The country's largest man-made-fabric (MMF) textile industry in the city is suddenly facing a grim situation. If production of polyester fabric has suffered heavy loss due to the ongoing agitation by textile workers, incessant rain in Tamil Nadu, especially in Chennai, have only made the situation worse for the city's textile traders. An estimated Rs 300 crore worth of orders have been cancelled by buyers in Chennai in the past fortnight because of the rains. Out of Rs 110 crore worth of daily supply of saris, home textiles and dress materials from Surat, textile products to the tune of Rs 30 crore are despatched to markets in southern India. Supply to Chennai has come down to 80 per cent in the last few days because of the rains. The year 2015 has not started on a good note for Surat's textile industry. The industry, which is grappling with weak demand for polyester fabric and instances of defaults to the tune of over Rs 150 crore, sees its hopes crashing further because of the floods in Chennai and the ongoing workers' agitation.
The powerloom sector has a production capacity of 3 crore metres of fabrics per day, weaved on over 6 lakh powerloom machines. Over 3.5 lakh powerloom machines have stopped working in over 12,000 units in Jolva, Palsana and Laskana in the last two weeks because of the agitation by workers who are demanding a wage hike. "South India is a major market for textiles from Surat. Chennai, Rajahmundry, Hyderabad, Bangalore, Thrissur, Kozhikode, Kochi, Vijaywada and Cuddalore are important textile centres in south India. Rains have hit these centres hard which have adversely affected the textile industry here," Southern Gujarat Chamber of Commerce and Industry's (SGtextile committee chairman Devkishan Manghani said. "Textiles worth Rs 30 crore are sent daily to south India from Surat. Supply to south India has come to a halt because of the rains and it may take at least three months for normalcy to return there. The losses to the textile units may run into hundreds of crores of rupees," Manghani added. "It is that time of the year when demand for saris and dress materials is nil in north India, so we have to depend on markets in south India for business. Next three months would be tough for Surat's textile industry," said Jay Lal of Federation of Surat Textile Traders Association (FOSTTA). "Most traders supply textiles to markets in south India on credit. Payments have got stuck because of the rains, disturbing the turnover chain. If the payments do not start coming soon, there will be a monetary crisis staring the textile sector in the city," Jay Lal added.
Total weaving units: Over 25,000
Total powerloom machines: 6.5 lakh
Powerloom machines closed: 3.5 lakh
Daily production of man-made fabric (MMF): 3 cr m per day
Production loss due to workers strike: Over 2 cr m per day
Daily supply of textile products from Surat: Rs 110 cr per day
Daily supply to southern India market: Rs 30 cr worth textile products per day
SOURCE: The Times of India
Khadi, the symbol of nationalism since the days of the East India Company, is now weaving tales of pride to children in the UK. About 3,000 khadi spinners and weavers from Saurashtra are narrating their stories of empowerment through button-up dresses, jeans and scarves that they make for their young overseas clients. Helping them is Moral Fibre, an initiative started by Shalini Sheth Amin, who designs the khadi garments that are retailed online by British brand 'Where Does It Come From?' Together, the two brands offer customers the ability to find out how and where their clothes were made and even information about the people who spun and wove the fabric. Traceability in the textile value chain has come to the forefront globally amid concerns over labour conditions and environmental degradation. "Each of our garments can be traced back to Athe farms by the consumer," said Amin. Each garment has a code tagged on the label, which, when keyed in on a website, provides details of the clothing. "One could actually get to know the hands that spun their khadi to those who wove the fabric, trace their villages, get to know about their families, their lives, et al. This bridges the divide between the two sides of the textile value chain," Amin said. Moral Fibre, based in Ahmedabad, has introduced finesse to the otherwise coarse khadi through processing and dying techniques. Amin has also attracted global attention: Moral Fibre supplied fabric for costumes in the Warner Bros. movie 'Pan' and has orders for two more fantasy movies.
SOURCE: The Economic Times
A panel headed by Chief Economic Adviser Arvind Subramanian has recommended the one per cent tax proposed to be levied on the goods and services tax (GST) on inter-state trade of goods to help manufacturing states be done away with. This is one of the major demands of the Congress and the recommendation could help the government break the GST gridlock in Parliament. In a report to Finance Minister Arun Jaitley on Friday, the committee recommended the main or standard GST rate be in the range of 16.9-18.9 per cent. It prefers it to be between 16.9 per cent and 17.7 per cent. The standard rate will apply to most goods and services in the new indirect tax regime. These rates were calculated by excluding real estate, electricity, alcohol and petroleum products.
OTHER KEY RECOMMENDATIONS OF SUBRAMANIAN PANEL
The panel also recommended other rates, with the lower rate for goods at 12 per cent and the highest rate at 40 per cent. The highest rate is for demerit goods such as alcohol, luxury cars, tobacco, etc. The panel recommended the rate on precious metals in the range of two per cent to six per cent. As this rate increases, the main GST rate should come down. CEA panel for removing tax on inter-state trade The panel said petroleum, alcohol, real estate and electricity should be brought under GST early on. According to the Constitution amendment Bill on GST, petroleum will be kept out till the proposed GST Council can decide on it. Alcohol and a few other items are to be kept out of GST, according to the Bill. This was another demand of the Congress. However, the panel advocated against putting any rate in the Constitution amendment Bill, in contrast to what the Congress wants. The party wants an 18 per cent cap on GST to be prescribed in the Constitution amendment Bill. However, the panel said, "The credibility of the macroeconomic system as a whole is undermined by constitutionalising a tax rate or a tax exemption."
The Subramanian committee estimated the revenue-neutral rate of the GST at 15 per cent. This is the rate at which the states and the Centre will not lose or gain revenue after the GST is applied. The 1 per cent tax was proposed in the constitution amendment Bill to bring manufacturing states like Gujarat, Maharashtra and Tamil Nadu on board. Succumbing to criticism that this would distort the GST, a Rajya Sabha select committee recommended confining the rate to only inter-state trade and not branch transfers from one company to another within a group. However, the Congress submitted a dissent note, wanting the rate to be withdrawn completely. Subramanian, too, had criticised the proposed levy. "Think of a good (product) going from Gujarat to Tamil Nadu, crossing four states. The good would embody an additional tax of about four per cent to five per cent, because it is one per cent for every state. That might make it easier to import into Tamil Nadu from Bangkok," he had said. The tax had the potential to undermine Make in India, he had said, adding, "That is why we need to look at this provision carefully. This period that we have gained, some of these issues need to be looked at again."
Briefing reporters later, Subramanian said allocation of the standard rate between the Centre and states would be decided by the GST Council. The council will be set up after the constitution amendment Bill is passed by Parliament and approved by at least 15 of 29 states. The council will be made up of the Union finance minister and state finance ministers, with one-third power with the former and two-thirds with the latter. Any decision can be taken with the three-fourths of members present and voting. Revenue Secretary Hasmukh Adhia said the final decision on the rate could only come from the policy choice that the GST Council made for the rate structure and exemption limits. Minister of State for Finance Jayant Sinha said the report will go to the GST council and then important policy decisions will have to be made on some of the parameters. Earlier, a sub-committee of the empowered committee of state finance ministers had suggested a revenue-neutral GST rate of almost 27 per cent. While the state GST component was proposed to be 13.91 per cent, the central component was to be 12.77 per cent. The committee had also proposed a narrow band for the state GST component. However, this rate was considered to be too high. Jaitley has assured Parliament that the GST rate will be significantly lower than this. Various experts in their suggestions to the select panel of the Rajya Sabha had suggested that the GST rate should be within 20 per cent. The Congress wants the rate to be within 18 per cent, with the cap mentioned in the Constitution. The GST will subsume state value-added taxes and central excise and services tax besides local levies. At present, the states impose VAT at four per cent and 12.5 per cent. Many states have increased their lower VAT rate to five per cent and upper VAT rate to 13 per cent. The Centre levies excise and service tax at 14 per cent each. Economic affairs secretary Shaktikanta Das said, "The report has been submitted. The department of revenue and finance ministry will go through it and put it into consultation with state governments, through mutual consultation between the state and Centre, through the empowered committee."
SOURCE: The Business Standard
The political cloud over the goods and services tax (GST) hasn’t really lifted, but the government has made its case more compelling for the Opposition and industry: A designated committee on Friday suggested the standard GST rate at an attractive and somewhat globally competitive 17-18% and voted against burdening the Constitution with the minutiae like the tax rates which should rather be a political choice and change with circumstances. The committee, headed by chief economic adviser Arvind Subramanian, also pitched for replacing all extant taxes on interstate trade with GST and denounced the idea of a 1% additional tax to help “manufacturing states.” The committee, with the principal mandate to define the revenue-neutral rate or RNR for GST, put it at 15-15.5% with a strong bias against keeping exemptions and preference for the lower end of that, after approaching the goal in three different ways. The RNR, which as the name suggests would preserve the revenue levels for the Centre and states and, hence, not fan inflation, will manifest itself in three rates — apart from the standard rate, there would be a “low rate” of 12% for essential goods and a demerit rate of a prohibitive 40% on tobacco products, aerated beverages, luxury cars and the like. The rates, of course, will comprise both the Centre and state components with a slightly higher share for the latter — in the case of the standard rate, for instance, a 17% rate would include the states’ 9%.
Precious metals that currently enjoy concessional rates of around 1%, the committee suggested, could be subjected to higher levies (up to 6%) to avoid the standard GST rate climbing to 20%, an eventuality that could distort the economy and lead to inflationary pressures. Talking to the media after submitting the report to finance minister Arun Jaitley in his Parliament building office, Subramanian said policymakers’ goal should be to make the GST as broad-based as possible, implying the need for an early re-look at the plan to keep petroleum products, real estate, electricity and alcohol outside the ambit of the proposed comprehensive indirect tax. Education and healthcare, to be exempt initially, would also need to bought under GST without much delay, he said, adding that India should strive towards a one-rate structure in the medium term. “The design of GST cannot afford to cherry-pick (among items for the purpose of differential tax rates) as that would undermine the objective of GST,” the committee said.
Stating that the GST rate proposed could still be slightly “on the higher side”, compared with developed countries and even some emerging market economies, Subramanian said the pan-India GST system that would militate against cascading of taxes would have a “self-policing” trait and provide a “historic opportunity to Make in India by Making One India”. “If you look around the federal systems in the world that have implemented VAT, it is remarkable how ambitious the Indian GST can be. The Indian GST would be the cleanest VAT that combines the best of centralised and decentralised systems in other countries,” he said.
SOURCE: The Financial Express
Expecting an upward revision of the first quarter GDP numbers, NITI Aayog Vice Chairman Arvind Panagariya today said the Indian economy can still manage 8 per cent growth rate this fiscal. “I have consistently maintained that economy is moving forward and we have seen the growth shift up to 7.4 per cent (in second quarter) now,” Panagariya replied when asked if GDP will touch 8 per cent mark as projected by him earlier. He further said, “I still remain optimistic…perhaps we will see somewhat revision in the first quarter figure also. So my prediction remains that by the time we get to the fourth quarter we would get to about 8 per cent.” Arvind Panagariya’s comments on the national accounts have come after the Finance Ministry in a statement said earlier this week the economy will grow in the vicinity of 7.5 per cent. However, the government had earlier projected a growth rate of 8.1-8.5 per cent for the current fiscal.
According the Central Statistics Office data released earlier this week, the Indian economy showed signs of recovery and grew at 7.4 per cent in July-September quarter this fiscal mainly on account of higher manufacturing growth of 9.3 per cent in the three-month period. The economy had grown at 7 per cent in the April-June quarter. During the first half of this fiscal GDP grew 7.2 per cent compared to 7.5 per cent in same period of 2014-15. On the rural economy, he said, “… we need to continue to take action particularly on the agricultural front. We would shortly come out with the paper which would be work of the taskforce on agriculture development.” Explaining further, he said, “Farmers must receive remunerative prices. This connects with issue of crop support prices and APMC (Mandi) reforms. The prices received by the farmers tend to be a smaller portion of what a consumer pays. There are also issues on the technology front.”
On setting up Atal Innovation Mission as envisaged by the government, he said, “We have a process underway to set up a mission secretariat. We would also set up a high-level committee which will guide work of the secretariat.” Earlier, Panagariya expressed disappointment over meagre expenditure on research and development, saying just one per cent of the GDP has been spent for the last many years. Finance Minister Arun Jaitley in Budget 2015-16 had announced the government’s plan to establish the Atal Innovation Mission (AIM) and said that initially a sum of Rs 150 crore will be earmarked for this purpose. The AIM will promote innovations in the country. Following the Budget announcements, NITI Aayog had constituted an Expert Committee under the Chairmanship of Professor Tarun Khanna, Director, South Asia Institute, Harvard University, USA. The panel has submitted its report. It has made wide ranging recommendations for short-term (where action can be taken relatively quickly to deliver almost immediate payoffs), medium-term (that can be addressed within a 5-7 year time frame) and long-term, which are likely to have long gestation periods, but will lead to a profound transformation in the entrepreneurial fabric of the country. The Committee observed that formulation of the AIM could be a defining moment in India’s economic history, and the idea must be unfettered and allowed to flourish. The Committee also emphasised the need to establish clear systems to monitor implementation, execution and impact. It has also been asked to incentivise corporates for their investments in research and development. Cash prize of up to Rs 30 crore for innovative entrepreneurs and setting aside 1 per cent of corporate profits to encourage out-of-the-box thinking are some of the proposals suggested by this panel.
SOURCE: The Financial Express
Finance Minister Arun Jaitley today said he was not worried about fiscal deficit and government would be able to meet its target despite additional outgo towards the implementation of the 7th Pay Commission. He admitted however that the impact of implementing the pay commission’s recommendations, which will result in an additional annual burden of Rs 1.02 lakh crore on exchequer, would last for two to three years. “I am not particularly worried about the fiscal deficit target,” he said while replying to questions on the impact of the recommendations on public finances at the HT Leadership summit. He further said that besides achieving the target, the government has also been able to improve the quality of fiscal deficit. The government proposes to bring down the fiscal deficit to 3.9 per cent of GDP in 2015-16, 3.5 per cent in 2016-17 and 3 per cent by 2017-18. “If you achieve a fiscal deficit by either cutting down expenditure or withholding tax returns, then you may strictly have statistical figure, but the quality of the fiscal deficit will always be suspected…we have concentrated on the quality of the fiscal deficit and we will probably be able to maintain it,” he added.
As regards the impact of the Pay Commission award to central government employees, Jaitley said the normal rule is that the expenditure on salary and pension should be 2.5 per cent of the Gross Domestic Product. The ratio will deteriorate in the initial years with the implementation, he said. However, “…as the base of the GDP increases, by the third or the fourth year, the spikes come down and (thereafter) you reasonably reach that 2.5 per cent figure back… These pressures will be for the next 2-3 years,” the minister added.
SOURCE: The Financial Express
India and Russia are likely to announce commencement of formal negotiations on a free trade agreement (FTA) when Prime Minister Narendra Modi meets Russian President Vladimir Putin in Moscow later this month — a step that could strengthen bilateral trade ties that have languished over the past two decades. A joint study group (JSG), set up earlier this year to examine the feasibility of an FTA between India and the Eurasian Economic Union (EEU) — comprising Russia, Belarus, Armenia, Kyrgyzstan, and Kazakhstan — has been asked to expedite its work and submit its report before the Prime Minister’s visit so that appropriate announcements can be made during the tour, a Commerce Ministry official told BusinessLine. “Although the Indians and Russians are separately preparing their inputs for the JSG report, there are indications that both sides would favour an FTA provided some vulnerable sectors are taken care of. The inputs would be combined in a single document and presented to the leaders,” the official said. Modi will visit Moscow on December 24-25 for the 16th India-Russian annual summit talks with President Vladimir Putin. Established in January this year, the EEU offers India access to a huge market with a population of over 180 million with a joint GDP of an estimated $2.7 trillion. “With India’s traditional markets such as the US, the EU and Japan facing continued economic uncertainty, it is vital for India to explore alternative markets. The EEU offers a wonderful opportunity for the country’s exporters and investors to diversify, and we are trying to grab it,” the official said. Since India’s exports to the EEU countries is less than $3 billion annually — with over $2 billion exported to Russia alone — and is just a small fraction of the region’s total imports, there is a huge potential of growth.
According to exporters’ body FIEO, India stands to gain substantially in areas such as pharmaceuticals, agriculture products, fertilisers, leather, and oil and gas if an FTA, formally called a comprehensive economic cooperation agreement, is signed with the EEU. “As the EEU aims to set up a common pharmaceuticals zone, India’s generic exporters could have easy access to the entire region,” the official said. With Russia continuing its ban against European Union farm imports, Indian exporters stand a chance to increase their shipments of dairy and meat items. India’s relation with other members of the bloc is also reasonably smooth, the official added. ONGC Videsh Ltd has been invited by Kazakhstan to explore its Abai bloc for energy resources, while India has also signed a deal with Belarus to supply 500 tonnes of potash fertiliser.
SOURCE: The Hindu Business Line
Given the vicissitudes of the world’s textile and apparel supply chain, China is changing its strategy to counter what Chinese experts describe as the “new normal.” “The ‘new normal’ situation implies the reality of slower growth rates … in China’s economy, coupled with spiraling costs that are going out of control,” explained Zhang Tao, the secretary general of the Sub-Council of Textile Industry (CCPIT), The Textile Industry Chamber of Commerce (CCOIC), in an interview with Apparel. Tao cited the rising production and labor costs in the textile and apparel industry — wages have risen over the years from a double-digit monthly salary to today’s nearly $700 per month — as the cause of China’s “losing the competitive edge in mass production.” China’s costs have risen dramatically and exceed those in of many other Southeast Asian countries, including Malaysia, the Philippines, Indonesia and Vietnam. Still, even as China imports textile and apparel products from Bangladesh, Pakistan and other countries, textile and apparel exports continue to be the number one contributor to China’s foreign trade, with China’s biggest markets the United States, the European Union and Japan. Also, many Southeast Asian exporters import China-made fabrics and re-export them after further processing. Last year, China processed approximately 10 million tons of cotton, 60 percent of which was grown locally. The remainder was imported from countries including the United States, India, and Pakistan.
Declining demand
According to the CCPIT data, China’s total export value of textiles and apparel from January 2015 to May 2015 reached just $30 billion, with the United States accounting for some $16.4 billion in that period. By contrast, in 2014, the total export value of textiles and apparel amounted to roughly $300 billion. Tao said that U.S. demand for textiles and apparel seemed to be picking up, but at a slower pace. “It is difficult for suppliers of low-end products [to find demand in the United States] because of the fierce competition and the cost-conscious U.S. consumer’s self-restraint in buying. However, the U.S. market is much more resilient and stronger than the European Union’s and Japan’s. Recovery is, however, not that strong, according to the feedback we get; buyers are not ordering as much as they used to,” Tao said. As the traditional markets seem to be saturated, Chinese exporters are also looking for greener pastures elsewhere, particularly in the emerging markets of South America, including Brazil, with its 300-million-strong population, and Russia, though the latter has problems vis-a-vis the sanctions it faces. Tao noted that Africa was also opening up to Chinese exports.
Seeking alternate production locales
To counter the sharp rise in production and labor costs, China is also looking for production sites beyond its shores — migration that typically was more focused on apparel than textile production. “Fabric production is not labor intensive but apparel production is. Chinese companies are worried by rising labor costs and one way to remain competitive in the world markets is by shifting production to low-cost sites,” he explained. But in a shift in thinking, says Tao, Chinese companies are looking to set up full manufacturing bases in the markets they wish to serve. Toward that end, Chinese textile companies have been buying out manufacturing assets such as mills in the United States, the most recent one in South Carolina. This is a reversal of the mass sourcing of textile and apparel production from what was then a low-cost production site more than two decades ago. Textile production in China is no longer profitable for many manufacturers, both international and Chinese, who are turning their backs on China. In addition to rising wages and energy costs, production in China also involves higher logistics costs and requires dealing with government quotas on imported cotton, which creates a lot of uncertainty for manufacturers.
Made in the USA — by Chinese companies
The scene and the actors are changing too, according to Tao. If there was a huge interest on the part of many U.S. manufacturers-turned-importers in sourcing cheap products from China, it is the Chinese who are now flocking to the United States to manufacture. The calculation by Chinese companies is that while U.S. labor costs are much higher, the productivity levels in the United States are also much higher, thus levelling off or even driving down the end costs in the final analysis. Other “perks” for Chinese manufacturers setting up shop in the United States come in the form of much lower energy prices, competitive prices of cotton, tax incentives from local governments and of course a reduction in shipping costs. Also, there is an opportunity to capitalize on the ‘made-in-America’ cachet, which is becoming increasingly desirable.
Additionally, the “keeping-a-foothold-in-the-market” strategy — producing goods in the market where they are sold — is appealing to many Chinese companies that are driven by the prospect of a trans-Pacific free trade market, which would result from the successful passage of the Trans-Pacific Partnership (TPP). The U.S.-led TPP agreement will include all of the major economies of the trans-Pacific region except China. And the fear of being shut out of the TPP has caused Chinese yarn companies to set up a base in the United States.
China’s yarn production costs have sharply risen, surging by as much as 30 percent compared to those of the United States, according to the International Textile Manufacturers’ Federation. Of course, the Chinese are not moving just into the United States. They also have been shifting manufacturing to other lower-cost countries in Asia, particularly Bangladesh, India and Vietnam. Chinese companies see multiple benefits accruing to them from their presence in the United States. Some Chinese exhibitors at the recent TexWorld show in New York told Apparel, on the condition of anonymity, that many Chinese companies found the United States an attractive manufacturing site because it offered unhindered and direct access to the huge U.S. market and noted that Chinese companies had so far made more than $45 billion worth of investments in new projects and acquisitions in the United States, with most of that in the past five years. The Carolinas are proving to be a hot spot, with more than 20 Chinese companies having set up operations, including a polyester fiber plant opened by Keer and Sun Fiber in South Carolina in 2014.
Some Chinese companies also want to use their U.S. operations to ship yarn to apparel manufacturers in Mexico, Central America and the Caribbean — countries that have duty-free access to the American market under NAFTA and CAFTA, provided the yarn is produced in a member country. The Chinese are taking lessons from companies in neighboring countries such as India, which recently have been making acquisitions or setting up shop in the United States. Indian textile manufacturer Shri Vallabh Pittie Group, for example, garnered a lot of attention when it opened a factory in Sylvania, Georgia. The impact of new plants being opened or old ones being revived can be seen on local job markets. South Carolina, for instance, welcomed the arrival of Keer, as it employed weavers and spinners who had been laid off after Springs Industries shuttered its cotton mills — at one time some of the world’s largest.
Recently, Chinese specialty textile company Legend Athletic Wear LLC opened its first U.S. production unit in Cincinnati, Ohio. (Ohio had been competing with Oregon and California to bag the Legend project.) The company, which uses sublimation technology to color fabrics, is the North American subsidiary of a Shanghai, China-based Australian textile-specialty company. Legend was founded by husband and wife co-owners Dr. Tan Kek Looi and Min Qi in 2005. From 2005 to 2012, the company’s sales grew from $84,000 to $1.8 million. Ohio’s Tax Credit Authority granted tax breaks to Legend, which expects to create 80 full-time jobs by the end of 2018 and to generate more than $2 million in new payroll; besides creating the new jobs, Legend plans to invest more than $1.4 million in its new manufacturing facility. Indications are that the owners want to establish the Legend brand in the United States and later launch it in China. With a strategy of geographic diversification, Legend and other Chinese manufacturers look to beat the pricing pressures of China’s spiraling inflation.
SOURCE: The Apparel Edge
The Investment Coordinating Board (BKPM) has proposed income tax cuts to support the labor-intensive footwear and textile industry. The BKPM’s deputy director for investment monitoring and implementation, Azhar Lubis, said the board had talked to the Office of the Coordinating Economic Minister and the Finance Ministry to suggest a reduction in employees’ income tax (PPh21) by as much as 50 percent. “It’s still a suggestion, but we hope they will grant it soon,” Azhar said on Thursday, adding that the incentive was suggested to last for five years and would come with terms and conditions. The mulled tax cut would only be applicable for companies that export 50 percent of their production, employ at least 5,000 workers and provide details on the employees’ Social Security Management Agency (BPJS) policies and salary slips.
Azhar explained that the incentive was expected to benefit the industry’s cash flow. “Some companies file their workers’ taxes directly to the tax office, so if the rate is cut, it will, of course, increase their cash flow,” he said. The government is pushing efforts to revive growth in the labor-intensive industry after the country’s economy weakened to the lowest level since 2009 in the past three quarters. Falling demand combined with soaring material prices, rising electricity tariffs and illegal imports have prompted manufacturers of shoes and textile goods to lay off workers. At least 40,000 workers at footwear factories and another 39,000 textile workers were dismissed in the first half of this year. To avoid more layoffs and revive the industries, the BKPM on Oct. 9 launched a special help desk for the two industries called “DKI-TS”. To date, the desk has assisted 33 companies that are under pressure to terminate 24,509 workers, of which three cases had been solved, saving 1,458 jobs.
Indonesian Textile Association (API) chairman Ade Sudrajat welcomed the tax incentive, but was of the opinion that it would only benefit the employees, not the businesspeople. “It will be useful to increase our employees’ purchasing power,” he said. He also added that the terms and conditions were too strict. “There are only few factories with more than 5,000 workers. It’d be better if it was at least 2,000 workers,” he said, adding that fewer than half of the shoe companies employed upward of 5,000 workers. Indonesian Footwear Association (Aprisindo) head Eddy Widjanarko shared the same view with Ade. “The benefit for us [the businesspeople] is only a little, but we appreciate the stated effort and intention to support the labor-intensive industry,” he commented.
In the past two years, textile and shoes businesses have seen decreased demand from within and outside the country against the backdrop of global economic uncertainty. Besides facing decreased orders, the industry faced the added challenge of rising electricity prices. State-owned electricity firm PLN last month lowered the industry electricity tariff from about Rp 1,200 per kwH to about Rp 1,100 this month. However, both Ade and Eddy said the price was still too high. The government’s third economic stimulus package released on Oct. 7, promises a 30 percent discount on power used between 11 p.m. and 8 a.m. Only later did PLN explainthat that incentive only applied if the usage exceeded normal volumes.
SOURCE: The Jakarta Post
Due to the demand, the organisers of the World Textile Awards, sponsored by The Textile Institute, Manchester, have now extended the final deadline for entries to 31 January 2016. Headquartered in London, the mission of the World Textile Awards is to provide a global platform for outstanding textile companies. The awards were created to recognise and reward companies in the industry through the entire supply chain from fibre production through to end stitched product. A winner will be awarded in each of the eight categories:
One winner will then be chosen for its exceptional commitment to quality and professionalism and garner the prestigious title of International Textile Firm of the Year, an accolade which went to Textured Jersey (Sri Lanka) in 2014.
Global platform
As the textile industry continues to evolve, now is the time for your company to gain recognition at a global level. The 2015 World Textile Awards are open to companies of any size worldwide that operate in textile manufacturing. Headquartered in London, the mission of the World Textile Awards is to provide a global platform for outstanding textile companies to share their successes and promote excellence at all levels of the industry. According to organisers, winning an award can help to increase the customer base and grow profits, provide PR and marketing opportunities, help break in to new markets and countries, and enhance the credibility of the products.
Judging
Each year, organisers assemble a team of the industry’s most respected experts from across the globe to be the World Textile Awards judging panel. They are drawn from leading textile organisations, institutions and companies. Entrants are asked to submit a written description, which details why you think you should win in your chosen category. Each written entry can be a maximum of 1,500 words. The judges will be looking for the following information in every entry:
SOURCE: The Innovation in Textiles
Workers at the Nigerian textile industry are facing massive job losses following the woes betiding the sector. Stakeholders say the recent forex policy of the central bank hampers them from importing raw materials. Deputy General Manager of Hafar Industries, Dr. Michael Adebayo, according to PUNCH said he would have to sack more of his workers after closing a major production line and asking the workers to go on compulsory leave.“I will have to sack my workers next month because our suppliers have notified us that they will no longer be sending raw materials to us since we been unable to access forex to pay for the supplies,” he said.The sector is also facing a dearth of locally made raw materials. This is due to the suspension of the distribution of subsidized fertilizers to farmers, Acting DG of the Nigerian Textile Manufacturers Association and Nigerian Textile, Garments and Tailoring Employers Association, Hamma Kwajaffa, said. The scheme that was initiated by former Minister of Agriculture and Rural Development, Dr. Akinwumi Adesina, under the Growth Enhancement Support progarmme of the Federal Government. Kwajaffa said the suspension of the scheme which allowed farmers to receive fertilizers and inputs through subsidized electronic vouchers had left cotton farmers without resources to continue to grow the crop and most of them have stopped growing cotton.
SOURCE: The Nigerian Bulletin
The second phase of China-Pakistan Free Trade Agreement (CPFTA) negotiation round was recently held in Beijing between Pakistan and China but the outcome was not satisfactory to Pakistan especially with reference to protecting its own industry. Pakistan and China have reportedly failed to finalize the second phase of Free Trade Agreement (FTA) due to differences on exclusion of a specific percentage of products from the list of items which will enjoy concessions; this was revealed by well informed sources. Both countries have negotiated the second phase of CPFTA wherein Pakistan shared concerns regarding insufficient utilization of concessions given by China to Pakistan and competition faced by local industries due to cheap imports from China. Pakistan is asking China for exclusion of 20 percent of total products from the concessions because of concerns of Pakistan's local industry. But China has shown willingness only on 10 percent exclusion of total products in the second phase under the WTO rules.
China is reluctant to give concessions sought by Pakistan in the second phase. Pakistan is delaying the process with the hope that China will entertain its request, the sources maintained. The CPFTA on trade in goods was signed on 24th November, 2006 and implemented from 1st July, 2007. FTA on Trade in Services was signed on 21st February 2009 and is operational from 10th October, 2009. The upsurge of Chinese imports has created some problems for the Pakistani local industry making it difficult to compete with Chinese products. Local industries are continuously approaching Ministry of Commerce with complaints of under-invoicing and mis-declaration with regard to imports from China. Some of the sectors that has approached the Commerce Ministry as they are struggling for their survival includes synthetic textiles, dyes and ceramics plastic articles, leather articles etc.
Pakistan-China volume of trade that was in the region of $4 billion in the year 2006-07, reached an all-time high at $10.19 billion in 2013-14. Pakistan's exports have jumped to $2.4 billion in 2013-14 from $575 million in 2006-07. Correspondingly China's exports to Pakistan have increased to $7.77 billion in 2013-14 from $3.5 billion in 2006-07. Pakistan's major exports to China are cotton yarn / fabric, rice, raw hides & skins, crude vegetable material, chemical material, etc. While major imports from China are machinery (all sorts) and its parts, yarn and thread of synthetic fiber, vegetable and synthetic textile fiber etc. Pakistan secured market access on products of immediate export interest like cotton fabrics, blended fabrics, synthetic yarn and fabrics, knit fabrics, home textiles, etc. During first 3 years of implementation of Phase-I, both sides reduced tariffs on almost 36% tariff lines to zero duty. The Phase II was supposed to start from the sixth year of the entry into force of the agreement and by the end of 2nd phase both sides would have to reduce tariffs on 90% tariff lines to zero percent duty. The FTA covers more than 7000 tariff lines at HS Code 8 digit level. It has been revealed that Pakistan could not utilize the concessions granted by China as per the review of the first Phase of CPFTA. Pakistan could only export in 253 tariff lines, where average export value was $500 or more, which is around 3.3% of the total tariff lines (7550) on which China granted concessions to Pakistan. Pakistan mainly exported raw materials and intermediate products such as cotton yarn, woven fabric, Grey fabric, etc Value-added products were missing. Some of the value-added products like garments, etc, are included in the concessionary regime.
Pakistan has signed FTAs with Malaysia, Sri Lanka & SAFTA. Most importantly the concessions granted partner countries in these FTAs don't undermine the MOP for Chinese exports to Pakistan. Chinese goods with the CPFTA enjoy a kind of monopolistic position in Pakistani market. On the other hand, China has FTAs with Chile, New Zealand, Singapore, Peru, Costa Rica and ASEAN countries. With Chile 75 percent of the tariff lines are at zero duty. With New Zealand above 90 per cent tariff lines are at zero percent duty. With Singapore, 166 percent tariff lines, Peru 72 percent tariff lines and with Costa Rica at present 65 per cent of tariff lines are at zero and 64 percent tariff lines would be at zero by 2016, with Malaysia, 94 per cent of tariff lines.
As regards ASEAN countries, with Brunei 67 percent tariff lines are at zero duty, Indonesia 93 percent tariff lines are at zero per cent, Thailand 93 percent tariff lines, Myanmar 93per cent tariff lines, Philippines 63 percent of tariff lines are at zero per cent. While for Pakistan only around 36 percent tariff lines are at zero.Ever since China has entered into FTA with other countries where it has exchanged concessions, which have undermined the Margin of Preference (MOP) for Pakistani products; more over the coverage and the depth of China's other FTAs is greater than CPFTA.
SOURCE: Yarns&Fibers
