Smriti Zubin Irani said there is a need to diversify our established opportunities instead of leaving the space for one Export Promotion Council (EPC) or one segment. Union Minister of Textiles and WCD, Smriti Zubin Irani has said that time has come to focus on the Micro, Small and Medium Enterprises (MSMEs). Speaking at a symposium on Emerging Opportunities for Indian Textiles and Crafts held in New Delhi, she said that the Textiles Ministry will get in touch with small scale manufacturers, who are meeting exports compliances, meeting delivery schedules and support them with finance, legislation, certification, quality control programs, and R&D to make them leaders in their respective sphere. Smriti Zubin Irani said there is a need to diversify our established opportunities instead of leaving the space for one Export Promotion Council (EPC) or one segment. She stressed on augmenting domestic capabilities. She further said that the industry should resolve to ensure that India is not a nation of job workers but a leader in the textile sector. The Textiles Minister also said that her Ministry always worked extra mile for every issue highlighted by the industry. Observing that India has been satisfied with just 10 big textiles companies for long, the Minister said that the time has come now for 100 new companies to spring up. The Minister appealed to the textiles industry to fulfill the intention behind the Prime Minister's announcement on anti-dumping duty on PTA and National Mission on Technical Textiles. Smriti Zubin Irani also asked the industry to meet the requirements of Jal Jivan Mission and farmers, apart from focusing on exports. In his keynote address, Secretary Textiles, Ravi Capoor said that the global economy is passing through a critical juncture and India should step into and seize the big opportunity. Referring to the Government's decision on the MMF (man-made fiber) sector, he said it is a bold decision that opens up huge opportunities. He said that the industry should add up to its capacity and occupy the space vacated by China. China vacated USD 20 billion dollar apparel space in the last 3 years and most of this was in the MMF sector. The Textiles Secretary said that the Technical Textile is one of the high growth potential areas where expertise needs to be developed. National Mission on Technical Textile will help provide the requisite support to the manufacturing sector to make globally competitive. The symposium was attended by senior officers of the Ministries of Commerce & Industry and Textiles, representatives of EPCs, buying offices and buying agents.
Source: Dev Discourse
The government on Wednesday said the domestic industry should take advantage of the huge $20-billion space vacated in the global apparel market especially in the man made fibre (MMF), by China, which is going through a tough time following the outbreak of the deadly coronavirus. “China vacated $20 billion dollar apparel space in the last 3 years and most of this was in the MMF sector,” textiles ministry said in a release. As per the statement, technical textile is one of the high growth potential areas where expertise needs to be developed. “National Mission on Technical Textile will help provide the requisite support to the manufacturing sector to make globally competitive,” it said. Addressing a symposium on emerging opportunities for Indian textiles organised by the Export Promotion Council for Handicrafts, Textiles Secretary Ravi Capoor said domestic textile exports have plateaued during the past 5-7 years, which is a “very worrying proposition for the government”. “India should step in at this stage to take the advantage although not a good way to project ourselves but every crisis has its own silver lining and I think while we are with China with all our emotions and financial, political and diplomatic help but still there appears to be a big economic opportunity which is coming up our way,” he said. He also said it would be the right time to bring the industry together and have a small dialogue to “see how the industry associations are prepared for this opportunity”. On the issue of plateauing exports, he said the government understood that one of the major issues is that “take up the space that has been vacated by China other than this present crisis (coronavirus)”.
Source: Economic Times
US President says he will save it for later on; New Delhi maintains it has to be a ‘win-win’. A trade deal between India and the US will not be sealed during US President Donald Trump’s visit to India next week, both the countries have confirmed. While Trump said that he was saving the big trade deal with India for later on and was not sure if it would happen before the US elections, Indian officials on Wednesday said that New Delhi did not want to rush into a deal. “Well, we can have a trade deal with India, but I’m really saving the big deal for later on. We’re doing a very big trade deal with India. We’ll have it. I don’t know if it’ll be done before the election, but we’ll have a very big deal with India,” Trump said, answering questions from the media before taking off for a four-day trip to the West Coast on Tuesday. The US Presidential election is scheduled in November this year. India will enter into a new trade deal only after weighing all the pros and cons as it is still suffering the consequences of the free trade pacts signed in 2010-11, a government official said. “We want to look into the future and work on a win-win situation with no compromises as many decisions have an impact on people’s lives,” he said.
The wish-list
The US has a big wish-list for the proposed trade pact. The list includes no price caps on medical equipment; greater market access for dairy products; zero import duties on mobile phones, motor bikes and high-end IT products; and lower tariffs on farm goods. India, on the other hand, wants full restoration of the Generalised System of Preferences (GSP) benefits for its exporters, greater export of agriculture produce and a roll-back of penal duties on its steel and aluminium. Trump said that though his country had not been treated well by India, he was very excited about his visit. “We’re not treated very well by India, but I happen to like Prime Minister Modi a lot. And he told me we’ll have 7 million people between the airport and the event. And the stadium, I understand, is sort of semi under construction, but it’s going to be the largest stadium in the world. So it’s going to be very exciting,” Trump said.
Source: The Hindu Business Line
The jump in core imports and PMI data suggests some signs of a pickup in domestic activity in January, although it could also be inventory restocking. India’s merchandise trade deficit widened unexpectedly to a seven-month high of $15.2 bn vs $11.3 bn in December (see graphic), above expectations (Consensus: $11 bn, Nomura: $9.7 bn). Much of the spike was due to import growth outperformance, which improved to -0.8% year-on-year (y-o-y) in January vs -8.8% in December (Nomura: -12%). Oil import growth rose to 15.3% y-o-y vs -0.8% in December, partly reflecting the low base, but also possibly due to the lagged effects of higher oil prices in Q4 2019. Core import (imports ex-oil, gold) growth also improved to -4.7% y-o-y vs -12.2% in December, signalling incrementally stronger demand conditions in January. Our price-volume analysis also showed a smaller contraction in core import volumes (-8.4% y-o-y, 3-mma vs -10.1% in December) and prices Within imports, there was an improvement in consumer goods’ growth (though still in contractionary territory), and stable growth in agricommodities, and a sharp turnaround in non-agri commodities (driven by higher oil import growth). By contrast, contraction in investment goods’ imports deepened in January. Exports contracted by 1.7% y-o-y in January vs -1.6% in December, below expectations (Nomura: 1.5%). Our price-volume analysis shows that core export (non-oil) volumes contracted by 2.7% y-o-y (3-mma basis) in January vs -2.8% in December, and price pressures also eased (2.3% vs 3.9% in December). The jump in core imports and PMI data suggests some signs of a pickup in domestic activity in January, although it could also be inventory restocking. Given the continued slump in investment goods’ import growth, and the continued contraction in consumer goods, it is too early to conclude that the improvement in imports is due to durable domestic demand. Disappointing export growth shows that India was clearly not benefiting from the export stabilisation witnessed in the rest of Asia before the COVID-19 outbreak—possibly because it was more tech-oriented. The weak rupee has also not helped revive export growth much. We remain cautious on the export and import outlook, especially given the virus outbreak, though the full impact may not be reflected in the February data. In the case of imports, we foresee negative supply-side shocks from China, which accounts for ~14% of India’s imports, and affects imports of electrical machinery & equipment, nuclear reactors & boilers, organic chemicals, plastic articles, and fertilisers. The sharp correction in oil prices should also slowly begin reflecting in the import growth statistics. As for exports, while China accounts for relatively smaller proportion of the demand for Indian goods, the overall global growth risks will weigh on export growth. On balance, we envisage a smaller trade deficit in the coming months due to expectations of a sharper fall in import growth vs export growth. Edited excerpts from Nomura’s First Insights (February 14, 2020). Authors are Research Analysts, Asia Economics, Nomura.
Source: Financial Express
Zilingo has enabled 60,000 businesses to digitise factory operations using Big Data and analytics. Founded by Dhruv Kapoor and Ankiti Bose, B2B fashion tech startup Zilingo Technologies has used the growing mobile and data penetration to envision a technology platform for SMEs. Using technology, it has been able to broaden the sourcing base for fashion-lifestyle companies, and enable financing where banks and NBFCs were not ready to finance these businesses, and to provide additional services using data in the form of intelligence and analytics. Currently, Zilingo connects 60,000 businesses and 6000 factories globally, with nearly 50 factories from India and a collective merchant count of over 50,000. Valued at $970 million, it has raised $308 million till date with Series D funding from Temasek, Sequoia Capital and Singapore Investment Fund and EDBI. “As we started we had the option of integrating with third party technology, but our fundamental aim was to build a long term business and so it made sense for us to build our own proprietary tech infrastructure,” says Kapoor. Zilingo targeted South East Asian markets to start with. “South East Asia had a massive middle class population, almost half a billion people and a high GDP per capita. They were also ahead in terms of mobile connectivity. There was also a large number of small and medium business owners,” says Kapoor. However, there were not enough people building technology to tap the potential of this demography and talent. Eventually, what started in Thailand is now spread across Singapore, Bangkok, Manila, Jakarta, Vietnam, Bangalore, Mumbai, Sydney, New York, Los Angeles and San Francisco. “All the things that big global brands take lightly were not accessible to SMBs. Given that, we addressed the consumer side first with a B2C platform. When we saw growth, we also went to the B2B side,” says Kapoor. Six months after stepping into the B2B side, it realised that the majority of the company’s growth came from solving the problems faced by factory owners, small business owners and the raw material providers. The B2B platform lets raw material providers sell to factories, factories to sell to wholesale distributors and they in turn to the retailer. Zilingo gets a margin of 10-30% on commission basis on each sale from both its B2B and B2C platforms combined. “This platform is augmented by key capabilities like logistics integration, digital payments and financing,” explains Kapoor. “We then set up offices in the USA and Europe, to enable discovery for the end brands.” The growth also led to the acquisition of Colombo-based SaaS startup Ncinga by Zilingo. “In the middle of 2019, we crossed $100 million monthly sales mark through our platforms and at the same time we were embedding deeper with factory and fabric mills,” tells Kapoor. “Ncinga’s technology helps factory owners manage throughput, efficiency and defects. Ncinga has made this complex process simple by using a bunch of tablets in the start, middle and the end of production lines,” explains Kapoor. This allows line managers to enter throughput, find defects and restructure styles as needed. The data collected from these lines is processed using Ncinga’s software. Zilingo today integrates this technology in its series of solutions. “As we scale Ncinga, we can use the insights to help factories get better financing,” tells Kapoor. Going forward, Kapoor expects IoT sensors to better Ncinga’s technology. He envisions Zilingo to solve all the problems from the time a raw material is produced till the time an end brand sells the final product, and not just become another e-commerce entity in the future. “We have constantly found that building a B2B platform is much harder than building a B2C platform,” says Kapoor, talking about the challenges ahead.
Source: Financial Express
The coronavirus outbreak will have a limited impact on India but the global GDP and trade will definitely get affected due to the large size of the Chinese economy, RBI Governor Shaktikanta Das has said. Only a couple of sectors in India are likely to see some disruptions but alternatives are being explored to overcome those issues, he said. The deadly virus has brought a large part of the world's second-largest economy China to a standstill and its impact has been felt across industries. India's pharmaceutical and electronic manufacturing sectors are dependent on China for inputs and they may be impacted, Das told PTI in an interview here. "It is definitely an issue which needs to be closely monitored by every policymaker whether in India or any other country. Every policymaker, every monetary authority needs to keep a very close watch. So coronavirus issue needs to be closely watched," he said. A similar problem, perhaps on a lower scale, occurred last time during the outbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, he said adding that the Chinese economy had slowed down by about 1 per cent during that time. At the time of SARS outbreak, China was the sixth-largest economy and accounted for only 4.2 per cent of the world's GDP. While, the Asian giant is now the world's second-largest economy, accounting for 16.3 per cent of the global GDP, therefore, any slowdown in the Chinese economy would impact the global economy. The RBI governor said that the coronavirus outbreak appears to be larger than SARS and this time China's share in world GDP and world trade is much higher. "So, the coronavirus will definitely have an impact on the global GDP and global trade," he said adding that every major economy today will have to be very careful and must monitor the situation closely. For India, China is an important trading partner and policymakers both in the government and the monetary authority "are very watchful of the developments that are taking place," he said. If the Chinese authorities are able to contain the problem, the impact on the global economy and on India will be minimised, Das said. On the impact on India, he said the pharmaceutical sector is sourcing raw materials from China. "Most of the large pharma companies, according to information that we have, always keep stock for three-four months. So, therefore, they should be able to manage and also those provinces from where these pharma intermediates are sourced have not been impacted by the virus outbreak. Therefore, there is an expectation that the supply of pharma raw materials will be maintained," he said. The other areas where India is dependent on China is mobile handsets, TV sets and certain other electronic products. "There again it is important that our manufacturers are able to develop alternative places of sourcing these raw materials." "So, I think there is evidence that already our manufacturers are discussing with other countries in the Asian region. So, if they are able to quickly access raw materials from these other countries, then to that extent the problem on our manufacturing will be contained," he said. He noted that the critical thing to be watched and monitored now is how quickly Chinese authorities are able to contain the problem. For India, he said, the important aspect is manufacturer should be able to quickly develop alternative sources. India exports iron ore to China and it could be impacted, he said. "But in economics, something negative in one place always works positive elsewhere. So if your iron ore exports are impacted, then perhaps the raw material supply to our local domestic steel manufacturers will be at reduced costs. So their cost of production may go down." Das said Coronavirus is a big human tragedy and the focus has to be on containing this menace. China's GDP has risen dramatically since SARS outbreak in 2003. In 2002, China contributed 23 per cent to the world GDP growth, in 2019 China contributed an estimated 38 per cent of world growth. The 11 Chinese provinces have announced an extended holiday period. Meanwhile, the death toll from the coronavirus epidemic in China crossed the 2,000-mark on Wednesday with the death of 136 more people, while the overall confirmed cases climbed to 74,185, authorities said.
Source: Economic Times
The corporate sector’s wishlist to deal with supply disruption caused by the coronavirus go beyond customs duty cuts and include a reduction in the 14-day quarantine period at the ports, relaxation in labour and environment regulations as well as more credit availability. Sources, however, said the view on an across-the-board supply disruption for the pharma sector may be overstated. For instance, at a meeting of nearly 20 sectors on Tuesday, a Mylan executive told finance minister Nirmala Sitharaman and her team of officials that the international drug major did not depend on China for most of its active pharmaceutical ingredients (APIs) or basic chemicals. A government official said that Indian companies had the capacity to manufacture many of the APIs but were operating at lower capacity as it was cheaper to import them from across the border. At the meeting, the quarantine period as well as the paperwork for goods being shipped into the country was also flagged by many representatives as a concern and there was a suggestion to airlift some of the basic drugs. Some business persons suggested that the quarantine period should be reduced to two days to aid the supply of raw material. There was a recommendation to ensure 24x7 operation at the ports along with a request to ease labour rules so that plants could operate in three shifts, which again means round-theclock operations. Similarly, to ensure that pharma and other chemical manufacturers have flexibility, there was a suggestion to ease environmental rules to expand capacity quickly. And, with the supply of inputs used by pharma, auto, solar and electronics getting impacted due to what threatens to be a pandemic, there were demands for customs duty cuts as prices of goods being shipped from other markets had shot up, a source present in the meeting told TOI. These sectors, businesses representatives said, have been hit the hardest. A Hero MotoCorp representative is learnt to have suggested that some automotive parts could be airlifted from China. While government officials did not respond to the issues raised by industry, a commerce ministry officer indicated at the gathering that DGFT may lift restrictions on protective clothing. There was also a demand from the medical device industry to lift some of the export restrictions.
Source: Times of India
As global GDP estimates are being downgraded by multilateral institutions because of coronavirus, India, too, will have to evaluate the impact on its economy, especially with the country’s high dependence on Chinese imports. China accounted for almost 14% of India’s imports in 2018-19, and an even higher share when one looks at India’s top imports. CII data estimates China accounting for 45% of India’s electronics imports, one-third of machinery imports, and almost two-fifths of organic chemicals. Given the coronavirus outbreak in China, the immediate requirement is to look for alternate sources of these products. Take essential products such as pharmaceuticals where India sources 65-70% of active pharmaceutical ingredients (APIs) from China. While there are enough stocks available for now, a longer disruption may lead to a shortage. This needs to be avoided by either expanding domestic capacity, or importing from alternate sources. As both options will be more expensive, some support from GoI in the form of a loan, subsidy or interest rate subvention would be welcome. China is also a key export market for Indian industry and accounts for 5% of India’s exports. Many firms would suffer revenue losses and MSMEs will need support to diversify to other regions. Key products exported to China include cotton, ores, organic chemicals and frozen fish. Since many of these products are raw materials or intermediate inputs, this may provide an opportunity to encourage higher value addition within the country. Capital support is required for businesses trying to do so, while marketing support is required for exporting the finished product to new markets. A government-industry task force should be set up to create a strategy to handle the situation and avoid industry closures, job losses and price increases. Different strategies may be required to address the challenges in different sectors and a nuanced approach is called for. In a sector such as electronics, where most components are imported, it may be the right time to attract investments so that more components are manufactured locally. The implementation of key industrial parks and logistics hubs must be fast-tracked. On the macroeconomic front, the implication of the virus outbreak will be visible in the short term as slowdown in growth and hike in prices. At a time when a revival in growth is expected, a recalibration of such expectations may be required. Supply disruptions and price increases may lead to some setback in the next couple of quarters. However, with government and industry putting together the right strategy for risk mitigation, a revival in the near to medium term is possible. Some benefits may also accrue on account of the likely moderation in the price of crude oil and other commodities, as China demand remains soft. With a number of factors impacting the demand-supply scenario across sectors, the macroeconomic picture will become difficult to anticipate. Prices of many items may rise due to shortfall in supply from China. RBI will need to look through the short term price disruptions while setting monetary policy. GoI needs to roll back some of the duty increases it had announced in the budget. The intention had been to encourage domestic manufacturing. But with possible price increase, this would only add to the cost of production within the country and is best avoided. In fact, reimbursement of state levies to exporters, as promised by GoI, must be expedited. As normalcy returns to China, a situation will emerge where Chinese producers will try to liquidate their inventories at a low cost. The government-industry task force must be alive to such developments and advise strategies such as quality standards be imposed on such imports. A comprehensive set of measures for the near to medium term needs to be formulated to combat the impact of the coronavirus. GoI and RBI must be ready to tweak policies wherever required to help tide over the exigencies created by the virus. Constant monitoring is required for the next few months.
Source: Economic Times
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
935.80 |
USD/Ton |
0% |
2/20/2020 |
|
VSF |
1360.12 |
USD/Ton |
0.21% |
2/20/2020 |
|
ASF |
2007.32 |
USD/Ton |
0% |
2/20/2020 |
|
Polyester POY |
1003.66 |
USD/Ton |
0% |
2/20/2020 |
|
Nylon FDY |
2214.49 |
USD/Ton |
0% |
2/20/2020 |
|
40D Spandex |
4100.37 |
USD/Ton |
0% |
2/20/2020 |
|
Nylon POY |
5357.63 |
USD/Ton |
0% |
2/20/2020 |
|
Acrylic Top 3D |
1250.11 |
USD/Ton |
-0.57% |
2/20/2020 |
|
Polyester FDY |
2050.18 |
USD/Ton |
0% |
2/20/2020 |
|
Nylon DTY |
2185.91 |
USD/Ton |
-3.16% |
2/20/2020 |
|
Viscose Long Filament |
1146.53 |
USD/Ton |
0% |
2/20/2020 |
|
Polyester DTY |
2450.22 |
USD/Ton |
0% |
2/20/2020 |
|
30S Spun Rayon Yarn |
2000.18 |
USD/Ton |
0.36% |
2/20/2020 |
|
32S Polyester Yarn |
1614.43 |
USD/Ton |
-0.44% |
2/20/2020 |
|
45S T/C Yarn |
2400.22 |
USD/Ton |
0% |
2/20/2020 |
|
40S Rayon Yarn |
2271.63 |
USD/Ton |
3.25% |
2/20/2020 |
|
T/R Yarn 65/35 32S |
2157.34 |
USD/Ton |
0% |
2/20/2020 |
|
45S Polyester Yarn |
1943.03 |
USD/Ton |
0.74% |
2/20/2020 |
|
T/C Yarn 65/35 32S |
1771.59 |
USD/Ton |
0% |
2/20/2020 |
|
10S Denim Fabric |
1.26 |
USD/Meter |
0% |
2/20/2020 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
2/20/2020 |
|
40S Combed Poplin |
0.97 |
USD/Meter |
0% |
2/20/2020 |
|
30S Rayon Fabric |
0.53 |
USD/Meter |
0% |
2/20/2020 |
|
45S T/C Fabric |
0.67 |
USD/Meter |
0% |
2/20/2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14287 USD dtd. 20/02/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
There is not much you can read from a 2 percent year-on-year growth in exports. The 7MFY20 export numbers are a continuation of the trend that started with FY20. Don't pin your hopes on miraculously achieving the export target this year. Keep hearing the “quality of exports" story from the government? Don't blame them. The export story has indeed been about higher volumes. But how high can the volumes go is the next big question. The major shift within textile export composition came in readymade garments – the volumes of which rose by an average 31 percent year-on-year, for 15 straight months starting October 2018. A 15 percent year-on-year increase in readymade garment exports was the lowest such increase during the period. January 2020 saw readymade garment volume drop by 15 percent year-on-year. Readymade garments volume of 4171 thousand dozen is a 14-month low. This could well be an aberration, but a cursory look at monthly year-on-year changes shows the volumetric growth may well have peaked a couple of months ago. With the high base already in play, even a slight bit of adverse demand trigger in the US and European markets, could spell trouble. Negative volume growth in some of the key, value added textile export categories does not seem too far-fetched. That is where the pricing becomes more important, and that too, does not seem to instill a lot of confidence. The major target market of Pakistan's apparel seems to be struggling, with big players facing multiyear low economic growth scenarios. Volumes alone may not be the answer anymore. What was a double-digit volumetric growth in four textile export categories – has now been restricted to just one on 7MFY20 basis. And if the prices don't go up – forget about double digit export value growth – Pakistan will do well to not report negative growth in textile exports. It remains to be seen if the Covid-19 disrupts China's trade to a larger degree than what it is today. Pakistan does not really boss the game in categories where China has a sizeable export market, even if it leaves some of its market for the taking, for time being. Ambiguity still persists on the treatment if energy input prices for the textile sector. The export report card doe not look like of a country that claims to be building its next wave of sustainable growth on exports, and the only credit to-date is a reduction in current account deficit.
Source: Business Recorder
Bangladesh is heavily dependent on the Chinese market for raw material, capital goods imports and substantial exports. Traders in Bangladesh are already feeling the pinch as longer than expected shutdowns of Chinese factories because of the coronavirus (covid-19) outbreak are having a big impact on the world’s second largest economy and the global supply chain. Forcing the closure of many factories in China, Bangladesh businesspeople begin to count the cost following a largely endemic viral disease in Wuhan city of China's Hubei Province that casts its virtually pandemic shadows over the country’s industrial sector. While a few hundred China returnees have been quarantined in a huge camp or hospitals and over a hundred stranded in Wuhan confines, to date, official virologists have declared the country free from covid-19 infection. A first Bangladeshi was reported infected not at home or in China, but in a third country, Singapore. But an account of lost business as is learnt from businesspeople the fallouts from the viral eruption began weighing and may weigh further down economic and development activities in Bangladesh. Bangladesh is heavily dependent on the Chinese market for raw material, capital goods imports and substantial exports. Reports have it that Khulna trader’s count loss of crab and eel export to the locked-down China. Entrepreneurs, especially in the apparel sector, in Dhaka fear raw-material supply-line cut and export disruptions also. The fruits market has also been affected. A ban on crab exports to China amid the covid-19 has left farmers reeling in Bagerhat. The suspension came into effect on January 23, 2020, the peak season for crab sales abroad. According to some farmers, if it continued for even a few more days, it is set to take a heavy toll on the industry. In the three months from December to February, China observed several festivals including the Lunar New Year. During this period Bangladesh provided a huge amount of crabs to China. Bangladesh’s exports make up more than 70 per cent of the crabs in the Chinese market. China stopped importing crabs this year in a bid to stem the outbreak of a new covid-19. But if the ban is not revoked, farmers here will incur heavy financial losses. More than 30 percent of the total crab exports are cultivated in Bagerhat. Full-grown crabs are difficult to preserve in farms for a long period. Analysts say that the supply chain of raw material for the export-centric industries already snapped by the fatal covid-19 epidemic has started hitting Bangladesh's economy. In addition to a disruption to the global supply chain, many other sectors, like computers and electronics, textiles, heavy machinery, shipping, transport, tourism and development project funding, may bear some cascading effects. As the markets are witnessing a substantial rise in prices of goods imported from China, including edible items, traders and consumers in Bangladesh are already feeling the pinch. Moreover, Bangladesh's apparel sector, the US $34 billion industry and the lifeline of the economy, may suffer badly for the outbreak of the virus. The supply chain of raw materials for the sector might be disrupted if it prolonged and spread further. China is the number one trade partner of Bangladesh. China-Bangladesh bilateral trade, as of fiscal year 2018-2019, stood at US $14.48 billion. China-Bangladesh bilateral trade is in favour of China as it has the largest share among the trade between the two countries. As per the Bangladesh Bank data in the fiscal year 2018-2019, Bangladesh imported goods worth US $13.65 billion, while the country exported products of US $831.2 million in the same period. On top of that, over 50 percent of Bangladesh's textile and textile-related goods, including garment accessories, are imported from China. Some economists look for a reverse-side business fortune. In what seen as a blessing in disguise they see a silver lining in the shadows. That is, Ready Made Garment (RMG) order shifts from China to other apparel exporters like Bangladesh which is second only to the economic superpower China in terms of global clothing business. But development project funding and works in mega infrastructure projects where many Chinese workmen work risk a slowdown. In addition, about 40 percent of capital machinery and spare parts for the textile and garment industry come from China. In the bilateral trade, there is already a temporary impact as the communication between the two countries is reduced, so the movement of goods also. Moreover, as there are closures in stores and factories over the fear of virus spread, the supply chain of industrial materials, especially apparel, leather and other manufacturing sectors, will see the gap. Bangladesh’s textile and apparel sector is highly dependent on China. If the supply chain does not work properly it can be a disaster with a delay in shipment. Some factories are already struggling to run properly. As the supply of goods may fall due to disruption in the supply chain, the business of every need will likely to hit. Moreover, the government of Bangladesh is implementing 10 fast-track projects, half of those being progressed by the Chinese funds and technical assistance. Including the much-hyped Padma Bridge, over 13,000 Chinese citizens like engineers, geologists, and technical officials are involved with these projects. If the covid-19 outbreak remained uncontrolled, it is feared that implementation of the projects might get slowed down thus pushing up the project costs. Road Transport and Bridges Ministry told recently that the construction of Padma Bridge work could be delayed if the covid-19 situation does not improve in two months. They are also tasked, other than the fast-track projects, with some other development projects including the four-lane expressway of Dhaka Bypass Road. Half of the Chinese people, most importantly, are engaged in the major development projects like the Padma Bridge, Padma Rail Link, Payra Thermal Power Plant, Chittagong-Cox's Bazar Rail Line, Karnaphuli Tunnel and Dhaka Bypass Expressway. The rest are mainly employed in the apparel sector, local government and urban development programmes. As a number of workers are stuck in China, the outbreak will take a heavy toll on the implementation of mega-projects. On the other side, the local traders of daily necessities are also feeling the pinch of covid-19 outbreak. The fruits market in Bangladesh has already been affected. It is apprehended that there is a risk of the local market being badly affected if the covid-19 problem in China persists for long. However, government sources said that it is too early to say anything in this regard. There will be no problem if the import of onion is halted from China given the amount of onion being imported at present. Onion is being imported from Myanmar, Turkey, Egypt and Pakistan. However, the government is keeping an eye on alternative markets to China to keep the price of ginger, garlic and other products under control. Nevertheless, the overall Bangladesh economy that relies heavily on China for import-exports trade of diverse types of commodities and development expertise is going to be hard hit if the calamity that engulfed China is going to last long. The writer is a retired Professor of Economics and Vice Principal at Cumilla Women’s Government College, Cumilla.
Source: The Independent
Textile mills need to calculate more than the immediate benefits, says Sivakumar Narayanan, Executive Vice President at Uster Technologies. “When market demand is relatively low, textile mills have to perform a balancing act, involving many delicate choices. The deployment of capital and management of personnel levels are critical, not only to current profitability but also to long-term business success when an upturn arrives. When the going gets tough, customers become more demanding, especially regarding quality and value for money, making markets ever more competitive for suppliers,” Mr Narayanan says. “At such times, investment decisions might tend to focus on quality improvement as a key criterion. But there is often a temptation to snatch at a narrow range of perceived benefits, for instant gains: technology upgrades, extra features and, of course, capital costs/discounts. Purchasing choices can become bogged down in these details, ignoring the wider view of clearly defined quality advantages and the vital aspect of ongoing operational costs.”
Counting the cost
According to Uster, a striking example can be found in the case of a potential investment in new yarn clearing equipment. “Here, practical calculations show that a typical winding installation with 500 positions can generate operating costs of over USD 3.5 million over a 10-year period. This is a conservative estimate, based on the cost of splices – several millions of them – over this timescale, needed because of unacceptable yarn faults and bobbin changes when quality monitoring is not adequately controlled,” the company explains. “It means that the initial capital investment can actually be dwarfed by these running costs: capital expenditure on the yarn clearers would turn out to be only a small fraction of the total lifetime spend. In fact, making prudent choices can result in the mill saving up to a million dollars over this time, depending on yarn type, quality and production conditions.” “Of course, it’s all too easy in a difficult trading environment, to seize an apparent bargain in terms of initial investment cost, especially where there’s a product upgrade promising a quick fix for a current problem. Not all investors take this short-term view, but those which do will often have some unpleasant surprises when starting to use their equipment.”
The bigger picture
Uster urges manufacturers to try to see the bigger picture: “A profitable investment – as a general principle – should always focus on operational costs and savings opportunities as part of the essential ‘bigger picture’. Evaluation of investments should factor in the differences in operational costs between competing choices, instead of focusing too much on what will likely be quite small differences in the initial capital cost,” Uster says. “Decision-makers should evaluate operational costs and capital expenditure as two totally different aspects of a new investment. Proper assessment of operational expenditure requires a closer look. It’s essential to find the real drivers of running costs and take product life-cycle into account, to calculate the savings. This is highly relevant in today’s difficult market environment – but it would be no less important even in better times,” the company concludes.
Source: Innovation in Textiles
Sweden-based fashion retailer H&M said it will make an evaluation over the business impact of the European Commission’s (EC) recommendation to partially withdraw Cambodia’s Everything but Arms (EBA) tariff benefits. The EC announced last week it wanted the European Union parliament to remove 20 percent of the Kingdom’s EBA trade status, over serious human and labour rights violations. In its statement, EC said the recommended partial withdrawal will specifically affect selected garment and footwear products and all travel goods and sugar; amounting to one-fifth of Cambodia’s yearly exports to the bloc, estimated at a cut of $1.1 billion. “H&M Group wants to continue to play a part in developing Cambodia in a positive way, including reducing poverty and strengthening human rights,” it said. “However, because of a lack of adequate initiatives in developing the Cambodian textile industry and a partial withdrawal of the EBA privileges we will now further evaluate how the EU’s decision will affect our business and production strategy in Cambodia.” The company sources goods from factories in the Kingdom employing about 77,000 workers, claiming it has been driving different social programmes on the ground to improve the livelihoods and working conditions of garment workers in Cambodia, where the firm placed its first orders in the 1990s. “Cambodia is an important production market for H&M Group,” it added, pointing out that the partial withdrawal of the EBA deal will have a negative effect on the employment of people in the textile industry. The firm said the textile industry employs around 1,000,000 people and is a key driver of the country’s economy. Without an EBA deal, the company said it will be difficult for Cambodia to create the necessary transformation of its textile industry and it will be tough for it to create a modern and competitive industry. “It will negatively affect future investments,” it noted. In addition to the statement, a Bangladesh-based newspaper quoting David Savman, head of production at H&M, saying the company would do less business in Cambodia if the trade benefits ended and he named China and Indonesia as optional sourcing countries. Last May, a group of international businesses in the garment industry – includeing Nike, Adidas, and Levi Strauss – sent a letter to Prime Minister Hun Sen pleading with his government to listen to the concerns of the European Union regarding “labour and human rights setbacks” in the country. “We are concerned that the labour and human rights situation in Cambodia is posing a risk to trade preferences for Cambodia,” they said in the letter. The letter said the group’s work with suppliers in Cambodia contributed to the $9.5 billion in garment, footwear and travel goods exported from Cambodia in 2018.
Source: Khmer Times
The still-evolving coronavirus outbreak has already disrupted trade and economic performance both regionally and globally. Perhaps the most insidious impact of the virus stems from China’s pre-eminent position as a producer of intermediary products that feed into global supply chains. China accounts for almost one-fifth of world manufacturing and Chinese intermediary products are predominant in the electronics, car, machinery and textile sectors. Subtracting Chinese inputs from these supply chains will, in some instances, cause production to grind to a halt, as has been the case for Hyundai Motor in South Korea. In other instances, alternative or workaround solutions will be found but they will be, by definition, suboptimal and more expensive. This will embed higher costs throughout the supply chains and could ultimately result in higher inflation. The picture is no less grim for countries which supply intermediary products to China’s shut factories. The two economies most affected are Taiwan and South Korea; their top export to China is the electronic integrated circuit, which accounts for 5 per cent of Taiwan’s gross domestic product and 2 per cent of South Korea’s. Aside from affecting the flow of goods across borders, the virus has been highly disruptive in less obvious ways. At Australian universities – and in surrounding communities – which are heavily dependent on full-tuition Chinese students, travel restrictions are preventing the retur n of the students. And Chinese tourists in countries such as Thailand (where Chinese tourism accounts for 2.7 per cent of GDP) have slowed to a trickle. The most important long-term consequence of the coronavirus, however, might be its impact on the already faltering confidence in trade. Before this, businesses and government had tremendous confidence in trade, in its ability to deliver mutual benefits, and in the ability of the multilateral trade system to reduce trade barriers, resolve conflict and inculcate a sense of stability and trade fairness. This confidence allowed trade to grow at roughly twice the rate of global GDP growth for most of the post-war era and led to steadily deeper economic integration. In recent years, however, this confidence in the benefits of trade and integration has suffered several body blows. As a result, we seem to be inching towards a tipping point in which the conventional wisdom begins to reverse and the risks of deepening integration and trade are judged to possibly outweigh the benefits. This did not happen overnight or was precipitated by a single development. It has been the gradual accumulation of several factors of which the coronavirus is only the most recent – but which threatens to be the straw that broke the camel’s back. Consider what immediately preceded the coronavirus. Global steel and aluminium tariffs imposed by the United States in 2018 were a shock to the global trade system and produced almost immediate in-kind retaliation. The gradually escalating US-China trade war began to ramp up later that year, taking the average US tariff on Chinese imports from 3 per cent at the onset to almost 20 per cent now. China’s exports to the US dropped 12.5 per cent last year, while China’s imports from the United States plunged 20.9 per cent in 2019 from a year earlier, according to data from China’s General Administration of Customs. The US continues to weigh other substantial trade actions that will surely beget commensurate retaliation. Given all this, it is perhaps unsurprising that, last year, global trade suffered its worst performance ever outside a recession, growing by only 1 per cent. These bilateral trade tensions and disputes are unfolding as the multilateral trade system is, to a large degree, simply breaking down. In the quarter-century of its existence, the World Trade Organisation has failed to conclude even a single round of multilateral trade negotiations and its dispute settlement function has been derailed by an impasse over appellate judges. Meanwhile, technological advances ranging from automation to artificial intelligence and additive printing are weakening the economic rationale for maintaining far-flung supply chains. As automation increases, the importance of wage differentials decreases. As the capabilities of additive printing advance, so does the ability of companies to keep operations onshore. As tariff walls grow, the cost associated with moving products across borders also grow. In these cases, the benefits of trade are waning, while the downsides mount. As if these developments were not concerning enough, the coronavirus has added a layer of trade-dampening implications. The painful experience of the epidemic is unlikely to be quickly forgotten by corporate risk managers or government officials pursuing greater national economic resilience. Also, the trade landscape has become more like a battlefield and technology is eroding the underlying economic rationale for trade. Ultimately, our age might come to be seen as the beginning of a new trade epoch as consequential as the post-war founding of our multilateral trade system. In a sense, the seven-decade-long “honeymoon for trade” — in which a rock-solid belief in trade’s benefits underpinned a steadily deepening trade and economic integration – might be coming to an end.
Source: SCMP
In recent years, the global trade of curtains has been rising with high growth rate. Total trade grew 10.14 per cent from 2016 to 2018, according to data from TexPro. The global trade of curtains was $8,146.26 million in 2016, which increased to $8,972.63 million in 2018. The total trade of curtains has risen by 5.29 per cent in 2018 over the previous year. Further it is anticipated that the total trade will reach $10,372.09 million in 2021 with a CAGR of 4.95 per cent from 2018, according to Fibre2Fashion's market analysis tool TexPro. The global export of curtains was $4,264.60 million in 2016, which increased by 10.38 per cent to $4,707.27 million in 2018. Total exports moved up by 4.31 per cent in 2018 over the previous year and is expected to reach $5,458.92 million in 2021 with a CAGR of 5.06 per cent from 2018. The global import value of curtains was $3,881.67 million in 2016, which increased by 9.88 per cent to $4,265.36 million in 2018. Total imports surged by 6.39 per cent in 2018 over the previous year and is expected to reach $4,913.18 million in 2021 with a CAGR of 4.83 per cent from 2018. China ($2,440.47 million), Mexico ($389.45 million) and Germany ($284.10 million) were the key exporters of curtains across the globe in 2018, together comprising 66.15 per cent of total export. These were followed by Poland ($201.71 million), US ($135.46 million) and India ($124.15 million). From 2013 to 2018, the most notable rate of growth in terms of export value, amongst the main exporting countries, was attained by Mexico (113.36 per cent) and China (5.71 per cent). US ($1,390.19 million), Germany ($484.80 million), Japan ($231.59 million) and France ($228.00 million) were the key importers of curtains across the globe in 2018, together comprising 54.73 per cent of total import. These were followed by UK ($217.63 million), Netherlands ($183.46 million), Canada ($139.16 million) and Australia ($91.83 million). From 2013 to 2018, the most notable rate of growth in terms of export volume, amongst the main importing countries, was attained by the US (22.62 per cent) and Germany (7.86 per cent).
Source: Fibre2Fashion
A multi-stakeholder event titled ‘EU-Bangladesh Apparel Trade: A Time for a Reality Check’ was held at the European Parliament in Brussels on 5 February. Tomas Zdechovsky, Member of the European Parliament of the European People’s Party (MEP) in cooperation with the Bangladesh Embassy in Brussels hosted the program. EU-Bangladesh-Apparel-Trade-A-Time-Reality-CheckFigure: State Minister for Foreign Affairs Md Shahriar Alam speaking at a multi-stakeholder event titled “EU-Bangladesh Apparel Trade: A Time for a Reality Check” held at the European Parliament in Brussels recently. Tomas Zdechovsky has taken initiative to create a platform to discuss the current state of the European Union-Bangladesh garment trade with his ability as a member of the International Trade Committee of the European Parliament (INTA) as a representative of the South Asian Council (DSAS). Bangladesh is the second largest of readymade garment (RMG) manufacturer after China and the latest exported value of Bangladesh RMG is $19.06 billion from July-Jan FY19-20 more than 84% of total overseas sales. Since the Rana Plaza incident at Savar in 2013 Bangladesh RMG worked on the safety issue and drew global attention attaining 280 LEED-certified factories by now. Former BGMEA President and Advisory Committee member of the Commerce Minister of Bangladesh Shafiul Islam Mohiuddin addressed some of the issues raised later on subcontracting, the fire safety standard and the Rana Plaza tragedy. Later on, State Minister Shahriar Alam said that the sea change in Bangladesh’s RMG industry over the past seven years, especially as a result of the concerted efforts of many dedicated actors and Prime Minister Sheikh Hasina envisioned a Bangladesh where prosperity and social justice coexist in a prosperous economy and our social partners work together to manage industrial relations in harmony. He called on Brussels stakeholders to help set a positive agenda for EU-Bangladesh trade relations beyond ‘disseminating relentless misinformation by some malls’. Bangladesh Power Development Board (BPDB) has proposed to raise the bulk tariff of electricity by 23.28% from this year and the minimum wage increased 51 percent by now. In this current situation, Bangladesh RMG must highlight the fair price of products to sustain the RMG industry. The former BGMEA Chief highlighted the industry’s leadership in promoting sustainability and called for ‘green prices’ for green factories. He invited further investment and partnerships with the EU for higher value-added items, including man-made fiber. During the panel discussion at the event, the President of BGMEA Rubana Huq said that labor narratives about Bangladesh need to be changed now. Bangladesh’s RMG industry is open to partnership and there is nothing to hide as far as workers’ protection and remedies are concerned. She addressed with facts and figures a host of issues raised by other panelists and discussants concerning the last leg of remediation measures by a number of non-exporting factories, the possible changes to the National Building Code that encompasses industries beyond the RMG sector, and legislative compliance with ILO standards. She spoke of the many innovative steps taken by BGMEA to promote the welfare, financial inclusion and family support of RMG staff. She emphasized that she had not received any reports of harassment or discrimination against workers while she was in office for the past ten months. Dan Rees, Director of Better Work Program (a flagship program of the International Labor Organization) acknowledged the progress made in the RMG industry in Bangladesh. He has calculated some of the gaps in labor law on export processing zones (EPZs) and trade union activities in the dispute resolution system. Dan Rees praised the openness to partner with industry and other stakeholders through the recently launched RMG Sustainability Council. Bangladesh’s Ambassador to Brussels, Mohammad Shahdat Hossain, has restored the government’s commitment to engage in this national free dialogue to mislead the industry. He suggested including Bangladeshi labor representatives on similar occasions in the future. Maximilian Krah, MEP of Identity and Democracy Group and INTA Reporter in South Asia praised Bangladesh’s recent economic growth performance and its contribution to the clothing sector. The German MEP has assured the European Parliament’s assistance in addressing the remaining challenges of the industry and facilitating a smooth transition from LDC status to Bangladesh. He cited the growing import of machinery and other materials from EU member states as an example of additional benefits to the EU from the growth of Bangladesh’s RMG industry. Michael H. Poster, a professor at New York University’s Start School of Business, emphasized the need to examine the role of international business rather than creating ‘exaggerated pressure’ on source countries’ factoring in policing mode. Several audience members echoed his sentiment and emphasized the need to promote an incentive-based approach under EU GSP regulations. Representatives from the International Trade Union Federation (ITUC) and Amphora also participated in the discussion.
Source: Textile Today
