MARKET WATCH 28TH NOV 2019

National

Uniqlo wants to expand ‘very rapidly’ in India

Indian clothing market expected to be worth $53.7 billion in 2020: Report

IKEA to invest €200m in race to turn 'climate positive'

Growth may have slowed, but recession loose talk

Japan keen to fix India’s RCEP issues

States to pile up debt in slowing economy: Moody's

Rupee opens 3 paise up at 71.32 against dollar

International

VITAS invites Indian firms to invest in Vietnam

Italian textile machinery to be present at Irantex: ACIMIT

Global partnership for Sustainable Development Goals

UK: The secret to exporting: make it a priority

 

National

Uniqlo wants to expand ‘very rapidly’ in India

Japanese retailer Uniqlo that is set to open its second India store on Thursday counts the market to be central to its business strategy. India CEO Tomohiko Sei says the firm wants to ‘expand very rapidly’ in the country. “India is a very big market and has a huge population. Expansion is definitely a long-term vision,” Sei told FE in an interview. The launch of the store, located in Gurgaon’s upscale Cyber Hub, comes within a span of about two months since the opening of its first outlet in New Delhi’s Ambience Mall. The retailer is understood to have generated over Rs 2 crore in sales in the first two days of its operation. Sei did not elaborate on sales numbers but said “it is on track”. “When it comes to India, there is no limit on investment as long as it is necessary,” Sei said. Uniqlo, however, entered India almost 10 years after competitor Zara while Swedish-based H&M made its foray into the country in 2015. The fast-fashion retailers posted higher revenues in the year to March 2019 – Zara that operates 22 stores across 10 cities saw its total revenue increase to Rs 1,437.87 crore from Rs 1,221.67 crore in FY18. Profit after tax, nonetheless, dipped to Rs 71.49 crore in FY19 against Rs 82.59 crore in the previous year, the company’s annual report showed. H&M reportedly made over Rs 1,200 crore in revenue during the period compared to about Rs 893 crore in FY18 while net profits increased nearly 29% to Rs 45 crore in FY19. Analysts at McKinsey & Company estimate Indian clothing market to touch $53.7 billion in 2020, making it the sixth-largest globally. The domestic retail industry is expected to reach $1,200 billion by 2021 and $1,750 billion by 2026. Of the total retail market, food and groceries comprise the largest share, followed by apparel and footwear, according to analysts at Deloitte.

Uniqlo’s entry price point – a shade lower than Rs 1,000 – will not impact customer demand, the company said. Sei said the company’s LifeWear concept is new to Indian consumers and distinguishes it from its rivals. “We deliver value and quality,” Sei added. Earlier this year, Tadashi Yanai, chairman and president at Fast Retailing that owns Uniqlo, had said high import duties affect product pricing in India. Local sourcing at present is not very significant.

Source: The Financial Express

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Indian clothing market expected to be worth $53.7 billion in 2020: Report

The Indian clothing market is expected to be worth $53.7 billion in 2020, making it the sixth largest globally, according to the fourth annual state of fashion report by The Business of Fashion and McKinsey & Company. While the global outlook for consumer spending is dim on account of rising trade tensions, political uncertainty and economic concerns, India presents an exciting opportunity particularly for price competitive players, analysts said in the report. “While GDP growth this year has been somewhat weaker than expected, in part due to regulatory uncertainty, India is still projected to be the fastest-growing major economy, according to the IMF (International Monetary Fund),” analysts said. India, which has attracted global brands like Zara, H&M and Marks & Spencer lately, saw the entry of Japanese retailer Uniqlo. Recently, the government relaxed local sourcing norms in single-brand retail, providing further impetus to the industry. The McKinsey Global Fashion Index (MGFI) forecasts that the overall fashion industry revenue growth will slow further in 2020 — down to 3-4% from the 3.5-4.5% growth predicted for 2019. The most optimistic region is Asia, although, even here only 14% of executives expect an improvement in conditions, the report showed. Respondents to the annual BoF-McKinsey executive survey reveals pessimism across all geographies and price points. The majority — 55% of fashion executives foresee a slowdown in 2020. A mere 9% of respondents think conditions for the industry will improve next year, compared to 49%, who said the same last year.

Source: The Financial Express

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IKEA to invest €200m in race to turn 'climate positive'

IKEA, the world's biggest furniture group, said today it would spend around €100m on supporting its direct suppliers in moving over to renewable energy.  Brand owner Inter IKEA, which is in charge of supply, said it also planned to invest around €100m in projects to remove carbon from the atmosphere through reforestation and forest protection.  It said the new investments would be part of its work towards IKEA becoming climate positive - to cut more greenhouse gas emissions than the IKEA value chain emits - by 2030.  The target includes its around 1,000 direct suppliers. IKEA produces around 10% of its range itself and sources the rest from suppliers.  In September Ingka Group, which owns most IKEA stores, pledged to exceed its 2020 target to produce as much renewable energy as the energy it consumes by the year's end.  More than 400 firms including IKEA, H&M, Coca-Cola and Sony have committed to a UN-backed initiative to help limit global warming to below 2 degrees Celsius.

Source: The RTE

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Growth may have slowed, but recession loose talk

Finance minister Nirmala Sitharaman on Wednesday promised more sector-specific steps to boost sagging economic growth and asserted that the 32 measures already initiated by the government have started “bearing results”. Replying to a short-duration discussion in the Rajya Sabha on the economic situation, she defended the government’s handling of the economy and stressed that it will never slip into recession. “Looking at the economy with a discerning view, you will see that growth may have come down but it is not recession yet, it won’t be recession ever,” Sitharaman said. The FM attributed the deceleration in GDP growth in the past two years to the lagged effect of the twin balance sheet crisis (bad loan-encumbered banks and over-leveraged firms), caused by the UPA’s indiscriminate lending.

Source: The Financial Express

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Japan keen to fix India’s RCEP issues

Tokyo’s eagerness to include India stems from the fact that it fears China setting the terms of the pact and also reap the benefits from easier origin rules that would allow it to sell goods coming from China to other RCEP countries at low duties....

The issue is likely to come up at the inaugural 2+2 ministerial dialogue between India and Japan later this week. Keen to have India back in the Regional Comprehensive Economic Partnership (RCEP), Japan has reached out to New Delhi to help address its concerns including those on trade deficit.  Tokyo’s eagerness to include India stems from the fact that it fears China setting the terms of the pact and also reap the benefits from easier origin rules that would allow it to sell goods coming from China to other RCEP countries at low duties, officials said.  The development comes in the wake of India opting out of the RCEP earlier this month after negotiating the pact with 15 other Asia-Pacific countries for seven years.  “Japan has asked how they can help in resolving our issues so that India can rejoin the grouping,” said an official in the know.  India withdrew from the agreement due to lack of reciprocity on its key demands on services market access, safeguards for import surge and circumvention of origin rules because of tariff differentials.  New Delhi was also not satisfied with the proposals to counter its burgeoning trade deficit with China, which was feared to rise after the pact came into effect.

“They know RCEP would be a low ambition agreement if India is in it otherwise China will dictate the terms,” the official said.  Moreover, Japan seeks to benefit the most from regional cumulation because it will be able to export. Regional cumulation means the origin doesn’t matter as long as the product originates from an RCEP member country. “China, South Korea and Japan are the biggest users of regional cumulation. India will not be able to counter these even with non-tariff barriers because it is a small user of such measures,” said an expert on trade issues.  As per another expert, Japan is likely to gain more from the RCEP than its free trade agreement with India and, hence, is making efforts to get India back. “There were many times during the RCEP negotiations when Japan did not support India and instead upped its demands. It is surprising that it should try to get us back now,” said the second expert.

The issue is likely to come up at the inaugural 2+2 ministerial dialogue between India and Japan later this week.

Source: The Economic Times

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States to pile up debt in slowing economy: Moody's

State governments will likely face difficulties in reducing deficits as economic growth slows and infrastructure spending continues, according to a report by credit ratings agency Moody's.

Challenges in controlling deficits at the state level will also impact fiscal consolidation efforts at the Centre which Moody's projects will post a fiscal deficit of 3.7% of GDP instead of the 3.3% target set in the union budget.

"As slowing growth and continued infrastructure spending are likely to keep state-level deficits elevated, we expect the central government will continue to face challenges in achieving its fiscal consolidation targets," said Gjorgji Josifov, an assistant vice-president and analyst at Moody's.

Moody's expects the debt burden of state governments to increase significantly from the Rs 7.5 lakh crore in loans budgeted for this fiscal, which itself represents an increase of 28% over total state borrowing in FY 2019, according to the report.

Josifov said that states were not able to generate enough revenues to cover their spending needs & the introduction of the GST had made them even more dependent on central government transfers.

The GST which replaced many indirect taxes has led to a decline in the proportion of revenue generated by states' own taxes from 52% to 44% according to the report.

In particular states such as Bihar and the north-eastern states as well as the union territories of Jammu and Kashmir, which have less productive tax bases, are dependent on central transfer for the majority of their revenue, according to the report.

Moody's projects that the state deficits for the fiscal will add up to around 3% of GDP bringing the general government deficit to 6.7% of GDP when coupled with the projected 3.7% deficit at the centre.

"Revenue continues to be insufficient to address state spending needs and as such, without policy changes, we expect deficits to persist around current levels at the state level, which will continue to challenge general government fiscal consolidation," the report reads.

Source: The Economic Times

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Rupee opens 3 paise up at 71.32 against dollar

The rupee on Thursday opened 3 paise higher at 71.32 against the US dollar following sustained inflows by foreign funds. The local currency on Wednesday closed 15 paise up at 71.35 against the greenback.

This month until now, the FIIs have added over $3 billion in the equity segment and in the last three months total fund inflows have soared to a total of over $6 billion thereby keeping the overall sentiment positive. “In the next couple of sessions, volatility for the rupee could be confined to a narrow range as most participants would remain cautious ahead of the important GDP and fiscal deficit number that will be released tomorrow evening. Today, USDINR pair is expected to quote in the range of 71.15 and 71.70,” brokerage firm Motilal Oswal Financial Services said.

Source: The Economic Times

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International

VITAS invites Indian firms to invest in Vietnam

Vietnam Textile and Apparel Association (VITAS) chairman Vu Duc Giang recently invited Indian companies to invest in the country’s yarn, weaving, dyeing and printing segments to take advantage of the market access provided by free trade agreements that Vietnam has signed. He was speaking at the India-Vietnam Textile Cooperation event in Ho Chi Minh City last week. He expressed hope that cooperation between the two sides would benefit both countries. K Srikar Reddy, Indian consul general in HCM City, said bilateral trade in textiles between India and Vietnam has registered impressive growth during the last two years. Indian textile and clothing exports to Vietnam grew 48 per cent during the last two years from $390 million in fiscal 2016-2017 to $578 million in 2018-2019, according to a Vietnamese newspaper report. However, there is significant untapped potential for trade in textiles between both sides, Reddy said. Under the India-ASEAN FTA most types of yarns, woven and knit fabrics could be imported duty-free from India, he added. Siddhartha Rajagopal, executive director of the Cotton Textiles Export Promotion Council of India, said in 2018, while Vietnam’s total textile imports were worth $27.90 billion, its imports from India were valued at $640 million, or only 2.29 per cent. Rajagopal invited Vietnamese companies to participate in the IND-TEXPO (reverse buyer-seller meet) to be organised by TEXPROCIL in March in Coimbatore. Organised by the Indian Consulate General, VITAS, the Vietnam Cotton and Spinning Association, and HCM City Textile and Garment -Embroidery Association, the event attracted 60 Indian companies, which also participated in the 19th Vietnam International Textile and Garment Industry Exhibition in HCM City from November 20 to 23.

Source: Fibre2Fashion

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Italian textile machinery to be present at Irantex: ACIMIT

As part of promotional activities set for 2019, Italian Trade Agency and ACIMIT, will organise Punto Italia, a service centre at next Irantex, the main Iranian textile and machinery trade show to be held in Tehran from December 9-12. Punto Italia will be used for meetings between Italian textile machinery builders and their Iranian customers. Moreover, in the service centre local companies will be able to get for information on the Italian technological offer. "Despite the difficulties that still exist for doing business in the Iranian market due to the well-known reasons, it is important to keep in touch with a market of significant importance for our manufacturers," said Alessandro Zucchi, president of ACIMIT. Embargo to Iran has in fact reset Italian exports towards the country, which until a decade ago was among the main foreign market of Italian builders. In the first half of 2019 the value of the Italian direct export to Iran was equal to €2 million compared to €15 million in the same period of 2018. “Unfortunately, what is happening in Iran testifies how geopolitical tensions can influence heavily the business of a sector," concluded Zucchi. Only two years ago, following the signing of the Iranian nuclear deal, named Joint Comprehensive Plan of Action (JCPOA), Italian exports came to a value of around €45 million. Punto Italia at Irantex is the signal that our entrepreneurs believe in the ending of the embargo and in the resumption of normal commercial relations with the Iranian counterpart." ACIMIT, the association of Italian textile machinery manufacturers, represents an industrial sector that comprises roughly 300 manufacturers (employing around 12,000 people), which produce machinery for an overall worth of around €2.5 billion, of which 84 per cent are exported.

Source: Fibre2Fashion

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Global partnership for Sustainable Development Goals

Messe Frankfurt Texpertise Network has announced commitment to the Sustainable Development Goals in global partnership with the Conscious Fashion Campaign and the United Nations Office for Partnerships to integrate the Sustainable Development Goals into over 50 leading international textiles trade fairs, attracting more than 22,000 companies and over half a million trade visitors annually.

In January 2019 the Sustainable Development Goals were introduced to a Messe Frankfurt event for the first time during the world's leading platform for sustainable fashion, Neonyt, in Berlin as part of Berlin Fashion Week, where the Conscious Fashion Campaign was presented. The initiative, in collaboration with the United Nations Office for Partnerships, engages global industry events to commit to the achievement of the Sustainable Development Goals and champions fashion as an influential sector to address the world’s most pressing issues. The campaign is dedicated to driving change through advocacy, education and engagement of industry stakeholders to create a sustainable future for all. The collaboration continued throughout the July 2019 show edition with the Conscious Fashion Campaign highlighting the Sustainable Development Goals via the engagement of attendees and exhibiting brands, as well as in panel talks on the stage of the Neonyt conference Fashionsustain with representatives from industry and NGOs. “The international fashion and textile industry can have significant influence on the achievement of the Sustainable Development Goals, both in terms of addressing climate change; ensuring environmental protection; promoting circularity; and enabling fair working conditions. Thanks to the more than 50 textile events that Messe Frankfurt organises annually across the globe, together with the Conscious Fashion Campaign, we can reach a broad, professional audience, raise awareness of the goals and galvanise support,” said Robert Skinner, Executive Director of the United Nations Office for Partnerships. Communication facilitator. “The Texpertise Network fulfils a role as a communication facilitator for all our global textile activities. We will gradually start to present the Sustainable Development Goals to this network at our events and encourage them to exchange ideas with one another. We’re very proud to support the Conscious Fashion Campaign and the United Nations Office for Partnerships in the activation and implementation of the goals,” said Detlef Braun, Member of the Executive Board at Messe Frankfurt. The UN Sustainable Development Goals came into force on 1 January 2016 and serve as a blueprint for more sustainable development across the globe. The 17 goals that address global challenges on an economic, social and environmental level are closely interwoven and the aim is to achieve them by 2030. Networking with the industry and communication with various interest groups will play a major role in achieving these goals. Kerry Bannigan, Founder of the Conscious Fashion Campaign, commented: “As a leading global company, Messe Frankfurt’s commitment to the Sustainable Development Goals amplifies our messaging for the fashion and textiles sector to choose economically, socially and environmentally responsible business practices to build a better world. Each Texpertise Network event by 2022 will be encouraging all exhibitors and attendees to take meaningful action.” Heimtextil, the world's biggest and most important trade fair for home and contract textiles that attracts around 3,000 exhibitors and expects 65,000 trade visitors from 7-10 January 2020, will be the next stop on the tour to present the Sustainable Development Goals. Here, goals will be presented and discussed at an interactive stand in the Green Village as well as in the form of panel discussions. The Sustainable Development Goals will also be integrated into the Green Directory for the first time. For the past 10 years, this index has listed sustainably producing companies at Heimtextil. In 2020, the Green Directory will comprise a record 262 entries. The Sustainable Development Goals will gradually be visibly presented at other trade fairs in the Texpertise Network portfolio. The next event directly after Heimtextil is Neonyt, which takes place once again during Berlin Fashion Week, from 14-16 January 2020.

Source: Innovation in Textiles

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UK: The secret to exporting: make it a priority

Yorkshire-based membrane technology firm ITP has become globally renowned by being both outward-looking and capitalising on its Britishness. For Yorkshire-based Industrial Textiles and Plastics (ITP), exports have been the key to success. Richard Menage, who is now the chairman of the company, set up the business 30 years ago selling industrial sheeting made in the Netherlands into the UK. ITP quickly developed from an importer into an innovative company that exports more than a third of its unique products worldwide. The business provides specialised, hi-tech membranes for use in everything from the Portsmouth-based Mary Rose Museum to the world’s largest night souk in Dubai. “Exporting has been key to our DNA,” says Mr Menage. “To make export work, it has to be part of your strategy – it won’t work if you do it on the side. We decided to make exports part of our core business, and this has been very successful.” Together with chief executive Marc van der Voort, who joined the company from its former Netherlands supplier, the company moved into the design and manufacture of high-value safety materials. “The sort of things we produce now are centred around two core technologies,” Mr van der Voort explains. “One is chemical resistance and the other flame retardancy.”

ITP membranes protect buildings from harmful gases and chemicals on brownfield sites, while exterior wall membranes and sheeting help ensure the safety of residential blocks, oil refineries and building sites with scaffolding. After the Grenfell Tower fire in June 2017, ITP demonstrated the importance of moving to technology that protects buildings by controlling the spread of fire, talking to its own customers as well as the standards specifiers studying the implications of the Grenfell fire. The stringency of British safety standards makes ITP’s products popular in many countries. “The UK is at the forefront in flame-retardant standards for all products,” says Mr van der Voort, explaining that this makes the company’s products attractive worldwide. “We have very good-quality standards here and are very safety-conscious.” ITP’s first international partnership was in Sweden, which Mr Menage says was chosen because of its similar climate, high safety standards and developed status. “We first made inroads into the petrochemical sector and that led to calls for other products.” Mr Menage stresses the importance of changing your approach for each market: “There are different routes in different countries – you have to know the market and the legislation,” he says. “I’d advise those who want to export to visit the region, learn the local habits, culture, way of working and relevant standards. Try to speak the language and don’t expect quick results – it may take more than a year to get orders.” The company remains family-owned, with a base in Easingwold, Yorkshire, which Mr Menage describes as “out in the sticks”. Despite this, there are eight languages spoken in the office and he adds that the global outlook is as useful as the local identity. “Most people who work here are local, and we have good staff retention. We are very well trained and skilled in what we do. But in terms of promoting ourselves, it is not the fact that we are from Yorkshire but the technical innovation that triumphs.”

There are different routes in different countries – you have to know the market and the legislationRichard Menage, chairman, ITP. The company moved its banking to HSBC 10 years ago and says that the bank’s global outlook has helped with the export strategy. “It is all over the world – it’s all geared to up to be quite seamless and online, and so it’s so much easier,” says Mr van der Voort. “HSBC has also helped us with our Brexit preparation and advice on currency rates. Having a good relationship manager can make all the difference, and we have been very fortunate with HSBC: the ones we’ve had are fantastic and there’s been real continuity.” ITP’s future prospects rely on more innovation and export. “There’s always new markets and new counties and new market sectors,” Mr Menage says. “We’re always looking for ways to transfer our technology from one market to another as well.” HSBC has joined forces with Telegraph Spark to share all the expert guidance and advice your business needs to break into global exporting. Securing finance, emerging markets to consider, defining a route to market - it’s all here

Source: The Telegraph

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