The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 04 FEBRUARY, 2022

NATIONAL

INTERNATIONAL

The Union Budget 2022-23 is growth-oriented & Futuristic - SRTEPC

Mumbai: The Hon’ble Union Finance Minister Smt. Nirmala Sitharaman presented the Budget 2022-23 focusing on 4 pillars of the Indian economy, viz., manufacturing productivity, financing investments, climate action and PM Gati Shakti plan. Shri Dhiraj R. Shah, Chairman, SRTEPC congratulated Hon’ble Prime Minister Shri Narendra Modi, and Hon’ble Union Finance Minister Smt. Nirmala Sitharaman for presenting the Budget which is a growth-oriented and futuristic. The Budget has signaled increased allocation for the textile sector by 8.1% increase in FY23 compared with the revised budget allocation for FY22. According to the Union Budget presented the total allocation of Rs. 12,382 crore for the textile sector for next financial year, Rs.133.83 crore is for Textile Cluster Development Scheme, Rs. 100 crore for National Technical Textiles Mission, and Rs. 15 crore each for PM Mega Integrated Textile Region and Apparel parks scheme and the Production Linked Incentive (PLI) Scheme. Shri Dhiraj R. Shah, Charman, SRTEPC informed that increased budget allocation for the textiles sector will help in growth of the industry and technological advancement. The Centre has also allocated Rs.105 crore for FY23 towards the Raw Material Supply Scheme. M o r e o v e r , t r i m m i n g s , embellishments, labels , etc. which were subject to 5% import duty will now be available as duty-free imports for exporters of textiles. This is going to boost our exports of value-added items like madeups, etc. Shri Dhiraj R. Shah, added. He also informed that, at present, machinery such as for knitting and weaving machines are included in the list of machines having Concessional Custom Duty of 5%. All these machines will attract 7.5% import duty. This will encourage the textile engineering segment to manufacture more state-of-the art textile machineries within the country in line with the “Make in India”, AtmanirbharBhart, initiatives of the government. The Budget has also mentioned on the review of customs exemptions and tariff simplification for certain items including fabrics. “This comprehensive review will simplify the customs rates and tariff structure particular for sectors like chemicals, textiles and metals, and minimise disputes,” she said. The rationalization of the Customs duty that includes the ad valorem tax and specific duty will be helpful for industry in the long term, SRTEPC Chairman mentioned. Some of the major issues mentioned during the Budget are the following: * New regulations to replace the Special Economic Zones Act for the development of enterprise and hubs. It will cover the existing industrial enclaves and enhance the competitiveness of exports. * The Emergency Credit Line Guarantee which has provided additional credit to MSMEs, extended till March 2023. Guarantee cover to be expanded by Rs.50,000 crore to a total cover of Rs. 5 lakh crores. Additional amount earmarked exclusively for hospitality-related sectors. * With 1486 Union Laws repealed, Ease of Doing Business 2.0 will be launched. * Allowing surcharge on all capital gain on all assets which have been brought down to 15 percent. * The Budget stepped up the capital expenditure sharply by 35.4 per cent to Rs 7.50 lakh crore to attract more private investment and attract growth. * For 2022-23, allocation of Rs 1 lakh crore is announced to assist the states in catalyzing overall investments in economy.

Source: GTA

Back to top

Budget 2022 is a foundational budget for the 'New India': Piyush Goyal, Union Minister of Commerce & Industry

Budget 2022 is a foundational budget for the 'New India', i.e., how to make India a prosperous country, says Piyush Goyal, Minister of Commerce & Industry, Consumer Affairs & Food & Public Distribution and Textiles. He talks about the amendment to SEZ law, support to the textile sector, exports, employment generation and plans associated with it among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: How do you see this budget and what expectations should we have for business growth that will lead to employment? I think, the whole focus has been on increasing the opportunities in the country and new employment opportunities are created to work for our people. At the same time, the investment made by the government should become a base to give a boost to the economy of the country. At a time when an investment of around Rs 10 lakh crore will be made on infrastructure (combining centre and the state) then its multiplier effect will be huge and there will be demand push to the whole economy. Based on the same the private sector can also make its investment and it will also benefit small and big industries, MSMEs among others. Our youths will get an opportunity to work and the entrepreneurs and start-ups will get a chance to implement new ideas. In a way, this is a foundational budget for the 'New India', i.e., how to make India a prosperous country. The honorable Prime Minister and the Finance Minister have laid a foundation stone for the purpose. You have identified champion sectors that have growth opportunities and have employment generation capabilities. What kind of progress is going on there because it will be quite challenging to see all parallelly? You would have seen that in the first two years, that time-to-time, the Prime Minister has taken several important decisions through different packages of Atmanirbhar Bharat and different decisions. For instance, the Production Linked Incentive (PLI) Scheme of around Rs 2 lakh crore for 14 sectors and even a decision to allocate Rs 19,500 crore through the PLI scheme to the solar sector was announced in this budget. A scheme of Rs 76,000 crore was also announced to bring the semiconductor industry to India. So, I think, instead of waiting for the budget for everything, time-and-again work has been done to encourage different areas where there is a requirement. In a way, in the last two years, there has been a continuous process to make India prosperous, self-reliant (Atmanirbhar), improve and increase its infrastructure, improve India's production capacity in different sectors along with quality so that we could produce at an international stage at a global scale. If you look at all these things, then you will get a balanced process of the last two years and you will get to know how a new direction of India is being created and going forward, how India will be made a prosperous country. What are the immediate challenges that you foresee and it should be addressed as they can become obstacles in our growth? First of all, we all have an eye on COVID and what turn it takes. Everything is in mind, as in, going forward, is there an increased in the pandemic or a decline or it is controlled. So, COVID will definitely be a challenge and we all will have an eye on it. Rest includes reduction of the compliances, increase the ease of doing business. To encourage the startups and entrepreneurs, from time to time, we also work on the suggestions that we receive from them. This is a continuous process and I can assure you that the government will be ready. All the ministries are working so that together they can give momentum to the country's economy. From our end, we are signing free-trade agreements with other countries and are also working on comprehensive economic partnerships. Our priority is to find ways to reduce the logistics cost in our country. Simultaneously, the speed of implementation of the infrastructure projects should be increased. Speed of investment can be increased by using the Prime Minister Gati Shakti - National Master Plan - a facility prepared by Mr Prime Minister with a very far-reaching thought. There should be ease of doing business and make the life of the common people more simple, we all have to draw attention towards the ease of living. Export is a big area of focus and we have definitely seen an improvement in the domain but need to work more on it. So, what are your plans to encourage exports and are you working on any scheme? A: I think, the remuneration of duties and taxes for exports that was levied at the state level or cesses. which are not included in the GST was already announced and its old backlog was also paid. The scheme has also been implemented. Interest equaliser scheme, which used to help our exporters and benefitted small exports in terms of the rate of interest has been re-established through this budget. Apart from this, the production linked incentive (PLI), which focused on quality and scale, will also help in our export surplus or export capabilities. The huge investment being made on the infrastructure among others will reduce the logistics cost will, naturally, support the export. So, the export will gradually stand on its feet. The clutches of subsidies, at least I feel, we must not go on it and we are focusing more on their problems. This year, we had a target to reach exports worth 400 billion US dollars by this financial year and we will cross it. It will be the first time in the history of India that export worth USD 400 billion will be made, the previous mark stood at around USD 330 billion and was achieved 3 years back from today. This will be a huge leap. It will increase by 35-40% next year, such growth will not be seen every year but going forward our exports will increase on a regular basis and we will strive for that. An amendment has been made in the Special Economic Zones (SEZ) Act, which will benefit local manufacturers in terms of the tariff that was kept for exports. So, what impact will it have on the overall economy? SEZ was a successful experiment. A very good palladium play infrastructure has been created and how it can be used more for the country. How the factories that have been established, the available land, plug and play infrastructure that is available in the SEZ, can be used more in fulfilling the countries for the country. For that purpose, instead of limiting the SEZ law on export, we want to turn it into an industrial park and can meet the requirements of India and new investments should come there, new industries are established and the service sector starts working from there. The connectivity of the lakhs of a hectare of the lands that are lying in the industrial parks should be improved and lands should be available at cheap rates. In addition, plug and play infrastructure, i.e., electricity, water, broadband connectivity, road connectivity, highway connectivity, railway, airport, is available in the industrial parks. Industries will be benefitted and industrial growth will be supported if the SEZ parks are jointly developed by the states and the centre. It is a matter of fact that the SEZs have got some benefits in the past. To make sure that the goods being manufactured outside in the domestic tariff area should not be disadvantaged, therefore, a discussion on imposition of the equalisation levy is going on with the finance ministry. We are going to bring changes in the SEZ law, so that in the long run a plug and play infrastructure is available to everyone in the country. A lot of actions has been taken for the growth of the textile sector and increase in its exports under your leadership, like the PLI scheme and megacluster parks. But in line with the increase in the raw material prices, especially for cotton and it was expected that the government is looking at the import duty and is also considering reducing or abolishing it. What is your take on it and what incentive the exporters will get from the point of view of textile? A: Cotton that is made in India, usually, meets the needs of India and is also exported. But there are some cotton that is not made in India and have to be brought from abroad, definitely, there is an import duty on it but to fulfil the requirements of our exporters, a duty-free import is allowed against the cotton that is required for export. So, I think, export must not face any difficulties due to this. Therefore, importing through authorisation for the cotton that is required for exports is allowed to them and it will continue in the future as well.

Source: Zeebiz

Back to top

India wants to improve trade, investment relations with Bangladesh: Indian HC

Indian High Commissioner to Dhaka Vikram K Doraiswami said his country wants to improve trade and investment relations with Bangladesh in the areas of logistics, food processing, automobiles and garments. In this regard, the Indian Ambassador to Bangladesh sought the cooperation of FBCCI in boosting bilateral trade. The Indian High Commissioner came up with such comments when he met FBCCI President Md Jashim Uddin on Tuesday (3 February) afternoon at the FBCCI office, said a press release today. In the last one year, Bangladesh-India trade has increased by 94%. At the end of the current financial year, Bangladesh's exports to India are expected to reach 2 billion for the first time. India is keen to take this trade relationship to a new height. FBCCI President Jashim Uddin said that development of the logistics sector is the prime agenda of FBCCI. The apex trade body is working to submit a 12-year plan to the government for the development of the logistics. On India's trade potential with Bangladesh, the FBCCI president said India could be a major supplier of yarn and cotton to the garment industry in the near future. Citing some of the Indian companies operating in Bangladesh, the FBCCI chief said, they all are doing great. "Therefore, the investment of other Indian entrepreneurs in Bangladesh has a huge potential to be profitable," he added. During the meeting, the FBCCI president called for the development of infrastructure in the Indian part of the land ports to boost bilateral trade. He said poor infrastructure hampers bilateral trade as many products cannot be exported from Bangladesh due to lack of facilities at Indian ports. The Indian ambassador informed that another new gate would be opened soon at Petrapol land port to facilitate the movement of trucks. He also assured that development work for other land ports would be undertaken if these ports are permitted to trade more goods. He said his government was keen to facilitate trade between the two countries. Therefore, the issue will get importance in the meeting of the secretary level next February. The ambassador also hoped to launch a CEO's forum between the two countries. He said the forum of chief executives of top India-Bangladesh companies could play the most effective role in resolving the issue of bilateral trade. FBCCI Senior Vice President Mostofa Azad Chowdhury Babu, Vice President Md Habib Ullah Dawn, directors Rejaul Kariem Rejnu, Bijoy Kumar Kejriwal, Md Shah Jalal, Mohammed Bazlur Rahman, Dr Joshodha Jibon Deb Nath, CIP, Priti Chakraborty and Secretary General Mohammad Mahfuzul Hoque were present at the meeting.

Source: TBS News

Back to top

New SEZ Act will be WTO-compliant, will have high-class infra: Comm secy

The existing SEZ Act was enacted in 2006 with an aim to create export hubs and boost manufacturing in the country. However, these zones started losing their sheen after the imposition of a minimum alternate tax and the introduction of a sunset clause for the removal of tax incentives The new law for special economic zones (SEZs) will comply with the global trade rules of the WTO and it will have a single-window clearance system besides world-class infrastructure and easy customs procedures, Commerce Secretary B V R Subrahmanyam said on Wednesday. The government on Tuesday proposed to replace the existing law governing SEZs with a new legislation to enable states to become partners in the 'Development of Enterprise and Service Hubs' (DESH). The existing SEZ Act was enacted in 2006 with an aim to create export hubs and boost manufacturing in the country. However, these zones started losing their sheen after the imposition of a minimum alternate tax and the introduction of a sunset clause for the removal of tax incentives. Explaining the rationale behind the new law, the secretary said India needs large industrial manufacturing zones, which have world-class infrastructure so that those places become manufacturing hubs of the future. "We are in the process of drafting a SEZ 2.0... We will recast the SEZ Act in the next couple of months. "This new Act will lead to the revival of activities in SEZ areas. They will be manufacturing for both international and domestic markets," he told reporters, adding that in the next few months, contours of the new law will be ready. "The new SEZ Act will be WTOcompliant and will have a single window (clearance system). High-class infrastructure will be there and more benefits will be there," he said. A dispute settlement panel of the Geneva-based World Trade Organization (WTO) in its report on October 31, 2019, has ruled that India's export-related schemes (including SEZ scheme) are in the nature of prohibited subsidies under the Agreement on Subsidies and Countervailing Measures and are inconsistent with WTO norms. India has appealed at the WTO's appellate body against this ruling. Currently, SEZs account for about 20 per cent of India's total merchandise exports. Originally, SEZs came up to take advantage of tax benefits but after the imposition of the sunset clause, those incentives are no longer there for the past two years to any new units. "So, there is a need to move beyond SEZ Act," Subrahmanyam said, adding that the Centre will partner with states so that they become part of DESH. Giving hint about provisions that could become part of the new law, he said there can be a single-window clearance system for both central- and state-level clearances and for that, "we may even think of putting states on the approval bodies either at state or regional level". He also informed that today, about 20,000 hectares of SEZ land and about 10 crore sq feet of built-up area is vacant in SEZs. Some other issues raised by the industry about SEZs include the matter of payments. Payments for goods sold from SEZ to the domestic market are made in the rupee but for services, it is in dollars. Products sold from SEZ in the domestic market attract customs duties. Talking about the Budget, the secretary said several measures are announced for the export sector. About the gems and jewellery sector, he said import duty on cut and polished diamonds and gemstones to five per cent and zero on sawn (or raw) diamond will help make India jewellery hub of the world. Due to the COVID-19 pandemic, a lot of small-value jewellery is traded on e-commerce, a lot of these orders are happening online. Finance Minister Nirmala Sitharaman has made it clear that in the next couple of months, by June, the government will come out with easy e-commerce rules for gems and jewellery business, he said. He also said that exemptions are being provided on items such as embellishment, trimming, fasteners, buttons, zipper, lining material, specified leather, furniture fittings and packaging boxes that may be needed by bonafide exporters of handicrafts, textiles and leather garments, leather footwear and other goods. Explaining it, he said some big companies in the US or Europe specify about the kind of buttons or threads they want in their clothes and for that, Indian exporters have to import these goods, which were earlier subjected to duty and now these items have been exempted. A lot of customs duties on chemicals have been reduced and that will enable exports, he said adding customs duties has also been rationalised for the electronics sector and this move would boost domestic manufacturing. "I think there is a fair amount of understanding between commerce and finance (ministries) that actually reducing tariffs on inputs helps exports a lot. So, having a very high tariff regime does not help and I think that message is coming through very clearly in the Budget," the secretary said.

Source: Economic Times

Back to top

India's Services Sector Activity Slows To 6-Month Low In January

India's dominant services sector expanded at its slowest pace in six months in January as restrictions due to a new wave of Covid-19 cases and surging prices weighed on demand, a private survey showed. India's dominant services sector expanded at its slowest pace in six months in January as restrictions due to a new wave of Covid-19 cases and surging prices weighed on demand, a private survey showed. The IHS Markit Services Purchasing Managers' Index slumped to 51.5 in January from 55.5 in December, far below the 53.0 expected in a Reuters poll of economists but still above the 50-mark separating growth from contraction. "The escalation of the pandemic and reintroduction of curfews had a detrimental impact on growth across the service sector," noted Pollyanna De Lima, economics associate director at IHS Markit. "Both new business and output rose at slight rates that were the weakest in six months." The new business sub-index was at its weakest since August as consumers stayed home amid rising coronavirus cases, curbing domestic demand. International demand remained gloomy and contracted for a twenty-third month, as it has since the onset of the pandemic. However, the contraction was moderate and the slowest in this sequence. While the business expectations index remained above 50, it slipped to its lowest reading since August, indicating dwindling positive sentiment. "Concerns about how long the current wave of Covid-19 will last dampened business confidence and caused job shedding. Firms were also alarmed about price pressures," added De Lima. Firms cut headcount for a second month in January due to the weaker demand. Input costs spiraled to a 10-year high on increased food, fuel, material, staff and transportation costs. The rate of inflation was one of the highest since data collection started in December 2005 and is likely to reinforce views that the Reserve Bank of India will raise interest rates next quarter in a bid to cool price pressures. The slowdown in both manufacturing and services activity pushed the composite index to a six-month low of 53.0 last month from 56.4 in December.

Source: NDTV

Back to top

Surat to host Its first-ever ‘The Surat T20 Cup’ for businessmen and entrepreneurs from February 26 to March 6, 2022

The diamond city is all set to witness the first-ever season ball cricket league ‘The Surat T20 Cup’ where the who’s who from the eight prominent business families in the diamond city of Surat will be selecting entrepreneurs and businessmen–season ball league players– at the auction event to be held at Avadh Eutopia on February 7. The Surat T20 Cup is the first-ever season ball cricket league for the business entrepreneurs and businessmen in the 30+ age category of Surat, where they will clash with each other at the super sporting match days at the NK Grounds starting from February 26 to March 6, 2022. There will be eight-team owners, 18 matches, and 120 players from the business background. The title sponsors for ‘the Surat T20 cup’ #averamsesurat is Bhanderi Lab Grown Diamonds, the event is driven by Landmark Honda, and Taste of Bhagwati is the hospitality partner. Owners’ gala meets in this connection was organised with the prominent businessmen of the city to discuss the game, the venue, and the selection process for the 30+ age players from the business fraternity and to promote the season ball league on January 30. Official sources said the who’s who from eight prominent business families in Surat including diamonds, textiles, and chemical sectors are the owners of the teams and will participate in the auction. The owners of the teams are Shreyans Arvindkumar Shah of Ankit Gems, a leading diamond company, Shailesh Goti of Dharmanandan Diamonds, Hetal Desai, entrepreneur Dhwanil Infra LLP, Snehal Patel, Bhanderi Lab Grown Diamonds, Sanjay Sarawagi of Laxmipati group, Piyush Patel of Dharmanandan Diamonds, Kunj Panchali of Aura Camp, Jayantibhai Narola of Shree Ramkrishna Exports (SRK) and Jaiprakash Agarwal of Rachana Group of Companies. Shital Mehul Pithawala, Founder of Big Bash Sports League, said, “Surat is going to witness the first-ever cricket event in its history where eight prominent businessmen from chemicals, diamonds, and textile sectors will be the owners of the season ball cricket league ‘The Surat T20 Cup’ being organised for the first time. The players are the Sundayto-Sunday season ballplayers and the cricketing tournament is organised to promote their cricket and expand the horizon of the game in Surat.”

Source: The Print

Back to top

Fissures among textile traders over FOSTTA polls

Fissures are emerging with various textile tradeing markets over conducting elections for Federation of Surat Textile Traders Association (FOSTTA). However, raising the issue in the election-bound year, textile market insiders suspect political motives behind the entire issue. The office bearers of FOSTTA claimed neither there are rules to hold elections in stipulated time nor the traders’ body has any registered legislature as well. A core committee has been formed to look into the issues. FOSTTA is the largest association of textile traders of the city that represents around 80,000 textile shops from 185 markets. “FOSTTA has not held an election since September 2012. A working committee that was formed in 2015 to hold elections is still continuing and they did not take any initiative to hold the election,” said Lalit Sharma, president of Textile Yuva Brigade. Sharma, a senior representative of Japan Textile Market Association, claimed his market complex will not follow any orders from FOSTTA unless elections are held. Few other market complexes have also joined hands and issued letters demanding election in FOSTTA. “FOSTTA is an important organization representing traders and they should follow democratic practices. “They have failed on various fronts despite being a key organisation and it being run in an undemocratic manner,” said Dinesh Katariya, secretary of Good Luck Market. President of Surat Mercantile Association, Narendra Saboo, said, “FOSTTA was formed in 1985 and it has been raising important issues since then. “But gradually it is failing to raise issues of traders. They should hold elections to win the trust of traders.” Claiming that they did not receive any representation, FOSTTA president Manoj Agarwal, said, “None of our active members have raised the demand for election. But a core committee is looking into the issue raised on social media platforms.” Agarwal alleged that some people who are not even textile businessmen are trying to create differences in FOSTTA which has addressed important issues effectively in the recent past.

Source: Times of India

Back to top

Garment exports hit by raw material prices

Textile and clothing exports from the country between April and December 2021 were up 18 % in dollar terms and almost 25 % in rupee terms compared to the corresponding period in 2019, according to data available. While the total textile and apparel exports in April - December 2019 were to the tune of $ 25 billion, it increased to almost $30 billion during the same period last year. In rupee terms, the exports grew from ₹ 1,77,803 crore to ₹ 2,21,528 crore. While cotton yarn, fabric and made-ups saw more than 40 % growth in dollar and rupee terms, ready made garment grew only 2.69 % in rupee terms (between April and December 2021 compared to the same period in 2019) and saw a negative growth of 2.81 % in dollar terms. Overall textile and clothing exports are expected to be a little more than $ 40 billion this financial year (2021-2022) compared as against the target of $ 44 billion. The main area of concern is exports of apparels, Textiles Secretary Upendra Prasad Singh told The Hindu on Wednesday. Many garments units, especially those located in Tamil Nadu, Karnataka, national capital region, and Punjab remained shut between April and June in 2021 because of the spread of COVID-19. “We have seen growth (in exports) in terms of value and quantity, especially during the last three months,” said A. Sakthivel, president of Federation of Indian Export Organisations. According to Raja M. Shanmugham, president of Tiruppur Exporters’ Association, garment exports from Tiruppur this fiscal is expected to be almost ₹ 32,000 crore as against ₹ 24,000 crore last financial year. But, the growth is mainly in terms of value. While the exporters have orders, high raw material prices are a deterrent to increase in volume. If the current trend in raw material prices continues, sustaining this will also be a challenge, he said. “There is a continuous spike in cotton yarn prices. Even if I have orders, I am unable to service those orders for want of funds,” he said. Majority of the garment exporting units are MSMEs and they are labour-intensive and vulnerable to several external factors. The government should step in to bring stability in raw material prices, Mr. Shanmugham said.

Source: The Hindu Businessline

Back to top

Bangladesh's textile millers urge govt not to raise gas prices

Claiming that its export-oriented factories incurred $1.75-billion production losses in the past three months due to gas supply crunch, the Bangladesh Textile Mills Association (BTMA) recently said gas shortage has led to several spinning, weaving, dyeing and printing mills in Dhaka, Gazipur, Savar, Ashulia and Narsingdi industrial zones not running at full capacity. If the gas price is hiked at the proposed 103-116 per cent in such a situation, they need an additional Tk 20.47-23 as electricity cost to produce a kg of yarn, BTMA claimed. "The overhead per-kilo production cost of yarn will be double or 50 cents from its existing rate of 25 cents if the proposed gas hike takes effect," BTMA president Mohammad Ali Khokon told a press conference in Dhaka. Opposing the state-owned distribution company's proposal for gas price hike, BTMA said the hike in gas price would erode competitiveness of the sector, according to Bangla media reports. Khokon urged the government to ensure uninterrupted gas supply by not raising the price further. Although some 1200 electronic volume corrector (EVC) meters have been imported, he said, a negligible number of factories get such devices installed. Despite the gas crisis, factory owners have been forced to pay millions in bills to Titas Gas Transmission and Distribution Company in the absence of EVC meters, he claimed. The BTMA chief urged the government to immediately install EVC meters at captive power generator mills for bill payment. He also demanded uninterrupted gas supply to industries by halting supply to fertiliser factories and transport sector for an interim period. He sought a 5-10-year energy policy to help the sector plan investment accordingly to produce additional raw materials worth $10 billion.

Source: Fibre 2 Fashion

Back to top

Bangladesh factory collapse trial resumes after five years

The Rana Plaza tragedy killed over 1,100 people and put a spotlight on poor safety standards in Bangladesh's garment industry. Bangladesh has resumed the murder trial in the collapse of a textile factory after five years of appeals and legal holdups, court officials confirmed. More than 1,100 workers died when the Rana Plaza factory complex came down on the outskirts of the capital, Dhaka, on April 24, 2013. In 2016, 41 people were charged with murder for their suspected roles in the disaster, including the building's owner, Sohel Rana, his parents and factory executives. They were accused of signing off on building standards and forcing employees to work inside the eight-story building despite knowing that it was not structurally sound. But the case was put on hold for more than five years because some defendants tried to appeal the indictment in court. 'Too much time has been wasted' This week, a judge ordered the trial to resume for 36 of the original defendants. Three have since died, while the cases of two defendants appealing their indictments will be considered separately. "We want to conclude the trial as quickly as possible. Already too much time has been wasted," chief public prosecutor Sheikh Hemayet Hossain told the AFP news agency. "The building didn't have any [construction] plan. It would shake when machines were switched on. And the owner of the building, Sohel Rana, used hired muscle to force the workers to go to work on the day of the collapse." World's second-biggest textile exporter The tragedy at Rana Plaza — where clothes for major fashion labels such as Primark and Benetton were produced — put a spotlight on unsafe working conditions in the lucrative textile sector. It also led to calls for clothing brands to take more responsibility for safety standards in their supply chains. Bangladesh's garment industry is worth some $35 billion (€31 billion) and accounts for more than 80 per cent of the country's exports.

Source: Frontline

Back to top

Strengthening garment industry vital for least developed countries in Asia graduating from category

Graduation presents an opportunity for the countries to develop strategies that can position the textile and clothing sector higher up the global value chain. Asian countries graduating from the least developed countries (LDCs) category need to take measures to bolster the textile and clothing sector as they graduate from this category, particularly in response to the economic impact of COVID-19, recommends a joint report by the World Trade Organization (WTO) and three UN bodies. The report entitled “The Textile and Clothing Sector in Asian Graduating Least Developed Countries: Challenges and Ways Forward” and published on 1 February focuses on countries such as Bangladesh, Lao People’s Democratic Republic and Nepal, where the textile and clothing (T&C) sector is a major industry and will be significantly impacted by graduation. “This timely study highlights the distinct patterns of insertion of graduating LDCs into the textile and clothing global value chains and discusses how LDC graduation may affect related outcomes, said Rolf Traeger, chief of the LDC section at UNCTAD. “Given the level of competitiveness of the garment industry, the prospect of losing preferential market access makes the imperatives of diversification and development of productive capacities is critical as ever for graduating LDCs. Hence the importance of their implementing effective industrial policies,” he said. Support measures benefit sector LDC support measures offered by international development and trade partners have benefitted the T&C sector. Adjustments to these measures is part of the graduation process and will need to be managed to ensure a smooth transition for the countries overall, the report finds. “The exports of textiles and clothing of graduating LDCs have largely been driven by LDC trade preferences. Examining the impacts of graduation for this sector is crucial for these countries to adapt to the new trading conditions. This collaboration is a unique effort of UN agencies and WTO to shed light on ways to fully realize the potential of this sector,” said Taufiqur Rahman, head of the LDC unit at the WTO. Combined T&C exports from LDCs in Asia account for 8% of the global total, which contracted in 2020 due to the pandemic. The sector is an important source of employment, especially for women. Graduation offers an opportunity The report notes that graduation presents an opportunity for the countries to develop strategies that can position the sector higher up the global value chain. Manufacturers consulted for the report said they expected graduation to impact their export performance. In addition to facing higher tariffs, most garment manufacturers rely heavily on imported textiles and will struggle to meet more restrictive rules of origin criteria after graduation. Many said they don’t have a response plan yet for LDC graduation and are focusing on addressing the impact of the pandemic. “This timely report sets out important preparatory measures to protect and strengthen the textile and clothing sector, the lifeblood of many LDCs in Asia, during and after graduation,” said Roland Mollerus, secretary of the Committee for Development Policy. “It provides some country-specific insights and serves as a valuable resource for countries and development partners to work together to chart a steady course for a smooth transition from LDC status and to reach critical targets in the final Decade of Action for the 2030 Agenda.” How graduation will affect sourcing Many major clothing brands and retailers consulted for the report believe that LDC graduation will only modestly affect their sourcing and are planning to expand sourcing from graduating LDCs over the next three to five years. Factors such as workplace safety, working conditions, environmental compliance, innovation and speed to market are increasingly becoming major factors for brands in their long-term sourcing. “We have consulted many brands and retailers on their future sourcing plans and how it affects graduating LDCs. What we have found is that major buyers are consolidating their sourcing portfolio and, increasingly, they are seeking to source from larger, often multinational apparel manufacturers,” said Matthias Knappe, programme manager, fibres, textiles and clothing at the International Trade Centre (ITC). “This poses a challenge to many apparel-producing SMEs in LDCs. Together with our partners, we hope to provide support for these small businesses, boost their competitiveness, and overcome this challenge,” he said. The report was produced by the WTO, the UN Department of Economic and Social Affairs, ITC and UNCTAD, bringing together different areas of expertise on LDC graduation and the T&C sector.

Source: UNCTAD

Back to top