The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 30TH APRIL 2021

NATIONAL

INTERNATIONAL

Viscose yarn prices to strengthen in Q2 2021

The monthly average price of 100% viscose yarn, FOB China, is expected to show regular gain in the remaining period of the second quarter (Q2) of 2021. Currently, viscose yarn traders and downstream plants are less active with upcoming holiday in May 2021. While some players continue to stock, other players will again start stocking after the holiday.

From the beginning of 2021, the monthly average price of viscose filament yarn has shown a continuous narrow fluctuation, and is expected to reach to $5.68 per kg by June 2021.

The monthly average price of 100 per cent viscose yarn was $2.54 per kg in January 2021 and it moved up to $3.00 per kg in March 2021 with a surge of 18.11 per cent in just two months. After the substantial rise in March 2021, the price showed a drop of 7.00 per cent in April 2021 and reached $2.79 per kg. The current market dynamics support the expectations of price rise by the end of the first half of 2021. The price is expected to climb to $3.05 per kg in June 2021 with a growth of 9.32 per cent over monthly average price in April 2021.

The price rise of 100 per cent viscose yarn in the 1st quarter of 2021 has been supported by the gradual stock building of downstream plants. Hence, viscose yarn inventory declined in the beginning of the year 2021. Yarn manufacturers remained under cost pressure due to further increase of pulp price amid tighter supply. The offer prices further increased in March 2021 with stable demand and rising prices of raw materials.

Source: Fibre2Fashion News

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Pandemic impact: Necessary to stop reverse migration

India has been recording lakhs of fresh Covid-19 cases every day over the last few days. Most major cities and growth centres—Delhi, Mumbai, Chennai, Bengaluru, Surat, etc—continue to witness rising cases at an alarming rate. Although the governments, both at the Centre and states, are trying to address the emergency, the health infrastructure has been too stretched to accommodate rising cases, forcing state governments to impose severe restrictions or lockdowns to break the transmission chain. Delhi has gone in for a lockdown and Maharashtra has opted for severe restrictions till May 1.

The fear of complete lockdown across states is looming large. Fears of a lockdown, livelihood uncertainty and community spread of the virus create ground for mass reverse migration from big cities—like last year, which magnified the spread of the virus to different parts of the country and gave a severe blow to the country’s supply chain for months. It’s time to stop reverse migration with financial assistance, provision of subsidised food and other benefits in kind to assure migrant labourers to stay wherever they are.

In this context, the Delhi government’s decision to provide financial assistance of Rs 5,000 to registered construction workers to contain another episode of reverse migration is timely. The Centre should come up with a financial package and coordinate with states for an effective solution in a localised way to stop reserve migration.

The first spike in Covid-19 cases last year, and the fear of strict lockdowns, triggered an unprecedented exodus of 1.14 crore migrant workers from cities, back to their villages. A survey conducted in 179 districts during May-June 2020 reveals that the second most important factor that made migrants make the difficult choice to return to their villages was economic (33.2%)—the top factor being the fear of contracting Covid-19 (35.6%).

When economic activities began to pick up last year, this led to labour shortages in important sectors like manufacturing (especially labour-intensive sectors such as footwear, textiles, etc), mining, retail and trade and hospitality, which have high dependence on migrant workers. Small and medium sized enterprises were hit badly, given their increased dependence on migrant labour. The latter includes both inter-state and intra-state migrants, but both categories represent rural-urban migration—often termed as distress migration.

The sudden exodus of labour force created multiple challenges including issues with capacity utilisation, affecting entire supply chains, putting severe cost pressures on firms and construction activities, and eroding operating profits, as wages rose and revenues fell. States with large manufacturing presence, such as Maharashtra and Gujarat, were particularly affected, as was Delhi with trader bodies estimating that 60-70% of the labour force employed in Delhi left the city during the 2020 lockdown.

The second fallout of reverse migration was the spread of the virus in rural areas in migrant-origin states like West Bengal, Odisha, Uttar Pradesh, Bihar and Jharkhand, from where lakhs of workers come to affluent states—mostly capital cities—in search of work. The return of migrants put strain on fragile rural health systems, where health infrastructure, human resources and trained personnel were inadequate, coupled with low testing capacity. By June 2020, Covid-19 had spread to 98 of the 112 poorest rural districts, up from 34 in mid-April 2020. Studies show routine health services in rural areas were disrupted in light of Covid-19 last year, putting vulnerable populations—pregnant women, undernourished children and the elderly—at heightened risk of non-Covid-19 diseases and mortality. The mass reverse migration not only spread the virus, but also created challenges for the state governments in terms of managing quarantine and other basic facilities.

At the height of the pandemic last year, when the economy was all but closed, income support—through one-time direct benefits transfers (DBT) to around 20 crore women, and around 9 crore farmers—was provided by the government. Also, 80 crore beneficiaries were entitled to additional 5 kg of foodgrains free of cost every month. But most of these relief measures were subsequently discontinued November onwards as the Covid-19 case-load had begun to subside.

The IMF suggested this month that an additional fiscal stimulus would be helpful in supporting India chart its economic recovery. If a fiscal stimulus is under consideration, it is a good idea to start thinking of the stimulus by supporting the most vulnerable. Seen from that lens, income support to vulnerable migrant workers in the informal sector, who fear loss of livelihood as also life, is the right step. The government also must assure these migrants of basic health facilities, including vaccination. All types of efforts—financial and non-financial incentives—should be made to contain another episode of mass reverse migration till we have structural reforms in place in the areas of rural development, urban livelihood guarantees, inter-state migration policies, and inter-state portability of government subsidies and entitlements.

Given the dual risk of economic disruptions in urban centres in key sectors due to sudden labour shortages, and the risk of Covid-19 spreading fast in rural areas, financial support mechanisms to abate mass reverse migration is a move in the right direction, particularly one that has been taken in a crisis mode. The government is vocal and deeply concerned to stop reverse migration this time. It is working with local administrations to convince factory managers and trade unions in industrial clusters, etc, to convince migrant workers and stop reverse migration. It is a case of once bitten, twice shy—migrant workers fear lockdowns and the fact that they may have to remain without food and housing and endure loss of income just like last year, and feel that going back to their villages is the best option. Some out-of-the-box thinking in terms of a special financial package is required to convince them to stay put.

Source: The Financial Express

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Garment exports save the day for manufacturers

Exports of fashion and lifestyle products from India have started seeing an uptick as demand in the UK and the United States is picking up, said suppliers to international brands such as Zara, H&M and Primark.

“As demand in the north American region and Britain starts to grow, our business has started to pick up," said Sanjay Jain, chief executive of PDS Multinational Fashions which supplies to brands including Zara, Walmart, Mango and Superdry.

Pent-up demand and increased online sales are expected to give a boost to exports, he said.

“Despite some problems related to migration of workers, exports are doing well,” said Rahul Mehta, chief mentor at the Clothing Manufacturers Association.

This comes months after shipments were kept on hold, orders cancelled and payments were stalled, as global retailers were in distress due to the high number of Covid-19 cases in most countries which led to lockdowns and low shopper turnout.

“We sent our first order for the summer collection last week,” said an executive at one of the largest apparel exporters to brands such as H&M and Zara, requesting anonymity.

The order volume, however, is nowhere close to the pre-pandemic level as brands want to mitigate risk, said exporters.

Global brands, which have been relying on e-commerce for most of their sales until now, are expecting shoppers to be back in stores as vaccination for Covid-19 has been rolled out and quite a few have taken the jab in the past few weeks.

According to industry estimates, the global textile and apparel market was worth $1.9 trillion in 2019 and was projected to reach $3.3 trillion in 2030. Europe and the US contribute about 30% to the total apparel market and hence the launch of vaccination in these two regions has led to the increase in international orders, said exporters.

Source: The Economic Times

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PLI scheme going under utilised, says Niti Aayog vice chairman

Only three sectors are functioning under the production linked incentive (PLI) scheme of the 13 sectors for which the government has allotted Rs 1.95 lakh crores, Niti Aayog vice chairman Rajiv Kumar has said. He said India required to raise its investment from below 30% of GDP to35-40% of GDP and exports as a share of GDP must go up as has been in China from 5% of its GDP to 28% of its GDP.

He stressed that the share of manufacturing in GDP should increase and limiting manufacturing only to small scale would not suffice.

Instead it (manufacturing) must emerge to be globally competitive with a condition of trust build between the government and the private sector. While the government should continue removing regulatory hurdles, the private sector should demonstrate self regulation as good faith to evolve as a responsible partner for growth, Kumar said at an interactive session of the MCC Chamber of Commerce in Kolkata.

On the issue of rising input prices, he said it was a global issue and every country was struggling with this problem. But if there were incidences of tax escalations leading to higher prices, the government would look into it.

On agriculture Kumar said, India required to be water efficient since water usage was too high compared to yields.

Given the fragmented pattern of land holding, industrial farming was not an option for India. But India needs to modernise agriculture with more engagement in organic farming.

The Niti Aayog, he said, was looking into coal and other natural resources mining and the reforms recommendations, once implemented, will help in resolve the problems of higher production of natural resources for economic growth.

“If our country can grow at 10-11% per year for the next decades, the per capital income of our country would be $16,000 by 2050,” Kumar said, adding during the 90s , China and India had similar per capita income. China grew at 10% per annum from 1980 to 2010 and it presently has a $14.9 trillion economy as compared to India’s $3trillion economy. This is because after 1991 Indian economy managed to achieve growth rate in the range of 6%, even as the country has the potential to grow at double digit rates.

Source: The Financial Express

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Most Indian companies protected against weakening rupee: Moody's report

Rating agency Moody's said on Thursday most rated Indian companies can manage the rupee’s depreciation due to hedge and part of earning in hard currency.

The currency’s sustained weakening against the US dollar will be credit negative Indian companies that generate revenue in rupees, but rely heavily on dollar debt to fund operations. This will lead to significant dollar-based costs, according Moody's.

Most companies have currency protections, with nearly half of Moody's rated portfolio benefiting from natural hedges. April 27, 2021, the Indian rupee closed around 74.66 against the US dollar, or about three per cent lower than levels in mid-March.

Moody's released a report that looks at 22 rated India-based companies across various sectors such as IT service-related, commodities, TMT and automotive.

India is reporting new record daily increases in coronavirus infections, prompting new lockdowns and restrictive measures to curb the spread of the pandemic.

The exponential rise in new coronavirus cases in India is a humanitarian crisis. It also raises concerns about the country's economic recovery and currency fluctuations.

Most companies have protections to limit the effect of currency fluctuations. These include natural hedges, where companies generate revenue in US dollars or have contracts priced in US dollars. Some have US dollar revenue and financial hedges; or a combination of these factors to help limit the strain on cash flow and leverage, even under a more severe deprecation scenario.

As a result, weaker credit metrics under a scenario in which the rupee depreciates a further 15 per cent against the dollar can be accommodated within the companies' current rating levels, agency added.

Refinancing risk associated with US-dollar debt over the next 18 months also appears manageable, as most companies are repeat issuers and others are government-owned or linked entities with good access to capital markets.

Source: The Business Standard

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Meera Industries bags order from Dodhia Synthetics

Meera Industries Ltd. (MIL) has secured a domestic order worth Rs 3.45 billion from Dodhia Synthetics Ltd., which is one of the leading exporters of carpet yarns from India. Meera Industries will deliver three sets of CT-260 Twister or Cabler machines to Dodhia Synthetics.

The Tape Drive CT-260 Model is one of the recent launches by Meera Industries. The company is known for its range of Cabling or Twisting and Continuous Heat setting machines in the BCF carpet yarn manufacturing segment, which is usually mostly controlled by European manufacturers.

MIL is expecting good business in the upcoming months because of exports of this model to overseas markets

Source: The Indian Textile Journal

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Indian economy was well on the road to recovery before new virus wave hit

Economic activity in India picked up speed last month, signaling it was well on the road to recovery before a new wave of coronavirus infections derailed progress.

The needle on a dial measuring so-called animal spirits moved a notch higher for the first time in six months in March, based on the three-month weighted average numbers of eight high-frequency indicators tracked by Bloomberg News.

While last month’s score -- helped by faster exports and improved liquidity -- cements a solid showing in the January to March quarter, fresh activity curbs amid the world’s worst Covid-19 outbreak in India merit a real-time reading of the economy using other indicators.

A basket of of high-frequency, alternative and market indicators pointed to a sharp slump in services activity in the week to April 25, Abhishek Gupta, India economist at Bloomberg Economics, said in a note Wednesday.

Business Activity

Activity in India’s dominant services sector moderated in March after expanding the previous month at its quickest pace in a year. The IHS Markit India Services PMI eased to 54.6 from 55.3, with a reading above 50 signaling growth. A similar survey for the manufacturing sector also showed expansion moderating.

Exports

Exports grew more than 60% from a year ago, engineering goods, with gems and jewelery, drugs and pharmaceuticals, and chemicals leading shipments. Merchandise imports too staged a smart rebound in March, growing by 53.7% from a year ago on the back of an uptick in domestic economic activity.

Consumer Activity

Passenger vehicle sales more than doubled from a year ago, rising to 291,000 units in March, according to SIAM data. Two-wheeler sales were at 1.5 million units, compared with 867,000 last year.

That optimism was, however, was tempered by slowing demand for loans. Bank credit grew 5.6% in March from a year earlier, dropping from 6.6% in February, central bank data showed. Liquidity conditions improved a bit, with the banking system in surplus, despite advance tax outflows in the second half of March.

Industrial Activity

Industrial production contracted 3.6% in February from a year earlier, reflecting a slowdown across most sectors. The only bright spot was consumer durable  goods, which recorded surprisingly strong growth, helped by a lower base.

Output at infrastructure industries, which makes up 40% of the industrial production index, also shrank 4.6% in February from a year ago, with a drop in cement output leading the charge. Both data are published with a one-month lag.

Source: The Economic Times

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Alok Industries post a net loss of Rs 5 billion in Q4

In the regulatory filing for the Q4 ending on March 31st, Alok Industries, that offers innovative textile solutions, has reported a net loss of Rs 5 billion. It is to be noted that the company had registered a profit of Rs. 17.9 billion in the same quarter last year.

The brand also mentioned that its total income increased by 95.04% since last year, from Rs 7.58 billion to Rs 14.78 billion. Reliance Industries announced that it would acquire 37.7% of stake in Alok Industries in February 2020 for Rs 2.50 billion.

Reliance Industries had announced in February last year that it will acquire a 37.7% stake for Rs 2.5 billion in Alok Industries. It was auctioned under the insolvency and bankruptcy law by the lenders to recover unpaid loans. Reliance Industries had jointly bid with JM Financial Asset Reconstruction Co Ltd for acquiring a stake in the company.

Alok Industries manufacturer had posted a gain of Rs 2.05 billion in January-March 2020, due to this debt resolution plan

Source: The Indian Textile Journal

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PM Modi to hold a meeting with ministers on Covid-19 situation today

Prime Minister Narendra Modi will chair a meeting of the council of ministers Friday morning to discuss the Covid crisis, which has the country in its grip in a deadly second wave, according to sources.

This would be the first such meeting to be held after the second wave of the pandemic hit India. The PM has held meetings with pharma companies, vaccine makers, oxygen manufacturers and state chief ministers during the past few weeks to review how the Covid situation was being tackled.

In his address to the nation on April 20, Modi had appealed to states that lockdown should be the last resort and that economic activity and livelihood should remain least impacted. He has maintained that the focus should be on restrictions and curfews in containment zones. A prolonged national lockdown imposed in March 2020 had adversely impacted the country’s economy and businesses and the government has so far been avoiding a repeat of that situation, officials said.

Many states have imposed lockdowns and restrictions on movement of people to curb the spread of the virus.

Shortage of oxygen supply and vaccines has been a major challenge in the current spell of Covid. Health minister Harsh Vardhan told reporters on Thursday that there was no need for people to panic and rush to hospitals. He said there was adequate supply of oxygen in the country earlier as well and now it had been increased further. Requirement of oxygen among Covid patients has been higher in the second wave of the pandemic compared to the first, according to health ministry data.

The health ministry has also seen a massive rush in the registration for Covid vaccinations in the 18-45 years age group. More than 8 million have registered on the CoWIN portal on the second day as well for the vaccine. “Vaccination is a critical component of the containment and management strategy of the government. The fight against the pandemic is ongoing and the government is using all its experience to tackle the situation,” Vardhan said.

He said that no one knew about the virus last year but now the government was better informed about how to deal with the menace and was leaving no stone unturned in its efforts to fight the deadly pandemic. Army too has been roped in for setting up Covid care facilities, involving retired medical officers. Modi on Thursday met the chief of army staff General MM Naravane to discuss various initiatives being taken by the Army to help in Covid management.

Source: The Business Standard

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INTERNATIONAL

 

Vietnam’s Q1 textile exports turnover is recovering

After a pandemic-caused slowdown in Vietnam’s textile export industry, the Q1 of 2021 has been moderately hopeful for the country. According to reports from Vietnam’s Ministry of Industry and Trade, the export turnover of the textile industry was estimated to be $7.2 billion in the first quarter of 2021. This was 1.1% higher over the same period.

Also, the turnover of fibre and fibre of all kinds’ exports increased to 31% and that of curtain fibres and technical fibres went up by 8.8%.

This recovery is said to be aided by the government’s effort for marketing trade promotions, commodity trade, and market search. The number of Free Trade Agreements signed by the country has also helped to remove barriers in entering new markets and prioritize export promotional activities.

Though the recovery is good for the market, the rise in the second pandemic wave is threatening to cause problems with the transportation of goods...

 Source: The Indian Textile Journal

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US economy accelerated at a robust 6.4% rate last quarter on stimulus

Powered by consumers, the US economy grew at a brisk 6.4 per cent annual rate last quarter a show of strength fuelled by government aid and declining viral cases that could drive further gains as the nation rebounds with unusual speed from the pandemic recession.

Thursday's report from the Commerce Department estimated that the nation's gross domestic product its total output of goods and services accelerated in the January-March quarter from a 4.3 per cent annual gain in the final quarter of 2020.

Growth in the current April-June period is expected to be faster still, potentially reaching a 10 per cent annual pace or more, led by an increase in people willing and able to travel, shop, dine out and otherwise resume their spending habits.

Economists say that widespread vaccinations, the reopening of more businesses, a huge infusion of federal spending and healthy job gains should help sustain steady growth. For 2021 as a whole, they expect the economy to expand close to 7 per cent, which would mark the fastest calendar-year growth since 1984.

A major reason for the brightening expectations is the record-level spending that is poised to flow into the economy. A $1.9 trillion package that President Joe Biden got through Congress in March provided, among other rescue aid, $1,400 stimulus payments to most adults.

On top of that, Biden is proposing two additional huge spending plans: a $2.3 trillion infrastructure package and a $1.8 trillion investment in children, families and education that the president promoted Wednesday night in his first address to a joint session of Congress.

The Federal Reserve's ultra-low interest-rate policy, which is intended to encourage borrowing and spending, has provided significant support, too. In fact, the economy is expected to expand so fast that some economists have raised concerns that it could ignite inflation.

In part, this is because stronger demand has caused supply bottlenecks and shortages of some goods and components, notably semiconductors, which are critical to the auto, technology and medical device industries, among others.

At a news conference Wednesday after the Fed's latest policy meeting, though, Chair Jerome Powell reiterated his confidence that any surge in inflation would prove temporary. And he said the Fed wants to see a substantial and sustained recovery before it would consider withdrawing its economic support. In the meantime, Powell made clear, the central bank isn't even close to beginning a pullback in its ultra-low rate policies.

The strength of the rebounding US economy has been particularly striking given the scope of damage the pandemic inflicted on it beginning in March of last year. With businesses all but shut down, the economy contracted at a record annual pace of 31% in the April-June quarter of last year before rebounding sharply in the subsequent months.

In recent weeks, the economic gains have become increasingly evident. In March, US employers added 916,000 jobs -- the biggest burst of hiring since August. At the same time, the pace of layoffs has dwindled, retail spending has surged, manufacturing output is up and consumer confidence has reached its highest point since the pandemic began.

Source: The Business Standard

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Lenzingg Group Integrates Circular Economy in Textile Supplier Sector

Lenzing Group releases its 2020 sustainability report, which details its accomplishments in sustainability throughout the last year while keeping the safety and health of its employees and partners top of mind. Its accomplishments include the launch of branded carbon-zero fibers named TENCE and the introduction of blockchain technology for greater transparency, as well as new goals set for the future.

  • The overriding target is to be climate-neutral by 2050.
  • The implementation of the two key projects in Brazil and Thailand represents an important milestone on this journey. Thanks to its excellent infrastructure, the production plant in Thailand conceived as a CO₂-neutral site can be supplied with sustainable biogenic energy. The plant in Brazil will feed more than 50% of the electricity generated into the public grid as renewable energy and feature a positive net CO₂ balance.
  • In order to enhance resource efficiency and offer a solution for the global problem of textile waste, the company developed the REFIBRA recycling technology. REFIBRA is the only technology in the world enabling the production of new lyocell fibers on a commercial scale from cotton scraps derived from manufacturing cotton clothing as well as from used garments.

Source: The Executive Magazine

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Sri Lanka’s Hayleys acquires South Asian Textiles Ltd  

Recently, Hayleys Fabrics, a subsidiary of the Sri Lanka-based Hayleys Group, acquired a total of 98.84% stake of the circular knitting company, South Asian Textiles Limited. The brand acquired a 97.68% stake from Ambeon Holdings Limited and a 1.16% stake from another unnamed minority stakeholder. The deal was valued at $28 million.

It is to be noted that South Asian Textiles Limited recently overhauled its machinery for $7 million and has invested in high-end knitting technology from Singapore’s Unitex and Italy’s Santoni. It has also invested in new finishing and printing equipment.

South Asian Textiles Limited currently operates eight flat knitting machines and 115 circular knitting machines. 60% of these are double jersey machines.  It has the ability to produce 800,000 kg of fabric every month including 100% cotton, 100% polyester, spandex, and cotton-polyester blends. The brand also produces printed, dyed, suede, and yarn-dyed fabric.

This acquisition will help Hayleys Fabrics produce higher value-added fabrics and improve its export portfolio

Source: The Indian Textile Journal

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J38 industrial units risk labour unrest, officials tell factory owners

At least 538 manufacturing units, including textile mills and readymade garment (RMG) factories, across the country have the risks of facing labour unrest over payment of wages and festival allowance ahead of the Eid-ul-Fitr, officials said.

Meanwhile, the government on Thursday asked all the industrial units to pay workers' April wages and festival allowance by May 10.

The instruction came at a meeting, led by state minister for labour Monnujan Sufian, held at Srama Bhaban in the city.

The tripartite meeting with factory owners and workers' representatives was held to discuss the payment of monthly wages and festival allowances, and the current labour situation across the country.

Labour secretary KM Abdus Salam, inspector general of the Department of Factories and Establishments (DIFE) Md Nasir Uddin Ahmed, vice presidents of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) SM Mannan Kochi, Md Nasir Uddin and Khandoker Rafiqul Islam, labour leader Sirajul Islam Rony, among others, were present at the meeting.

Non-payment of dues and festival allowance are among the reasons that might fuel unrest, according to the people familiar with the situation.

Of the total 538 factories, some 143 are non-RMG factories that also run the risks of witnessing labour unrest while 261 are the members of BGMEA, according to Industrial Police (IP).

Some 76 are registered with Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and 33 are affiliated with the Bangladesh Textile Mills Association (BTMA).

Twenty-five factories under the Bangladesh Export Processing Zones Authority (BEPZA), listed with the IP, might also face unrest over non-payment of wages and other allowances.

The listed units are located in the six IP zones - Dhaka except for Dhaka metropolitan area, Gazipur, Chattogram, Narayanganj, Mymensingh and Khulna areas.

When asked, an IP official said they were closely monitoring these factories and will sit on Sunday for working out measures to avoid any untoward incidents.

According to the IP, a total of 158 factories are yet to pay wages for the month of March last.

Out of the non-paid factories, some 68 are non-RMG factories while 49 are listed with BGMEA, 14 BKMEA, 15 BTMA and eight with BEPZA.

Labour leaders said the risks of unrests were created due to the absence of fixed festival allowance in garment factories, partial and non-payment of festival allowance during the last Eid, payment of wages and allowances on the last working day before Eid holiday, mass termination, non-payment of legal benefits and sudden closure or lay-off of the factories.

Source: The Financial Express Bangladesh

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