INTERNATIONAL
NATIONAL
In a resounding call to protect the Indian Viscose Filament Yarn (VFY) industry, the Directorate General of Trade Remedies (DGTR) has made an emphatic recommendation: impose antidumping duties (ADD) ranging from 5.48% to 12.98% on Chinese VFY exporting manufacturers. This decisive move comes after a meticulous investigation initiated by the Association of Man-Made Fiber Industries (AMFI). The incessant surge in Chinese VFY imports has left the Indian VFY industry grappling with a dire situation. Domestic capacity utilization has dwindled to a critical 70%. The deluge of Chinese VFY imports at predatory prices imperils thousands of jobs and drastically underutilizes the Indian VFY industry. Capitalizing on their colossal production capabilities and a sluggish domestic market, Chinese manufacturers have launched an aggressive campaign to conquer the Indian market supported by their government. Since the abolition of ADD in 2018, Chinese VFY imports into India have skyrocketed, growing at an astonishing 32% Compound Annual Growth Rate (CAGR). The figures speak volumes: from 16,000 tons in CY'18 to a staggering 58,000 tons in CY'22. This upward trend shows no signs of abating as Chinese companies continue to inundate the Indian market with their burgeoning production capabilities. State-owned Chinese VFY producers enjoy substantial government subsidies that provide them with an insurmountable cost advantage. This support has rendered the Indian VFY industry economically unviable. The findings from DGTR's anti-subsidy petition confirm the extent of Chinese government support, elucidating the subsidization of VFY exports and significant subsidy margins. The VFY industry and its value chain in India contributes substantially to the nation's growth, employing more than 1,00,000 workers and playing a pivotal role in conserving foreign exchange. Expanding VFY capacities within India holds the potential to invigorate industrial growth, generate employment, and rectify the trade imbalance with China. The impact of ADD on Chinese VFY exports on end-users is anticipated to be minimal, with a range of 1-3% on final products. DGTR's findings underscore that the primary objective of ADD is to reinstate fair competition, safeguard the domestic industry, and ensure consumers have an array of choices. DGTR's unflinching recommendation to impose ADD on Chinese VFY exports represents a pivotal step toward securing the future of the Indian VFY industry. It acts as a protective barrier against the relentless deluge of Chinese imports and stands as a robust measure to ensure a level playing field for all stakeholders. This resolute decision is a ray of hope for the Indian VFY sector, poised to reinvigorate and thrive in the face of adversity.
Source: Tecoya Trend
The Welspun Group aims to reach $10-billion market capitalisation, from the current value of $3 billion, in the next two to two-and-a-half years, the conglomerate's chairman BK Goenka said. "Our target in the next two to two-and-a-half years is how we become three times our market cap and create wealth for our shareholders," Goenka told ET in an interview. The Welspun Group has interests in textiles, line pipes, flooring solutions, warehousing, roads, and oil and gas, and is laying out an expansion strategy for each of its businesses. The group is focusing on four major segments with an aim to build a robust business in each segment Its textile arm, Welspun India, is present in home products like flooring, home textiles and advanced textiles. The company wants to be a world leader in this category in the next three years. "We are clear in our mind. We see Spaces (the home textile brand) and Welspun on a solid path in times to come," said Goenka. Welspun Corp, which houses Sintex and pipes, is aiming to be the building material company and oil and gas company "We will sell under the brand Sintex because already we have a distribution channel and we have a name that is synonymous with it. We have 10,000 dealers and 2,500 distributors and we can expand. So, with our credibility and our platform, I think, we can take it to the next level and we are bullish on this," Goenka said. The company acquired water tanks and other plastic product maker Sintex-BAPL for ₹1,251 crore this March. "The idea was to acquire Sintex Textiles but somehow, we got pipes and tanks which is also good for us because we are in the water business," said Goenka, adding Sintex is an iconic brand and has a huge brand recall. Over the past few years, Sintex's market share has declined from 22% to 8%. Welspun is looking at rebuilding the brand and regaining the market share. "We are reorganising the whole brand and marketing. We are putting three new plants in the northern, southern and eastern regions of the country. We are expanding the manufacturing capacity," he added. To give a fillip to its steel business, Welspun Corp in 2021 acquired Welspun Steel (WSL), which is engaged in the manufacturing of BIS-certified steel billets and direct reduced iron, specialty steel and thermo-mechanical treatment bars. The water business, which falls under Welspun Enterprise, is the third segment the firm is very bullish on. This August, Welspun Enterprises acquired a 50.1% stake in technology-based EPC firm Michigan Engineers for ₹137.07 crore. Michigan Engineers is now its subsidiary. Welspun Enterprises is betting big on the water and wastewater management business and expects threefold growth in the segment in the next 3 years from the current order book of over ₹5,500 crore (as of June 2023). It is also building its warehousing division with a pipeline of around 12 million square feet of warehousing in the next two to three years. "And I think in the next three to five years, we'll be at 25 million square feet of warehousing space. We see this as a sunrise industry," Goenka said.
Source: Economic Times
Textile stocks, mainly cotton and fabric manufacturers, have been attracting investors interest in recent times at the bourses. According to analysts, strong Q2, momentum in domestic economic activity and focus on emerging areas such as technical textiles and home furnishing have led to an interest in textiles companies. Top performers such as Trident, Welspun, Raymond, Gokaldas Exports, Indo Count Industries Ltd have seen a turnaround in their fortunes. Shares of Trident opened at Rs 36 (- 2 per cent from previous close) on the BSE and have gained 15 per cent in the past three months. Gokaldas Exports opened at Rs 800.65 (+1 per cent) and delivered 59 per cent returns during the period. Raymond was almost flat at Rs 1,861.70 and has lost five per cent in three months, while Indo Count gained 38 per cent and opened at Rs 287.10 (near its 52-week high of Rs 302.05) ICICI Securities and Edelweiss have initiated a Buy recommendation for Gokaldas Exports keeping the target price at ₹973 and ₹933, respectively. Axis Direct recommends a Buy on Welspun with a target price of ₹160. A report released by FICCI-Wazir Advisors in October noted that Indian textile and apparel market size was around $165 billion in 2022, including the domestic market of $125 billion. Given the long-term positive outlook, the market size is projected to grow at a 10 per cent CAGR to reach $350 billion by 2030. Industry sources said though the production of cotton, the key raw material, is likely to be lower, textile firms are expected to manage the situation through blends. Also, prospects for cotton production in the US are bleak which can result in a big opportunity for India to capture a greater share in global market. Indian textiles is expected to manage the lower crop with a good carryover stock. Brushing aside the headwinds such as Covid pandemic, global recessionary trends, Russia-Ukraine war, volatility in raw material prices, inflation, etc, the industry is expected to witness significant growth. Though there were reports of sluggish export orders, piling up of inventories ahead of the Fall season, the broader picture seems to be a bright one. Abhishek Jain, Head of Research, Arihant Capital, told businessline: “Recently, we’ve observed notable improvements in inventories with several large companies boasting of strong order books which is a positive sign. Despite the recent rally over the past six months, there remains a sense of optimism for the textiles sector. Additionally, the reduction in US channel inventories and consistently decent retail numbers for the past few weeks, if sustained, can provide much-needed momentum. The industry has also witnessed consolidation and many players are confident in delivering good numbers.” Bright prospects According to CARE Ratings, the destocking at the retailers-end in the US and key export markets amid the recessionary trend in Europe and the cut-down on nonessential expenses in the US due to the high inflation has impacted the demand. With the destocking at the retailers-end coming round, the home textile industry witnessed an increase in order flows from the US during H1- FY24. The rating agency believes the demand is expected to improve in FY24 on account of the uptick in orders as the inventory levels at the retailer-end normalises, which will also aid in the improvement of the operating margins due to the improved operating leverage attributed to higher capacity utilisation. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the textiles industry faced headwinds in FY23 due to weak demand and high input prices. Global growth slowdown impacted demand. “But the situation is improving now and divergent trends are visible in the industry. Cotton yarn and fabric manufacturers are doing well. Export orders are good for this segment. This is visible in the Q2 results of companies like Welspun India which has posted good top and bottom lines and optimistic commentary.” The government’s measures ranging from giving a push to technical textiles, the PLI scheme, launch of mega textile parks under the PM-Mega Integrated Textile Region and Apparel (PM MITRA) scheme, Silk Samagra scheme to boost sericulture and silk industry, SAMARTH Yojana aimed at skill development, to signing of FTAs with many countries, etc have helped. Raw material prices One of the advantages that textile mills enjoy is that prices of raw materials have stabilised. Jain dubs this as a favourable factor which can work wonders for the textile sector. JM Financial projects a stronger 2HFY24 demand outlook for the textile sector. “Reduced cotton prices (down over 40 per cent in 12 months) coupled with improving scale in H2 2023 could lead to a material margin boost. With UK FTA ($1billion additional opportunity for India) in the horizon and possibility of “China+1” picking pace can significantly re-rate earnings and multiples for the space,” a note said. India is targeting an average GDP growth of over 7 per cent per annum to become a $5-trillion economy by 2025-26. As the world’s fifth-largest economy with a population of 1.4 billion people, and with demand for home products increasing at 20 per cent per annum, business growth opportunities are galore for textile sector and the stocks too are likely to perform well.
Source: The Hindu business line
Though India is the world’s leading consumer of silk, production of the lustrous and shiny fibre spun out of silkworms has consistently fallen short of the growing demand in the country. But, statistics available from the Central Silk Board (CSB) show that raw silk production in India has recorded a significant increase during the last 10 years – up from 23,678 metric tonnes during 2012-13 to 36,582 metric tonnes during 2022-23.
Source: The Hindu business line
Textile stocks, mainly cotton and fabric manufacturers, have been attracting investors interest in recent times at the bourses. According to analysts, strong Q2, momentum in domestic economic activity and focus on emerging areas such as technical textiles and home furnishing have led to an interest in textiles companies. Top performers such as Trident, Welspun, Raymond, Gokaldas Exports, Indo Count Industries Ltd have seen a turnaround in their fortunes. Shares of Trident opened at Rs 36 (- 2 per cent from previous close) on the BSE and have gained 15 per cent in the past three months. Gokaldas Exports opened at Rs 800.65 (+1 per cent) and delivered 59 per cent returns during the period. Raymond was almost flat at Rs 1,861.70 and has lost five per cent in three months, while Indo Count gained 38 per cent and opened at Rs 287.10 (near its 52-week high of Rs 302.05). ICICI Securities and Edelweiss have initiated a Buy recommendation for Gokaldas Exports keeping the target price at ₹973 and ₹933, respectively. Axis Direct recommends a Buy on Welspun with a target price of ₹160. A report released by FICCI-Wazir Advisors in October noted that Indian textile and apparel market size was around $165 billion in 2022, including the domestic market of $125 billion. Given the long-term positive outlook, the market size is projected to grow at a 10 per cent CAGR to reach $350 billion by 2030. Industry sources said though the production of cotton, the key raw material, is likely to be lower, textile firms are expected to manage the situation through blends. Also, prospects for cotton production in the US are bleak which can result in a big.
Source: The Hindu business line
The central government on Tuesday, November 7 authorised the release of tax devolution of ₹72,961.21 crore to state governments for November 2023 - three days ahead of schedule. “The Union Government has authorised the release of tax devolution of Re 72,961.21 crore to State Governments for the month of November 2023, on 7th November instead of the usual date 10th November," said the finance ministry said in a statement. This will enable the state governments to make in-time releases and add to the festivities and celebrations among the people, it added. With an allocation of ₹13,088.51 crore, Uttar Pradesh has topped with the highest allocation in November, followed by Bihar at ₹7,338.44 crore. The funds have been allocated to the states based on a predefined formula that takes into account various factors such as population, area, and fiscal capacity. The state-wise distribution of the net proceeds of union taxes and duties for June 2023 reveals the amounts received by each state. The government usually releases funds under tax devolution to states on 10th of each month. In the past too, releases have been advanced to facilitate states in their fight against covid and also to help push capital spending. Tax devolution is a major source of funds for states, used for spending on development, welfare and priority-sector projects and schemes. Currently, 41 per cent of taxes collected by the Centre is devolved in 14 instalments among states during a fiscal year.Meanwhile, the number of income tax returns (ITRs) for assessment year (AY) 2023-24, filed by 31 October, stood at a record 76.5 million, up 11.7 per cent from the comparable period of the previous year, the Central Board of Direct Taxes (CBDT) said on Wednesday.
Source: Livemint
The Prime Minister, Shri Narendra Modi, today urged the masses to celebrate India’s entrepreneurial and creative spirit by supporting the local talent using digital media. He also shared a link on which people can post a selfie with the product or its maker on the NaMO App. The Prime Minister posted on X: "This Diwali, let us celebrate India’s entrepreneurial and creative spirit with Vocal for Local threads on NaMo app. narendramodi.in/vocal4local Buy products which have been made locally and then post a selfie with the product or the maker on the NaMo App. Invite your friends and family to join your thread and spread the spirit of positivity. Let us use the power of digital media to support local talent, encourage the creativity of fellow Indians and keep our traditions thriving."
Source: PIB
Geographical location is a pivotal factor in making trade competitive which is crucial for overall economic growth. Haryana, a state that was born out of Punjab 57 years ago, was once a barren land with minimal development. However, today, it ranks among the top ten states in terms of export values, mainly due to its geographical advantage of being close to the National Capital Region(NCR). It has five times more exports than Punjab. Similarly, coastline states that have access to ports are better equipped to engage in international trade, while landlocked regions like Punjab face higher trade costs and challenges in transit from the seas. Unfortunately, policymakers have not prioritized overcoming geographical challenges and regional disparities, the focus must shift towards developing each district of such states as an export hub to ensure balanced economic growth. In the era of the fourth digital industrial revolution and e-commerce channels, developing countries have been able to meet the increasing demand for goods and services from developed countries, thereby exploring new opportunities in international trade. India's goal of making each district an export hub highlights the need for active participation from all districts to promote exports of goods and services produced However, in the latest ranking of states based on the Export Preparedness Index (EPI), Punjab is positioned at a low 10th with a score of 58.95, whereas Haryana takes the lead at 5th with a score of 63.65. It is noteworthy that Gujarat has the highest number of 8 districts among the top 25 districts of the country in terms of export share (54%), followed by Maharashtra with 5 districts, Haryana with one, and Punjab with none. To increase exports significantly, states must actively participate in export promotion activities in each district. Punjab, in particular, has untapped potential in the form of unique products in each district. Identification of these districts as export hubs would unlock their local potential and fuel economic growth, generate employment, boost rural entrepreneurship, and enhance exports. It's high time that Punjab takes the necessary steps to actively participate and promote export operations in each district, in tandem with 'Vocal for Local' and 'Make in India' initiatives. The Foreign Trade Policy (FTP) 2023-28 is determined to boost India's foreign trade through decentralized export promotion. As a part of this policy, the Districts as Export Hubs initiative has been introduced as a crucial strategy. This initiative aims to identify potential export products and services in all districts and create institutional mechanisms to promote them, which is a significant step towards achieving the policy's objectives. To make this initiative a grand success, the Districts as Export Hubs Initiative proposes several strategies. These include creating a robust institutional framework, identifying potential export products, building the capacity of new exporters, conducting outreach programs for export promotion, addressing bottlenecks related to infrastructure and logistics, and converging ongoing government schemes to support these initiatives. These strategies will ensure that India's potential for foreign trade is fully realized, and the country becomes a major player in the global market. Permission must be granted for the flow of bilateral trade from Punjab through Pakistan Territory to Middle-East Countries, CIS Nations to Europe and the US to further boost competitive trade. To synchronize the state and centre policy of exports and act as the nodal coordination point for exporters between the state and centre, the establishment of a Directorate of Exports in the state is of utmost importance. Given that most trade is shifting to global value chains that require timely deliveries, exporters must be allowed to choose the shipment mode as per their business requirements. China has already created an efficient and seamless logistics system to ship goods to global customers, and we must take action now to ensure that we do not fall behind. The government must create a separate customs code for e-commerce shipments to match the emerging channels. This will not only reduce costs but also expedite the delivery of merchandise by exempting import duties on rejects and treating re-imports as duty-exempt imports in line with global practices. It's high time that the exporters should be allowed to claim GST refunds. To boost export orders for high-potential product categories like engineering goods, chemicals, telecom equipment, and processed food items, we must focus on developing market intelligence, organizing training for MSMEs, and facilitating the fulfilment of export orders. This is a must-do to stay ahead of the competition. The Districts as Export Hubs Initiative should be prioritized with the objectives of enabling farmers and MSMEs to benefit from export opportunities in foreign markets. To achieve this, we need to create a district-level ecosystem for innovation and technology utilization to increase export competitiveness and reduce transit and transaction costs for the exporter at various stages of the export cycle. Platforms should also be provided for wide and global reach of products and services from the district, which in turn, will promote local farmers and small entrepreneurs. This is a win-win situation for all. To create a competitive space in the export market, it is essential to implement the initiative effectively. State and District Export Promotion Committees have been formed, but they are not functioning effectively to meet key target areas such as disseminating market intelligence, improving quality standards, and providing access to international certification industries, as well as monitoring export performance at the district level. The District Export Action Plans aim to identify goods and services for export promotion, employment and revenue generation to drive the local economic growth.
Source: Daily Pioneer
INTERNATIONAL
This information is known from the report published by the Office of Textiles and Apparel (OTEXA) of the United States. This report contains updated information as of September. According to data from the US Department of Commerce, Bangladesh exported $5.78 billion worth of ready-made apparel to the country during the January-September period, compared to $7.54 billion in the same period last year. During the year, the country's apparel exports fell by $1.76 billion. On the other hand, in September of this year, Bangladesh's garment exports to the country were $594.7 million. In September last year, Bangladesh exported goods worth $911 million to the country. Compared to September of last year, the income due to the export of clothing made in the United States decreased by $316 million. In the first nine months of this year, Bangladesh's garment exports to the US have declined in seven months except January and July compared to the corresponding months of the previous year. Exporters say the economic slowdown and high inflation caused by the RussiaUkraine war have reduced the purchasing power of US consumers. And because of this, the demand for ready-made garments has decreased. This has had a negative impact on the export of apparel made in the country. According to the concerned, such situation may prevail for another three to four months. Then maybe exports can increase gradually.
Source: Textile Today
Speakers at the inaugural ceremony of 15th Bangladesh Denim Expo said that Bangladesh needs to double its denim export to achieve US$ 100 billion export target by 2030 that fixed by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) early this year. Commerce Minister Tipu Munshi, MP, said, “Bangladesh is the 2 largest apparel exporting country in the world; but in denim we are largest exporter both in EU and USA, even before China.” “Bangladesh Denim Expo has a huge contribution behind the success of Bangladesh’s denim export’’ the minister said while inaugurating the 15 edition of the expo as the Chief Guest in Dhaka today. Siddiqur Rahman, Former President of BGMEA; Faruque Hassan, President of BGMEA; SM Mannan Kochi, Senior Vice President of BGMEA; and Mostafiz Uddin, Founder and CEO of Bangladesh Apparel Exchange (BAE) were the Special Guests on the occasion. Siddiqur Rahman said, “Denim and denim related products accounts for about one fourth of Bangladesh’s total apparel export. So, to fetch the US$ 100 billion apparel export target the country has to double its denim export by 2030.” “It’s possible. Because we believe that the brands and retailers will choose Bangladesh as their preferred apparel sourcing destination since the country has made exemplary progress in workplace safety and sustainability in recent years,” he added. Faruque Hassan said, “The presence of 200 green garment factories LEED certified by United States Green Building Council (USGBC) in the country is the testament to Bangladesh’s apparel industry’s commitments towards sustainability.” “Among the world’s top 10 green factories now at least 8 are located in Bangladesh,” he added. SM Mannan Kochi said, “Currently BGMEA and the government are taking highest cautions for apparel business in the country running smoothly.” The successful arrangement of the 15th Bangladesh Denim Expo is a proof of the safe business atmosphere prevalent in Bangladesh”. Ziaur Rahman, Regional Country Manager (Bangladesh, Pakistan & Africa), H&M said, “H&M has taken the initiative to reduce 56% carbon dioxide by 2030. It has taken initiative to sign a power purchase agreement to make the market competitive for the company. He emphasized taking a more regularized scheme for the recycling process to be done. Also, focused on innovation - try, learn and adapt techniques which are vital for the apparel industry. On this note, H&M is working with the GIF for green innovation.” Moreover, new technologies are required for less carbon emissions and less water usage. Besides he also mentioned the higher wages of the garment workers by inviting the ministers for negotiation since, H&M does not negotiate rather work on the strategic aspect of the apparel sector. Mostafiz Uddin said, “Bangladesh denim industry has huge potentials. His organization Bangladesh Apparel Exchange (BAE) has been working to unlock the untapped potentials of the denim industry.” A total of 80 exhibitors from 12 countries are participating in the 15th Bangladesh Denim Expo. About 5000 visitors from home and abroad have registered to attend the 2-day expo starting from this Wednesday. Four-panel discussions are also being organized in this edition of the expo. Joshua Gacutan, Second Secretary (Economic), High Commission of Australia in Bangladesh; Kazi Faiyaz Murshid, Director General, Ministry of Foreign Affairs, Government of the People’s Republic of Bangladesh; Arshad Jamal Dipu, former Vice President, BGMEA & Chairman, Tusuka Group; Moyeen Hyder Chowdhury, Branch Manager, Bangladesh & Pakistan, Puma; Munir Ahmed, Director, M&J Group. Also, Mohamad Anis Agung Nugroho, Program Manager, Better work Bangladesh; Katharina Mayer, Regional CRM Manager, Indian Subcont. & Turkey, Bluesign technologies AG; and Tucker Asano, Senior Director of Sales & Marketing, YKK Bangladesh PTE LTD are speakers at the panel discussion on ‘Bangladesh Apparel Industry in 2030: The Road Ahead’. Ziaur Rahman, Regional Country Manager, Bangladesh, Pakistan & Ethiopia, H&M; Dr Bernd Spanier, Deputy Head of Mission, The European Union Delegation to Bangladesh; Sharif Zahir, Managing Director, Ananta Group; Dr Shahriare Mahmood, Chief Sustainability Officer, Spinnova; Sarwat Ahmad, Senior Adviser, GIZ; and Dr Ravichandran. L, Director – (Product innovation / Business), Atlantic Care Chemicals are the speakers at the panel discussion on ‘Transforming Human Capital for USD 100 Billion Export Target’. Thijs Woudstra, Deputy Ambassador, Embassy of the Kingdom of the Netherlands in Bangladesh; Abdullah Hil Rakib, Director, BGMEA & Managing Director, Team Group; Shafiur Rahman, Country Manager, G-Star RAW; Shams Mahmud, Managing Director, Shasha Denims Ltd & Former President, DCCI; Matteo Urbini, Managing Director, Soko Chemicals; and Andrea Venier, Managing Director, Officina+39 are the speakers at the panel discussion on ‘Sustainable Transition of Denim Industry’. Ali Mushtaq Butt, Commercial Counsellor & Head of Trade Mission, Embassy of Denmark in Bangladesh; Mohammad Hatem, Executive President, BKMEA; Md. Shahidullah Azim, Vice President, BGMEA; Luthmela Farid, Director, Pacific Jeans; Adib Sajjad, Country Manager, Solvei8; and Deepak Shah, Group CEO (Bangladesh and Vietnam), TEX Fasteners are the speakers at the panel discussion on ‘Unlocking the Untapped Potential’.
Source: Textile Today
Educational organisation British Council has partnered with the University of the Arts London (UAL) and announced an open call for designers, design entrepreneurs, and SMEs from the UK and India to apply for the New Landscapes Catalyst Grant Scheme, a collaborative research and development scheme. Under the direction of the Fashion, Textiles and Technology Institute (FTTI) at UAL, the goal is to develop solutions to support globally sustainable fashion, textiles, and technology. In one of the five main categories—sustainable development, materials, manufacturing and commerce, retail interaction, and digital—joint submissions from at least one eligible UK applicant and one eligible Indian applicant are invited. “This initiative aims to make a substantial impact on the fashion and textile landscape by directly addressing critical global challenges,” states a press release. Seven awards of up to £ 7,000 each will be given out as part of the three-year “New Landscapes: India R&D” competition to foster joint initiatives between UK-based SMEs and Indian design entrepreneurs and SMEs. “This next phase of collaboration between the British Council India and the UAL FTTI will continue to address the wider apparel and textile industry’s relationship with climate change,” comments Jane Harris, director of the University of the Arts London Fashion, Textiles and Technology Institute.
Source: Apparel Resources
Global fashion retailers including H&M and Gap are committed to raising purchase prices for Bangladesh-made clothing to help factories there offset higher workers' wages, a U.S.-based association representing more than 1,000 brands said. 9 Bangladesh is the world's biggest garments exporter after China. This week, after deadly protests between police and factory workers, the government mandated an almost 60% raise to the minimum monthly wage to 12,500 taka ($113) from December, the first increase in five years. Factory owners had said the wage hike, which comes ahead of a January general election, would eat into their profit margins by increasing costs 5-6%. Labour accounts for 10-13% of total manufacturing costs, industry estimates show. Asked if they would raise purchase prices by the 5-6% that costs will rise, Stephen Lamar, chief executive of the American Apparel & Footwear Association (AAFA), told Reuters: "Absolutely". "As we and our members have reiterated several times now, we are committed to responsible purchasing practices to support the wage increases," Lamar said in an email. "We also renew our pleas for the adoption of an annual minimum wage review mechanism so that Bangladeshi workers are not disadvantaged by changing macroeconomic conditions." Low wages have helped Bangladesh build its garment industry, which employs about 4 million people. Readymade garments are a mainstay of the economy, accounting for almost 16% of GDP. Even after the increase in minimum wage, which some workers said was too little, Bangladesh lags other regional garment manufacturing hubs such as Vietnam, where the average monthly wage is $275, and Cambodia, where it is $250, data from the International Labour Organization shows. Last month, several members of the AAFA including Abercrombie & Fitch and Lululemon, told Bangladesh Prime Minister Sheikh Hasina they wanted workers wages to rise, and to take into account inflation, which is currently at 9%. Lamar also wrote to Hasina in July. Retailers in the United States and Europe are the main buyers of Bangladesh-made clothes. Like most consumer goods retailers, fashion companies are grappling with high inventories and a slowing global economy, where shoppers in key markets are buying less as they feel the pinch.
Source: Retail.economictimes.indiatimes.com
