For almost a year now, India’s major textile hubs of Ludhiana, Surat, and Erode have been fighting an almost insurmountable challenge: rising imports, or arguably large-scale dumping, of man-made fibre (MMF) fabrics that is affecting a sector valued at about $60 billion. Rajesh Bansal, a fabric processor in Ludhiana, took his friends from Nagpur recently to a retail outlet to buy fleece. “Of the six pieces shown to us, four were from China,” he says. “China dumps fabric and this creates problems,” asserts Ashok Jirawala, president of the Federation of Gujarat Weavers Association. “We ran our weaving units to full capacity and now we have unsold stocks. So, we plan to cut production by 20%.” C. Jaganathan, who weaves fabrics in Erode, imports viscose yarn from China. “When the prices were ₹180 a kg for Indian yarn, I got it for ₹125 a kg from China. Only for the last one month Chinese prices are higher. The Chinese sellers are now offering the current price for a year,” he observes.In the last three years, MMF fabric imports, which attract mostly 20% duty, have doubled and most of it is knitted synthetic fabrics, contends R.K. Vij, secretary general of the Polyester Textile Apparel Industry Association. According to data shared by Mr. Vij, in 2019-2020 (April to March), about 325 tonnes of fabric were imported every day from China at $4.61 a kg. The volume increased to 887 tonnes a day in the April-June quarter of this fiscal and the average value was about $2.90 a kg. Of this, value of knitted or crocheted dyed fabrics made of synthetic fibre was just $1.4 (about ₹118) a kg.
‘Under invoicing hurts’
It is not just imports, but “under invoicing of imported finished fabrics that is a major issue,” notes Mr. Vij. “The government should issue a notice to Customs, stopping clearance of fabrics that are priced below a certain value at the ports,” he urges.
A worker processing yarn at a sizing unit in Erode district, Tamil Nadu
Rising import of MMF fabric and relatively higher domestic prices of MMF fibres are severely impacting local spinners, knitters, weavers and processors as they are unable to supply at competitive prices. This has hit both, the local and export manufacturers, and the downstream industry is said to be operating at only 70% capacity. Quick trade estimates for November from the Confederation of Indian Textile Industry (CITI) show that export of man-made yarn, fabrics, and made-ups were 7.33% lower year-on-year. For April-November, the decline was 23.2%. In 2017-18, fabrics dominated India’s total MMF exports with 33% share, while yarn made up 32%, as per a study on the Ministry of Textiles website. India’s share in global MMF trade was 2.7% in 2019. “Indian textiles is predominantly cotton based,” says a Tamil Nadu-based viscose products producer, who spoke on condition of anonymity. “We could not bring much innovation in MMF products. China, Thailand, Korea have been the innovators,” he adds. “We were out-priced on the raw material front for the last 15 years. We do small value additions. With the China + 1 strategy, there is a big push from western brands but we do not have the capabilities. China is the biggest player in MMF. It is desperate to sell its raw material at any cost as its customers are looking at other countries for sourcing it. China determines the international prices.” The viscose products producer says, given China’s dominance, India’s introduction of Quality Control Orders (QCOs) on MMF fibres is severely impacting the entire value chain. The government has introduced QCOs on polyester raw materials, polyester fibre and yarn, and viscose fibre, making Bureau of Indian Standards (BIS) certification mandatory for these products, even if they are imported.
‘QCOs killing industry’
“The QCOs are killing the industry,” says Rakesh Mehra, Chairman, CITI. “The government should have started with QCOs for garments. That is left open [for imports] and it has introduced QCOs for fibre. This has led to fibre prices going up. What should be of good quality is what touches the skin. But, that [garment and fabrics] is imported without any quality control. One has to do a deep study on the prices and imports. The industry is for QCOs and good quality, But, it should be introduced first at the garment stage,” adds Mr. Mehra. Any textile mill that produces MMF yarn (polyester or viscose) should get the yarn tested for BIS standards. “How can a small-scale mill spend lakhs on testing,” asks a small-scale textile mill owner, speaking on condition of anonymity. “It should not be mandatory at the yarn stage,” he adds.
By extension, quality control on fibre imports is denying the market of high quality fabrics. A viscose yarn producer says a garment exporter in Tiruppur showed a sample that he claimed was a branded speciality fabric. On closer examination, it turned out to be a blend of nylon and viscose. “No one really checks. The sellers are using brand names to push any type of blended fabric into the market,” adds the yarn producer, who does not wish to be identified. In a slow market, the imports and QCOs on fibre seem only to drag down the industry, not just the MMF sector but the promising technical textiles segment too. The industry is unable to import MMF fibres under advance authorisation scheme for overseas orders where the customers specify the speciality fibres to be used. “There is no clarity on this and it is leading to a lot of confusion,” says the Synthetic and Rayon Textiles Export Promotion Council chairman Bhadresh M. Dodhia. “The surge in import of value added products is ridiculously high. QCOs should be implemented across the value chain at the earliest,” he adds.
MSMEs on edge
Almost a year of declining orders and high prices have put MSME units’ finances on edge. “I weave rayon fabric and sell it to local traders who sell in the north Indian markets,” says Aruchamy, a weaver in Palladam who owns and operates automated looms. “The buyers have reduced the prices by ₹2 to ₹5 a metre in the last one year. For every three looms, there should be one worker. I now have one person to man five looms. A fitter asks for ₹30,000 a month as salary. I cannot afford it. This affects the quality of the fabric produced,” he adds. “I used to pay ₹4 lakh a month as electricity charges for the auto looms unit,” says Mr. Jaganathan. “That has increased to ₹6 lakh now. Similarly, labour costs have shot up too. In Erode, auto loom units should pay almost ₹1,000 a day to a worker,” he adds. He is among the MMF weavers in Erode who are demanding reimbursement of GST paid under an inverted duty structure for a year so they get some financial relief. When GST was introduced in July 2017, MMF fibre and yarn were levied 18% duty and fabric was 5%. From November 1, that year, the tax on yarn was reduced to 12%. The weavers assumed that they would get a refund for the higher duty that they have been paying. But, a good two years later, in January 2019, weavers were told that the refund would take effect only from August 1, 2018, a whole year after they had paid higher taxes. And that the refund would be on the condition that the weavers did not owe any outstanding GST for the concerned taxation period of 13 months, failing which, an 18% penalty was levied on the entire 13 months GST value. As the weavers had been hopeful of getting the refund, they had not updated their accounts to reflect the changed taxation and ended up paying the penalty to get their refund. Mr. Jaganathan contends he should get ₹50 lakh as refund for the 13 months.“There are many weavers who had to shut operations because of the GST issue,” says B. Kandavel, organising secretary of Federation of Tamil Nadu Powerlooms Associations. Across the country, the government may have to pay ₹1,000 crore, or so as refund to the MMF weavers. This will be a significant financial relief to the weavers, adds Mr. Kandavel.
Source: The Hindu
The special purpose vehicles will be established across seven states to boost the textile sector. 49% of the project cost will be covered by the Centre ₹800 c cr will be given for a greenfield park by the textile ministry. The government is in the final stages of creating special-purpose vehicles for the Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) parks to boost the textile sector. All formalities to establish SPVs will conclude early next year, two officials aware of the development said. Seven parks are set to come up at Virudhunagar in Tamil Nadu, Warangal (Telangana), Navsari (Gujarat), Kalaburagi (Karnataka), Dhar (Madhya Pradesh), Lucknow (Uttar Pradesh), and Amravati (Maharashtra). SPVs were incorporated in Gujarat and Uttar Pradesh. The process of setting up SPVs were initiated in Madhya Pradesh, Tamil Nadu, Telangana, Maharashtra, and Karnataka, and is in the final stages, one of the two officials said, seeking anonymity.
Source: Live Mint
The textile industry witnessed a downtrend in exports in November 2023, despite the opening of markets in western countries on account of the festive season, with readymade garments—a mainstay of the textile export portfolio—experiencing an 15% decline. The industry experts are hopeful that trend will reverse in coming months when purchase orders for summer clothes will start coming from western countries, given that Indian cotton-based wearables are high in demand in foreign countries. The industry experts are hopeful that trend will reverse in coming months when purchase orders for summer clothes will start coming from western countries, given that Indian cotton-based wearables are high in demand in foreign countries. The major exporting destination for Indian garments are European Union, the US and the middle east countries. According to the government data, readymade garments experienced an 15% decline, with export figures dropping from $10.36 billion in April-November 2022 to $8.84 billion in the corresponding months of 2023. This dip raises questions about the evolving consumer preferences, market dynamics, and global economic conditions influencing the demand for fashion and apparel. Export of jute manufacturing, including floor covering, reduced to $234 million in April-November 2023 from $303 million in the last fiscal in same period, ballooning the trade deficit by 23% (y-o-y) and 24% month-on-month in November 2023 as per the quick estimates released by the commerce ministry. Amidst an overall downtrend in November 2023, there are notable exceptions, providing insights into the industry's resilience and adaptability as cotton yarn and handloom products, in particular, emerged as beacons of growth, recording a commendable 6% increase during this period. “For Indian textile industry, European Union, the US and the middle east are the main markets. There are specific reasons for decline in the textile trade. EU is yet to get over from the ongoing Ukraine-Russia war that has impacted the retail sale," said Rahul Mehta, president of Clothing Manufacturers Association of India (CMAI). “The demand from the middle east is down due to ongoing Israel-Gaza war. The US market is performing well and we are hopeful of correcting export figures in upcoming months," he said, adding “the decline in November is attributed to pre-winter season as we are not much in winter cloth manufacturing for global markets."
The quick estimates recently released by the commerce ministry indicate a 21% month-on-month increase in the trade deficit, emphasizing the need for a comprehensive understanding of the forces at play in the international trade arena. Export of handicrafts items dropped from $1.16 billion in April-November 2022 to $1.04 billion in the first eight months of the current fiscal, registering negative growth of 10%. India is among the top garment-manufacturing countries in the world. India is one of the largest consumers and producers of cotton with the highest acreage of 13.5 million hectares, which is 38% of the global area under cotton cultivation, as stated by Indian Brand Equity Foundation (IBEF), a body established by the ministry of commerce and industry. India’s textile and apparel market size is growing at a CAGR of 14.59% from $172.3 billion in 2022 and is expected to reach $387.3 billion by 2028, the IBEF report said, adding the industry is one of the biggest contributors to the economy with a 2% contribution to the GDP. The textile industry is also the second largest employer after agriculture, providing direct employment to 45 million people and 100 million people in the allied sector. Andhra Pradesh, Telangana, Haryana, Jharkhand and Gujarat are the top textile and clothing manufacturing states in India.
Source: Live Mint
Synopsis Bangladesh is in talks with the 15-member RCEP bloc and is likely to take a call about joining it after the elections on January 7. India had pulled out of the RCEP pact in 2019 after negotiating for seven years, citing concerns on trade deficit with China, circumvention of rules of origin, and how the base rate of customs duty was unaddressed. The RCEP now comprises the 10 Association of Southeast Asian Nations (Asean), as well as Australia, China, Japan, South Korea and New Zealand. New Delhi: India is reassessing its plan to ink a trade pact with Bangladesh, cautious of Dhaka's intention of joining the China-led Regional Comprehensive Economic Partnership (RCEP) and Chinese goods entering the country through circumvention. Bangladesh is in talks with the 15-member RCEP bloc and is likely to take a call about joining it after the elections on January 7. India had pulled out of the RCEP pact in 2019 after negotiating for seven years, citing concerns on trade deficit with China, circumvention of rules of origin, and how the base rate of customs duty was unaddressed. The RCEP now comprises the 10 Association of Southeast Asian Nations (Asean), as well as Australia, China, Japan, South Korea and New Zealand. "Bangladesh has reduced its overall imports and is thinking of joining the RCEP. We are cautious about it. We are watching the implications on trade and industry," said an official. Bangladesh is India's biggest trade partner in South Asia. The two sides had decided to start negotiations on a bilateral Comprehensive Economic Partnership Agreement, with the aim to implement the pact by the time Bangladesh graduates out of its least developed country (LDC) status in 2026. The official added that Bangladesh already gets preferential benefits under the South Asian Free Trade Area (SAFTA) of which India is also a member.
"Bangladesh has a major import squeeze. Cotton yarn and edible commodities have been hit, but we are not pressuring them to import more," said another official. India's exports to Bangladesh in April-October FY24 were $6.04 billion and $12.21 billion in FY23. Imports were $1.15 billion in the first seven months of 2023-24 and $2.02 billion in last fiscal. The European Union has extended preferential access to Bangladesh's exports. This is significant as the EU suspended the benefits under Generalised System of Preferences to India's exports of textiles, chemicals, leather, plastics, metals and machinery January 1, 2023. "Any trade agreement with Bangladesh will only benefit them and add to their advantage," said a Delhi-based trade expert.
Source: Economic Times
Synopsis The upcoming India-US Trade Policy Forum (TPF) meeting in January is set to address visa concerns, agricultural trade promotion, and the restoration of benefits under the US Generalized System of Preferences (GSP) program. US Trade Representative Katherine Tai is scheduled to meet with India's Commerce and Industry Minister Piyush Goyal during the two-day meeting starting January 13, 2024. Issues about visas, promoting agri trade and resumption of benefits under the American generalised system of preferences (GSP) are expected to figure in the meeting of India-US Trade Policy Forum (TPF) in January here, an official said. US Trade Representative Katherine Tai will be here for a meeting with Commerce and Industry Minister Piyush Goyal. "Both sides will discuss ways to increase trade and investments between the two countries during the two-day meeting from January 13, 2024. It will be the 14th ministerial-level meeting of the India-US TPF," the official said. The last meeting was held in Washington in January 2023. India in that meeting highlighted the delay in the issuance of business visas to people from India. New Delhi is also keen on restoration of its beneficiary status under the US GSP programme. The GSP allows eligible developing countries to export duty-free goods to the US. About 1,900 Indian products from sectors such as chemicals and engineering were getting duty-free access to the US market under the GSP, introduced in 1976. Both the countries in the last TPF meet had noted that the movement of professionals and skilled workers and business travellers between the countries contributes to enhancing bilateral economic and technological partnership, the official added. The official said that the proposed social security totalisation agreement may also figure in the meeting. Under a totalisation agreement, an expatriate in either country need not contribute to the social security schemes of the host country. It would benefit a number of Indians, particularly from the IT sector who are working in America and paying social security but are unable to get any benefit out of it. In the 13th TPF meeting, the two countries launched a new working group on "resilient trade" to deepen bilateral dialogue on a range of issues that can enhance the resiliency and sustainability of the trade relationship including trade facilitation. TPF is a platform to resolve trade and investment issues between the two countries. It has five focus groups -- Agriculture, Investment, Innovation and Creativity (intellectual property rights), Services and Tariff and Non-Tariff Barriers. The US is the largest trading partner of India. America accounts for about 20 per cent of India's total exports in goods and is a key market for services sectors like IT. The bilateral trade between the countries has increased to USD 129.4 billion in 2022-23 from USD 120 billion in 2021-22. India received USD 6 billion in foreign direct investment from the US in 2022-23.
Source: Economic Times
The government is considering allowing filing of updated or revised returns under the goods and services tax (GST), a move expected to benefit taxpayers and also bring down litigation under the indirect tax regime. As per the proposal, taxpayers will be able to rectify their returns including computation of tax, ET has learnt. “We are looking at allowing updated returns under GST,” a senior official told ET. At present, there is no provision for filing revised returns under GST, barring minor corrections in the invoice details uploaded on the portal. Industry has been demanding this facility and a petition in this regard is before the Supreme Court. The facility is already available under income tax. “This will add immensely to the ease of filing returns and reduce litigation where the intent is not to evade tax and a taxpayer has either miscalculated or missed out on a detail,” the official added. The Central Board of Indirect taxes and Customs is thrashing out the details that will then be taken up by the law committee of the GST Council and then by the council itself. The facility may be initially introduced for yearly returns then expanded to quarterly ones. It would take at least 8-9 months post GST Council approval for implementation as it would require a significant upgrade of the GST Network. The GSTN will entrust the task to the next technology vendor for the GST portal as the contract of the current service provider Infosys will end on September 30, 2024. “If everything goes smoothly, we will be able to implement the new facility by April 2025,” an official from GSTN said. “Just as the robust compliances continue to be the backbone of GST, the GST return forms require timely updates to reflect the changing fiscal landscape, including revising the annual return form to reflect the altered input tax credit reporting implemented in monthly return effective August 2022,” one of the expert said. Another expert says hundreds and thousands of GST-registered persons and GST-registered dealers often make natural human errors, such as calculation errors and counting inaccuracies, which can be corrected if an option for revised returns is made available along with pre-filled returns. “While the proposal would be helpful for businesses, it is essential to ensure that the data is picked up on real time basis, validated and businesses should be able to edit all fields in the auto populated returns, and tax payment computations should be based on the data populated by business,” he said.
Source: Economic Times
India, the world's third-largest energy consumer, made its first-ever payment in rupees for crude oil purchased from the United Arab Emirates (UAE), signalling what could be a strategic push to promote the local currency globally. The move is part of India's broader efforts to diversify oil suppliers, cut transaction costs, and establish the rupee as a viable trade settlement currency. This initiative aligns with the Reserve Bank of India's move on July 11, 2022, allowing importers to pay in rupees and exporters to receive payments in the local currency. Officials have stressed that internationalisation is an ongoing process, and currently, there are no specific targets. In July, India formalised an agreement with the UAE for rupee settlements, leading to the Indian Oil Corporation (IOC) making payments for purchasing one million barrels of crude oil from Abu Dhabi National Oil Company (Adnoc) in Indian rupees. Additionally, some Russian oil imports have also been settled in rupees. With over 85 per cent of its oil needs reliant on imports, India has adopted a multifaceted strategy, emphasising sourcing from the most cost-effective suppliers, diversifying supply sources, and adhering to international obligations. The nation's approach proved advantageous during the ramp-up of Russian oil imports, saving billions of dollars. Despite these efforts, India aims to explore trade settlements in rupees rather than dollars to streamline transactions by eliminating currency conversions. While there has been success in non-oil trade settlements with specific countries, oil exporters overall have hesitated to embrace the rupee, expressing concerns about fund repatriation and high transactional costs. The oil ministry, addressing a parliamentary standing committee, emphasised that payments for crude oil can be made in Indian rupees, contingent on suppliers adhering to regulatory guidelines. The ministry added that there has not been much international interest in making payments using the Indian rupee as suppliers are wary of the repatriation of funds and high transactional costs. In the financial year 2022-23 (April 2022 to March 2023), India spent $157.5 billion on importing 232.7 million tonnes of crude oil. Key suppliers included Iraq, Saudi Arabia, Russia, and the UAE, with West Asia contributing 58 per cent of all supplies. The domestic supply meets less than 15 per cent of the demand.
Source: Business Standard
Chinese researchers have created a groundbreaking knittable fibre, inspired by the unique structure of polar bear fur, offering superior thermal insulation. Published in the Science journal, this development introduces an encapsulated aerogel fibre, notable for its durability, washability, and the ability to be dyed, enhancing its applicability in high-end textiles. Traditionally, aerogel fibres have been unsuitable for textile production due to their limited strength, stretchability, and reduced insulating efficiency in damp conditions. However, the team from Zhejiang University turned to the distinctive fur of polar bears, renowned for its warmth and water-resistant properties, as a model. Polar bear fur consists of a dense shell surrounding a porous core, a structure the scientists emulated. Their innovation led to the creation of a robust aerogel fibre, infused with lamellar pores, which captures infrared radiation, thus retaining heat while preserving its mechanical strength, making it ideal for knitting and weaving. Remarkably resilient, this fibre sustains its insulating qualities even after undergoing 10,000 stretch cycles at 100 per cent strain. The researchers demonstrated its effectiveness by knitting a thin sweater from the fibre. Despite being significantly thinner than a conventional down jacket, this sweater matched the jacket’s thermal insulation capabilities. This breakthrough points towards exciting future prospects for multifunctional aerogel fibres and textiles, broadening the scope of advanced textile technology.
Source : Fibre2fashion
Cambodia's trade engagements with member nations of the Regional Comprehensive Economic Partnership (RCEP) have seen a significant increase, according to a recent report from the ministry of commerce. In the period from January to November this year, the total trade value with RCEP countries reached over $26.5 billion, marking a substantial portion of Cambodia's overall international trade. The trade volume accounts for 61 per cent of Cambodia's total international trade, which stands at $43 billion for the same period. Furthermore, Cambodia's exports to these countries have shown significant growth. Cambodia exported goods worth $7.21 billion to RCEP countries during the January-November period, representing a year-on-year increase of 27.29 per cent compared to last year, according to Cambodian media reports.
Source: Fibre2fashion
HÀ NỘI - Việt Nam's textile and garment industry has not been able to fully capitalise on the advantages and potential of FTAs, according to the Ministry of Industry and Trade (MoIT). To address this issue, the MoIT, as the leading agency for FTA negotiation and enforcement, has been enhancing connections with ministries, localities, associations, and stakeholders to establish a collaborative ecosystem to help the textile industry effectively leverage FTAs. According to Ngô Chung Khanh, deputy head of the multilateral trade policy department under the MoIT, the Vietnamese government has signed various FTAs with many markets around the world, with a key focus on reducing tariffs to the lowest and quickest levels and simpler rules of origin for Vietnamese goods, especially in the textile and garment sector. In a recent survey by the Vietnam Chamber of Commerce and Industry (VCCI), while most enterprises had some understanding of the FTAs, only about 8 per cent possessed a clear understanding. According to the ministry, Việt Nam's trade balance has been significantly in deficit in the East Asian markets, amounting to nearly US$129 billion in 2022, with $60.5 billion in trade with China, $37.9 billion with South Korea, and $13.42 billion with ASEAN. Meanwhile, the Southeast Asian economy registered a substantial surplus with the US and the EU last year, $95 billion in surplus with the US, $31.4 billion with the EU, and $5.2 billion with the UK. However, the market share of Vietnamese textiles in FTA markets has not increased in the past 4 years and remained relatively modest. In the EU, Vietnamese textiles account for only 4 per cent in the UK, 2 per cent in Canada, and 13 per cent in Mexico. The proportion of raw processing in Vietnamese enterprises is still too large, with cut-make-trim (CMT) accounting for about 65 per cent, OEM production about 30 per cent, and ODM production about 5 per cent. Difficulty in accessing capital remained a major challenge for enterprises in making further investments and improving competitiveness. The VCCI's survey showed the percentage of enterprises concerned about credit access has been increasing over time. In 2020, only 40.7 per cent of enterprises were concerned, in 2021, this figure increased to 46.9 per cent, and in 2022, it reached 55.6 per cent. In addition, Vietnamese businesses have yet to embrace development and lack collaboration. However, Khanh said sustainable development was not only a requirement of foreign management agencies but also of consumers. Failing to meet consumers' demands would likely result in losing orders. He said in the FTA implementation plan, the government had set up a framework for Vietnamese and FDI businesses to enhance collaboration but so far, it had not been able to minimise unhealthy competition within the industry. Trần Hoàng Phú Xuân, CEO of HCM City-based FASLINK Fashion, said there were still few Vietnamese businesses that actively participate in international trade fairs to understand end-users and target markets, preferring to receive orders directly in Việt Nam through intermediary companies. Factors that have been hindering stronger growth include a global economic slowdown, resulting in fewer orders being placed. The MoIT proposed a number of solutions, aiming to widen the search for new partners and seek new customers. However, the ministry said the long-term plan was to build an ecosystem for the industry, one that would connect farmers to manufacturers, exporters, associations, regulatory agencies, consulting companies, logistics, and importers. The Prime Minister's Office has also instructed the ministry to coordinate with ministries, localities, and associations to develop a plan for each province to develop key product lines. Khanh said Vietnamese businesses must start positioning FTA markets as keys in their export strategy. To enter these markets, enterprises needed to research and understand the market information and policies, devising an access and brand-building strategy. VNS
Source : Vietnam News
