The Indian government is proactively working to equip the textile industry to face global competition in the next one decade, textiles secretary Upendra Prasad Singh has said. Addressing a session during the 10th Asian Textile Conference (ATEXCON), he urged the industry to focus on value and quality so India can benefit in a shifting scenario. Chairing the technical session on ‘Rebuilding India’s Textile & Apparel Industry’, the secretary said that the government is trying to act on problems of the industry. However, it is difficult to have a balance between various stakeholders in fragmented value chain. He suggested that the industry should think about handlooms sector. He said that size and scale are major issues for the industry to compete in the current market scenario. Arvind Singhal, chairman of Technopark Advisors, who moderated the session, said that the industry has to think about technological solutions of current problems and challenges. The industry needs to focus on sustainability, integration, and more value addition. Currently, the industry should not focus on volume but on value. Gautam Nair, chairman of Export Promotion Committee of Apparel Export Promotion Council (AEPC), said that there are many disruptions in the industry. COVID-19 has disrupted the industry most. Brands and other buyers were seriously thinking on ‘China plus one’, but they could not find assured sourcing destinations, so they had to go back to China. According to Nair, India has long way to cover in the journey of increasing its market share. “We need to integrate the supply chain. Bangladesh has successfully presented itself as assured supplier before the buyers. But Indian industry needs to do a lot of things.” Sunil Patwari, vice chairman of The Cotton Textiles Export Promotion Council (TEXPROCIL), said in the session that there are huge opportunities for the Indian industry. “If we are able to attract 10-15 big brands, we can expect substantial market share. But we need to focus on strengthening our system, product innovation and value addition. In line with sustainability, we must have large number of certified factories which can attract buyers,” he said adding that environment friendly ecosystem has currently become very important in the entire world, so sustainability and circularity are must. Next to speak was Bhadresh Dodhia, vice chairman of the Synthetic & Rayon Textile Export Promotion Council (SRTEPC), who said that the industry needs to focus on man-made fibre, which has tremendous opportunity. According to him, man-made fibre is more sustainable and environment friendly. “The government is very proactive for the same and it is incentivising the industry for man-made fibre production. We need to ensure availability of man-made fibre as per the per future demand in the next three to five years.” Representing the Federation of Buying Agents (FBA), Lokesh Parashar suggested that the industry should work on scale and research on products and innovation. He said, “We are not able to supply product of 100 container volume in whole month, but the Chinese industry offers 3,000 container supply in one month. Secondly, Indian industry looks for orders from buyers, but buyers expect long term supply deals on large scale basis.”
Source: Fibre 2 Fashion
Union Textile Minister, Shri Piyush Goyal gave a five-Point Mission to the Indian textile industry while inaugurating the 10th Asian Textile Conference in New Delhi. He said if the industry focuses on innovation, sustainability, digitisation, newer products and utilisation of Free Trade Agreements (FTAs), it can expand its size to $250 billion in the next 5-6 years and the textile industry will be able to achieve exports of $100 billion. Shri Piyush Goyal was addressing the industry captains in the 10th Asian Textile Conference (ATEXCON). Earlier, State Textile Minister Darshana Jardosh, Textile Secretary, Upendra Prasad Singh and industry veterans and experts also addressed the conference. The Minister said that it was nice to see that the industry is seriously discussing innovation for productivity and expansion. The industry can optimise its resources for demand by innovating its system. It can utilise innovative ideas and digitisation in supply side too. The industry can handle stiff competition more effectively by innovation and digitisation. He said that sustainability is very important for the Indian textiles sector which can reduce the pressure on the environment by using reusable resources. The industry can also reduce production costs through sustainability. Shri Piyush Goyal said that digitisation is another area which can help optimise the entire value chain. He said that he was very glad to know that the industry captains are already talking about digitisation. In current era of information technology, every industry is benefitting from new technologies like blockchain and more. He suggested that the industry should think about high quality products and elementary products like zip and embellishments, which the Indian textile industry imports at present. High quality products can lend a good image to the industry. The Minister said that the industry should focus on taking maximum benefits from present FTAs. Such agreements are arrangements between nations to give relaxations to each other. After the signing of FTAs, it was the industry’s duty to take maximum advantage. The Minister said that the Government is focusing on signing more FTAs with developed countries. Shri Piyush Goyal appreciated the futuristic approach of the 10th edition of the Asian Textile Conference. He remembered that Indians were lacking clothes 75 years ago when the country became independent. However, India has successfully overcome that challenge. He further said that the industry is now working along the lines of the vision of Prime Minister Narendra Modi. CITI and Egyptian Cotton also signed a Memorandum of Understanding (MoU) in the presence of the Textile Minister. Both the industry bodies will work together for mutual benefits.
Source: Indian Textile Magazine
Union Minister of Textiles, Commerce & Industry, Consumer Affairs and Food & Public Distribution, Piyush Goyal said that Textile Industry has a big role to play in making Free Trade Agreements a success. Goyal said that innovation is going to be the defining feature in India's march towards becoming a Developed Nation. He highlighted the role of innovation across all value chains in the Textile sector and also urged the Textile sector to focus on recycling and digitization. He said if the industry focuses on innovation, sustainability, digitisation, newer products and utilisation of Free Trade Agreements (FTAs), it can grow fast and compete with the best in the world. Speaking on sustainability, Goyal said that textiles sector can reduce the pressure on the environment by using reusable resources as well as reduce its own production costs. Piyush Goyal said that digitisation is another area which can help optimise the entire value chain in the sector. He expressed satisfaction at the fact that the industry captains are talking about digitisation. In current era of information technology, every industry is benefitting from new technologies like blockchain and more. He suggested that the industry should think about high quality products and elementary products like zip and embellishments, which the Indian textile industry imports at present.
Source: Business Standard
There is an urgent need to have ownership of sustainability in Indian textile industry. It will help in taking the industry forward in the direction of becoming environmentally friendly with lesser footprint on earth, experts said at a technical session of Asian Textile Conference (ATEXCON). They added that sustainability cannot come without price. Experts from various fields discussed on ‘Scaling up Cleaner Production with Sustainable Textile Solutions during the tenth edition of Asian Textile Conference (ATEXCON) held in New Delhi. Ajay Sardana, president & head - Strategy & Business Development, Reliance Industries Limited (RIL) moderated the session. He said that it was good to discuss fibre to fashion and sustainability in a single session. Farhad Vania, senior portfolio advisor at GIZ India, said that there was need to have ownership of sustainability. No buyers will pay higher price until there is certain certification and provision. Mridula Ramesh, executive director of Sundaram Climate Institute, also highlighted on the effectiveness of sustainability. She emphasised on earth-friendly processes and production in the industry. Khaled Schuman, executive director of Cotton Egypt Association, said that Egyptian cotton is highly sustainable. His government has developed a system to ensure real Egyptian cotton in the global market after certain problems came up in Britain few years back. “Today, a logo of Egyptian cotton can assure a buyer about the origin of cotton,” he said. Prasanta Deka, head- Market & Product of BG RMS Rieter India Pvt. Ltd, and Tatheer Zaidi, general manager of pollution management in MSME at Solidaridad Network Asia also discussed various aspects of the topic.
Source: Fibre 2 Fashion
Textile mills and garment units have reduced production as high raw material prices have made operations unviable for these units. The South India Hosiery Manufacturers’ Association (SIHMA) president AC Eswaran said that garment units catering to the domestic market have brought down production by 50%. Lakhs of workers, who are from other districts and work in Tiruppur, are affected by this, he said. According to the South India Spinners Association (SISPA), several textile mills in the Micro, Small and Medium-scale Enterprises (MSMEs) categories have downed shutters as quality cotton is not available at affordable prices. The spinning sector is incurring huge cash losses in day-to-day operations due to high cotton prices and low yarn prices. Cotton was sold at about ₹1 lakh a candy (355 kg) and it dropped to ₹82,000 a candy in July. It has risen to the ₹1 lakh level again. The hike of ₹18,000 a candy was within a short period. The mills are incurring cash loss of ₹40 to ₹50 a kg of yarn because of this volatility in cotton prices, said association president J. Selvan. Many mills may become non-performing assets (NPA), if the current situation continued, he said. The associations said multinational companies (MNCs) should not be permitted to procure domestic cotton. Some MNC companies are purchasing more, and stocking up, alleged SIHMA. Export of cotton and yarn should be permitted only after meeting the domestic needs, it said. The SISPA president added that cotton should be removed from the Multi Commodity Exchange platform and cotton exports should be permitted subject to its availability for the entire season.
Source: The Hindu
The Indian textile industry should think out of box to get benefits of opportunity in the changing world, Vijoy Kumar Singh, special secretary of Indian ministry of textiles, has said. The government has made necessary changes in labour laws, and the industry should now move to the areas where workers are available rather than relying on migrant workers. The industry must come out of comfort zone and think about usage of recycling fibre, Singh said at a technical session on ‘Changing Trends in Asian Textile and Apparel Trade’ during the 10th Asian Textile Conference (ATEXCON), organised by the Confederation of Indian Textile Industry (CITI). Singh said Indian industry should collaborate and integrate its system to tap the opportunity provided by ‘China plus one’ sourcing destination. He said that since textiles is a labour-intensive industry, it should set up factories where workers are available. The industry finds it difficult to train migrant workers in Delhi-NCR and other traditional manufacturing hubs, where labour come from other states. The Indian government has amended labour laws suitably to set up factories for large numbers of workers. He said that India has an enterprising class, and added that the country already has quality logistics infrastructure in most of the regions, and now it is on the industry to come forward to get benefits of changing trends. Moderating the session, Dr. Christian Schindler, director general of International Textile Manufacturers’ Federation (ITMF), said that sustainability has become more important in the recent past. “The textile industry is hit by more and more regulation, specifically in Europe. Therefore, the industry needs to rationalise process and system, which can help reduce footprint on environment.” He threw a number of critical questions before the panellists of the session for discussion. Rakesh Vazirani, head - sustainability services, Business Unit Products of TUV Rheinland, discussed on a strategy for sustainable textile. He presented a detailed plan for a plant on how to ensure sustainability of the process. He also underlined the need of digitisation in the industry. He said that market data is very important in today’s world for penetration in any market. Justin Huang, president of Taiwan Textile Federation, and Aroon Hirdaramani, chairman of Sri Lanka Apparel Exporters Association and executive director of Hirdaramani Group, also virtually participated in the discussion.
Source: Fibre 2 Fashion
The Ministry of Ports, Shipping and Waterways has released a draft to amend the Indian Ports Act, 1908, which aims to bring in sweeping reforms in the sector by bringing non-major ports into the national fold, creating a new mechanism for resolution of disputes, and empowering maritime state development council (MSDC). The draft bill will see comments from stakeholders before being tabled in Parliament. “The Indian Ports Act, 1908 is more than 110 years old. It has become imperative that the Act is revamped to reflect the present-day frameworks, incorporate India’s international obligations, address emerging environmental concerns, and aid the consultative development of the ports sector in the national interest,” the shipping ministry said. The bill seeks to eliminate delays in decision making for non-major ports through the creation of a council, which will be chaired by the Union minister for ports, shipping, and waterways. “MSDC will ensure cooperative federalism where Centre and State/UT (union territory) governments will work together towards preparing a progressive road map for the country,” the ministry said. However, sector experts say the bill could face the same fate as the Major Ports Authority Act amendment, which was introduced last year and faced criticism over the possibility of higher concentration of power in the hands of the central government, which controls 12 major ports of India. While most central and state stakeholders find a seat in this council, all final binding powers rest in the hands of the chairperson, who, according to the proposed amendment, is the Union minister of ports. Senior officials in the ministry told Business Standard that the bill seeks to create a level-playing field for all ports as major ports act under the aegis of central regulations while non-major, especially private ports, function through respective state maritime boards and local legislations. “We need to bring this parity as soon as possible and our intention is to have the bill cleared by the winter session of Parliament,” the official said. Sector watchers also stressed on the lack of provision of participation from the private sector, whose role in the port sector has been growing over the last decade. A Mumbai-based port sector expert said there was a growing need for private sector players to have some participation in the MSDC. Three earlier versions of this bill were shared with major ports, state governments, and state maritime boards, and their feedback has been incorporated in this draft, which is likely the Centre’s final stand on the issue. One of these earlier versions was met with strong opposition, according to reports. Tamil Nadu Chief Minister M K Stalin had reportedly written a letter to heads of all coastal states, exhorting them to register their protest against the bill, as it will take away many operational powers of non-major ports away from state governments. Odisha and Gujarat had also written to then shipping minister Mansukh Mandaviya echoing similar concerns against the draft law.
Source: Business Standard
Surge in merchandise exports helped the manufacturing sector in FY22, but was not broad-based and may not sustain in FY23’, said a report by India Ratings and Research suggesting a decline in manufacturing sector for the fiscal year. The Indian manufacturing sector, which received a fillip in FY22 due to export growth, is likely to be hit by a slump in foreign trade activity in FY23, a report said on Thursday. An analysis of industrial output and merchandise exports by India Ratings and Research suggested that the "exuberance" witnessed in merchandise exports in FY22 helped the manufacturing segments. "Surge in merchandise exports helped the manufacturing sector in FY22, but was not broad-based and may not sustain in FY23," the rating agency said. The exports trend of FY22 may not sustain in FY23 due to the adverse impact of the Russian invasion of Ukraine, leading to recessionary concerns in the advanced economies, stringent COVID-19 control measures in China impacting production in various sub-sectors in India, and continued disruptions in global supply chain/trading sanctions imposed on Russia, it added. The note said India's average annual merchandise exports during FY16-FY20 were USD 297.02 billion, having peaked at USD 330.08 billion in FY19. The same jumped to the highest-ever USD 421.89 billion in FY22. "Since the pickup in merchandise exports has primarily been driven by the higher exports of manufactured goods, its spillover effect was expected to be visible in the higher capacity utilisation and an improvement in the industrial growth numbers in FY22," it said. The agency said it mapped the merchandise trade data to the two-digit Index of Industrial Production, and disaggregated goods export data with the IIP. "Even on the FY20 base with the exception of a few, most manufacturing segments recorded double-digit export volume growth. In fact, the export volume growth pattern across the different manufacturing segments was broadly similar both on the FY21 and FY20 base," Paras Jasrai, an analyst at the agency, said. The agency said basic metals, textiles, pharmaceuticals and food products witnessed a robust rebound in export volumes in FY22 when compared to FY20 volume levels, suggesting that the production in these segments benefited from the buoyant export demand. Textiles witnessed a sharp recovery both in exports and import volumes along with production, it said, adding that all these sectors have a share of 26.4 per cent in the overall industrial sector and formed 24.1 per cent of the merchandise exports in FY22. On the other hand, the sectors which not only witnessed low growth in production levels but also low-to-moderate export volume growth in FY22 were railways locomotives, ships and aircraft, wearing apparel and leather products, among others. Labour-intensive sectors such as wearing apparel and leather products have benefited from neither domestic nor external demand, it said, adding this does not augur well from the perspective of employment generation in the country.
Source: Live Mint
The government is likely to release next month the new foreign trade policy with a focus on boosting ecommerce exports and developing districts as export hubs. The commerce department is working on the policy that may detail ways to reduce the compliance burden on small exporters and fund MSMEs to increase exports. It may also seek to make proper categorisation of products which are at present clubbed as "others", as this system leads to misclassification and tax evasion, thereby adding to the growing trade deficit. "We are working on ways to facilitate ecommerce exports through the policy," said an official, adding that the policy could be put in place by the end of next month. Attention is likely to be given on MSME exports as well as developing districts as export hubs. The policy comes amid India's export growth slowing. Goods exports rose 2.14% from a year earlier to $36.27 billion in July, even as the trade deficit almost tripled to $30 billion. In fiscal 2022, India's outbound shipments were a record $421.8 billion. The government aims to take the value to $1 trillion by 2030. The commerce department is in consultations with stakeholders to integrate global markets through bilateral trading arrangements, government-to-government engagements and making use of the multilateral agreements of the World Trade Organization. Product and country strategies are also being discussed to diversify India's export products. Exporters have sought a separate chapter on ecommerce in the policy that would enlist all the export benefits available to the sector that should be at par with conventional exports. "We have suggested setting up an integrated park for cross-border ecommerce," said Ajay Sahai, director-general of the Federation ofIndian Export Organisations. Such parks should provide comprehensive facilities such as banks, fintech companies, foreign post offices, courier terminals, logistics companies, warehouses, customs, tax refund - all under a single umbrella. Also, some space can be earmarked for packaging and small operations.
Source: Economic Times
India has the potential to reduce imports from China by around 40 per cent in the coming years, according to an analysis conducted by industry body PHD Chamber of Commerce and Industry. India holds the immense potential to reduce 40 per cent imports (around $35 billion) from China in the coming times as there are various product categories that India also produces but at a lower volume, Pradeep Multani, President, PHD Chamber of Commerce and Industry, said in the report. The report titled ‘Prospects and Potential for Enhancing Exports and Reducing Imports of India’, presents a comparative analysis of bilateral trade with the largest importer and exporters of India i.e. China and the USA. The recent dynamic schemes announced by the Government of India such as the PLI scheme and PM Gati Shakti schemes have enhanced the sentiments of the Indian producers to produce more at a competitive cost which will give considerable competition to China, Multani noted in the report. In recent years imports from China have increased significantly except the Pandemic year. India imported around $87 billion worth of goods from China in the year 2021 wherein top 10 import product categories comprised around $54 billion. Imports from China have changed from low-value, low-cost products like toys and crackers to high-value items like electronics, the report said. Unfair competition from imports from China had a severe impact on the growth prospects of domestic manufacturers, especially small businesses. According to the report, India has significant scope for producing more import substitution in the sectors including chemicals, automotive components, bicycle parts, agro-based items, handicrafts, drug formulations, cosmetics, consumer electronics, and leather-based goods among others. Enhanced production in these sectors will not only reduce imports from China but also boost India’s exports in such product categories, the report highlights. There are approximately 36 sub-sectors that can reduce India’s dependence on Chinese imports. These sectors collectively account for around $35 billion in India’s imports. “Since the domestic market has production capabilities; these sectors can readily minimize their dependence on China in a phased manner without any substantial extra investments,” said Multani. In the first phase, India may focus on the sectors that are included in the PLI scheme. The sectors such as electrical and electronic components comprise $26 billion in India’s imports from China, Whereas, Active Pharmaceutical Ingredients, Machinery and components, plastics and fertilizers are collectively contributing around $30 billion and can be the major exports, suggested Multani. In the second phase, labour-intensive sectors such as textiles, iron and steel, tanning, dyeing extracts, man-made filaments, furniture and lighting among others can also be considered for the import substitution and export promotion, he said. Export promotion strategy for 36 sub-sectors would have a positive cascading effect on the economy through forward and backward linkages in the industrial production processes, he added
India-Bangladesh cargo movement via waterways increased to 47.4 lakh tonnes in fiscal 2021-22—a 20 per cent rise as Bangladeshi manufacturers preferred the river routes for transporting raw materials from India. The figure is the highest since fiscal 2001-02, according to data from the Bangladesh Inland Water Transport Authority (BIWTA). The figure nearly doubled in four years from 24 lakh tonnes in fiscal 2018-19 due to a rise in cement production in Bangladesh, according to a report in a Bangladesh newspaper. During the last fiscal, Bangladesh vessels carried 42.18 lakh tonnes while Indian vessels carried 5.22 lakh tonnes. This is the third consecutive year cargo movement through waterways between India and Bangladesh has being growing. The pandemic, convenience and lower cost encouraged many businesses to prefer waterways to transport goods from India under a Protocol on Inland Water Transit & Trade between Bangladesh and India (PIWT&T) signed in 1972
Source: Fibre 2 Fashion
Claiming the recent fuel price hike as carried out by the Government will increase their production cost by Taka 75 crore a month, textile manufacturers in Bangladesh have demanded the Government pay them 50 per cent of the additional cost as subsidy. This was underlined in a press communiqué issued by the Bangladesh Terry Towel and Linen Manufacturers and Exporters Association and signed by its Chairman M Sahadat Hossain, which maintained the sector’s monthly production volume is around US $ 175 million of which 90 per cent is its production cost while adding the fuel price crisis will add around US $ 7 to 8 million to their production costs. Such a scenario might impact the industry badly if the Government delays taking steps to resolve the issue, further added the press release.
Source: Apparel Resources
A Vietnam-Taiwan textile and garment industry exhibition will open on August 23 in Ho Chi Minh City. A Vietnam-Taiwan textile and garment industry exhibition will open on August 23 in Ho Chi Minh City. The event is jointly held in both in-person and virtual forms by Taiwan Textile Federation (TTF) and the Vietnam National Trade Fair and Advertising Company (Vinexad), A Vinexad representative said around 60 Vietnamese garment makers and exporters and 13 Taiwanese textile producers, including those already operating factories in Vietnam, will participate in the event. Vietnamese enterprises hope to seek suppliers capable to meet their needs for quality fabric in making garment for the domestic market and export at the event. There will be nearly 150 B2B meetings in the framework of the exhibition. In the first seven months of this year, Taiwan exported 5.55 billion USD worth of textile and garment products, with shipments to Vietnam alone valued at 1.48 billion USD, mostly fabric./.
Source: Vietnam Plus
Company braces for more external supply chain volatility, cost increases In addition to Target unloading inventory already owned during the second quarter, the company has also started reevaluating inventory distribution across categories for a dramatic reduction going forward. “We took a hard look at sales trends and determined ideal inventory levels across every category for the remainder of the year,” said John Mulligan, EVP, chief operating officer. “As a result, we’ve meaningfully reduced our fall season receipt commitments in many discretionary categories.” In Q2, Target reduced fall season receipts in discretionary categories by more than $1.5 billion. This translated to an 85% or lower capacity at the company’s distribution centers through the remainder of the year, “even after the seasonal increase in holiday inventory is set to occur over the next two months,” he continued. A new low This represents the first time Target’s fall season inventory is projected to peak at a lower level than in spring, “providing another vivid illustration of the unique dynamics we’ve encountered so far this year, he said. Chief growth officer and EVP Christina Hennington said Target teams spent much of Q2 “aggressively working through excess inventory at every point along the product journey, from vendor to guest.” This included rigorously reforecasting expectations for the balance of the year and beyond and determining where to reduce future receipts and orders. “In some cases, it meant working with vendor partners to reduce our fall receipts in light of our updated expectations,” Hennington went on. “It also meant quickly building compelling promotional plans to drive unit velocity for products we already owned.” As it relates to home, the category posted a low-single-digit decline in Q2 compared to last year, “despite affinity for our seasonal assortments and encouraging early results in back-to-school and back-to-college,” she said. Consistent with the first quarter, mix accounted for approximately 10 basis points of pressure, added Michael Fiddelke, EVP, chief financial officer. “The softness in higher-margin categories like apparel and home was largely offset by softness in lower-margin discretionary categories, most notably electronics,” he said. Another shift for receipt intake calendar While stress from excess inventory has presented the biggest challenge to Target’s team this year, dealing with high costs and volatility in the external supply chain has run a close second, Mulligan noted. On the upside, lead times in global shipping have begun to decline and spot rates for shipping containers have fallen somewhat while petroleum prices and fuel surcharges have been easing, compared with the peak rates as recent as early Q2. “[But] conditions remain highly unfavorable when compared to the years before the pandemic,” Mulligan warned. “And we’re mindful of the continued risks in the months ahead, including potential slowdowns at the West Coast ports, a reversal of the recent decline in energy costs, and the possibility of additional COVID lockdowns in China.” In addition, Target continues to encounter “far too many delays affecting overseas shipping,” which requires the company to pay spot rates to move containers – “rates that are well above our pre-negotiated shipping rates.” In light of these ongoing macro impacts, the company is actively moving receipt dates earlier than it would have in the past, in hopes of mitigating the business risk from receiving shipments later than expected. Investing in the store fleet These headwinds have also turned much of Target’s attention toward capital expenditures this year on its store network, including expanding its footprint with up to 24 new locations and updating hundreds of existing units. The first and largest investment within this endeavor is the store remodel program, “where we completely transform the space in the existing location, modernizing the shopping experience while enhancing the productivity of our team,” Mulligan said. To date, more than 100 remodels are currently in flight across the country of the almost 200 targeted for this year. Smaller investments to hundreds of other locations are also in the works. This includes the“hundreds of fulfillment remodels scheduled for completion this year to, among other things, increase capacity of drive-up, in-store pickup, and Shipt services. Target is also making significant investments to its internal supply chain, including: building additional upstream capacity to its network; the addition late last year of two upstream distribution centers; and the opening of six new upstream facilities over the next several years, including two on track to open in 2023.
Source: Home Textiles Today
The country's imports meant for manufacturing its readymade garments show an unexplained trend if compared with apparel exports. For example, the RMG sector's imports of raw materials, such as cotton, synthetic fibre, yarn and other accessories, rose 51.2% year-on-year in FY22, but exports saw only 24.6% growth. This means the growth in raw material imports was nearly double the growth of exports – a phenomenon that has never been witnessed before. Central bankers and industry people can only guess the reason behind. "The figures mean exporters sold their products at a loss, which is not true for the overall industry," said SM Majedur Rahim, director of Giant Group that exports $40 million worth of products annually. He said import growth should not be higher than that of exports because it cannot be sustainable business. Rising prices of raw materials in the global market may push import costs up, reducing profit margin, but exporters are still not making a loss, he added. On condition of anonymity, a central banker said there may be a possibility of overinvoicing. The issue of mismatch between imports and exports has not come to the attention of the relevant department of the Bangladesh Bank. An investigation is needed to find out the real reason behind it, he noted. For a comparative study, one can look at import and export figures for the industry in FY21. While raw material imports grew 4.8% in that fiscal year, exports increased by 18.6%. So, export growth was much higher than import growth, which should be the case because of value addition. Figures also reveal that Bangladesh's RMG is also losing out on value addition. In FY21, raw materials made up 69% of exports value. But this dramatically shot up to 83% just a year later. In the January-March quarter of the last fiscal year, the value was over 90%, leaving a thin margin for exporters. With such a thin margin, exporters cannot meet their operational costs. But an exporter is not supposed to import raw materials worth more than 75% of exports value as per the Bangladesh Bank rule. Industry insiders say exporters cannot survive if they import more than 80% of export value as there are other operational costs. The import growth of garment-related goods was 58% in the last fiscal year, of which growth of raw cotton import was 39.32%, yarn 115%, textile and articles thereof 51.63%, staple fibre 50.89% and dyeing and tanning materials 24.60%, data from the central bank shows. Apparel also led capital machinery imports After three years of negative growth, the country saw a big jump in capital machinery imports in the last fiscal year led by the apparel industry. The capital machinery imports grew by 40.78% in FY22, overcoming the negative growth of 12.39% in the previous fiscal year. Textile and garment sectors mostly led the imports in the last fiscal year, registering 24% and 46% growth respectively. The capital machinery imports of these two sectors were negative in the last three years. How garment exporters explain the mismatch Kutubuddin Ahmed, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "The growth comparison between raw material imports and exports will not be justified as we textile makers import cotton at least five months before a shipment of readymade garments." He further explained that spinning mills import raw cotton at least two months before getting orders, shipping lines take at least one and a half months and garments makers also receive orders at least two months before shipments. "The textile and apparel industries always react like Rhinoceros [slow to react]," he added. Echoing Kutubuddin, BGMEA acting president Shahidullah Azim said, "We always ship goods a minimum 60 days after fabric imports and in some cases, we procure raw materials at a time to meet a long-time demand." Replying to a query, Shahidullah Azim said, "There is no chance of over-invoicing at this moment as garment exporters are trying to save their back." A number of brands have deferred shipments owing to global economic slowdown, while some buyers are cancelling orders, he added. Kutubuddin Ahmed, chairman of Envoy Textile, said, "Last fiscal year, cotton prices almost doubled, which was also reflected in our raw material import payments, but buyers are not willing to pay in line with that." BKMEA Executive President Mohammad Hatem said the apparel sector's value addition had gone slow in the last three fiscal years owing to some valid reasons – during the pandemic year of FY20, a number of buyers cancelled over $3 billion worth of apparel orders and a part of these orders shipped at discounted prices in the following year. In the pandemic year, a number of brands had gone bankrupt and they did not pay their exporters, and last year, all types of raw material prices almost doubled, he added. At this moment, local sourcing of fabrics has been hampered because of power supply shortage. That is why garment exporters are importing those at high prices to meet their export deadlines, he noted. LETTER But the additional costs will not be adjusted with product prices, Mohammad Hatem said.
Source: TBS News
