Introduced with the intention of making India's textile industry competitive and strengthening exports, the Rebate of State and Central Taxes and Levies (RoSCTL) scheme is losing its sheen. According to garment exporters, the scheme in its current form is eroding the margins of the domestic textile industry, affecting competitiveness of apparel and garment exports.The scheme provides rebate against the taxes and levies paid by the exporters on inputs. This rebate has been converted into scrips that are tradable i.e. exporters can sell scrips to importers and the importers, in turn, can pay import duty with these scrips as an alternative to cash payments. While the scrips were at discount earlier also, later the discounting went up from 2-3% to about 20%. Currently, it is in the range of 10-15% and keeps fluctuating. The discounting of scrips benefits importers, who take undue advantage at their cost, say exporters. “The aim of the scheme was to make India's textile sector competitive against Bangladesh and Vietnam . The demand has been in line with the government's intention, which was always to reimburse the exporters but due to the discounting of scrips, the purpose of the scheme has been defeated,” said Vijay Jindal, president, Garment Exporters and Manufacturers Association (GEMA). According to him, exporters are likely to incur losses of Rs 6,000 crore. The textile industry wants the government to restore cash reimbursement instead of tradeable scrips.
Benefiting importers
The discount on tradeable scrips has gone up from 3% to about 20%, benefiting importers who are taking undue advantage at the cost of exporters, says industry
Source: Tribune
The mixing of synthetic or semi-synthetic fibre with cotton to make yarn is hurting the business of the powerloom owners from the textile town of Ichalkaranji. The fibres are spun into yarn, which is then converted into garment and then sold to the dress makers. The cotton yarn should be solely made from cotton fibre. The mixing of the other types of fibres deteriorates the quality of the garment made. Powerloom Owners’ Association members on Monday met the Merchant’s Association and requested the office-bearers to warn the suppliers not to blend the cotton and synthetic fibres to make the yarn. They also demanded that if the traders want to supply such blended yarn then it must be mentioned on the packaging along with the proportion of the synthetic fibre used in the yarn. Vinay Mahajan, president of the Powerloom Owners’ Association, said, “We are losing the business due to such mixing. The mixed yarn does not produce good quality garment. The dyeing process gets difficult and can be easily found by anyone buying it as the colour used for cotton yarn fades for the synthetic yarns. The mixing of synthetic fibre with cotton fibre without the yarn buyer’s knowledge invites criminal action against the suppliers.” Every day, around 150-200 truck load of yarn is supplied to the powerlooms from Ichalkaranji. Most of the yarn is brought from Andhra Pradesh and Tamil Nadu’s spinning mills. “The spinning mill owners are resorting to such blending because the price of cotton has shot up to Rs 84,000 per 165 kg package. The price was half just a few months ago. The synthetic fibre produced using chemicals is cheaper and the powerloom owners cannot easily find the mixing until it is sold further to dyers for colouring the garment. Many dyers have returned the garment after dyeing which is of no use to us,” said Mahajan.
Source: Times of India
Opposing the power tariff hike in Tamil Nadu, many powerloom weaving units– across hubs like Coimbatore and Tirupur districts– are on indefinite strike. The State Government recently announced a 30 percent hike in electricity prices,which will negatively impact the business of over one lakh units. It is being said that a total of Rs. 35 crore worth production of weaving has been hit per day in Coimbatore and Tirupur districts, following the power loom weavers’ strike against the electricity tariff hike. As per reports, Federation of Tamil Nadu Powerloom Unit Owners’ Association has decided that powerloom units will not pay the revised tariff. Many trade bodies across the Tamil Nadu have opposed the State Government’s decision of power hike and urged to take back this decision. Ravi Sam, Chairman, The Southern Indian Mills’ Association (SIMA), has advised the textile industry to give priority in making investments in the renewable energy generation (Wind and Solar Power) to remain competitive and fulfill sustainability obligations. “As the grid power has crossed Rs.8 per unit in almost all the major textile manufacturing states except the states having hydel power generations, the power intensive textile industry has lost its global competitiveness on power front,” he said and further added that since the power cost accounts over 40 per cent of yarn manufacturing cost, it has become essential for the textile mills to plan for 100 per cent captive power generations of wind and solar power.
Source: Apparel Source
• The minister met his counterpart Saudi Minister of Commerce Dr. Majid bin Abdullah Alkassabi to discuss economic ties between the Kingdom and India India and Saudi Arabia plan to strengthen their long-held ties through sustainable initiatives that will expand the opportunities for both nations, Union minister of commerce and industry Piyush Goyal said. Goyal visited Saudi Arabia from September 18-19 to attend the Ministerial meeting of the India-Saudi Arabia Strategic Partnership Council. Along with Goyal, Saudi Minister for Energy, Prince Abdulaziz bin Salman Al-Saud co-chaired the Ministerial meeting of the Committee on Economy and Investments of the India-Saudi Arabia Strategic Partnership Council. The minister met his counterpart Saudi Minister of Commerce Dr. Majid bin Abdullah Alkassabi to discuss economic ties between the Kingdom and India. The Strategic Partnership Council was instituted in October, 2019 during the visit of the Prime Minister of India to the Kingdom of Saudi Arabia and has two main pillars i.e. Political, Security, Social and Cultural Committee and the Committee on Economy and Investments. The notable outcomes of the Ministerial Meeting are: 1. Streamlining efforts to realize the announcement made by Crown Prince Mohammad Bin Salman, during his visit to India in February 2019, of investments worth USD 100 Billion in India. 2. Endorsement of the 41 areas of cooperation identified by the technical teams under the 4 broad domains of Agriculture & Food Security; Energy; Technology & IT; and Industry & Infrastructure. 3. Agreement to undertake implementation of the priority projects in a time bound manner. Priority areas of cooperation include: 4. Collaboration in digital fintech sector through operationalization of UPI and Rupay Card in the Kingdom of Saudi Arabia. 5. Re-affirmation of continued cooperation in joint projects including the West coast refinery, LNG infrastructure investment and development of strategic petroleum storage facilities in India During the visit, Minister met Dr. Majid bin Abdullah Al-Kassabi, Minister of Commerce of Saudi Arabia, and held wide ranging discussions on the entire gamut of bilateral trade, commerce and investments linkages. Diversification and expansion of trade and commerce, removal of trade barriers, including the outstanding issues related to sanitary and phytosanitary measures and trade remedies, automatic registration and marketing authorization of Indian pharma products in Saudi Arabia, feasibility of institutionalizing Rupee-Riyal trade, introduction of UPI and Rupay cards in Saudi Arabia; were amongst the key points of discussion. “Had a fruitful meeting with Dr. Majid bin Abdullah Al-Kassabi, Minister of Commerce, KSA. Discussed ways to attract greater investment & further diversify bilateral trade to boost economic ties between India & Saudi Arabia", the Minister tweeted after the meeting. Piyush Goyal also met Khalid Al-Salem, President of Royal Commission of Jubail and Yanbu, Eng. Saad Al-Khalb, CEO of Saudi EXIM Bank, and other senior officials of the Ministry of Industry, Saudi Arabia. According to the ministry, discussions were held on a wide range of topics such as institutional tie-up of the EXIM banks of the two countries, joint projects in third countries, mutual recognition of standards, establishment of startup and innovation bridge, strengthening collaboration in infrastructure development, particularly in the domains of construction, railways, industrial and manufacturing collaboration in Pharmaceuticals, Automobiles, Petrochemicals, Specialty chemicals, Technical textiles, mining and increasing project exports from India. “Had a productive meeting with Khalid Al-Salem, Chairman of the Royal Commission for Jubail & Yanbu, Saudi Arabia. Identified a range of mutually beneficial opportunities to further strengthen economic cooperation between the two countries", Goyal tweeted on his meeting. During the visit, Goyal also participated in a CEO Roundtable with prominent businessmen in Saudi Arabia. Discussions focused on encouraging increasing exports from India, facilitating inward investments into India, innovative ways and means of deepening and broad basing bilateral economic linkages. “Had an enriching interaction with CEOs of companies from different sectors in Saudi Arabia. Delighted to see their enthusiasm towards further strengthening trade & investment linkages between the two countries", he tweeted about the interaction. Goyal also interacted with Minister of Energy of Saudi Arabia Prince Abdulaziz bin Salman Al Saud. “Discussed how energy security with climate change sensitivity can deliver economic growth & prosperity. Deliberated on stronger partnership in renewable energy between our two countries", he tweeted about the meeting. Goyal also inaugurated “The India Week" in Riyadh as part of the ongoing efforts of Embassy of India in Riyadh to celebrate Indian products especially Food products like Millets, Textiles etc. “Brand India shining bright in Saudi Arabia!" the Minister tweeted. On his visit, the minister was accompanied by a delegation comprising officials of the ranks of Additional Secretaries and Joint Secretaries from the Ministries of Agriculture, Commerce, Electronics and IT and from NITI Aayog.
Source: Live Mint
India’s apprehension and decision not to join was perhaps due to a fear that Chinese goods would enter duty-free into India, swamping the home market. Three years ago, India abruptly walked out of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement among 15 nations, including China. The RCEP trade negotiations had been going on for nearly 10 years, during which India had been an active and enthusiastic participant. The present RCEP grouping represents about 30% of global GDP and rising. Intra-RCEP trade without India is worth $2.3 trillion. The RCEP agreement finally came into force on January 1 this year (they were waiting and hoping India would join). This agreement encompasses broad areas of cooperation and seeks to eliminate nearly 90% of all tariffs, making it a sort of economic union. India’s apprehension and decision not to join was perhaps due to a fear that Chinese goods would enter duty-free into India, swamping the home market. But our trade deficit with China has anyway been growing steadily for the past three years, and even total trade volume has increased, notwithstanding the clash in Ladakh. India could benefit from the ‘China plus one’ strategy of many global investors, as they seek to set up factories outside China, in other countries like Vietnam, Thailand and India. But by not joining RCEP, India may have dented its chances of attracting investments in various parts of the manufacturing supply chain in sectors like electronics, textiles and automotive. That is because when investors choose to locate their investments, which span a whole value chain, and when the chain has to cross boundaries, they would choose to be inside RCEP territory to enable seamless movement of goods. If agreement with Australia, too, the 13th out of the 15 RCEP nation. There are three big trade groupings in the world that straddle big parts of Asia. Apart from RCEP, the other two are the Comprehensive and Progressive Agreement for TransPacific Partnership (CPTPP) and the new Indo-Pacific Economic Framework (IPEF). The IPEF, launched in May, includes 14 countries, and CPTPP includes 11 countries. Australia, New Zealand, Malaysia, Singapore, Vietnam, Japan and Brunei are members of all three groupings. India is not present in two out of the three. China, of course, is not in IPEF or CPTPP, because these two groupings were brought together explicitly to keep China out. The CPTPP is a modified version of TPP, which was led by the US when Barack Obama was President. But under Donald Trump, the US withdrew from TPP and kept out of CPTPP, too. It was meant not just to be a trade agreement but to influence and shape the emerging trade rules in the Asian region, and to counter China’s clout. Thus, it has provisions that cover investment rules, labour and environmental standards, greater integration of manufacturing value chains, etc. The CPTPP is ambitious and is now alluring enough for even China to be knocking on its doors. South Korea and the United Kingdom may be seeking entry, too. Note that Japan now has a free trade agreement with the European Union since 2018. That means the EU, too, has a foot in. The United States is paying a price for staying out of CPTPP (and, of course, the Chinadominated RCEP), in terms of lost trade opportunities and decreased geopolitical clout. That explains the aggressive initiative it has taken in the formation of IPEF. This 14- nation grouping represents 28% of global GDP and a substantial trade volume, too. It has four pillars, comprising trade, supply chains, tax and anti-corruption, and clean energy. The IPEF allows members to opt-out of any pillar. Here, too, India displayed some squeamishness, opting to stay out of the trade pillar. India’s trade minister said. Japan could be detrimental to developing countries like India. That was effectively implying that India would choose to adhere to lower labour protection standards or allow more “dirty” industries with lax environmental standards, to gain a competitive advantage in global trade. But those days are gone. And India has de facto agreed to harmonise labour and environmental standards with the West since it is also pursuing a free trade agreement with the European Union. So, what is the point of staying out of the IPEF’s trade pillar? Indeed, right after opting out of RCEP, India has aggressively pursued bilateral free trade pacts with Australia, the UK, UAE, Canada and the EU. Why then the hesitation to sign up for regional and multilateral groupings like the IPEF? India’s growth is critically dependent on being globally competitive in both manufacturing and services. We also have to be committed to the principle of openness in international trade. Our tariffs should be moderate, and we have to desist from frequent and instinctively protective measures to shield our domestic industry from global competition. And with our commitment to employment generation (not just value addition), India can benefit more from global engagement. The window of opportunity due to ‘China plus one’ will not be open forever. Labourintensive exports give us our competitive edge, be it in textiles, tourism and agroprocessing, or software services at the higher end. It is in our interest to embrace free or nearly-free trade across all sectors. In a world slowing down due to a recession, even if our share of trade goes up from 3% to 4% of global trade, that would be a huge boost for the Indian economy. And that is eminently feasible only if we are less afraid of open and free trade.
Source: Deccan Herald
The report has not been submitted so far, even though the GoM was planning to do so by September 16. The Goods & Services Tax (GST) Council may meet in October instead of September, as the group of ministers (GoM) on casinos, race courses & online gaming, as well as the panel on the GST Appellate Tribunal (GSTAT), are yet to submit their reports, sources told FE. With no unanimity about taxing at the rate of 28% on the full value of the consideration, without making a distinction between games of skill or chance, the GoM led by Meghalaya chief minister Conrad Sangma has sought legal opinion on whether or not the prize money in online gaming and horse racing is covered within “actionable claim”. The report has not been submitted so far, even though the GoM was planning to do so by September 16. It will likely be submitted after another meeting of the GoM to include a legal view on the matter later this month, sources said. In the last GoM meeting on September 5, West Bengal and Uttar Pradesh had supported goods and services tax (GST) on online gaming, horse racing and casinos at a uniform rate of 28% on the full value of the consideration, without making a distinction between games of skill or chance. The GoM, in its first report, has recommended that in the case of online gaming, the activities should be taxed at 28% on the full value of the consideration, by whatever name such consideration may be called, including contest entry fee, paid by the player for participation in such games. Since GST is levied on online skill-based gaming at 18% currently on the platform fee (about 20% of the contest entry fee), the tax incidence on the gaming industry will rise. In the case of racecourses, the GoM had earlier said that GST should continue to be levied at the rate of 28% on the full value of bets pooled in the totalisator and placed with the bookmakers. In the case of casinos, GST was to be applied at the rate of 28% on the full face value of the chips/coins purchased from the casino by a player. In the case of casinos, once GST is levied on the purchase of chips/coins (on face value), no further GST was to apply to the value of bets placed in each round of betting, including those played with winnings of previous rounds, the GoM had said in its first report. On August 18, the GoM on tribunals convened by Haryana deputy chief minister Dushyant Chautala finalised that the GST Appellate Tribunal (GSTAT) be set up with a principal bench in New Delhi and similar benches at various other locations. However, it is yet to submit the report to the council. According to sources, each of these regional benches will consist of a judicial officer equivalent to a high court judge and a senior tax officer, from either the Centre or the state, as a technical member. A state can host a maximum of five benches and the state governments would be given certain relaxation on the nomination of technical members.
Source: Financial Express
• India's top lender State Bank of India asked exporters to avoid deals with Bangladesh in dollars and use rupee and taka instead • The move seem to curb exposure to the Bangladesh's falling reserve Top lender State Bank of India has asked exporters to avoid settling deals with Bangladesh in the dollar and other major currencies as it looks to curb exposure to Dhaka's falling reserves, according to an internal document and a source. Bangladesh's $416-billion economy is battling rising prices of energy and food as the Russia-Ukraine conflict widens its current account deficit and dwindling foreign exchange forces it to turn to global lenders such as the International Monetary Fund (IMF). "The country is facing a shortage of foreign currency due to higher import bills and weaknesses of Bangladeshi taka against dollar in recent times," the SBI said in an Aug. 24 letter sent to its branches and seen by Reuters. The letter and its contents have not previously been reported. The SBI did not immediately respond to an e-mail seeking comment. The decision not to increase exposure to the dollar and other foreign currencies in relation to Bangladesh stemmed from the current economic situation and the neighbouring nation's shortage of foreign currency, the bank said in its circular. "However exposure in Indian rupee (INR) and taka will continue," it added. Bangladesh's foreign exchange reserves declined to $37 billion by Friday from $48 billion a year earlier, according to data from the central bank, which provides import cover of just five months. Finance ministry officials have said Bangladesh is seeking a $4.5 billion loan from the IMF, in excess of its maximum entitlement of $1 billion under the IMF Resilience and Sustainability Trust. A source familiar with the matter said SBI did not want to increase its exposure to Bangladesh. "We have an approximate exposure of $500 million to Bangladesh and have taken the decision not to grow it further aggressively, and maybe, even reduce it as needed, with the news surrounding the economy," added the source, who spoke on condition of anonymity. Bangladesh is just one of India's neighbours in financial distress. The island nation of Sri Lanka is grappling with a financial crisis as its central bank reserves stand at just $1.7 billion at a time of galloping inflation and severe shortages of food and fuel that sparked protests and a change of government. And Pakistan's central bank reserves of $8.6 billion are sufficient for just about a month of imports. TRADE IN LOCAL CURRENCY Bangladesh wants to cut dependency on the dollar, commerce minister Tipu Munshi said last week, and it does not see a problem in dealing in local currencies. Speaking at an event in Dhaka, he was responding to a query on the growing focus on local currency trade, and added that the finance ministry was looking at ways to do this. However, the Bangladesh central bank's executive director, Serajul Islam, told Reuters, "No such decision has been taken yet," in reference to trade in local currencies with India. Last week, the Bangladesh central bank freed up banks to do transactions in Chinese yuan, so as to enable trade with China. Last month, rating agency Standard & Poors affirmed its stable outlook rating for Bangladesh, saying it expected its external position to stabilise within a year. However, the agency said it might lower the ratings on Bangladesh if net external debt or financing metrics worsen further as higher commodity prices and strong imports could add to weakening in the taka and drain foreign exchange reserves. "Despite its moderate net debt position, the Bangladesh government's interest burden is considerable," the agency added. "Its foreign currency-denominated debt, though predominantly borrowed from multilateral and bilateral sources, is subject to exchange rate risk." An Indian textile exporter, who asked not to be identified, said banks and importers in Bangladesh were not willing to trade in rupees, however, and preferred the taka currency instead. Also, India has not yet clarified if exports denominated in rupees will receive the same benefits as those in dollars, he said. SBI's circular is very alarming, as they have said not to take exposure on Bangladesh exports," the exporter added. "Bangladesh is a major trading partner and if a premier bank like SBI does not take exposure, how will the trade grow? It is going to go down." India’s exports to Bangladesh rose 17.5% to $4.94 billion in the period from April to July, or the first four months of the fiscal year to March 31, 2023, while imports were up about 11% at $580.7 million, government data showed.
Source: Reuters
‘Even earlier, 40-50 were being sold weekly due to high yarn prices’ The power tariff hike has come as the proverbial last straw on the camel’s back as far as power loom units in Tiruppur are concerned. Many power loom unit owners said they dismantled machinery and sold them as scrap in the past six months because they were bogged down by high yarn prices and low weaving charges (given by master weavers), The revised power tariff will force many more to follow suit, they said. According to industry sources, Tiruppur and Coimbatore districts have over 1.5 lakh power loom units, from which 40 to 50 power loom machines have been sold as scrap every week for the past six months. Power loom owner K Balasubramaniam (42) said, “I have been in the business for over 20 years. Low weaving charges and the hike in yarn prices affected me. Though we went on strike from December 2021 to January 2022 and textile companies increased weaving charges to Rs 4.95 per metre, they reduced it to Rs 4.50 per metre in two months. Besides, We didn’t get warp yarn as textile firms couldn’t buy yarn due to high prices. So I decided to sell my machines for scrap. I now work as a driver.” B Rajakumar (41), another power loom weaving unit owner, said, “I have 12 machines, and due to poor weaving charges, I can’t afford to operate the unit. With the increase in power tariff, I will have to pay a power bill of Rs 55,000, instead of Rs 22,000, every two months.” Another power loom weaving owner V Shankar (35) said, “In my 25 years of experience, this is the first such crisis. I run my machines in a premises rented for Rs 6,000 per month. With a low weaving charge and hike in power tariff, many power loom units will not survive, as each unit has at least four machines, so, the power consumption will be more than 1,000 units. If the tariff hike is not recalled, I will have to discard my machines.” Coimbatore-Tiruppur districts’ power loom unit owners president C Palanisamy said, “Hundreds of machines were discarded over the past six months. When the State proposed the power tariff hike, we passed resolutions and met top Tangedco and government officials but didn’t get any respite.” A TANGEDCO official said, “Power loom operators can submit individual petitions to TN Electricity Regulatory Commission which has accepted Tangedco’s tariff hike proposal. The commission is the sole authority on these matters.” An official of the State’s Department of Textiles said, “Demand and supply decide the price of cotton. It is up to the Union government to decide on procurement of cotton through Cotton Corporation of India and directly supply it to mills.”
Source: New Indian Express
In July, the RBI unveiled a mechanism to settle international transactions in rupee to promote the growth of global trade, with emphasis on exports from India The Centre is pushing for bilateral trade with Cuba and its settlement in rupee as a part of its strategy to internationalise the domestic currency. A delegation from Cuba, including officials from its central bank, met Indian government officials and banks last month to discuss bilateral trade and settlement using the Reserve Bank of India’s (RBI’s) payment mechanism in rupee, said people aware of the matter. Since the Cuban nation has opened up its economy and is looking to implement reforms to attract investments from India, Cuban banks have evinced interest in opening special rupee vostro accounts (SRVAs) with Indian banks. The move is an effort by the Centre to lay the groundwork for the central bank’s new framework for trade settlement in rupee, pushing for the local currency’s internationalisation. The meeting was held on the directions of the Department of Financial Services under the Ministry of Finance, said an official. In July, the RBI had unveiled a mechanism to settle international transactions in rupee to promote the growth of global trade, with emphasis on exports from India. More importantly, the move is a recognition of the Indian rupee as an international currency. According to the mechanism finalised by the RBI, banks of partner countries can approach authorised dealer (AD) banks in India for opening SRVAs. The AD bank will then have to seek approval from the central bank with details of such an arrangement. The official cited earlier said that the Cuban delegation that had visited India last month had informed India that the country has implemented several reforms that could be explored by Indian companies as well as banks to give trade ties and the bilateral payment mechanism a leg-up. Although India’s relations with the Caribbean nation have traditionally been ‘warm and friendly’, the bilateral trade between the two nations has been limited. The total trade between both countries stood at $27.57 million, which is negligible compared to India’s total trade of over $1 trillion during 2021-22. India exported goods worth $26.57 million during the last fiscal year, while imports were to the tune of $1 million only. The main items of Indian export to Cuba are pharmaceutical (pharma) products, organic chemicals, plastic products, medical equipment, textiles, metals, and mineral oil products. On the other hand, India imported mainly pharma and tobacco products. Trade experts said one of the reasons for Cuba being interested in rupee trade could be a shortage of foreign exchange. Therefore, dealing in local currency could be a good way to push trade. Besides, the country is set to host an international fair in November to attract investment. While the rupee trade mechanism is yet to be implemented on the ground by banks, public sector banks like State Bank of India, among others, have already started working to make the RBI’s latest mechanism operational. Earlier this month, the Centre, along with the RBI, prepared an action plan for facilitation of special rupee accounts for trade settlements, which included nudging banks and the Indian Banks’ Association to reach out to foreign banks for opening such vostro accounts. Banks have also been asked to process over 115 proposals at the earliest.
Source: Business Standard
Combined head-haul and regional trade volumes fell by 0.4 per cent year on year (YoY) in 2022 first half, according to Container Trade Statistics. Head-haul volumes were 1.3 per cent lower than a year ago, while regional volumes were 0.6 per cent higher. The full year volume estimates are 77.8 million TEU and 63.7 million TEU for head-haul and regional trades respectively. Under normal market circumstances, the peak season in key head-haul trades should lift volumes in the third quarter (Q3). However, recently released volume statistics indicate that there may be no peak season this year, but it is quite likely that volumes will slow in the fourth quarter, International shipping association BIMCO said in a release. BIMCO has offices in Houston, London, Copenhagen, Athens, Singapore and Shanghai. Container volumes in head-haul and regional trades are the key drivers of container vessel demand, average container rates, liner operator profits, and, since 2020, port congestion. In July, the combined head-haul and regional trade volumes fell 1.5 per cent month over month (MoM) but were up by 1.5 per cent YoY. While this initially seems to be a relative improvement in volumes, compared to first half results, the figure appears in a different light when historical seasonality is considered, BIMCO observed. As an example, in the Far East to North America trade lane, volumes in July have historically been on average 7 per cent higher than June volumes due to the beginning of the peak season. However, this year volumes were 3.3 per cent lower in July than in June. Applying historical seasonality, volumes should have been nearly 200,000 TEU and 10.6 per cent higher than actual volumes. Focusing on the rest-of-year period from August to December, calculation indicates that combined head-haul and regional trade volumes will be down by 1.9 per cent YoY. From a congestion perspective it is interesting to note a 10.7 per cent YoY and 8.2 per cent YoY fall in import volumes to the Europe and Mediterranean region and North America respectively, BIMCO said. Considering the risk of energy shortages in Europe during winter and that conditions for consumers and businesses are likely to get worse before they get better as the year progresses, it is possible that volumes could end even lower, BIMCO added.
Source: Fibre2fashion
Ethiopia, China, and Germany have pledged to increase their cooperation regarding the promotion of the social, labour, and environmental standards in the textile sector of Ethiopia. Representatives of the three countries endorsed their commitment towards the ‘Sustainable Textile Investment and Operation in Ethiopia’ project at a recent conference in Addis Ababa, Ethiopia’s capital. The project, which is a collaboration between the China National Textile and Apparel Council (CNTAC), Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ), Ethiopian Textile Industry Development Institute (ETIDI), and the United Nations Industrial Development Organisation (UNIDO), intends to address challenges at a global level and endorse the implementation of the 2030 Agenda for African and Asian countries in the textile sector. The initiative mainly focuses on Chinese investors and their Ethiopian business partners in the Ethiopian textile and garment industry. “So far, China is one of the biggest investors in the textile sector in Ethiopia, with a total of about $450 million. We have over 30 Chinese textile companies in Ethiopia,” Zhao Zhiyuan, Chinese Ambassador to Ethiopia, was quoted as saying at the conference according to various Chinese media reports. The agreement between the three nations took place at the two-day conference held at the United Nations Conference Centre (UNCC) in Ethiopia's capital, Addis Ababa, recently. The conference aimed to foster sustainable textile industry development and increase awareness of the environmental, social, and governance (ESG) framework among all key players in the textile industry in Ethiopia.
Source: Fibre2fashion
The Ready-made Garments Export Council of Egypt (RMGEC) said the sector’s exports hit US$1.44 billion in the period from January to July 2022, marking a 35 percent rise in comparison with the same period in 2021. In a statement Monday, the council said the US led the importing countries from Egypt in terms of ready-made garments, as its imports rose to $ 820 million in the first seven months in 2022 against $595 million in the same period 2021. Egyptian ready-made garments exports to Europe also increased by 26 percent to hit $266 million in the above mentioned period, compared to $ 212 million in the same period last year. Exports to Arab countries increased to 33 percent, reaching $195 million in the seven months, against $146 million in the same period last year. The council noted that it will take part in the United Nations Climate Change Conference (COP27) – which will be held in Egypt in November – in order to review the latest achievements in the clothes and textiles sector in the field of recycling and turning the industry’s waste into a chance for contributing to sustainable economic growth.
Source: Egypt Independent
There is a strong argument for suggesting our garment industry has too many of its eggs in one or two baskets, leaving it massively over-exposed. In the US and Europe, a recession is coming. As an apparel maker, I can already feel the early signs of a storm heading our way. Orders have been decreasing for many of us in the industry since this summer, after picking up dramatically at the back end of last year. The issues around a recession are well-documented. High and rising inflation in the US and much of Europe; soaring energy prices that are placing businesses and households under huge financial strain; fallout from the pandemic, which means many governments have huge debts and are unable to do much more to bail out economies – all of these are factors. Most seasoned economic observers believe that 2023 will be tough. Perhaps the garment industry in Bangladesh could use the next 12-18 months to think carefully about which markets it targets. At the moment, there is a strong argument for suggesting it has too many of its eggs in one or two baskets, leaving it massively overexposed. Allow me to explain. At present, around 60 percent of Bangladesh’s garment exports go to the EU. Twenty percent go to the US. The rest are exported globally. These figures have changed slightly in recent years, with the EU gaining a larger share (up from around 52 percent over the past decade) at the expense of the US, where exports have fallen in terms of market share. But between the two, these markets have for some time represented 80 percent of garment exports from Bangladesh. Is this healthy? On the one hand, it is a cause for celebration that we have been so successful in penetrating these two huge markets. On the other hand, no business wants to become over-reliant on certain customers or, in this case, certain regions of the world. This is why I believe, as apparel makers, we should begin to focus more heavily on new and emerging markets. Two obvious examples are India and China, although there are others such as Australia and South America. China and India are the only countries in the world with a population size of over a billion. China’s population is around 1.4 billion, while India’s population is approximately 1.39 billion. Together, the two countries make up around 36 percent of world population. To offer some perspective, the entire continent of Europe makes up only nine percent of the global population. This alone should be enough to make exporters sit up and take notice. More important than this, however, is spending power, which is increasing in both China and India. China is now the largest middle class market globally, with over 900 million people. According to some estimates, this middle class collectively spends more than USD 20 billion per day. There’s more. China’s middle class is expected to expand in the next few years. The World Bank suggests China’s middle class is expected to grow by six percent and reach over 1.2 billion by 2030. By this year, it is estimated that the middle class spending share in China will be 87 percent. This is a huge amount of spending power for Bangladeshi exporters to tap into. India’s growing middle class also offers huge promise. India’s middle class is expected to have a growth rate of 8.5 percent until 2030, according to the World Bank. At the present time, the middle class population in India is almost 400 million. Obviously this is not as big as China’s, but this figure is set to double between now and 2030, giving India a middle class population of 800 million within eight years. The middle class spending share in India is currently over 70 percent and by 2030, the spending share of India’s middle class is projected to reach over 80 percent. This distinction of middle class is important. As middle class populations grow, spending power increases. Countries with higher middle class populations have a higher propensity to import foreign goods. Expect imports into China and India to steadily increase over the next few years. So what next? I was encouraged recently to follow Prime Minister Sheikh Hasina’s four-day trip to India. This is seen by many observers as the beginning of growing bilateral cooperation between the two neighbours. Much of the talk will have been about inward investment opportunities, but garment makers in Bangladesh should be following such talks closely. There is no reason why Bangladeshi garment makers should not view India as an opportunity for growth. We could also be doing more to increase our presence in China. China obviously has its own textile industry already, but this should not rule it out as an export opportunity for Bangladesh. In fact, we can compete very well with China on price and, in any case, China’s textile sector is very focused on high-end and technical textiles. Bangladeshi garment makers could complement this work. In the coming months and years, I see a huge opportunity for Bangladesh to extend its export reach way beyond the US and EU. By limiting ourselves to these two markets, we are missing out on a whole world of opportunities. We are also leaving ourselves hugely exposed to economic shocks in the Western world. This is an unhealthy situation. As the last few years and the pandemic have shown, nobody can ever be quite sure of how global events might unfold in the future. It pays to hedge your bets as an exporter.
Source: Asia News
The controversies surrounding the effectiveness of the various funds for the revival of the country’s textile industry are not new, having been raging for some time. Right from the administration of General Ibrahim Babangida when the first real effort to rehabilitate the sector was made with the establishment of a N100 billion Cotton, Textile and Garment Revival Fund, lots of challenges still persist in the sector. These include issues such as the high incidence of smuggling, protracted import culture in the country and the often conflicting policies of government. As has been muted in various circles, these challenges will invariably continue unabated except the country successfully transits from its current consumption-oriented economy to that of production. The protracted import orientation in the country has led to an unhealthy taste for foreign textile and garment wears, usually displayed at public events – at work, at school and at play which has deprived local textile firms of the much needed patronage to enhance their contribution to the country’s gross domestic product. This orientation very much needs to change. A clear case of where some semblance of change is taking place is in Anambra State where the Governor, Charles Soludo, a globally-acclaimed economist and former governor of the Central Bank of Nigeria (CBN) publicly announced that his policy as state governor is to adorn the Akwete dress and other locally made fabrics in other to encourage local production and demand for the local goods. Hence the display of a strong political will such as this is clearly a key requirement for the overcoming of some of these challenges confronting the textile subsector of manufacturing in the country. Very few of the textile firms in Nigeria are still in operation. In the Lagos area, those still around and struggling include Spintex Mills Nigeria Limited, Lucky Fibres Plc and Nichemtex Plc. Major textile firms across the country such as the Nigerian Textile Mills, Aba Textile Mills, Asaba Textile Mills, Kaduna Textile Limited and a host of others have either gone extinct or are now moribund. This is a very sad commentary on the country’s textile industry which was globally recognised a few decades ago when it was the third largest in Africa only behind Egypt and South Africa in the days of boom, in terms of turnover and other related economic indicators. Then, it also represented about a quarter of total employment in the manufacturing sector and was second only to the civil service in employment in the country.
However, the overwhelming dependence on the oil sector and the concomitant cheap oil revenue to government has diverted attention away from the textile subsector which has led to the gradual decay of textile production in the country. These have been exacerbated by the increasing influx of cheaper textile fabrics from China and India, among others sold at prices way below the cost or even the factory-gate prices of local firms. Under the Goodluck Jonathan administration, efforts were made to address the issues by placing a ban on importation of textile fabrics, but like other trade restrictive policies, these failed to yield the desired results. These issues are what the various Federal Government multibillion naira textile revival funds are meant to address. Despite the establishment of various revival funds over time in the region of about N300 billion, not much progress have been recorded in the revival of ailing textile companies. The funds made available to rescue the textile industry have recorded some little progress with much of the effects being negative. On the positive side, according to Issa Aremu, the former Vice President of the Nigerian Labour Congress and General Secretary of the National Union of Textile Garment and Tailoring Workers of Nigeria, over 38 firms had benefitted from the funds with over 8,000 jobs saved. However, contrariwise, the decay in the subsector appeared to have been increasing in spite of the release of funds by the federal agencies such as the CBN and the Bank of Industry (BOI). In 2020, for example, the CBN announced a N50 billion special mechanism fund for the revival of ailing firms in the textile industry under the administration of BOI at a concessionary rate of 4.5 per cent, yet this has not brought any reprieve to the subsector, as expected. With about 60 per cent of the funds already disbursed, according to the BOI, the indications are that the more the funds are released to the sub sector, the more the textile and garment sector died. Something is definitely wrong somewhere. Though the Federal Government says it will work on reviving the remaining moribund textile companies in the country, throwing money at problems does not necessarily solve them. The problems of the textile and garment industry go beyond the provision of funds. Issues of corruption as well as effective implementation need to be investigated. Presently, with government statistics that only seven textile companies are functioning below maximum capacity compared to what obtained in the past, a lot needs to be done to salvage the situation. First, there is the need for a strong political will to address the challenges of the subsector. This includes formulation of policies that will promote the use of Made-in-Nigeria textiles and garments at all occasions as is being currently promoted in Anambra State under the leadership of Charles Soludo. The other issue is the addressing of the market access challenges of the local firms. Hence the use of tariffs to checkmate the influx of cheap textiles from China and India among others needs to be revisited. The provision of infrastructure, particularly energy supply is a sine qua non for the growth of the textile and garment subsector. Other issues relating the macroeconomic policy environment such as exchange rate and price stability issues also need to be addressed in enhancing the revival of the subsector. This should be in addition to the provision of security which is currently a matter of great national concern. Currently, the Nigerian textile subsector of manufacturing is unable to produce textile product at globally competitive prices. Though the need for more funds in the revival of the subsector should not be underplayed, a more holistic approach needs to be taken to address the need of local textile goods production in the country.
Source: The Guardian
Experts urge govt Bangladesh should formulate a national logistics policy, which will help build an integrated logistics system centring the Chattogram port, experts said yesterday. There should be a masterplan capable of fulfilling the future logistics demand in Bangladesh's ports, they said. "We do not have any masterplan for the port currently," said M Masrur Reaz, chairman of the Policy Exchange of Bangladesh. The masterplan should be formed following the national logistics policy so that the port does not suffer from overcapacity, he said. Reaz made the remarks while presenting the keynote paper at a seminar on "Efficient port logistic management and trade competitiveness of Bangladesh" organised by the Dhaka Chamber of Commerce and Industry (DCCI) at its auditorium in the capital. The chairman of Policy Exchange of Bangladesh recommended going for investment in the logistics sector through public-private partnership (PPP). "Bangladesh is far behind in logistics performance and it is ranked 100 overall in the logistic performance index while 102nd in logistics quality and competence index." "If we want to develop an integrated logistics sector, we have to ensure PPP investment especially in ports," Reaz added. He went on to say that Bangladesh has one of the highest logistics costs globally. Modern ports can strengthen regional connectivity and global markets, inland container depots (ICDs) and industrial zones, he said. The first terminal of Payra port will be opened for use soon and a terminal has already been set up under the PPP model for Mongla port, Md Mostafa Kamal, shipping secretary, said at the event as the chief guest. A number of foreign companies like DP World, PSA International and Red Sea Port have shown interest to work for enhancing the capacity of Bangladesh's ports, the secretary said. Bangladesh has done a tremendous job in ports but the country is still lagging behind, said Shamim Ul Huq, country director of the DP World Bangladesh, a Dubai-based multinational logistics company. "To compete in the global market, we need an integrated logistics platform and coordination among the multiple agencies is very important." Kabir Ahmed, president of Bangladesh Freight Forwarders Association, said the port should not be used as a warehouse. A strong infrastructure in Chattogram port will lower the cost of doing business in Bangladesh, cut lead time efficiently and investment will surge, said DCCI President Rizwan Rahman. Syed Ali Jowher Rizvi, managing director of Summit Alliance Port; Md Zafar Alam, joint secretary of Chittagong Port Authority, also spoke.
Source: Asia News
Originally scheduled to take place in October 2022, the autumn editions of Intertextile Shanghai Apparel Fabrics and Yarn Expo will now be merged with next year’s spring editions, to be held from March 8-10. The decision is in support of the ongoing pandemic control measures in Shanghai, while the move will also integrate industry resources more efficiently and provide more certainty to exhibitors in their planning. "We know how important the Autumn sourcing season is for textile buyers and suppliers, but as a responsible trade fair organiser, we hold a commitment both to our participants and the local authorities that extends beyond the fairground," Wilmet Shea, deputy general manager of Messe Frankfurt (HK) Ltd, said in a press release. "Given the ongoing pandemic control measures in Shanghai, and after consultations with key stakeholders, we have decided that deferring the autumn fairs to next Spring is the most appropriate arrangement for the textile industry." Shea added: "While we have looked to find an appropriate time slot later this year for the autumn shows to be held, any postponement would congest the trade fair calendar by placing the autumn fairs too close to the Shenzhen editions of Intertextile Apparel Fabrics and Yarn Expo this November, as well as the Spring editions in Shanghai next March." Between now and next spring, the Shenzhen editions of Intertextile Apparel Fabrics and Yarn Expo held in autumn, offer textile suppliers and buyers the opportunity to expand their business in the Greater Bay Area, a fast-growing hub for high-end fashion. Intertextile Shanghai Apparel Fabrics is co-organised by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Textile Information Centre. The co-organisers of Yarn Expo are Messe Frankfurt (HK) Ltd and the Sub-Council of Textile Industry, CCPIT.
Source: Fibre2fashion
