The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 18 NOV, 2019

NATIONAL

INTERNATIONAL

Drawback committee visits MMF units MUMBAI

The Drawback Committee constituted by the Govt. of India and headed by Mr. G. K. Pillai Chairman with Mr. Y G Parande and Mr. Gautam Ray as Members visited the manufacturing facilities of key MMF units in Kharach Surat and Silvassa this week The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) facilitated the field visits of the Drawback Committee at multiple factories of its members to review manufacturing processes in order to recommend revision in Drawback Rates Given the depressed domestic as well as global economic conditions it was imperative to arrange for the review of the Drawback rates in order to avail of all possible benefits that can accrue for SRTEPC member manufacturer exporters. In this connection the team at the Council has been coordinating with its members from various textile clusters for inputs related to the manufacturing process of products across the purview of the Council. SRTEPC worked out recommendations of drawback rates basis the calculations made after taking due consideration to represent the entire universe of Man-made Fibre Textile Manufacturers and Exporters. SRTEPC coordinated the visit of the Drawback Committee along with Mr. Anand Jha Under Secretary Drawback on 13th November 2019 to observe and understand the manufacturing process of MMF Textile items produced in the Birla Cellulose plant at Kharach in order to recommend a revision in drawback rates of various types of items being produced and exported by Grasim Industries Ltd. The Chairman of the Council Mr. Ronak Rughani Vice Chairman Mr. Dhiraj Raichand Shah and Mr. Narain Aggarwal Immediate Past Chairman along with the Executive Director Mr. S. Balaraju and Council officials briefed the Drawback Committee. The visit gave the members of the Drawback Committee an insight of Viscose Staple Fibre made from plants and its conversion from Fibre to the Garmenting stage with or without other important elements involved in the manufacturing process. Mr. Ajay Sardana Joint President (Marketing & Business Development) of Grasim Industries Ltd. along with other prominent Business Heads from the Company briefed the Duty Drawback Committee and explained to them about various processes involved in manufacturing of Viscose Staple Fibre. The Drawback Committee was made aware of the increase in duties and taxes levied on various types of raw materials thereby making the end products costly resulting in these products becoming uncompetitive in the International markets. It was therefore deemed necessary by the Drawback Committee to reexamine the duty structure and tax forming component of the final cost of the products so that appropriate drawback can be worked out for refund purpose thereby making Indian products much more competitive in the global markets. The Chairman of the Council Mr. Rughani made a presentation before the Committee by presenting the export and import data of the various MMFT products as well as key issues faced by the Industry. The Chairman of the Council emphasized the need for enhancement in the Drawback Rates for all synthetic textile items. It was pointed by the Chairman that Post GST exports of MMF textiles have been adversely impacted. Mr. Rughani also informed that exports of Indian MMF textiles have witnessed decline in some segments. In his presentation the Chairman put up the industry requirements in order to grow the exports and stabilize the stressed Indian Man-made Fibre Textile Sector The Duty Drawback Scheme allows exporters to get a refund / recoupment on customs duty paid on imported goods used in the manufacture of goods for exports. As is customary the drawback rates are worked out and notified every year after taking into account the budgetary changes in the duty structure and the consumption of input materials and the duties suffered on these input materials. During the visit the Council arranged for the Drawback Committee to visit Fairdeal Filaments Textile Park in Surat to get a feel of the Non-Woven Industries. These products employ artisans and craft persons belonging primarily to economically and socially weaker sections of the society. Hence these product categories are considered important not only from the export point of view but also from the point of view of employment generation to a very important section of the society. In terms of potential this product caters to the fast growing and much in demand ‘Technical Textiles’ category. Non Wovens have a very important role to play in the coming years since it is majorly used in the automobile industry and as a filter fabric in heavy industries. Given the scope of this product category in the future it was imperative for the Drawback Committee to understand the processes of this very technical product. The SRTEPC team then took the Drawback Committee to Creative Fabrics and Shraddha Textiles companies engaged in the manufacture of Woven Fabrics using water-jet looms. Both these companies represented the power loom sector The council also arranged for the Committee to visit the manufacturing plant of AYM Syntex Ltd thereby covering the Nylon Filament Yarn category. The Council thus provided a representation of manufacturing process of Viscose Staple Non- Woven Woven and Nylon textile sectors of our varied and diverse industry. With the visit of the high ranking officials SRTEPC is now hopeful that the Drawback Committee would make recommendations for the benefit and future of the Indian MMF Industry.

Source: Tecoya Trend

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Govt working on policies to push MSME exports, local production: Gadkari

He further said that secondly, the government is working on policy to increase indigenous production of products that are being imported. The government is working on two policies to increase MSME exports and bring down imports by encouraging local production, Union MSME and Road Transport Minister Nitin Gadkari said on Saturday. While addressing the gathering at Small Micro Enterprise (SME) conference at Nagpur, Gadkari mentioned that the MSME sector has 29 per cent contribution in country's growth and 48 per cent of export is done through MSMEs. Similarly, about 10-11 crore jobs have been created in MSMEs. "The government is working on two policies.Firstly on the industries which are into export business - how to support and increase their export," the minister said. The leather industry has a total turnover of Rs 1,40,000 crore of which Rs 80,000 crore to Rs 90,000 crore is domestic and around Rs 45,000-50,000 crore is from export. "I have suggested them on working on modernisation, upgradation, product designing and how to reduce the cost of production and improve quality, so that our share increases in the international market. We are working on a policy on how to strenghten export business," Gadkari said. He further said that secondly, the government is working on policy to increase indigenous production of products that are being imported. "The products that being particularly imported should get manufactured in the country itself. We are in talks with the commerce ministry on these two policies and it is in the final stages," said Gadkari. Gadkari emphasized on three important factors - reducing capital cost, power cost and logistic cost - to become competitive in international market and these these factors have also been discussed while making the new policy. Gadkari also spoke about contribution of MSMEs in the defence sector. Gadkari raised concern over defence procurement procedure saying that the files are stuck for many years and when the product is finalised and tenders are issued till then the product becomes outdated. He asked for change in Defence procurement system. Gadkari also said that MSMEs does not get that much work from defence sector as these should get and asked for study to make a good policy which can facilitate work for MSME in defence sector.

Source: Business Standard

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Textile exports continue slide

Production of textiles and clothing in September also was down by 2.6 per cent and almost flat for the 6-month period. Apart from handicraft products and jute products, all the other textile-related products continued their downward slide in exports in the month of October. However, the industry expects that with the easing of trade tensions between the US and China, exports would see a positive growth by the end of the fiscal. Cotton yarn, made-ups and handloom products were down by 6 per cent in October and by 12.5 per cent between April and October. Man-made yarn, fabrics and made-ups were marginally down for the month and declined 5.69 per cent during the seven-month period. Textiles and apparels were down by 3.21 per cent and of this textile exports slid 4.15 per cent. For the seven-month period, textile exports were down 8.84 per cent. Though apparel exports were down in October, during the seven-month period it was marginally up over last year. Production of textiles and clothing in September also was down by 2.6 per cent and almost flat for the 6-month period. “The exports are still sluggish, but the drop has been lesser compared to earlier months. The trade tension between the US and China are easing and this has improved the Chinese imports, especially yarn. The GST refunds are also taking a longer time to reach the exporters,” said Sidharth Rajagopal, Executive Director, Texprocil. Carpets witnessed the steepest decline in percentage terms — 16.87 percent. A saving grace was handicraft exports, which grew by 7.66 per cent. Jute product exports also went up by 9.75 per cent. The industry expects that the exports will improve in the coming months and that it might see a positive growth by the end of the fiscal. “If the US-China trade issues settle down, the demand would improve. Once the exporters receive refunds, their cash flow and bottomline will improve. They will be able to price products more competitively. If the cotton prices also remain range-bound, by the end of the fiscal we might see positive growth in exports,” he said.

Source: Asian Age

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New norms to ease restrictions on FDI by joint ventures of Indian companies

In a bid to ease the flow of foreign funds into legitimate business activities, the government may soon ease restrictions on foreign direct investment (FDI) by joint ventures (JVs) or wholly-owned subsidiaries (WOS) of an Indian company without categorising such investments as "suspect" involving 'round tripping' of funds. The existing legal framework under FEMA does not permit FDI by an overseas JV or WOS of an Indian party without the prior approval of RBI. Similarly, there are restrictions on Indian entities to undertake overseas direct investment (ODI) in a foreign entity which already has existing FDI investment structures in India. Official sources said that the changes would soon be be made in existing overseas direct investment (ODI) Regulations to ease the restrictions and put such investments (FDI and ODI) under the automatic route (without prior approval of RBI). The changes have become important in the backdrop on slowing of the Indian economy and resultant lack of investment by the corporate sector. The stringent view adopted by the RBI under the objective of preventing 'round tripping' of funds has impacted abilities of certain Indian companies which have made ODI outside India to attract FDI in India even for their group entities, even for legitimate and bona fide business purposes. A High Level Advisory Group (HLAG)-chaired by economist Surjit Bhalla, on how to increase India's exports, in its report has also suggested sweeping change in FDI regulations with a way to attract funds that go into building businesses in the country. Sources said that the Department for Promotion of Industry and Internal Trade (DPIIT) is also studying the report for finalising changes in the Press Note pertaining to FDI by JV of WOS of Indian party. Official sources said that though the changes would give free access to FDI by an Indian entity through its own JV or WOS, it would need to be established that such flow of funds is only for bonafide business interests and such funds are invested as FDI in India through proper banking channels. Accordingly, it is likely that investment by a foreign entity (in which ODI is being made) whose total value of existing FDI does not exceed 25 per cent of its consolidated net worth not be considered as 'round tripping' or in violation of ODI regulations. Net worth of overseas entity in this case should be at least $10 million. Moreover, any additional FDI may be allowed provided such funds are not directly or indirectly from India. The HLAC in its report has also recommended exemption to overseas listed companies i.e. companies which are listed overseas in Financial Action Task Force (FATF) jurisdictions (with market capitalisation of certain specified thresholds), should also be allowed to invest in India, irrespective of its shareholding being held by persons resident in India. ODIs include investments done outside India by an Indian by the way of subscription to the memorandum of a foreign entity or purchase of existing shares of a foreign entity either by market purchase or private placement or through stock exchanges, signifying a long-term interest in the foreign entity.

Source: Economic Times

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Simplifying GST: Govt plans mass outreach programme for return filers

FM Sitharaman meets stakeholders pan-Indian initiative for new forms on December 7. With the government facing severe revenue stress, Finance Minister Nirmala Sitharaman on Saturday met representatives of small and medium enterprises, chartered accountants, retailers, and independent professionals to iron out concerns related to goods and services tax (GST) compliance. In a live demonstration of sorts, the representatives attempted to file actual returns during the meeting to highlight their concerns. The one-to-one meetings were attended by representatives of the Indian Chartered Accountants Association (ICAI), Laghu Udyog Bharti, Rajasthan Tax Consultant Association, Confederation of All India Traders (CAIT), and a Kolkata-based independent tax professional. The aim of the exercise was to further simplify GST forms and make the filing process more user-friendly, the finance ministry said in a tweet. Sitharaman asked the revenue department to carry out a similar exercise across the country on December 7 for the new return forms to come into effect from April 2020. That would mean commissioners across circles would meet select individual GST return filers to respond to their queries and resolve issues. Saturday’s meeting was attended by officers from the Department of Revenue and GST Network (GSTN) — the information technology backbone for GST. “The FM decided that every commissioner of every circle should invite assessees with accountants who will actually file returns on a real time basis in front of the officer to understand the problems,” Revenue Secretary Ajay Bhushan Pandey told reporters after the meeting. The new GST return is available on the GSTN portal for trial and 85,000 have been filed so far on a voluntary basis. The FM has sought regular interactions between GSTN and the Central Board of Indirect Taxes and Customs (CBIC) to help improve the interface for users. GST collections have been dismal with revenue falling short of the Rs 1-trillion target for the third straight month in October. It was in fact 5.3 per cent lower than that in the corresponding month last year at Rs 95,380 crore. "As compared to the value-added tax regime, the compliance rate is much better. But there is a big scope for improvement," said Pandey. Earlier in the day, stakeholders, in their meeting with the FM, tried filing the summary return form GSTR 3B, outward supply form GSTR1, annual return form GSTR9 and the reconciliation statement 9C, besides raising issues pertaining to GST refunds. "Many of the issues that came up pertained to making amendments and corrections in a more convenient manner, issue of credit or debit notes. Some wanted the facility of downloading GSTR 2A return data in a custom range as against only month-wise available now," said Pandey. They also.highlighted the prevailing confusion where officers were asking for physical copies of invoice of items shown in the GSTR2A. "We told them that it was not correct on the part of officers to ask for physical invoices when data has been captured in GSTR2A. GSTR 2A is a purchase-related tax return that is automatically generated for each business by the GST portal . When a seller files his GSTR-1, the information is captured in GSTR 2A.

Source: Business Standard

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Exporters voice concern at disabling of benefits

All India Spices Exporters Forum (AISEF) and Federation of Indian Coir Exporters Association (FICEA) have expressed concern at the non-availability of export incentive schemes introduced to offset infrastructural inefficiencies, associated costs and encourage export of notified goods, from August 2019.  “We have absolutely no idea as to how to deal with this crisis, Initial feedback from sources spoke of a technical glitch, which would be rectified soon. However there has been no clarity on the enabling of the system apart from some updates via tweets in this regard from DGFT,” said Rajiv Palicha, chairman, All India Spices Exporters Forum. Exporters found that the claims from the period August 1, 2019 were disabled by DGFT. They were expecting MEIS to continue till March 31 2020, when the new foreign trade policy (FTP) comes in place. “FTP has a good legal framework for trade facilitation. Sustained growth in exports needs policy continuity adhering to the duration clause of FTP,’ he said. Introduced in 2015, the merchandise exports from India scheme (MEIS) was created by merging five existing reward schemes. It incentivizes merchandise exports of more than 8,000 items now and is the biggest of its kind. Exporters earn duty credits at fixed rates of 2 to 5 per cent depending upon the product and country. Rewards under the scheme are payable as percentage of realized free-on –board value and MEIS duty scrips can be transferred or used for payment of a number of duties including basic customs duty. “If the benefit is not allowed in full from August 1st 2019 exporters will lose heavily as exporters work with very thin margins and will all sustain losses in current year. Further export of spice and spice products, the exporters Forum estimates would reduce by 30 % bringing loss of forex to the country, Palicha said.

Source: Economic Times

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Non-filers of GST returns may face cancellation of registration

The Goods & Services Tax (GST) Administration plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis. Filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. The problem here is that nearly 20 per cent of assessees do not file their returns, which affects GST collections. The Central Board of Indirect Taxes & Customs (CBIC) held a meeting with the Principal Chief Commissioner and Commissioner of GST & Customs on November 13. According to sources, PK Dash, Chairman, CBIC, expressed his displeasure in the progress of cancellation of registration of non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods and are liable to action under GST law. “…the task of cancellation of registration of such non-filers of GST returns should be taken on priority basis and should be furnished by November 25, ” a communication sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. It has also asked for reports to be sent on a daily basis.

Conditions for cancellation

Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard. According to GST Law, a registered person will have to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person will also have to file returns for the period of activity undertaken. The law is very clear here that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Source: Business Line

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Reflections on RCEP and FTAs

In the process of evolving comparative advantage, some sectors will lose out. This, however, is not typical of FTAs but of all trade. India has decided not to join the 16-member Regional Comprehensive Economic Partnership because of concerns regarding sensitive sectors, the liberalisation of the services sector, mode 4 relating to movements of professionals, in particular, and the large trade deficit with China as well as with countries of the Association of Southeast Asian Nations (Asean). We are now thinking of negotiating free-trade agreements (FTAs) with other countries as well as undertaking a review of the India-Asean FTA. At this point it may be useful to reflect on some aspects of FTAs, in general, and the ...

Source: Business Standard

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RCEP debate: Issue of diminishing returns from FTAs plagues India

The basic building block of the proposed RCEP - the Asean FTA - continues to be one-sided. The government says the pressure to remove tariffs and provide access to India’s vast untapped domestic market, without getting much in return, ultimately forced India out of the Regional Comprehensive Economic Partnership (RCEP) deal. The fear is not unfounded, say experts, as New Delhi’s existing free-trade agreements (FTAs) suffer from the same issues, leading to disproportionate growth in imports while exports rise slowly. This is true for each of the five largest trade deals currently in force, with growth in imports, in most cases, increasing at double the pace of ...

Source: Business Standard

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Textiles to pharma: India's deepening slowdown explained in six charts

What could be the reason for these successive downward revisions across the board? Some key indicators make it evident. Economy observers are finally spelling out the gravity of the slowdown India finds itself in. Before the financial year began, the Reserve Bank of India thought the Indian economy would grow at 7.4 per cent in FY20. Over eight months, it gradually revised its estimate downward to 6.1 per cent. Last week, the State Bank of India projected FY20 growth at 5 per cent, and a top Delhi-based think tank expects the economy to grow at 4.9 per cent.

What could be the reason for these successive downward revisions across the board? Some key indicators make it evident.

Earnings from rail freight are gradually reducing and contracted by 7.7 per cent in September 2019 (chart 1). This indicates declining industrial demand. Air travel did pick up in FY20, but is now looking down, showing slackening demand (chart 2). While petrol consumption seems on track, diesel consumption has tanked, reaffirming industrial slowdown (chart 3). The index of industrial production (IIP) shows the areas of stress in the economy (chart 4). Even pharma has come under pressure. Core inflation is a measure of inflation without volatile components like food and fuel. It represents business demand and pricing power of companies. While it was driving overall inflation up until recently (strong demand), it has now fallen below the level of overall inflation (weak demand) (chart 5). On the external front, while exports remain poor, imports are increasingly falling in FY20, showing deepening economic stress (chart 6).

Source: Business Standard

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MSME ministry likely to streamline existing schemes for better results

Central schemes may be significantly modified to maximise returns on fund allocation and speed up industrial output. The government is drawing up plans to streamline existing schemes for micro, small, and medium enterprises (MSMEs), with an aim to combat liquidity crisis, low professional exposure, and low skills that the sector continues to face. Central schemes enabling cluster-based development, those promoting new business, and skill training programmes may be significantly modified to maximise returns on fund allocation and speed up industrial output. Prime among these is the Cluster Development Program that provides common physical infrastructure facilities in a fixed geographic area to a ...

Source: Business Standard

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Trade tensions and protectionism reasons for decline in October exports: FIEO

MUMBAI: Reacting to a marginal decline in October exports by 1.1 percent with USD 26.38 billion during the month FIEO President Mr Sharad Kumar Saraf said that trade tensions and rising protectionism has led to this marginal decrease in exports during the month. Further this decline may also be attributed to the base year effect as compared to October 2018 during which exports grew by about 18 percent. Sluggishness in the economies across the globe coupled with Trade War between US-China Brexit and developments in Iran Turkey Iraq have further escalated the problem.

Source: Tecoya Trend

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Niti's National Energy Policy to be umbrella plan for all energy ministries

The National Energy Policy (NEP), being drafted by the NITI Aayog, will become the guiding policy for all energy ministries. Encompassing regulations for coal and mines, renewable energy, oil and gas, and the environment, the NEP will be put up for the Union Cabinet soon. This could be the first time that a single integrated policy would cover half a dozen ministries. People involved in the drafting said all energy ministries and also energy-consuming departments would have to follow the NEP in formulating their own policies and regulations. “The manner in which each ...

Source: Business Standard

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Initial draft industrial policy targets $1 trillion gross value addition in manufacturing by 2025

The Department for Promotion of Industry and Internal Trade (DPIIT) has prepared an initial draft industrial policy which targets to raise value addition in the manufacturing sector to $1 trillion by 2025, an official said. The policy envisions to create globally competitive business enterprises which can generate gainful employment and sustainable livelihoods. It entails creating industry that is equipped with innovation, technology; financially viable and environment friendly; and whose benefits are shared by all sections of the society, the official added. The initial draft policy is being circulated to seek views of different ministries and departments. The policy would work in tandem with the Skill India Mission to improve employability of future workforce, and with the foreign trade policy to enhance India’s share in global merchandise exports. It would also enable harmonious implementation of macro fiscal and monetary policies and ensure that incentive regime for industry is competitive. Further, it will work to revive investments into industry and manufacturing with a balanced focus on both quantity and quality of investments. The draft has also proposed a detailed implementation mechanism of the policy under which it has suggested setting up of a national industrial competitiveness council and a steering committee. The new industrial policy was prepared and sent to the cabinet by the department last year, but some new suggestions were made and now it is being reworked by the DPIIT. This will be the third industrial policy after the ones released in 1956 and 1991. It will replace the industrial policy of 1991 which was prepared in the backdrop of the balance of payments crisis.

Source: Financial Express

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Global Textile Raw Material Price 17-11-2019

Item

Price

Unit

Fluctuation

Date

PSF

956.60

USD/Ton

0%

11/17/2019

VSF

1495.18

USD/Ton

-0.95%

11/17/2019

ASF

2189.27

USD/Ton

0%

11/17/2019

Polyester    POY

977.29

USD/Ton

0%

11/17/2019

Nylon    FDY

2211.39

USD/Ton

0%

11/17/2019

40D    Spandex

4108.90

USD/Ton

0%

11/17/2019

Nylon    POY

2325.52

USD/Ton

0%

11/17/2019

Acrylic    Top 3D

1077.16

USD/Ton

0%

11/17/2019

Polyester    FDY

2453.92

USD/Ton

0%

11/17/2019

Nylon    DTY

5392.93

USD/Ton

0%

11/17/2019

Viscose    Long Filament

1219.83

USD/Ton

0%

11/17/2019

Polyester    DTY

2054.45

USD/Ton

-2.04%

11/17/2019

30S    Spun Rayon Yarn

2078.70

USD/Ton

-0.21%

11/17/2019

32S    Polyester Yarn

1569.37

USD/Ton

-1.35%

11/17/2019

45S    T/C Yarn

2411.12

USD/Ton

-0.59%

11/17/2019

40S    Rayon Yarn

1769.11

USD/Ton

0%

11/17/2019

T/R    Yarn 65/35 32S

2296.99

USD/Ton

0%

11/17/2019

45S    Polyester Yarn

2354.06

USD/Ton

-1.79%

11/17/2019

T/C    Yarn 65/35 32S

1940.31

USD/Ton

0%

11/17/2019

10S    Denim Fabric

1.26

USD/Meter

0%

11/17/2019

32S    Twill Fabric

0.69

USD/Meter

-0.21%

11/17/2019

40S    Combed Poplin

0.96

USD/Meter

-0.44%

11/17/2019

30S    Rayon Fabric

0.55

USD/Meter

-0.52%

11/17/2019

45S    T/C Fabric

0.67

USD/Meter

0%

11/17/2019

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14267 USD dtd. 17/11/2019). 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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SA’s biggest retailers commit to local textiles

South Africa’s biggest clothing retailers have promised to purchase an additional 85 million units in locally manufactured clothes, shoes and leather goods over the next few years in an attempt to boost the local textile industry. This undertaking by some of the biggest players in the clothing retail sector will boost the acquisition of locally produced goods from its present level of 44% to 65% by 2030. The announcement was made at the SA Investment Conference in Sandton, where a master plan for the development of the local textile, clothing, shoe and leather industry was signed by, among other parties, government, labour, the Foschini Group, Pepkor, Edcon, Mr Price and Woolworths. The textile industry has been pleading for protection and intervention since the 1990s, and government’s current industrial policy action plan notes that the industry has lost about 120 000 jobs since the drastic reduction of import tariffs during that period. The industry presently employs about 95 000 people and contributes 2.9% to South Africa’s GDP. “More than 60% of textile, clothing, shoes and leather products for the local market are presently imported.’’ According to the master plan, government pledged to take decisive action against illegal imports, and unions bound themselves to adjustments in the employment environment, which would increase competitiveness. Manufacturing companies promised R6.8 billion in investment over the next five years. This is part of the R370 billion in investment pledges made during the investment conference and will contribute to President Cyril Ramaphosa’s goal of achieving R1.2 trillion investment in South Africa over the next five years. According to the department of trade, industry and competition, the implementation of the textile master plan will create an additional 120 000 employment opportunities in the value chain, with 70 000 of these being in manufacturing. Professor Justin Barnes, chairperson of B&M Analysts, which was involved in the development of the programme as well as support programmes for the vehicle manufacturing industry, last year told City Press’ sister publication, Rapport, that increased domestic production was an important step in stabilising the textile and clothing industry. More than 60% of textile, clothing, shoes and leather products for the local market are presently imported. According to the department of trade, industry and competition, the implementation of the textile master plan will create an additional 120 000 employment opportunities in the value chain, with 70 000 of these being in manufacturing. With the master plan, government is attempting to recreate the support given to the local vehicle manufacturing market.

Source: News 24

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CPEC effect: Taiwanese textile companies may relocate to Pakistan

Being a cheap labour market, Pakistan can transform into an excellent destination for Taiwanese textile companies, which are willing to relocate their units outside Vietnam, said Taiwan Textile Federation President Justin Huang. “At present, Vietnam is crowded, which causes difficulties for Taiwanese textile firms there, such as labour shortages,” Justin said in an interview with The Express Tribune. “In Pakistan, however, labour issues will not emerge at least for the next 10 years and this is something attractive for us. He pointed out that China had invested massively in Pakistan’s infrastructure development projects under the China-Pakistan Economic Corridor (CPEC) and stressed that Taiwanese businessmen could take maximum advantage from such investment.

Pakistan had a duty-free export agreement with the European Union and in December, the second phase of a free trade agreement (FTA) with China would also become functional, which would prove to be helpful for the Taiwanese investors and trade and industrial development in Pakistan, he said.

“We are different from China and other countries because we focus more on technical and functional textiles,” he emphasised.

Justin added that he would forward all the information collected from Pakistan to other federation members in Taiwan including the fact that Pakistan was a huge market of 200 million with excess labour and the government was willing to support foreign investment.

The federation president expressed the resolve to devise a mechanism for enhancing trade and investment collaboration between Taiwan and Pakistan in the textile and garments sector. He was of the view that Pakistan’s textile industry produced excellent products for home use and had the capacity to produce quality apparel as well. “If things follow the right direction, we will transfer new technologies and manufacturing processes to Pakistan, which will facilitate the country in upgrading its products,” Justin stressed.

“After that, Pakistan will not have to compete with China or Bangladesh on price issues and the country will be able to add value to its products.” Textile companies based in Taiwan have already designed products for global brands like Nike and Adidas. Sixteen teams in the football World Cup 2018 used Taiwan-based fabric in their kits. He voiced hope that the FTA with China would also assist Taiwanese companies, which had already invested in China and had set up their units in the country.  “Our officials can bring in their work experience to Pakistan along with the academia to train the local human resources,” he pointed out. “In future, Pakistan will need a lot of textile engineers, hence, there is a need to provide sufficient training to them so that the country can utilise its manpower.” He also stressed the need for easing the visa approval process for the Taiwanese investors. “Right now, it is difficult for us to visit Pakistan due to a long process of applying for the entrance visa,” he said. “It took me more than three weeks to get approval for Pakistani visa.”

Source: The Express Tribune

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Clothing as a commodity: The naked truth

The global apparel industry has a serious overproduction issue and it impacts all sections of the supply chain. We hear so much about the issue of recycling, circular economy and all manner of new and exciting industry initiatives designed to take the fashion industry forward and make it more sustainable. But hold on just one moment. Are we not in danger of running before we can walk, with the focus on industry initiatives which have sunset dates that are 10 or 15 years from now, when we currently have a major problem that is staring us all right in the face: product waste? Excess inventory or product waste is the dirty secret that has an impact right across the apparel supply chain, from one end to the other. Recent research, for instance, found that at least 10 percent of garments—which equate to 230 million pieces—remain unsold in Germany each year, while in North-West Europe, 4,700 kilo tonnes of post-consumer textile waste are generated annually. These figures were included in two separate reports which looked at the staggering scale of waste and excess inventory in the global apparel industry. One of the reports points out that less than one percent of textiles collected are currently recycled into new ones, while around half are downcycled, incinerated or landfilled. Yet in reality, this is not a smart recycling issue. We know recycling technologies have come on at a fantastic rate and will surely play a huge part in the industry in future. But that’s a discussion for another time, for this is an over-production issue. It is an inventory management issue. It is a logistical issue. And it is one that the industry should—and can—be addressing now. The good news is that there are many possible solutions to this problem which we could begin implementing right now. I will come back to these solutions later. In economics, we have the widely accepted concept of scarcity. We live in a world of scare resources and it is this scarcity that dictates the dynamics of demand and supply. Excess demand over supply sees prices rise; and excess of supply over demand sees prices fall. This way prices are dictated. But the apparel industry at times appears to operate in a parallel universe where the laws of demand and supply have been turned on their head; or, rather, they are never given the chance to take effect. In short, the market is broken. Allow me to explain. Because apparel has been outsourced to the cheapest possible destinations where wages are lowest—like Bangladesh—and because suppliers have been pressured to work in increasingly fine margins, this means apparel retailers can now get clothing onto shelves for next to nothing. This, in turn, means clothing has become—certainly in large parts of the market—commoditised. It is produced in such huge quantities that the market is always completely saturated and there is a huge excess of supply over demand at any given time, and this in turn ensures that prices remain at rock bottom. Only if the market were to collectively squeeze supply would prices increase, but this won’t happen because no retailer wants to be the first to blink on this issue. Instead, they keep producing more and more and if this means an excess of inventory (which it does, and has done for decades), nobody is too concerned because, as outlined earlier, production costs have been squeezed so low anyway. A few more thousand units which don’t sell simply aren’t seen as a big deal in this industry. For sure, we have seen improvements in logistics and inventory management in some parts of the apparel industry but, at heart, this remains an industry which is frighteningly relaxed about the issue of excess product. But this is about more than just retailers. In supply chains, excess produce—waste—is also a huge problem. Waste is generated in the supply chain in several ways as textile fibres go through the spinning, manufacturing, wet processing and production stages. Ten percent, or more in some cases, of output can be lost as waste during each of these stages. In Bangladesh, the more positive news is that we do manage to make use of this waste. Some excess fabrics are reused in the local market. For instance, a large portion can be cut down for smaller garment sizes. Some are reused for quilts, cushions and other related products. Some are mechanically recycled and rebranded. And some are used in value-added products other than textiles, such as composites and insulation. But we can and should be doing more about the issue of waste in production because more waste in the production process ultimately means lower margins. In this sense, in Bangladeshi factories, waste is an economic issue as much as an environmental one; nonetheless, it is one the industry as a whole needs to address through better factory management, better training and more sophisticated production techniques. Where waste becomes a real environmental challenge is, as indicated, where we move further along the supply chain. It seems insane that in a world of scarce resources, factories are producing far more of a product than the market is actually demanding. I mentioned solutions earlier, and these are fairly clear-cut. Firstly, we need agreed minimum unit prices paid to RMG factories by brands and retailers. One of the reasons brands are so relaxed about excess inventory is because unit prices are so low. Higher prices would soon sharpen their focus and encourage them to treat the issue of stock management a little more seriously. Secondly, we need the extension of Extended Producer Responsibility (EPR) laws to the global apparel industry. EPR is a policy approach under which producers are given a significant responsibility—financial and/or physical—for the treatment or disposal of post-consumer products. Such laws are common in many industry sectors but, sadly, not in apparel. That needs to change. Finally, we need a broader, cultural shift to encourage people to place greater value on clothing and stop viewing it merely as a commodity. Education can help here but ultimately this will not change as long as retailers continue to saturate the market with mountains of clothing, a large majority of which they know in advance will end on the sale rail or not get sold at all. Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

Source: The Daily Star

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BB extends special loan rescheduling facility until February 4

By the deadline, defaulters will be allowed to file application for availing the facility at two percent down payment. The Bangladesh Bank (BB) on Sunday extended the special loan rescheduling facility until February 4 next year. By the deadline, defaulters will be allowed to file application for availing the facility at two percent down payment. The textile and garments sector can avail the special rescheduling and fresh loan facility without conducting any special audit, which was mandatory earlier. The BB's Banking Regulation and Policy Department (BRPD) issued a circular in this regard on Sunday, asking all the scheduled banks to comply with the latest instruction. The BB said it extended the timeframe for the loan defaulters in compliance with the directives of the November 3 (2019) verdict of the Supreme Court. In the circular, the BRPD asked scheduled banks to follow the bank-client relationship to allow the latest special rescheduling facility. The BRPD's fresh order dropped the provision of mandatory special audit for the textile and garments sector to avail the special rescheduling and fresh loan facility. The previous deadline for filing application for availing the special rescheduling facility ended on October 20, 2019. On May 16 this year, the BB had opened a special bailout scheme for loan defaulters with 2% down payment and a long 10-year repayment facility with one-year grace period. The circular also extended one time exit facility with maximum interest waiver for the defaulters. The circular said there would be no new credit facility for the defaulted borrowers, who will be the beneficiary of the special rescheduling facility. Human Rights and Peace for Bangladesh (HRPB) filed a writ petition with the High Court (HC) challenging the BB's May 16 circular. The HC on May 21 issued a status quo till June 24 on the central bank’s circular. The same court on June 24 extended the order for the next two months. However, the HC order was stayed for a two-month period by the Supreme Court's Appellate Division on July 8, creating the scope of opening up the effectiveness of the BRPD circular for rescheduling and one time exit. In light of the Supreme Court's appellate division's order, the central bank's BRPD issued instruction on banks on August 8, 2019 to notify loan defaulters to submit application with a deadline on September 7, which later were extended several time.

Source: Dhaka Tribune

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