to magnify the deficit, and the Budget isn’t quite an expansionary one, some analysts have said.

Source: The Financial Express

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‘Tax on foreign e-comm companies is justified’

India has clearly conveyed to the US Trade Representative’s (USTR) office that it does not agree with the latter’s conclusion that the country’s 2 per cent equalisation levy on foreign e-commerce companies discriminates against American companies, Commerce Secretary Anup Wadhawan has said.

“If there is economic benefit in certain jurisdiction, there has to be some taxation in that jurisdiction. The whole argument of a permanent brick and mortar establishment does not work,” Wadhawan said, addressing media representatives on Wednesday. The OECD (Organisation for Economic Cooperation and Development) is also moving in that direction (as India), the Secretary said.

Wadhawan reasoned that as some countries have established presence in e-commerce, they were facing problems. However, when the situation becomes more balanced, these countries would want to impose taxation on foreign e-commerce companies operating in their jurisdiction.

“India’s DST (digital service tax, referred as equalisation levy in India) is discriminatory, unreasonable, and burdens or restricts US commerce, and thus, is actionable under Section 301 (of Trade Act, 1974),” the USTR said in its investigation report issued last month.

‘Protecting industries’

Commenting on the Budget, the Commerce Secretary said the proposed rationalisation of customs duty structure, with a thrust on both easy and competitive access to raw material and infant industry protection, aims to encourage exports, particularly of value-added products. This includes reduction in duties on critical raw-material such as iron and steel, copper scrap, naptha, nylon fibre and yarn. To rationalise the duty structure of gold and silver, the rates have been reduced to 7.5 per cent from 12.5 per cent with agriculture infrastructure and development cess of 2.5 per cent.

Source: The Hindu Business Line

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Budget marks directional change for Indian economy: Finance Minister

The Union Budget has marked a clear directional change for the Indian economy, with infrastructure, health and agriculture identified as three big ticket areas for expenditure, finance minister Nirmala Sitharaman said Wednesday.

“This Budget mark a clear directional change for the Indian economy and that directional change is not what the government has offered as a sudden response, but it was something that was preoccupying the Indian minds for over 30 years,” she said at FICCI's national executive committee meeting via videoconferencing.

She added that budget has tried to raise resources which are non-tax resources at a time when resources are needed for expenditure, but without burdening any specific section of society or industry.

“I underline that we have not burdened any section of Indian society with any additional demand for even an additional rupee.”

Sitharaman asked the industry to ramp up investments and expansion, so as to share the burden as government alone would not be able to meet the demand of growing and aspirational India.

"Government alone, even if it brings bags full of money, cannot just meet the demand of the growing and aspirational India,” Sitharaman said.

The union finance minister expressed confidence that the government's revenue generation will increase in 2021 through asset monetisation and other non-tax avenues besides disinvestment.

The Union Budget has laid out clear pathway for monetisation of idle and non-core assets besides a pipeline for disinvestment of assets including Air India, BPCL, Shipping Corporation of India, Concor  NSE 0.19 %, BEML and others in the next financial year.

Speaking on the setting up of Development Financial Institutions (DFI), Sitharaman said that government will enable one DFI and the entire financing of long-term infrastructure will happen in a very market driven way, which will bring in efficiency.

The government has given an transparently provided its statement of finances along with reforms and stimulus which was announced over 2020. “There is no patching up or white washing," she said.

Source: The Economic Times

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India's home textile exports decline by 12.56% in 2020

Indian home textiles export decreased 12.56 per cent to $5,021.59 million in 2020 (January to October) compared to the export of $5,743.26 million in the same period in 2019. This was due to sudden export decline in home textiles during the outbreak of Covid-19 which affected the textiles value chain, specifically from March 2020 to May 2020.

The export was least in April at $83.21 million according to Fibre2Fashion's market analysis tool TexPro.

US, Germany, UK, UAE and Australia achieved the top positions as an export destination for home textiles from India in 2019 as well as in 2020. Also, US and EU contributed for approximately 75.00 per cent of the total home textiles export from India.

Most of the states in the EU such as Germany, UK, France, Italy, Spain, Poland, Belgium and Sweden, and US were put under lockdown in the month of March and April 2020 along with shutting down of home textiles stores for 3 to 4 months.

The Karur Textiles Manufacturer Exporters Association also reported that approximately 70 manufacturing units remained closed in the period after lockdown with poor workforce.

Source: Fibre2Fashion News

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Govt sticks to $5 trillion economy target; emphasis on infra aimed at achieving goal: DEA Secretary

The government is sticking to the target of becoming a USD 5 trillion economy by 2024-25 and emphasis on infrastructure sector and other initiatives taken in Budget 2021-22 are aimed at achieving the goal, Economic Affairs Secretary Tarun Bajaj has said.

The Budget presented by Finance Minister Nirmala Sitharaman on Monday has given a big push to infrastructure spending, monetisation of assets, ramping up of capacities in healthcare sector and agriculture sector, among others. These initiatives are aimed at reviving the economy ravaged by the COVID-19 pandemic.

“We have not revised the target. We are pushing for it. The various initiatives of the government including emphasis on infrastructure are targeting towards achieving that goal,” Bajaj told PTI in an interview.

The spending on infrastructure has gone up from Rs 4.12 lakh crore to Rs 5.54 lakh crore while on the health sector it has risen to Rs 2.23 lakh crore from Rs 94,000 crore in the Budget Estimate for 2020-21.

Prime Minister Narendra Modi in 2019 envisioned making India USD 5 trillion economy and a global economic powerhouse by 2024-25. With this, India would become the third largest economy in the world.

Although the Indian economy is estimated to contract by 7.7 per cent during the current fiscal, it is projected to record a growth rate of over 11 per cent in 2021-22.

Last month, the International Monetary Fund (IMF) projected an impressive 11.5 per cent growth rate for India in 2021. This expected growth rate would make the country the only major economy of the world to register a double-digit growth amid the coronavirus pandemic.

China is next with 8.1 per cent growth in 2021 followed by Spain (5.9 per cent) and France (5.5 per cent). With the latest projections, India regains the tag of the fastest developing economies of the world.

On the GDP growth, the Secretary in the Department of Economic Affairs (DEA) said real GDP growth would be 10-10.5 per cent in the next fiscal.

"Our revenue figure is under-stated not overstated. We have taken nominal GDP at 14.4 per cent and revenue growth at 16.7 per cent. So the buoyancy is only 1.16 per cent. We are hopeful we will get more than this. We will definitely be within 6.8 per cent and could be lower also," he said.

Allaying apprehensions on impact of large borrowing on private investment, Bajaj said there is ample liquidity in the market. As a result, the cost of borrowing for the government also declined this year, he added.

There are other alternatives before the government, including the National Social Security Fund (NSSF).

"If private sector needs to come up, we will be happy to create space for them," he said.

The government will borrow Rs 12.05 lakh crore from the market in 2021-22, lower than the Rs 12.80 lakh crore estimated for the current financial year.

According to the Revised Estimate, the gross borrowing for the current financial year was raised to Rs 12.8 lakh crore as against the Budget Estimate of Rs 7.8 lakh crore, an increase of 64 per cent.

"The gross borrowing from the market for the next year would be around Rs 12 lakh crore. We plan to continue with our path of fiscal consolidation, and intend to reach a fiscal deficit level below 4.5 per cent of GDP by 2025-2026 with a fairly steady decline over the period," Sitharaman had said while unveiling Budget 2021-22 in the Lok Sabha on Monday.

Gross borrowing includes repayments of past loans. Repayment for past loans in the next financial year has been pegged at Rs 2.80 lakh crore.

Source: The Economic Times

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Textile giant Shahlon Silk Industries adding new overseas markets!

Surat-based leading fabric and manmade fibre manufacturing firm, Shahlon Silk Industries Ltd., is adding new markets.

The company feels that the demand for textile products is very strong in both domestic and international markets led by increasing demand for fashion and home furnishing products.

After adding the new markets, the company exports will have a reach in almost 15 locations across the US, Europe, Middle East, Bangladesh, Africa, Belgium, Egypt, Jordan, North Africa, Thailand, Turkey, Sri Lanka and Korea.

Having four manufacturing facilities at different locations in Gujarat, the company garners 87 per cent of its revenues from domestic markets and 17 per cent from exports.

Its installed capacity for fabric manufacturing is 40 million metres per annum, while the same for yarn is 22,200 metric tonnes per annum.

Dhirubhai Shah, Chairman of the company, said “During the current quarter, we have added marquee clients in both domestic and interactional markets, which would result in increased volumes. The global trade and supply chain scenario has been changing and favouring India, in terms of becoming key sourcing partner for both fabric and manmade fibre products.”

The textile giant is focussing on improving its operating margins and profitability through better revenue mix and operational efficiencies.

Source: Apparel Online

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Demand grows for setting up of MITRA

With finance minister Nirmala Sitharaman making the announcement for establishing seven mega investment textile  parks (MITRAs) in the country over the period of three years in the Union Budget-2021, the Southern Gujarat Chamber of Commerce and Industry (SGCCI) and textile associations have  started lobbying with the central government for setting up  MITRA in Surat.

SGCCI on Tuesday wrote a letter to the FM demanding the establishment of MITRA in Surat to boost the man-made fabric (MMF) sector and to make the textile entrepreneurs globally competitive.

Official sources said that the SGCCI had submitted expression of interest (EoI) to the Ministry of Textile for  establishing mega textile park on the 1,000 acres of land in Surat on December-20. The mega textile park will help in building a stronger manufacturing base and de-risking of business models and attracting more investment in the textile sector.

Source: The Times of India

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India’s Exports Likely To Get A Boost From New Textile Parks

India’s exports are likely to get a boost once seven new textile parks are set up in the next three years.

“Small countries like Bangladesh have taken over India because we are not able to produce volumes. Textile parks would give us a chance to integrate our operations,” said Raja Shanmugham, a textile exporter from Tiruppur in Tamil Nadu state, which contributes a major amount to India’s knitwear exports. “At present, most of our players are micro and small-scale companies. Using these facilities will help us increase our scale and grow.”

The Mega Investment Textile Parks were announced by Finance Minister Nirmala Sitharaman in her speech unveiling the 2021-22 budget on Feb. 1.

Cotton yarn, fashion apparel and handmade carpets from India are well known in the global market, but the country lags behind smaller counties like Bangladesh and Vietnam when it comes to exports. Last year, India exported ready-made garments worth about $8.1 billion, according to the Apparel Export Promotion Council. Bangladesh exported about $28 billion around the same time, data from Statista shows.

Prabhu Dhamodharan, an exporter and the convener of the Indian Texpreneurs Federation, is optimistic about the new textile parks.

“These parks could be aligned with environmental, social and governance goals to attract international buyers and investors,” said Dhamodharan. “Tamil Nadu, with a robust manufacturing ecosystem, should work towards getting two parks.”

India is one of the leading exporters of textiles used in making apparel for big American and European brands such as Tommy Hilfiger and Marc O’Polo. A large volume of these textiles comes from Tiruppur and Coimbatore, both in Tamil Nadu.

The textile parks will benefit the bigger players first, Shanmugham said. “It will take a few years at least for smaller players to set up their units in these parks.”

The president of the Textile Association of India, Ashok Juneja, believes the new parks will help the domestic textile industry diversify. India is strong when it comes to exporting cotton garments, but lags China and other countries in exports of synthetic and other materials.

“These parks will help automation in the textile industry, which is now dependent extensively on manual labor,” said Juneja. The industry almost came to a standstill last year when around 300,000 laborers in some 500 textile units in Tiruppur left for their hometowns after the lockdown. Many were migrant workers who lost their jobs when plants closed.

“Once this park comes up, we will benefit also because all our players can use common research and development facilities,” said Juneja. “… These mega parks will help us only if our government signs free-trade agreements with countries just like Bangladesh and Vietnam have done.”

The textile parks could also help India take on other countries, especially China, industry analysts say. India’s textile manufacturers have been expecting to get at least 10 percent of China’s orders since many countries are eyeing non-China markets amid the pandemic.

In 2005 India proposed a Scheme for Integrated Textile Parks under which dozens of textile parks were to be set up across the country, funded by $185 million released by the government between financial years 2015-16 and 2019-2020. India follows an April-March financial year.

To date, 59 textile parks have been sanctioned under the scheme, with 22 of those completed and the rest in various stages of completion, according to the Ministry of Textiles’ year-end review for 2019.

Source: The Tribune

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COVID-19 factor! India’s apparel export contracts to US $ 12.26 billion (down 24.52%) in 2020

According to the provisional data released by Ministry of Commerce and Industry, India has seen 24.52 per cent de-growth in its apparel exports value during 2020 (calendar year).

The country was able to hit a figure of just US $ 12.26 billion from its apparel shipment in 2020 as against US $ 16.25 billion in 2019, all because of down market sentiments due to COVID-19.

As reported earlier by us, September remained the best month of the ‘Made in India’ garments as exports in this month valued US $ 1.19 billion, noting 10.22 per cent Y-o-Y growth.

However, the dismal performance continued in all other months. Though there were months when India tapped minor growth on M-o-M basis, a heavy negative trajectory could be seen in most of the period in 2020.

USA remained the largest export destination in 2020 with US $ 3.30 billion worth of apparel shipment, declining 24.04 per cent on Y-o-Y basis.

UAE witnessed 18.47 per cent decline and was on 2nd spot with US $ 1.52 billion worth of apparel imports from India in the recently concluded year.

UK was the top destination for India in Europe as the Asian country shipped US $ 1.12 billion worth of apparels to UK, plunging 29.24 per cent on yearly note.

Source: Apparel Online

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Comments by foreign individuals and entities on farmers’ protests; AEPC comes forward to support Government

Apparel Export Promotion Council (AEPC), the official body of Indian apparel exporters, has come forward to support Indian Government’s efforts in resolving the impasse with protesting farmer groups.

In a press release on recent comments by foreign individuals and entities on the farmers’ protests, the council said that no person should comment on such serious matters without knowing the facts and understanding the issues at hand.

It further shares the view of the Ministry of External Affairs, “The Parliament of India, after a full debate and discussion, passed reformist legislation relating to the agricultural sector. These reforms give expanded market access and provide greater flexibility to farmers. They also pave the way for economically and ecologically sustainable farming.

A very small section of farmers in parts of India has some reservations about these reforms.

Respecting the sentiments of the protestors, the Government of India has initiated a series of talks with their representatives. Union Ministers have been part of the negotiations, and eleven rounds of talks have already been held.

The Government has even offered to keep the laws on hold, an offer iterated by no less than the Prime Minister of India.

Yet, it is unfortunate to see vested interest groups trying to enforce their agenda on these protests, and derail them. This was egregiously witnessed on 26 January, India’s Republic Day. A cherished national commemoration, the anniversary of the inauguration of the Constitution of India, was besmirched, and violence and vandalism took place in the Indian capital.

Instigated by fringe elements, Mahatma Gandhi statues were desecrated in parts of the world. This is extremely disturbing for India and for civilised society everywhere.

Indian police forces have handled these protests with utmost restraint. It may be noted that hundreds of men and women serving in the police have been physically attacked, and in some cases stabbed and seriously wounded.

The Government said that it would like to emphasise that these protests must be seen in the context of India’s democratic ethos and polity, and the efforts of the Government and the concerned farmer groups to resolve the impasse.

Before rushing to comment on such matters, it has urged that the facts are ascertained.

The temptation of sensationalist social media hashtags and comments, especially when resorted to by celebrities and others, is neither accurate nor responsible.

Source: Apparel Online

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India Handloom brand generates sale of Rs. 1,046.52 crore

The Ministry of Textiles (MoT) has said that it is aware of the condition of weavers across the country and in order to come out of the COVID 19 pandemic situation and for welfare of handloom weavers, many initiatives have been taken in the recent times.

Union Minister of Textiles, Smriti Irani informed about these initiatives in Rajya Sabha (upper house) – initiatives from various ministries, Government agencies, e-commerce entities and many other stakeholders.

To promote e-marketing of handloom products, 23 e-commerce entities have been engaged for online marketing of handloom products and so far, total sale of Rs. 123.97 crore has been reported through the portals.

India Handloom brand, which was launched on 7 August 2015, has so far issued 1,590 registrations under 184 product categories and generated sale of Rs. 1046.52 crore.

To support the handloom and handicraft sectors and to enable wider market for handloom weavers/artisans/producers, steps have been taken to on-board weavers/artisans on Government e-Market place (GeM) to enable them to sell their products directly to various Government Departments and organisations.

So far about 1.5 lakh weavers have been on-boarded on the GeM portal.

At the same time, to enhance productivity and marketing capabilities and ensure higher returns on weavers’ through collective efforts and pooling of resources, 109 handloom producer companies have been formed in different states.

Handloom Export Promotion Council (HEPC) has organised various virtual events facilitating marketing and sales of handloom products in the domestic as well as international markets.

National Handloom Development Programme (NHDP), Comprehensive Handloom Cluster Development Scheme (CHCDS), Handloom Weavers’ Comprehensive Welfare Scheme (HWCWS) and Yarn Supply Scheme (YSS) are some of the main schemes for handloom sector, implemented by MoT.

During the 2019-20, handloom export of India was US $ 315.62 million (Rs. 2,248.33 crore).

Source: Apparel Online

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INTERNATIONAL

With extra duties, taxes, Brexit threatens to make UK-Europe trade more costly

On January 31, 2020, when Brexit came into force it was expected to ease trade relations between the Europe and the UK. But, one month since the conclusion of the trade deal, things are far from smooth for luxury brands in both regions. As a Vogue Business reports shows, 20 of 57 luxury brands that operate in both UK and Europe face delays in product deliveries. Additionally, customers are being burdened with unexpected duties and taxes on their products. Brands are being taxed for product returns, affecting their profit margins. Luxury firms like the London department store Fortnum & Mason and Kate Spade New York, are being forced to suspend sales to Europe, until things work out.

Consultants and industry experts expect the situation to improve soon. However, they believe, Brexit has made trade between the two regions more costly. Simon Cotton, CEO, Jonhstons of Elgin says, it has increased courier charges between the two regions with firms charging over £4.50 for a parcel delivery between the UK and EU alongwith potential additional administrative costs. UK companies sourcing their products from outside Europe have to pay a duty on import of products besides an extra charge for exporting them. These products can achieve a tariff-free status only if they fulfill the complicated rules of origin, adds Aruni Mukherjee, Director-Indirect Tax, KPMG UK.

Troubled by this, retailers like John Lewis have temporarily halted exports to Europe while others have declined to pay the extra duties or taxes. Amazon has withdrawn its products from the Northern Ireland market though retailers like Robert Ettinger, CEO, of namesake brand has received several inquiries from brands for making products in the UK.

Product returns and trade shows

Besides being burdened with extra duties and taxes, retailers also face additional charges on product returns by customers. Post Brexit, a product returned by a European customer to a UK brand and vice versa attracts additional duties and taxes even the brand has already paid a duty while shipping the product. UK government advisors have recommended splitting the supply chain into two parts and handling shipments and returns separately with the UK and EU. However, such a solution is not feasible for smaller businesses like the womenswear brand Cefinn.

According to Adam Mansell, CEO, UK Fashion & Textile Association (UKFT), Brexit may also lead to an increase in freight levels once stores in the UK reopen, and brands move through stock imported before Christmas. Though European brands have not increased the average price of goods in their British online stores, their costs are eventually likely to increase as Mastercard plans to increase its fees for customers using a UK card to buy a product from an EU retailer, says data from BenchMarque by Deloitte.

The UK fashion industry and retail sector is yet to experience the full effects of post Brexit laws like the government’s abolition of its VAT (Value-Added Tax) retail export scheme. It may face further challenges post pandemic in the form of extra costs that retailers may have to bear for showcasing their products at European trade shows. The future for retailers certainly seems challenging.

Source: Fashionating World

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Karl Mayer's TM 3 tricot machine a hit in China

Karl Mayer’s TM 3 290” tricot machine has proved to be a hit in China. By the end of October 2020, the company had sold over 350 machines. The forecasts for the following months assume that demand will remain high. Karl Mayer offers solutions for warp knitting and flat knitting, technical textiles, warp preparation for weaving, and digitalisation.

The innovative tricot machine is mainly used for the manufacture of rigid and elastic velour and raised articles for clothing and furniture. The bestsellers include various velour articles, suede leather, or articles with a cotton look. At ITMA 2019, Karl Mayer’s HKS 3-M ON was successfully introduced to the market as high-tech model of the latest tricot machine generation. With the TM 3, the basic machine range will follow in the generation change. The new TM 3 is characterised by a further optimised price-performance ratio. With a working width of 280” which can be extended by 10”, it is much wider than its predecessor with 180” and/or maximum 186” and just as fast, according to Karl Mayer.

The extra width available also increases flexibility when producing several fabric lines. The number and width of the textile strips can be varied in a higher band width. The TM 3 offers further versatility, thanks to its ability to process elastane. For this purpose, the standard version is modified by an optional unit for the guiding and tension monitoring of the elastic yarns in the ground guide bar GB 3. In particular for the manufacturers of elastic velour articles, this equipment variant might be extremely interesting, Karl Mayer said in a media statement.

As a further option, the standard 32” beam superstructure for the ground guide bar GB 1 can be replaced by an 40” variant when using DTY yarns. The longer running length maximises the beam change intervals and, thus, minimises downtime. In addition, like all machines of the third generation, the new TM 3 offers the features of KAMCOS 2 and the advantages of bars made of carbon fibre reinforced plastic. The high-tech material is extraordinarily light and provides a temperature stability that meets the requirements of the high working width. The spring elements of the tension rail could also be optimised by a solution of fibre-reinforced plastic. The result of this improvement is maximum effects when compensating yarn tensions and, thus, a smooth yarn run-in as an important prerequisite for an exact fabric appearance. The machine with the extraordinary performance at an excellent price is offered in gauges of E 28 and E 32. The patterning is done by an N-gear, Karl Mayer said.

Source: Fibre2Fashion News

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Brexit sees second-hand clothing mountain build in England

A mountain of used goods is building up in the north-east of England as one of the biggest exporters of second-hand clothing to the EU has suffered a breakdown in trade caused by Brexit.

Since January, exports to the EU from ECS Textiles in North Shields have ground to a halt due to border delays, piles of paperwork and confusion over post-Brexit rules, costing charities thousands of pounds in lost donations each week.

ECS would normally send five 20-tonne container loads by sea to Latvia each week, full of second-hand clothes, toys, furniture and bric-a-brac for resale in eastern Europe. However, its deliveries have failed to get through since the end of the Brexit, with one container stuck in the port of the Latvian capital, Riga, incurring charges and threatened with import tariffs usually reserved for Chinese goods.

James Officer, sales manager at ECS Textiles, said the backlogs meant its warehouse was full to the brim with donated clothing that could not be shipped. “We’re at capacity. It could essentially close the business because we have no more physical room and it’s a really big worry. We’ve got containers sat in port, we’re paying standing charges, our customers can’t have their goods, and we’re not being paid. The business has ground to a halt.”

One month since the Brexit trade deal came into force, problems and delays caused by additional paperwork, border checks and red tape are causing major disruption for businesses. UK prime minister Boris Johnson has described the issues as “teething problems”, however growing numbers of companies there are warning the additional costs and delays are a permanent business hurdle.

ECS Textiles, with a turnover of about £2 million per year and hubs across the UK, collects clothes and bric-a-brac from charity shops and homes and resells these items to the continent, raising thousands of pounds per week for good causes including veterans’ charities, animal welfare and the NHS.

Mr Officer said one animal charity would normally receive £5,000 per week, but it was only able to pay £1,000 because of Brexit-induced delays.

Rules of origin

The company has fallen foul of rules of origin requirements. UK goods are eligible for zero-tariff sales in the EU. But because most of the goods ECS is exporting were produced in China, port authorities in Latvia are threatening to charge 5.3 per cent tariffs – or border taxes. The charge would eviscerate the profits required to keep the company running and raising funds for charity.

ECS says the work done to sort and grade the items it exports should allow them to qualify as British. Although the firm has had support from the local chamber of commerce, Mr Officer said the UK government had not helped it to obtain a rule of origin certificate to let it keep trading with the EU.

“That 5.3 per cents on every container will dramatically reduce the amount we can donate to charities that we’ve collected on behalf of, and that’s a real worry.” – Guardian service

Source: The Irish Times

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S. Korea, Cambodia strike free trade deal for broader economic cooperation

South Korea said Wednesday it has clinched a free trade deal with Cambodia, the latest in a series of its free trade pacts to revitalize its ailing exports amid the new coronavirus pandemic.

Trade Minister Yoo Myung-hee and her Cambodian counterpart Pan Sorasak held a virtual meeting and declared that Seoul and Phnom Penh have completed FTA negotiations, according to the Ministry of Trade, Industry and Energy.

"The FTA will pave the way for the two countries to overcome challenges from the COVID-19 pandemic, and seek sustainable economic growth," Yoo said. Cambodia is South Korea's 60th-largest export destination.

Major exports include beverages, textiles and cargo trucks. South Korea mostly imports clothes and shoes from the Southeast Asian nation.

The two countries plan to hold an official signing ceremony in the near future. The pact also needs a parliamentary approval.

South Korea and Cambodia launched feasibility studies on the FTA after holding a summit in March 2019. The first round of negotiations kicked off in July last year.

Under the deal and also when combined with the upcoming Regional Comprehensive Economic Partnership (RCEP), Cambodia will lift tariffs on 93.8 percent of all products, with South Korea eliminating duties on 95.6 percent.

South Korea has been rolling out what it calls New Southern and New Northern Policies, which center on expanding trade ties with emerging nations and reducing its reliance on China and the United States, which take up roughly 40 percent of annual exports.

South Korea already held an FTA with the Association of Southeast Asian Nations (ASEAN), but it has been pushing for separate agreements as well to seek closer ties. Seoul kicked off FTAs with Singapore in 2006 and Vietnam in 2015.

ASEAN comprises Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.

The country's exports to the bloc, meanwhile, edged down 15.2 percent on-year in January to US$8 billion amid the COVID-19 pandemic.

Seoul currently awaits the official launch of the RCEP later this year, which covers ASEAN and its dialogue partners -- South Korea, China, Japan, Australia and New Zealand.

South Korea and Indonesia signed the Comprehensive Economic Partnership Agreement (CEPA) last year, which now awaits parliamentary approval. The CEPA is equivalent to a free trade agreement but focuses on a broader scope of economic cooperation.

It is negotiating with Malaysia and the Philippines as well.

Last year, South Korea's outbound shipments came to $512.8 billion, down 5.4 percent from 2019.

Source: Yonhap News Agency

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China apparel export falls in 2020

China’s apparel exports fell in the beginning of 2020 with Covid-19 outbreak. Apparel exports plunged 39.23 per cent in January 2020 to $7.63 billion from $12.55 billion in December 2019, according to Fibre2Fashion's market analysis tool TexPro. The exports dipped 15.11 per cent for the year 2020 (January to November) to $112.54 billion (2019: $132.57 billion).

Coronavirus severely impacted apparel value chain as it emerged from the manufacturing epicentre Wuhan. Wuhan is in Hubei province of China where the infection was first reported, is a major industrial and transport hub in the centre of the country, where there are at least 11 apparel factories, as well as thread and textile factories, printing and dyeing facilities, and footwear manufacturers. The trade disruption got triggered in February 2020 with full or partial lockdowns in 13 Chinese cities that had severely restricted key land, air, and maritime transport routes from across the country.

Nevertheless, the trade recovered in June with 53.86 per cent rise to $11.74 billion compared to January, as China Customs Statistics (CCS) reported that the country’s garment exports started rising from April 2020 and gained momentum in June 2020 with loosening of government restrictions and increased product flow across the textiles and apparel supply chain.

Source: Fibre2Fashion News

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Dependence on imported raw material problem for Morocco

Two major constraints being faced by the Moroccan textile industry at present are over-reliance on traditional textile markets and dependence on imported raw material. As Europe struggles to control the pandemic, both Moroccan textile product exports and the supply chain of raw materials coming from the continent, have experienced disruption.

The pandemic has exacerbated the dire state of the textile industry in the country, exposing its vulnerability compared to competitors abroad, according to the Moroccan Association of the Textile and Clothing Industry (AMITH).

With challenges piling up as Morocco slowly moves to the post-pandemic, new normal, AMITH has drawn up a road map for developing the sector focusing on four main factors: adapting to the needs of customers, innovation and creativity, sustainability and the technical development in manufacturing.

“The sector must strengthen its level of adaptation to customer requirements, its anticipation capacities, as well as the quality of its logistics services,” AMITH directort general Fatima Zahra Alaoui was quoted as telling representatives of domestic media outlets.

Such a shift will allow the textile industry to adapt to the global sourcing map in a post-pandemic world, she said. According to AMITH, many foreign contractors are turning to local suppliers. With countries and contractors visibly wishing to reduce their reliance on Asian countries, AMITH believes the post-pandemic reality could present a great opportunity for the textile industry in the country.

Domestic firms should integrate environment-friendly and transparent manufacturing initiatives, she suggested.

According to AMITH, four-fifths of textile companies are not planning any investment in the coming months.

Source: Fibre2 Fashion News

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Myanmar coup will hamper apparel sourcing

The latest coup in Myanmar has changed the dynamics of the whole region. Especially puts foreign investment – FDI commitments into Myanmar were worth $5.5bn in the 2020 FY, which ended in September – in the country’s apparel manufacturing at risk, poses a great threat with looming trade sanctions, and may push some clothing retailers to cut their sourcing ties with the country.

Though Myanmar’s readymade garment (RMG) sourcing is new compared to its neighbors, the country’s RMG export has seen steep growth since it began to arise from decades of seclusion and military rule around 10 years ago and sums brands and retailers including M&S, Next, H&M, Bestseller and C&A among its clients.

Clothing, footwear and handbags are Myanmar’s 2nd largest export sector and grew 26% year-on-year to reach US$6.7bn in 2019, of which around US$5.2bn is garment. Although amid COVID-19, apparel exports in the first 11 months of 2020 slipped back to about $4billion.

Although Myanmar is a debated sourcing base. Not only is it being behind in main areas including political and legislative reform, compliance and sustainability, infrastructure and energy, but big brands have been sourcing from the country. While, country wise, total trade in goods between Myanmar and the United States amounted to nearly $1.3 billion in the first 11 months of 2020, up from $1.2 billion in all of 2019, according to U.S. Census Bureau data.

Industry experts have expressed concerns this holistic development will be dampened due to the coup.

“The military takeover in Myanmar could halt the boom in clothing export sales to Europe, which grew 40% in 2020, year-on-year,” says Director-General of the European Textile and Apparel Confederation, Euratex.

Dirk Vantyghem said that this has been attained through a major investment into the country’s apparel industry – its upstream textile section remains small. As a result, at the time of the coup, Myanmar was Europe’s 10th biggest source of apparel imports, with clothing has become one of the country’s main export portions.

Vantyghem says, “Consequently, with fashion brands likely to decrease orders from the country because of political risk. From a development angle, this will have an overwhelming impact on the Myanmar economy.”

Vantyghem says he is uncertain the level to which European brand orders would migrate to near-shoring after the coup. Adding that It is hard to quantify. I think to a partial extent Turkey may benefit as may Portugal and Romania.

“Perhaps more likely would be that Chinese-owned plants in Myanmar may seek to persuade buyers to move orders to associated factories already in place in Bangladesh and Vietnam, which both profit from privileged access to European markets.”

And it is no secret that the Chinese clothing and textile manufacturers are more and more viewing Vietnam as a gateway to Europe because of its recent free trade agreement.

From the viewpoint of production capacity, Vantyghem added that Vietnam has enough options to manage production capacity.”

He predicts, “Who will suffer most will be the women in Myanmar,” who have been working in a self-employed capacity for the country’s booming clothing sector. He adds that if the EU imposed sanctions it would make matters worse for its apparel exporters – Myanmar currently has almost completely free access to EU markets through the EU’s Everything but Arms free trade status.

Recent research by the UN in 2019 also provoked a good number of fashion brands to review their sourcing from Myanmar to evade being connected to violations of international human rights and humanitarian law after numerous RMG suppliers were found in connection with the country’s military.

The EU has also warned to remove Myanmar’s Everything but Arms (EBA) duty-free trade benefit in reply to the suspected ethnic genocide of the Rohingya.

Mike Flanagan, CEO of UK-based apparel industry consultancy Clothesource, reflects that the military take-over might close expansion within the Myanmar RMG industry, which has continued despite the COVID-19 pandemic.

Flanagan pointing a key problem is that when fashion brands look to make real sourcing plays in an increasing outsourcing hub, they like to fit their executives to supervise production or use 3rd party expert mediators.

Even if no big violent protests are succeeding the coup – which is far from certain – the danger of sending representatives to Myanmar has increased and that will limit brands’ readiness to join directly in growing orders and production in the country.

Most notably, the retailers and brands are closely following the developments, but refrain from risking what this will mean for the way in going forward.

Source: Textile Today

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