The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 24 APRIL, 2018

NATIONAL

INTERNATIONAL

Coming apart at the seams

Hit by falling production and exports in the aftermath of GST, garments needs policy support to address both immediate and structural issues. Amiti Sen and LN Revathy reportTirupur in Tamil Nadu, India’s well-known garments hub, employing about six lakh, wears a sleepy look these days. There aren’t many load pullers and lorries stacked with material to be seen. Nearly 3,000 km north, in Noida’s garment units, there is an almost beguiling sense of normalcy. Inside a factory unit with large iron gates, workers are busy piling up reams of patterned cotton cloth, ready to be cut and sewn into attractive clothing. Others are grouped together in different rooms going about their tailoring work like dutiful soldiers. But there can be no denying that India’s garments industry, the second largest employment generator after agriculture, is in trouble. Apparel production and exports have both declined sharply over the past 10 months, despite a growth in global demand (see table). What exactly is ailing our apparels sector, which accounts for over 10 per cent of total exports? “Acute liquidity crunch is the main reason. Because of lower rates of refunds under the duty drawback and remission of state levies (ROSL) schemes, manufacturers and exporters are short of cash. Smaller units are not in a position to take new orders,” explains Anil Peshawari, Meenu Exports, Noida.

GST blues

It’s been a triple whammy. The lowered rate comes on the back of slow GST refunds, as exporters (who are tax exempt) apply for both reimbursement of input taxes as well as IGST paid on the finished goods. The sector has barely recovered from the impact of demonetisation. After GST came into force last July, the Centre re-calculated duty drawback rates and slashed it to 2.2 per cent from an average of 9 per cent while the ROSL rates were reduced to 1.3 per cent from 3.3 per cent. Subsequently, the government recanted and increased the incentives under the Merchandise Export from India Scheme (MEIS) to 4 per cent, from 2 per cent. But the net loss in reimbursements for exporters is 5-5.5 per cent of export value, as per industry calculations. While Peshawari owns a large unit and is managing to somehow tide over the situation because of his scale of operations, smaller units are facing the heat. “My unit is small and I export to just a few countries in Europe, I had been doing well as orders were regular. Because of the lowering of drawback and ROSL rates and the money stuck in GST refunds, my liquidity has taken a hit. I am now forced to reject orders and if things don’t improve I fear that I may have to shut shop,” another Noida -based exporter, who does not wish to be named, says. Tirupur Exporters’ Association (TEA) President Raja M Shanmugham agrees that it is the small exporter who is worst hit. “Small and tiny units are struggling to cope as they have not been able to get GST refunds. Only 300-odd cases were filed for refund up till April 10,” he says. There are about 8,000 MSME units in the knitwear cluster. About 1,000 units are engaged in the export of garments. While the tax authorities have been advising units to engage a senior person or auditor to help file GST returns, small players contend that they cannot afford to engage a person at a senior level. HKL Magu, Chairman, Apparel Export Promotion Council, puts it thus: “The industry suffered because funds were blocked and payments to suppliers and workers were hit. This affected production.” Apparel output fell by 10 per cent during April-February 2017-18. As for the post-GST duty drawback cuts, the government rationalises the move by saying that exporters’ taxes are completely reimbursed now. Exporters, however, contend that input taxes paid by exporters were low in any case and the GST refund was only giving them an advantage equivalent to 0.5 per cent of export value. Despite low input taxes, the drawback rate in the previous regime was high as the government was using it as a mechanism to compensate garment exporters for disadvantages they suffered vis-à-vis competing countries such as Bangladesh, Cambodia and Sri Lanka. “The high drawback rate was a way to support the domestic industry and help it compete against countries like Bangladesh and Sri Lanka that have got a free trade agreement (FTA) with the EU. Our products straight away become 9.8 per cent more expensive in the EU because of import duties as these countries’ exports are duty free,” says Peshawari. As the EU is one of the biggest markets for Indian garments and textiles, losing it would be a big blow. According to A Sakthivel, a Tirupur-based garments exporter and an office-bearer of Federation of Indian Export Organisations, the reduction in incentives by about 5 per cent is a jolt. Exporters were already working on a thin margin of 3-4 per cent.

Structural issues

M Vijay Bhaskar, Professor of Economics, Madras Institute of Development Studies, explains that the wafer-thin margins are a result of sellers, mostly small-scale and fragmented, lacking pricing power against large, MNC buyers. With fashions being engineered to change every two months against, say, a year, about two decades ago, sellers are placed at a disadvantage, he explains. Taking the pricing issue further, Ahmedabad-based Ashim Roy, General Secretary of New Trade Union Initiative, says: “Rather than focus on labour arbitrage at a time when wages are already rock bottom, the government should address the pricing issue by working towards some institutional framework. Logistics costs, too, are much higher in India than in competing countries.” Economic Survey 2016-17 too points out that Vietnam, while prevailing over India in market share, has a higher wage (see graphic). The other structural issue is the traditional tariff bias against man-made fibre at a time when the global demand for it is on the rise. CMD, Indorama Synthetics, OP Lohia, says: “For cotton garments, there is synchronisation of taxes from raw material to garment, at 5 per cent. In the synthetic sector, the GST on polyester fibre or yarn is still at 18 per cent, whereas on the fabric it is 5 per cent. It defeats the purpose of tax reform, when you have a higher tax on raw material.” In sum, a government that seems intent on propelling the labour-intensive garments sector as a central actor in its ‘Make in India’ drive is yet to get its policy mix right.

Source: The Hindu

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Lift ban on letters of undertaking, say exporters

MUMBAI: The apex exporters lobby Federation of Indian Export Organisations (Fieo) has written to the RBI and finance ministry seeking lifting the blanket ban on letters of undertaking (LoUs) saying it will further hurt exports by making them more uncompetitive. The Fieo, promoted by the ministry of commerce and industry, has written to the RBI governor Urjit Patel and finance ministry seeking reintroduction of the crucial trade finance instruments, but feels that the government will have to take the lead to end the stalemate, a top Fieo official has said. “The LoUs were in operation for many years, so at the drop of a hat you cannot abolish such instruments...why deprive our exporters or importers of it?” Fieo director general Ajay Sahay said. Admitting that the lobby has so far underplayed the impact of the mid-March move by the RBI, Sahay said earlier Fieo felt that only the gems & jewellery sector used the instrument, but it has later transpired that others, including the employment-intensive textiles and leather industry, are also using LoUs. When asked if the ban will impact exports, he said, “absolutely”, and added that while the gems & jewellery sector will be the worst impacted, others will also be hit. Sahay pointed out that gems & jewellery exports have contracted by a massive 36% following the regulatory actions, which employs 5 million. He explained that the alternatives for LoUs like bank guarantees increase the cost by 1-3%, hence making exports uncompetitive globally.

Source: The Times of India

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Textile industry banks on expo to promote Gujarat as garment hub

In a bid to transform Gujarat from a fabric manufacturing hub to apparel manufacturing hub, textile players are organising a three-day expo ‘Farm to Fashion’ from May 4 in Ahmedabad. Local manufacturers will display their offerings to buyers from across the country and abroad. Players say instead of selling cotton and fabrics, the idea is to encourage production of garments within the state. “The idea is to support entire value chain, from farmers to garment manufacturers. Gujarat is the largest producer of cotton in the country so logically we should also be the largest producer and exporter of garments. Ironically, we export cotton and fabrics to competitors like Bangladesh and lose out on apparels. We want players to start garmenting within the state,” said Shailesh Patwari, president of Gujarat Chamber of Commerce and Industry (GCCI), which along with Maskati Kapad Market Mahajan is organizing the expo next month. Relative lower productivity in cotton and garments combined with Free Trade Agreements (FTA) has resulted in Indian garments becoming uncompetitive to competitors like Bangladesh, Vietnam and Indonesia. A ‘White Paper’ conducting SWOT analysis of textile sector in the country will be prepared at the end of the event, which will also act as an input to modify the Textile Policy of the country. Till the ecosystem for garment exports is set up, efforts to increase the exports of fabric will continue. Major export houses from Delhi, Bengaluru, Mumbai and other major hubs will also participate to promote the sales of fabrics. “Of late Gujarat has witnessed tremendous growth in the capacity in the production of fabrics. We have invited buyers from the country and outside to give a boost to the sales,” said Gaurang Bhagat, president of Maskati Kapad Market Mahajan.

Source: Daily News & Analysis

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Jute industry irked over govt decision to buy plastic bags

The jute industry is apparently peeved with the decision of the Department of Food & Public Distribution under Union ministry of consumer affairs to buy 250,000 bales (one bale is 180 kg) of plastic bags. The packaging requirement of food grains for the Rabi Marketing Season (RMS) in 2018-19 has been pegged at 1.69 million bales. Of this, the shortfall for jute bags was calculated at 0.25 million bales. After consultations with the industry and on the strength of recommendations by the Jute Commissioner, the textiles ministry had approved the use of high density polyethylene (HDPE) and polypropylene (PP) bags to the extent of 250,000 bales. The jute industry, however, alleged the industry's capacity was ignored and an artificial shortfall was created. “Although, the Food Ministry created an unwanted opportunity for synthetic (PP/HDPE) suppliers they failed to manage orders. They could only manage a puny amount (order for 23000 bales) from Punjab. However, they did not supply a single bale”, said an industry source. The ministry is understood to have extended the RMS delivery date for supply of plastic bags by a couple of months from March and had already requested Uttar Pradesh and Madhya Pradesh to float tenders for supply of synthetic bags by May 2018. “The move will devastate the industry as it has no supply orders in May and its whole capacity is left idle. The industry is capable of fulfilling all government requirement”, the source added. Indian Jute Mills Association (IJMA), the apex body of the industry, has moved the Prime Minister's Office (PMO), protesting the partisan move and has sought to reverse the decision to purchase plastic bags. “We were taken aback in the food review meeting for RMS 2018-19 and advance planning meeting for KMS (Kharif Marketing Season) 2018-19 held on April 17, 2018 when we learnt that the Department of Food shall be exercising the permission to dilute 0.25 million bales in May 2018. If the Department of Food is allowed to use the permission to purchase HDPE/PP bags during May 2018, at a time when the jute industry will have no orders in hand, it will be catastrophic for the jute economy and a number of mills will have to close down. The plight of the jute farmers shall be even worse as the price of jute fibre (lower grades) have ruled well below MSP (Minimum Support Price) levels for a large part of this jute year and this decision shall bring the price of raw jute spiralling down”, read a letter to the Prime Minister, quoting IJMA chairman Manish Poddar. IJMA has asked for revocation of the dilution orders in favour of plastic bags and placement of fresh orders for requirement of jute bags in the RMS of 2018-19.

Source: Business Standard

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Production cuts loom large for cotton seed firms, farmers to be impacted

Squeezed between rising cost of production and falling realisation, cotton seed companies are planning to cut production for the kharif sowing 2019 which may impact India's 8 million farmers adversely. Cotton seed producers claim that their production costs have risen by 20 per cent the past three years, especially since the Bollgard II Bt cotton price was fixed at Rs 800 per packet of 450 each two years ago. But, after stagnating for two years, the government of India decided to cut its prices by Rs 60 or 7.5 per cent to Rs 740 per packet for the current year. The cut was announced at a time when seed companies initiated awareness programmes for farmers to help them adopt best farm practices to fetch higher yield from the same sowing area. Last year, many farmers in Maharashtra, Andhra Pradesh and Telangana reported huge cotton output loss due to pink bollworm attack on the standing crop. The decline in output in major producing states prompted the government to reduce its cotton production forecast 5-7 per cent for harvesting season 2016-17. "We had requested the government to raise seed prices after two years of stagnation at Rs 800 a packet (of Bolgard II) to accommodate increasing labour cost, fixed and other costs including the research and development (R&D). Instead, the government cut its prices by 7.5 per cent to Rs 740 a packet. While the cost of production has gone up by nearly 20 per over the last three years, realisation slumped by 7.5 per cent. This will result into lower production and investment capacity for the next season as the distribution of seed packets for the current season got almost over. Seed supply would impacted heavily next year," said Satish Kagliwal, Managing Director, Nath Seeds and Founder President of National Seed Association of India (NSAI). India has seen a sharp increase in cotton production from a deficit country till two decades ago to one of the largest cotton producers now. With its production between 33 and 38 million bales (one bale = 170 kg), India's annual cotton exports stand at 4-5 million bales. India sends cotton to China, Bangladesh and a number of other major textile manufacturing countries. Indian exports also include cotton yarn on a large scale to China and Bangladesh, among others destinations. "With this kind of price cut, it has become difficult to realise cotton seed production as a sustainable business model," said Ashwani Yadav, Executive Director, Federation of Seed Industry of India (FSII). Seed manufacturers prepare production and distribution strategies of seed packets a year in advance to enable farmers to source high yielding seeds from reliable sources. Thus, seed producers ensure the packet reaches distributors by the first fortnight of March in north Indian states like Punjab and Haryana for farmers to procure seed for early sowing by March-end. Sowing of cotton seeds gradually spreads to other states for sowing with the pre-season showers. So, the distribution for the current season has already done in the north Indian states. India produces around 50 million seed packets of 450 grams each for 8 million farmers of the country to grow cotton in 12.26 million ha of land every year. Last year, however, crop damage in Maharashtra, Andhra Pradesh and Telangana has raised questions on the quality of seeds supplied to farmers.

Source: Business Standard

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Miffed with falling apparel exports, businessmen demand slashing lending rates

LUDHIANA: Concerned over the declining India’s apparel or readymade garments (RMG) exports, the garment exporters of the city are now demanding that the Centre should lower the lending rates for them and roll out new incentive schemes else the fall will continue. According to the recent data released by Directorate General of Commercial Intelligence and Statistics (DGCI&S), there has been a decline of 7.60% in India’s RMG export in the financial year 2017-18 as compared to 2016-17. As per the data, the total exports of RMG from India was Rs 1,16,554 crores in 2016-17 which has fallen to Rs 1,07,698.80 crore in 2017-18. Alarmed over the fall, the prominent garment exporters of Ludhiana on Saturday attended a meeting organised by Apparel Exporters Promotion Council (AEPC) and discussed their next course of action. Speaking on the issue, Harish Dua, president, Knitwear and Apparel Exporters Organisation, and executive member of AEPC, said, “In the nine months, a huge fall has been registered in India’s RMG exports. Various reasons are responsible for this grim situation, the biggest being the non-seriousness of the Union government to solve issues concerning the garment exporters. It’s been months now since various incentives and subsidies available to us were withdrawn and reduced, but ever since no new initiatives have been taken by the government to revive exports.” Dua also said, “We once again request the government, especially the ministry of commerce to start new schemes to encourage the exporters and also introduce incentives to support us.” Narinder Chugh, a permanent invitee to AEPC, said, “This is a very critical situation especially for Ludhiana, which has the highest number of garment exporters in the region. From the past one year, the growth of garment exports has suffered a big blow, but we can overcome the problem if the government takes some initiatives such as reduction of the rate of interest on bank loans for exporters to 2%. In addition to this, solving the issue of delay in GST refunds and bringing new schemes for technology upgradation can change the entire scenario for us.”

Source: Times of India

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How to reverse the trend of jobless growth

Promoting the growth of MSMEs, skilling for an industry-ready workforce, producing periodic data on employment, promoting & tracking entrepreneurial sector are some ways that can lead to sustainable employment generation. India experienced decline in jobs due to a reduction in contract workers (nearly 70,000 were retrenched in the first half of FY16, compared to 161,000 additions in the first half of FY15). In a jobless growth economy, unemployment remains stubbornly high even as economy grows. This may be because a relatively large number of people may have lost their jobs or new members entering the workforce are much higher than jobs available. In India, the latter seems to be the case, thereby obstructing the benefits of growth from reaching the masses. While analysing the paradox of jobless growth, I have categorised the reasons and the possible solutions into a ten-point action plan:

*Formalise labour arrangements: India experienced decline in jobs due to a reduction in contract workers (nearly 70,000 were retrenched in the first half of FY16, compared to 161,000 additions in the first half of FY15). Contractualisation is a universal phenomenon and the solution is to simply end the informal nature of employment. Better pay, job security, safe work environments and social security benefits will only help workers bring out their best. In fact, companies making high-specification products realise that contract labour can lead to batch rejections.

*Improve business sentiment: Employment in export units, reeling under a shrunken global demand, has seen a sharp decline. In the automobile sector, only a handful of jobs have been added. Large manufacturers are trimming operations; Nokia shut down its handset factory in Chennai, rendering 8,000 workers jobless, and for Microsoft, the new owner of Nokia, making smartphones in China and Vietnam was cheaper. Following on the heels of Goldman Sachs and Nomura, JP Morgan Asset Management also exited its onshore India-based mutual funds business. Cement major Lafarge is another case in point. The focus should be on kick-starting the investment cycle, incentivise job creation by giving infrastructure a push, finding a way to lower interest rates and improving ‘ease of doing business’.

*Improve labour-absorption: The economy is generating fewer jobs per unit of GDP—more work is being done with fewer employees due to major improvements in automation, robotics and productivity. So, more focus on labour-intensive sectors will generate employment. While sectors like financial services and e-commerce seem obvious as ones to focus upon, the significance of new economy enterprises shouldn’t be underestimated. These could be in education, hospitality, healthcare, as also green sectors such as solar and wind.

* Policy push to speed up the five labourmarket transitions: Transitioning from farm to non-farm, rural to urban, subsistence self-employment to wage employment, informal to formal, and school to work will enhance productivity norms.

*Schemes to promote MSME growth: Arresting the lacklustre global demand and weak exports, and diversifying the exports basket are the dire needs of the MSME sector. Enhancing the employment potential of MSMEs is critical as the sector contributes 40% to India’s manufacturing output, employing 14 crore workers.

*Skilling for an industry-ready workforce: Given India’s demographic dividend, it acquires special significance. With 54% of our population below 25 years of age, we are sitting on a massive workforce. Unfortunately, many of them are unemployable with their skills not matching the emerging industry requirements. While curriculum has largely remained static, its application has become dynamic.

Major gaps in skills are in industries such as auto, building and construction, textiles and retail. Also, there is a skills shortage for jobs ranging from welders to masons and from electricians to nurses. Industries require market-driven skills to meet their business needs of higher productivity, lower costs and higher efficiencies. It is imperative that apart from beefing up their in-house training facilities, the industry focus on tie-ups with educational/training institutes, and refurbishing curriculum, content, teaching/training methodologies.

*Manufacturing sector needs a boost:While the services sector contributes 58% to India’s GDP, the manufacturing sector’s contribution is 24%. India’s late policy resurgence towards manufacturing is the main reason why the country lags behind China. The sector’s role in triggering structural change has remained unattended while we have focused on the less employment-providing, less tradeable and less technology-oriented services sector.

India is not likely to emulate China where 34% of its labour force is involved in manufacturing. But even if we can increase this to 20%, up from the current 11%, it would account for another 100 million jobs!

*Producing periodic and reliable data on employment: Regular estimation of job numbers and related indicators has long guided policy creation in some of the other successful economies. Employment generation must be the soul of policy creation; to do that, it is imperative to know the statistics on the same periodically. The last time India carried out a focused and comprehensive estimation of the employment situation nationwide was in 2012 through the 68th round of NSSO. Needless to say, these figures are no longer used for gauging policy exigencies in the country.

*Promoting entrepreneurial sector: Many of the jobs in the economy are created by Flipkarts, Myntras and Snapdeals of the world. Start-ups are an engine of job-creation. According to NASSCOM, 3-4 IT start-ups are born every day in India and India is the third largest start-up base; just behind the US and the UK but ahead of China and Israel, with 1,400 new start-ups in 2016, up by 8-10% from 2015. These ventures are poised to grow 2.2 times to reach 10,500 by 2020.

*Dignity of labour: It remains an exotic concept in India. Shuffling papers is seen as more dignified as compared to holding a torque wrench and rolling up of sleeves on the shop-floor. The faster this mindset changes, the better it is for India.

UNDP’s Asia-Pacific Human Development Report 2016 warned India could face a critical shortage of jobs in the coming 35 years. There are two ways to look at it—as a huge wave of unemployment and demographic disaster that will leave India floundering, or as an unprecedented resource for wealth creation that will outpace much of the world if equipped with right skills.

Source: Financial Express

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Fashion weaving in jail

Pearl Academy aims to bring prison inmates weave fashionable clothes. Call it Jailhouse Rock-albeit with a difference! Pearl Academy, India’s leading institution in design, fashion, creative businesses and media, is now going to various prisons in the country, involving the jail inmates in fashion weaving in a vibrant atmosphere and grooming their artistic acumen. While this may well be part of their CSR initiative, such activities are also coming in handy to the group in corporate brand building and establishing goodwill as a socially responsible group. Taking a cue from Mahatma Gandhi, who brought about a revolution in the freedom movement of India through his spinning wheel the Charkha, Pearl Academy is now seeking to bring a social and economic revolution amongst a section of India languishing in its prisons which the society knows as ‘prisoners’ and ‘criminals’, this time round, using the wheel of a sewing machine, top Pearl Academy officials said. Antonio Maurizio Grioli, Head – School of Fashion, Pearl Academy, said that their efforts aim at turning these prisons into incubators of some of India’s greatest talent and the prisoners as India’s talented workforce. They have already done it with the inmates of Tihar Jail and moves are already afoot to replicate the same model at various other prisons across the country, starting with Mumbai, Noida and another in the outskirts of Delhi. Pearl Academy, in its 25th year of its existence, at present, has campuses in Delhi, Noida, Jaipur and Mumbai, and is looking at expanding to some other cities including Kolkata. Pearl Academy, which is the only Indian educational institute to be ranked among the top 25 fashion schools globally by Business of Fashion and has been judged as the Best Design Institute by Assocham for 3 years in a row, has lined up plans to visit different prisons, set up textile lab or fashion lab within the prison, impart intense training, do handholding and get the best out of their creative talent, explained Grioli. Pearl Academy has teamed up with Tamana NGO to carry out this initiative. It has also teamed up with INTI in Malaysia to start a new project whereby students and faculty of both the institutes would collaborate to do some projects to help students contribute towards fulfilling their responsibility to society. The project that it has already started is the painting of the sewing lab in SETU – wall painting is being done by the students of Noida Campus. INTI students have participated by sending their ideas on graphics that could be done on these walls. Such wall paintings around the sewing labs have not only uplifted the façade of the building but also the spirits of the seeking learners at SETU, said Ujjwal K Chowdhury, School Head-School of Media, Pearl Academy. Besides all such activities, “Pearl Academy students have become hot favourite among big brands and designers. We started this year on a high as we signed up with Manish Arora as our ideation partner. Our fashion students get international exposure when they intern with established designers, assisting them at Paris Fashion Week, Milan, New York, etc Through the Creative Career Conclave, we intend to make students and parents aware of the opportunities available after creative education. We have had many students from this region and all are doing extremely well,” said Grioli.

Source: Financial Cronicle

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Global Textile Raw Material Price 2018-04-23

Item

Price

Unit

Fluctuation

Date

PSF

1429.38

USD/Ton

0.56%

4/23/2018

VSF

2263.19

USD/Ton

0%

4/23/2018

ASF

2858.76

USD/Ton

0%

4/23/2018

Polyester POY

1468.29

USD/Ton

0%

4/23/2018

Nylon FDY

3525.80

USD/Ton

-0.45%

4/23/2018

40D Spandex

5717.52

USD/Ton

0%

4/23/2018

Nylon POY

1747.02

USD/Ton

0%

4/23/2018

Acrylic Top 3D

3732.27

USD/Ton

-0.42%

4/23/2018

Polyester FDY

6003.40

USD/Ton

0%

4/23/2018

Nylon DTY

1723.20

USD/Ton

0%

4/23/2018

Viscose Long Filament

3287.57

USD/Ton

-0.48%

4/23/2018

Polyester DTY

2985.82

USD/Ton

0%

4/23/2018

30S Spun Rayon Yarn

3017.58

USD/Ton

-0.52%

4/23/2018

32S Polyester Yarn

2207.60

USD/Ton

0%

4/23/2018

45S T/C Yarn

3033.46

USD/Ton

0%

4/23/2018

40S Rayon Yarn

2350.54

USD/Ton

0.68%

4/23/2018

T/R Yarn 65/35 32S

2572.88

USD/Ton

0.62%

4/23/2018

45S Polyester Yarn

3192.28

USD/Ton

0%

4/23/2018

T/C Yarn 65/35 32S

2715.82

USD/Ton

0%

4/23/2018

10S Denim Fabric

1.48

USD/Meter

0%

4/23/2018

32S Twill Fabric

0.91

USD/Meter

0%

4/23/2018

40S Combed Poplin

1.27

USD/Meter

0%

4/23/2018

30S Rayon Fabric

0.71

USD/Meter

0%

4/23/2018

45S T/C Fabric

0.75

USD/Meter

0%

4/23/2018

Source: Global Textiles

 

Note: The above prices are Chinese Price (1 CNY = 0.15882USD dtd. 23/4/2018). 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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Bangladesh emerges largest importer of Indian cotton

Bangladesh has emerged as the biggest importer of Indian cotton this season. It imported around 21 lakh bales of cotton from India overtaking China, which was largest importer of Indian cotton until now. For many seasons, China has remained the largest importer of cotton from India and has imported around 17-18 lakh bales during any given season. However, for the past couple of seasons, China has not been importing much cotton because of large reserves of the crop within the country itself. In the last two seasons, China has imported some 19 lakh bales of cotton. Bangladesh, on the other hand, has imported around 36 lakh bales during this period. According to industry people, there have been no restrictions on the import of cotton in Bangladesh.Cotton is exported from India via Kolkata port and the road route from Benapole. Traders say that expenses on logistics are reduced since Bangladesh in India’s neighbour. Bangladesh produces less than 8 lakh bales in a season and is not considered a significant cotton producer. Over 90 % of the country’s textile mills’ needs are met through imports. The country has over 85 textile mills and a large presence in powerloom and processing. The country’s textile business has 35% foreign direct investment, industry sources said. Both US and China are large investors in the textile business. US exports around 25-28 lakh bales. The Cotton Association of India (CAI) has estimated domestic consumption at 324 lakh bales while the exports for the season are estimated at 65 lakh bales which is higher by 5 lakh bales than the CAI’s estimate of the previous month as the country is now witnessing a good export demand. The carry-over stock at the end of 2017-18 season is estimated by the Association at 21 lakh bales, which is lower by 1 lakh bales of 170 kgs each than the CAI ‘s earlier estimate. Several new textile mills have come up in Gujarat and other states have started operations resulting in about 35 lakh new spindles this year. India is also the second largest exporter of cotton in the world next only to the US and it also has a vibrant import market. So far, India has exported 15 lakh bales of cotton to China. As per data provided by CAI, the country has contracted 15-20 lakh bales for exports to China. Following the trade war with the US, China has imposed tariffs on import of cotton from the US. Cotton is one of the 106 US goods on which Beijing has imposed up to 25% tariffs. Atul Ganatra, President, Cotton Association of India (CAI), had earlier said India has been receiving demands for cotton from several other countries, including Vietnam, Indonesia and Turkey. According to the CAI, India had exported 63 lakh bales of cotton last year. Each bale has nearly 170 kg of cotton. Sourcing cotton from India is more cost effective and less expensive in comparison to other countries, according to traders. India has already shipped nearly 53-55 lakh bales in the current season and contracts have been signed for another 8-10 lakh bales scheduled for shipment in April-May.India will export 65-70 lakh bales of cotton in the ongoing cotton season 2017-18 (October-September) amid aggressive demands from neighbouring countries like Bangladesh, Pakistan and China, according to traders. The country’s cotton exports would reach 65 lakh bales by May-end as Bangladesh, the world’s largest cotton importer, does not have much of its own production and its spinning mills largely depend on imports, CAI has said. In the early six months of this cotton production and marketing season 2017-18 (October-March), India had sold 55 lakh bales of cotton, of which 17 lakh bales were shipped to Bangladesh followed by 11 lakh bales to Pakistan, 10 lakh to Vietnam, 7 lakh to China, 7 lakh to Indonesia and Taiwan, and 3 lakh to other countries including Sri Lanka, Turkey and Thailand, among others.

Source:  Financial Express

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Zimbabwe: Quton releases new cotton hybrid seed

Zimbabwe’s major cotton seed producer Quton, has released new cotton hybrid seed with a higher yield potential compared to current non hybrid varieties, in a move that is set to revive the country’s cotton sector that has been on the decline for years. Speaking at the launch of the new cotton seed hybrids in Harare recently, Quton managing director Edworks Mhandu, said his company is releasing the hybrid varieties after conducting successful trials in partnership with the Cotton Research Institute in various parts of the country. He said the results of research had shown that the hybrid seeds, which generally require less water had a yield potential of 20-25 percent higher than non – hybrid seeds. “The new cotton hybrid seed is going to revolutionise the country’s cotton sector through improved yields and improved livelihoods for farmers. Our vision is not ending with hybrids only, but we want to go further into biotechnology to enhance the competitiveness of Zimbabwe’s cotton sector. It’s now possible for breeders to introduce new varieties in 6 to 7 years instead of 15 years. We are introducing these varieties with the main objective of increasing productivity and enhanced incomes for cotton farmers.” Quton, the country’s sole cotton seed producer in collaboration with the Cotton Research Institute, conducted trials over the last two cropping seasons to develop highly adaptable and high-yielding cotton varieties to enhance the country’s competitiveness on the world market. The company released its C567, C571 and C608 cotton hybrid varieties, which broadly have large bolls, very high oil and protein content as well as good fibre quality compared to the QM301 open variety. With good agronomic conditions and practices, the C571 and C567 varieties can yield about 5 500kg per hectare while the drought tolerant C608 can yield some 4 000kg per hectare. Quton breeders say the figures could be higher depending on soil and other agronomic conditions. They say the hybrid varieties have a potential for 60 bolls per plant. Quton and the Cotton Research Institute conducted trials in the 2015/ 16 and 2016 /2017 cropping seasons in main cotton growing regions — Gokwe, Sanyati, Muzarabani, Bindura and other areas. “Our trials were a huge success and I’m optimistic that these new varieties will gain acceptance and improve the livelihoods of cotton farmers,” said Mr Mhandu. “The cotton sector had gone on a downward spiral for several years. The question was, what do we do to increase productivity. These cotton hybrid varieties could help us increase our return per hectare and help our farmers to retain interest in growing cotton. Quton is working flat out to ensure our farmers get some economic benefits from the seed. If farmers are happy with their returns, then we know we are going to get business.” Quton is already training thousands of farmers in major cotton growing regions of the country on how to grow these new varieties. Training was also done during trials to help build the capacity of farmers to grow cotton hybrid seeds. Quton cotton breeders say a shift to the use of less water tolerant seeds would help offset challenges related to unpredictable rainfall patterns resulting from climate change. India’s leading agri-biotech company Maharashtra Hybrid Seeds Company, acquired a controlling stake in Quton in 2014 from Seed Co in a transaction worth $10 million. The acquisition gave the Indian firm a platform to introduce hybrid seeds to Africa. The foray into African market is expected to strengthen Quton and Mahyco’s positioning in the global cotton market. Quton also has operations in Tanzania, Malawi and Zambia where cotton hybrid seeds have also been undergoing trials. These countries too, predominantly use open pollinated varieties. Mahyco is working to introduce these hybrids in seven other African countries. Quton breeders say the new varieties have a potential to transform cotton production through improved viability for farmers, increased cotton hectarage and increased national cotton output. “Hybrids will certainly attract farmers back into cotton growing in Zimbabwe because of improved yields per hectare,” said a breeder. More than 180 000 small-scale farmers are growing cotton to sustain their livelihoods but falling world cotton lint prices, rising production costs and low returns have continued to subdue cotton production in Zimbabwe and most other African countries. About 98 percent of the cotton grown in Zimbabwe is exported in its raw form. Zimbabwe’s cotton production has dropped from an estimated 400 000 tonnes annually at its peak a few years ago to 200 000 tonnes now. The decline has been attributed to a combination of factors, lack of suitable hybrid varieties, including lower prices for the crop and drought. Home

Source: The Herald

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Pakistan: Textile Exports Surge 7.77 Pc In 9 Months

The textile group exports from the country increased by 7.77 percent during the first three quarters of current fiscal year as against the exports of the corresponding period of last year. The textile group exports from the country increased by 7.77 percent during the first three quarters of current fiscal year as against the exports of the corresponding period of last year. The exports of textile were recorded at $9.99 billion during July-March (2017-18) against the exports of $9.27 billion during July-March (2016-17), according to data released by Pakistan Bureau of Statistics (PBS) here on Monday. The products that contributed in positive growth in external trade included raw cotton, the exports of which grew by 35.76 percent by going up from $41.12 million last year to $55.82 million during the current fiscal year. Similarly, knitwear export increased from $1.7 billion to $1.98 billion, showing growth of 14.12 percent while the exports of yarn (other than cotton yarn) increased from $17.75 million in first nine months of previous year to $23.32 million, an increase of 31.34 percent. During the period under review, the bed wear exports increased by 4.99 percent, from $1.56 billion to $1.67 billion in the period under review while the towels' exports increased by 1.18 percent from $591.28 million to $598.245 million this year. The export of ready made garments increased by 12.56 percent by growing from $1.7 billion last year to $1.9 billion this year while the exports of art, silk and synthetic textile increased by 70.39 percent, from $133.673 million to $227.771 million. During the period under review, the exports of made up articles (excluding towels and bed wear) also increased by 7 percent, from $480.4 million to $514 million. Similarly cotton cloth exports also witnessed an increase of 1.05 per cent as it went up from $1.61 billion in Jul-March (2016-17) to $1.63 million in same period of current fiscal year, whereas export of cotton yarn increased by 4.9 per cent from $941.4 million to $987.58 million.Meanwhile, the textile products that witnessed negative growth in trade included cotton (carded or combed), exports of which declined by 97.87 percent, from $235,000 to $5000 while the exports of tents, canvas and tarpaulin decreased by 38.39 percent, by declining from $107.05 million to $65.955 million, the PBS data revealed. On year-on-year and month-on-month basis, during March 2018, the exports of textile group witnessed an increase of 12.95 per cent and 12.81 percent when compared to the exports during March 2017, and February 2018 respectively. During the period under review, the exports increased from $1.065 billion in March 2017, and $1.066 billion in February 2018 to $1.202 billion in March 2018.

Source: Pakistan Point News

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Ethiopia: Ethiopian businesses disappointed by new PM's economic stance

Local business leaders at a banquet in Ethiopia’s capital last week were hoping the new prime minister Abiy Ahmed would tell them he planned to loosen the state’s grip on the economy. He took power on April 2 promising a “new political beginning”. But four people who heard his dinner speech said he signaled he would stick with policies to keep the government’s hand in sectors such as infrastructure, banking and telecoms.

Ethiopia has let foreign companies such as fashion chain H&M set up factories in a decade-long push to change the economic focus from agriculture exports, such as coffee, to manufacturing. Other sectors are also open to investors. Analysts say the government must free up the economy further to sustain annual growth rates it estimates averaged nearly 10 percent in the past decade and to create jobs. Anger over high unemployment fueled violence over ethnic tensions that led to the resignation of Abiy’s predecessor Hailemariam Desalegn in February. But those at the speech said Abiy did not outline plans to open up new sectors, a move which could also ease a shortage of foreign exchange. He said state spending on infrastructure, which has crowded out local companies, would continue. “Point blank, Abiy said that demanding the state be out of the business sector is not feasible,” said a hotel owner who was at the dinner. He said Abiy was responding to the business leaders’ requests.

“The state will remain in the business sector.”

Abiy named 10 new ministers to his cabinet on Thursday to clear a path for political reform. He told the new ministers to tackle graft and streamline bureaucracy. But he retained the rest of Hailemariam’s 34-strong cabinet, including the finance minister. That is consistent with remaining a “developmental state”, the term the four businessmen said Abiy used at the banquet. His office did not respond to requests from Reuters for comment on his policies. Economists describe a “developmental state” as one where the government is deeply involved in the economy. The philosophy was embraced by rebel-turned-statesman Meles Zenawi, who died in power in 2012. It continued under Hailemariam. “It’s frustrating to see that for all Abiy’s intentions to bring about changes in politics, that is not translating into the economic sector,” said Tsedale Lemma, the editor of the Addis Standard news website.

“MORALISTIC TONE”

Local businesses say they find it hard to compete against the state. The government has spent hundreds of millions of dollars in recent years building roads and railways to support the manufacturing expansion. Many of the projects are funded with foreign exchange. Some is borrowed domestically, depriving local businesses of loans to fund their own projects. It also depletes foreign exchange reserves that could be used to support other areas of the economy. This means it is hard for foreign businesses to send profits home and for local businesses to import. Access to loans and hard currency is the “biggest headache” for businesses, Endalkachew Sime, secretary general of the Ethiopian Chamber of Commerce said. The International Monetary Fund said foreign reserves at the end of the 2016/17 fiscal year stood at $3.2 billion, less than the cost of two months of imports. The government does not regularly release foreign reserves figures. The hotel owner said Abiy had lectured the business leaders at the dinner with a “moralistic” tone for buying foreign cars during a foreign exchange shortage. Endalkachew said Abiy should listen to the participants with a “big open ear”.

FACTORIES OPENING UP

State investment in infrastructure has been the largest driver of gross domestic product growth. Coffee is the biggest export, and over 70 percent of the population is employed in farming. Gold, sesame, khat and livestock are also major exports. Abiy looks set to continue Hailemariam’s plan to shift away from agriculture to manufacturing, currently 8 percent of GDP. The government has already welcomed Chinese, Turkish, Indian and Western investors in factories making textiles, garments, leather goods and processed agricultural products. This has contributed to a sharp rise in foreign direct investment. The Ethiopia Investment Commission’s spokesman said FDI was $2.2 billion for the first half of the 2017/18 fiscal year, a 22 percent increase from the same period a year earlier. Other sectors have also had foreign participation. The government sold the tobacco company, National Tobacco Enterprise, to a Japanese tobacco company in December for $434 million. Heineken and Diaigeo bought the 2 state-run breweries. Unilever opened a factory producing soap and other products in 2016 and wants to expand. The government is also looking for partners in the sugar industry. In retail, foreign companies may not open their own branches although they can bid for contracts with a state wholesalers. Sheraton (SHPF.BO), Hilton (HLT.N), Radisson, and Marriott (MAR.O) have hotels in the capital. Accor Hotels (ACCP.PA) is planning to open three. Ethiopia has also said it would like to create a secondary local currency bond market, which could increase liquidity for local and foreign companies.

SHUT OUT

Nevertheless, some of the big sectors are still closed. Ethio Telecom is one of Africa’s few remaining telecoms monopolies and the state-owned Commercial Bank of Ethiopia the largest financial institution. Economists say industries growing in neighboring Kenya, such as technology start-ups, are stifled by red tape and low internet penetration. There is also no stock market. Alemayehu Geda, economics professor at Addis Ababa University, estimates the unemployment rate, while officially at 18 percent, is closer to 50 percent. Reducing it will be key for long-term stability in Ethiopia, he said. “The prioritization by the government of the manufacturing sector is logical as it would create many jobs,” said Michael Ghebru, Chief Executive of Belayab Foods and Franchise PLC, which opened the first of ten planned Pizza Hut restaurants in Ethiopia this month, the first major foreign food franchise. “But there are other sectors that are bringing in a lot of revenue and employment as well so their challenges should also be put into consideration.”

Source: Reuters

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Researchers investigate 'why clothes don't fall apart'

Cotton thread is made of many tiny fibers, each just 2-3 cm long, yet when spun together the fibers are capable of transmitting tension over indefinitely long distances. From a physics perspective, how threads and yarns transmit tension—making them strong enough to keep clothes from falling apart—is a long-standing puzzle that is not completely understood. In a new paper published in Physical Review Letters entitled "Why Clothes Don't Fall Apart: Tension Transmission in Staple Yarns," physicists Patrick Warren at Unilever R&D Port Sunlight, Robin Ball at the University of Warwick, and Ray Goldstein at the University of Cambridge have investigated yarn tension in the framework of statistical physics. Using techniques from linear programming, they show that the collective friction among fibers creates a locking mechanism, and as long as there is sufficient friction, a random assembly of fibers can in principle transmit an indefinitely large tension. Their results provide a quantitative basis for the heuristic explanation proposed by Galileo in 1638, who was puzzling over the problem of how a rope can be so strong when it is made of such small fibers. "The very act of twisting causes the threads to bind one another in such a way that when the rope is stretched… the fibers break rather than separate from each other," he wrote. In modern terms, Galileo was describing friction. In the new study, the researchers modeled the yarn as a group of randomly overlapping fibers. The results showed that, as the friction increases, a percolation transition emerges. As the researchers explain, this transition corresponds to "a switch from a 'ductile' failure model where the yarn fails by fiber slippage to a 'brittle' failure mode where the failure mechanism is fiber breakage." Above this threshold, the tensile strength becomes roughly 100 times stronger than before. "We now understand better at a fundamental level how friction stops fibrous materials from falling apart," Goldstein told Phys.org. "From an applied perspective, we can use the insights to underpin the design of fabric conditioners, for example." In the future, the model could also be used to optimize the properties of sewing threads made of various fiber blends. When extended from fibers to granular media, the results may also have applications for better understanding the stress transmission in sand piles and grain silos. In addition, the researchers plan to investigate the threshold in greater depth. "We plan to write a longer paper exploring the nature of the 'supercritical' state, above the percolation transition," Goldstein said.

Source: Phys.org

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