The government had rolled out PLI schemes for 15 key sectors, including technology, textile, automobile, pharmaceutical drugs, speciality steel, electronics, among others Commerce and Industry Minister Piyush Goyal on Tuesday said the government was working on production-linked incentive (PLI) schemes for more products to boost manufacturing in India. “We have committed to making India a manufacturing hub. We have come out with a PLI scheme for 14 sectors, apart from (a PLI scheme for) semiconductors, aggregating to Rs 2.7-3 trillion. We are willing to go the extra mile in other sectors. Should there be a need, we are working on a few PLI schemes already,” Goyal said at an industry event organised by Ficci. The government had rolled out PLI schemes for 15 key sectors, including technology, textile, automobile, pharmaceutical drugs, speciality steel, electronics, among others. Most of these schemes have been notified, and are at different stages of implementation. The minister asked the industry to get out of the mindset of different standards for domestic and international markets and emphasised that ‘quality’ of every Indian manufactured goods needs to be world-class. “Colonial thinking has to be removed from our ecosystem. Covid-19 has helped us understand the value of quality. There is a resurgence of confidence in our manufacturers, and this is the opportunity we should not let go,” he said. Referring to the slew of free trade agreements that India is negotiating at the moment, the minister said the world wants to engage with India. “Last two days in Saudi Arabia, I discussed nearly 30 sectors in which they are looking at our participation. Pharma, mining, innovation & startups, infrastructure offer huge opportunities,” the minister said.
Source: Business Standard
Talking about his recent visit to Saudi Arabia, the minister said there is huge potential to increase cooperation in areas like fintech, education, infrastructure, renewable energy, e-commerce, e-gaming and health. The government is working to extend incentives under the production linked incentive (PLI) scheme to more sectors, Commerce and Industry Minister Piyush Goyal said on Tuesday. The government has announced PLI schemes for 14 sectors, including white goods, textiles and auto components. The objective of the PLI scheme is to make domestic manufacturing globally competitive, create global champions in manufacturing, boost exports and create jobs. "We came up with PLI for 14 sectors apart from semiconductor... We are willing to go the extra mile in other sectors. We are working on a few PLI schemes already," Goyal said at an event here. There are demands for extending the PLI scheme for sectors like toys, certain electronic components, furniture and bicycles. Talking about his recent visit to Saudi Arabia, the minister said there is huge potential to increase cooperation in areas like fintech, education, infrastructure, renewable energy, e-commerce, e-gaming and health. Saudi Arabia wants Indian educational institutes to set up campuses there, and expand dual degrees, he added. He also said Indian infrastructure companies should explore markets in other countries as huge demand is there worldwide for infrastructure investments. To promote manufacturing, he asked the industry to focus on standards, technology-led manufacturing, skill development, and sustainable development goals. On free trade agreements, he urged the industry to engage with the world and take advantage of these trade pacts as protectionism cannot continue. Talking about importance of quality, Goyal said that even the poorest of the consumers deserve the best quality products and the culture of no compromise with quality has to be adopted in the country. There is a need to change this mindset of two quality standards for domestic and international markets, he added. "If you do not mind, sometimes, we also differentiate between our customers based on the colour of his skin. And not necessarily in a city like Mumbai or Delhi, but yes, certainly, you go to a small town or place and there is that colonial mindset... "That colonial thinking, if we can remove from our ecosystem, it will also help us focus on quality," he told the industry.
Source: Zeebiz
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.
Source: The North Lines
The policy was unveiled by Prime Minister Narendra Modi on Saturday The Cabinet on Wednesday approved the national logistics policy, which aims to ensure seamless movement of goods and services across the country and cut elevated logistics costs. The policy was unveiled by Prime Minister Narendra Modi on Saturday. He had also set a goal of reducing the country’s logistics costs from as much as 13-14% of its gross domestic product to a single digit over the next few years. High logistics costs are often blamed for eroding India’s export competitiveness. Briefing reporters after the Cabinet meeting, information and broadcasting minister Anurag Thakur said the target is to place India among the top 25 nations (in terms of logistics efficiency) by 2030. The country grabbed 44th spot in the World Bank’s Logistics Performance Index in 2018. According to an official statement, the policy is targeted to reduce such costs to a level where it will be comparable to global benchmarks by 2030. It will also create data-driven mechanism for an efficient ecosystem. The empowered group of secretaries (EGoS), created under the PM Gati Shakti national master plan, will closely track the implementation of the logistics policy as well. It will also set up a services improvement group, which will monitor all logistics projects regularly and act as a sort of bridge between the government and industry. It will enable stakeholders to raise queries and flag issues so that an inter-ministerial group can find appropriate solutions. The policy has three other critical features: Integration of Digital System (IDS); Unified Logistics Interface Platform (ULIP); and Ease of Logistics (ELOG). Under the IDS, 30 different systems of seven departments are integrated; these include data of the road transport, railway, customs, aviation and commerce departments. This will lead to faster cargo movement. The ULIP will make all available transport modes visible to stakeholders so that they can take informed decisions. Under the ELOG, rules will be simplified.
Source: Financial Express
The textiles ministry is considering three investment thresholds of ₹15 crore, ₹30 crore and ₹45 crore, with double turnover as the criteria for incentives that would range between 8% and 10% under the ₹4,200 crore scheme. It is also likely to add a minimum number of stitching and sewing machines as another benchmark to avail the sops. The second edition of the production-linked incentive (PLI) scheme for textiles is likely to offer incentives for manufacturing of garments and home textiles such as blankets and bed spreads, and textile accessories like lace, button, and zippers. The textiles ministry is considering three investment thresholds of ₹15 crore, ₹30 crore and ₹45 crore, with double turnover as the criteria for incentives that would range between 8% and 10% under the ₹4,200 crore scheme. It is also likely to add a minimum number of stitching and sewing machines as another benchmark to avail the sops. "The scheme will attract investment and reduce the import dependence in textile accessories," said an official, adding that such value addition sectors are labourintensive that require low investment but have a high potential to create jobs. The selected companies would have to achieve the minimum turnover, which is two times the investment, in the first year and then 20% increase in turnover over the previous year. PLI 2.0 for the textile sector is being considered as the ministry has an unutilised budget of about ₹4,000 crore after it approved 64 applications with an investment potential of ₹19,798 crore and projected turnover of ₹1.93 lakh crore in the next five years under the first phase of the scheme. In the first edition of textile PLI scheme, the minimum investment required was ₹100 crore and ₹300 crore while the minimum turnover required to be achieved for incentive was ₹200 crore and ₹600 crore, respectively. Industry had sought a lower investment threshold of ₹25 crore instead of ₹100 crore in the second PLI and also a waiver from the condition to set up a new company for the purpose of investment.
Source: Economic Times
Minister Goyal is expected to hold bilateral meetings with counterparts from member countries Commerce and Industry Minister Piyush Goyal is set to attend the three-day Group of 20 (G20) nations’ trade, investment, and industry ministerial, which begins on Wednesday in Bali, Indonesia. Member nations are expected to thrash out key trade issues related to market access, building sustainable supply chains, reform of the World Trade Organization (WTO), among others. There could also be discussions on industry’s responses to pandemics, digital trade, and sustainable investment for global economic recovery. The meeting takes place at a time when the world is yet to fully recover from the Covid19 pandemic’s shock and is staring at recession, thanks in part to the geopolitical tensions triggered after the Russian invasion of Ukraine. On the sidelines of the ministerial, India will try to woo its trading partners to negotiate free trade agreements (FTAs) fast, people aware of the matter said. “One of the points that India may highlight is that by 2047 the Indian economy will grow tenfold. This should be kept in mind while signing FTAs are these pacts are typically long term. On the other hand, India’s competitors may not grow at a similar pace, including the developed nations with whom India is signing FTAs. This must be kept in mind during negotiations,” one of the officials said. Goyal is expected to hold bilateral meetings with his counterparts from the United Arab Emirates (UAE), Saudi Arabia, South Africa, the United Kingdom, France, Spain, Indonesia, Canada, United States, and South Korea, the official told Business Standard. India has already signed two trade agreements earlier this year with the UAE and Australia, though the latter is yet to be ratified by the Australian Parliament. India is currently negotiating FTAs with the UK, Canada, and the EU. Discussions for a trade deal with the Gulf Cooperation Council (GCC) countries and Israel are also on. According to a media report, US Trade Representative Katherine Tai has convened a meeting of G20 trade ministers to discuss issues related to the WTO’s dispute settlement mechanism. The outcome document of the WTO ministerial has promised to revive the dispute settlement body in next two years. The G20 is a strategic multilateral platform connecting the world’s major developed and emerging economies. G20 member nations represent more than 80 per cent of the world’s gross domestic product (GDP), 75 per cent of international trade, and 60 per cent of the world’s population.
Source: Business Standard
Goyal will be on a visit to Indonesia between September 21 and 23 for the G-20 trade, investment and industry ministerial meeting. Commerce and industry minister Piyush Goyal on Tuesday said India needs to “globalise trade” and get the best from the world while simultaneously giving it the best. The call for greater engagement with the world comes at a time when key western markets are witnessing recession. India is aiming at goods and services exports of about $750 billion for FY22, up 11% from a record $676 billion in the last fiscal, despite concerns around demand slowdown in its top markets–the US and the EU. Exhorting domestic industry to focus on five key areas in the manufacturing sector (standards or quality, durability, design, price and sustainability), the minister called for the adoption of best global standards. To build competitive edge, companies must adopt new technologies like IoT, AI and machine learning, while looking at “upskilling and retraining our workforce to be able to meet the needs of Industry 4.0”, he said. Addressing a Ficci event, Goyal asked industry to capitalise on the production-linked incentive schemes that have been announced for over a dozen sectors. The country needs to focus on green energy, reducing emissions and adopting various sustainability and other targets under the SDG goals, he added. Goyal to visit Indonesia for G-20 talks Goyal will be on a visit to Indonesia between September 21 and 23 for the G-20 trade, investment and industry ministerial meeting. He is also expected to attend a meeting of the G20 trade ministers, convened by US Trade Representative Katherine Tai in Bali on Wednesday, to deliberate on reform measures relating to the World Trade Organisation’s (WTO’s) dispute settlement mechanism. India has already called for expeditious restoration of the almost- dysfunctional Appellate Body of the WTO for dispute resolution, without diluting its core features. The US has blocked the appointment of judges, thus crippling the WTO’s appellate mechanism.
Source: Financial Express
The FTA is expected to give a major thrust to Indian exports in labour intensive sectors like leather, textile, jewellery, processed agro products, etc The best way to celebrate Diwali will be to have a good free trade agreement between India and the United Kingdom, British High Commissioner to India Alex Ellis said on Tuesday. He observed that the free trade agreement (FTA) will lead to creation of more jobs, growth and opportunities for both India and the UK. Speaking on the sidelines of an event, he asserted that there was "high ambition" to complete the India-UK FTA by Diwali -- a deadline set earlier by both nations -- and added "that would be an auspicious date". Asked if one could expect a 'Diwali Dhamaka' for India in relation to the FTA, the British High Commissioner quipped, "I hope so." Earlier addressing an Assocham conference, Ellis said: "We have the aim to finish the FTA by Diwali." Speaking at the conference, Joint Secretary in the Commerce and Industry Ministry Rajendra Ratnoo said leaders from the countries "are very very committed towards this FTA and have set a very, very ambitious goal of gifting to the people of the two sides very optimistically by the end of October, as a Diwali gift." He said a major part of the trade deal has been thrashed out while certain areas remain which are being discussed. Elaborating on the potential benefits emanating for India from the FTA with the UK, he said it is expected to provide certainty, predictability, transparency and will create a more facilitative and competitive services regime. "The FTA is expected to give a major thrust to Indian exports in labour intensive sectors like leather textile jewellery processed agro products etc," the Joint Secretary added. A free trade agreement is a trade pact according to international law to form a free trade area between the cooperating states. India and the UK trade mostly in services which accounts for about 70 per cent of the overall trade. Both countries also aim to increase their bilateral trade to USD 100 billion by the end of this decade.
Source: Business Standard
The discussion will focus on quality, design, value and innovation that will empower the participants with right knowledge and exposure in India's biggest Global Spin conclave on promotion of handlooms, handicrafts and technical textiles will be held in Chennai on Wednesday and Thursday. World Association for Small and Medium Enterprises (WASME) and IAMKHAADII Foundation (IAMKHADI) in association with the Union Ministry of MSME will be organising the GlobalSpin Trade Conclave and Exhibition on export promotion of handlooms, handicrafts and technical textiles. State Department of Handloom, Handicraft, Textiles and Khadi will be the State partner and will be hosting the conclave with the support of Ministry of Textiles as knowledge partner and NIFT Foundation for Design and Innovation (NFDI) as co-organiser. The conclave will be inaugurated by Handloom Minister R Gandhi. With the theme "Technology, Supply Chain, Innovation, Credit, Market and Sustainability" the conclave aims to work towards globalisation of Indian textile industry by analysing the best practices, new production techniques, innovative procedures and product qualities to satisfy all international eco-standards. Spanning over two days, the conclave will have a series of panel discussions with over 30 industry and sector leaders and International foreign experts from Russia, Mauritius, UAE and Nigeria as speakers. The discussion will focus on quality, design, value and innovation that will empower the participants with right knowledge and exposure in handlooms and technical textiles. Few MOUS will also be signed between Co-optex and IAMKHADI on social footprinting, with Traceyarn on block chain, with Kosha on traceability and a few others. More than 250 MSMEs, including artisans, designers, traders, exporters, manufacturers, entrepreneurs and startups will participate.
Source: DT Next
India looks well poised to sustain a growth rate of 7% through the decade, V Anantha Nageswaran, chief economic adviser said on Tuesday. “Given that the world is experiencing after-effects of the pandemic and the ongoing conflict in Europe, India’s growth rate has come off the projection (of 8-8.5% in the Economic Survey) made in January to about 7% for current financial year,” Nageswaran said, adding that this rate will likely be sustained in the remainder of the decade. He was speaking at the Global Fintech Fest, adding that despite the slowdown in the global scenario, the economic momentum in India is unmistakable. The Reserve Bank of India (RBI) has projected the gross domestic product (GDP) in real terms to expand at a rate of 7.2% for the current financial year, but it may revise the forecast marginally downwards given that the June quarter growth came in at 13.5%, as against 16.2% projected. India replacing United Kingdom as the fifth largest economy in absolute terms is creditable achievement and it is barely a surprise, the CEA said. Speaking on the progress made by UPI, Nageswaran said that the retail payment system is actually mimicking some symptoms of Central Bank Digital Currency (CBDC). “So we are sort of leap-frogging the technology even as other countries are grappling with the design of CBDC, India’s fast retail payment system is colliding with the functionalities that CBDCs are expected to deliver,” he said. UPI will soon enable cross-border remittances with Singapore soon by allowing interoperability between Singapore’s e-Next with UPI. The cost of cross border remittances has come down to 6% level which was over 10% earlier. To make cross border remittances free, interoperability is a critical component and UPI is enabling that, he said.
Source: Financial Express
Earlier forecast was 7.2%; institution says high inflation is another growth hurdle, cut FY24 forecast to 7.2% from 7.8% The Asian Development Bank (ADB) cut its fiscal year 2022-23 (FY23) gross domestic product growth forecast for India to 7 per cent from 7.2 per cent on Wednesday, citing sluggish global demand and tightening of monetary policy to manage inflationary pressures from elevated prices for oil and other commodities. “While India’s GDP is steadily closing in on its pre-pandemic trend level, economic growth in the near term is likely to be affected by the global slowdown and high inflation,” said ADB Country Director for India Takeo Konishi. “We expect that the government’s continued efforts to improve the regulatory climate for businesses and infrastructure will boost investment and create more jobs in the medium term,” he said. The multilateral institution also cut its FY24 forecast to 7.2 per cent from 7.8 per cent. In a statement, the agency said that retail inflation is forecast to remain elevated over the next two years, averaging 6.7 per cent in FY23 before moderating to 5.8 per cent in FY24. “Inflationary pressures will crimp private consumption. However, subsidised fertilisers and gas, free food distribution, and excise duty cuts will help offset some of the impacts of high inflation on consumers,” it said. ADB said that while the services sector is rebounding, the manufacturing sector is expected to grow slower because of rising input costs. Agriculture value-added is likely to be marginally lower, as the sown area has declined, and the monsoon remains uneven, it said, adding that a slowdown in global growth will result in sluggish exports, while the value of imports is likely to increase. “Investment growth is likely to be led by public rather than private investment. Increased borrowing costs for the government, due to rising policy rates, will accentuate fiscal pressure until FY24 along with the cost of subsidies,” ADB said, adding that India’s current account deficit may widen to 3.8 percent of GDP in FY23 due to rising imports and a slowdown in exports. ADB is just the latest agency to have cut its FY23 GDP forecast for India. After the Q1 GDP print of 13.5 percent, a number of banks and financial institutions slashed their India growth forecasts for the current financial year. These included State Bank of India, Goldman Sachs, Citigroup, ratings agencies Moody’s, Fitch and India Ratings. The agency’s India forecast cut was part of a larger downgrade for Asian developing economies, amid mounting challenges that include increased monetary tightening by central banks, fallout from the protracted Russian invasion of Ukraine, and recurrent Covid-19 lockdowns in China. “The region’s economy is expected to grow 4.3 per cent this year, compared with the bank’s projection in April of a 5.2 per cent expansion. The growth forecast for next year has been lowered to 4.9 per cent from 5.3 per cent. Excluding China, the rest of developing Asia is projected to grow by 5.3 per cent in both 2022 and 2023,” it said. Additionally on Wednesday, ratings agency Moody’s said that along with China and Japan, the currencies of India, South Korea, Malaysia, Philippines, and Thailand are under some pressure. In a report, it said that not only will the Asia-Pacific central banks need to raise rates further through the end of this year and into next year, but they will have to stay at high levels for longer if the U.S. federal funds rate remains at a high rate through 2024 as is now expected. “The fastest- growing economies at the moment—Malaysia, Vietnam and India—are likely to slow the most as their period of rapid post-Covid recovery comes to an end,” Moody’s said.
Source: Business Standard
With high inflation in US and Europe, consumers are spending less on clothes and less purchase is leading to more stock getting piled up at every store, leading to the miseries of the retailers. Not so long ago, the apparel retail sales scenario in the US and EU was no less than extraordinary. The US had seen apparel retail sales surge by 13.76 per cent to US $ 81 billion in January to April period, with clothing imports growing by 40.55 per cent to US $ 32.43 billion. It was no different in EU, where apparel imports went up by around 30 per cent to € 21.70 billion in the same period. However, things have not been so rosy in last two months – be it at a department store, specialty store or hypermarket. In May ’22, volume-wise, the US imported 2,772.93 million SME worth of garments, while the same was 2,763.30 million SME in June ’22 – noting 0.35 per cent decline on monthly note. In value terms, the imports valued US $ 8.64 billion, up by 1.52 per cent over May ’22. That’s distinct enough to indicate that the US buyers reduced sourcing in June ’22 for basic low-cost products as compared to May ’22 to save themselves from piling up inventory. The fact of the matter, however, is that inflation is very high in the US and Europe – owing to political and economic crisis – and shoppers are spending more on food and fuel. Simply put, consumers are spending less on clothes especially in last two months. Less purchase is enough to get the stocks piled up at every store – be it a department one, specialty or hypermarket one. In fact, inventory-pile up has actually compounded the miseries of the retailers even as holiday season isn’t far away. While placing too many orders may leave them with no choice other than offering heavy discounts post holidays, less orders will obviously push the shoppers towards rival retailers – not to mention the monetary losses that the businesses will face. The situation is so tricky today that any aggressive stand on inventory could hit the retailers significantly. Apparel sales have been dismal at big box retailers Walmart and Target which in July 2022 announced slashing of prices on some products to move through the inventory, particularly apparel. Target saw its profits in Q2 ’23 (May 1-July 31) being hit badly after it slashed prices to clear out a glut of unwanted inventory. According to National Retail Federation (NRF), after a record-setting Spring, imports at the USA’s major container ports are expected to slow significantly for the remainder of the year, but 2022 should still see a net gain over 2021. “Retail sales (collectively of all commodities) is still growing, but the economy is slowing down and that is reflected in cargo imports. Lower volumes may help ease congestion at some ports, but others are still seeing back-ups and global supply chain challenges are far from over,” commented Jonathan Gold, NRF Vice President for Supply Chain and Customs Policy. Target is also deciding in some cases to pack away merchandise to sell at full price in the future and in other cases to promote. Yes, rather than trying to sell through all the excess goods at lower prices right away, some retailers are packing away items for sale at a later date. This strategy was once used by the well-known department store chain T.J. Maxx, and is now getting adopted by many others. Kohl’s Corp., yet another department store chain that currently has 40 per cent more inventory than what it had a year back, is also packing away pajamas and fleece that arrived late with hopes of selling them in the Fall. It’s not been easy for specialty retailers as well! Capri Holdings has been taking an aggressive view of holiday inventory. As per its Q1 ’23 (April 2-July 2) report, the net inventory was US $ 1.265 billion on 2nd July 2022, a 66 per cent increase compared to the prior year. Relative to pre-Covid levels, first quarter inventory increased by 25 per cent. Higher inventory was planned reflecting the company’s new programmes to receive seasonal merchandise earlier as well as hold more core inventory. Management expects inventory levels to be below prior year by the end of FY ’23; however, the company anticipates that any greater (and ongoing) supply chain disruptions could further extend inventory delays or cause an increased inventory level due to less purchasing in the market. The same story continues in the UK too! Though UK businesses have been finding freight rates slumping and supply chain troubles easing, the consumer demand too has been waning equally. Sainsbury’s, the UK’s second-biggest hypermarket, has revealed that sales at established stores have fallen by 4 per cent Y-o-Y in the 16 weeks to 25 June 2022. This includes 10 per cent drop in clothing sales. Many Sainsbury’s shoppers have tried to offset inflation by switching away from big brands rather than buying significantly fewer items. In its efforts to reduce the cost, Sainsbury’s is now investing £ 500 million and doing everything possible to bring the prices down – especially on the products customers buy most often. Another hypermarket Asda said that one-fifth of UK households had negative income in June 2022 and therefore it has been offering lots of discounts on apparels to clear stores’ inventory before going cautiously for holiday season’s sourcing.
Inflation eats away garment orders at Asian hubs! Even as inflation is tightening its stranglehold across the US and Europe, some of the major garment hubs like Bangladesh and India are feeling the heat! Bangladesh’s textile industry is presently facing major challenges owing to the global recession and inflation as retailers in both European and US markets are either deferring the shipments of finished products or delaying orders. Here it’s important to state that the European Union accounts for nearly 60 per cent of the Bangladesh’s garment sales, while the US makes up around 20 per cent. Both economies have been gasping for breath on the cusp of a recession that would pump the brakes on any post-pandemic revenge spending. Although Walmart’s slashed earnings’ outlook is ringing alarm bells for Bangladesh, which hugely depends on garments for 80 per cent of its exports, the warning signs were already there, said Faruque Hassan, President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA). It’s no different for India too! Indian textile producers have also been witnessing initial signs of a demand slowdown as high energy and food prices have weakened the demand for products such as curtains and bedspreads in the top export markets of the US and Europe, said Indian Textiles Secretary Upendra Prasad Singh. While apparels have been hit to some extent, it’s been worse for home textiles as the latter is more price-sensitive than former. In May ’22, Bangladesh’s shipment to USA was 280.86 million SME that increased marginally to 282.49 million SME in June ’22, noting a meagre 0.58 per cent growth on monthly basis. On the other hand, India’s shipment to USA in volume terms reduced to 138 million SME in June ’22 from 163.89 million SME in May ’22. The figures are alarming as one can see a clear downfall and fluctuation in the export volumes of India, while Bangladesh that had been growing in double-digits till April has seen an arrested growth level from May ’22 onwards. But every cloud has a silver lining! Supply chain troubles are slowly easing, which might benefit everyone in some way. Also, with several countries adopting China-plus-one-strategy and many more free trade agreements coming up, there’s hope. A lot will, however, now depend on how the political and economic situation unfolds across the globe in the months to come.
Source: Apparel Resources
European textile and clothing industry recently urged the EU to protect the industry from the crisis resulting from exorbitant increase in natural gas and crude oil prices amid Russia’s invasion on Ukraine. Latest export data reflects the crisis as outbound shipment of technical textile and polyester products have begun to slide in recent months. European apparel and textiles confederations like EURATEX, CIRFS, ETSA, EDANA and EUROCOTON have demanded EU to safeguard the future of the industry as gas prices reach sky-high levels. The industry has suggested a mechanism for electricity pricing and called for a cap on gas prices. It said that measures need to be adopted to avoid bankruptcy and relocation of textile production outside of Europe. The associations added that specific segments of the textile industry are particularly vulnerable as man-made fibres (MMF), synthetic and cellulose-based fibres are energy intensive segments and dyeing and finishing production units make very intense use of gas. Latest data on exports of these products from the EU has highlighted the downward trend. According to Fibre2Fashion’s market insight tool TexPro, exports of textile products and articles for technical usage (HS code 5911) declined to $727.345 million in the second quarter of this year. The exports had amounted to $759.015 million in the first quarter of 2022 and $725.802 million in fourth quarter 2021. The exports of man-made filaments (HS code 54) slipped to $2,101.952 million in the second quarter of 2022 from $2,910.941 million in the first quarter of 2022. Exports of artificial filament tow or cellulose acetate (HS code 550210) declined from $67.136 million in the first quarter of 2022 to $43.960 million in April-June quarter of this year. The shipment of tyrecord high tenacity yarn of polyester (HS code 590220) decreased to $72.538 million in the second quarter of 2022 from $97.496 million in the previous quarter.
Source: Fibre2Fashion
BB yet to enlist rupee for LCs; businesses say, if done, they will be benefitted. Businesses in Bangladesh will not be able to use the Indian rupee in conducting trade with entities abroad as Bangladesh Bank has not enlisted the currency as a means of settling letters of credit (LCs). However, entrepreneurs said if trade between Bangladesh and India takes place in the local currencies, pressure from falling US dollar reserves and associated ongoing forex market volatility would be reduced to some extent. Bangladesh, which boasted of having $48 billion in reserves in August 2021, saw it go down to $37.13 billion as import bills surpassed exports and remittances. Taka, the local currency, went down 20 per cent in value year-on-year to Tk 102.56 per dollar yesterday. Businesses said India was the second largest source of imports for Bangladesh. Industrial raw materials, capital machinery, cotton, yarn, fabrics, and chemicals worth $16.19 billion were imported in fiscal year 2021-22. On the other hand, Bangladesh exported goods worth $2 billion to the neighbouring country. This means that if both the countries allow use of the local currencies, requirement for the US dollar will be substantially curtailed. The issue of using local currencies came to the fore after the State Bank of India (SBI) issued a notice on August 24 saying it would allow LCs making use of the taka and rupee instead of the US dollar and other foreign currencies. With no option available as of yet, Bangladeshi businesses will have to sidestep settling exports and imports through the SBI, said a number of Bangladesh Bank (BB) officials, on condition of anonymity. This will be so, unless the BB officially allows settling LCs using the local currencies, they said. For instance, the BB on September 15 allowed local banks to maintain accounts with their corresponding lenders or branches abroad in the Chinese yuan. This was to help local businesses settle foreign trade transactions using the yuan. Similar instructions will have to be issued by the central banks of both countries for allowing the local businesses to settle LCs using the rupee and the taka. Contacted, Md Serajul Islam, spokesperson of Bangladesh Bank, declined to comment on the issue. As per the BB notification, local businesses are allowed to settle their foreign trade using 18 foreign currencies. These include the US dollar, Canadian dollar, Australian dollar, Singapore dollar, euro, Great Britain pound, Swiss franc and Chinese yuan or renminbi. "Bangladesh is categorised under high risk and under caution risk category as per our country risk model," said the SBI in its notice. "The country is facing shortage of foreign currency due to higher import bills and weakness of the taka against the US dollar in recent time," it read. Under such a situation, the SBI has decided not to use the US dollar and other foreign currencies till further instructions, it said. The foreign lender has also taken a decision to put on hold new business exposure in Bangladesh. The Daily Star contacted the SBI's Dhaka office seeking a comment. They did not provide any remark. However, businesses said trade in local currencies would be beneficial. Even if all the bilateral trade cannot be conducted in the taka and rupee, at least $2 billion worth of trade, which is equivalent to what Bangladesh exports, can be in local currencies, said Abdul Matlub Ahmad, president of the India-Bangladesh Chamber of Commerce and Industry. Experts of both countries can sit together to find a solution so that the whole of the bilateral trade can be transacted in the taka and rupee, he said. There will also be a positive impact on prices of basic commodities as the purchase of the US dollar costs extra money in the present volatile global currency markets, Ahmad said. Similarly, it is possible to trade in the Chinese yuan and Russian ruble to retain US dollar reserves in the time of crisis, Ahmad said. Mohammad Ali Khokon, president of Bangladesh Textile Mills Association, also welcomed the proposal trading in the taka and rupee. The pressure from falling US dollar reserves will reduce to a great extent as Bangladesh imports a lot of industrial raw materials and goods from India, he said. Md Saiful Islam, president of the Metropolitan Chamber of Commerce and Industry, said had there been no special terms and conditions and trade had taken place normally, the taka and rupee trade would be beneficial for both countries. Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said if the Indian businesspeople accept the taka and their Bangladeshi peers accept the rupees, then there would be no problem. Echoing this, Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry, suggested holding consultations with experts so that the transaction can be conducted in the local currencies as soon as possible. Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said enabling a vibrant trade in the rupee and taka would require years but the BB can start the process from now. The economist, however, warned that Indian businesses might not initially show interest in doing foreign trade using the taka instead of the dollar.
Source: The Daily Star
The Vietnamese textile-garment industry's domestic procurement hit a record high rate of 57 per cent in the first eight months this year, close to the target of 60 per cent set for 2025, according to Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex), who recently said this had remained at around 50 per cent for a long time. The sector’s export revenue between January and August this year was worth $30.2 billion, a rise of nearly 20 per cent over the same period last year and the highest growth rate of the past decade, Vinatex revealed. The sector ran an estimated trade surplus of around $17 billion in the eight months, according to a Vietnamese newspaper report. The average export revenue would decrease to $3.1-3.2 billion per month in the four remaining months of the year, compared to the average of $3.8 billion per month till August, Vinatex forecast. In the medium and long term, Truong said Vinatex would invest in promoting a green and circular economy, adding that the investment would be large, however. He called for policies to support industries like the garment-textile with high local procurement rates and high trade surplus.
Source: Fibre 2 Fashion
The Bangladesh government was recently urged by speakers at a seminar hosted by the Dhaka Chamber of Commerce and Industry (DCCI) to make the port logistics system more efficient to reduce the cost of doing business and attract more investment into the industrial sector. They called for framing a 'National Logistics Policy' for a more resourceful and organised port logistics management. The seminar’s theme was 'efficient port logistic management and trade competitiveness of Bangladesh'. As the Abu Dhabi Port has showed interest to work in Bangladesh's port sector, it would be helpful for enhancing capacity of the ports, shipping secretary Mohammad Mostafa Kamal told the seminar. Along with Chattogram port, Mongla port has also started handling more containers while Payra port will be fully operational soon, he added. DCCI president Rizwan Rahman said port logistics management is an important element of international trade competitiveness. With the country's growing export, Chattogram port has become the world's 64th busiest, but has been ranked as Asia's least efficient seaport, he said. "If the infrastructural capacity of Chattogram port is increased, our cost of doing business will reasonably fall, resulting in better lead time, which lures more investors in the country," Rahman was quoted as saying by Bangla media reports. Slow container handling, lower drafting capacity, inefficient port management, limited port yards, poor turnaround time and scarcity of modern equipment are a barrier to Chattogram port from turning efficient, according to the World Bank. Bangladesh is ranked 100th in the logistic performance index and 102nd in the logistics quality and competence index.
Source: Fibre2Fashion
The South African flag is increasingly decorating labels on garments at major retail chains across the country. It’s an effort to bolster the country’s clothing and textile sector. More than half of the textiles sold by South African retailers are imported from abroad, according to the government, and nearly 60% of those imports come from China. Retailers signing on to a master plan by the government to support local businesses say there are more benefits than just job creation. Hazel Pillay, general manager of retailer Pick n Pay Clothing, said, "Being able to have the product made locally means that you can actually respond to what the customer needs more efficiently, which is really what every retailer wants — to move towards more fast response.” Pick n Pay Clothing is among the retailers such as Woolworth’s, Mr. Price and Truworth’s increasing their supplies of locally sourced products from 28% in 2019 to 40% today. The shift is now gaining momentum on the heels of global trade disruptions due to the coronavirus pandemic, as well as record unemployment. Katekani Moreku, a young designer recruited to aid in the effort," said, “It gave me a lot of attention and gave me a lot of publicity. In the times that we live in when there's a very high rate of unemployment, I think that it will have a very large impact that will create more jobs for all generations.” Moreku estimates his collaboration with Pick n Pay in 2020 created about 1,000 jobs, from manufacturing to digital marketing. That’s what the South African government wants to see, with a target of 121,000 new textile jobs by 2030. More investment needed But retailers, including Pick n Pay’s Pillay, say it will require investment in skills training and support for entrepreneurs. “Before the 2000s, yes, the skills were readily available," Pillay said. "And as [production] moved to China, investment in skills development, the investment in machinery all disappeared. But I think if we reviewed where the local business is in another 10 years, we're certainly going to see a recovery in some of that style of product being manufactured locally.” That growth is necessary as the retailer aims to have 60% of all textile goods sourced locally in the next five years. But economists warn that setting quotas and targets alone won’t be enough to rebuild the industry. Dawie Roodt, chief economist for financial services firm Efficient Group," said, “What you need to do if you want to get more investments in textile and more localization in textile, or any industry for that matter, is for the government to become much more efficient. Like, for example, make sure that infrastructure works properly, make sure that it's safe to invest in South Africa and things like that.” Regular power cuts and decaying railways are impeding local manufacturers from producing and transporting goods. And there are other practical barriers to closing the $3 billion trade imbalance between China and South Africa. “Keep in mind that they've got economies of scale," Roodt said. "South Africa as compared to China is a relatively small country. So I don't think it will be possible for us to really compete in a big way.” But for budding designers, even a small boost in the local industry gives hope for success in the future.
Source: VOA News
Beijing welcomes the development of US enterprises in China and will continue to provide a market-oriented, internationalised and legalised business environment, according to state councilor and foreign minister Wang Yi, who recently said his country’s attitude of continuing to strengthen economic and trade cooperation between the two countries is certain. This was one of the five ‘certainties’ about China that Wang, who recently met representatives from the National Committee on US-China Relations, the US-China Business Council and the United States Chamber of Commerce in Washington DC, elucidated. The other ‘certainties’ are the prospects of China's own development, its resolution to reform and open up, its policy towards and its willingness to carry out multilateral coordination with the United States. As China-US ties are now at a low ebb, there is a concern that the two countries are entering a new Cold War, he was quoted as saying by an official news agency. China will continue to deepen its reform, open wider to the world, establish a new system for higher-level openness, build an open world economy, and further promote economic globalisation, he said. The key is that the United States should return to a rational and practical China policy at an early date, he said. What China opposes is unilateral bullying and the Cold War mindset, Wang added, urging both sides to jointly conform to basic norms governing international relations based on the UN Charter and universally recognised international laws.
Source: Fibre 2 Fashion
The European Textiles Association (EURATEX) is urging more incisive action in tackling the energy crisis in the region and says policies must be implemented without delay. EURATEX says while it welcomes recent proposals from the European Commission, it acknowledges they “lack ambition” and will come at the cost of losing industrial capacity and jobs across Europe. Earlier, the Commission proposed to change the Title Transfer Fund (TTF) benchmark parameters and decouple the TTF from the electricity market and revise the merit-order principle for the electricity market, and amend the state-aid framework. EURATEX said under the current proposals Europe will remain without its integrated textiles ecosystem, as we know it today, and no means to translate into reality the EU textiles strategy, for more sustainable and circular textiles products. “An ambitious and meaningful European price cap on the wholesale price of natural gas is absolutely necessary. Europe is running out of time to save its own industry. It is now time to act swiftly, and decisively in unity and solidarity at European level. We understand a very high price cap has been so far discussed among Ministries and that is not reassuring for companies across Europe: if any cap is, as expected, above 100/MWh, these businesses will collapse,” the body said. “Already in March 2022, with EU gas wholesale prices at EUR200/MWh, the business case for keeping textiles production was no longer there. To date, natural gas wholesale prices have reached the level of EUR340/MWh, more than 15 times higher compared to 2021. Currently, many businesses have suspended their production processes to avoid the loss of tens of thousands of euros every day. We hope this will not become the new normal and – to reduce the likelihood of such a scenario – we call on the Commission, the EU Council and the Parliament to swiftly adopt decisive, impactful and concrete actions to tackle the energy crisis in Europe and ensure the survival of the European industry.” Euratex also said specific segments of the textile industry in Europe are particularly vulnerable including the man-made fibres (MMF) industry which is energy intensive; nonwovens, which is highly dependent on gas and electricity; dyeing and finishing which have no technological substitutes. “Given the dire international competition in which the EU textiles industry operates, it is not possible to just pass on the increased costs to consumers. Yet, with these sky-high prices, our companies cannot afford to absorb those costs. The EU textiles companies are mainly SMEs that do not have the financial structure to absorb such a shock. In contrast with such reality in Europe, the wholesale price of gas in the US and China is EUR10/MWh, whereas in Turkey the price is EUR25/MWh. If the EU does not act, our international competitors will easily replace us in the market, resulting in the deindustrialisation of Europe and a worsened reliance on foreign imports of essential products.”
Source: Just Style
