As part of its efforts to bring together all the industry associations related to the textile sector and present a common memorandum to the Union Government, the Confederation of Indian Textile Industry (CITI) organised a meeting here on Thursday in which representatives of 29 organisations from south India took part. Spinners, handloom and powerloom weavers, textile processors, and garment manufacturers took part. A common memorandum will be finalised after a meeting in Mumbai on Saturday and will be presented to the Union Government next week, said T. Rajkumar, chairman of CITI. The CITI has, so far, organised such meetings in six textile clusters in the country. “We had assured the Union Finance and Commerce Ministers that we will come out with a common memorandum. This exercise is to arrive at a consensus among all segments of the industry soon on the immediate needs,” Mr. Rajkumar said. Since the textile and clothing sector is fragmented, the aim is to arrive at common demands that will benefit the entire industry and present those to the Government. There are opportunities in the man-made fibre segment. But the industry is unable to tap it because of the inverted duty structure under GST. When the industry has excess yarn production capacity, the Government needs to support yarn exports. “And, we need debt restructuring to protect the existing industries,” he said. “We are in a situation where the industry needs a special package. Cotton yarn exports declined 36 % between April and July this year compared to the corresponding period last year; there is no clarity on MEIS; and almost 45 % of industries across the textile value chain need a debt restructuring package,” he pointed out. The Union Government gave a stimulus package in 2008-2009 and in 2011, the Reserve Bank of India issued a circular so that banks could consider debt restructuring on a case-to-case basis. At least such a circular should be issued now, he said.
Source: The Hindu
Finance minister Nirmala Sitharaman on Friday asked ministries to provide capital expenditure plans for the next four quarters and accelerate payment of dues to micro, small and medium enterprises (MSMEs), contractors and vendors as she detailed the government’s plans to fasttrack spending to boost growth. She also said a large chunk of pending dues to MSMEs, contractors and other vendors have been cleared and out of Rs 60,000 crore dues, Rs 40,000 crore has been released and remaining Rs 20,000 crore would be released by the first week of October. The MSME sector had complained about delayed payments and the government has swung into action to get the issue resolved and ensure funds are not a constraint for the sector. FM said the government’s capital expenditure was on track and budget estimates would be achieved, highlighting the efforts to get engines of the economy roaring again after GDP growth slowed to an over six-year low of 5% in the April-June quarter of the current financial year. The government has unveiled a series of measures, including a sharp cut in corporate tax rates and is hopeful that growth will revive in the second of the financial year. The FM said private banks and NBFCS have told her that consumption is good and there is growing credit offtake. She said this should ensure good consumption buoyancy in the festival season. Expenditure, both revenue and capital, made by the Centre provides a major boost to aggregate demand. Total expenditure of the central government for FY 2019-20 through the budget is pegged at Rs.27.86 lakh crore. Of this, capital expenditure is budgeted at Rs 3.38 lakh crore (12.2%) as against the revenue expenditure of Rs 24.27 lakh crore (87.8%). During review, the finance minister impressed upon the ministries that regular payments must be cleared expeditiously as it spurs investment cycle. She emphasised that all efforts must be made to ensure that outstanding payments are cleared before the festival season. Expenditure secretary G C Murmu said central public sector enterprises (CPSEs) had released payment of Rs 20,157 crore in the last three months. He said that department of expenditure would constantly monitor the progress of large infrastructure projects for the ministries as well as the CPSEs and followup meetings would be held. He informed that meetings with the ministries to assess revised estimates for 2019-20 and the budget estimates for 2020-21 would be initiated from the middle of October 2019. Departments were asked to make accurate assessment of resource requirements and make projections. This would enhance allocative efficiency, he said.
Source: Times of India
India may cut duties on 80% of Chinese imports under RCEP
India may cut tariffs on 80% of products imported from China under a 16-country free trade agreement. India may cut or eliminate tariffs on 80% of products imported from China under a 16-country free trade agreement, the last round of negotiations for which is underway in Vietnam. The concessions will, however, be less than what it has offered to other countries that are part of the Regional Comprehensive Economic Partnership (RCEP) as India tries to avoid cheap Chinese goods flooding the country once the agreement is signed. The RCEP is a proposed FTA between the 10 member states of the Association of Southeast Asian Nations (Asean) and its six FTA partners – China, India, Japan, South Korea, Australia and New Zealand. RCEP negotiations began in November 2012. India plans to cut duties on 86% of imports from Australia and New Zealand, and 90% for products coming in from Asean, Japan and South Korea, officials said.
Discussions on with China
There is a possibility that the negotiations would extend into the night. “Discussions with China are on and it is a work in progress. We have still not finalised the offer,” an official said, indicating the offer India was likely to push. As per the plan, India would immediately eliminate customs duties on 28% of goods, while tariffs on other imports from China would be reduced or eliminated over a period of 5,10, 15 and 20 years. This will give India time to strengthen its domestic manufacturing. Last week, the government cut taxes on new manufacturing plants to 15% to attract investments. “We are trying for 20 years and beyond for some countries and certain products. However, there will be some products whose tariffs would be immediately eliminated,” the official said. Sources also said New Delhi had not made much headway with its proposal for strict rules of origin, to prevent Chinese goods from entering India through other RCEP member states. The rules of origin are criteria to determine the source country of a product, based on which they either get tariff concessions or are subjected to duties. India had proposed that the last country from which a product is exported should do the most value addition with the help of indigenous inputs. Strict origin norms are crucial as India had a trade deficit with 11 RCEP members. The trade deficit with China in 2018-19 was a whopping $53.6 billion. There has, however, been progress on the auto-trigger mechanism. This mechanism gives India the option to raise duties if it sees a sudden surge in imports on particular items from a partner country and protect itself. Investor-state dispute India has also managed to keep the controversial investor-state dispute settlement out of the trade agreement for now. But, whether that would be permanently removed from the pact was still being deliberated, officials said. India had advocated that local remedies should be exhausted before an investor can ask for third-party arbitration to resolve a dispute. The country had opposed this mechanism fearing loss of sovereignty that comes with such arbitration, as had happened in the case of tax disputes with oil and gas explorer Cairn NSE 0.81 % and telecom operator Vodafone. While the ongoing round is said to be the last for the agreement, some meetings are likely before a ministerial meeting next month, as stakeholders present, including those from industry, have aired their concerns on Chinese imports flooding into the country once a trade deal is sealed.
Source: Economic Times
Almost all the talk at present is about import substitution and raising tariffs, but a fundamental reason for India's recent slowdown has been its failure to generate export momentum, writes T N Ninan. When domestic demand is slack, competitive economies look to export markets. Indeed, every country that has grown rapidly has been a successful exporter. One of the fundamental reasons for the slowdown in India in recent years has been its failure to generate export momentum, especially merchandise exports. So exports have fallen significantly in relation to gross domestic product (GDP). The economy cannot work its way out of the current slump without reversing these trends and achieving an export boost. Yet, almost all the talk is about import substitution (which is fine if done efficiently) .
Source: Business Standard
RSS-affiliate Swadeshi Jagran Manch (SJM) on Thursday raised concerns over reports suggesting that India has accepted suggestions of other countries regarding rules on investments at Regional Comprehensive Economic Partnership (RCEP) meet. It even said that the move was contrary to the stated position of the NDA government. Calling the move as "disturbing", SJM Co-convenor Ashwani Mahajan said that the details coming in public domain suggest that the provisions are not only "detrimental" to the interests of the economy, but are also contrary to the stated position of National Democratic Alliance (NDA) regime. "These provisions are a meek surrender of the sovereign rights of any country to seek the transfer of technology from the investing companies, training to their domestic partners, and removing the cap on the quantum of royalties which domestic companies can pay to their foreign partners," he said in a statement. He stated that the conglomerates from South Korea, Japan and even China will gain, while India is bound to lose in this. "This is ante to the spirit of NDA regime's ambitious Make in India plan, and for the integration of domestic industry with the global supply chain," he said. Mahajan further stated that India can't afford foreign investments in its economy, without any real benefit for the domestic players. "If MNCs are not helping their partners to improve their know-how and want to repatriate a large part of their revenue to their global coffers, the FDI will become more detrimental for the society," he added. He said the issues were flagged by the commerce ministry in Modi 1.0 regime and the Commerce and Industries Ministry had prepared a cabinet note, seeking provisions to curb the outflow of the transfer of royalty and other technical fees by multinational conglomerates. The 2009 annual outflow of nearly $5 billion swelled to $20 billion in the last fiscal, the statement said adding that capping the outflow was actually needed. "The provisions, negotiators agreed --if they did-- will accelerate the outflow of foreign exchange and would also exert pressure on the balance sheets of the Indian entities of these MNCs as well; along with robbing the shareholders of their fair share of the dividends," he said. He stated that it will widen the current account deficit and create more pressure on the forex exchange rates. "And the history tells us, this will never accelerate the investments in the country," he added. Mahajan further asserted that any such move by the government will be a meek surrender to the country's legal provisions of pushing the investing companies to adhere to these requirements. "The experience with the other bilateral investment agreements is, the foreign investors pushed the Indian government to litigation in the name of non-fulfilment of the conditions of these investment agreements and sought hefty compensation. As the investment grew, so did the litigation," he said. He sought a national debate before agreeing to any provisions and urged the ruling dispensation to take stakeholders in confidence about the safeguard mechanism. "The present structure and provisions are very difficult to accept; would do more damage than resolving any existing challenge," he said. India has not yet signed the RCEP agreement but has agreed to several provisions that bring it in line with the investment rules applicable in most comparable countries, including banning host countries from mandating that the investing companies transfer technology and training to their domestic partners, and removing the cap on the quantum of royalties domestic companies can pay their foreign partners. India and the other RCEP countries are currently in the final phase of negotiations in Vietnam.
Source: Business Standard
In a move which could significantly improve the ease of doing business, the Centre proposes to make five years the minimum period for which licences and permits are renewed by various ministries. “The Cabinet note on national policy for ease of doing business, approved by the Commerce and Industry Minister, which aims to do away with the need to renew most licences and permits, also suggests that any renewal should be granted only after obtaining the approval of the Cabinet Secretary,” a government official told BusinessLine. All ministries will be asked to list out the licences/registration granted by them to businesses, and eliminate the requirement of renewal for most, the official added. If a ministry is of the view that in order to meet regulatory needs it is important for licences in a certain sector to be renewed, it has to objectively justify its stance. “Even in cases where a renewal is justified, the periodicity of renewal should not be less than five years, to reduce the burden on businesses,” the official further said.
Eye on ranking
The national policy on ease of doing business, being steered by the Department for Promotion of Industry and Internal Trade (DPIIT), aims to help India reach the goal of being among the top 50 countries in the global ease of doing business ranking carried out by the World Bank every year. India ranked 77 out of 190 countries last year, climbing up 23 places. The Cabinet note has now been forwarded for inter-ministerial consultations and will subsequently be sent to the Cabinet for approval. The need to renew registrations, clearances, no objection certificates and licences imposes a heavy burden on businesses, and its elimination could reduce the time and cost of compliance, according to the DPIIT. The official quoted above said the DPIIT has already included this recommendation in the State reforms proposed by it, and States and Union Territories have been advised to eliminate the requirement of renewal of registration under the ‘Shops and Establishment Act’.
Towards ease of doing business
- Cabinet note on the national policy for ease of doing business aims to do away with the need to renew most licences and permits
- If a ministry insists on renewals, it should first justify its stance
- The renewals should be made for at least five years
Source: The Hindu Business Line
Slow growth in the partner region eventually affects the demand from the exporting country and hence Europe, being India’s second-largest export destination after Asia, may make Indian exporters face the headwinds. A sharp decline in production expectations, fewer new orders, and the stocks of finished products have dragged the industrial sentiment of the Eurozone to a six-year low, raising the possibility of a decline in India’s exports demand in the region. Meanwhile, the business climate indicator in the Eurozone has also plunged to a six-year low and the fall in industrial sentiment has pushed the overall economic sentiment to a five-year low in September 2019. Slow growth in the partner region eventually affects the demand from the exporting country and hence Europe, being India’s second-largest export destination after Asia, may make Indian exporters face the headwinds. For many sectors like textiles, the Eurozone is the largest market for India. “Europe is the second-largest destination for India’s exports and thus any negative sentiment in the EU economy may have an adverse effect on India’s trade. Sentiments in the trade partner countries play a major role in demand,” Madan Sabnavis, Chief Economist, Care Ratings, told Financial Express Online. However, on the positive side, India’s exports to the EU contain many non-traditional goods like medicines, which will be comparatively lesser affected in case of any downturn, he added. India’s economy is already going through a phase of slowdown, guided by the fall in domestic demand and investment, coupled with the disturbances from the global headwinds. While the US-China trade war was expected to give a room to Indian manufacturers to push their products to fill the gap, the trade war has also spread a cloud of uncertainties, which reduced the demand globally. Many countries’ economic growth suffered from the slowing business and trade, where India specifically registered its economy growth at a six-year low of 5 per cent in the first quarter of the current fiscal year.
Source: Financial Express
The Asian Development Bank (ADB) has revised its outlook for India’s economy, with growth now expected at 6.5 per cent in fiscal 2019-20 that ends on March 31 next year. The downward revision is following weaker expansion in the first quarter of the year with slower growth in consumption and investment affecting the manufacturing and service sectors. In an update of its flagship economic publication, Asian Development Outlook (ADO) 2019, ADB says that proactive policy interventions along with a recovery in domestic demand and investments will likely see the economy pick up in 2020-21 growing by 7.2 per cent. In July, ADB had forecast 7.0 per cent growth for FY20 and 7.2 per cent in FY21. “India will remain as one of the fastest-growing economies in the world this year and next year as the government continues to implement policy reforms and interventions to strengthen economic fundamentals,” said ADB chief economist Yasuyuki Sawada. Significant corporate tax cuts, announced by the government on September 20, 2019, will uplift private investment, including foreign direct investments, and enhance India’s global competitiveness. Bank recapitalisation, support measures for non-banking financial companies (NBFCs), and cuts in monetary policy rates should improve the health of the financial sector, while increasing the credit flow to industry and infrastructure projects. Other measures, such as a direct income support for small farmers, a tax relief for low-income taxpayers, and reduced loan interest rates are expected to boost rural and urban consumption across the country. Fast-tracking of goods and services tax (GST) refunds should provide an important boost to small- and medium-sized firms that have been constrained by a shortage of working capital. Implementation of these measures will brighten prospects for India’s economy in FY21. Risks remain tilted to the downside given the weak global economy and, on the domestic front, the lag between growth-enhancing measures and the impact on demand. Indian exports are likely to be hit by subdued overseas demand and rising trade tensions, and the current account deficit will be 2.2 per cent in FY20 and 2.5 per cent in FY21. Foreign direct investment (FDI) could get a boost this fiscal and the next as the trade tensions between the US and China may push some businesses to move part of their operations to India. To capitalise on this, the Indian government would do well to improve investment climate and further liberalise investment regulations, the report says. Inflation will be benign for both FY20 and FY21 at 3.5 per cent and 4.0 per cent, respectively, both within the central bank target range, as food prices remain stable.
Source: Fibre2Fashion
Illegal movement of goods in five sectors viz textiles, ready-made garments, cigarettes, machinery and parts and consumer electronics hampered the addition of over 16 lakh jobs in India in 2017-18, according to a new study. Over 5 lakh jobs addition was directly impacted because of smuggling. This included employment of those working in labour-intensive sectors like readymade garments and tobacco products and a considerable chunk lost direct employment opportunities, a study conducted by Thought Arbitrage Research Institute (TARI) said, The Indian Express reported. While unemployment is on a four-decade high in the country, “Total estimated livelihood opportunity lost in the economy is about 16.36 lakh because of the estimated smuggling in these five industries because of backward linkage and multiplier effects of these industries,” the report said. Titled Invisible Enemy: Impact of Smuggling on Indian Economy and Employment, the study was commissioned by FICCI CASCADE. Further, 11.35 lakh job opportunities were lost because of “backward linkage and multiplier effects”, i.e, industries which are ancillary or are indirectly linked via production process to these sectors also lost on about 11 lakh jobs as finished products were smuggled in India, PC Jha, FICCI advisor said, the newspaper reported.
How smuggling affects manufacturing in India?
The manufacturing activity that should have ideally happened in India, shifts abroad when suggling happens, FICCI advisor said. Not only does this result in job loss in the country, but the government also loses out on customs and GST revenue which comes via legal trade. “Smuggling, counterfeit trade and piracy hold back progress, raises the cost of goods, leads to tax evasion, hampers job creation and creates safety hazards for consumers,” Anurag Singh Thakur, Minister of State, Finance and Corporate Affairs, said. He also emphasized that Indians must learn to differentiate between original and counterfeit products so that jobs and money can be saved.
Source: Financial Express
India needs to import bulk consumer goods, and intermediates because of their insufficient availability, and higher prices. Even after tariffs, these imports remain competitive vis-à-vis domestic products. India seems close to agreeing to conclude the RCEP after more than seven years of prolonged negotiations. While this will bring relief to some quarters, it is likely to disappoint several more, particularly those who feel India should have stayed away from RCEP. Many arguing that India should not join RCEP are also of the view that India should not be part of trade agreements—regional or bilateral. Some of these views argue that only the WTO is worth joining, and no other trade agreement is worth the effort. Others suggesting that India should back off from RCEP are generally anti-trade. There’s no denying that between the WTO’s rules-based global trade order, of which India has been a member since the beginning, and any other FTA, however large in scope, the former is the superior choice. Global rules are always preferable to selective regional rules. However, the two are not mutually exclusive. Belonging to the WTO doesn’t mean disengaging from FTAs, particularly since WTO itself encourages these FTAs, if they can obtain greater trade liberalisation. The latter can be significant for a large FTA, like RCEP, which includes some of the world’s largest economies. Thus, commitment to WTO can’t be a reason for not joining RCEP. However, if engaging in trade itself is considered a wrong priority, then, rather than backing out of RCEP, India should, ideally, quit WTO, of which it is a founding member One of the most trenchant criticisms of the RCEP is the adverse effect it will have on India’s domestic markets through a deluge of imports. India’s FTAs with SE Asia, Japan, and Korea are cited as examples for driving home the point. These criticisms fail to note a simple point: why would imports be necessary if the products were available at home at the same prices? Even if they were available at slightly higher prices, imports would’ve been much less required. India needs to import bulk consumer goods, and intermediates because of their insufficient availability, and higher prices. Even after tariffs, these imports remain competitive vis-à-vis domestic products. This is because of the inherently high costs of domestic production in India. Such costs make imports necessary, both for producers and consumers. In many cases, producers find intermediate inputs costlier at home than abroad, and are forced to import the same. It is hardly surprising, therefore, that imports have been high, particularly from SE Asia and Asia-Pacific, as these regions enjoy greater competitiveness in manufacturing. Is India’s lack of success in bringing down costs of production a good enough reason for not engaging in trade, and running away from RCEP? In the entire tirade over RCEP, while a lot has been written and spoken on the deluge of imports, there has hardly been much mention of the gains that RCEP can bring for Indian exports. Exporters themselves, ironically, have been reticent to RCEP. Perhaps, as producers, they continue to suffer from high costs, and harbour the fear of not being able to penetrate other markets, notwithstanding preferential tariffs. The fear is genuine, but not a good enough reason for avoiding RCEP. More so, at a time when the government is trying to incentivise exporters through various measures, the most notable being reduction in corporate tax rates, which puts tax liabilities of Indian businesses on par with those in the region. The most unfortunate part about the negative discourse on RCEP in India has been the fact that India’s inefficiencies, and limitations have been taken as grounds for avoiding RCEP. If manufacturer-exporters had lobbied with the government for a positive agenda in RCEP, with the precondition of obtaining incentives through lower taxes and access to credit, India could have looked at RCEP differently. It is sad that no such efforts were made by industry. It is equally sad that state governments in India have also refrained from looking positively at RCEP. Indeed, several states, particularly India’s coastal states, should have been at the forefront of negotiations on RCEP through positive efforts. On the contrary, they have been conspicuously quiet. India’s trade engagement has traditionally suffered from absence of ‘pro-trade’ constituencies. This is unfortunate. Trade doesn’t simultaneously benefit everybody. But, eventually, open trade, facilitated by enabling trade agreements, brings numerous benefits that are difficult to visualise at one go. Apart from getting cheap imports for both consumers, and producer-exporters, trade deals are great facilitators for investment. Coming at a time when the trade war is ripe, supply chains are fragmenting to scatter across the Asia-Pacific, and India is looking to revive export demand for coming out of an economic slump, RCEP can be a great instrument for attracting trade-inducing investments. Recent Indian policies, like liberalising sourcing norms in single-brand retail, backed by RCEP, create right conditions for drawing more manufacturer-retailer investments to India, like Apple and Samsung. Much of these investments would also be export-oriented, particularly to the rest of South Asia, as well as West Asia. The grand aspiration of India being a global player, with a prominent voice in regional affairs, cannot be realised by distancing itself from trade. Trade is a great confidence and strategic trust builder, a fact that India—shifting from non-alignment to multi-alignment—can ignore only at its own peril. The author is Research Lead, Trade and Economic Policy, Institute of South Asian Studies, NUS
Source: Financial Express
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
1040.43 |
USD/Ton |
-2.11% |
9/27/2019 |
|
VSF |
1503.16 |
USD/Ton |
0.19% |
9/27/2019 |
|
ASF |
2151.68 |
USD/Ton |
0% |
9/27/2019 |
|
Polyester POY |
1100.73 |
USD/Ton |
-0.38% |
9/27/2019 |
|
Nylon FDY |
2348.69 |
USD/Ton |
0% |
9/27/2019 |
|
40D Spandex |
4066.38 |
USD/Ton |
0% |
9/27/2019 |
|
Nylon POY |
2271.56 |
USD/Ton |
-0.61% |
9/27/2019 |
|
Acrylic Top 3D |
1219.91 |
USD/Ton |
-0.57% |
9/27/2019 |
|
Polyester FDY |
2580.05 |
USD/Ton |
0% |
9/27/2019 |
|
Nylon DTY |
5300.32 |
USD/Ton |
0% |
9/27/2019 |
|
Viscose Long Filament |
1297.04 |
USD/Ton |
0% |
9/27/2019 |
|
Polyester DTY |
2201.45 |
USD/Ton |
0% |
9/27/2019 |
|
30S Spun Rayon Yarn |
2145.37 |
USD/Ton |
0% |
9/27/2019 |
|
32S Polyester Yarn |
1668.62 |
USD/Ton |
-0.42% |
9/27/2019 |
|
45S T/C Yarn |
2411.78 |
USD/Ton |
0% |
9/27/2019 |
|
40S Rayon Yarn |
1808.84 |
USD/Ton |
0% |
9/27/2019 |
|
T/R Yarn 65/35 32S |
2257.54 |
USD/Ton |
0% |
9/27/2019 |
|
45S Polyester Yarn |
2411.78 |
USD/Ton |
0% |
9/27/2019 |
|
T/C Yarn 65/35 32S |
2040.20 |
USD/Ton |
0% |
9/27/2019 |
|
10S Denim Fabric |
1.24 |
USD/Meter |
-0.11% |
9/27/2019 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
9/27/2019 |
|
40S Combed Poplin |
0.96 |
USD/Meter |
0% |
9/27/2019 |
|
30S Rayon Fabric |
0.57 |
USD/Meter |
0% |
9/27/2019 |
|
45S T/C Fabric |
0.66 |
USD/Meter |
0% |
9/27/2019 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14022 USD dtd. 27/09/2019). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
In a note, ICRA points out that India's position in the EU market has been adversely affected by the preferred access to key competing nations such as Bangladesh and Vietnam, by way of free trade agreements. India’s apparel export sector will tell you that by being out of free trade agreements (FTAs), you are giving a competitive edge to others, while a section of textile mills may argue that by entering into FTAs you can kill the chances of domestic industry. Both are right, and that explains why FTA negotiations have become a tough job for the Central government. For instance, the Northern India Textile Mills' Association (NITMA), a 100-plus member entity representing domestic textile industry, has written to Commerce Minister Piyush Goyal that the concessional tariff offered to polyester yarn under India's FTA agreement with Indonesia and Vietnam combined with post-GST tariff rationalisation is harming the growth prospects of a section of domestic textile mills that deal with this man-made fibre. The association points out that there has been an 855 per cent increase in the quantity of polyester yarn imports to India over the last 26 months. "The average total monthly import from these two countries in the pre-GST period was 565 tonnes. Over the last two months, it rose to 5,400 tonnes, an increase of 855 per cent," Sanjay Garg, President, NITMA says. Of the 50 million spindle capacity of Indian textile mills, about 10 per cent produce polyester yarn. What worries these units is the fact that polyester yarn is allowed to be imported under zero duty under ASEAN FTA, its key raw material, while polyester staple fibre (PSF) carries an import duty of 5 per cent. This makes yarn imports more attractive than import of yarn fibre for local production of polyester yarn. According to Garg, there used to be some protection against the influx of imports under this FTA during the pre-GST days as imported yarn was subject to CENVAT at 12 per cent and a special additional duty (SAD) of 4 per cent. While the domestic yarn was exempt from CENVAT, it was applied to PSF. "Therefore, domestic yarn had the benefit of 12 per cent CENVAT on the value added component during yarn production as well as the benefit of 4 per cent SAD. This was sufficient to protect against the clearance at zero duty under the FTA. However, post-GST, with the removal of CENVAT & SAD, polyester yarn is being cleared at zero duty and this leads to astronomical increase in the quantity of imported yarn being imported from these countries," he points out. What complicates the matter is high prices of locally-sourced polyester stable fibre. Garg says that PSF manufacturers have managed to maintain high price levels as domestic prices of PSF are calculated taking into account the landed rate of PSF from Indonesia. Besides there is also an anti-dumping duty on Purified Terephthalic Acid (PTA), the raw material of PSF, which turns domestic price of PSF even higher. The association wanted the government to utilise the opportunity to review India's FTA with ASEAN and increase the Basic Custom Duty on polyester yarns from the current level of 5 per cent to 10 per cent to protect the industry. On the other hand, India's apparel exports have been facing a challenging time for the last two years due to FTA advantages other countries have compared to India. "External environment for India's apparel exporters remains challenging amid a pick-up in activity on several FTAs among key trading nations, which have intensified competition from nations having a cost advantage over India." Commenting on this, Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, says. In a note, ICRA points out that India's position in the EU market has been adversely affected by the preferred access to key competing nations such as Bangladesh and Vietnam, by way of free trade agreements. These include Comprehensive and Progressive Agreement for Trans Pacific Partnership (CP TPP) between 11 nations including Vietnam, which had come into force for seven nations by January 2019, and EU-Vietnam Free Trade Agreement, which got signed in June 2019 (pending ratification). These could make it increasingly more difficult for India's apparel exporters to maintain their competitiveness in its largest market, the EU, which accounts for about 35 per cent of India's apparel exports, the note says. "Apart from challenges in the EU market, retail trends in the US also remain discouraging, which could exert additional pressure on the order flow for India's apparel exporters, going forward," adds Roy.
Source: Business Today
Myanmar’s garment sector is on track to meet a target of $10 billion in exports, according to the Myanmar Garment Entrepreneurs Association (MGEA), which had laid out the target and a goal to create one million jobs under the Myanmar Garment Industry Strategic Plan 2014-2024. Export figures rose from $800 million in 2015-16 to over $4 billion in the current fiscal. As the number of factories increased last year, export volumes increased as well, said Myanmar Garment Manufacturers Association chairman U Myint Soe. In the near term, more Chinese businesses are also relocating to Myanmar because of the US-China trade war and around 80 per cent of the new investments in the cut-make-pack (CMP) businesses in Myanmar are from China, he said, adding that garment enterprises from China, Hong Kong and Taiwan have entered Myanmar. The export volume for fiscal 2018-19 up to August was worth $4.37 billion compared to the $3.2 billion figure in the same period a year ago—an increase of $1.17 billion, said ministry of commerce deputy secretary U Khing Maung Lwin. Garment exports have been rising yearly in Myanmar, especially since 2013, when the European Union granted goods from Myanmar preferential access to the EU market under the Everything But Arms tariff scheme. The industry is being boosted by Thai CMP firms setting up shop in Myawaddy in Kayin state near the Thailand border to derive benefits from the EU’s preferential treatment for Myanmar, a newspaper report quoted the official as saying. New factories are also boosting volumes he added.
Source: Fibre2Fashion
According to official statistics released by China Customs in September, China's exports to the United Stated declined by 3.7 percent year-on-year. This isn't only about the Sino-U.S. trade war. Fundamental challenges are taking place, including intense transformation in the Chinese textile manufacturing sector.
Large-scale Manufacturing is Fading
"A dozen years ago, very few factories would be willing to manufacture clothing in less than 1000 pieces," Lily Chen, a freelance fashion designer recalls. "Many textile factories made margins depending on massive manufacturing orders and low labor cost." When Chen was a senior fashion designer for a U.S. fashion brand, she had to work with Chinese textile factories to make products designed by the brand. At that time, it was common for factories to manufacture 10,000 pieces of clothing based on a single fashion model. But Chen says it is no longer the case. "It's now more risky for these factories to do massive manufacturing with low-end products," Chen notes. "Sometimes, even one mistake in large-scale production can cause factories to lose money." With the fast-paced change in the fashion world, Chinese consumers have become more mature and rational in a market with a robust variety of brands. On the other hand, rising mall rentals for brand stores, increasing labor cost in factories and the expense of warehousing the accumulated stock of clothing place pressure on the traditional fashion industry. "No matter how much money a fashion brand makes," Chen cautions. "The stock of unsellable clothing can be the bottleneck for the brand's further development." Following NEW LOOK and Topshop, both popular U.K. fashion brands that have left Chinese market, U.S.-based Forever 21 officially announced its departure in May, 2019. Meanwhile Meters/bonwe, a Chinese fashion brand established by a Zhejiang entrepreneur, announced that they had closed 1500 stores over the past three years, while the firm reported losses approaching 150 million RMB for the first half of 2019. As the Chinese manufacturing and fashion markets are swamped with issues caused by high quantities of low-end products, many in the industry undertake new directions.
Innovation Is The New Trend
ISPO is a Munich-based international sports equipment and fashion trade show. The 2019 Shanghai ISPO exhibition showcased many sports products featuring high-technology and human engineering design. TITTALLON skiwear product, which utilizes an air circulation system, explored solutions for a common skiwear issue - how to adjust skiwear to changing body temperatures. In close collaboration with its Chinese partner, FASHION-POWER Group, this Holland-based brand has been producing high-end products scaled to this niche. "While the traditional clothing manufacturing outlook in China is bleak," Dr. Tim Klatte, the Advisory Partner of Grant Thornton China, comments. "There are opportunities for companies to upgrade their products and move towards and embrace innovation as a method to remain relevant." As Chinese textile manufacturing experiences a structural transformation, more fashion companies adapt their traditional manufacturing from Original Equipment Manufacturer (OEM) into Original Design Manufacturer (ODM), in which the factory becomes involved in research, design, concept and engineering and attaches the buyers' label. "Instead of large-scale manufacturing for brands," Chen says. "The factories now prefer to work closely with designers." As a freelance designer, Chen pitches to foreign and domestic fashion brands the high-end product she designs in collaboration with factories. In small-scale production, many factories in the textile powerhouse region of Zhejiang province have transformed their manufacturing model into innovation. They still take orders for big brands but are establishing factory-owned independent brands. "It is a trend that Chinese textile industry is heading for an individualistic development style," says Shen Bin, a vice professor in Donghua University. "This is based on a stronger collaboration inside the industry and among supply chains." Rather than relying on mall sales, fashion brands have explored marketing and sales on a variety e-commerce platforms such as WeChat store, Tmall and other apps. According to iiMedia Research, by the end of 2019, the Chinese fashion e-commerce revenue will reach one trillion RMB. Fashion brands are capitalizing on this trend.
Dyeing To Survive
Notorious for high energy and water consumption as well as chemical waste, textile manufacturing is regarded as the second-most polluting industry next to the petroleum industry. Despite only one-fourth of the world average renewable water per capita, China was late on acknowledging the water shortage and quality degradation. China saw the first water protection regulation, the Law of the People's Republic of China on Water, which was released in 1988 and amended in 2002. However, the enforcement of water protection legislation has only recently become a priority. On September 27, 2019, China's Ministry of Ecology and Environment drafted ecological criteria entitled The Standard of Water Waste Emissions for the Textile Industry. It seeks collaboration from the textile industry for comment before the regulations are formally released. "A large number of high-risk textile manufacturing companies have been forced to limit their production scale or provide rectification," Shen notes. "In the short-term, adding high-tech to enhance clean energy performance does increase production cost but regulations can improve the long-term credibility of Chinese factories." Seeking to have better clean-energy performance, some textile manufacturing factories have adopted high-tech automation hybrid with traditional production systems to concentrate on "cleaning up" the dyeing process. Some factories in Shandong, Guangdong and Hunan have been improving their water management, since International Finance Corporation (IFC) launched the China Water Program in 2012. Donghua University, renowned as a top university majoring in the textile industry, has played a vital role in setting up the criteria. "There is a strong need to deepen the reform in the Chinese textile industry." Shen concludes.
Source: Business Times
In a move to promote the patronage of locally made textiles, the East African Community (EAC) has introduced policies for the establishment of special fashion days and weeks in the region. Fridays have been declared Afrika Mashariki Fashion Day, during which the people in member countries will wear attires made in the region. Afrika Mashariki translates to ‘East.’ Meanwhile, the first week of September in every year has been earmarked for the Afrika Mashariki Fashion Week – a trade fair and exhibition of locally designed textiles and garments. As explained by a senior Public Relations Officer at the EAC Secretariat, Simon Peter Owaka, the declarations are part of strategies adopted by the region to spur demand for locally made textiles and garments and to build brand identity. “The declarations would enhance local consumption of East Africa-made products and enhance our productive capacity in the textile sector,” Owaka told Anadolu Agency. “Imagine a foreigner moving in EAC countries on a particular Friday and finding people donning similar attire – a strong message of an intact community.” Owaka also pointed out that if a combined population of nearly 190 million people bought local attire for Friday, many jobs will be created, incomes improved and the East African people will no longer have to depend on used clothes. The initiative would also serve as motivation to local and foreign companies to invest in local textile production. However, the initiative has been greeted with mixed reactions. While some residents welcome the idea of wearing of new locally made attires, others claim that their prices are much higher (compared to imported used clothes), which discourage buyers. The latest declarations will be implemented in all EAC member states – Rwanda, Uganda, Kenya, Tanzania, Burundi, and South Sudan. And the annual fashion week will be hosted in all member states on a rotational basis each year. Each country is expected to develop national policies and legal framework to foster the implementation of the policy. “Through member states, mechanisms or guidelines will be put in place to promote (the) implementation of these policy decisions,” the official said.
Boosting local production
EAC member states in 2017 agreed to grant garments and textiles manufacturers a three-year waiver of duties and value-added tax (VAT) on inputs, fabrics, and accessories not accessible in the region. Also, the bloc also adopted a three-year strategy to phase out importation of used clothes and shoes. Levies were imposed on the products from 2017 to 2019. This was aimed at boosting local production and reducing the cost of production. In February, the bloc reaffirmed plans to develop a strong textile and leather sector in the region. Member states as well are determined to offer citizens competitive options in regional textiles and footwear. Tanzania’s Deputy Minister of Agriculture, Mary Mwanjelwa, earlier this year disclosed plans to boost the country’s cotton exports to $150 million by 2020, up from the current $30 million. Last month, Uganda unveiled a strategy for the cotton, textiles and apparel sector with the aim of increasing fibre cotton production, scaling up domestic value addition and creating employment. The scheme supports its third edition of the National Development Plan (NDPIII). The collective policies and efforts by the EAC governments are based on the potential of the textile sector. A recent study by the EAC Secretariat on cotton, textile and apparel value chains revealed that the sector could become a major player in the regional industry. The report says regional textile will have a potential trade valued at $3 billion by 2025. However, rising importation of used clothes hampers the development potential in the local industry.
Source: Ventures Africa
