Speaking at a CII webinar, S Kishore, special secretary in the Department of Commerce, said recognising the pivotal role played by SEZs in pushing the country's exports, several reforms have been introduced and these include digitisation of processes and promotion of green zones to attract FDI. Extension of benefits of the RoDTEP scheme to special economic zones and exportoriented units (EOUs) is in the pipeline to make SEZs more investorfriendly, a senior government official said on Tuesday. The government in August announced rates of tax refunds under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme for 8,555 products, such as marine goods, yarn, dairy items, but SEZs and EOUs were kept out of this. The industry is demanding for this extension. Speaking at a CII webinar, S Kishore, special secretary in the Department of Commerce, said recognising the pivotal role played by SEZs in pushing the country's exports, several reforms have been introduced and these include digitisation of processes and promotion of green zones to attract FDI. "Measures like extension of the RoDTEP scheme to SEZs and EOUs are in the pipeline to make SEZs more investor friendly and leverage geopolitical phenomena," he said. He added that there is strong inter-ministerial coordination for addressing policy issues and promoting Indian special economic zones (SEZs) as readymade land banks that offer plug-and-play facilities. He said the Indian SEZs offer state-of-the-art infrastructure that will help in establishing India as the global manufacturing hub, and the government is committed to making them more inclusive for all sectors. Speaking at the webinar, Sanjay Budhia, co-chairman of CII National Committee on EXIM and Managing Director Patton International Ltd, said the SEZs are playing a pivotal role in helping achieve the country's exports target of USD 400 billion during the current fiscal. He suggested that granting infrastructure status to SEZs, formulating separate rules and procedures for manufacturing and services SEZs, and merging the SEZ policy with other schemes such as the national industrial manufacturing zones will also prove to be useful.
Source: Economic Times
The export potential in textiles is large. We need to build a conducive and innovative ecosystem with proactive policy. The Cabinet approval for seven integrated mega textile and apparel parks panIndia makes eminent sense. It would boost value addition on-site, reaping economies of scale and scope, reduce logistical and sourcing expenses, and generally step up sector-specific competitive advantage across the board. The value chain in yarn, fabrics and ready-mades is scattered and quite fragmented nation-wide. So, for instance, while cotton is grown in Gujarat and Maharashtra, spinning takes place in Tamil Nadu, processing gets done in Rajasthan and Gujarat, and garment-making happens mostly in the National Capital Region, Bengaluru and Kolkata. The proposed mega parks, spread over 1,000 acre and more, would provide facilities for weaving, dyeing, printing, fashion designing and garment-making in one location. They would have core infrastructure such as incubation centre, plug-and-play facility, and skill development units so as to keep abreast of the latest trends in textiles and apparel. The export potential in textiles is large. We need to build a conducive and innovative ecosystem with proactive policy. The Centre has recently announced ₹10,683 crore production-linked incentive scheme for textiles. The textiles parks scheme would have an outlay of ₹4,445 crore, and is slated to provide support for project development in the cluster mode. The recent move to provide export-oriented units rebate on state and central taxes and levies would also help. But the fact remains that the share of textiles in India's export basket has declined, and is now barely in the double digits. A recent Crisil study says that absent free trade agreements (FTAs) hurt our export performance. Decent work in the textile parks would gain custom, in today's world.
Source: Economic Times
The scheme aims to establish seven major 'holistic integrated textile processing regions' across the country, which would integrate the currently scattered value chain of textile products. With an aim to create world-class infrastructure with plug-and-play facilities that enable major investments in exports, the Cabinet on October 6 approved seven new mega textile parks. The parks are a part of the government's 'Farm to Fiber to Factory to Fashion to Foreign' push, and will generate 1 lakh direct & 2 lakh indirect employment per park, Textiles Minister Piyush Goyal said. The government had first proposed the Mega Investment Textiles Parks (MITRA) scheme back in February, to enable the textile industry to become globally competitive and boost employment generation and exports. These will be set up at greenfield or brownfield sites located in different willing states. Presently, the entire value chain of textiles is scattered & fragmented in different parts of the country. This includes cotton grown in Gujarat & Maharashtra, spinning in Tamil Nadu; processing in Rajasthan & Gujarat; garmenting in the National Capital Region, Bangalore, Kolkata etc and exports from Mumbai & Kandla. States such as Tamil Nadu, Punjab, Odisha, Andhra Pradesh, Gujarat, Rajasthan, Assam, Karnataka, Madhya Pradesh & Telangana have expressed interest, Goyal added. Big plans The scheme will have two parts, with the larger component being development support. The government estimates the cost of setting up each park at an estimated Rs. 1700 crore. "Of this, upto 30 percent of the project cost or Rs, 500 crore in greenfield parks, and upto Rs. 200 crore in brownfield parks will be provided by the government as development capital support," Goyal said. On the other hand, the first movers who establish anchor plants and hire atleast 100 people will also also get a competitive incentive support from the government. These businesses can secure upto Rs. 10 crore in a year for three years or a total of Rs. 30 crore under this formula, the Minister stressed. He added this will not be part of the existing PLI scheme. The government wants 'holistic integrated textile processing regions' to be established around these parks. This would include common services centres, design centres, research and development centres, training facilities, medical and housing facilities as well as Inland Container Terminals and logistics warehouses. Officials say the scheme was conceived keeping in mind that it will work in tandem with the production-linked incentive scheme(PLI) in the textiles sector. Last month, the government had notified the Rs 10,683-crore PLI, specifically aimed at boosting the production of man-made fibre (MMF) fabric, MMF apparel and technical textiles. Moneycontrol had reported how the government, pushed by the Textiles Ministry had changed its basic parameters for PIs, till then. While most PLIs targeted high-value goods or those that would cut import dependence, synthetic fibres, which include rayon, nylon, polyester and acrylic, and technical textiles don’t come under either category. Both schemes together are expected to turn the tide on falling investments and decreasing productivity in the sector. Lot at stake In terms of employment, the textiles and apparel industry in India is only behind the overall agricultural sector. It provides direct employment to 45 million people and 60 million people in allied industries, according to Invest India, the government’s investment promotion arm. India is among the world’s largest producers of textiles products and apparel. The domestic textiles and apparel industry contributes five percent to India’s GDP, seven percent of industry output in value terms, and 12 percent of the country’s export earnings. The share of India’s textiles and apparel exports in mercantile exports was 11 percent in 2019-20. With the commerce minister now responsible for the sector, the unique trade issues that have eaten away at India’s competitiveness in the global market for textiles are now expected to be given more focus. Indian companies and exporters have continuously lost market share overseas to more aggressive rivals from China, Bangladesh, and Thailand. This has been excruciatingly large in segments like apparel.
Source: Money Control
But, the infrastructure should be set up by the states and the Centre; roping in private investors may complicate matters The seven mega textiles-and-apparel parks to be set up under the Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) scheme should provide the sector much-needed world-class infrastructure. Despite several inherent advantages, especially the large pool of low-skilled labour, India’s textile industry has been left behind in the global market by smaller and niftier nations like Bangladesh and Vietnam. As economists Arvind Subramanian and Shoumitro Chatterjee pointed out in a recent study, India produces roughly $34 billion in textiles and clothing. If it were to produce in line with its labour force, the size of its domestic textile and clothing sector should be $174 billion. In other words, the country’s missing production in the key low-skill textiles and clothing sector is a whopping $140 billion (~5% of GDP). Indeed, India’s share in the global textiles trade ought to have been far bigger, given the strong raw material base for both cotton and synthetics. However, its share in global exports of cotton yarn shrank 600 basis points to 23% in CY2020 from 29% in CY2015, while, in readymade garments (RMG), the share has stagnated at 3-4% over the past decade, which must be seen in in the context of the global market itself shrinking. As analysts at CRISIL have observed, despite the EU and the US being the largest RMG export destinations for India, with ~32% and ~27% share in FY20, respectively, India was unable to increase its presence. One reason for this is the absence of free trade agreements (FTAs), but it is also to the credit of competing countries that they have made enormous strides. Against this backdrop, the proposed mega parks could be useful. However, the infrastructure should be set up by the states and the Centre; roping in private investors may complicate matters. It is true the Centre has promised viability gap funding (provided in the outlay), but one is not sure that private players would be too keen to participate. Indeed, too many stakeholders could result in delays and disputes; it is better to give the states a free hand in the building and running of the park, subject to certain conditions. The Centre’s outlay of Rs 4,445 crore seems adequate for the moment. It is up to the states to come up with affordable land, electricity and water supply. Ultimately, they must take the initiative and those that have the simplest labour compliance procedures should be given priority. The scheme envisages the parks be set up across 1,000 acres each and be equipped with plug-and-play facilities. While an SPV structure has been proposed—between the state, Centre and the private investors—this construct could work equally well with just two stakeholders. Justifiably, the capital allocation will be bigger for greenfield parks—as the scheme envisages—and smaller for a brownfield one. The incentive set aside, to the tune of Rs 300 crore, for the early birds who set up the manufacturing units, is a good idea. The integrated parks will complement the recently-approved Rs 10,638-crore production-linked incentive (PLI) scheme for man-made fibre and technical textiles segments where India’s share is relatively small. While infrastructure is critical to achieve economies of scale—the textiles sector has been rather fragmented—trade negotiations also need to be pursued. New Delhi has been against joining trade groups like RCEP, but FTAs can be pursued.
Source: Financial Express
Amount to help meet shortfall in compensation cess’ The Centre released ₹40,000 crore to States and Union Territories on Thursday to help meet the shortfall in GST compensation cess collections, through back-to-back borrowings from the market. The Finance Ministry said this was part of the ₹1.59 lakh crore shortfall estimated in the Compensation Fund for States, to be raised via market borrowings, but indicated that total GST compensation to be paid in 2021-22 may exceed States’ actual dues for the year. An amount of ₹75,000 crore had already been transferred in July, leaving another ₹44,000 crore to be borrowed and disbursed over the rest of 2021-22. The balance amount would be released in due course, the Ministry said. ‘Over and above’ “This release is in addition to normal GST compensation being released every two months out of actual cess collection,” the Ministry said, adding that more than ₹1 lakh crore was also estimated to be released to States during the financial year, based on actual GST cess collections. Pending dues “The sum total of ₹2.59 lakh crore is expected to exceed the amount of GST compensation accruing in FY 2021-22,” it added, signalling that some of the pending dues from 2020- 21 would be offset to that extent. “It is expected that this release will help the States/UTs in planning their public expenditure among other things, for improving, health infrastructure and taking up infrastructure projects,” the Ministry said.
Source: The Hindu
The minister's statement comes in the backdrop of the US indicating that they are not looking at a new trade agreement with India To further strengthen the economy of India and the United States, commerce and industry minister Piyush Goyal on Thursday pitched for a stronger trade and economic partnership between the two nations. Close partnership between both nations is central to a free, open, inclusive and prosperous Indo-Pacific region, the minister said. “India is a trusted partner and ally of the US. Going forward, it is in the interest of both countries to strengthen strategic partnership into a more comprehensive economic and trade partnership also,” Goyal said at the US India Business Council’s (USIBC’s) 46th annual general meeting and India Ideas summit. “India and the US can collaborate on many areas and strengthen each other's economies. The US has a huge investment surplus that can be used for infrastructure investment in India. We can help bring down the healthcare costs in the US,” Goyal said. Since India is recognised as a major defence partner of the US, Goyal also called for multiple dialogues across areas of energy, health, trade and innovation to improve business-to-business relationships and provide the people of both countries with better services and opportunities. The minister’s statement comes in the backdrop of the US indicating that they are not looking at a new trade agreement with India. In the past, India had extensive discussions with the US on a limited trade deal. However, the deal didn't get through with the change in the US administration in the beginning of the year. India is also trying to ink trade deals with its key trading partners and ‘like-minded’ nations such as the UK, Australia, European Union and UAE. As far as the US is concerned, it is India’s second largest trading partner. The minister further said that India-US relationship had developed to a global strategic partnership, based on the convergence on bilateral, regional and global issues. Besides, Prime Minister Narendra Modi and the US President Joe Biden have been proactive in deepening relations between both nations. “India and the US need to leverage our complementary strengths in technology, finance, production and supply and enhance cooperation in electronic manufacturing, Fintech, Ed-tech, pharma and health, biotechnology, etc”, he added.
Source: Business Standard
Arvind Limited, an India-based integrated textile manufacturer producing cotton shirting, denim, knits and bottomweight fabrics, will take advantage of the Product Linked Incentive (PLI) scheme recently announced by the government and invest in the man-made fibre (MMF) segment. The company will also continue its expansion in technical textiles. “It is a very exciting time for us in India as for the first time ‘China plus One’ is becoming real, and it is amazing to see the level of focus from the policy side on our industry,” Kulin Lalbhai, executive director, Arvind Limited, said today at the ‘Interactive Cotton Webinar’ coinciding with Global Cotton Day and Azadi Ka Amrit Mahotsav and CITI CDRA Golden Jubilee Celebrations. “Every month one mega announcement is coming, and we are very excited right from RoDTEP, and then RoSCTL and now PM MITRA and the PLI scheme. At Arvind we are going to support and participate in all of these. With PLI we hope to come in strongly into the man-made fibre (MMF) and continue expanding in Technical Textiles,” said Lalbhai in the presence of Union minister of textiles, commerce and industry, Piyush Goyal. Speaking about the plug n play model, Lalbhai said “We have experienced it globally in Ethiopia and seeing the same coming in India, it can be a game changer for a lot of MSMEs and large companies.” While there is a need to scale up the MMF and technical textiles segments and diversify products, the competitiveness of Indian cotton will be important, as cotton value chain is the golden goose which should not be killed, according to Lalbhai. Pointing out the need for the Indian government to sign in free trade agreements (FTAs) with major apparel exporting countries, Lalbhai said, “One big opportunity we are missing is that China is eating the world trade as far as fabrics is concerned. Whether it is Bangladesh, Indonesia or Vietnam, China has 80 per cent market share in fabrics. Most of these countries have import duties on Indian fabric and none on Chinese fabrics. “Even the infrastructure bottlenecks are preventing us from becoming the fabric hub in South Asia. That is the big opportunity we can unlock.” Finally, bringing the focus on the domestic market, Lalbhai said that a fair and just GST will be important. “Kapada (clothing) should be a very democratic commodity. Seeing it at a potential 15 per cent duty at some day worries us,” he concluded.
Source: Fibre 2 Fashion
Sahai says looking at the trends, India is confident to touch $400 billion worth exports this year. And since the production is now backed by PLIs, it's aiming at exports worth $2 trillion by 2027-28. For the first time, India's export crossed the $100-billion mark in the quarter ending September. With this rise, the prolonged container shortage has also posed a formidable challenge for Indian exporters. To know more about these challenges, Business Today's Rajat Mishra spoke to Ajay Sahai, Director General & CEO of the Federation of Indian Export Organisations (FIEO).
Here are the edited excerpts of the interview:
1). India reported $101.89 billion worth of exports in the quarter ending September. This is the first time the net exports have been at this level. Is this a sustainable trend? Ajay Sahai: It's a quite sustainable trend and we would like to accelerate further because the demand booking position of Indian companies is extremely robust. The world is looking towards China, and India is definitely on the radar. The $100 billion figure would have been more if we had not suffered the logistics challenges, particularly the shortage of containers, the lack of space and skyrocketing trade. So, looking at the trends, we are confident to touch $400 billion exports this year. And since the production is now backed by PLIs (production linked incentives), we are looking towards $2 trillion worth exports -- $1 trillion from the goods side and $1 trillion from services by 2027-28.
2). What's the current situation when it comes to container shortage? Will it get worse? Ajay Sahai: As far as the container shortage situation is concerned, it's a global phenomenon and every country in the world is facing this problem. One can say this is the COVID-19 impact only, which has disrupted the supplies. Across the world, there is a huge backlog. If you look at the US and other countries, ships are waiting for birthing for the last 40-45 days. The situation is grave in Europe as well. So first of all, it's a global phenomenon. And therefore, unless we are through this adverse impact of the pandemic, I'm not seeing much improvement. We are also encouraging products that can move from container to bulk or breakbulk cargo. The container movement is now regularly monitored by the government to see the shortage should not come in the way of India's exports. We have been lucky so far, and the numbers show we are managing it.
3). Commerce and Industry Minister Piyush Goyal wants both goods & services exports from India to touch $1 trillion each. What are the roadblocks? Ajay Sahai: The biggest challenge we'll face is not something the government would change. The Indian exporters will have to chip in because if we want to earn trillion-dollar merchandise and billion-dollar services, we have to align our exports. Unfortunately, if you look at the global imports, electronics, machinery and automobile collectively contribute to roughly 85 per cent of the global imports. The imports size is around $6.6 trillion in this segment, and India's share is just 0.8 per cent. So, if we aim for $1 trillion export, it may not be possible with the traditional sectors. They are extremely important as they generate huge employment. That's why the new foreign trade policy has to be two-pronged. Coming back to the supply side, logistics cost is making Indian exports uncompetitive. If we can reduce it, it will provide much-needed competitiveness.
4). Many say RoDTEP has not met the exporters' expectations because many export products, which enjoyed benefits under MEIS, are now kept outside the scheme's ambit and the rates notified are too low. Do you feel the same? Ajay Sahai: Many industry segments may be disappointed, but they should also appreciate that RoDTEP is a duty refund scheme, whereas MEIS was a promotional scheme. RoDTEP was switched into WTO discipline, while MEIS was not, so comparing the two would not be logical. Of course, some sectors feel they are entitled to a higher rate. And they have been given a lower rate; we have told them to bring more comprehensive data, which can be viewed to see if the rate hike is justified or not. This is an evolving scheme, and I'm sure the rates can be increased during the review. But issues raised by some sectors are genuine, which have been excluded from that ambit like iron steel articles, pharma, organic chemicals and inorganic chemicals.
5). What's the export-import situation with Afghanistan now? Ajay Sahai: Export-import is still a challenge. Imports have started but it'll take some time before the numbers rise. But most payments, that I have been told by importers, are routed through Dubai as, perhaps, exporters there like to keep the money outside the management's purview. Exports are happening but with uncertainty. Due to the lack of banking practices in Afghanistan, and the depreciation of the Afghani rupee, export is a challenge.
Source: Business Today
Indian exporters are facing a crisis in getting empty containers to send their finished goods to European nations and North and South American countries. Industrialists of Karur district have raised concern over the drastic rise in shipping charges of finished products owing to shortage of containers in shipping companies worldwide. Even as things are returning to normal after the pandemic, Indian exporters are facing a crisis in getting empty containers to send their finished goods to European nations and North and South American countries. Karur, which is one of the vital industrial hubs in Tamil Nadu is famous across the globe for its household textiles and decorative items, including curtains, cushions, pillowcases, bedspreads, blankets and table covers. Around 90 per cent of the products manufactured here are exported to foreign countries. In this situation, the shipping companies across the world have increased their freight charges drastically, which has left the exporters and manufacturers in distress. Karur export industries carry out trade of around Rs 3,500 crore a year. "The top 10 shipping companies in the world, including APM-Maersk, MSC (Mediterranean Shipping Company), CMA-CGM, ONE (Ocean Network Express) line, Hapag-Llyod, Evergreen line and HMM, have raised their charges by whopping 400 per cent," said Dr Stiffen Babu, a household textile exporter from Karur. "From January to April, the finished goods which we sent from Chennai or Thoothukudi harbour to the Hamburg port in Germany would cost around $1,500 to $2,000 for a 40- ft container. Now, it has touched $8,000. This applies for all the European countries, including Germany, Italy, Spain, England, Sweden and Denmark, among others. Also, charges for shipping our goods to New York port, which cost $3,000 earlier, now cost between $15,000 and $17,000. The companies have cited a shortage in containers for the drastic rise in the freight charges," Babu added. Although the importer bears 90 per cent of the cost for shipping the goods, the price hike has affected them a lot. "Foreign buyers have reduced their orders and some have even cancelled a orders. Goods worth around Rs 200 crore have piled up across the Karur industries owing to container scarcity. The Ministry of Shipping, Commerce and Textile must immediately intervene and sort out this issue by holding talks with the shipping companies," Babu said. Karur Textile Manufacturer Exporters' Association honorary president Atlas Nachimuthu told TNIE, "Container shortage and increased freight rates compound exporters' shipping woes. Currently, there is a backlog of two to three weeks of vessel berthing at the US ports. Due to this, there is heavy congestion at the ports and vessels are not able to discharge and pick up the empty containers. Recently, due to Covid-19 outbreak at three ports in China, the Chinese government laid down strict restrictions for vessels to enter the ports. They made 21 days compulsory quarantine period for the vessels, which led to queuing. These are reasons for container shortage as there is imbalance in container inflow and outflow from the ports of US and China. For these delays, the shipping lines are forced to pay detention charges and demurrage to the port authorities, which ends in increase in container freight rates. Exporters are facing challenges to ship the finished goods and there is space congestion at warehouses."
Source: New Indian Express
Adviser to the Prime Minister on Commerce and Investment Abdul Razak Dawood on Thursday appreciated new investment of $5 billion in the textile sector. “We have been informed that an investment of approximately USD 5bn is in the pipeline under which 100 new textile units are expected to be established,” he said on his official Twitter account. “Our Make-in-Pakistan policy is beginning to show results,” the adviser said. He said that apart from enhancing export capacity, the new investment was likely to create about 500,000 jobs. Mr Dawood said the incumbent government had reversed the de-industrialisation and they were now on a path of industrial growth in Pakistan.
Source: Dawn
The Taiwan Textile Roadshow has been held from October 6-7 directly in Hanoi and in the online format via Zoom, aiming to strengthen cooperation between Vietnam and Taiwan (China) in the textile and garment sector. The Taiwan Textile Roadshow has been held from October 6-7 directly in Hanoi and in the online format via Zoom, aiming to strengthen cooperation between Vietnam and Taiwan (China) in the textile and garment sector. The event, jointly held by the Taiwan Textile Federation (TTF) and the Vietnam National Trade Fair and Advertising Company (Vinexad), saw the participation of 12 textile manufacturers from Taiwan. The Taiwanese enterprises have introduced techniques to produce fabric using dyeing treatments that can reduce the impact on the environment. They have also applied innovative technologies in production to produce fabrics with many outstanding features such as fabric from recycled plastic, warp-print fabric, antibacterial fabric, UV protection fabric, cooling and multi-functional fabric. In 2020, Vietnam was Taiwan's largest textile and garment export market with an export turnover of up to 1.9 billion USD, accounting for 25.3 percent of Taiwan’s total export turnover of textiles and garments. The main import items from Vietnam were clothing and accessories. This year, the Taiwan Textile Roadshow targets the formation and strengthening of sustainable partnership between garment and textile material production firms with Vietnamese garment and textile firms. Earlier, similar events were held in Ho Chi Minh City and Hanoi, including nearly 400 direct and online exchanges among 100 Vietnamese and 16 Taiwanese businesses in the field.
Source: Vietnam Plus
21 Readymade garment (RMG) exports from Bangladesh increased by 11.48 per cent to $9.059 billion in the first three months of fiscal 2021-22 compared to exports of $8.126 billion in the same period of the previous fiscal, according to the provisional data released by the Export Promotion Bureau. Knitwear exports gained more than woven RMG exports. Knitwear exports increased by 15.69 per cent to $5.164 billion in July-September 2021- 22, as against exports of $4.463 billion during the comparable period of the previous fiscal, as per the data. Exports of woven apparel increased at a slower rate of 6.35 per cent to $3.895 billion during the period under review, compared to exports of $3.662 billion during the comparable period of 2020-21. Woven and knitted apparel and clothing accessories’ exports together accounted for 82.19 per cent of $11.021 billion worth of total exports made by Bangladesh during JulySeptember 2021-22. Meanwhile, home textile exports (Chapter 63, excluding 630510) also rose by 10.65 per cent to $279.23 million during the three-month period under review, compared to exports of $252.35 million during July-September 2020-21. In the fiscal ending June 30, 2021, readymade garment exports from Bangladesh increased by 12.55 per cent to $31.456 billion compared to exports of $27.949 billion in the previous fiscal. However, this value was lower than $34.133 billion exports made during July-June 2018-19.
Source: Fibre2Fashion
Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon today said due to the supportive policy of the government, the investment in the primary textile sector is around $12 billion. He also noted the contribution of textile and clothing in total export revenue was 82%. "In financial year 2020-21 the country's total export earning was $38.35 billion of which textile and clothing export was $31.45 billion," he said while addressing a programme arranged by Cotton Council International, USA and Bangladesh Cotton Association (BCA) marking World Cotton Day 2021. BTMA president said the sector is helping the country to retain foreign exchange and enriching the foreign reserve as well, said a press release. "Both the import and consumption of cotton in Bangladesh had risen steadily over the past decade. The Textile & Clothing sector has started to rebound after the Covid-19 halt and there is an upward trend in local & international demand of clothing products. In order to meet the said demand, the local Spinning mills required to import more cotton," he said. Khokon said in fiscal year 2020-21, Bangladesh imported 8.2 million bales of cotton. "If we look at the last 5 years data, our main sourcing countries of cotton are East & West Africa, India, CIS Countries, USA and Australia," he added. The BTMA president further said the cotton import from the US is expected to increase to 14% in the coming year. "If the US government considers providing some concession for the RMG products of Bangladesh made from US Cotton there will be a win-win situation for both the countries," he said. He also requested US Ambassador to Bangladesh Earl R Miller and Brazil Ambassador to Bangladesh Joao Tabajara de Oliveira Junior to press their governments to increase cotton export to Bangladesh. Textiles and Jute Minister Golam Dastagir Gazi alongside the two ambassadors were present at the programme.
Source: Tbs News
Despite significant jump in cotton arrivals, flood of export orders and government incentives, the textile sector is unlikely to optimally capitalise on this opportunity owing to the rising cost of production, unavailability of utilities and above all rising freight costs. Both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) have communicated to the industries that the gas supply would remain minimal in the coming winters, while the freight rates have multiplied due to shortage of containers and vessels. The recent arrival of 3.85 million cotton bales for the mill use casts positive overtures on cotton production outlook where the current production target is set at 8.5 to 9 million bales for FY22. The commodity prices have started receding, down 4 per cent to currently hover around Rs14,393/maund but still at historically highest levels. Cotton prices have surged 49 per cent during the last one year where low cotton production of 5.3 million bales, compared with the historical average of 8 million bales, amid robust demand from spinners pushed up the prices. Various fiscal incentives have been offered to the export-oriented textile sector to stimulate exports growth. To this end, import duties on various raw materials such as filament yarn were slashed in the Federal Budget for 2021/22, which bodes well for the value-added textile sector. The textile sector is also the recipient of cheap financing facilities by the State Bank of Pakistan (SBP) under the Exchange-Traded Fund (ETF) and the Long-Term Financing Facility (LTFF) schemes where the borrowing rates have been set at 3 per cent and 5 per cent, respectively. Financing under these facilities can be utilised to increase the production capacity, as well as managing working capital requirements. Further, the turnover tax has also been reduced to 1.25 per cent of sales from 1.5 per cent of sales and is expected to be reduced further in the next federal budget. “Cotton arrivals went up 100 per cent to 3.8 million bales. This could not only help Pakistan achieve more than 5 per cent GDP growth but would also increase our exports significantly,” the All Pakistan Textile Mills Association (Aptma) said in a tweet. Abdul Rahim Nasir, chairman of Aptma, said that the cotton yam was sufficiently available in the county for consumption in the value-added sector for export purposes, “which is evident from the fact that [the] cotton yam export has declined in the past years, resultantly textiles have achieved historic high exports of $15.4 billion”. The international cotton prices remained strong throughout the first quarter of FY22, as these hover around $112/lb. with an increase of 10 per cent on a quarterly basis in the first quarter of FY22 and cumulative year-to-date increase of 32.6 per cent. However, as per the latest USDA report, the global production/mill use is projected at 119.6/124.1 million bales, around 7.2/4.5 million bales higher than in FY21. The local yarn margins currently stand at Rs247.2/kg, or 64 per cent, compared with Rs176.2/kg or 60 per cent in FY21, due to the robust demand outlook for the textile products. With the high textile demand likely to persist in FY22, amid return to normalcy phenomenon, the analysts expect the yarn margins to remain buoyant throughout FY22. Further, the local yarn manufacturers actively targeted Chinese and Bangladeshi markets for exports last year, which resulted in a shortfall of yarn in the local market, which had to be fulfilled through imports. However, with the local yarn margins at record levels and prohibitive international freight costs, it is expected the trend to change this year and the majority of the local yarn demand to be met by local yarn manufacturers. The exports of textile products stood at a whopping $1.47 billion this August with an increase of 46 per cent, compared with $1.01 billion exports in August 2020/21. With the onset of the current fiscal year, there seems to be a booming trend in textile exports, as July, the first month of the current fiscal year also witnessed a 15 per cent growth, amounting to $1.471 billion. The average increase in the exports of textile products for the current fiscal year (JulyAugust FY22) was recorded as 29 per cent to $2.949 billion, compared to the $2.289 billion exports in the corresponding period of the last financial year. As far as the equity market is concerned, the textile sector performance has remained sluggish delivering a negative return of 1.8 per cent in the fiscal year so far, despite significant positive developments, supporting earnings outlook. Baig Group of Companies chairman Mirza Ikhtyar Baig said orders were coming big time, and would keep coming. “[The] cost of production is increasing due to the depreciation of the rupee because the export is import-based and around 70 per cent inputs are imported.” “[The] new textile orders are coming, but the biggest problem is the scarcity of empty containers and vessels.” He said freight from Karachi to Germany had surged to $7,000/container, while freight from Shanghai to the US was $16,000/container. “Despite these rates, China has booked 5,000 containers, causing a worldwide shortage of empty boxes and vessels.” Pakistan Apparel Forum chairman Javed Bilwani said that the costs have increased significantly in the last couple of years, which not only trimmed their earnings, but also made it difficult to compete with the regional peers. “[The] export-oriented industries can’t afford power and gas outages. Production cannot be stopped, so we have to make alternative arrangements, which requires additional cost and energy,” Bilwani added. Bilwani, a leading garment exporter, said the textile sector exports were increasing as there were abundance of orders. “A momentum has been built, and it is the high time that the government supports the textile sector through ensuring uninterrupted supply of utilities at affordable rates.” The exporters were faced with certain other challenges such as shortage of export containers and unavailability of vessels. “These problems are manageable but rising fuel costs due to insufficient supplies quite adversely impact the business,” he said. Mohsin Ali at AKD Securities said the textile sector performance at the equity market had remained sluggish in the current fiscal year so far, delivering a negative 1.8 per cent return, despite significant positive developments supporting the earnings outlook. “Moving forward, analysts expect the earnings of textile companies to remain robust in the near-term with [the] rupee depreciation and higher off-takes, as [the] global economies started reaching the pre-Covid levels and could keep [the] sector in the limelight. Hence, we maintain our bullish stance on the sector where any dip in prices will provide an opportunity to take exposure in textiles.”
Source: Bol News
Rapid progress at the Eravur Fabric Processing Zone. An initial secured investment of US$35 million will see the establishment of a state-ofthe-art new fabric mill at the Eravur Fabric Zone in Sri Lanka and negotiations are also underway with two international companies for further major investments. Aiming to catalyze a new era for Sri Lankan textiles and apparel manufacturing, the venture is supported by the country’s Ministry of Industry and Commerce and the Board of Investment (BOI) of Sri Lanka, working in close collaboration with the Joint Apparel Association Forum (JAAF). Tax benefits Of the allocated approximately 300 acres of land, fifty have been secured for this first investment and cabinet approval for the zone’s classification under the Strategic Development Projects Act has also been secured, enabling the extension of tax and other relief and incentives to investors. “We would like to see the first company commence commercial operations in the next six months to a year,” said BOI Chairman Sanjaya Mohottala. “We have been very aggressive on timelines because of the clear consensus of the nationally significant value that the zone can generate. At present, all land has been demarcated, and water and electricity supply are being finalised. In excess of half the commercial land has been allocated or reserved, and we are seeing great demand. If necessary, we are able to expand the zone even further.” Economy of scale He added that the most immediate benefit from the park’s establishment will be in the cost advantages and enhanced economies of scale gained through the capacity expansion and vertical integration of domestic supply chains. Currently, Sri Lanka has approximately 300 apparel manufacturing facilities across the country. By contrast, it has only seven textile and raw material factories capable of producing fabric for export, and for conversion into garments for export. Sri Lanka imported over 250,000 tons of fabric both for export-oriented apparel manufacturing and for local consumption in 2019, at a cost of US $ 2.2 billion. In the context of unprecedented disruptions across global supply chains and persistent commodity and currency volatility, the increased availability of high quality raw materials will enable an immediate and drastic reduction in raw material costs, while also conserving foreign currency. The increased domestic production of textiles also translates to a higher percentage of domestic value. If that threshold increases from its current 52% to 65%, it qualifies for a larger proportion of Sri Lankan exports for zero-duty benefits under GSP Plus. Sustainability. The economic argument in favour of investing in Eravur is bolstered by its potential to also be the most sustainable venture of its kind in the entire Asian region, with local stakeholders having already committed to establishing extensive renewable energy facilities, water recycling facilities, science-based targets, and circular business models. At a macro-level, increased local production capacity will contribute significantly to these targets by reducing the end-to-end length of Sri Lanka’s apparel supply chains. This in turn will enable tighter backward integration and lower carbon emissions. “Sri Lanka’s environmental standards for industries are quite stringent, especially compared with regional competitors,” Mohottala said. “A key feature of the zone will be its central wastewater treatment facility with a sea outfall, which will require a high standard of treatment. Fortunately, we already have strong expertise available locally, with many of Sri Lanka’s textile producers having established facilities on par with global best practices on wastewater treatment. We have used this to our advantage by calling in the local industry’s technical experts and drawing on their pioneering experiences to optimise wastewater treatment protocols at Eravur.” The greater localisation of production will also result in improved oversight and control over environmental standards within the zone, he added. “This also enables greater transparency, traceability and accountability across the supply chain, which will confer preferable competitive advantages to Sri Lankan apparel exporters. In addition, this will empower brands and retailers to make clear and credible claims to genuine sustainable sourcing.” “With the development of the zone, we will be able to create thousands of stable, wellpaying direct and indirect jobs. This could prove to be one of the most transformative developments to take place in the Eastern Province in recent history,” Mohottala concluded.
Source: Innovation in Textiles
