The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 21 AUGUST, 2018

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INTERNATIONAL

Prabhu reviews proposed industry, farm export policies

New Delhi :Commerce and Industry Minister Suresh Prabhu reviewed the proposed new Industrial Policy, which will replace the existing policy of 1991, and the agriculture export policy, with senior officials on Monday. The Minister also discussed export promotion strategies that the country needs to adopt to improve performance of the export sector, according to his tweet. “(I) held a meeting with the Commerce Secretary and senior officials of the DGFT today. Discussed various export promotion strategies and reviewed the upcoming Agri Export Policy and Industrial Policy. We are working on new initiatives to take India’s export to the next level,” Prabhu said in a tweet. Both policies are likely to be placed before the Union Cabinet for approval soon.

‘Make in India’

It is proposed that the new Industrial Policy, being driven by the Department of Industrial Policy & Promotion, will aim at making India a manufacturing hub by promoting ‘Make in India’. It will also suitably incorporate the use of modern smart technologies such as IOT, artificial intelligence and robotics for advanced manufacturing. The six thematic areas include manufacturing; MSME; technology and innovation; ease of doing business; infrastructure, investment, trade & fiscal policy; and skills and employability for the future. The new policy, which will replace the almost three-decades-old existing one, seeks to create jobs for the next two decades, promote foreign technology transfer and attract $100-billion FDI annually. As part of the exercise, the government is also reviewing all regulatory policies so that all unnecessary regulations could be done away with, Prabhu recently said.

Doubling farm exports

Another important policy proposal reviewed by the Minister was the ‘Agri Export Policy’, aimed at doubling agricultural exports to $60 billion by 2022, placing India among top 10 agriculture exporters in the world and promoting stability in export rules. In his Independence Day speech, Prime Minister Narendra Modi talked about the new agriculture export policy to be unveiled soon to boost farm income as the government was on track to achieve the target of doubling farmers’ income by 2022.

Source: Business Line

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Rupee might stabilise at 68-69 a dollar: Garg

The Economic Affairs Secretary was speaking at an interactive session organised by the Merchants’ Chamber of Commerce & Industry in Kolkata. The rupee, which has taken a severe battering of late, is expected to stabilise at 68-69 per US dollar level riding on positive capital inflows this month, Economic Affairs Secretary Subhas Chandra Garg on Saturday said. The rupee is already Asia’s worst performing currency and had touched an all-time low of 70.09 per US dollar on Tuesday. According to Mr. Garg, the current turmoil in Turkey, triggered by U.S. sanctions, had not affected the perception of India. The flow of foreign portfolio investments (FPI) had not altered either and there had been no outflow in July, Mr. Garg said while speaking at an interactive session organised by the Merchants’ Chamber of Commerce & Industry here. During the first three months, there had been outflow of capital and in the last year the total outflow was $ 20 billion, he added. “If oil prices do not rise further, the chances of the rupee stabilising at 68-69 level is more,” Mr. Garg said. When asked how the rupee will be affected if China devalued its currency, he said that for the first time in the last 20 years, the Chinese economy had experienced current account deficit (CAD). “Now China’s exports and imports are altering fundamentally. So far, the depreciation of the Chinese yuan was not so high. Even if the Chinese currency is devalued, India will not be affected as long as the depreciation of all currencies vis-a-vis the dollar was similar,” he added. There would be no problem as terms-of-trade would not change, Mr. Garg said. “However, we are watching closely to what extent China devalues its currency,” he said. Owing to high oil prices, India’s CAD had risen to 1.9 per cent for which the rupee was depreciating. This called for a need for higher capital inflows, he added.

Source: The Hindu

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Cheap power for looms spurs Surat weavers’ move to Maha

Surat: For power loom weavers in the Diamond City, Navapur, a border district in Maharashtra — about 100km from Surat — has become the preferred destination for setting up weaving units. About 250 power loom units, owned by Surti weavers, have been established in Navapur’s Maharashtra Industrial Development Corporation (MIDC) estate and the nearby Chokhawala compound over the past couple of years. If the power loom weavers are to be believed, unlike the Gujarat government, the Maharashtra government has a proactive textile policy which offers substantial benefits to those setting up units there. The benefits includes cheap electricity, at less than Rs 3.5 per unit; 35% subsidy on capital investment on bank loans and 50% on own investment; and low land rates compared to GIDC estates in Gujarat. A power loom weaver, Anish Bardolia, from Surat has installed about 30 Rapier machines in the 16,000 square feet industrial shed in the Navapur MIDC. Bardolia has a Rapier machine unit in Surat’s Khatodara as well. “The textile poli- cy of the Maharashtra government makes Navapura attractive,” he said. “I am operating the unit in partnership with a local weaver there. The electricity tariff is almost half of what we are charged in Surat.” Bardolia explained that on an average, if a power loom unit in Navapur consumes 22,000 units per month, the power bill comes to around Rs 77,000. However, if the unit operates in Surat and consumes the same amount of power, the electricity cost would be Rs 1.65 lakh. According to Bardolia, the land price in Navapur is about Rs 2,700 per square yard compared to Rs 20,000 per square yard at GIDC in Pandesara or Sachin. The Navapur unit manufactures about 7,000 metres of fabric per day. Bardolia has shifted the labour from Surat to Navapur by providing workers with facilities such as lodging and food. The number of weavers who have shifted to Navapur may be small, but the industry leaders believe that the Gujarat government needs to come up with a competitive textile policy on the lines of Maharashtra’s to stem the migration. A power loom weaver from Surat, Bharat Patel, who has set up a unit in Navapur, said: “Navapur is about 100km from Surat and we get cheap labour as well as electricity. We got a 35% subsidy on the investment of Rs 3 crore.” Hence, Patel said, he decided to set up a unit there three months ago. Man-made Textile Research Association secretary Dinesh Zaveri said, “The textile policy of the Maharashtra government is very positive compared to Gujarat’s. This is the reason why power loom weavers are shifting to Maharashtra and the Union territory of Silvassa.” Another power loom unit owner in Surat, Manoj Sethia, is also planning to set up a unit in Navapur. “The textile policy in Maharashtra is industryfriendly. If we are paying Rs 7.30 per unit for electricity in Surat, the Maharashtra government is offering it at half the rate.”

Source: Press Reader

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Bihar weavers to get identity

Patna: The Bihar government plans to emboss the Handloom Mark to all handloom cotton and silk products woven in the state for the sake of authenticity and transparency in subsidy distribution. It will also help identify which product has been woven where and by whom. "We are planning to start labelling all handloom products in the state with the Handloom Mark, which is provided by the central government. It will help differentiate handloom products with power loom and mill products. It will also cut out fake products," said principal secretary, industries, S. Siddharth. Siddharth added that the state government will give subsidy ranging from 10 to 20 per cent to weavers only on those products that carry the Handloom Mark. The step will bring transparency in subsidy distribution, as the the number printed on the label will denote who wove what and where. At present, there are around 6,741 active handlooms in Bihar with unique identification numbers, while the state government is trying to increase the number to 10,000. The Handloom Mark scheme was launched in 2006 under the office of the development commissioner for handlooms, with the textiles committee under the ministry of textiles as the implementing agency to give a collective identity to handloom products that would help guarantee for the buyer that the product being bought is genuinely hand-woven. The National Institute of Design (NID), Ahmedabad, had designed its logo from the interlocking of the warp and the weft to form a three-dimensional cube. So far, Bihar has been using Handloom Mark labels in the satrangi chadar - the hospital bedsheet scheme meant for government hospitals since 2017-18. The government now wants to expand to all products, except low-priced ones such as gamchha (towel), lungi and handkerchief. Industries department officials said the challenge was to supply enough Handloom Mark labels to weavers, as the textile ministry offices in Varanasi and Calcutta are not providing it in adequate numbers. Bihar State Handloom Cooperatives Union chairman Naquib Ahmad said even the central agencies were not giving the required number of Handloom Mark labels to handloom cooperatives. "I have directed my officials to look into the matter and pursue it even at the central government's level, if needed," said Siddharth, when asked about the issue.

Source: The Telegraph

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Centre, states differ over who will foot bill for MSME tax break

New Delhi: Differences have emerged between the centre and states over who will foot the bill for a big tax break for micro, small and medium enterprises (MSME) that is in the works—partial tax exemption from the Goods and Services Tax (GST) for entities with up to ₹1.5 crore sales. The proposal which is now being examined by a ministerial panel led by Union minister of state for finance Shiv Pratap Shukla seeks to share the financial burden between the centre and states, which the states are opposing. The original proposal, discussed at the last GST Council meeting on 4 August, sought to give relief on the central government component of GST (CGST) for businesses with sales upto ₹1.5 crore, similar to the excise duty exemption small businesses enjoyed in the pre-GST era. That would have led to the Union government alone losing revenue as states would continue to charge state GST on these firms, the equivalent of Value Added Tax (VAT) which they were liable to pay in the earlier regime. The Union government now wants that states too share the burden. “The ideal way to give relief is to refund 50% of the total taxes paid by businesses with sales upto ₹1.5 crore. That means, half of CGST and half of SGST may be refunded through a scheme,” an official familiar with the discussions between central and state authorities said on condition of anonymity. “States, however, say the proposal was the Centre’s baby and that it alone should take the revenue hit,” said this person. A second person who also did not wish to be identified said states are unlikely to yield on this issue and that the Centre may have to bear the burden on its own. This may mean that the relief for small tax payers is lower than what was initially envisaged. “The refund may be only 15-20% of the CGST component if states don’t agree to share the financial burden,” the person said. Around 2.8 million units were registered under Central Excise with the central government. The second person added that the GST impact on smaller units may be overstated. There was no credit available for excise duty, unlike that in GST. The net tax incidence may be 1-2% of the value of the product, the second person added. The GST Council on 14 August issued the terms of reference for the Shukla panel, which allows it to come up with an interim report on all MSME-related issues it is looking into, before the next GST Council meeting on 28-29 September. The Council also gave it enough flexibility to consider all proposals discussed during the last Council meeting as well as any new ones received afterwards, said the person cited above. This gives greater room to accommodate new suggestions on the proposals. The central government is keen to give relief to the MSME sector which suffered earlier due to the disruption triggered by the November 2016 demonetization and the July 2017 rollout of GST. Small businesses and traders are also politically relevant as they form a key support base of political parties, including the BJP. MSMEs form the backbone of India’s economy. According to data available with the government, more than 63 million MSME units are engaged in manufacturing, services and trade more than half of them are in rural areas—and account for about 110 million jobs. These companies account for 29% the country’s GDP.

Source: Live Mint

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BIMSTEC envoys bat for FTA

BIMSTEC suffers from a “lack of visibility” in the region, said the envoys of seven member countries who form the “Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation,” who also called for the speedy conclusion of a Free Trade Agreement within the group comprising Bangladesh, Bhutan, India, Nepal, Sri Lanka, Myanmar and Thailand. Prime Minister Narendra Modi will join a summit of leaders from BIMSTEC countries in Kathmandu on August 30-31 and hold bilateral talks with most of them, including Bangladesh Prime Minister Sheikh Hasina and Nepal Prime Minister K.P. Oli. At an event organised by business chamber FICCI just ahead of the summit, envoys of BIMSTEC countries said the FTA should be the top priority for them. “It is really disappointing that we are yet to finalise and conclude the FTA which was negotiated in 2004. We need to expedite the BIMSTEC FTA to boost our intra-regional trade from its present level of 7% to 21%,” said Bangladesh High Commissioner Syed Muazzem Ali. “The visibility of BIMSTEC needs to be enhanced in a region where already a few other regional cooperation groups like ASEAN, SAARC, SASEC are in place,” he added. When asked about a timeline to complete the FTA, Sri Lankan High Commissioner Chitranganee Wagiswara said it was still unclear whether the agreement would go forward during the summit. “Even for the framework (2004) it took seven years. It is easy to negotiate an FTA between two countries. India and Sri Lanka have it. But when seven countries are involved maybe it is not so easy,” she said. Others added that at present the negotiations of the 16-nation Regional Comprehensive Economic Partnership (RCEP), due to be completed by the end of 2018, were taking precedence. The envoys also spoke about the need for the upcoming summit to promote security issues including “terrorism and violent extremism” in the region. “Terrorism is the most significant threat in the Bay of Bengal region as well as South East Asia and we call for more cooperation amongst the member states on this issue,” said Myanmar Ambassador Moe Kyaw Aung. Thailand’s Ambassador Chutintorn Gongsakdi pointed out that the India-Myanmar-Thailand Trilateral Highway had not been completed, which is crucial to trade movement between the countries.

Source: The Hindu

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5-year plan: Arvind to pump in ₹500 crore every fiscal

Arvind, a diversified conglomerate with interests ranging from textiles to retail and real estate, will invest ₹500 crore every year for the next five years to expand its textile business. The investments will be made from its internal accruals and will total ₹2,500 crore by 2023. “We have a clear plan to invest ₹1,500 crore for the next three years. After that we will continue to invest for another two years. We expect our revenues to go up to ₹12,000 crore by the end of five years from the present ₹6,000 crore,” Kulin S Lalbhai, Executive Director, told BusinessLine. “The entire textile trade is moving from China to this part of the world. We feel Arvind is in a unique position to take advantage of this even as the growth in domestic industry for apparel is also strong,” he added. The investments would be mainly for large-scale garmenting, with the company planning to convert at least 50 per cent of its fabrics into garments.

From fabric to garment

At present, Arvind converts only 10 per cent of its total fabrics produced into garments. The investments will also be used for the company’s foray into performance and functional clothing (active wear) and synthetics, and for scaling up its branded textiles and technical textiles businesses. The company intends to create five hubs. Of this, four will be in India — Jharkhand, Gujarat, Andhra Pradesh and Bengaluru — and one in Ethiopia. Each hub will employ 5-10,000 workers. At present, the company has just one hub — in Bengaluru — employing 10,000 workers.

 Demerger on track

As part of its demerger plan, the listed entity Arvind will be split into Arvind, Arvind Fashions and Anup Engineering. These companies will be demerged by the first or the second week of September, and then delisted within 45-60 days. “In the interim, Arvind would be the only listed company,” Lalbhai said. A number of other businesses such as Arvind Internet, Advanced Materials, Envisol and Telecom are also now being incubated under Arvind.

Source: The Hindu

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Govt mulls duty-free import of capital goods to skirt WTO

New Delhi : The government is working on a scheme to allow duty-free import of capital goods by the domestic industry, a measure that may be linked to employment generation. The initiative could be an alternative to some of the export incentive schemes that will now have to be phased out or withdrawn because of their incompatibility with global trade rules, a government official told BusinessLine. “At present, exporters can import capital goods duty free under the Export Promotion Capital Goods (EPCG) scheme and also under initiatives for EOUs (export oriented units) and SEZ (Special Economic Zone) units. However, these schemes are no longer compatible with World Trade Organisation (WTO) norms and have to be phased out or withdrawn. The new scheme is being designed to offer similar benefits to manufacturers within the boundaries of WTO norms,” the official said. A team led by the Directorate-General of Foreign Trade (DGFT) and including trade experts and industry representatives is fine-tuning the scheme, which will finally be included in a Cabinet note on alternative incentive schemes for the domestic industry and exporters. Since India’s per capita Gross National Income (GNI) exceeded the threshold of $1,000 for three years in a row in 2015, it can no longer extend export subsidies, under WTO rules. With India still continuing with many of its export sops, the US dragged the country to WTO’s dispute settlement body earlier this year, complaining that its export subsidies were harming American companies. It identified five popular export promotion schemes, including the merchandise export from India scheme (MEIS), the EPCG scheme, and some incentives available to EOUs and SEZ units, as being in violation of the WTO Agreement on Subsidies and Countervailing Measures. “The idea now is to replace these schemes with ones that are not directly linked to exports. The duty-free import of capital goods scheme being designed will be available to all domestic producers and would be linked to criteria other than exports — such as employment. This will ensure that exporters will continue to get duty-free benefits along with other domestic producers,” the official said. The average level of import duty on capital goods is around 7.5 per cent. Bringing it down to zero for the domestic industry that meets certain criteria like employment generation will provide relief for manufacturers, especially those who have newly set up their plants.

The catch

There are, however, a couple of glitches in the execution of the scheme. A scheme to incentivise capital goods import could go against the interests of the domestic capital goods industry. “The government is clear that the ultimate objective is to give a fillip to ‘Make in India’. This can be done by giving the industry more benefits if they procure domestically,” the official said. The Finance Ministry would also suffer a revenue loss if a duty-free import scheme is implemented as capital goods are a source of generation of income from Customs duty, the official added. “All these factors have to be taken into account before finalising the scheme. Hopefully the scheme will be given a final shape soon,” the official said.

Source: Business Line

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Rupee up 33 paise versus dollar

Mumbai : The Indian rupee made a strong comeback on Monday from its life-time low and ended with a stellar 33 paise gain at 69.82 on heavy dollar unwinding and a robust rally in domesticequities. This is the biggest one-day vault against the American currency in seven weeks. Staging a smart recovery, the rupee opened with a gap up at 69.83 against last Thursday’s close of 70.15 at the inter-bank foreign exchange (forex) market. The fresh breakout pushed the rupee to hit a session’s high of 69.59 as foreign banks sold the greenback. A strong rally in local equities further added momentum. After revisiting a high of 69.59, the local unit finally ended the day at 69.82, revealing a sharp rise of 33 paise, or 0.47 per cent.

Source: Business Line

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Ind-Ra revises down India's FY19 GDP growth rate

India Ratings and Research (Ind-Ra) has revised down its economic growth forecast for fiscal 2018-19 to 7.2 per cent from the earlier 7.4 per cent. The key reason is the headwinds emanating from the elevated global crude oil prices and the government decision to fix the minimum support prices of all kharif crops at 1.5 times the production cost.  Ind-Ra believes the other headwinds lurking on the horizon are the rising trade protectionism, the depreciating rupee and no visible signs of the abatement of the non-performing assets of the banking sector, according to a press release from the company. The organisation expects the annual value of exports to touch $345 billion in 2018-19, crossing the peak of $318 billion attained in 2013-14. India will continue to face headwinds on the exports front, it says. At a disaggregated level, Ind-Ra expects private final consumption expenditure to grow 7.6 per cent in 2018-19 compared to 6.6 percent in the last fiscal. The thrust for growth is coming from the waning impact of demonetisation, rise in rural consumption due to two consecutive favourable monsoons and reduction in the goods and services tax rate on several items. However, investment expenditure as measured by gross fixed capital formation is unlikely to significantly improve over 2017-18 figures and is expected to grow at 8 per cent, it adds. (DS)

Source: Fibre2Fashion

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Global Textile Raw Material Price 20-08-2018

Item

Price

Unit

Fluctuation

Date

PSF

1548.83

USD/Ton

3.40%

8/20/2018

VSF

2075.29

USD/Ton

0.14%

8/20/2018

ASF

3024.94

USD/Ton

0%

8/20/2018

Polyester POY

1643.36

USD/Ton

0%

8/20/2018

Nylon FDY

3388.52

USD/Ton

0%

8/20/2018

40D Spandex

5017.34

USD/Ton

0%

8/20/2018

Nylon POY

5489.98

USD/Ton

0%

8/20/2018

Acrylic Top 3D

1868.78

USD/Ton

0%

8/20/2018

Polyester FDY

3097.66

USD/Ton

0.47%

8/20/2018

Nylon DTY

3199.46

USD/Ton

0%

8/20/2018

Viscose Long Filament

1832.42

USD/Ton

0%

8/20/2018

Polyester DTY

3504.86

USD/Ton

0.42%

8/20/2018

30S Spun Rayon Yarn

2748.63

USD/Ton

0%

8/20/2018

32S Polyester Yarn

2297.79

USD/Ton

0.64%

8/20/2018

45S T/C Yarn

2981.32

USD/Ton

0.49%

8/20/2018

40S Rayon Yarn

2908.60

USD/Ton

0%

8/20/2018

T/R Yarn 65/35 32S

2530.48

USD/Ton

0%

8/20/2018

45S Polyester Yarn

2457.77

USD/Ton

1.81%

8/20/2018

T/C Yarn 65/35 32S

2530.48

USD/Ton

0.58%

8/20/2018

10S Denim Fabric

1.36

USD/Meter

0%

8/20/2018

32S Twill Fabric

0.84

USD/Meter

0%

8/20/2018

40S Combed Poplin

1.16

USD/Meter

0%

8/20/2018

30S Rayon Fabric

0.65

USD/Meter

0%

8/20/2018

45S T/C Fabric

0.70

USD/Meter

0%

8/20/2018

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14543 USD dtd. 20/8/2018). 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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Sector Skill Council by Aug end for Pak textile sector

A shortage of skilled labour in Pakistan’s textile sector warrants the establishment of a Sector Skill Council, according to National Vocational and Technical Training Commission executive director Zulfiqar A Cheema. The council, to be become operational by August end, will strengthen the industry and boost economic progress, he said recently in Islamabad. Associations representing the textile industry in the country have welcomed the establishment of the council, according to Pakistani media reports.

 Source: Fibre2Fashion

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VN strives to avoid MFN tariffs

The Department of Trade Defence under the Ministry of Industry and Trade will begin releasing Việt Nam’s export data to the Eurasian Economic Union (EAEU) on a monthly basis to help local businesses avoid Most Favoured Nation (MFN) tariffs. Việt Nam and the EAEU signed a free trade agreement on May 29, 2015, which came into force on October 5, 2016. Under the deal, the EAEU – consisting of Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan – committed to eliminating tariffs for up to 9,774 tax lines (90 per cent) for products imported from Việt Nam. Việt Nam’s footwear, textiles and garments, and interior design products are eligible for zero import duty. However, if the volume of these products exceeds a trigger level established in the agreement, the EAEU will adjust the zero import duty to MFN tariffs for six to nine months, depending on the volume. As of June 2018, the MFN tariffs had been imposed on Vietnamese underwear and children’s wear products. According to the department, there are no products at risk of tax in 2019. However, domestic firms should act accordingly to avoid the imposition. Việt Nam’s customs statistics show trade between the two sides hit US$3.9 billion in 2017, up 31 per cent year-on-year. Last year, Việt Nam also recorded a trade surplus of nearly $1 billion with the bloc. In the first four months of 2018, bilateral trade was at $1.53 billion, an annual increase of 35 per cent. Key Vietnamese exports to the EAEU were phones and components, computers and electronic devices, apparel, footwear, fruit and vegetables, coffee, cashew nuts and seafood. Việt Nam mainly imported petrol, oil, steel, fertilisers and machinery from the EAEU. Commodities from each side supplement each other, limiting disadvantages often seen with other FTAs.

Source: Vietnam News

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Turkish technical textiles exports up 20%

Turkey’s technical textile exports grew by 20.1% to US$ 898 million in the first half of 2018. The most exported product group from January to June was nonwovens. Exports of these products increased by 30.6% and were worth around US$ 294 million. This product group accounted for 32.7% of total technical textile exports. The second major product group in the first half of 2018 was packaging products, worth around US$ 182 million. Total technical textile exports account for 20.2%.The product group that recorded the biggest growth in the first half of the year was parachute fabrics. Exports of these products rose by 135.7%, compared to the same period last year. Germany became the most important export market. Technical textile exports made to Germany during this period were worth US$84 million, with an increase of 23.6%.The second most important country was Italy, with an export value of US$ 58 million and an increase of 15.8%. The third export market was the USA. This country imported US$ 58.5 million worth of technical textile products from Turkey in the first half of the year. The share of the USA was 6.5%.Exports worth US$ 480 million were realised in the 28 EU member countries, with an increase of 26.1%. With this exports figure, the share of the EU was 53.4%.

Source: Innovation in Textiles

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‘China tariffs to raise costs from cradle to grave in U.S.’

A broad cross-section of U.S. businesses has a message for the Trump administration: new tariffs on $200 billion of Chinese imports will force Americans to pay more for items they use throughout their daily lives, from cradles to coffins. Six days of public hearings on the proposed duties of up to 25% will start on Monday in Washington as part of President Donald Trump’s and the U.S. Trade Representative’s efforts to pressure Beijing for sweeping changes to its trade and economic policies. Unlike previous rounds of U.S. tariffs, which sought to shield consumers by targeting Chinese industrial machinery, electronic components and other intermediate goods, thousands of consumer products could be directly hit with tariffs by late September. The $200 billion list targets seafood, furniture and lighting products, tires, chemicals, plastics, bicycles and car seats for babies. “USTR’s proposed tariffs on an additional $200 billion of Chinese imports dramatically expands the harm to American consumers, workers, businesses, and the economy,” the U.S. Chamber of Commerce said in written testimony for the hearing. The top U.S. business lobbying group said the administration lacks a “coherent strategy” to address China’s theft of intellectual property and other harmful trade practices and called for “serious discussions”. Mid-level Trump administration officials and their Chinese counterparts are expected to meet later this week in Washington to discuss their trade dispute. But it is unclear whether the talks will have any effect on the implementation of U.S. tariffs and retaliation by China. In more than 1,400 written comments submitted to USTR that will be echoed in the hearings, most businesses argued that the tariffs will cause harm and higher costs for products ranging from Halloween costumes and Christmas lights to nuclear fuel inputs, while a small number praised them or asked that they be extended to other products.

‘Safety of children’

Graco Children’s Products Inc. said tariffs “will have a direct negative impact on our company, American parents and most importantly the safety of American children.” The company said higher prices may prompt more parents to buy car seats, swings and portable play yards on the second-hand market. “The proposed tariffs may force parents to use unsafe sleeping environments or let children dangerously co-sleep with parents,” Graco wrote. The tariff “only causes a children safety issue; it will not convince China to change its policies.” Evenflo Feeding said the tariffs will hit manual breast pumps “and would cause disproportionate economic harm to U.S. interests.” At the other end of the life cycle, Centennial Casket Corp. President Douglas Chen said his Plano, Texas-based company relies exclusively on Chinese-made caskets and the tariffs would cause “great loss” and raise costs for “grieving families purchasing caskets for their loved ones at one of the worst times of their life.” The Internet Association, representing companies including Facebook Inc., Amazon.com Inc. and Alphabet Inc., said the tariffs “would cause disproportionate economic harm to American Internet companies. The list includes products that impact how Internet companies function.”

Cost of nuclear fuel

Westinghouse Electric Co. LLC, the leading U.S. nuclear fuel producer, said it relies on China for zirconium and zirconium powders — key inputs for tubes used in nuclear fuel assemblies that it uses at plants in Utah, Pennsylvania and South Carolina. There is no U.S. source of zirconium so the tariff would “raise the cost for Westinghouse to manufacture nuclear fuel for U.S. commercial nuclear power plants” and ultimately “would increase the cost of electricity to a significant percentage of U.S. electricity consumers.”

Source: The Hindu

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‘Made in Cambodia’ May Become New Fashion Label With Tariffs Hitting China

The next designer handbag you buy is less likely to bear a “made in China” label. Fashion companies, eager to diversify their supply chains, were already expanding into production sites in Southeast Asia as alternatives to China. Then the trade war happened. Now, with tariffs on products such as Chinese handbags set to rise, nations like Cambodia and Vietnam are looking more attractive than ever for consumer-goods makers such as Steven Madden Ltd. and Tapestry Inc.’s Coach. And while the Trump administration has slapped duties on goods from many of its largest trading partners this year, it’s allowed some Cambodian products to continue duty-free access to the U.S. market. “The shift has been under way,” said Steve Lamar, executive vice president of American Apparel & Footwear Association. The talk of tariffs has created “a lot of anxiety” and companies are gauging how fast they can make more changes to their sourcing, he said. A study released in July by the U.S. Fashion Industry Association showed that, while all of the companies participating in the survey sourced goods from China, 67 percent expected to decrease the value or volume of production in the country over the next two years. U.S. trade protectionism was listed as the number one challenge for the industry.

Moving Output

Steven Madden Chief Executive Officer Edward Rosenfeld said on the company’s most recent earnings call that it has been shifting production of its handbags to Cambodia from China. The maker of shoes and accessories sees 15 percent of its handbags coming from Cambodia this year, with this percentage doubling in 2019. “That gives us frankly about a three-year head start on most of our peers, because many folks are just now trying to make that move,” Rosenfeld said on the July 31 conference call. “Our head of handbag sourcing is actually over there right now, working on a plan to ramp that up.” Tapestry, the luxury company behind Coach and Kate Spade handbags, has adopted a similar strategy, boosting its Vietnamese production and leaving less than 5 percent of its sourcing from China. Vera Bradley, meanwhile, mentioned last December it is looking at sending manufacturing operations to Cambodia and Vietnam from China.

Investment Incentives

 “Cambodia does offer pretty good investment incentives like tax holidays,” said Matt van Roosmalen, country manager for Cambodia at Emerging Markets Consulting, an investment advisory firm focused on Southeast Asia. “As long as the tariff exemptions persist, companies will be more incentivized to invest production capacity in Cambodia.” The moves to shift production have had an impact in China: Hong Kong-based Stella International Holdings Ltd. -- which develops and manufactures footwear for brands like Prada SpA and Guess? Inc. -- has seen its stock drop to its lowest point since 2009 as China and the U.S. ratchet up the trade rhetoric. Vietnam, meanwhile, has enjoyed a foreign investor-led economic boom for years, attracting billion-dollar investments from the likes of Samsung Electronics Co. and Intel Corp. It is transforming from mainly an exporter of agricultural commodities, such as rice and coffee, to a Southeast Asian manufacturing hub. “The country enjoys relatively low inflation, a stable currency, and political stability – all of which helps to attract foreign investment,” said Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi. “The opportunities are clear – Vietnam is a country of 95 million people traveling pretty quickly on the path from bicycles to motorbikes to BMWs.” Even before China and the U.S. escalated trade tensions, Cambodia enjoyed duty-free privileges for products such as handbags, suitcases and wallets, part of a U.S. program to help boost development in low-income countries. This designation has so far been maintained by the Trump administration. In addition to the tariff threat, wages have risen steadily in China, while Cambodia remains one of the lowest-cost countries when it comes to labor. According to estimates provided by Oxford Economics, labor cost in Cambodia is a quarter of China’s.

‘Not Easy’

Lamar, of the American Apparel & Footwear Association, does recommend caution, however. “The reality, unfortunately, is that shifting out of China is not easy,” he said. One reason is that cheap labor does not necessarily equal effective production. Cambodia’s productivity rates are low compared to China, making it a challenge to manufacture more elaborate products. In a survey by the Hong Kong Development Council, which promotes trade and investment for the territory, factory managers suggested that the average labor productivity of Cambodian workers was about 50 to 60 percent that of Chinese workers. Another reason is that Cambodia’s infrastructure is well behind China’s. The nation’s infrastructure ranked 106 out of 137, behind neighbors Vietnam and Laos, in the World Economic Forum’s Global Competitiveness Report.This can cause difficulties in getting merchandise out of the country, Lamar said.The U.S. government recently said that Cambodian elections in July, in which the ruling party won all 125 seats in the National Assembly, were “flawed.” As a result, the U.S. and Europe could review their trade policies and “potentially stop giving tariff preference to Cambodia’s garment industry,” said Tommy Wu, senior economist at Oxford Economics. Such a move would be a blow for the nation, where garments make up 64 percent of total exports. “Setting more output in Cambodia should be taken with caution until the political dust settles,” said Sophal Ear, associate professor of diplomacy and world affairs at Occidental College in Los Angeles.

Source: Financial Express

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NCTO Renews Call For Tariffs On Textile And Apparel End Items At USTR China 301 Hearing

WASHINGTON — National Council of Textile Organizations (NCTO) Senior Vice President Sara Beatty is testifying this afternoon on Panel 6 at the Office of the U.S. Trade Representative’s hearing on the Trump administration’s proposed Section 301 tariffs on $200 billion in imports from China. Beatty’s statement as prepared for delivery is included at the bottom of this release and it reiterates NCTO’s 24-page public comments and testimony from earlier this year that the following products be prioritized on the China 301 retaliation list:

  • finished apparel that tracks with product being sourced from U.S. Free Trade Agreement (FTA) partners,
  • textile-based home furnishings and other end items, and
  • advanced technical textile products.

NCTO is a Washington, DC-based trade association that represents domestic textile manufacturers, including artificial and synthetic filament and fiber producers.

  • U.S. employment in the textile supply chain was 550,500 in 2017.
  • The value of shipments for U.S. textiles and apparel was $77.9 billion in 2017.
  • U.S. exports of fiber, textiles and apparel were $28.6 billion in 2017.
  • Capital expenditures for textile and apparel production totaled $2.4 billion in 2016, the last year for which data is available.

Sara Beatty, Senior Vice President, National Council of Textile Organizations

Source: Textile World

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