Aftermath of outbreak of the Coronavirus disease (COVID-19) that was first reported from Wuhan China on 31 December 2019 global trade scenario has witnessed real disruptions. The World Economic Forum sees huge economic damage due to the COVID-19 around the world because businesses are dealing with loss of revenue and disrupted supply chains due to China’s factory shutdowns tens of millions of people remaining in isolation in dozens of cities and other countries extending travel restrictions. In view of the prevailing global situation specially in the supply chain pertaining to Manmade fibre textile segment Mr. Ronak Rughani Chairman Synthetic & Rayon Textiles Export Promotion Council (SRTEPC) fast stepped in with acute observations and assessments on potential tariff lines wherein Indian companies need to focus on. SRTEPC Chairman says that outbreak of the COVID-19 in Wuhan China throws up opportunities as well as challenges as China holds a major stake in the global trade and now the entire global supply chain has been impacted. Mr. Rughani mentioned that in line with the Government’s effort to fill up the emerging gaps in the global supply chains the Synthetic and Rayon Textiles Export Promotion Council has also been making efforts to fill up the due share globally in the Manmade fibre textiles segment. Citing an assessment made by SRTEPC on global exports of MMF textiles by China and India Mr. Rughani informed that the leading five markets for Chinese MMF textiles alone viz. USA Vietnam Bangladesh Brazil and Turkey cater to more than double of India’s present total exports of MMF textiles to the entire world in value terms. SRTEPC has prepared a segment-wise list of five most potential product lines for top five markets to focus on. Regarding the emerging gaps in the major MMF textile consuming markets SRTEPC made a detailed Power Point Presentation before the Minister of Textiles Ms. Smriti Zubin Irani and Secretary (Textiles) Mr. Ravi Capoor wherein the market-wise focused list of items were highlighted. The main segments being highlighted by the Council to focus on are Made-ups for USA Knitted & Woven Fabrics for Vietnam and Bangladesh Knitted & Woven Fabrics and Filaments for Brazil and Filaments & Spun Yarns for Turkey. The targeted tariff lines in the Made-ups segment are Blankets Curtains & interior blinds Tarpaulins awnings & sunblinds Shawls scarves mufflers mantillas veils etc. Flexible intermediate bulk containers etc. In the Knitted fabrics segment the tariff lines are Pile fabrics dyed fabrics etc. In the Woven fabrics segment the tariff lines are Printed plain weave fabrics polyester staple fibre 85% + cotton wt.1 70g/ m2 dyed woven fabrics 85% artificial fibres Dyed 3 or 4-thread twill polyester staple fib85% +cottn wt.170g/m2 etc. In the Filaments segment the tariff lines are polyester partially oriented untwist or twist50turns/m Other yarn of polyester untwist or twist 50 turns/m not for retail sale Other yarn of polyesters single twist 50 turns/m not for retail sale etc. In the Spun Yarn segment the tariff lines are Multiple or cabled yarn staple fibres of nylon/other polyamides Single yarn staple fibres of nylon/other polyamides Yarn of polyester staple fibres 85% mixed solely/ mainly with artificial staple fibres etc. Mr. Rughani informed that if India could accommodate even 20% share of the total Chinese exports of MMF textiles to these markets then our exports will cross US$ 8 billion. While representing to the Government about the emerging gaps in the global MMF textile trade and corresponding efforts made by the Council to increase exports Mr. Ronak Rughani insisted on Government’s support for Fibre neutrality inclusion of MMF Fabrics Yarns and Fibres in the RoSCTL/ RoDTEP Scheme signing of effective FTAs with major textile consuming markets/ regions such as EU GCC Brazil USA etc. review the India – ASEAN FTA etc. We have also sensitised the industry on the potential segments markets specific tariff line etc. to focus on and urged the industry to swiftly work for filling up the gaps emerging in the global MMF textile supply chain Mr. Rughani informed
Source: Tecoya Trend
Irani has also pitched for correcting a crippling indirect tax structure in the man-made textiles segment, in which GST rates are high at the raw material stage and the ITC (input tax credit) process takes time, acceding to a long-pending request of the textile industry, sources told FE. Textile minister Smriti Irani has approached finance minister Nirmala Sitharaman seeking her intervention to ensure parity of the goods and services tax (GST) rates between cotton-based and man-made textiles, and undo a historical imbalance in favour of the natural fibre-dominated value chain that has hurt the country’s export prospects. Irani has also pitched for correcting a crippling indirect tax structure in the man-made textiles segment, in which GST rates are high at the raw material stage and the ITC (input tax credit) process takes time, acceding to a long-pending request of the textile industry, sources told FE. Decisions on GST rates, of course, are being taken by the GST Council that comprise both the Centre and states, either by consensus or majority vote. While the GST on cotton and textiles made of it stands at a uniform 5% across the value chain, the rate for synthetic fibre is 18%. Man-made filament/spun yarn is taxed at 12% and fabrics 5%. This is despite the fact that man-made textiles make up for as much as 65-70% of global demand and consequently hold immense export potential. In India, however, cotton textiles account for around 70% of the market. Coupled with rigid labour laws and elevated logistics costs, this distortion — caused by policy interventions for decades — has stunted the country’s ability to raise garment exports exponentially. Earlier this week, textile secretary Ravi Capoor told a gathering of industry executives that while China has “vacated the apparel market worth $20 billion over the past three years”, mostly in the technical textiles segment, India has barely gained, and Vietnam has emerged as the biggest beneficiary. China has been cutting down on its exports in labour-intensive sectors, as it moves up in the global value chain and focusses on hi-tech products. The latest move comes at a time when outbound shipments of textiles and garments shrank 6.4% year-on-year in the April-January period (even on a favourable base), aiding a decline in overall exports that have contracted for a sixth straight month through January. As such, the labour-intensive sector’s share in the overall merchandise exports has been sliding consistently in recent years, having dropped from as much as 13.7% in FY16 to just 10.6% this fiscal (up to January), the lowest in around a decade. While a parity in the tax structure for cotton and man-made textiles has long been sought, industry executives are more optimistic about the structural change now, emboldened by the fact that the Budget 2020-21 took a big step by ending an anti-dumping duty on purified terephthalic acid (PTA), which is used for making polyster staple fibre, filament yarn and film. High duty incidence on PTA imports was a cost push across the value chain and was one of the sources of weak pricing power of the downstream synthetic textile industry in export markets. In a recent reply in Parliament, Irani highlighted that uneven GST rates had led to an inverted duty structure in the man-made fibre textile value chain. Sanjay Jain, former chairman of the Confederation of Indian Textile Industry (CITI), said even though refund of inverted duty is permitted under the GST regime, the process takes time, effectively blocking working capital of companies for months. According to OP Lohia, chairman of Indo Rama Synthetics, the GST should have a uniform rate structure for all fibres and this disparity between natural and man-made fibres must end. When the GST was introduced in 2017, the tax incidence of 18% for man-made fibre was retained (earlier it was 17.5%, including both the excise duty and value-added tax) but it didn’t bridge the gap with the cotton fibre.
Source: Financial Express
India will soon firm up a plan to handhold top textile companies to help them achieve sufficient size and scale to cater to worldwide demand. The aim is to create a few global champions to boost exports through fiscal benefits and adequate infrastructure support by the states. A senior government official told ET that a policy is being finalised to address the lacunae under existing textile-related schemes and come up with parameters that will help identify states through the challenge method to set up textile parks with all forward and backward linkages available in the same place to make India cost competitive. “A proposal will be submitted to chief secretaries of all states for consideration as the Centre plans to rope in states,” the official said. The government plans to set up 1,000-acre mega textile parks as it revamps the Scheme for Integrated Textile Park as part of the New Textile Policy. Top policy measures that are being considered include significantly raising the cap on investment under the existing scheme that will prompt companies to set up mega manufacturing units in one place and undertake technology upgradation. Currently, different subsidies are capped at lower investment levels, prompting companies to remain small and scattered. “Besides, the Centre will soon float a challenge method for states to come on board for setting up such mega textile units by providing land, electricity and water at reasonable cost,” said the official. Preference will be given to coastal states and states with abundant water availability for such mega units in the long run. The Niti Aayog recently held a meeting with top officials of all stakeholder ministries and industry executives to understand issues restricting growth of the sector and measures needed to give an immediate push to firms to scale up. It’s estimated that Indian textiles are 14% more expensive than those made by units in China, Bangladesh and Vietnam due to high logistics costs. The plan, if successful, could be replicated in other sectors such as IT and fisheries as the government strives to push Indian exports, which have been stagnant at $350 billion over the past several years. The benefits could be restricted to apparel, fabric, made-ups and technical textiles, including manmade fibre, because of the substantial value addition in these sectors. Another official confirmed to ETthat the focus is on manmade fibre (MMF), technical textiles and garments as the government is looking for a few champion companies. As per an industry representative, the plan is twofold--to promote champions in existing textile subsectors and identify new ones in new product lines. The champion companies or star trading houses get certain benefits such as self declaration during customs clearance and exemption from furnishing bank guarantees for availing of export promotion schemes. “Globally, the growth is in manmade fibre. In India, the share of cotton textiles is 60% and the rest is synthetic while the trend is the opposite elsewhere,” said a Delhibased exporter of textiles. Commerce and industry minister Piyush Goyal recently said the government is focusing attention on manmade fibre as the world has moved to this. India has been focused on cotton textiles over the years, he said.
Source: Economic Times
India has some distance to go in fully shifting from pro-crony to pro-business policies, Chief Economic Adviser Krishnamurthy Subramanian said on Saturday. It will be the probusiness policies that will enable the "invisible hands of the market" and also take the country to the goal of USD 5 trillion GDP, he added. "Pro-business policies are those that enable fair competition in the country. We have some distance to go in terms of enabling that fully. Pro-crony policies on the other hand just help incumbents and that is something that we have to stay away from in enabling the invisible hands of the market," he said at an alumni conference of his alma mater IIT-Kanpur here. Indian policymaking has been criticised for favouring crony capitalists in the initial decades after Independence, till the country shifted gears by adopting liberalisation in 1991. Subramanian said after the CAG's report on telecom spectrum allocations came out in 2011, investor returns from "connected companies", a euphemism for crony firms, have been very low as compared to the broader indices. The problem with cronyism is that it is not better business models and processes which drive the growth, he said, adding that we should always aim for "creative destruction" where the incumbents are challenged. In a critique of the dominant policy choices in the initial decades after Independence, Subramanian said "the tryst with socialism did not deliver the tryst with destiny", referring to first prime minister Jawaharlal Nehru's famous speech when India attained freedom. He also made a strong case for not depending only on recent work in economics to make policy choices and neglecting age-old texts like the Arthashastra. "Scholarly work isn't something that was written in the last 100 years but dates back millennia," he said. The Arthashastra stresses on ethical ways of creating wealth, he said, adding that we need to focus on creating trust in the markets as well. If governance standards have to be increased in the country, there has to be a greater focus on disclosing related-party transactions, the CEA said. The comments come in the wake of frauds like the one at non-bank lender DHFL. The Union Budget's thrust on 'Assemble in India' should not be seen as substitute to the government's flagship 'Make in India' programme, but as a complementary aspect which will act as a precursor to other goals, he said. On the focus on 'Assemble in India', Subramanian cited the case of Suzuki's entry into the country in 1980s and the developments in the auto sector since then to illustrate that simple assembly of parts to make a car is a precursor to manufacturing and also intellectual property creation. Pointing out to the recently released Economic Survey, he said over four crore well-paying jobs can be created in the country by 2025 by focusing on assembling for the world, and the same can go up to eight crore by 2030. Asked about the Budget's thrust on imposing tariffs on certain sectors and how it has been criticised as being protectionist by some, Subramanian said we need to make a distinction between duties that are imposed on finished products against those on raw materials or intermediate goods which hurt exports. "We need to move towards far more open trade policies on intermediate goods and raw materials to enable exports," he told reporters. To a question on external member of the Monetary Policy Committee Chetan Ghate's pitch for more structural reforms, Subramanian said all measures like rate cuts and reforms work with a lag and we should allow time for their benefits to accrue.
Source: Economic Times
Though India’s readymade garment exports showed a marginal increase in April 2019-January 2020 period, apparel exporters are confident of capturing a larger market share due to the renewed enthusiastic support of the government, the Apparel Export Promotion Council (AEPC) said in a statement on Sunday. The statement cited AEPC Chairman A. Sakthivel saying this while addressing the body''s 42nd Foundation Day here on Saturday. The statement said that the Chairman has brought up issues being faced by apparel exporters and discussed ways to promote apparel exports iin his recent interactions with Finance Minister Nirmala Sitharaman, Commerce Minister Piyush Goyal and Textiles Minister Smriti Zubin Irani. "While the government has prepared the ground for growth of man-made fibre production in the country with its removal of anti-dumping duty on PTA, the Council has planned to participate in mega exhibitions across the world to showcase Indian apparel," he said. "Having started out of a small office space in Nehru Place in Delhi as a quota monitoring entity, our Council today has a countrywide presence with 12 offices and a 8,000 strong membership constitution of almost all large production houses, trading houses and small & medium scale units," Sakthivel said. AEPC members will participate in various international fairs this year including ''India Tex Trend Fair'' in Tokyo and ''Pure London'' in July, ''Magic Fair'' in Las Vegas and ''Apparel Textile Sourcing'' in Canada in August, ''Who''s Next'' in Paris in September, and ''Australia International Sourcing Fair'' in Melbourne in November. "The apparel sector is the largest employment provider after agriculture and employs 12.90 million workers, of which 65-70 per cent are women," he added.
Source: Outlook India
More than 1,000 representatives of Gujarat’s trade bodies and industries will participate in the `Namaste Trump’ event. Of these, around 200 will represent the Gujarat Chamber of Commerce and Industry (GCCI). Another 150 will be from Associated Chambers of Commerce in India (ASSOCHAM). “We have sent names of more than 150 industrialists for attending the Namaste Trump event. All promoter-level industrialists will attend the event on Monday,” said Chintan Thaker, co-chair, Assocham Gujarat chapter. Various industry bodies in the state were earlier asked by the state government to pre-register businessmen and industrialists for the event. About 370 delegates from the Diamond City, Surat, will also take part in the Trump-Modi mega show. Leading diamond cutting and polishing unit owners, along with top representatives of Surat’s textile, chemical, weaving and real estate sectors will attend the event. Over 650 industrialists, businessmen and representatives of chambers and industry bodies from Vadodara will attend the event. These include office-bearers of various trade and industry bodies of central Gujarat along with several representatives of industries based in the region.
Source: Economic Times
The Indian Texpreneurs Federation (ITF), which has 450 members in the state from across the textile value chain, has zeroed in on four core areas — integration, sustainability, financial restructuring and leadership skills — based on a research. It would apply these to improve overall business performance of textile industry in the state in the financial year 2020-21, ITF convener Prabhu Dhamodharan said. The core areas were decided based on a research ITF did along with research firm Crisil Limited. While the association members are practising concepts such as sustainability and leadership training, they seek to increase participation in the next fiscal. Value-addition is the way forward for the textile industry, Dhamodharan said. “The pressure on standalone spinning mills is higher than that on integrated or semi-integrated textile units. Of the 87 lakh spindles units represented in the federation, only 20% are integrated. It’s the right time for standalone spinning companies to move up the value chain to make value-added finished products. For this, ITF would set up an advisory cell with industry and external experts to guide members to step into integration and make high value-added products to improve their financial performance.” Speaking of sustainability, the official said the State is leading in areas such as zero liquid discharge and the use of green energy. “Power accounts for 10% of the yarn cost. We are planning to bring down energy consumption. Ten ITF members have GreenCo certification and seven have Higg Index. We plan to triple these numbers,” he said. However, many textile firms couldn’t afford the measures due to working capital crunch, said Damodharan. “We have requested the ministry of textiles for a one-time financial restructuring. This includes converting of working capital loans as long-term loans in account of non-availability of working capital, a moratorium of two years and infusion of new working capital.” The federation is also planning to provide leadership training to managers and supervisors. “We had trained 400 managers and supervisors at the ITF Leadership Academy last year in areas such as communication skills, emotional intelligence, innovation and creativity. As a result, teamwork has become better. We plan to train 1,000 more managers and supervisors from textile firms in the coming financial year.”
Source: Times of India
The Central Board of Indirect Taxes and Customs (CBIC) has asked its field formations to collect about Rs 46,000 crore as interest on delayed payment of goods and services tax (GST) on the basis of gross tax liability, i.e. the tax liability without adjusting the input tax credit (ITC) available in the electronic credit ledger. This move has caused a lot of heartburn in the trade. The government contends that if a tax payer is required to pay tax of Rs 1 crore but has available ITC of Rs 99 lakh and delays payment of the due tax of Rs 1 lakh after adjusting the ITC, then interest must be paid on the gross tax liability of Rs 1 crore. This position has been upheld by the Telangana High Court in the case of Megha Engineering and Infrastructures. [2019 (26) GSTL 183 (Telangana)], on the basis of the law as it stands. The contention of the trade is that the interest should be collected on the net tax liability of Rs 1 lakh in the above example, which is the amount payable in cash after adjusting the available ITC. The GST Council, in its 31st meeting on December 22, 2018, had accepted this stand and recommended charging interest only on the net lax liability. The central government has also got the relevant Section 50 of the Central GST Act, 2017 suitably amended last August. However, it has not yet notified the amendment but has assured that the same will be given effect as soon as the two remaining states, Telangana and West Bengal, amend the relevant State laws. The CBIC says this amendment will operate prospectively and so, all interest on delayed payment of tax till the amendment takes effect will be on the basis of gross tax liability. The trade says once the GST Council has conceded the unfairness of charging interest on gross tax liability, there should be no hesitation in giving retrospective effect to the amendment. Meanwhile, the Madras High Court, in the case of in the case of M/s Refex Technologies (2020-TIOL-382-HC-MAD-GST) has held that the amendment allowing payment of interest on the basis of net tax liability is clarificatory and therefore, retrospective in its operation. When the tax payers started receiving the notices for interest, some approached the courts and the Gujarat High Court, in the case of Amar Cars, stayed the notice demanding such interest and asked the government to respond. The overall sense in the trade is that the main aim of the government is to garner revenue by any means, even when it knows that there is no merit in asking for interest on the basis of gross tax liability. As the law stands, the government may have a right to demand interest on gross tax liability but it must recognise the unfairness of the demand, hold up such demands and amend the law retrospectively providing for interest on net tax liability, say the tax payers. The wise way forward for the government is to persuade the GST Council to allow interest payment on net tax liability retrospectively, get necessary amendments made in the GST laws and give effect to the same quickly. Meanwhile, demands on the basis of gross tax liability can be held in abeyance.
Source: Business Standard
Think tank National Council of Applied Economic Research (NCAER) today pegged the economic growth for the current fiscal at 4.9%, a tad down from 5% estimated by the National Statistical Office (NSO). However, for 2020-21, the NCEAR expects the Indian economy to improve its growth rate to 5.6%. Indian economy grew by 6.1% in 2018-19. “GDP growth is forecast to be 4.9% in Q3: 2019-20, and 5.1% in Q4: 2019-20. The annual growth rates for 2019-20 and 2020-21 are forecast to be 4.9% and 5.6%, respectively,” the NCEAR said. The NSO as well as the RBI has projected the GDP growth rate at 5% for the current fiscal. The NCEAR has indicated some improvement in the fourth quarter of the current financial year. Elaborating further it said, “Due to better rainfall in the monsoon as well as the post-monsoon seasons and considerable improvement in the storage of water in major reservoirs of the country, the prospects for growth in the agricultural sector remain bright.” Both the Ministry of Agriculture’s second advance estimates and NCAER’s own estimates point to higher agricultural output in the current fiscal as compared to previous year. This should also lead to lowering of food inflation in the coming months, which has otherwise remained high due to the lower than expected output of a few commodities, particularly vegetables and pulses, it added. The Index of Industrial Production declined by 0.4% in the second quarter of 2019-20 and by 0.9% in the third quarter of 2019-20 on a year-on-year (y-o-y) basis. The IIP of capital goods and consumer durables goods declined in the both second and third quarters of the current fiscal. Consumer non-durables also declined in December 2019. On the bright side, core IIP improved in December 2019, with buoyant growth in the key sectors of steel and cement, it said. Talking about green shoots in the services sector, it said, “The GVA of the services sector grew at 6.8% in Q1 and 6.9% in Q2 this fiscal. Three lead indicators, viz., tourist arrivals, aviation passenger traffic, and services trade, were the bright spots in Q3: 2019-20.” It further said, “Cargo traffic across different transport modes continued to show negative growth in the third quarter of the current fiscal. After falling to 49.2 in October 2019, the Nikkei PMI Services Index showed a sharp and sustained rebound. This signals that the sector is in the process of bottoming out.” The 2020-21 Budget, it said, has not provided the expected strong fiscal stimulus to revive faltering growth. The revenue projections are still overly optimistic though more realistic than the projections last year.
ICE cotton falls on spike in virus cases
Cotton futures dipped on Friday as a spike in new coronavirus cases intensified fears that the epidemic will hurt the global economy and in turn demand for the natural fiber. Cotton contracts for May settled down 0.37 cent, or 0.5 per cent, at 69 cents per lb. It traded within a range of 68.45 to 69.36 cents a lb. The USDA on Thursday projected US cotton plantings at 12.5 million acres in 2020. “Certainly the longer it goes on the more impact it will have (on cotton),” said Sid Love, commodity trading adviser at Sid Love Consulting.
Source: Tribune India
The Indian textile mill industry, which employs about 10 crore people directly and indirectly, is at a crossroads. Many of its players — one in every three, to be precise — are facing a severe cash-flow crisis. If the Centre doesn’t lend a helping hand, over the next few years many textile companies will go belly up, resulting in large scale job losses. A study commissioned by the Indian Texpreneurs Federation (ITF), an association representing the entire value chain of textile manufacturing in Tamil Nadu, and done by CRISIL, found that many textile companies in the country are under workingcapital stress. The study, which BusinessLine is privy to, covered a total of 1,150 spinning mills and 700 readymade garment units, capturing a third of the industry in terms of revenue. In 2017-18, the 1,150 spinning mills recorded a revenue of ₹2.17-lakh crore, but an aggregate profit was only ₹2,177 crore — a net profit margin of just 1 per cent. Equally bad was the condition of ready-made garment mills — a total revenue of ₹89,271 crore and a net profit of ₹1,161 crore, which is a profit margin of 1.3 per cent. There are at least 600 companies that have 5-7 per cent net profit margins, but the loss-making small spinning mills and ready-made garment units pulled down the profit margin to 1 per cent for the sample group in the study.
Weak financials
The pressure on profitability has increased in recent years. A drop in demand for textiles following the euro zone crisis, the USChina trade war and high volatility in cotton prices (price per candy of cotton has been vaulting between ₹38,000 and ₹48,000 over the past two years) have played spoilsport. Cotton yarn exports in the first nine months of 2019 were down by 50 per cent over the same period in the previous year. While large mills with cash in coffers have managed, weaker units with funding constraints have been bleeding. Ideally, for any capital-intensive business, the operating profit margin should be at least 12-14 per cent, but the operating profit margin of the 1,150 spinning mills that were analysed by CRISIL was 7.8 per cent in 2018. The rating agency expects this to worsen to 6.9 per cent in 2019 and 5.4 per cent in 2020. The shortage of working capital puts mills at a disadvantage on many aspects. One, while mills that could pay in cash in 715 days can buy cotton at a lower price, others have to pay extra. In the last cotton year, for instance, while those who could buy in cash paid ₹120-122/kg for cotton fibre, mills that asked for a longer credit time were charged ₹133-135/kg by ginners. Further, the players who buy on a long credit get poor quality cotton, hitting their realisation. Prabhu Dhamodharan, Convenor, ITF, says if there is working capital support, the distressed mills can see an improvement of 6-7 percentage points in their operating margins. “While on one side they will save 4-5 per cent on raw material cost as they will be ready to pay the supplier in cash, on the other side, they can sell directly to customers and not go through traders and realise ₹4-5/kg higher on yarn. If funds are available, mills can also invest in process efficiency which will bump up margins.”
Solution
Banks have been hesitant to lend to textile companies. Even those companies that give collaterals get loan only to the extent of 50 per cent or less from banks, say mill owners. This has blown up the liquidity crisis in the sector. As per the CRISIL report, the gross bank credit to the textile sector has not increased much since 2014-15 and has been to the tune of ₹2lakh crore. While the fear of banks is not without a reason, if there is no additional funding for these units, they may soon turn NPAs (non-performing assets). If the Centre is able to nudge banks to do a case-by-case appraisal and lend, many good mills that are grasping at straws will revive. A moratorium for existing loans, for at least two years, will reduce the pressure on mills immediately. However, this will not be sufficient, says Dhamodharan. “Fresh funding will also be required, in addition to converting existing workingcapital loans to longterm loans for 5-7 years.” If banks want to avoid an NPA trap in future, they have to do some fresh lending to spinning mills and ready-made garment units now. Banks can have an enhanced surveillance mechanism and keep a check on the way mills are putting the additional funds to use. Members of ITF have taken the grievances of the industry to the Textile Ministry and are hopeful of a positive outcome soon.
Source: Press Reader
The coronavirus gives India another chance to woo global firms that are manufacturing in China vital to get it right this time. Given the 1.7% fall in India’s April-January exports—this means exports grew a mere 0.5% per annum in the six years since Narendra Modi came to power — Union commerce minister Piyush Goyal’s talk over whether the Service Exports Incentive Scheme (SEIS) should be withdrawn sounds counter-intuitive why reduce incentives when this can also reduce exports? But, given that the government doesn’t have unlimited amounts of money to incentivise exports, it probably does make sense to spend the money where it has the greatest impact. A lot of the service exports that get SEIS benefits today are those made by big firms that will continue to export even without a 2-3% SEIS reimbursement. If, on the other hand as Goyal suggested, this money was spent to boost tourism, this would also generate a lot of jobs. Similarly, in the case of textiles that are another big area of export opportunity, as the High-Level Advisory Group (HLAG) recommended, apart from implementing the technology upgradation scheme better—so as to improve the capabilities of Indian suppliers—the government must get the top 10 global textiles and clothing firms to set up large plants in India. Once the big producers are here, the exports will automatically take place. In the case of electronics, where India’s trade deficit is ballooning (see graphic)—at 26% of India’s total trade deficit, electronics is second only to oil—the strategy has to be similar to that for textiles, to attract the biggest global players like Apple and Samsung to manufacture in India over time, as happened when Suzuki bought Maruti from the government, exports will also start rising on their own. Apple’s exports from China retail at $200 bn, so if this manufacturer is to come to India along with its main component suppliers, logically speaking, India will also become an export hub. The global smartphones export market is around $300 bn—60% of this is done out of China and 10% out of Vietnam—and 75% of this is shared by Apple, Samsung, Huawei, Oppo/Vivo and Xiaomi, so getting these biggies to manufacture in India is critical. India began talking of wooing firms like Apple and Samsung 6-7 months ago when the then principal secretary to the prime minister asked secretaries to various ministries to draw up a plan to woo big manufacturers in China in the light of the increased US-China trade tensions these firms were facing the possibility of their exports out of China being slapped with import duties when they were shipped for sale in the US. Despite this, however, no decision got made and, meanwhile, the US and China managed to dial back on the trade war, reducing the urgency for firms to want to exit China. Samsung which had a large part of its production in Vietnam anyway, shut the last Chinese factory during this period while Samsung also has a large facility in Noida in India, most of its production takes place in Vietnam. The huge disruption in global trade and manufacturing in China thanks to the coronavirus has, once again, opened up an opportunity for India to try and woo global biggies it is important to get it right this time. While India’s trade deficit was $133 bn in April-January FY20—it was $136 bn in FY14 and $184 bn in FY19—what is worrying is that the share of electronics in this has been consistently shooting up it was 14% a decade ago in FY09, 17% just before Modi took oath in mid-2014 and is around 26% right now. In absolute numbers, the electronics deficit shot up from $17 bn in FY09 to $45.1 bn in FY19. Compare this with the zero electronics deficit that Digital India 2015 had projected for FY20. Indeed, while India’s mobile phone exports were a mere $2.7 bn in FY19, the National Policy on Electronics 2019 projected these rising to $110 bn by 2025! Interestingly, while the electronics deficit had been rising, it remained at around $23 bn in the few years before the Nokia phone factory shut following a dispute with the Indian tax authorities. At that point, smartphones were around 30% of electronics exports and this collapsed after Nokia shut operations despite the fact that, by then, India started its phased manufacturing programme (PMP) for mobile phones. While some will argue that India is better off continuing with its PMP—import duties are hiked to accelerate local production of various components—the continued rise in imports, and the poor export showing makes it clear this doesn’t really help large exports require genuine manufacturers, not mere assemblers. A purely export-incentive-driven offering, say, 5% of the value of each phone exported may appear a good way to reduce the cost disadvantage of manufacturing in India as compared to either China or Vietnam, but this may not work as it could well turn out to be WTO-incompatible. In which case, just ensure the likes of Samsung and Apple manufacture more in India, whether by way of greater tax incentives or free land or some other facility is for the government to decide as the firms scale up and get more efficient, exports will follow. Apart from manufacturing, with India also emerging as a global player in engineering R&D centres—SAP and IBM get 8-10% of their global patents from their centres in India—and firms like Qualcomm, Texas Instruments and Intel already doing some work on chip design here (bit.ly/2HFsc7J), there is also more scope to do value addition in India than in, say, a Vietnam. Indeed, it was more R&D in India—after Suzuki bought out the government stake in Maruti—and involving Maruti engineers in its global projects that saw, over time, India becoming a small-car exporter. Given India’s sad history with missing several opportunities—when China vacated the lower-end of the textiles and clothing market, it was countries like Vietnam and Bangladesh that took advantage of this—it can’t afford to miss out on the electronics opportunity more so since Vietnam has already marched ahead by getting most of Samsung’s operations.
Source: Financial Express
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Item |
Price |
Unit |
Fluctuation |
Date |
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PSF |
931.93 |
USD/Ton |
0% |
2/23/2020 |
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VSF |
1363.04 |
USD/Ton |
0.31% |
2/23/2020 |
|
ASF |
1999.03 |
USD/Ton |
0% |
2/23/2020 |
|
Polyester POY |
1003.07 |
USD/Ton |
0% |
2/23/2020 |
|
Nylon FDY |
2205.34 |
USD/Ton |
0% |
2/23/2020 |
|
40D Spandex |
4083.44 |
USD/Ton |
0% |
2/23/2020 |
|
Nylon POY |
1141.80 |
USD/Ton |
0% |
2/23/2020 |
|
Acrylic Top 3D |
2440.10 |
USD/Ton |
0% |
2/23/2020 |
|
Polyester FDY |
5335.50 |
USD/Ton |
0% |
2/23/2020 |
|
Nylon DTY |
1244.95 |
USD/Ton |
0% |
2/23/2020 |
|
Viscose Long Filament |
2041.72 |
USD/Ton |
0% |
2/23/2020 |
|
Polyester DTY |
2176.88 |
USD/Ton |
0% |
2/23/2020 |
|
30S Spun Rayon Yarn |
2006.15 |
USD/Ton |
0.71% |
2/23/2020 |
|
32S Polyester Yarn |
1607.76 |
USD/Ton |
0% |
2/23/2020 |
|
45S T/C Yarn |
2390.30 |
USD/Ton |
0% |
2/23/2020 |
|
40S Rayon Yarn |
1764.27 |
USD/Ton |
0% |
2/23/2020 |
|
T/R Yarn 65/35 32S |
2262.25 |
USD/Ton |
0% |
2/23/2020 |
|
45S Polyester Yarn |
2148.43 |
USD/Ton |
0% |
2/23/2020 |
|
T/C Yarn 65/35 32S |
1935.01 |
USD/Ton |
0% |
2/23/2020 |
|
10S Denim Fabric |
1.26 |
USD/Meter |
0% |
2/23/2020 |
|
32S Twill Fabric |
0.68 |
USD/Meter |
0% |
2/23/2020 |
|
40S Combed Poplin |
0.96 |
USD/Meter |
0% |
2/23/2020 |
|
30S Rayon Fabric |
0.53 |
USD/Meter |
0.27% |
2/23/2020 |
|
45S T/C Fabric |
0.67 |
USD/Meter |
0% |
2/23/2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14228 SD dtd. 23/02/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
While India’s textile industry is all set to capture $20 billion (Rs3,086 billion) market opportunity created by shutdown in China in the wake of coronavirus outbreak and Bangladesh and Vietnam are also gearing up to ensure their share, but Pakistan’s textile industry is struggling for the implementation of all inclusive electricity tariff of 7.5 cents per unit as the Power Division has included more surcharges in the bills owing to which power tariff for export industry has gone to 13 cents per unit. This situation will not only make Pakistan’s textile products in international market non-competitive, but also make industry vulnerable enough not to grab the opportunity created in world market because of China shutdown and if the tariff of 13 cents per unit continues to appear in bills then there is fear that process of deindustrialisation may start, triggering massive unemployment and unrest in the country. This is the essence of the letter written by Executive Director All Pakistan Textile Mills Association (APTMA) Shahid Sattar to Abdul Razak Dawood, Adviser to Prime Minister on Commerce, Textile, Industries and Production and Investment written on Friday. According to a copy of the letter with subject ‘Golden opportunity to increased export market share being squandered’ APTMA mentioned that Indian Textile Secretary Ravi Capoor has called for the textile industry of India to rally and grab the opportunity created by the shutdown in China. In this connection, the government of India is extending all possible support to the industry to capture as much of the estimated $20 billion market opened up. Bangladesh and Vietnam are similarly gearing up. Unfortunately, in Pakistan, the confidence of the industry and investors has been shattered by the Power Division’s move to impose additional costs or surcharges over above the all-inclusive 7.5 cents per unit approved by the ECC and cabinet vide SRO 12 of January 1, 2019. Further clarification that the 7.5 cents per unit was all inclusive was given on February 8, 2019 and March 29, 2019. APTMA in its communication to Abdul Razak Dawood said that the intent of regionally competitive energy tariff is being nullified by the Power Division’s letter dated February 10, 2020 which has resulted in billing of these unjustified arrears from January 2019. Pakistan’s textile sector is currently operating at near full capacity and directly in need of fresh investments for modernisation, expansion and new projects in order to meet export orders. As a result of the short-sightedness of the Power Division, APTMA in the letter says, what to speak of expansions or new projects, even the currently operating companies are likely to go out of business leaving millions workers direct and indirect out of work. “This will surely cause civil unrest dues to the sharp increase in unemployment.” “If the Power Division’s ill-advised about turn on the matter of the all-inclusive 7.5 cents per unit electricity tariff for export sectors is not corrected, we will not only lose this once in a life time opportunity for enhancing exports but also head towards pre-mature deindustrialisation, massive unemployment, a precipitate falls in exports,” says the letter. In the interest of Pakistan, APTMA requested the adviser’s assistance in correcting the grave error being enacted. Shahid Sattar in the letter hoped that the adviser will also raise voice with textile industry to correct the injustice being meted out to exporters. Shahid Sattar reiterated that the industry is committed to rapidly increase exports and capacity to meet the enhance export orders and capture as much of the opportunity as well provided the regional competitive tariff of 7.5 cents earlier approved by PM, ECC, cabinet and then notified too is fully implemented.
Source: The News Pakistan
The Survey analysis continues to shed light on production expectation at the end of February after the first part of the report is focused on the situation that was seen and expected before the middle of this month. To our dismay, only 18.1% of all the 1201 respondents under the survey reported to recover their capacity up to over 70% while 23% of them could have 50%-70% revitalized, and nearly 60% of the total companies in the survey are in the view that they are able to get the lines running in 50% or less, a gloomy picture if their answers turn out to be true. A national online survey in Questionnaires was conducted by China National Textile and Apparel Council(CNTAC) from Feb.7-10, with a report circulated only to limited readership to show a comprehensive outlook and insight of the textile industry by specific sectors in different provinces on the basis of 1201 respondents, just a sample of the whole textile economic fabric if we can see wood and see forest. Continuing here with Part II of survey analysis, as how the Chinese production is expected to pick up by the end of Februry. These answers are not persistently consistent if we look into the different sectors in the up-mid-down streams of the whole textile industry. Obviously, as massive consumption on shopping boom is not optimistically foreseen at the moment when consumers are not encouraged to expose themselves to outdoor activities, the garment and home-textile industrial sectors that produce finished goods are subject to a bit harder impact brought forth by necessarily strict measures for disease prevention and control, leading to a slow production recovery, to such an extent that only 10% and 12.4% respectively from these two sectors expressed their belief that they both will re-steam their production up to over 70 percent at the end of the month, far short of what is expected. Noticeably, the number of companies foreseen to run the factory less than 20% of the rated capacity takes up a considerable bulk of the total respondents in these finished-goods sectors, 35.2% and 33% each. Every cloud has its silver lining, the manmade fiber and industrial textile sectors present a sunny side of the picture, with 39.4% and 25% of their companies in the survey promising to regain production to over 70% of the full capacity. If we see the production to be re-energized to run capacity in the provinces that were chosen as important sampled regions, Henan province in Central China is more optimistic with 43.5% of the respondents ready to gear up to over 70 percent of the production capacity at the end of February. If we see the picture based on companies’ size and scale in the sales income profile and employment, it is reasonable to find that the bigger the company is, the better the company runs in capacity resumed. The following table shows 30.6% of the big companies are able to recover 70 percent of the installed capacity, while only 10.7% of the small ones can do the same. Some smaller ones or micro companies, 63.9% of them, are devoid of such an aim, expected to resume less than 20% of their production at the best when it comes to the end of February. Production to be Recuperated in the Companies under Survey in Different Size & Scale by Annual Sale and by Employment
Source: Fashionating World
A national online survey in Questionnaires was conducted by China National Textile and Apparel Council(CNTAC) from Feb.7-10, with a report circulated only to limited readership to show a comprehensive outlook and insight of the textile industry by specific sectors in different provinces on the basis of 1201 respondents, just a sample of the whole textile economic fabric if we can see wood and see forest. A novel coronavirus got running rampant across China since its outbreak in December at the end of 2019 and made its way to a global health crisis as the World Health Organization (WHO) declared it a Public Health Emergency of International Concern(PHEIC) on Jan.30, 2020, and China was hit the hardest due to the very special time when the whole country was overwhelmed with joys in Spring Festival in jubilant family reunion and friends and relatives gathering for China Lunar New Year that started on Jan.25, to the neglect of the possible contagion if we see, the traditional legacy sets hundreds of millions of people on homebound journey on trains, planes, ships and highway driving, making the epidemics prevention and control equally the hardest, then. Chinese government has taken proactive efforts in all perspectives to curb the epidemic not only by reinforcing medical rescuers fighting on coronavirus-ridden frontline, but also by strictly carrying out various backing-up measures to impede the epidemic spread, including prolonging holidays for longer homestay, constraining outdoor activities with less transportation, delaying back-to-work time, which results in temporary slowdown of growth speed in national economy, and textile industry does not bear the brunt of the impact, but never walks away easy. A national online survey in Questionaires was conducted by China National Textile and Apparel Council(CNTAC) from Feb.7-10, with a report circulated only to limited readership to show a comprehensive outlook and insight of the textile industry by specific sectors in different provinces on the basis of 1201 respondents, just a sample of the whole textile economic fabric if we can see wood and see forest. In geographic view, the companies in Central China(except Hubei province, the most catastrophic area this time) have been reopened to production more than that in the eastern part of the country. Jiangsu is the largest textile province in eastern China, with its operation resumed at less than 6 percent of all its respondent companies received in the Questionaires while the companies in Henan, Jiangxi and Anhui provinces in the Central China have a better rate in reopened operation respectively by 26.1%, 18.2% and 12.9%.
Protuberant Problems
The outstanding problems at the moment are questioned and answered to the point that 69.1% of the respondents goes to short hands or employees having no way to come back to work, 68.2% goes to impediment to logistics or transportation, 54.3% goes to procrastination of production schedule or possibility of default on delivery, etc.. The following table shows these key problems that challenge the specific sector with 83.3% going to textile machinery and 80.3% to dyeing and printing sector in the labor shortage column, while manmade fiber and industrial textile sectors have more protuberant problems in impediments to transportation and logistics respectively by 89.4% and 78.2%. The wool textile businesses have different highlight of problems particularly in production schedule delay and contract default risk.
Impact on Export
When the lethal pneumonia infected with the novel coronavirus was wide-spreading and declared as PHEIC, the impact on export in the whole textile industry was a tangible reach and touch, making it hard or even impossible for Chinese textile business people to visit clients overseas as some countries have imposed unnecessary tour caveats for their own citizens and travel bans on Chinese visitors by over-reacted measures. New orders are yet to be seen in a worrying uncertainty, and even the containers already shipped to the clients are confronted with the delayed disembarkation or intensified quarantine check backed up by too many complicated red-tape procedures. Approximate 60 percent of the companies in the Questionaires responded to say that their export business is restricted by the country of export market as a consequence of the epidemic right now.
Contributed by Mr. ZHAO Hong
He is working for CHINA TEXTILE magazine as Editor-in-Chief in addition to being involved in a plethora of activities for the textile industry. He has worked for the Engineering Institute of Ministry of Textile Industry, and for China National Textile Council and continues to serve the industry in the capacity of Deputy Director of China Textile International Exchange Centre, V. President of China Knitting Industry Association, V. President of China Textile Magazine and its Editor-in-Chief for the English Version, Deputy Director of News Centre of China National Textile and Apparel Council (CNTAC), Deputy Director of International Trade Office, CNTAC, Deputy Director of China Textile Economic Research Centre. He was also elected once ACT Chair of Private Sector Consulting Committee of International Textile and Clothing Bureau (ITCB)
Source: Fashionating World
The group called on the industry to change its approach to protecting the planet: “We are asking not for sustainability but a complete reinvention of this industry in a way that regenerates the environment,” Extinction Rebellion spokesperson Sara Arnold said. She added that the industry can’t do it alone and urged it to “call on the government to act”.
The impact of fast fashion
The rise of “fast fashion” – clothes made quickly, cheaply and sold at low cost – has seen our buying habits change. In the EU, the amount of clothes bought per person has increased by 40% in just a few decades. But 30% of clothes in Europeans’ drawers and wardrobes haven’t been worn in So cheaper for us – but at what cost to the planet? The carbon emissions of the fashion industry are hard to calculate, with long supply chains and the different materials that go into the production of all the clothes, bags and shoes we wear. But take polyester – a common material in modern clothes. A polyester shirt’s carbon footprint is around 5.5kg of greenhouse gases, and polyester production for use in textiles released around 700 billion kg of greenhouse gases in 2015. That’s the same as 185 coal-fired power stations at least a year. What about cotton? It has a – marginally – lower carbon footprint at 4.4kg per shirt. But it takes 2,700 litres of water to make just one cotton shirt – what an average person drinks in two-and-a-half years. Production can also pollute water, while fabric dyeing uses 5 trillion litres of water every year.
Taking action
Helen Crowley, Fellow and Senior Advisor for Resilient Supply Chains at Conservation International, explained at the Forum’s Annual Meeting of the Global Future Councils in Dubai last year that tackling these issues requires taking a broad view: “It takes a whole supply chain approach. It doesn’t just look at your shop, it doesn’t just look at manufacturing,” she said. “It looks at where you’re sourcing your raw materials, how you’re extracting your raw materials. If it’s wool, if it’s cashmere, it’s cotton, if it’s leather – how you’re extracting them, and understanding, how you can make a difference there.”
Crowley said she also believes we have a responsibility as individuals: “So, what can I do? … It’s about taking a broader approach and thinking, OK, I’m going to create a sustainable wardrobe and buy things that last longer. I’m going to buy less because I really probably don’t need as much as I think.”
A fashion pact
Last year, companies from across the fashion and textile industry signed The Fashion Pact, which focuses on three key environmental goals: stopping global warming, restoring biodiversity and protecting the oceans. The pact, launched by luxury brand group Kering as a mission from French President Emmanuel Macron, is a milestone. “We’re at this really pivotal moment where a whole sector is rallying behind some really tangible action, because they recognize it is something that needs to get done for their business, their value proposition, but also because it’s something that has to get done for society and the planet,” Crowley said. Helen Crowley is on a year-long sabbatical from Kering, where she’s Head of Sustainable Sourcing Innovation.
Source: World Economic Forum
