The government is considering an industry demand to lower the turnover and investment thresholds, and include cotton-based products in a Rs 10,683-crore production-linked incentive (PLI) scheme that is meant for only technical textiles and apparel made of man-made fibre.
In a webinar on PLI on March 5, which was addressed by Prime Minister Narendra Modi, senior industry executives highlighted the limited financial muscle of an overwhelming large percentage of companies in the labour-intensive sector, especially in the wake of the Covid-19 pandemic, to seek a relaxation of the “rigid criteria”, sources said.
According to the draft “focus product incentive scheme”, reviewed by FE, the government has proposed to offer as much as 11% incentive to large companies for investments over Rs 500 crore in greenfield projects in technical textiles. The benefit, however, is linked to an incremental turnover of Rs 1,500 crore in the first year and a 25% rise in turnover each year after that.
It also suggested that firms with an annual turnover of Rs 100-500 crore will be eligible for an incentive of 9% for brownfield projects. This will be subject to an increase in turnover by 50% each year.
Similarly, companies with a turnover of Rs 500 crore or more will be granted a 7% incentive in the first year. The benefit is tied to the condition that turnover has to be raised by 50% in the first year and by 25% each year after that.
The incentives in all the categories will be trimmed by 100 basis points each year after the first year and granted for a total of five years starting FY22.
The draft PLI scheme marks a paradigm shift in the government’s decision-making on two counts. First, it earmarks big bucks for big companies, shedding its long and costly bias towards small businesses. Second, it seeks to correct India’s historical policy preference for a cotton-dominated value chain, which is contrary to the global trend. The idea is to reclaim India’s export markets after ceding substantial ground to Bangladesh and Vietnam in recent years.
A source said given the fragmented nature of the textile and garment sector and the absence of enough large players, the government may be forced to review the turnover or investment criteria. But inclusion of cotton in the scheme seems unlikely at the moment, he added.
Noted textiles expert DK Nair said the scheme seems to be well-intentioned, but the targets, especially for incremental turnover, will be hard to meet. More importantly, investment decisions are typically guided by the prospect of long-term returns, and at the moment, it doesn’t look promising. An incentive regime for a few years can’t substitute hardcore structural reforms to ensure low logistics costs, cheap credit, flexible labour laws, easy land acquisition and abolition of inverted duty structures. So, getting textile companies to undertake large-scale investments still remains an arduous task, given the structural oddities, Nair said.
Moreover, assessing incremental turnover of companies, especially the unlisted ones, will be a herculean task, given the scope for manipulation between group firms, he added.
Raja M Shanmugham, president of the Tirupur Exporters’ Association, said most exporters in the country’s largest garment hub, are small and medium enterprises that have already been hammered by the Covid-19 pandemic. In such a situation, there is a pressing need for setting realistic targets. Also, cotton-based products that undergo high level of value-addition must be included in the scheme, Shanmugham said.
Even before the pandemic struck, textile and garment exports shrank 8.6% year on year to $33.7 billion in FY20. As such, the sector’s share in the overall merchandise exports has been sliding consistently in recent years, having dropped from as much as 13.7% in FY16 to just 10.8% last fiscal, the lowest in around a decade. Globally, while China remains the most dominant player by a wide margin in both textiles and garments, India has been beaten by both Bangladesh and Vietnam in recent years in apparel exports.
The scheme for technical textiles is part of the 13 PLI schemes that the government has announced in the aftermath of the pandemic. The total incentives under 13 such schemes, covering sectors including telecom, electronics, auto part, pharma, chemical cells and textiles, stood at Rs 1.97 lakh crore over a five-year period.
The idea is to lure mainly large companies to create “global champions” out of India that have the potential to grow in size, using cutting-edge technology and can, thereby, penetrate the global value chains.
Source: The Financial Express
USA has seen a dismal start of 2021 as it nosedived by 18 per cent in its apparel import values and 7.70 per cent in volumes during January ’21 – as says OTEXA data.
The fall in the country’s import impacted the partner countries, and all major Asian export destinations felt the brunt as they saw plunging value-wise exports to USA in double digits including India, China, Bangladesh, Indonesia, Cambodia and Vietnam.
As far as volume-wise import of USA is concerned, Indonesia and Vietnam fell in double digits, while Bangladesh, China and India declined in single digit.
On the other hand, Pakistan remained the only country in top 10 tally which noted significant surge both in value terms and in volumes terms in its shipment to the US market during January ’21.
Below tables contain the complete details –
Y-o-Y % Change in Volume-wise Apparel Exports to USA from Top 10 Countries:
(Qty in million SME)
|
Countries |
Jan ’20 |
Jan. ’21 |
% Change |
|
World |
2,311.35 |
2,134.52 |
(-) 7.65 |
|
China |
826.63 |
794.96 |
(-) 3.83 |
|
Vietnam |
392.91 |
348.42 |
(-) 11.32 |
|
Bangladesh |
219.08 |
198.66 |
(-) 9.32 |
|
Cambodia |
102.68 |
91.14 |
(-) 11.25 |
|
Indonesia |
106 |
77.40 |
(-) 26.98 |
|
India |
105.16 |
94.93 |
(-) 9.73 |
|
Honduras |
57.86 |
46.96 |
(-) 18.83 |
|
Mexico |
56.88 |
54.13 |
(-) 4.83 |
|
Pakistan |
58.60 |
68.62 |
17.10 |
|
El Salvador |
42.13 |
39.66 |
(-) 5.87 |
Y-o-Y % Change in Value-wise Apparel Exports to USA from Top 10 Countries:
(Values in US $ million)
|
Countries |
Jan ’20 |
Jan. ’21 |
% Change |
|
World |
2,311.35 |
2,134.52 |
(-) 7.65 |
|
China |
826.63 |
794.96 |
(-) 3.83 |
|
Vietnam |
392.91 |
348.42 |
(-) 11.32 |
|
Bangladesh |
219.08 |
198.66 |
(-) 9.32 |
|
Cambodia |
102.68 |
91.14 |
(-) 11.25 |
|
Indonesia |
106 |
77.40 |
(-) 26.98 |
|
India |
105.16 |
94.93 |
(-) 9.73 |
|
Honduras |
57.86 |
46.96 |
(-) 18.83 |
|
Mexico |
56.88 |
54.13 |
(-) 4.83 |
|
Pakistan |
58.60 |
68.62 |
17.10 |
|
El Salvador |
42.13 |
39.66 |
(-) 5.87 |
Source: Apparel Online
Madhya Pradesh, one of the leading states of India, is attracting huge investments in textile industry. Indore, a major apparel manufacturing hub in the state, has ample potential to attract this investment.
This was highlighted by prominent textile and apparel players during the first day of the 76th National Textile Conference being held in Indore.
The two-day conference was chaired by MP Shankar Lalwani. The special guests at the conference included Dr. Ved Pratap Vaidik and industrialist Bharat Modi.
Ashok Juneja, National President, Textile Association (India), said that many large groups are now investing in Madhya Pradesh, which will generate huge employment. Importantly, several big companies are exploring investment opportunities in Madhya Pradesh.
Ashok Veda, Vice President, said that association is initiating efforts to attract big names in the textile industry – those who are now looking for investment opportunities in Madhya Pradesh.
It was also highlighted that earlier, only yarn was made in Madhya Pradesh, which was sent out for weaving cloth, but now weaving and processing are also being taken care of in the state.
There is a huge market for falalen (flannel fabric) in Indore, but in the absence of a processing plant, textile players have to send their goods to other states.
Source: Apparel Online
Union minister Smriti Irani on Sunday expressed confidence that India will become self-reliant or Aatmanirbhar in silk production in the next two years.
The Minister for Textiles and Women and Child Development said the government aims to provide employment to over one crore people exclusively in the silk segment through the Krishi Vigyan Kendra programme.
She said that India’s raw silk production increased 35 per cent in the last six years.
Six years ago, 70 lakh people in India were employed in this sector whereas 90 lakh people are currently employed in the segment, she said.
The minister was addressing a programme to announce an MoU between the Textiles Ministry and the Agriculture Ministry, an official statement said.
In a tweet, Irani said the “@TexMinIndia-@AgriGoI MOU will focus on establishing tree based agro-forestry models in sericulture & exploring possibilities of activities through Krishi Vigyan Kendras(KVKs). This will enhance training, boost technology & create sustainable livelihood for silk farmers/rearers”.
On the eve of International Women’s Day, the minister also distributed Buniyaad Reeling Machines to women silk reelers with an aim to eradicate unhygienic and obsolete thigh reeling practice.
The Central Silk Board (CSB) under the Ministry of Textiles and the Ministry of Agriculture and Farmers Welfare signed a Memorandum of Understanding (MoU) on a convergence model for implementation of Agro-forestry in the silk sector under the ongoing Sub-Mission on Agroforestry (SMAF) Scheme, in the presence of Irani and Minister of State for Agriculture and Farmers Welfare Parshottam Rupala here.
Irani said that 8,000 women thigh reelers were identified for providing Buniyaad machines and 5,000 women have already been supported under Silk Samagra Phase I. She said that for remaining 3,000 thigh reelers, fund provision has been made in order to eradicate Unhygienic and Obsolete Thigh Reeling Practice from the country.
The minister further stated that this MoU signing will increase the agricultural income from 20 to 30 per cent.
Referring to the PPE kits, in which India has become the second largest producer in the world, she said that India has the capability of creating history in Agro-Technical Textiles also. She said farmers income has almost increased to 60 per cent by adopting Agro Technical Textile.
Irani observed that consumption of agriculture based technical textile will increase by involving Krishi Vigyan Kendra in creating awareness about Agro-tech and Technical textiles. She said this will lead the way for creation of new products.
Speaking on the occasion, Rupala said that the MOU signing will not only increase the income and production of farmers but will also remove the difficulties faced by them. He suggested to link the farmers dealing in silk production with Farmers Produce Organisations (FPO) for increasing their earning.
Source: The Financial Express
Anish India Exports (AIE), a Gurugram-based garment manufacturer, has partnered with sustainable finishing technology company Jeanologia to set up a first-of-a-kind zero-waste garment finishing plant – AIE Laundry 5.Zero.
What’s interesting is that the plant is also the first eco-efficient operational centre completely led by women.
The idea of AIE behind setting up the plant is to drive the change in the country by empowering women and establishing a new digital operational model in the apparel industry.
AIE Laundry 5.Zero combines Jeanologia’s sustainable technologies such as laser, e-Flow, G2 ozone and Colorbox along with H2 Zero, which is the company’s first water recycling system.
According to Jeanologia, the combination of these technologies guarantees zero discharge, eliminates all the harmful (for humans and environment) processes and reduces total water usage in the finishing process by 85 per cent.
AIE is committed to empowering women throughout its business, and aims to achieve that goal in part through the new finishing centre.
Ishita Tandon, Chief Sustainability Officer, AIE commented on the development, “Our goal is that diversity in leadership is not only healthy for the business, but also that women can show their full creative potential and empower them throughout the company.”
Carmen Silla, Marketing Manager, Jeanologia stated, “Women are rising up in India, and this project embraces these challenges. We are convinced that small actions can make big changes, and a sustainable garment plant led by women in India is the best way to start.”
Source: Apparel Online
Goods and services tax (GST) collections grew 7% year-on-year to ₹1.13 trillion in February, breaching the $1-trillion mark for the fifth straight month, on the back of improved compliance and a recovery in economic activity. Mint explores:
What is driving the surge in GST revenue?
Normalization of the economy, aided by a corona curve that India managed to flatten since its mid-September peak. India’s lockdown to contain covid infections was as harsh as it was abrupt, snapping off supply chains. The economic seizure was felt most acutely in April, when GST revenue slumped to ₹32,172 crore, about a third of the previous two months. Since then, it has been trending higher as covid-appropriate behaviour allowed shops, markets and factories to resume operations, boosting demand for goods and services. Stringent steps against fake invoicing to claim input-tax credit also boosted collections.
What does this uptrend trend signal?
The steady increase in GST collections since September is a result of heightened economic activity and rising commodity prices. This shows that covid-related anxieties have abated, and consumption demand is perking up. A key indicator of demand is power consumption, which rose for a sixth straight month in February. Similarly, imports rose for the third month in a row. Other high-frequency data-points, such as car sales, manufacturing activity and fuel demand, indicate a strong economic revival. A gradual re-opening of hospitality and tourism sector will further buoy the economy and raise tax collections.
How did the services sector perform in February?
Activity in the services sector, which makes more than half of India’s GDP, expanded at its fastest pace in a year in February, driven by an increase in fresh orders and rising business confidence on the back of the immunization drive. Firms shed staff amid rising input-cost inflation, but jobs will come back as fresh capacities are added to ease order backlog.
What trend will GST collections follow?
GST revenues are likely to follow the uptrend in coming months. E-way bills, which must be generated to transport goods worth over ₹50,000, jumped by about one million in February over the previous month. It must be noted that GST collections in any month are for transactions done during the previous month. A rise in bill generation in February, which has fewer days, will translate into robust collections in March. As the services sector normalizes, and air travel and tourism operate full steam, expect the tax kitty to swell.
What are the potential risks to the economy?
The gradual recovery is a result of consumption revival, but private expenditure is missing. Consumption-led recoveries tends to be short-lived. As demand improves, hopefully, private investments will come alive. A fresh rise in cases has sparked concerns of a second wave, which can muddy investment. Also, a spurt in inflation can prompt central banks to tighten monetary policies, roiling financial markets. Inflationary pressures are building as a result of a rise in prices of commodities such as crude.
Source: The Mint
After falling by over 23 per cent in apparel imports during 2020, USA couldn’t see any positive turnaround to start 2021!
The official data says USA fell by 18 per cent to US $ 5.52 billion in its apparel import values during January ’21 as compared to US $ 6.76 billion in January ’20.
In terms of volume, USA tumbled by 7.70 per cent to 2.13 million SME in the first month of 2021.
There was a drastic drop in the unit prices of the imported apparels as the prices sunk 11.64 per cent to US $ 2.58 per SME in Jan. ’21 as against US $ 2.92 per SME in Jan ’20.
However, as compared to December ’20, the import values got a surge which says M-o-M recovery is on track.
In December ’20, USA imported US $ 4.83 billion worth of apparels so the surge witnessed in the following month (January ’21) was 14.28 per cent.
All major apparel export destination tumbled in their respective shipment to USA in January such as China, Vietnam, Bangladesh, India and Indonesia, while the countries such as Pakistan, Egypt, Ethiopia and Colombia improved their performance on Y-o-Y basis.
Source: Apparel Online
A coalition of nine European Union (EU) and US initiatives linked to the garment, footwear and accessories industry recently released a joint statement expressing profound concern over the ongoing unrest in Myanmar resulting from the February 1 military coup. It urged companies sourcing from Myanmar to safeguard workers’ safety, economic security and rights to peaceful protest without penalisation.
The group, comprising the American Apparel & Footwear Association, amfori, ETI Sweden, Ethical Trading Initiative, Ethical Trade Norway, Fair Labour Association, Fair Wear Foundation, Initiative for Compliance and Sustainability and Social Accountability International , calls for an end to the military’s continued and increasingly violent crackdown against its own people, including against leaders of unions and labour rights organisations.
The garment, footwear and accessories sector is a huge source of employment in Myanmar, with nearly 600 factories employing 500,000 workers.
The coup puts at risk the hard-fought social and economic progress of the country as well as the well-being of its people, including many already-vulnerable garment workers.
Further, brands and their suppliers are encouraged to identify and sever any ties to companies linked to the Myanmarese military services, the coalition said in a press release.
Source: Fibre2Fashion News
With the British Prime Minister Boris Johnson expected to visit this year, officials from India and the UK are working towards firming up a proposed Free Trade agreement. In an interaction with the media persons, Alex Ellis, UK High Commissioner to India said, “Traditionally India has not been very enthusiastic about trade deals. There is a shift and a desire for bilateral trade deals with countries including the UK.”
While the trade negotiations are complex in nature, according to the new High Commissioner, “Both countries had complementary economies and this is one big growth area.”
Why the Trade deal?
Following the UK’s exit from the European Union, New Delhi is keen on a FTA with that country. Why? Because the UK is an important trade partner and is also an attractive market for the service providers from India.
As part of an early harvest programme in lieu of matching benefits, according to reports, India is likely to give greater market access to Scotch whisky from that country.
G-7
India has been invited to the G-7 meeting later this summer. The High Commissioner expressed hope that Prime Minister Narendra Modi will attend it.
According to senior officials, there is no clarity yet whether the G-7 meeting will be in person or in the virtual mode.
India had also been invited for the D-10 group (which includes democratic partners Australia, South Korea and India in addition to the G-7).
Cairn Dispute:
In response to a query, the top British diplomat expressed hope that there is a swift settlement of the Cairn Dispute. According to him, “It was no secret that there are discussions going on between the two sides on this matter.”
What is the dispute?
India has lost It is over retrospective taxes and India losing the international arbitration case.
India-UK Trade Relations
Working towards an enhanced trade partnership later this year, both countries already have a strong and growing trade relationship. As reported earlier, before the global pandemic the bilateral trade between the two countries had witnessed a vibrant 11 per cent increase.
In the last decade there has been a steady rise in the bilateral trade between the two countries. The bilateral trade between the two countries has touched US 15.48 billion in 2019-20.
India and the UK are also fast-tracking discussions on concluding a comprehensive migration and mobility partnership agreement. Once this is concluded and inked it will allow in the faster movement of students and professionals in both directions.
Education
In response to a question relation to the new graduate scheme announced recently, he said, “Under this New Graduate Scheme, the students can now work in the UK after finishing their studies. This scheme is going to help a large number of Indian students who will benefit from it.”
The two sides are also keen on strengthening cooperation in Cyber security; joint defence production as well as promoting vaccine production.
Source: The Financial Express
Xi Jinping has struck a confident posture as he looks to secure China’s prosperity and power in a post-Covid world, saying that the country is entering a time of opportunity when “the East is rising and the West is declining.” But behind closed doors, China’s Communist Party leader has also issued a blunt caveat to officials: Do not count out our competitors, above all the United States.
“The biggest source of chaos in the present-day world is the United States,” Xi said, a county official in northwest China recounted in a speech published last week on a government website. He quoted Xi as saying: “The US is the biggest threat to our country’s development and security.” That warning, echoed in similar recent public comments by senior officials close to Xi, reinforces how he is seeking to balance confidence and caution as China strides ahead while other countries continue to grapple with the pandemic.
His double-sided pronouncements reflect an effort to keep China on guard because, despite its success at home, it faces deep distrust in Washington and other Western capitals. Although China is growing stronger, Xi has said, there are still many ways in which “the West is strong and the East is weak,” officials have recounted in speeches recently issued on local party websites.
Xi will unveil a long-term blueprint for navigating China in this new global environment later this week, when the Communist Party-controlled legislature, the National People’s Congress, gathers on Friday and convenes for about a week.
“Xi Jinping strikes me as ruthless but cautious in erecting a durable personal legacy,” Dimitar Gueorguiev, an assistant professor of political science at Syracuse University who studies China, said in an interview. In the eyes of China’s leaders, he said, “the response to the coronavirus was really a textbook example to the party of how you could bring things together in a short amount of time and force through a program.”
Xi and other Chinese leaders have recently described challenges, both short-term and long-term, that could hold back their ambitions. The Biden administration has signalled that it wants to press China on human rights and compete with it on technological advancements and regional influence in Asia.
At home, China is grappling with an aging population and trying to overhaul an engine of economic growth that uses too much investment and energy for too little gain and too much pollution. Beijing also sees a threat in Hong Kong after anger at the Communist Party’s deepening control there ignited months of antigovernment protests in 2019. Underscoring Xi’s hard line against any political challenges, the Chinese legislature appears poised to back plans to drastically rewrite election rules for Hong Kong, removing the vestiges of local democracy in the former British colony. China is also looking to its next big leadership shake-up next year, when Xi, 67, appears likely to claim a third five-year term in power, bulldozing past the term limits that had been put in place to restrain leaders after Mao Zedong and Deng Xiaoping.
Having emerged triumphantly from the pandemic, Xi will look to further centralise his power, said Lynette H. Ong, a political scientist at the University of Toronto. The congress is part of the party’s stagecraft this year to reinforce the view that Xi is essential to safely steering China through momentous changes. “The looming risks and tests will not be any less than the past,” Xi told an audience of younger party officials in Beijing, according to official reports. “Our party has relied on struggle up to this day, and must rely on struggle to win the future.” And in July, Xi will preside over the centenary of the founding of the Chinese Communist Party, celebrations that are likely to cast him as a historic leader like Mao and Deng. Adding to the aura of success are China’s plans next year to hold the Winter Olympics and to have a space station in orbit.
Source: The Business Standard
