Buyers are looking for new sources after the virus outbreak in China disrupts supplies. Textile producer BSL Ltd, one of the major players in fabric, believes India may be able to grab more market share following the supply chain disruption in China after the breakout of Covid-19. India and Turkey are the two major producers of fabric, apart from China, which is the dominant player. BSL, which earns 60-65 per cent of its revenue from fabric exports (suitings and furnishing), expects robust sales from the overseas markets. “The coronavirus outbreak could turn out to be a huge opportunity for us in India. Buyers will realise that they cannot do business depending on a single source (China). In the long run, they have to hedge their sourcing from other locations such as India,” Nivedan Churiwal, joint managing director of BSL, said. BSL, which exports to 60 countries, sniffs the maximum opportunity in home furnishing for the overseas market. It sells to various customers, including retailers such as Ikea. Industry analysts agree that there may be a long-term opportunity but it would depend on the duration of the disruption. “If it (trade disruption linked to Covid-19) goes on for a year or so, there may be. But if China comes back to the market quick, it would be able to get back lost market share,” Abhishek Rathi, senior analyst with India Ratings & Research, said. Many textile players have received supply enquiries from overseas players who want the shipment within weeks. “For most companies, it may not be possible because of supply constrains,” Rathi added. India exports Rs 2,400 crore worth of fabric every month with the US, New Zealand and West Asia being some of the top buyers. Analysts said gains from the virus can only be said to occur if unscheduled orders, presumably prompted by China’s failure to supply, are repeated over a significant period of time.
Domestic focus
Aware of the ground reality of world trade, BSL, like other textile players, is also focusing on the domestic market. Previously known as Bhilwara Suitings Ltd, BSL is one of the few major producers in the organised sector. It is now looking to revamp the identity of the 50 -year-old Bhilwara brand, expand wholesale and retail touchpoints and add a super premium suiting range. It has set aside a budget of Rs 20-25 crore for ad and marketing spends, quadruple the retail network to 6,000 across the country in two years and introduce a super premium brand.
Source: The Telegrap
In order to boost the khadi industry, the finance ministry has asked all government departments to mandatorily buy at least 20 per cent of their textiles requirement from KVIC, handloom clusters and registered weavers. In order to implement this change, the Ministry of Finance has amended Rule 153 of General Financial Rules (GFR) 2017. Till now, the central government had reserved all items of hand spun and hand-woven textiles (khadi goods) for exclusive purchase from Khadi Village and Industries Commission (KVIC). As per the amended rule, "of all items of textiles required by the central government departments, it shall be mandatory to make procurement of at least 20 per cent, from amongst items of handloom origin, for exclusive purchase from KVIC and/ or handloom clusters". The handloom clusters include co-operative societies, self help group federations, joint liability group, producer companies, corporations including weavers having 'pehchan cards', said a recent circular from the Ministry of Finance, Department of Expenditure Procurement Policy Division (PPD). In the Union Budget presented to Parliament on February 1, Finance Minister Nirmala Sitharaman had increased the allocation for 'khadi, village and coir industries' to Rs 1,525.94 crore for the next fiscal.
Source: Economic Times
The Centre has now started looking for alternatives to China to source 1050 items including textile fabrics, antibiotics like amoxicillin and erythromycin, vitamins and insecticides, semiconductor devices. China accounts for over 50% of India's imports, which has been hit due to coronavirus spread. According to a report in the Times of India, the commerce department, which has already held at least one round of detailed consultations, has shot off letters to Indian missions across the globe to identify potential suppliers. A detailed analysis of potential markets has been undertaken and shared with other ministries and foreign missions, the publication mentioned citing sources. For instance, in the case of antibiotics, Switzerland and Italy were identified as potential sources given they are among the top exporting countries. Like India, other countries are also chasing this source to import antibiotics. Although there has been a positive response from some of the countries, getting an alternative source for the supply of electronics and mobile phones and their components is proving to be a tough task given the complete dominance that China has in the sector. The ToI report said that Commerce & industry minister Piyush Goyal is scheduled to hold detailed consultations in the coming week to move forward with the strategy and also seek measures to boost local production wherever possible. A key theme of the minister’s discussions with government agencies and industry representatives will be to implement a plan to push the export of 500-550 items where India has the potential to fill the gap created by China. A preliminary analysis following detailed discussions by the commerce department has shown that the situation is particularly grim in the case of pharma and chemicals, smartphones, electronics and white goods and plastics, where India depends on China for a bulk of its imports, the report mentioned. Besides, there are sectors such as textiles yarn, certain organic chemicals and gems and jewellery, which are seeing an adverse impact on exports given that China and Hong Kong are major buyers.
Source: Times Now News
With the Chinese economy getting impacted due to the coronavirus outbreak, India can push its exports in the global markets to fill up the space vacated by the neighbouring country, industry body Assocham said on Sunday. It said Indian exporters of electronics, pharmaceuticals, speciality chemicals and automobile segments depend on China for raw material and are facing supply constraints, but there are several areas where there are increased opportunities for domestic traders. "Barring a few segments, a large number of engineering exports from India can fill up the market vacated by China; so is the case with products like leather and leather goods," Assocham Secretary General Deepak Sood said. He said India can also tap the opportunities in segments like agriculture and carpets. "We also need to scale up several of our sectors to compete effectively with China even when the Chinese exporters are able to normalise their global supply chain," Sood said. He also said while the health emergency of the Coronavirus epidemic is a matter of grave concern for the entire world, it is incumbent on larger economies like India to fill up the gaps in the global market and there is a need to approach the issue with a clear strategy. According to the latest PMI (Purchasing Managers' Index) data, China's factory output level in February has plummeted to the lowest in about two decades, and the consequences are bound to be felt in the global market, Assocham said. "While India's merchandise exports have contracted by 1.93 per cent between April-January period of the current fiscal, the coming few months can provide our exporters greater market access in the absence of usually aggressive and competitive Chinese suppliers," it added.
Source: Economic Times
Close on the heels of the Government of India announcing a Rs 1,480-crore National Technical Textiles Mission, the government of Tamil Nadu has decided to set up a ‘technical textiles park’ in Salem. In an informal chat with BusinessLine on the sidelines of the annual meet of the Tamil Nadu chapter of the Confederation of Indian Industry (CII), the state’s Chief Secretary, Mr K Shanmugam, said that the government has planned two textile parks, in Tuticorin and Salem. The one in Salem would be for technical textiles, he said. ‘Technical textiles’ are textile material and products used for their technical performance rather than as personal clothing. They could be anything ranging from bullet proof and fire proof jackets and to sheets used in surfacing of roads and those used in medicines, such as bandages and gloves. Technical textiles are conventionally divided into 12 broad categories: Agrotech, Buildtech, Clothtech, Geotech, Hometech, Indutech, Mobiltech, Meditech, Protech, Sportstech, Oekotech, Packtech. The Indian market for technical textiles is estimated at $16 billion (Rs 11,500 crore) and is growing at 12 per cent. The National Technical Textiles Mission aims to grow the market by 15-20 per cent a year, so that it reaches a size of $ 40-50 billion by 2024. The global market for these products is estimated at $ 250 billion and is growing at 4 per cent a year. As such there are great export opportunities. The industry has welcomed the idea of Tamil Nadu, one of the textile hubs of the country, giving the technical textiles sector a push. “The Kongunadu region, comprising towns such as Coimbatore, Tiruppur, Salem and Erode, is a place where good fabric is produced; setting up a technical textiles park here is a very good idea,” says M Raja, founder and President of the Coimbatore-based Saastha Technical Textiles. R Jeyamohan, Project Director, TexValley, a marketing center for textiles near Salem, also welcomed the idea of a technical textiles park in Salem, but stressed that there should be tie-up with the buyers. K Hari Thiagarajan, Executive Director of the Madurai-based Thiagarajar Mills, who took over today as the Chairman of the Tamil Nadu chapter of CII, said that the government should also support in marketing technical textiles, perhaps by organizing buyer-seller meets.
Source: The Hindu Business Line
The Confederation of All India Traders (CAIT), in a reversal from its earlier stand, has announced that traders have become disillusioned with the government. It has attributed its displeasure to the economic downturn, and indifferent attitude of ministers/officials towards domestic trade. Consequently, the CAIT has called a meeting of the National Governing Council in Patna on March 5-6, to deliberate on the current business scenario and decide on its future strategy. Bihar is set to go to polls this year. “After the BJP government came to power, traders had great hope that the attitude of the government towards traders would change. However, nothing has changed and traders remain neglected as ever before,” it said in a statement on Sunday. It added that traders remain “very impressed with Modi's positive attitude and thinking towards the traders and small industries".Over the past 6 years, CAIT has repeatedly backed the BJP in state and national elections, and has become an instrumental player in the corridors of power, lobbying keenly on policies governing retail, e-commerce, and foreign direct investments, among others. B C Bhartia, national president of CAIT, and Praveen Khandelwal, secretary general, said the executive wing of the government is intentionally neglecting traders’ issues. Traders say the CAIT and other organisations had led several campaigns across the country to support Prime Minister Narendra Modi’s policies — including Digital India, Skill India, adoption of digital payments, and GST. Stepping up its attack, the CAIT also said that despite several problems caused by demonetisation, traders supported the government in its efforts to fight black money. CAIT has issued a long list of demands that remain pending. On GST, it has pointed out that the system has become very complicated, duplicitous, and inefficient, calling it “mental torture”. On the contentious issue of e-commerce, it has once again trained its guns on global digital giants, alleging that these are “destroying and devastating domestic trade”, and continue their alleged unethical business practices despite repeated warnings by the government. It also called out the Enforcement Directorate for not releasing its report on the matter, two years after the body began probing certain e-commerce entities. Further, it argues that foreign direct investment norms continue to be violated. CAIT has also criticised Modi for the management of the Mudra scheme. “It is true that trillions of rupees have been disbursed under the Mudra Yojana, but it is also a fact that the beneficiaries for whom the Mudra Yojana was introduced didn’t get the loan. This is why non-performing assets are increasing,” it said. Khandelwal said there were fears over Modi not being given correct feedback about trade and business issues. He added that the contribution of the corporate sector to GDP remained a low 15 per cent, despite the attention given by ministers.
Source: Business Standard
Goods and services tax collections for February stood at Rs 1.05 lakh crore, falling short of the Rs 1.15 lakh crore target set by the government but grossing 8% more than the revenue collection for the same month last year. It was the fourth consecutive month when GST collections crossed Rs 1 lakh crore. Of the total Rs 1,05,366 crore , the central GST stood at Rs 20,569 crore, state GST at Rs 27,348 crore and integrated GST at Rs 48,503 crore, which included Rs 20,745 crore collected on imports, the revenue department said in a statement on Sunday. The GST cess stood at Rs 8,947 crore, including Rs 1,040 crore collected on imports. The total number of GSTR 3B Returns filed for the month of January up to February 29, 2020 was 8.3 million, the department said. The revenue department had in January reset the target for GST collections to Rs 1.15 lakh crore for February and Rs 1.25 lakh crore March. The targets were earlier Rs 1.1 lakh crore for each month. The Central Board of Indirect Taxes and Customs (CBIC) has been on a war footing to augment collections by reducing input tax credit (ITC) fraud. Field formations of GST authorities have been asked to focus on identifying fraudulent ITC claims while weeding out miscreants that may use fake invoices or inflated or fake e-way bills. Recently, several thousands of notices have been issued by authorities asking companies to reverse ITC which has been wrongfully claimed. Tax authorities has also been mandated to use data analytics to check mismatch of supply and purchase invoices, mismatch in return filings, over invoicing, excess refunds availed, patching the tax leakages, fake or huge ITC claims, and refunds under inverted duty structure. Experts said the consecutive collections of Rs 1 lakh crore was an encouraging sign for the economy, and expected collections to stabilise at this level going forward. “The GST collections continuing at above the Rs 1 lakh mark is quite an encouraging situation for the Indian economy,” said Abhishek Jain, tax partner at EY. “One possible significant reason linked to reasonable collections is the differential liabilities discharged by businesses in reference to the observations in GST annual returns and audit for 2017-18; which was due in January 2020,” he said. MS Mani, partner at Deloitte India, said, “These numbers indicate that the GST collections are becoming stable, with new changes like e-invoicing and new returns slated for next month, more stability is expected in future.” GST authorities would now go all out to enhance the March collections so that the deficit is reduced to the extent possible, he said. In its statement, the revenue department said the government settled Rs 22,586 crore to CGST and Rs 16,553 crore to SGST from IGST as regular settlement. The total revenue earned by the Centre and all the states put together after regular settlement was Rs 43,155 crore and Rs 43,901 crore, respectively. GST revenues during February from domestic transactions showed a growth of 12% year on year, the department said. Taking into account the GST collected from import of goods, the total revenue increased by 8% on year while GST on import of goods declined by 2% on year.
Source: Economic Times
Growth in advances to the services sector decelerated to 8.9 per cent from 23.9 per cent in January 2019. Bank Credit growth declined to 8.5 per cent in January from 13.5 per cent in the year-ago period led by a sharp slowdown in loans to the services sector, according to RBI data. Bank loan growth to non-banking financial companies (NBFCs) slowed to 32.2 per cent in the reporting month from a growth of 48.3 per cent a year-ago. During the month, personal loans segment grew by 16.9 per cent. Within personal loans, credit to housing segment grew by 17.5 per cent from 18.4 per cent, while education loan showed a negative growth of 3.1 per cent as against a negative growth of 2.3 per cent in January 2019, RBI data showed. Advances growth to agriculture and allied activities contracted to 6.5 per cent from 7.6 per cent rise last year. Credit growth to industry decelerated to 2.5 per cent from 5.2 per cent. Within industry, loan growth to paper and paper products, rubber plastic and their products and construction accelerated. However, credit growth to textile, food processing, chemical & chemical products, basic metal & metal products, all engineering and infrastructure decelerated, RBI said. According to the latest quarterly statistics on deposits and credit of banks, bank loan growth decelerated to 7.4 per cent in the October-December, 2019 from 12.9 per cent the year-ago quarter. During the quarter, loans by public sector banks grew by 3.7 per cent while credit from private sector banks saw a growth of 13.1 per cent. In the fortnight ended February 14, 2020, bank credit grew by 6.3 per cent to Rs 100.41 trillion, from Rs 94.403 trillion in the year-ago fortnight. Deposits grew by 9.2 per cent to Rs 132.35 trillion in the fortnight compared to Rs 121.19 trillion, the RBI data showed. In February, the Reserve Bank Governor Shaktikanta Das had said that slowing credit growth is the biggest challenge the banking industry is facing. "The most critical challenge today for banks, not just in India but also elsewhere, is slowing credit off-take. It affects the profitability of banks," Das said a media event. Rating agency Crisil, in a recent note, said credit growth is likely to be around 6 per cent in this fiscal but is expected to accelerate to 8-9 per cent in FY21. "Prolonged slowdown in bank lending may be bottoming out this fiscal, with gross credit off-take set to rise 8-9 per cent on-year in FY21, a good 200-300 basis points (bps) over the likely growth of near 6 per cent this fiscal," Crisil said. This uptick in loan growth would be driven by a gradual pick-up in economic activity, continuing demand for retail loans, and strong growth in lending by private sector banks, it said. The country's GDP grew at 4.7 per cent in the December quarter, its slowest rate in more than six years.
Source: Business Standard
Almost 750 million people are under lockdown and production in 18 cities/towns has come to a standstill in China. China’s manufacturing activity fell to its lowest level on record in February with the Purchasing Managers’ Index (PMI) at 35.7 points, well below the 50-point mark that separates growth and contraction every month. In India, the Sensex crashed 1,448 points on Friday and over 3,000 points during the last week. Apart from the bloodbath in the equity and forex markets, concerns persist on supply disruptions of goods from China. The crisis aected a depreciation in the value of the domestic currency. The Rupee on Friday plunged by 63 paise to settle at a nearly six-month low of 72.24 against the US dollar. A Care Ratings report shows that India exported a total of $16.7 billion worth of goods and services to China in FY19. The report estimates that the total export loss due to the pandemic could be in the region of $13.4 billion. Analysts say that traders usually keep an inventory of 45 days, and with protracted supply interruption, they could be headed for some pain with only 10-12 days of inventory le. India’s dependence on China for supplies spans across sectors and sub-sectors and the present situation indicates that the trade normalisation could take up to six months, says Motilal Oswal in a report on the impact of the virus on Indo-China trade.
Sectoral concerns
Pharma: India depends on China Automotive heavily for the import of key APIs and key starting materials (KSMs), and there is apprehension that in the wake of COVID-19, supplies from China might To combat these fears, the drug price regulator National Pharmaceutical Pricing Authority (NPPA) has asked states and Union territories to keep a close watch on the availability of key raw materials which are imported from China and used in the production of all kinds of medicines. In a letter, the NPPA Chairman Shubhra Singh asked the state oicials to keep a close tab on the situation in order to prevent the hoarding of such items. “The key drug industry associations have assured the government that there is enough stock of Active Pharmaceutical Ingredients (APIs) and formulations in the country,” Singh said in the letter. “However, as a measure of public health preparedness in respect of APIs/Intermediates/KSMs which are imported from China, it is requested that State Governments and UTs may closely monitor the production and availability of APIs and their formulations to prevent black marketing and hoarding,” the letter said. Automotive: The automobile industry is likely to be impacted less by the crisis, the Motilal Oswal report says. Some analysts feel that this would be on the account of demand and production in the sector bottoming out in India in the run-up to the transition to BS-VI fuel. However, Aditya Makharia & Mansi Lall, analysts at HDFC Securities expect auto sales to be lacklustre in the upcoming quarters on the account of the transition and the virus impact. This assessment is similar to Fitch Solutions that expects a contraction of 8.3% in vehicle production in India due to coronavirus outbreak. This, the agency states is on account of automotive manufacturers halting production. It said, “We see India adopting similar policies if the virus spreads throughout the country.” China accounts for 27% of India’s automotive component imports and this year, vehicle demand in the country is projected to decline by 8.3%. “The problem is further aggravated by the Chinese government’s suspension of shipments by sea until further notice and allowing air-only shipments that are not suitable for Auto Components and forging industries, therefore the Indian OEMs are unable to plan production beyond the inventory as currently available to them,” S Muralishankar, President, Association of Indian Forging Industry said. The Government of India has issued a notification mandating the decontamination of containers at the port prior to release to the Indian Customs. However, the guidelines/procedures to be followed for decontamination have not been notified, therefore it is not possible for the Indian importers to clear consignments that have already reached Indian Shores on time, he added. impact on the IT sector at the moment. “Though we don’t see any material impact on Indian IT companies, there could be some near-term impact on companies oering services to larger US IT firms. These companies generate around 15% of their total revenues from the Greater China region,” said Sanjeev Hota, head of research, Sharekhan by BNP Paribas. Soware amounting to $9 billion was exported to East Asia from India, according to the Reserve Bank of India data. India is expected to lose about $2-3 billion worth orders assuming China contributes a 20-30% share in this basket, suggests the Care Ratings report. Textiles: On an average, India exports 20-25 million kg of cotton yarn a month to China. Cotton yarn prices have fallen by 3-4% in the domestic market as traders anticipate a curtailed demand from China due to the prevailing situation, according to a statement issued by CMAI. With the epidemic, Chinese textile factories have halted operations since the Chinese New Year. India imports $460 million worth of synthetic yarn and $360 million worth of synthetic fabric from China annually. If the outbreak continues, Indian garment manufacturers will need to look at other alternatives, including local sourcing, which in turn may increase the cost of the finished goods by 3-5%.
Global economy
The pandemic has turned global with the virus now present in at least 53 countries, impacting more than 83,000 people, as per the World Health Organisation (WHO) data. In fact, the number of fresh cases in a day recorded outside China has increased compared to cases within Mainland China. Analysts feel that disruptions to international travel and supply chains, school closures and cancellations of major events have blackened the outlook for a world economy that was already struggling with the fallout from the US-China trade war. The outbreak could mean that the International Monetary Fund (IMF) projections on an uptick in global growth from 2.9% in 2019 to 3.3% in 2020 could be negatively impacted.
Key indicators
The virus sent shockwaves in global equity markets last week. Global stocks saw a meltdown during the week especially on Friday, with an index of global stocks setting its largest weekly fall since the 2008 global financial crisis, and a whopping $5 trillion wiped from the global market value this week. Stock indices did not react much to the spread of the virus initially. However, as the month went by there seems to have been distinct signs of panic as the spread became global. sharply from the region of 1.84% in December to 1.30%. Meanwhile, crude oil prices have seen a sharp decline, even in the midst of expectations of an output cut by the OPEC countries, Care Ratings report said. On Friday, while West Texas Intermediate crude settled down 4.9%, to $44.76 per barrel. US crude has fallen about 16% last week, the biggest weekly decline since December 2008. The most active Brent crude contract for May was down 3.2%, at $50.749 a barrel, a 14-month low. “Gold, on the other hand, has been the biggest gainer as funds are getting transferred to bullion, as stock markets get more volatile and growth projections are being revised downwards. The dollar continues to be a strong currency which means that others would tend to weaken over time.” the report added. Even as the spread continues unabated, a clearer picture of the impact of the pandemic on the global and Indian economy may take a few more months to be registered. What the future has in store, only time and further data reports will tell.
Source: Deccan Herald
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
936.65 |
USD/Ton |
0% |
3/1/2020 |
|
VSF |
1372.8 |
USD/Ton |
0% |
3/1/2020 |
|
ASF |
2009.15 |
USD/Ton |
0% |
3/1/2020 |
|
Polyester POY |
950.95 |
USD/Ton |
-3.62% |
3/1/2020 |
|
Nylon FDY |
2159.3 |
USD/Ton |
-0.66% |
3/1/2020 |
|
40D Spandex |
4104.1 |
USD/Ton |
0% |
3/1/2020 |
|
Nylon POY |
1222.65 |
USD/Ton |
-1.16% |
3/1/2020 |
|
Acrylic Top 3D |
2009.15 |
USD/Ton |
-0.35% |
3/1/2020 |
|
Polyester FDY |
2187.9 |
USD/Ton |
0% |
3/1/2020 |
|
Nylon DTY |
1122.55 |
USD/Ton |
-1.88% |
3/1/2020 |
|
Viscose Long Filament |
2416.7 |
USD/Ton |
-0.59% |
3/1/2020 |
|
Polyester DTY |
5362.5 |
USD/Ton |
0% |
3/1/2020 |
|
30S Spun Rayon Yarn |
2030.6 |
USD/Ton |
0% |
3/1/2020 |
|
32S Polyester Yarn |
1615.9 |
USD/Ton |
0% |
3/1/2020 |
|
45S T/C Yarn |
2409.55 |
USD/Ton |
0% |
3/1/2020 |
|
40S Rayon Yarn |
2187.9 |
USD/Ton |
0% |
3/1/2020 |
|
T/R Yarn 65/35 32S |
1951.95 |
USD/Ton |
0% |
3/1/2020 |
|
45S Polyester Yarn |
1758.9 |
USD/Ton |
0% |
3/1/2020 |
|
T/C Yarn 65/35 32S |
2273.7 |
USD/Ton |
0% |
3/1/2020 |
|
10S Denim Fabric |
1.26412 |
USD/Meter |
0% |
3/1/2020 |
|
32S Twill Fabric |
0.6864 |
USD/Meter |
0% |
3/1/2020 |
|
40S Combed Poplin |
0.96668 |
USD/Meter |
0% |
3/1/2020 |
|
30S Rayon Fabric |
0.53339 |
USD/Meter |
0% |
3/1/2020 |
|
45S T/C Fabric |
0.67067 |
USD/Meter |
0% |
3/1/2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14300 USD dtd. 01/03/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The garments industry is projecting exports to register flat growth this year, as firms struggle to alternative sources for raw materials outside of crisis-hit China. Robert M. Young, president of the Foreign Buyers Association of the Philippines (Fobap), said nearly all of the country’s apparel production is stopped due to the disrupted shipment of raw materials from source countries, particularly China. The Asian superpower is wrestling with its coronavirus crisis that forced many factories to shut down. As such, the Philippines has to find alternative sources for fabric, textile and accessories, as it has no respectable domestic output for these items. “At present, almost all of our apparel production are now halted due to raw materials delayed deliveries from China, Korea, Taiwan and other Asian countries,” Young said in a statement last Friday. “Reason being is that [the] Philippines has no local source or backup industries, such as fabric, textile and accessories, as every item is imported.” This was largely the reason the garments industry, which is trying to make a comeback through public and private efforts, is tempering growth forecast this year, expecting export receipts to stay the same or increase by just 1 percent. In spite of threats from the outside, Young argued the Philippines would keep its position in the worldwide market. His optimism is boosted by the looming passage of the proposed Corporate Income Tax and Incentives Rationalization Act (Citira), which was approved last year by the House of Representatives and is now just awaiting Senate legislation. Young said the industry is anticipating new players to come in when the Citira bill becomes law, as it will reduce corporate income tax to 20 percent by 2029, from 30 percent at present—the highest rate in the whole of Southeast Asia. In terms of market, the Fobap chief said the United States will keep its status as the country’s largest buyer of clothing products this year. He added the US will further solidify this position if it expands the Generalized System of Preferences (GSP) of the Philippines to garments. As a GSP beneficiary, the Philippines can ship a total of 5,057 products to the US at zero tariff. “Right now the GSP is only for gift wares and all these hard goods,” Young explained. “We are hoping that in the new GSP come December 2020, we will include the footwear and garments in the US GSP.” Data from the Philippine Statistics Authority showed that exports of apparel and clothing products last year declined nearly 7 percent to $906.28 million, from $974.44 million in 2018. Last year, the Board of Investments unveiled a road map seeking to bring back the Philippines as one of the world’s largest exporters of garments. In the short term, the industry is required to grow by 12.3 percent annually starting this year to enter the circle of the world’s top 20 by 2022.
Source: Business Mirror
The impact of the RMG industry on our national economy has been mostly positive; at least on the surface. Implementation of relatively new technology like data science and machine learning is shifting business practices today. The RMG sector might be in for big changes. And they might be vastly different from your expectations.
How it has worked
RMG and textile industries in Bangladesh have been mostly local in the past. They were efficient at the time, based on the nature of customer demands and buying behavior. And the production schedule matched the seasonal buying behavior of consumers of apparel in the country. The business model has worked so far so well based mostly on the lower wage demands. The mixture of these few factors, along with many more variables created a favorable environment for textile businesses in the country. And the subcontinent by extension.
How RMG has changed
Automation brought on the biggest string of changes in the textile industry in Bangladesh. We moved on from hand sewn products to a more mechanical approach. But the dexterity of workers in operating machines remains an important factor to this day. However, the workers are not dexterous enough it would seem. While we remained productive in comparison to our neighbors; hourly productivity remains relatively low from a global perspective. This in addition to rising wage demands and global competition is making our RMG industry less lucrative. In addition, customer behavior is evolving. We have moved on from seasonal buying to more intermittent strings of purchases. This is driven by online presence of companies and prompt response times of platforms like Daraz or Aliexpress. We want things fast, and we want them all the time.
Factors of the next big change in RMG
Data analytics and AI is shaping the business environment and taking all business across the world in different directions. New supply chain designs based on Big Data about consumer behavior is shifting processes to a more predictive direction. Businesses are forecasting demand patterns in consumers and filling demands before they are made. This calibrating of customer demands is affecting textile and even fashion industries by extension. In addition, machine learning and AI is taking fashion modelling and textile demand in newer, weirder avenues. And all things point to the next big change in textile being brought on by data science and machine learning. By the way, check out this neat article on AI doing funky and potentially kinda bad stuff.
Source: HiFi Digital
China has now appealed to the World Trade Organization (WTO) members to remove “unnecessary restrictions” which have affected trade between China and World. This is in the wake of the coronavirus pandemic which has cut flights to mainland china with shipping lines avoiding ports in the country, as the virus kill at least 2,700 people with more than 80,000 infections globally. Through its Ministry of Commerce(MOFCOM), China says it will strengthen communication and coordination with economic and trade partners. The ministry “calls on WTO members to remove unnecessary restrictions as soon as possible, in order to create a favourable international trade environment and jointly safeguard the development of global supply chains,” the Chinese Embassy in Nairobi said in a statement. “The Ministry of Commerce will facilitate more foreign companies in resuming work and production in order to stabilise the global supply chain,” it added. The National Development and Reform Commission (NDRC) believes that China will maintain stable economic growth and meet this year's goals. According to the Embassy, some 90 per cent of major enterprises in eastern China's Zhejiang Province have resumed production. The same barometer in Jiangsu, Shandong, Fujian, Liaoning, Guangdong and Jiangxi Provinces has surpassed 70 per cent. This comes as businesses in Kenya remain uncertain of the future in the wake of a drastic drop in business patterns with China, the country's top import market source. Data from the Kenya Trade Network Agency(KenTrade), which oversees the country's trading platform-Single Window System, already shows a 38.7 per cent drop in the value of imports from China in January. The agency's data shows the value of imports from China in January dropped to Sh54.9 billion, compared to Sh89.6 billion in January 2019. Clearing agents have reported reduced activities on imports from China, Kenya's biggest source where a total of Sh324.9 billion worth of goods came from between January and November last year, Kenya National Bureau of Statistics data shows. “Volumes have reduced and iff the situation persist, we are likely to see a further drop on imports from China,” Kenya International Freight and Warehousing Association chairman Roy Mwanthi told the Star. The virus was officially confirmed on January 7, before the World Health Organisation declared it a global emergency on January 30. Hundreds of factories in China have remained closed as a control measure. Small traders are staring at grim days according to Nairobi Importers and Small Traders Association chairman Samuel Karanja. “Most of us get goods from China, which we can’t do now,” he said. Most affected businesses according to the Kenya National Chamber of Commerce and Industry are importers of raw material for manufacturing, clothing and textile, plastic and other fast-moving goods, sanitary goods, beauty products, and electronics. “Businesses are running out of stock and they will be forced to either source from other markets or suspend operations,” KNCCI Mombasa chapter CEO James Kitavi said. Kenya receives at least two to three ships every week which have either originated from China or called at Ports in China en route to Africa. Kenya Export Promotion and Branding Agency says with China being a leading supplier and purchaser of goods and services, the virus effects will cause economic shock. “We hope that the menace will be curtailed as soon as possible so that the economies can progress normally,” CEO Peter Biwott said. Meanwhile, he has called for aggressive diversification of markets with a focus on Africa, as Kenya remains key in unlocking economic potential through trade.
Source: The Star, Kenya
The United States has decided to postpone a meeting with leaders of Southeast Asian countries it had planned to host on March 14 due to worries about the coronavirus outbreak, two U.S. officials familiar with the matter said on Friday.U.S. President Donald Trump had invited leaders of the 10-member Association of Southeast Asian Nations (ASEAN) to meet in Las Vegas after he did not attend a summit with the group in Bangkok in November. “As the international community works together to defeat the novel coronavirus, the United States, in consultation with ASEAN partners, has made the difficult decision to postpone the ASEAN leaders meeting,” one of the sources, a senior administration official, told Reuters. The official added that the United States values its relationships with ASEAN member nations and looks forward to future meetings. The U.S. State Department did not immediately respond to a request for comment. The decision comes amid growing fears that the virus will spread in the United States as countries report new infections, companies announce curbs on employees’ travel and global stock markets continue to plummet.
US cases still relatively few in number
The number of confirmed coronavirus cases in the United States is still relatively small at around 60, most of them repatriated American passengers from the Diamond Princess cruise ship docked in Japan. U.S. Secretary of State Mike Pompeo had said on Monday preparations for the meeting were going ahead in spite of the coronavirus outbreak. e coronavirus outbreak started in China late last year. The latest World Health Organization (WHO) figures indicate over 82,000 people have been infected, with more than 2,700 deaths in China and 57 deaths in 46 other countries. While the outbreak appears to be easing in China, it has surged elsewhere and countries other than China now account for about three-quarters of new infections. China is not a member of ASEAN, which groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Although the State Department has repeatedly stated that ASEAN is at the heart of its strategy to maintain a “free and open Indo-Pacific” in the face of rising Chinese power, Trump’s decision not to attend the Bangkok meeting raised questions about the U.S. commitment to the region. Japan’s Nikkei Asian Review earlier this month quoted diplomatic sources as saying that leaders from Vietnam, Laos, Singapore, Cambodia and Thailand planned to attend Las Vegas summit.
Source: CNBC
China is the largest container cargo handler in the world, processing 30 per cent of global traffic or around 715,000 containers a day in 2019, according to global financial market and infrastructure data provider, Refinitiv The Commerce Department is considering imposing duties on over a 100 products that India imports heavily from China in light of the coronavirus (Covid-19) outbreak. The issue is set to...
Source: Business Standard
