The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 03 MARCH, 2018

NATIONAL

INTERNATIONAL

Textile industry seeks sourcing curbs to check rising apparel imports

Increasing apparel imports — particularly from Bangladesh — is slowly and silently killing the entire domestic textile value chain from fibre to apparel, according to the textile industry. The industry has sought immediate government intervention to impose sourcing restrictions in order to cut the damage. “This no doubt would be a timely and temporary intervention. We need to come up with a permanent solution,” said Prabhu Dhamodharan, Convenor, Indian Texpreneurs Federation (ITF). ITF representatives met Suresh Prabhu, Union Minister for Commerce and Industry, in Delhi to highlight the plight of the textile industry. He later told BusinessLine that apparel imports into India had risen from $10.94 million in 2009 to cross $100 million-mark in 2015 before soaring to $136.43 million in FY2016. India allowed duty-free import of readymade garments from Bangladesh under SAFTA in 2006. This facility was initially limited to 8 million pieces. But in 2010, this quantitative restriction was lifted. The Made-in-Bangladesh garments import surged. From a Compounded Annual Growth Rate (CAGR) of 67 per cent between 2006 and 2010, it rose to 98 per cent between 2011 and 2014. There was a marginal drop in imports in FY2017 because of the overall slowdown, but they resumed pace in FY18 and are proving to be a killer. Bangladesh does not produce enough fabrics domestically. The duty-free, quota-free facility extended to Bangladesh (in view of it being considered a Least Developed Country (LDC)) benefits China’s export of textiles. Bangladesh imports fabrics from China, converts them into garments and exports the stuff to India. Since import of Made in China fabrics is meant for export, Bangladesh does not impose any import duty on the fabric import and this facilitates backdoor entry of Chinese textiles into India. India has not imposed any sourcing restrictions. To make matters worse, the duty-free quota facility has now been extended to all 49 LDCs on a non-reciprocal basis and without any sourcing restrictions. This could cause more harm to the domestic textile manufacturing sector as some of the LDCs such as Ethiopia, Cambodia and Myanmar, which have duty-free access to the EU, Japan and US markets might dump garments here. ITF also refuted the charge that India’s textile exports (of denim in particular) to Bangladesh is on the rise. “It is not correct as most of the textile exports from India is routed through Bangladesh because of the cheap labour available there for conversion into apparel,” he said.

Tweaking SAFTA rules

On the way forward, ITF suggests tweaking SAFTA (South Asian Free Trade Area) rules of origin to make use of yarn and fabric of Indian origin mandatory for allowing duty-free quota-free market access. “This would boost our export of yarn and fabric to Bangladesh and other LDCs,” Dhamodharan said, adding “we will not be the first to impose sourcing restrictions as the US has imposed it under NAFTA (North American Free Trade Agreement) for duty-free import of garments from Mexico and other NAFTA members.” “We have accepted sourcing restrictions imposed by Japan. This has hurt our apparel exports to Japan under India-Japan CEPA (Comprehensive Economic Partnership Agreement). The Government can do something similar to help the domestic industry without really denying duty free market access to Bangladesh and other LDCs.” The federation has appealed for a fibre neutral policy. ITF has, in the meanwhile, decided to engage an expert to prepare a report on the textile industry's competitiveness, FTAs and growth prospects. “This would be ready in the next 8 weeks. We plan to submit this report to the government,” the ITF Convenor said.

Source: Business Line

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Expedite GST refunds to all exporters: Make interim payments, tally and settle later

At a time when the world is experiencing a rare bout of coordinated growth in the developed and emerging economies, India’s export has been lethargic. A prime culprit is sloppy switchover from the old indirect tax regime to the new one. Exporters face huge delays in getting refunds under the goods and services tax (GST) regime, and are in an ‘extreme liquidity crunch’, according to the article on this page on Wednesday by Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations (FIEO). The Centre needs to promptly expedite GST refunds to exporters and revamp attendant systems; we do not export taxes and exports are anyway supposed to be zero-rated under GST. GST should not be blamed for a sliding currency as well. One reason why refunds are stuck is mismatch of invoice details in shipping bills and GST refund (GSTR). And the reason for the lapse seems plainly procedural. If GST Network (GSTN) invoice details are required in the shipping bill, the required column space ought to have been added to the pro forma in July. As it turns out, the arrangement to include both commercial and GSTN invoices in the format has been available only since last November. Further, the Integrated GST (IGST) amount in the shipping bill, often enough, does not tally with that in the GSTR. But this is because the tax paid is on transactional value, while the shipping bill pertains to free on board value of exports. If the item with the relevant shipping bill has been exported, the IGST amount as shown in the GSTR should be promptly refunded as well. Delays in refunds are also due to mismatch in GST returns, or, say, non-filing of local export general manifest (EGM) forms. But as GSTR and EGM are both export-linked, the different steps for tax refund and duty drawback seem avoidable. We need to simplify the rules and not change them often. A retrospective rule now says exporters pay no IGST and only provide a letter of undertaking or bond. But what of IGST already paid? GSTN and customs data do need streamlining.

Source: Economic Times

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Change rules of origin to check B’desh imports: Textile industry

Coimbatore: With apparel from Bangladesh made from fabric sourced out of China flooding the Indian market, the textile industry wants the union commerce ministry to tweak SAFTA’s (South Asia Free Trade Area) rules of origin to make it mandatory for the neighbour to use yarn and fabric produced in India in its garments to claim duty and quota-free exports. Even as textile exports from India continue to decline, there has been a continuous rise in imports of textile products, especially after the implementation of GST. India’s imports of garments from Bangladesh increased 66% year-on-year (y-o-y) to $111.3 million during July-December 2017, according to data released by Export Promotion Bureau of Bangladesh. While knitted apparel imports from Bangladesh soared 77% y-o-y to $36.5 million between July and December 2017, woven apparel imports grew 62% y-o-y to $74.8 million. “Tweaking SAFTA rules of origin to make the use of yarn and fabrics of Indian origin mandatory for allowing duty-free, quota-free market access will prevent China from taking undue advantage of a facility that is meant for poor LDCs (least developed countries),” said Prabhu Dhamodharan, convenor, Indian Texpreneurs’ Federation (ITF). “At the same time, it will give a boost to India’s export of yarn and fabrics to Bangladesh and other LDCs, which at present are being supplied by China,” he said. “India will not be the first country to impose such sourcing restrictions for allowing duty-free import of apparel. The US has imposed sourcing restriction under NAFTA (North American Free Trade Agreement) for accepting duty-free import of garments from Mexico and other NAFTA members,” Dhamodharan pointed out. India allowed duty free import of readymade garments from Bangladesh under SAFTA in 2006. Earlier, this facility was limited to 8 million pieces per annum. This restriction was removed in 2010. Imports from Bangladesh has been growing at a steady pace ever since and gained momentum in mid-2017.  In the pre-GST era, import of garments from Bangladesh was attracting Rs 77 per piece (where MRP is Rs 999 per piece) in duties and Rs 116/pc (where MRP is Rs 1,500/pc) in the shape of CVD (countervailing duty) plus education cess and thereon. However, in the post-GST scenario, there is no cost for import of garments from Bangladesh. “Bangladesh imports Chinese fabric, converts them into garments using its cheap labour and exports them to India without paying any duties,” ITF stated. Since import of ‘Made in China’ fabrics is meant for exports Bangladesh doesn’t impose import duties, it said. “Thus, this unilateral duty free market access given to Bangladesh is actually facilitating backdoor entry of Chinese textiles into India,” Dhamodharan said in his representation to union commerce minister Suresh Prabhu. Incidentally, India has not imposed any sourcing restrictions on LDCs. India has now extended the duty-free, quota-free facility to all 49 LDCs on a non-reciprocal basis without any sourcing restrictions. “So we will have more Bangladesh-type situations in the future,” ITF cautioned. Interestingly, Bangladesh imposes high import duties — sometimes as high as 100%-150% — that includes basic customs duty, regulatory duty, supplementary duty, VAT and advanced VAT on textiles.

Source: Times of India

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Home Textile : Increasing Production Demand and Emerging Technology That Creates a Better Experience for Consumer

Pune, India - Home Textile Market industry had made research and come up with a report that focuses on the major players in the Home Textile Market throughout the world. The report includes information like company profiles, specification and product picture, production, capacity, contact information, cost and revenue. Likewise, equipment and upstream raw materials as well as downstream demand analysis is also tackled. Home Textile is a flexible woven material consisting of a network of natural or artificial fibers often referred to as thread or yarn. Yarn is produced by spinning raw fibers of wool, flax, cotton, or other material to produce long strands. Textiles are formed by weaving, knitting, crocheting, knotting, or pressing fibers together., The global Home Textile market will reach xxx Million USD in 2017. The report begins from overview of Industry Chain structure, and describes industry environment, then analyses market size and forecast of Home Textile by product, region and application, in addition, this report introduces market competition situation among the companies and company profile, besides, market price analysis and value chain features are covered in this report. The research makes use of primary and secondary sources to extensively cover the state of Home Textile market. Manufacturers, distributors, suppliers, importers, end-users, and market experts are some of the people consulted to validate the data of the research. Other information gathered includes trends, problems and challenges, market drivers, market background, policies, and developments of the industry. They all proved to have an impact with the growth in Home Textile market. All of these factors are studied and analyzed in detail so as to arrive at a fair conclusion. All information gathered are them summarized to lay out a clear picture of the current status of Home Textile market. Summary includes trade studies, benefits of the market, business provisions and conditions, and growth predictions. It is supported and influenced by the analysis and outcomes of other in-depth researches. In conclusion, global Home Textile market standing in 2018 and in the coming years is determined by its performance up until now. Results are supported by various sources and market research techniques, all of which are verified.

Source: Digital Journal

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Connected maps supply chains up to raw materials

Connected, Control Union’s supply chain traceability platform, has mapped supply chains to the origins of raw materials. Several fibre suppliers, including Lenzing Group, Aditya Birla and ENKA International have joined the Connected, an open platform, allowing companies to trace a product’s journey back, from finished garment to the source of raw materials. The platform also allows users to acquire a range of important data, from flows of materials to compliance information. Every producer in the platform is linked to its suppliers or to its clients, and can receive and submit orders and shipments via Connected. In addition, every user of the platform has access to local support centres managed by Control Union in all producing regions.  Franco Costantini, senior manager – Supply Chain Services at Control Union says: “We all know how complex textile supply chains are and how difficult it is to have their full and continuous visibility. This is a great achievement, particularly considering that the platform was only launched in September 2017. It is a clear sign of commitment, by the industry at large, to transparency and responsible sourcing.” “Partnering for systemic change is a key focus area of Lenzing’s sustainability strategy called Naturally Positive. Lenzing believes that collaboration and transparency are a prerequisite for improving the sustainability of the textile industry. Therefore Lenzing contributes to the Connected platform to ensure transparency of its fibres and their raw materials’ sustainable origins.” says Robert van de Kerkhof, CCO of Lenzing Group. Connected helps brands reach their goals of traceability and sustainability; meanwhile, producers of raw materials, such as fibres producers, can use the platform to drive and monitor the uptake of their sustainable products. “Connected has addressed an important need of traceability across the value chain by introducing a system bridge from fibre to retail. This is expected to provide visibility to sustainable innovations in fibres and also facilitate integrated solutions to the consumer,” says Manohar Samuel, president – Marketing at Birla Cellulose. “As the textile industry is one of the most fragmented, resource-intensive and least transparent industries in the world, ENKA deeply appreciates and supports initiatives such as Connected which are helping to increase visibility and transparency in our complex textile supply chain. When people are able to trace a product’s journey back, they can easily sort out the sheep from the goats. This is a crucial step on our way to improve the environmental footprint of the textile industry. As a manufacturer of sustainable fibres, ENKA has a long tradition in supporting sustainable fashion solutions.” says Till Boldt, managing director of ENKA International.

Source: YNFX.

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Stable outlook for cotton textiles, synthetics in India

India Ratings and Research has maintained a stable outlook for cotton textiles and synthetics for fiscal 2018-19 as margins may expand due to softening in cotton prices, better consumer spending outlook and the low base effect of the last fiscal. However, the possible impact of pink bollworm on cotton and rising crude prices on synthetics are the constraints. Better margins, modest reduction in working capital requirements and subdued capital expenditure in the next fiscal will lead to an improvement in the overall credit profile in India, according to a press release from the Fitch Group company. The slowdown in domestic demand growth for textiles due to demonetisation and the implementation of the goods and services tax seems to have bottomed out in the second half of the current fiscal. A higher-than-expected rise in cotton acreage at 19.0 per cent and a consequent 11.0 per cent increase in crop production in the current and last fiscals are likely to moderate cotton prices in the next fiscal, although domestic cotton prices increased in the last few months due to the pink bollworm issue. The global stock-to-use ratio for cotton, excluding China, increased to 56.0 per cent in fiscal 2017-18 from 47.0 per cent in the precious fiscal, although Chinese inventory declined by 17 per cent year-on-year. An increasing crude price is likely to narrow the spread between cotton and synthetic yarns, thereby moderating the pace of switch to synthetics from cotton textiles. Operating margins of synthetics manufacturers may witness volatile margins due to fluctuations in crude price and delays in passing on cost inflation, the company said.

Source: Fibre2fashion.

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Global Textile Raw Material Price 2018-03-01

Item

Price

Unit

Fluctuation

Date

PSF

1449.56

USD/Ton

0%

3/1/2018

VSF

2306.65

USD/Ton

0%

3/1/2018

ASF

2685.83

USD/Ton

0%

3/1/2018

Polyester POY

1394.26

USD/Ton

0.06%

3/1/2018

Nylon FDY

3586.37

USD/Ton

0%

3/1/2018

40D Spandex

5924.63

USD/Ton

0%

3/1/2018

Nylon POY

1631.25

USD/Ton

0%

3/1/2018

Acrylic Top 3D

3349.39

USD/Ton

0%

3/1/2018

Polyester FDY

2922.82

USD/Ton

0%

3/1/2018

Nylon DTY

1643.10

USD/Ton

0%

3/1/2018

Viscose Long Filament

3807.56

USD/Ton

0.42%

3/1/2018

Polyester DTY

5972.02

USD/Ton

0%

3/1/2018

10S OE Cotton Yarn

2275.06

USD/Ton

0.14%

3/1/2018

32S Cotton Carded Yarn

3630.61

USD/Ton

0.02%

3/1/2018

40S Cotton Combed Yarn

4161.46

USD/Ton

0.02%

3/1/2018

30S Spun Rayon Yarn

3017.61

USD/Ton

0%

3/1/2018

32S Polyester Yarn

2211.86

USD/Ton

0.50%

3/1/2018

45S T/C Yarn

3017.61

USD/Ton

0%

3/1/2018

40S Rayon Yarn

3144.00

USD/Ton

0%

3/1/2018

T/R Yarn 65/35 32S

2654.23

USD/Ton

0%

3/1/2018

45S Polyester Yarn

2354.05

USD/Ton

0%

3/1/2018

T/C Yarn 65/35 32S

2543.64

USD/Ton

0%

3/1/2018

10S Denim Fabric

1.47

USD/Meter

0%

3/1/2018

32S Twill Fabric

0.90

USD/Meter

0%

3/1/2018

40S Combed Poplin

1.26

USD/Meter

0%

3/1/2018

30S Rayon Fabric

0.70

USD/Meter

0.22%

3/1/2018

45S T/C Fabric

0.75

USD/Meter

0%

3/1/2018

Source: Global Textiles

 

Note: The above prices are Chinese Price (1 CNY = 0.15799 USD dtd. 1/3/2018). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

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US-Applied DNA bags patent for fiberTyping cotton technology

Applied DNA Sciences has announced the receipt of a notice of allowance for its U.S. Patent Application No. 14/191,947 (US 2014/0295423 A1) entitled Methods for Genetic Analysis of Textiles Made of Gossypium barbadense and Gossypium hirsutum Cotton. The allowed patent application supports the company’s patent protection for its fiberTyping technology. The newly allowed ‘947 application protects the company’s proprietary methods of cotton species identification in a manufactured article via the extraction and analysis of target sequences found in the chloroplast DNA of the article. The allowed claims cover chloroplast DNA target sequence analysis via all known sequence-specific DNA analysis techniques, including qPCR (quantitative polymerase chain reaction) and hybridisation probe technologies. With the addition of the allowed ‘947 application, the company has been granted 4 US patents on its fiberTyping technology, which now cover the identification of a cotton species in a manufactured article via both target sequence and length polymorphism analysis of chloroplast DNA. The company plans to closely monitor cotton products imported into the US that allege to be verified via mature cotton fibre genotyping analysis, and will act accordingly. Dr. James Hayward, president and CEO of Applied DNA said, “With the allowance of this patent application, we have now successfully protected both means by which the chloroplast DNA of cotton fibres can be analysed, giving us a strong patent position in the cotton genotyping market. Our fiberTyping technology, coupled with our patented SigNatureT molecular tags, are the ultimate combination for the corroboration of cotton content label claims. No other system can provide the immutable forensic level identity and traceability proof our technology provides. With the recent announcement of our GeoTyping technology, we are continuing to push the boundaries of cotton genotyping science.”

Source: Fibre2fashion

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Chinese print head for textile applications on the horizon

It is reported that a new Chinese-made print head is in development, with digital textile printing applications in mind. A source told WTiN that the print head is being produced by Suzhou RealFast Print Technology, which was founded in 2013 and is located at Suzhou Industrial Park in Wuxi, China. Already focused on inkjet print head technology and related products, Suzhou’s business has to date been directed at development for high-speed office printing, inkjet printing broadly, printing electronics, ceramic printing and ink manufacture. The company has also established a collaborative laboratory with Science Suzhou Nano, in China, and is working on R&D in multiple new areas. Suzhou RealFast Print Technology is said to have received strong support from the Suzhou Municipal Government and Suzhou Industrial Park and has invested in science and technology personnel. The company has a number of domestic patents, including thermal, piezoelectric, and high-speed continuous inkjet print head technology. Though not applicable to the textile sector, the company has recently realised one of its patented print heads. Now commercially available, the thermal inkjet print head can achieve printing resolutions of 300-1,200 dpi, and the company is also offering inkjet printhead drive control solutions, custom inkjet system equipment development, ink compatibility technology development, inkjet performance testing and other technical advice and services. With this patented head now available, the textile industry should look out for a subsequent piezo print heads, which could have applications in the textile sector. The only piezo print head the company currently offers is the SUREjet-P08, with just eight nozzles, which is most likely suitable only for label printing. Given that established piezo print heads have a hundred times more nozzles than the SUREjet-P08 – for example, Epson’s MicroTFP, which has 800 nozzles – further development is will certainly be required. However, it is suggested that.   However, the company’s association with the Chinese Academy of Sciences of Suzhou Nano implies that the Chinese government has invested funds into this area and it is rumoured that they are looking to develop domestic production of ink jet heads, with acquisitions of intellectual property rights also taking place.

Source: Wtin

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China-Pakistan Economic Corridor brings economic benefits to Pakistan: report

The China-Pakistan Economic Corridor has been leaving motivational impacts on different sectors in Pakistan through its plentiful economic benefits and opportunities, said a report released here on Thursday. The report, "The economic benefits of the modern silk road: The China-Pakistan Economic Corridor (CPEC)," is jointly prepared by the Association of Chartered Certified Accountants (ACCA) Pakistan and the Pakistan-China Institute (PCI). The report, which is based on research work and surveys, said that the unprecedented CPEC has provided 60,000 jobs to Pakistanis since 2015 and that it would create over 800,000 new jobs in different sectors up to 2030. It said that the 21 energy projects planned under CPEC will double Pakistan's current capacity of electricity production by producing 16,400-megawatt electricity after their completion. Pakistan's Foreign Minister Khawaja Muhammad Asif said at the report's launching ceremony that the CPEC power project has brought a great change in Pakistan's energy sector by bringing 13-14 hours a day load-shedding in 2013 to zero in 70 percent areas of the country. Asif said he is a firm believer that the Belt and Road Initiative will change Pakistan and the region for the better because it is a significant transformative initiative in recent history and is an engine of shared dreams, common prosperity and win-win cooperation among countries. The report predicted that CPEC will change Pakistan's business and economic landscape through infrastructure and transportation development, establishing special economic zones, promoting tourism, increasing trade and commerce. Chinese Ambassador Yao Jing said at the ceremony that a lot of investors from China and other countries are coming to Pakistan to explore business opportunities under CPEC. He said the final purpose of CPEC is to benefit society and people. Chairman of the PCI Mushahid Hussain Syed, who also serves as a senator in Pakistan's parliament, believed that CPEC benefits are already evident to the people of Pakistan as it has helped the country achieve a 5.3-percent growth rate in 2017, the highest in last 10 years. In a survey of 500 finance and business professionals conducted by the ACCA, 79 percent of them expressed that the businesses in Pakistan will have to adapt to the changes engendered by CPEC in next one to five years, the report said. The report also highlighted the advantages of the joint ventures, saying that the local experience of Pakistani companies and the technical skills of Chinese companies will result in a win-win situation. Author of the report Malik Mirza stressed that to meet future challenges, Pakistani businesses should have to adapt to changes, such as analyzing the Belt and Road Initiative and its impacts, efficient allocation of resources, investment in human and organizational development, technological advancement and risk management.

Source: China Daily

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'Such Measures Will Harm World Trade': China Slams Trump's Move To Impose Tariffs On Steel, Aluminium Imports

China today criticised US President Donald Trump's announcement to impose tariffs on imports steel and aluminium saying that such unilateral measures will “harm” the world trade. “If countries around the world follow US measures it will harm the world trade e”, Chinese Foreign Ministry spokesperson Hua Chunying told media briefing. She said in recent years, the world economy is recovering slowly. “The global recovery is still unstable. All countries should make concerted efforts and cooperate to resolve relevant issues instead of taking measures unilaterally”, she sad. “China urges the US to abide by the multilateral trade rules and make contribution to the international trade and economy,"she said. Trump said on Thursday that his administration will impose tariffs on steel and aluminium imports early as next week. The announcement created furore around the world. Trump said the US will impose a 25 per cent tariff on steel imports and 10 per cent tariff on aluminium to shore up the struggling industries in America. The new US tariffs were expected to further affect China's steel sector specially as it suffered from over capacity. Canada and the EU said they would bring forward their own countermeasures to the steep new tariffs. The US tariffs as well as remarks by US officials saying that backing China's inclusion into World Trade Organisation, (WTO) was a mistake was also sharply criticised by Wang Guoqing, spokesman of the China Peoples Political Consultative Conference, (CPPCC). Addressing a press conference ahead of the annual meeting of the CPPCC to begin here on March 4, Wang said, a big country like should honour its words instead of renege on its promise and resorting to unilateral sanctions. Referring to the criticism that admitting China to WTO was a mistake, Wang said China has delivered its commitments on market access under WTO. China opposes protectionism and increased IPR protection has created a level playing field, he said referring to criticism that China has not opened much of its economy for foreign investments and trade. “What is worrisome to many WTO members is the unilateral actions from US. As important members of WTO, China and US should uphold its rules and together improve the rules based fair and open multilateral system centred around WTO," he said.

Source: Business Line

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Sindh CM vows to save Pakistan Textile City Company

Murad Ali Shah, chief minister (CM) of Sindh in Pakistan, recently told a national assembly standing committee on commerce and textile delegation that a conspiracy has been hatched to destroy the Pakistan Textile City Company (PTCC) at Port Qasim so that its industry shifts somewhere else. Winding up PTCC will harm the province’s interests, he said. The standing committee had recommended revival of PTCC on January 4 this year and reiterated its stance in this meeting, according to Pakistani media reports. The provincial government, which owns 16 per cent share in PTCC, will support the company’s revival to generate employment, Shah said. The federal government took an unrealistic decision of liquidating the company and selling company land that it did not own, he said. The chief minister directed the Sindh chief secretary to write a letter to Chairman Winding-Up Committee Barrister Zafrullah Khan in order to apprise him about the decision of the provincial government. He said the Sindh government would extend full financial support to PTCC in case of a proposed change in the financial and capital structure of the company. The PTCC was provided land covering 1250 acres by the Sindh government in the form of shares.

Source: Fibre2fashion

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How has China managed to become the leader in the global textile and apparel market?

China treated the textile sector as a priority industry, while Indian textile industry has had to compete with its hands tied to its back, facing various problems. These problems have cropped up mainly from faulty government policies. We will come to that later.

1979 Open-Door Policy

In 1979, China began its open-door policy and kick-started economic reforms. It chose to restructure its textiles industry, identifying it as a priority. With over 100 years’ experience in textiles, China had the basic infrastructure for the industry in place. So, it only needed a sharp focus, which began by raising capacities in each segment of the sector. The textiles industry is a labour-intensive one, and China chose to exploit its low-cost human resources, what with a huge population looking for sources of income. China came up with six priorities to promote the textile industry – giving it a favourable treatment from supply of raw materials, to power, modernisation, bank loans, foreign exchange, and import of advanced technology. From around 18 million spindles in the 1980s, China’s capacity in spinning mills went up 120 million spindles by 2015, or 48 per cent of the total capacity in the world. (In comparison, India has 51 million spindles, making up 20 per cent of the world capacity.) Again, the capacity of looms that is important for producing fabric increased rapidly during this period. China’s global share of the shuttle-less looms that help weave fine fabrics increased from a mere 6 per cent to 46 per cent in 2010. (India’s share, in fact, decreased to 3 per cent in 2015!) While taking these measures, China primarily targeted its production for the export market. It took advantage of a bilateral pact that it had signed with the United States (US) in 1980. This got Chinese textile products a good market and the testimony to this fact is that the agreement underwent modification four times, the latest in 1997. This helped China export nearly 50 per cent of its total domestic production at one point of time in the 2000s. The initiatives also gave China the advantages that a first-mover usually gets in any industry.

Encouragement to Private Sector

One of China’s key features in restructuring the textile industry was encouraging the private sector to set up new modern units. It changed the landscape of the industry forever. Next, this helped China to dismantle the old machinery and increase productivity. According to the EU SME Centre – a European Union (EU) initiative to support small and medium-sized enterprises so they can do business in China, even when the world was going through tough economic conditions during 2008-11, China’s exports to the EU, US, and Japan increased. China also chose a policy mix that suited its national interests. It opened up its textile industry to foreign direct investment (FDI) that helped the rapid expansion. Between 1979 and 1999, China received FDI worth $360 billion with 60 per cent of it going towards labour-intensive industries like textiles. It came up with lucrative offers to foreign investors and devalued its currency against the dollar, thus managing the foreign exchange market. In 1994, the yuan was devalued by 50 per cent, making Chinese products highly competitive in the global market. China, as a result, garnered a major share in the global market when other countries suffered from the effects of the Mexican peso crisis.

What Ails India’s Textiles Industry?

India, in contrast, has always lagged behind. Currently, its situation is such that countries like Bangladesh and Vietnam have now left India behind, especially in the readymade garments shipments. So what is ailing the Indian textile industry when it often looks to emulate the Chinese industry? A few things in particular have always been hurting the Indian textile industry. First, Indian infrastructure, at least until a few years ago, was a hurdle the textiles industry had to overcome day and night. Next, until Indian farmers began growing genetically modified or Bt cotton, the cotton-based textile industry faced a shortage of raw material. In 1994, spinning mills bled after the cotton crop failed and traders hoarded cotton. The third hurdle that the sector has been facing and had been complaining about at least until 2015, has been the hank yarn obligation. Since India has three million handlooms, the government has always been of the view that the sector should get a continuous yarn supply. Therefore, it is mandatory for a textile mill to ensure that 40 per cent of its production is in hank form. (This was 50 per cent until 2003, when it was reduced.) The textile industry has been seeking some sort of relief from this obligation, but in vain. The handloom sector is a huge vote bank that political parties dare not touch. However, the textile industry’s argument is that most of the handlooms have given way to powerlooms and, therefore, a review of the law is necessary. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), successive governments have come up with various schemes to help the textile industry move forward. Currently, at least 10 schemes are active.

Small, Unorganised Units A Bane

One of the major ills of the industry is the unorganised units that are smaller in size. In fabric manufacturing and processing, these units use secondhand machinery that is imported. Shuttle-less looms that help weave fine fabrics make up only two lakh of the nearly two million looms in the country – a clear indication of Indian inefficiency. Dismantled looms in China find their way into India and it is no surprise that Chinese machines make up nearly one-third of textile machinery imports into India. Despite these disadvantages, the textile industry offers direct employment to 45 million people directly and another 20 million indirectly. It is the second-largest employment-generating industry after agriculture. Other issues worrying the textile industry, according to FICCI, are higher capital costs, absence of fibre neutrality, poor technology, and a lack of access to credit. Capital costs are higher in India, as also power costs. Absence of fibre neutrality is affecting the availability of man-made fibres at competitive prices, while outdated technology of machines is another impeding factor. Access to credit has always been an issue since the industry in India has to pay a high interest rate, ranging from 11 per cent to 12.5 per cent, compared with 5-7 per cent in competing countries. The Indian textile industry is also hurt by the absence of free-trade agreements with major markets like Europe. While lesser developed countries such as Bangladesh can export to Europe at zero duty, others like Pakistan enjoy an advantage under a general system of preference plus system. Indian imports to Europe attract 9.6 per cent duty. If India has to compete on equal terms in the global market, it has to first increase productivity and efficiency. That can be achieved only if it encourages the setting up of more integrated textile units. While skilled manpower is the need of the hour for the sector, a technology upgrade should be given priority. The quality of products should improve and FDI should be made attractive. According to the Department of Industrial Policy and Promotion, foreign investment in the textile sector hardly touched 5 per cent of the total FDI inflows between 2000 and 2015. Textiles took root in Asia since the Western nations couldn’t help the sector sustain. A similar scenario is now unfolding with China’s rate of growth declining in the last couple of years. India’s growth can certainly improve and even outpace China’s. But all indications are that it is unlikely to overtake China in the near future. For that matter, China has now turned its attention to technical textiles. India, too, has set up a technology mission under its “Make In India” programme. How far can India give the Chinese a fight is something that we will know only in the next decade or so.

Source: Swarajyama

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How China Built $150 Billion Lead Over India In Textile Exports

Workers at an apparel unit. India has been left behind by countries like Bangladesh and Vietnam in the apparel sector.  Workers at an apparel unit. India has been left behind by countries like Bangladesh and Vietnam in the apparel sector.     China is racing ahead of other countries, including second-placed India, in the global textile and apparel sector.    Several factors have led to China’s rise as a leader in the market, but it all began when the country accorded priority to the sector in the late 1970s. Between 2001 and 2015, India’s textile and apparel exports nearly quadrupled from $10.7 billion to $41 billion. It actually doubled to $20 billion in 2005 from 2001 and then took another 10 years to touch $40 billion. During that time, China’s textile and apparel exports rose from $50 billion to nearly $200 billion. In the global market, China enjoys a 40 per cent market share and India is a distant second with a meagre 5 per cent share.

Source: UN Comtrade

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African countries to ban imported secondhand clothes from UK, US

The African countries to enhance textile manufacturing sector that presently contributes 8.7 percent to the regional Gross Domestic Product to 25 percent by 2032. In March 2016, the head of states in the East African Community (EAC), which comprises of Uganda, Kenya, Tanzania, Rwanda, Burundi and South Sudan, had agreed to ban import of used clothes from the US and UK into the region in three years as part of the EAC Vision 2050 and the Industrialization Policy. The countries are hoping that local factories will create much-needed jobs and increase exports. The three African countries – Rwanda, Tanzania and Uganda have strongly agreed to ban second-hand clothing, mostly imported from the US and UK, in order to support their own textile industries. But the US has claimed that the proposed ban goes too far and violates the free trade agreements under the African Growth and Opportunity Act (AGOA), which aims to expand trade and investment on the continent. At a summit last Friday in Uganda’s capital Kampala, leaders agreed on a compromise in response to the pressure from Washington. According to them, second-hand imports will not be directly banned, but import taxes will still need to be paid.In addition, they want to invest more money in their own textile industry. In the meeting’s closing communiqué, they said that the members of the East African Community should promote their textile industry by using measures which do not jeopardize the benefits of AGOA membership.  According to Rodgers Mukwaya from the UN Economic Commission for Africa (UNECA), it is still unclear whether the US intends to go along with its threats. But even if the EAC is excluded from the AGOA by the US, it probably won’t pose much of a risk.  The AGOA has not had a strong benefit for countries in Eastern Africa. So any ban from the US will not have a big effect on the exports from Eastern Africa with the exception of Kenya.

Source: YNFX

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