The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 10 SEPT, 2018

NATIONAL

INTERNATIONAL

'Indian textile exports grew by only 1% in 10 years'

While textile exports from competitor countries grew by 4 per cent over the last decade, those from India grew by only 1 per cent. Currency fluctuation is among the factors that make exports competitive, and in recent weeks, the Indian currency has depreciated and touched the lowest ever - @ 72 a dollar. Meanwhile, currencies of other countries are getting devalued as well, so they might stop importing for a while. On the other hand, textile exports are more sensitive to the demand rather than the price segment and the demand is not picking up in the United States and Europe. Given this scenario, Fibre2Fashion Spoke to industry experts on the impact of the stumbling INR on the apparel industry in terms of order bookings in the next six to nine months. Here are the responses:

Sanjay Jain, managing director, TT Ltd:

Rupee depreciation is a clear positive as we can quote more competitive dollar prices for apparel exports. However, it is important to view that in relation to those of our trade rivals like China, Bangladesh, Sri Lanka, Pakistan and Vietnam. Our real advantage is limited to the extent of extra devaluation. Despite everything, it will surely give some respite to garment manufacturers, who were in dire straits for the last one year following the implementation of the goods and services tax (GST) and the INR appreciating from 68 to 64. Hope it now stays in the range of 70, so that the impact on apparel exports starts showing in the next six months when new orders start getting shipped.

Roshan Baid, MD, Alcis Sports and Paragon Apparels:

Rupee depreciation is good news for the garment industry. We get more competitive in our pricing against competitors like Bangladesh, Vietnam and African countries. It is also a deterrent for importing cheap apparel from Bangladesh, Vietnam and other South Asian countries. The order booking will definitely increase in India.

Raghav Agarwal, director-marketing, Salona Cotspin:

Rupee devaluation is a boon for me, since I earn more. The currencies of other countries are getting devalued as well, so they might stop importing for a while.

PK Verma, head of finance, Pratibha Syntex Ltd:

Rupee has depreciated by about 8 per cent in the current financial year and that has definitely helped the competitiveness of textile and apparel exports of Pratibha as well. But, besides currency fluctuation, other factors are equally important in making exports competitive. On the business front, textile exports are more sensitive to demand than the price segment and demand is not picking up in the United States and Europe. On the contrary, our country is losing ground to Vietnam, Bangladesh and Cambodia. However, with the falling rupee, imports will get costlier. Over the past ten years, we, as a country, could not perform according to our potential as we grew by only 1 per cent against our competitors who grew by 4 per cent. Similarly, yarn performance has not been encouraging as our market share is going down. However, consistent government efforts to reduce logistics cost and focus on skill development may reap benefits in the times to come in the form of upswing in our share in global trade by 3-4 per cent.

Manish Mandhana, CEO, Being Human Clothing:

For a homegrown brand like Being Human Clothing, depreciation in rupee brings positive effect, especially when rupee weakening is in context of our competitors’ currency. It gives exporters an advantage over international brands due to better pricing. The order bookings will definitely reflect positively as cheaper products will attract more buyers.

Vishal Pacheriwal, co-founder, Raisin, Parvati Fabrics Ltd:

The Indian apparel industry depends hugely on the import-export trade. India imports a huge quantity of fabrics from China each year and the sinking rupee would bring in a wave of impact. A depreciating rupee has direct impact on costlier imports. Goods that have been exported previously earn more in Indian currency and in the new exports, the same amount spent for the total number of units a buyer can get would go high. Considering the local market—for both the manufacturers and consumers—not a lot of effect would be seen due to the depreciating rupee as products manufactured indigenously would hardly see any impact. Rajesh Bagrecha, MD, Komal Texfab Pvt Ltd: The rupee depreciation against the US dollar will benefit exporters. They will be able to get good returns on their export shipments. And at the same time while booking new export orders, they can quote competitive prices and hatch forex with banks to maintain the price and margin as quoted. On the other side, oils and gold imports account for 35 and 11 per cent respectively of India’s trade bill. The huge demand for dollar from oil importers is pushing the rupee lower. To control such a situation, the Indian economy requires strong structural reforms.

Source: Fibre2Fashion

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Indian economy fastest growing, says PM

Prime Minister Narendra Modi on Friday said Indian economy is on the move and is becoming the world’s fastest growing major economy. “Indeed, India is on the MOVE: Our economy is on the MOVE. We are the world’s fastest growing major economy. Our cities and towns are on the MOVE. We are building 100 smart cities. Our infrastructure is on the MOVE. We are speedily building roads, airports, rail lines & ports,” the Prime Minister said. He added that mobility is a key driver of the economy. Better mobility reduced the burden of travel and transportation, and can boost economic growth. It was already a major employer and can create the next generation of jobs. Mr Modi was speaking after inaugurating the NITI Aayog's first-ever global mobility summit – MOVE. “Our goods are on the MOVE. GST has helped us rationalize supply chains & warehouse networks. Our reforms are on the MOVE. We have made India an easier place to do business. Our lives are on the MOVE. Families are getting homes, toilets, LPG cylinders, bank accounts & loans,” he maintained.

Source: United News of India

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Performance of textiles industry better, says SIMA chairman

The performance of the textiles industry during the financial year 2017-18 has been slightly better than last year, said the chairman of Southern India Mills Association (SIMA) and managing director of KPR Mill, P Nataraj. In his address after being re-elected as chairman of SIMA at its 59th annual general body meeting, Nataraj said yarn and cloth production increased to 5,676 million kg and 66,524 million square metre as against 5,667 million kg and 63,482 million square metres. Though affected by demonetisation and goods and services tax (GST), the economy was back to normal now, indicating steady growth, he said. Major policy initiatives that could address the GST- related issues were reduction of the tax on man-made filament and spun yarn from 18 to 12 percent as well as inclusion of all textile job work under a GST of five percent, he said. "Though major demands in respect to the GST have been addressed, we still have some issues that are yet to be addressed, he added. Earlier, the annual general body meeting of SIMA unanimously re-elected office-bearers for the second term for the period 2018-2019.

Source: Moneycontrol.com

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Yarn spinners not passing on reduced GST benefits, say weavers

SURAT: The power loom sector has petitioned the Goods and Service Tax (GST) Council and the Gujarat state GST commissioner against yarn spinners for not passing on the benefits of the reduced GST rate from 18 per cent to 12 per cent on the supply of yarn to power loom weavers. The Federation of Gujarat Weavers Association (FOSTTA) in its petition stated that small and marginal weavers have been hit hard due to the increase in yarn prices in the last couple of months. According to FOGWA, the yarn spinners have increased yarn prices in all the yarn deniers by Rs 25 per kilogram in the month of August. Again, the yarn prices in various deniers were hiked by Rs 5-Rs7 per kilogram on September 1 and by Rs 8 per kg on September 7, taking the overall price rise at Rs 40 per kilogram. In order to sustain their profits, weavers have been compelled to increase the price of unfinished fabrics by Rs 3 per metre, which will ultimately increase the prices of finished fabrics. President of FOGWA, Ashok Jirawala said, “The yarn spinners have attributed the hike in yarn prices to the weak rupee and the international crude oil prices. Actually, the price hike is artificial and it has highly impacted the profits of the small and marginal players in the power loom sector.” Jirawala added, “The production of unfinished fabric has gone down by almost 40 per cent as the small and marginal players are making huge losses. They have stopped the purchase of yarn and still the spinners have gone on the spree of increasing the prices.” Leader of power loom sector Mayur Golwala said, “The reduction of GST rate from 18 per cent to 12 per cent on yarn has not been passed on to the weavers by yarn spinners. Section 17(1) of the GST Act mentions that any benefit in tax rate has to be passed on to the recipient of the goods or services.” Power loom weavers have stated that the yarn spinners have indulged in anti-profiteering activities and that the GST Council and the state GST commissioner must immediately intervene for the overall benefit of power loom weavers.

Source: The Times of India

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Tajikistan keen on garments, tea from India: Envoy

Tajikistan ambassador to India Jalolov Mirzosharif Friday pitched for more bilateral trade in sectors like garment and tea. Speaking at a session organised by the Federation of Indian Export Organisations, the envoy said the ties between the two countries had been nurtured through the ages. The economic relationshup between India and Tajikistan was elevated to Strategic Partnership in 2012 making Tajikistan the third central Asian country to sign such agreement with India, he said. On bilateral trade with India, he said in 2016, the Tajik Chamber of Commerce and Industry and FICCI formed a joint business council to carry forward trade. Also there are regular exhibitions of Indian exporters in Tajikistan, he said. He said there is also regular air freight between NewDelhi and Dushanbe and Delhi-Moscow-Dushanbe apart from rail traffic between Mumbai-Bandar Abbas-Dushanbe. However, the envoy said that Indian products like jackets, T shirts and boots had great visibility in Tajikistan some years back. "Others like China took up the opportunity but Indian producers and exporters perhaps could not keep pace," Mirzosharif said. On the prospects of Indian tea, he said, "Indian tea used to have a good reputation in Tajikistan which is still there. But we are not getting Indian tea," he said. Mirzosharif said Tajikistan has a virgin landscape and there are a number of tourism projects in his country. FIEO Eastern Region Chairman Nari Kalwani said the bilateral trade between India and Tajikistan rose from USD 20.44 million in 2016-17 to USD 23.97 million in 2017-18. Kalwani listed some of the potential areas as textiles, tea and coffee along with pubolishing equipment and materials.

Source: Business Standard

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Garment exporter? Why an AEO certification can add real value

With more and more countries committing themselves to the efficient implementation of AEO or frameworks similar to AEO, this is certainly the trade language of the future. Authorised Economic Operator programme (AEO) is a worthwhile investment for any garment manufacturer whose organisation is involved in international supply chain. The status is attributed to only those organisations that maintain safe, secure and compliant international trade procedures. For those of you who are new to this, AEO is an internationally recognised status which demonstrates that your organisation operates both efficient and compliant customs controls and procedures. In this era where business efficiencies are defined by speed, AEO accreditation can help fast-track shipments through customs and security procedures by providing quicker access to simplified custom procedures. In some cases, the benefit may also include waivers for guarantees. A bouquet of other benefits is offered by AEO, including lower rate of physical inspections of imported/exported goods, faster release of shipments, preferential treatment by Customs Authorities, and deferred payment of duties, to the companies that meet compliance criteria and demonstrate the security of supply chain. Therefore, there is undeniable wisdom in getting the certification even though it is not mandatory. Customs organisations all over the world face the twin challenge of securing the borders from unlawful trade and simultaneously facilitating and speeding up legitimate trade. These are exactly the objectives that AEO works towards achieving. Globally, AEO certification will progressively evolve into an industry standard for claiming eligibility to any administrative and governmental discretions, priority and facilitation. In my opinion, it will not be any different in India as well, very soon. While AEO certification has been offered since 2012 in our country, the Central Board of Excise and Customs has re-launched a more effective and reworked three-tier AEO programme merging the ongoing Accredited Clients Programme (ACP) and AEO programme recently. This has certainly been received well by the exporter fraternity and found to be very useful. Further, the process of AEO certification has been made a time bound exercise by the government, which implies that AEO-T1 certification can be obtained within a period of one month after submission of required documents by your organization. The AEO-T2 & T3 certifications can be obtained between a reasonable three-five month period. If you are an organization established in India and are involved in global trade as an importer, exporter, cargo agent, warehouse operator, port operator, carrier or customs house agent, irrespective of the size of your business, you are eligible for AEO certification. Also, since, AEO status is not location specific, it applies to a particular entity as a whole. Each entity needs to apply for AEO certification separately. It is no uphill task to be eligible for AEO or apply for it. An applicant needs to provide the standard operating procedures and details of the following at the time of application:

  • Site plan details
  • Business partner details
  • Legal compliance, that is, no issuance of show cause notice/ prosecution case
  • Security plan details
  • Safety and Security standards
  • Managing commercial and transport records
  • Process map for movement of goods
  • Financial solvency status

If you are an exporter, there is a three-tier system of certification, with varying levels of benefits: T1, T2 and T3. What makes the process faster and efficient is also that in case of T1 certification, no physical verification is conducted and only the application is reviewed. Physical verification by AEO Programme Team is conducted to verify compliance with the above requirements for the grant of T2 and T3 certification within 90 days of application. The AEO specialists conduct onsite visit of domestic facilities to confirm the security practices are in place and operational in case of higher certification levels. The team prepares the reports with recommendation to the AEO Programme Manager within 60 days of completion of onsite verifications. Once you are an AEO certified exporter in India, you are likely to get varying levels of benefits from the importing country, as per India's Mutual Recognition Agreement (MRA) with the respective country. Under the MRA, the customs authority of exporting countries or regions ensures the safety and authenticity of export shipments before export and the customs authority of the importing country or region ensures the preferential customs treatment for AEO certified entities at the time of import. While India has a well negotiated MRA with a few countries, the MRA with few other significant importing destinations is underway. With more and more countries committing themselves to the efficient implementation of AEO or frameworks similar to AEO, this is certainly the trade language of the future. Numerous MRAs have been concluded and many more are in negotiation, as I write this. There is, thus, an undisputed merit for an MSME in Apparel export to enrol for AEO certification.

Source: The Economic Times

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India's apparel sector's performance worrying: ICRA

India’s apparel exports are likely to stay subdued in the near term, growing at a modest pace of 1-2 per cent for the rest of this fiscal due to factors like transition to the goods and services tax (GST) regime and liquidity challenges, according to a report by rating agency ICRA. This implies a 4 per cent annual decline in apparel exports this fiscal. The country's apparel sector's performance is worrying as it is contrary to global trends, said ICRA. Exports have witnessed a sharp de-growth of 14 per cent year on year in the first four months of this fiscal. This likely will be the fourth consecutive weak year for exports following the 4 per cent de-growth in the last fiscal and modest growth rates of 1 per cent and 3 per cent in fiscals 2015-16 and 2016-17 respectively, a news agency report cited ICRA as saying. Apparel exports to the United Arab Emirates have declined sharply over the past one year. A stronger rupee heightened the challenges in the global market by affecting competitiveness of players, according to Jayanta Roy, senior vice president and group head, ICRA. The global apparel trade is back on the growth trajectory with an estimated growth of 4-5 per cent in the first half of calendar year 2018 and 2 per cent in 2017 in US dollar terms. The positive trend is due to the strong recovery in apparel imports by the European Union (EU), which accounts for two-fifth of the global apparel trade, ICRA added. (DS)

Source: Fibre2Fashion

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Opinion : Why the RCEP trade deal could hit India's agriculture, manufacturing sectors

India should ask for a reasonable phase-in period for tariff elimination before the proposed RCEP deal kicks in  this could be used to lend a competitive edge to the real sectors. The Regional Comprehensive Economic Partnership (RCEP), the 16-member mega-regional trading arrangement that is being negotiated for the past six years, seems to be ready for the end-game by close of the year. This was the message that was conveyed at the end of the meeting of the ministers from the RCEP Participating Countries (RPCs) held in Singapore last week. The ministerial statement informed that the ministers had adopted a “Package of Year-End Deliverables”, which was developed by the Trade Negotiating Committee. The ministers tasked the negotiators “to expeditiously bring negotiations to a mutually beneficial and fair conclusion” and “to exert utmost efforts to achieve each of the targets in the Package”, so as the “achieve a comprehensive, high-quality and mutually beneficial economic partnership agreement”. Other than the sense of optimism that the deal would be done before the end of 2018, the ministers gave little away in terms of the substance of the proposed deal. The negotiating processes of free trade agreements (FTAs) have been high on rhetoric about their likely beneficial outcomes and the participating countries have always stood by the informal commitment they make to each other not to allow public scrutiny of the work-in-progress. The negotiating process of the RCEP has been no different, and even though there are countries with vastly differing expectations from the agreement, there is no way in which there can be independent assessments in individual countries as to whether the likely outcome(s) match their expectations. Take for instance the case of India, a country that always appeared to be a rather reluctant participant at the negotiating table. Thus, while the main protagonists of the proposed agreement, which include most of the RPCs, have pitched for comprehensive liberalisation of goods trade, India has been reluctant to go that far. In 2015, while putting forth its initial offers on tariff liberalisation, India’s offer to China was elimination of tariffs on 42.5 percent of its traded products. For all other countries, India was willing to go up to 80 percent. India’s tariff offers were borne out of its experiences of implementing the FTAs with ASEAN, Japan and Korea. In each of these agreements, India had seen a ballooning of its trade deficits, caused by a steep rise in imports and lack of export penetration in the markets of FTA partners. India’s trade with ASEAN and Korea has seen a near doubling of the deficit since 2009-10, when these agreements were being finalised, while with Japan, the deficit had grown at a lesser pace. In fact, India’s trade deficit with the RPCs in 2017-18 was well over USD 104 billion, as against the overall deficit of USD 162 billion. That India was clearly wary of China was eloquently expressed in the initial offers to China. Despite not enjoying preferential market access like the other major economies, China’s presence in India’s market had seen tremendous expansion. It exports to India had increased from about USD 31 billion in 2009-10 to over USD 76 billion in the previous financial year, while its imports from India increased from USD 11 billion to USD 13 billion. The rapidly growing imports from China have not only stymied India’s manufacturing sector, they are now threatening some of our critical sectors such as textiles. According to the Confederation of Indian Textile Industry (CITI), India’s trade with China in textiles and clothing has gone from a surplus in 2013-14 to a deficit of USD 1.5 billion these are worrying signs for these employment-intensive sectors. If existing levels of trade openness vis-à-vis the RPCs have pushed India’s manufacturing sector into an existential crisis, can the Indian economy bear the brunt of further liberalisation? The answer seems to be an unequivocal no, since indications are that many of the RPCs would like see tariffs eliminated in no less 90 percent of the products. At this level of tariff-elimination, small producers in agriculture and dairying, would be left in a highly unequal competition with the corporate interests from several RPCs. In the manufacturing sector the RCEP tariff-cut could adversely affect the automobile industry, which has been able to survive in an adverse domestic environment with the help of tariff protection. Where did India see the gains that kept it engaged with the RPCs? The answer is, of course, services. From the multilateral trade negotiations to now, in the FTAs, India has been looking for enhanced market access for its service providers, especially the skilled and the semi-skilled, or the "Mode 4".But the RPCs have been lukewarm to India’s proposal of dealing with tariff elimination in the goods sector and services sector liberalization on parallel tracks, which could have given India some room to offset the adverse consequences of tariff elimination. Clearly, India needs to work on its long-neglected vulnerabilities in agriculture and manufacturing, if it is to secure some gains from the proposed RCEP. This would require a reasonable phase-in period for tariff elimination, which could be used to lend competitive edge to the real sectors. The challenge would be to negotiate effectively with countries, such as China, which are looking at the market opening via the RCEP to make good the losses it is suffering in the bruising tariff war with the United States.

Source: moneycongtrol.com

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India: No deal to choose US oil over Iran’s; price alone will decide

New Delhi : India is clear that commercial considerations will drive its crude oil imports from the US and that oil bought from Washington should not be seen as replacing Iranian petroleum. “Yes, scaling up oil imports from the US was discussed at the 2+2 dialogue between the two countries as part of measures to correct the trade deficit. But we are clear that these are commercial decisions — dependent on how competitively oil is priced and on the requirements of our refineries,” said a senior government official. Besides, the US is working on improving the infrastructure for exporting oil and gas, said the official, adding that “once done the scope of scaling up imports will be higher”. Asked if scaling up crude imports could mean replacing Iranian oil, the official told BusinessLine: “We are dealing with two issues separately and our stand has been communicated to the US.” According to Vandana Hari, a Singapore-based oil market analyst, “India’s crude import needs will rise, with increasing refining capacity and fast-growing domestic consumption. The US crude is an additional option for Indian refiners.” But a refiner needs to weigh the crude suitability, taking into account the cost and freight charges, she said. Indian refiners such as Indian Oil Corporation are already buying US oil. From April 2017 to February 2018, 2.1 million tonnes were bought, and more is on the way.

What works against the US

On the requirements of Indian refiners, she said: “The US has some sour crude from the Gulf of Mexico available for export, but the vast majority is light, sweet grades, from the shale regions. For an Indian refiner, the light sweet US grades will have to compete with West African, North Sea and Asian crude, all of which have a shorter haul to India. The sour US grades will be up against supplies from West Asia, which have an even shorter travelling time.” In sync with the views of some of the oil traders, Hari says, “...another disadvantage of US crude is that so far only one port in the country is capable of directly loading a VLCC — the Louisiana Offshore Oil Port. Crude shipments from all the other Gulf of Mexico ports have to be done through ship-to-ship transfer if loading a VLCC, which involves additional costs, or they have to use the smaller Aframax or Suezmax tankers, which increases the unit cost of transporting crude.” So, it is hard to imagine the US crude becoming mainstream for India, she said, adding that “it will probably serve as a top-up, an ad hoc spot purchase when the arbitrage works”. Last March, the Trump regime identified India amongst 16 countries with which the US runs a trade deficit and whose trade policies needed to be investigated to find out the reason for the deficit. Since then, India has taken steps to buy more from the US, including oil. According to Commerce Ministry officials, due to India’s efforts, the US’ trade deficit with India had reduced by $1.5 billion in April-July 2018 to $5.67 billion from $7.09 billion in April-July 2017. Officials from the Ministry of External Affairs said India would end up sourcing $2.5 billion of oil from the US this year. At the recent 2+2 dialogue’, the MEA pointed to the US that while India would keep sourcing oil from the US and also increase buying from the UAE, stopping or drastically cutting imports from Iran would be difficult. India told the US that while it was open to discussing alternative sources of crude, the focus had to be the prices as higher rates could impede economic growth in the country and also lead to inflation, the official added.

Source: Business Line

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Cost of Compliance under GST goes up by 2X for taxpayers

Today a number of fintech companies provide cloud-based GST compliance software and scalable solutions for the end-to-end management of GST data. The erstwhile indirect tax structure always left a broad scope for tax evasion. With the implementation of GST, transparency and ease in tax compliance are expected to rise. However, effective change management needs to be in place to get habituated to the new system. It also involves the tedious task of restructuring accounting records for transactions carried out. The average time taken in preparing GST returns in GSTR-1 and GSTR-3B from internal systems and then submitting them on the government portal, by any taxpayer processing more than 10,000 transactions a month himself, may involve roughly 12 hours while only half the time was spent on filing VAT and excise returns. This is because GST returns require invoice details to ensure an end-to-end compliance by the taxpayer. Not just this, the filing of service tax returns by professionals was a bi-annual task. However, with the introduction of GST, filing 25 returns is a cumbersome financial activity. Every action that business performs consists of a cost factor, and there has been a notable rise in the cost of compliance under GST. Here's how. In the pre-GST era, the filing of indirect tax returns was a mutually exclusive activity by the taxpayers, independent of the supplier or buyer’s return. Reconciliation of sales and purchase data with that of other taxpayers for a particular period was much more comfortable as return filing was confined to a business organisation. Business did not stress upon reconciliations as far as returns were concerned and were mostly done once a month or quarter at the time of filing returns. The correctness of tax return data reported through returns as well as the sanctity of input tax credit claim was reviewed by tax authorities. The tax authorities could reconcile the data uploaded by the various taxpayers on the several portals of the VAT, Service Tax, Central Excise and review billing and purchase information. However, now under GST, these responsibilities have been passed on to the taxpayers themselves. Taxpayers, now must upload invoices as well as make sure input credit claim is reconciled or else pay penalty. Under GST, efficiency in managing working capital lies with how well taxpayers manage to utilise their Input tax credit. Therefore, vendor account reconciliation is of growing importance under GST. Unlike the pre-GST period, agreement with vendor data must be in done real-time to ensure the tax returns are clean, or, the taxpayer ends up with his Input tax credit blocked which may affect the margins of the business. Staying on top of vendor reconciliation requires constant review which involves effort and workforce for this task since it has direct implications on working capital. Every enterprise must follow a collaborative approach to stay ahead and avoid potential mismatches in reported data. Goes without saying that setting this up and making sure your process is going efficiently requires atleast some investment and resources. Every enterprise must ensure that sophisticated user management is in place to fulfill reconciliation requirements. The quality of the workforce in place to address the complexities and use of smart tools is of rising importance. An enterprise must use intelligent ways and techniques to comply with the taxes that will help reduce cost. Up until now, spreadsheets have been a potent tool for processing data. Unfortunately, that’s not enough. Using productive add-ons in the spreadsheet is required to identify gaps in return data and correct the same before submitting it on to GST portal. These features and tools can range from the use of a simple Vlookup to the complex VBAs. Further, taxpayers can also easily ingest data through excel-mappers that can help pull out data from ERPs to submit details on to GSTN. However, a better real-time solution would be integrating ERPs for GST return filing to address all the data gaps promptly. For effective communication with vendors, email has always been the best and affordable medium. However, tracking the variations and follow up on payments on a daily basis is a difficult task through emails. Therefore, for effective data management, a centralised system or tool is required. Today a number of fintech companies provide cloud-based GST compliance software and scalable solutions for the end-to-end management of GST data. These initiatives have helped a lot of enterprises to reduce the burden of compliances at a nominal rate. When digital filing of VAT returns was introduced, it came along with teething issues though, over time, the benefits outweigh the costs. GST too will hopefully pass this phase in the coming year or so. Meanwhile, with the steady increase in the GST revenue, it is hoped that the government will prune compliances requirements by streamlining the process. The writer is Founder & CEO ClearTax.

Source: The Economic Times

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Why GST exemptions would prove to be a bane rather than a boon

It is far more prudent to levy GST at a lower rate so that the input tax credit is available through the value-chain and the cascading effect is completely neutralised. GST follows the value-added tax (VAT) mechanism, where tax is payable on every value-add in the supply-chain (either supply of goods and / or services) Now that more than a year has passed since the GST implementation, and the revenues are more or less steady, and considering the fact that the general elections are scheduled for next year, expectations that the government should exempt more and more goods and services from GST levy are high. In the last GST Council meeting, many decisions were taken concerning GST exemptions. On the face of it, exempting any supply of goods/services from the levy of GST appears to be consumer-friendly as no GST is payable on such supply. However, in reality, the consumers may end up carrying the burden of at least a certain amount of GST due to the cascading effect of the GST exemption. GST follows the value-added tax (VAT) mechanism, where tax is payable on every value-add in the supply-chain (either supply of goods and / or services). Further, India’s policymakers have chosen the tax-invoice method (which is the most popular method, globally) for the VAT mechanism to be followed by businesses. The crux of any VAT system is the ability of the buyer (in a B2B scenario) to claim credit of the tax paid on the purchases while discharging the tax payable on the sales effected. Any break in this chain results in increase in the cost of goods/services supplied. Hence, ultimately, the final consumer bears the burden of the tax applied on every stage of value-add as she can’t claim any input tax credit as the goods/services are consumed by him/her and are not used for any furtherance of business. Hence, before asking for/granting exemption from GST, a detailed analysis of the tax paid on procurement of inputs, input services and capital goods for the supply of goods/service needs to be done to ascertain the quantum of input tax credit foregone so that, ultimately, the benefit is maximised in the hands of the final consumer. Also, the anti-profiteering provisions embedded in the GST law need to be complied with to ensure that the right quantum of the benefit is passed on to the consumers.  The existence of almost five GST rates (3%, 5%, 12%, 18% and 28%) that are applied to various constituents of the inputs, input services and capital goods procured by businesses makes it even more difficult to ascertain the exact quantum of the input tax credit. Adding to the complexity is the fact that, in most of the cases, inputs, input services and capital goods are commonly used for manufacturing taxable as well as exempt supplies. In such cases, proportionate input tax credit is available, and one has to apply the prescribed formula for arriving at the eligible and ineligible input tax credit. Having done all of this for every tax period, the businesses are then required to determine the benefit to be passed on to the consumers for complying with the anti-profiteering provisions in the GST law. Coming back to the GST exemptions, take the case of a product having a maximum retail price (MRP) of Rs 200, which is taxed @ 12% GST. The GST component @12 % in the MRP is Rs 21.43. Assume that Rs 100 is the value of input, input services and capital goods which is subjected to a levy of 12% GST (it could be 5%, 18% or even 28%) used in the manufacture of the product. The manufacturer (and other value-chain partners such as wholesalers and retailers), in this scenario, can claim input tax credit (`12) through the value-chain till the product is sold to the final consumer for Rs 200 and the GST paid on inputs, input services and capital goods is a pass-through tax with no impact on the earnings as the GST chain is intact. Now, the GST Council decides to exempt the above product from GST, though, inputs, input services and capital goods will continue to be taxable. In such a scenario, the expectation of the consumer is that the new MRP, other things being constant, would be Rs 178.57 (200 – 21.43). The manufacturer may not want to bear the incidence of the GST paid on inputs which has now become a cost incurred for the goods sold and, hence, she would revise the MRP to Rs 190.57 (178.57 + 12). In this example, when compared to the original MRP of Rs 200, the consumer would be benefited only to an extent of `9.43 (200 – 190.57) as against an expectation of Rs 21.43. Imagine, if instead of an exemption, the GST Council would have chosen to reduce the rate to 5% on the above product. All other things being constant, this would have resulted in a revised MRP of Rs 187.50 [Rs 178.57 + 8.93 (GST @5%)] arrived at after completely avoiding the tax cascading effect as the manufacturer would have continued to claim full input tax credit as in the case when the GST rate was 12%. Thus, the consumer would have benefited by an additional Rs 3.07 (190.57-187.50) had the GST rate been reduced to 5% instead of granting of an exemption. From the above example, it can be seen that rather than exempting the supply of goods/services, especially those where GST is applicable on inputs, input services and capital goods used in supply of such goods/services, it would be more prudent to levy GST at a lower rate so that the input tax credit is available through the value-chain and the cascading effect is completely neutralised, ultimately paving the way for reduced prices to the end consumer. If this is not done, GST exemptions would prove to be a bane rather than a boon!

Source: Financial Express

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No reason for Rupee to slide further: Subhash Garg, Economic Affairs secretary

NEW DELHI: The government pegged the “right” value of the rupee at 68-70 to the dollar, asking foreign currency borrowers and importers not to panic. Economic affairs secretary Subhash Chandra Garg told ETin an interview that there was no reason for further depreciation of the Indian currency and no extraordinary measures were needed as of now. Garg also said crude oil should not cross $80 per barrel and the government was working to ensure that supplies from Iran would continue. The US has been pushing for an embargo on Iranian oil exports over its nuclear programme. He said consumers are bearing the cost of high crude right now, but at some point this might need to be spread wider. “So, the choices you have are either general inflationary effect or spread of cost to awider group of taxpayers or to specific consumers...the most suitable section to bear this cost will need to be decided.” He added the government would stay the course on fiscal consolidation. The rupee recovered on Friday to close 26 paise up at 71.73 against the dollar, having flirted with the 72 level. “I have maintained that 68-70 perhaps is the right level and I don’t expect it to go beyond. There may be some temporary factors that came into play last week but there is no fundamental justification,” Garg told ET, warning against taking advantage of the sentiment. “Seventy-two to a dollar is perhaps an outer limit or beyond the reasonable outer limit for depreciation and those operators who are trying to take advantage of this contagion feeling in emerging markets may come to grief later,” he said, adding that sentiment may already have turned. He said last week’s turbulence was because of the belief that emerging markets with a current account deficit may face some pressures going forward and the rupee was no exception.

CAPITAL ACCOUNT

Garg said there was no undue pressure on India’s capital account and no counter measures were required as of now. “The numbers have also come for Q1--the entire deficit on BoP (balance of payments) basis is only $11 billion, which is only $3-4 billion a month. That, in the context of India, is not very large and we can take care of it. That is not to be taken too seriously,” he said, placing the entire external account in context. In July, there was FPI (foreign portfolio investor) outflow but in August there was positive inflow. This month, by and large, FPI flows are on balance, he added. “Therefore, on the capital account, I don’t see any sense of fundamental mismatch and that gives me a sense that extraordinary measures are not required,” he said. “Of course, we have to remain prepared if need be. There is a stage to deal with it, but we have not reached that stage.” Finance minister Arun Jaitley said last week that there was no need for a knee-jerk reaction on the currency.

OIL ISSUE

Garg attributed the rise in crude to events in Venezuela and Libya, and some uncertainty continuing on the Iranian oil front. Brent ended last week down marginally at $76.83 after nearing an almost four-year high. “One can’t really expect crude to average anything over 80,” Garg said, adding that the country can manage prices at these levels, which would translate into a $20-25 billion impact on an annual basis. “So, while crude does impact, right now it does not have that kind of impact on BoP that we cannot manage with our reserves and with our resources.” On the issue of high consumer prices for fuel, Garg said the government was not making more money because of higher rates. “The government of India excise duty on petrol and diesel is in specific terms–it’s not ad valorem. Therefore, increasing crude prices does not increase government’s budgeted revenue from excise duty,” he said, adding that any reduction in duties would impact the budget. “If there is any reduction in excise revenue, the budgetary deficit either goes up or we have to take other measures--expenditure cut or other revenue measures to make up for loss of revenue,” he said, adding that if the fiscal deficit is allowed to rise, then there would be generalised inflation.

Source: Financial Express

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Indian rupee to languish around 70 per dollar a year from now: Reuters poll

BENGALURU - India's battered rupee, which has lost more than 12 per cent this year, will hover near record lows on a worsening trade balance and at best only pare some of those losses in the coming 12 months, a Reuters poll found. Extending its losses, the rupee on Thursday breached the level of 72 per dollar for the first time, rattled by trade tension that has hurt most emerging market currencies. Taken before the currency hit a new record low, the latest Reuters poll of 40 foreign exchange analysts showed the rupee was still expected to remain vulnerable at 70.42 per dollar in a year's time, weaker than 68.22 predicted in August's poll. While the 12-month consensus was for it to gain 2 per cent, no analyst polled expected it to be where it was in January, with the most optimistic call at 66.10 per dollar in a year. "The recent financial market turmoil has pushed the INR too low," said Hugo Erken, a senior economist at Rabobank. "Admittedly, India is still coping with current account deficits and a relatively large public debt level, but the entire Indian debt is in denominated in INR. "The Indian economy is in much better shape than five years ago. And we still expect one more (interest rate) hike in October. Given all these developments, we expect some strengthening." But a separate Reuters poll of economists showed the Reserve Bank of India was not expected to raise rates until 2019, having done so at a second straight meeting in August. An increasing number of foreign exchange analysts polled remained bearish about the rupee's outlook, with risks from rising oil prices, uncertainty ahead of next year's general elections and an escalating trade war. "The pair is already trading at 72 level...I see no strong reasons why this trend should reverse soon, unless for a sharp weakening of the dollar which is not our house view for the near-term," said Prakash Sakpal, an economist at ING. "I am skeptical that more (interest) rate hikes will help the INR, given its exposure to a continually widening current account deficit, due to a surging oil import bill and also rising political uncertainty ahead of elections in early 2019." India's trade deficit widened to a more than five-year high of $18.02 billion in July, driven by higher global prices of crude oil and steady capital outflows, which dragged the rupee lower. India remains the fastest growing major economy with annual economic growth of 8.2 per cent last quarter, but the rupee - already shaken by higher oil prices, high inflation and trade conflicts - will take another hit if the U.S. Federal Reserve hikes rates this month. With oil prices elevated, Indian inflation was above the RBI's medium-term target of 4 per cent for a ninth consecutive month in July, putting more pressure on the rupee.

But it is not alone.

Most emerging currencies covered by the Reuters poll are at best expected to either stay near current levels or appreciate only slightly. China's yuan was predicted to gain slightly over the coming year. "We are pursuing our strategy of selling emerging market currencies of countries that diverge sharply from the Fed's monetary policy, and are doing so against a backdrop of trade tensions," said analysts at Natixis.

Source: The Economic Times

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Global Textile Raw Material Price 09-09-2018

Item

Price

Unit

Fluctuation

Date

PSF

11470

USD/Ton

0%

9/9/2018

VSF

15100

USD/Ton

0%

9/9/2018

ASF

20800

USD/Ton

0%

9/9/2018

Polyester POY

12275

USD/Ton

0%

9/9/2018

Nylon FDY

23800

USD/Ton

0.42%

9/9/2018

40D Spandex

34500

USD/Ton

0%

9/9/2018

Nylon POY

22000

USD/Ton

0%

9/9/2018

Acrylic Top 3D

13600

USD/Ton

0%

9/9/2018

Polyester FDY

24700

USD/Ton

0%

9/9/2018

Nylon DTY

37780

USD/Ton

0%

9/9/2018

Viscose Long Filament

13600

USD/Ton

0%

9/9/2018

Polyester DTY

21700

USD/Ton

0%

9/9/2018

10S OE Cotton Yarn

14555

USD/Ton

0%

9/9/2018

32S Cotton Carded Yarn

24335

USD/Ton

0%

9/9/2018

40S Cotton Combed Yarn

27085

USD/Ton

0%

9/9/2018

30S Spun Rayon Yarn

19900

USD/Ton

0%

9/9/2018

32S Polyester Yarn

16450

USD/Ton

0%

9/9/2018

45S T/C Yarn

20800

USD/Ton

0%

9/9/2018

40S Rayon Yarn

18000

USD/Ton

0%

9/9/2018

T/R Yarn 65/35 32S

17600

USD/Ton

0%

9/9/2018

45S Polyester Yarn

17700

USD/Ton

0%

9/9/2018

T/C Yarn 65/35 32S

20900

USD/Ton

0.48%

9/9/2018

10S Denim Fabric

9.33

USD/Meter

0%

9/9/2018

32S Twill Fabric

5.75

USD/Meter

0%

9/9/2018

40S Combed Poplin

8.02

USD/Meter

0%

9/9/2018

30S Rayon Fabric

4.62

USD/Meter

0%

9/9/2018

45S T/C Fabric

4.84

USD/Meter

0%

9/9/2018

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14611 USD dtd. 9/9/2018). 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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China's Trade Outlook Darkens as Trump Raises Stakes on Tariffs

On Friday, U.S. President Donald Trump doubled down on his threats to impose higher tariffs on the nation’s goods, saying he’s ready to tax all imports "at short notice." While economists see the immediate impact of trade tension as limited, the effect on economic confidence may be larger, warned former People’s Bank of China Governor Zhou Xiaochuan. Trade data for August released Saturday echoed both the cause and effect of the standoff with the U.S. -- the surplus with the U.S. rose to a record, while overall export growth slowed. A lone bright spot may be faster-than-expected import growth, signaling that domestic demand in the world’s second-largest economy is holding up for now. “With further large-scale U.S. tariff measures imminent, Chinese exporters will be hit hard and China’s GDP growth rate in 2019 is likely to be dented,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit in Singapore. “If the U.S. keeps ramping up its tariff measures against China, the export sector will face a long, hard road ahead despite government measures to mitigate the impact.” Hours before Trump’s Friday threats, China announced measures to support some of the exporters targeted by the barrage of higher duties. The Ministry of Finance said it will raise export rebate rates for 397 goods, ranging from lubricants to children’s books, meaning that firms shipping such products abroad will pay less value-added tax. The new rates will be effective from Sept. 15, the ministry said in a statement on its website. Chinese exporters are feeling the pain as trade tensions between the world’s two biggest economies worsen. Data released Saturday showed that China’s trade surplus with the U.S. widened to $31.1 billion during the month, according to Bloomberg calculations. The rise came despite exports climbing at the slowest pace since March. Shipments rose 9.8 percent in dollar terms, the customs administration said Saturday. Imports climbed 20 percent. "Exports to the U.S. grew at a faster pace than the previous month as exporters front-loaded orders before the additional tariffs on $200 billion Chinese goods take effect," said Gai Xinzhe, an analyst at the Bank of China’s Institute of International Finance in Beijing. Faster U.S. economic growth also pushed up demand, Gai said. The key driver of China’s surging surplus with the U.S. is Trump’s Keynesian stimulus when the economy was already near full capacity, said David Dollar, a former U.S. Treasury attache in Beijing and now a senior fellow at the Brookings Institution in Washington. “The import tariffs are not likely to change that,” he said. China though is wrestling with a policy-induced economic slowdown that’s collided with uncertainties over the impact of the trade war. That’s prompted leaders to ease their campaign to curb debt as they seek insurance against the risk of a future economic downdraft. "Export growth could decelerate to 5 to 10 percent over the next few months, then slowing more next year on high base, trade tension and a broad slowdown of the global economy," Larry Hu, a Hong Kong-based economist at Macquarie Securities Ltd., wrote in a note Monday. "The US-China trade tension is escalating given the talk from President Trump last Friday."

Source: Bloomberg

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Pakistan : Proposed gas tariff hike worries textile millers

ISLAMABAD - All Pakistan Textiles Mills Association (APTMA) on Friday expressed concerns over the government’s expected move to increase the gas tariffs by around 46 percent. A delegation of APTMA, led by Aamir Fayyaz Sheikh, has called on Finance Minister Asad Umar. Abdul Razak Dawood, the Advisor to Prime Minister on Textile, Commerce, Industry and Production, and Investment, was also present on the occasion. Sources informed The Nation that APTMA has expressed concerns over the government decision to enhance the gas prices. They have asked the government to reduce the electricity and gas prices to reduce the cost of doing business. Similarly, the representatives of textile sector have also demanded to release the pending exporters’ refunds. The Federal Board of Revenue (FBR) has reportedly withheld around Rs100 billion of exporters as tax refunds, which is one of the reasons behind decline in exports of the country during last few years. According to a press statement issued here, the delegation congratulated the finance minister on assuming charge of the Ministry of Finance and said that the industry hopes that the new government will take decisions in the interest of the industrial sector after incorporating the feedback from the respective sectors. The finance minister told the delegation that it is his foremost priority to support in any way possible the export oriented sectors of the industry and in this regard all possible cooperation will be provided from the government. APTMA discussed various issues regarding gas and electricity pricing, proposed withdrawal of customs duty and sales tax on import of raw materials, sales tax refunds,  extension of duty drawback scheme for 5 years and maintaining market based exchange rate. The finance minister assured the delegation of his full support to uplift this export oriented sector on the condition that the sector will fulfill its obligations for increasing exports bringing in much needed foreign exchange and will not in any case be helpful to anyone involved in tax evasion. The minister said that the news relating to increase in gas and electricity tariff has been misreported in the media and so far no such decision has been taken by the government. The minister stated that the Ministry of Finance will fully support the recommendations of Advisor Textile and Commerce in all industry related matters. Meanwhile, finance minister has also chaired a meeting here at the Finance Division on the issue relating to fertilizer production and its continued availability in the market in sufficient quantities. The representatives of the fertilizer industry briefed the minister on the production capacity of the fertilizer units and made the proposals for ensuring smooth supply in the market. The minister said that the availability of sufficient quantities of fertilizer to the farmers on affordable rates was a priority of the government and all necessary measures will be taken to that end.

Source: The Nation

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Uncertainty is biggest challenge facing US textiles industry

The United States Fashion Industry Association (USFIA) is dedicated to fashion made possible by global trade. This opening line on the website was used at the beginning of the association’s President Julia Hughes recent seminar in Toronto on US trade policy. The tagline is especially pertinent given the current policy being pursued by the US under President Trump and Hughes got directly to the point of the negative impact on the US fashion industry and globally. Founded in 1989, the USFIA membership includes brands, wholesalers, retailers and importers. The organisation based in Washington, D. C. describes itself as “the voice of the fashion industry”, representing members interests at home and abroad. The proceeds of free-trade, eliminating tariff and non-tariff barriers is central to its mandate. The US Trade Commission estimated that in 2016 textiles and apparel accounted for 9.7% of imports from China, compared with 39% electronic products. However, the impact on the sector not just in the US but globally is of high significance to the industry. In an article titled ‘Walmart, Nike Suppliers Put on Notice by China Tariff Threat’ (6thMarch 2018) the Chinese and Hong Kong companies shown to be most at risk from Trump tariffs were Li & Fung with 64% of revenue coming from US, with the electronics company AAC Technologies were second at 62%.Robert E. Lighthizer, the US Trade Representative insists that President Trump is fulfilling his election promise to push for trade reform to ensure “fairer outcomes for US workers and businesses, and more efficient markets for countries around the world…we have already begun to revise outdated and unfair trade deals, build a stronger US economy, pursue an aggressive enforcement agenda, and press for significant reforms of the WTO.” The impact of this agenda is already being felt within the US and globally. USFIA’s 2018 Benchmarking Study is based on a survey (undertaken April-May) of twenty-eight executives at leading US fashion companies. The top business challenge cited is the protectionist trade policy in the United States and the uncertainty this causes at very level from markets to supply chain and retail. This is echoed in a comment by Hun Quach, Vice President for International Trade at the (American) Retail Industry Leaders Association: “Virtually no sector will go unpunished. We’re really concerned about what this would do for the prices that American customers pay every day”. Linked to this is the third top challenge cited as increasing production and sourcing cost. If production and sourcing are repatriated to the US it will have a cost impact that will have to be passed on to the consumer who may choose to change their buying pattern or frequency. So how much do US brands rely on overseas suppliers? The answer is a lot. Of those surveyed by USFIA eight out of the top ten sourcing destinations are in the southern hemisphere (in order): China, Vietnam, Indonesia, India and Bangladesh. Mexico came in ninth and USA tenth. With 48% of US textile and apparel imports coming from China, Julia Hughes puts it simply “China plus Vietnam plus many”. The USFIA survey found that sourcing from the Western Hemisphere (including members of NAFTA and CAFTA-DR) is increasing. Utilisation of free trade agreements in the sector remains underutilised for sourcing. There is slight, though hardly significant, increase in the utilisation of NAFTA, CAFTA-DR and AGOA the main three FTA agreements for the US. On trade policy USFIA membership responding showed an overwhelming 77% support for reducing documentation requirements for importing and exporting textiles and apparel under FTAs. Administration time and complexity are proving to be a barrier to existing trade policy benefits that US fashion companies might avail of. Use of the exceptions to the ‘Yarn- forward’ Rules of Origin are a case in point. The US Customs and Boarder Protection Agency describe the requirements being: “the yarn used to form the fabric (which may later be used to produce wearing apparel or other textile articles) must originate in a NAFTA country”. This may seem fairly straightforward until the customs web site continues in a Monty Pythonesque fashion: “Thus, a wool shirt made in Canada from fabric woven in Canada of wool yarn produced in Argentina would not be considered originating since the yarn does not originate within a NAFTA country. If, however, Argentine wool fibre was imported into Canada and spun into wool yarn, which was then used to produce the wool fabric, the shirt would be considered originating”. This is before getting to the actual paperwork. It is hardly surprising that such benefits to brands are out of reach for logistical reasons. Many respondents said they did not use the short supply list mechanism because the documentation requirements were too complicated, while even more said they did not use the cumulation rule because they did not know what it was. The World Bank describes the rule whereby “cumulation allows producers to import materials from a specific country or regional group of countries without undermining the origin of the final product”. However, the interpretation of this rule is not entirely transparent as in two examples given by the Canadian law firm, Bennett Jones. The final assembly of the Apple iPhone takes place in China. Yet the added-value in China is less than 2% (2014 figures) and the applicable US Rule of origin confers origin on China. The second example given by Bennett Jones is a Tee-shirt produced in Bangladesh that imports around 80% of its yarn. The yarn-forward rule then means that apparel goods made up in the country often does not necessarily qualify for preferential treatment under FTAs. The outcome is low utilisation of trade preferences for apparel. While a company like the VF Corporation may have the resources to untangle such regulations a SME does not, putting them at a competitive disadvantage. In conversation with Julia Hughes she is clear about the single biggest challenge facing the industry and it is uncertainty. While she would speculate on likely scenarios under the Trump administration, she would not be drawn on future trade between US and UK under BREXIT. America, like the rest of the world it seems will have to wait and see. Marie O'Mahony writes and consults for the textile and apparel industry and is based in Toronto, Canada. She is the author of several books on advanced and smart textiles published by Thames and Hudson and has been a visiting professor at various educational establishments including London's Royal College of Art, Ontario College of Art & Design and the University of Technology Sydney.

Source: Innovation in Textiles

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Nigeria : Union Seeks Forex Window To Import Textile Equipment

The Textile, Garments and Tailoring Senior Staff Association of Nigeria (TGTSSAN) has urged the federal government to reduce the exchange rate for the survival of the textile industry. The union stated this in a communiqué issued at the end of its just-concluded 2018 industrial relation seminar held in Akure, Ondo State. According to the association, the industry was burdened by challenges of access to foreign exchange at affordable rate for the importation of machines and other equipment. National president of the union, Ambi Karu, hinted that more than 200 textile firms had been shut as a result of systemic challenges, while some reduced their production, staff strength and remuneration of workers. He argued that there was nothing wrong for the government to give the local textile companies a 90 per cent rebate on cost of generating power. On the issue of inadequate power supply, the association urged government to give the textile plants zero per cent Central Bank of Nigeria (CBN)’s interest loan to build embedded power plants and pipelines to gas their factories. The union called on government to put legislation in place to support local manufacturers, adding that there should be a deliberate government policy to ban importation of cheap textiles materials into the country.

Source: Leadership

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H&M Foundation opens 'Garment-to-Garment' recycling plant in circular fashion drive

Fashion retailer H&M's charitable arm, the H&M Foundation, has this week opened a hydrothermal textile recycling plant as the company strives to become "truly circular" by 2030. The technology aims to overcome the problem of recycling hard-to-recycle textile blends, which are the most widely-used fabrics globallyThe opening of the new pre-industrial sized facility in Hong Kong marks the first time that H&M’s hydrothermal recycling technology is put into practice at scale. The innovative recycling method involves using heat, water and a blend of biodegradable chemicals to separate cotton and polyester from mixed fabrics. Once the fibres are separated, they can be sorted for reuse in new garments, including jeans. The H&M Foundation claims that this method, which it calls “Garment-to-Garment recycling”, prevents the potential for chemical pollution finding its way into the environment while minimising carbon emissions and costs. While the plant will initially be used by H&M only, the retailer has pledged to licence the technology, so it can be used by other fashion manufacturers. The Foundation’s innovation lead Erik Bang said the opening of the plant, which was co-funded by The Hong Kong Research Institute of Textiles and Apparel (HKRITA), marks a “significant step towards a new fashion industry that operates within the planetary boundaries”. “As we scale up and make this technology freely available to the industry, we will reduce the dependence on limited natural resources to dress a growing global population,” Bang said. Alongside the Garment-to-Garment plant, the H&M Foundation is showcasing a miniaturised version of the recycling technology at a pop-up H&M store in Hong Kong in a bid to educate customers about the importance of recycling. Customers are being encouraged to bring their unwanted or end-of-life clothing to the temporary store, where they will have the chance to see the technology first-hand. “Seeing is believing, and when customers see with their own eyes what a valuable resource garments at the end of life can be, they can also believe in recycling and recognise the difference their actions can make,” Bang added.

Cradle-to-cradle clothes

The H&M Foundation and HKRITA predict they will collectively invest more than £5.2m (€5.8m) on sustainable fashion initiatives over the next four years, with 50% of this funding set to be earmarked for research into textile recycling. The remainder of the investment will be spent on projects which promote inclusion and diversity in the fashion industry. The move comes shortly after H&M announced it would be one of the brands leading a new Ellen MacArthur Foundation initiative that aims to help drive a circular fashion industry, along with Nike, GAP and Burberry. The brands, joined by HSBC and Stella McCartney, have pledged through the Make Fashion Circular project to create business models which will keep garments in use, utilise materials which are renewable and find ways of recycling old clothes into new products. It is thought that these moves could help the global fashion industry to capture $460bn currently lost due to the underutilisation of clothes each year, as well as $100bn from clothing that could be used but is currently lost to landfill and incineration. Within its own operations, H&M said in 2016 that it was more than a quarter of the way towards its goal of becoming “truly circular” by 2030. The company is currently one of the world’s biggest users of recycled polyester and in January, unveiled a new sportswear collection for women that is predominately made from PCR polyester.

Source: edie.net

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S Korea shows strong appetite for Vietnamese garments

Vietnam gained a year-on-year increase of 24.88 per cent in textile and garment export to South Korea that was worth $1.5 billion between January and July this year, according the country’s department of customs. China and Vietnam were the two largest garment suppliers to the South Korean market, accounting for 34.46 per cent and 32.67 per cent respectively. The export value of those products to the South Korean market reached $270.7 million in July, a rise of 24.18 per cent over figures in June this year and 24.06 per cent over figures in the corresponding month last year, according to a report in a Vietnamese newspaper. South Korea became the fourth largest export market of Vietnam, reaching $2.7 billion in 2017. According to the country’s industry and trade ministry, the strong growth in exports to South Korea was primarily due to the high competitive ability of Vietnam’s garments and higher spending of consumers in that market. Tariff preferences from the free trade agreement between both the nations also helped. By the end of this year, Vietnam’s textile and garment exports to South Korea are expected to rise by 20 per cent year on year. (DS)

Source: Fibre2Fashion

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Vietnamese garment firms strive to capture domestic market

Vietnamese garment manufacturers are increasingly investing in new technologies and focusing on developing novel products to recapture the domestic market, which is dominated by international brands at present. They are expanding their retail networks, creating original designs and supplying those to foreign brands as part of value-addition. In 2016, Pham Thanh Tung-based Duc Giang Garment Company (Dugaco) set up a fashion centre to design, make samples, manufacture and distribute high-quality, competitively-priced original products. It has also opened nearly 200 fashion outlets across the country. Dugaco makes uniforms for the state treasury, the Hanoi People’s Court, Vingroup, Agribank and Vietinbank. Chien Thang Garment Company, which manufactured garments for foreign brands for 20 years, has now launched its own brand, Padu. Several subsidiaries of the state-owned Vietnam National Textile and Garment Group (VINATEX), such as Garment Co 10, Viet Tien and Nha Be, have also invested in introducing their own brands, according to a Vietnamese newspaper report. VINATEX recently opened a six-storey fashion centre in Hanoi featuring products from famous domestic brands. After two months, the company’s revenues reached VND19 billion. Spending on garment products now accounts for 5-6 per cent of Vietnamese consumers’ total spending, worth around $3.5-4 billion, according to the Vietnam Textile & Apparel Association (VITAS). This indicates that the market holds great potential for domestic enterprises. But smuggled and counterfeit products pose a great barrier to domestic brands. Garment Co 10 maintains more than 200 shops and dealers throughout the country and is upgrading and expanding its fashion centres. VINATEX has asked its members to research and create product lines to satisfy the rural consumers.

Source: Fibre2Fashion

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