The Synthetic & Rayon Textiles Export Promotion Council

MARKET WATCH 11 MARCH, 2020

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INTERNATIONAL

 

Time to tell the India story right: WCD and Textiles minister Smriti Irani

Union Minister for Women and Child Development Smriti Irani, speaking at the ET Global Business Summit, on Saturday said that her ministry has been engaging with global agencies that comment on Indian health parameters to "set the India story right, and in proper context." "We have reached out to global agencies that look at Indian health parameters only from the prism of maternal mortality rate. Even then, when we were calculated on the Global equality index we have been evaluated on NMR of 174 when the MMR is actually 122. They have told us they will correct it next year," the minister said. She said the government is "steadily and steadfastedly" engaging with global agencies that comment on Indian matters, particularly with regard to gender. "When they look at economic empowerment of women they only look at those in labour and not those who run small businesses...even the women what part of 59 lakh self help groups don't get counted." Stressing that the "India story has to be told in the right context," she said, "Nobody is perfect but you can't deny that we have taken the right steps in the last few years." Talking about recent legislations such as the one allowing the right of a woman to terminate pregnancy till 24 weeks, the minister said, have shown "how progressive we are as a country." She also said the proposal to set up separate help desk in every police station has been accepted, and thanked Home Minister Amit Shah to have put in place administrative protocols for the same. Irani said for three decades the MSME sector had not received the subsidy it deserved and now the government is overhauling the 60- year-old legacy of the textile sector by bringing in necessary reforms. "It is only in 2016 that we got a Statistics officer so that you have hard data. Till then we had no official statistics on production capacity or distribution networks." The Minister said that the government is in conversation with States to reach out to farmers to ensure they have better certified seeds. She also said while scalability and production are challenges in the sector there are environmental norms that have to be followed. The Ministry is open to anyone with legislative issues, she said.

Source: Economic Times

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Maharashtra: Textile mills rejoice increase in power subsidy

Textile mill owners had a reason to rejoice on Friday after the state government increased the power subsidy for textile mills by Rs 1.15 per unit. Deputy chief minister and state finance minister Ajit Pawar, in the maiden budget of Maha Vikas Aghadi (MVA) presented on Friday, said that the subsidy grant for the power load more than 27 horse power or 20 kilo watt has been increased by Rs 1.15 per unit. The effective tariff for power consumed by the textile mills is Rs 5.45 per unit. Textile mill owners claim that increase in the subsidy will effectively result in more savings and thereby they can opt for more investment and hire more employees. In Ichalkaranji, the textile town of the district, around 3,000 connections have a power load of 27 HP or more and the monthly consumption of power is around 15,000 units to 1.5 lakh units. Last year, during floods, textile mill owners incurred damages around Rs 125 crore after over 400 textile units housing around 4,000 power-looms were shut down. Satish Koshti, president of Ichalkaranji power-loom association, said, “The sector is going through the worst phase since last six years due to the bad policies such as demonetisation. Earlier, the subsidy grant was reduced by Rs 1.22 per unit which further affected the sector badly and investment was totally stalled further causing job losses in the sector which provides huge number of employment to people. With increase in the subsidy, more money will be saved.” Meanwhile, industrialists are not happy with reduction in duty on power consumption from 9.3% to 7.5%. Energy minister Nitin Raut has claimed that it will lead to loss of Rs 2,500 to the state exchequer, but will help the ailing core industries.

Source: ET Energy World

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GST Council may correct rate anomaly on March 14

Mobile phones, textiles and a few other goods may become costlier if the GST Council chooses to correct certain duty structures on them due to which finished products attract lower duty than the raw material. This imbalance in taxes, which is called inverted duty structure, has been resulting into a loss of close to Rs 25,000 crore per annum to the government as it has to refund the tax already paid. Under the GST regime, a registered taxpayer can claim a refund on account of the rate of tax on inputs being higher than that on output supplies. But when the raw material used attracts higher duty and the finished goods have a low duty, the finished goods producer gets a refund of the tax paid in the inputs he used. This refund is oen delayed as it is to be verified. Such a situation open led to a confrontation between the taxpayers and tax authorities, an official said. The bulk of the refund demand due to inverted duty structure comes from the lower tax slabs of 5% or 12%. The duty adjustment could be done by hiking the tax rate on finished products as also lowering the rate of the input tax credit. At present mobile phones attract a 12% duty under the GST but its components attract 18%. Similarly, finished textiles have a 5% duty but the raw materials are taxed at 12%. The industry associations have been raising the issue of this rate anomaly for some time. More than a dozen goods including mobile phones, footwear, fabrics, man-made yarn, ready-made garments fertilisers, tractors and pharma equipment attract lower duty on finished products but higher on the raw material. The government was all set to take the decision in the GST Council meeting on March 14 but the only hitch is the prevalence of coronavirus issues that have already jacked up the cost of raw material and the finished products as well, the official said.

Source: DHNS

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GST portal glitches to dominate agenda of Council meeting on Saturday

Glitches on the goods and services tax (GST) portal will dominate the agenda of the Council meeting on Saturday, even as states will vehemently seek resolution of delayed compensation issue. Infosys Chairman Nandan Nilekani has been asked to make a presentation before the Council. “Hassles on the GST portal even 30 months after roll-out is unacceptable and that has been communicated to both GST Network and Infosys,” said a government official. States are likely to demand that Infosys should have a point of contact in each state to resolve these glitches, the official said. Meanwhile, the electronic invoice facility is likely to be deferred by three months from April 1 to July owing to lack of readiness of both GSTN and the taxpayers. Finance Secretary Ajay Bhushan Pandey took a detailed meeting with Infosys officials on March 7 on the GSTN-related matters, more importantly ahead of the crucial roll-out of new simplified returns from April 1. GSTN’s tech support partner Infosys has been asked to come up with a plan for quick resolution within a fortnight. System capacity constraints and the inability of GST Network to provide smooth return filing will be taken up at the Council. With new returns format to be rolled out from April, it was imperative for GSTN and Infosys to work effectively, he added. The department of revenue, in a letter to Infosys on March 5, highlighted that the issues flagged in 2018 were still unresolved and that failures month after month resulted in genuine taxpayers getting frustrated. “It is requested to go through the pending issues, day-to-day disruptions and the future road map and come up with a plan for quick resolution within 15 days. Infosys has set high international standards and it is expected that the efficiency which your organisation is known for should be visible in GST project also,” the letter said. It also said even though the GST system has been in operation for the last 30 months, there have been instances of taxpayer complaints on facing issues in filing returns in the last two days of filing of returns. “It is noticed that MSP (Master Service Provider) Infosys has been repeatedly asked to take timely action and to identify the root cause of issues after each event and taken corrective action. However, problem still persists,” it said. The ministry said such glitches on the portal led to an unhealthy tax compliance requirement, more so when on account of such disruptions some taxpayers end up becoming liable for payment of late fee, interest. The ministry is working to shore up GST revenues. In the April-February period this fiscal year, GST collection stood at Rs 11.24 trillion, down from Rs 12.67 trillion in the year-ago period. No response at peak hours, wrong computation of late fees for annual returns for FY18, and offline tool not available for GSTR9 are among a list of problems flagged in the letter. Compensation cess issue will be raised by the states, who are likely to ask for full compensation for the fiscal year, irrespective of collections and pitch for extension of compensation period. The Centre, meanwhile, is expected to clearly tell states that they will be compensated only as much as is collected in the cess fund, according to the law. With only 56 per cent of compensation dues for October and November worth Rs 19.958 crore disbursed last month, states are expected to strongly seek a resolution on the matter. The Centre is supposed to compensate states on a bi-monthly basis for any losses they incur in the first five years of GST implementation. The loss is estimated if they do not record 14 per cent increase in the subsumed indirect taxes keeping 2014-15 as the base year. The Centre has released a total of Rs 120,498 crore as GST compensation to the states and Union Territories so far in FY20 out of Rs 87,821 crore collected till February.

Source: Business Standard

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E-invoicing under GST may be deferred

The government is considering deferring the implementation of e-invoicing under goods and services tax (GST) by three months to July 1, two officials aware of the development said, adding that the Goods and Services Tax Council may consider such a proposal at its meeting on Saturday. “It (deferment) is being considered… The Council has to take up the matter at the meeting… they may announce it after the meeting and consultation with states,” one of the officials said, asking not to be named. Trials to upload e-invoices on the GST Network (GSTN) — introduced in January — have seen lukewarm response, and barely 1% of registered businesses under the GST regime used it, the other official said. “We need feedback… if only a few companies upload e-invoices now, we will not know the shortcomings of the system. When it becomes mandatory from April 1, a deluge will inundate the system, and then people will say that the government’s systems are not working,” the official added, requesting anonymity. The deferment proposal comes close on the heels of finance minister Nirmala Sitharaman pulling up the GSTN top brass and technology provider Infosys at a GSTN meeting last week. According to people who were present at the meeting, Sitharaman criticised both for repeatedly failing to resolve technical issues and for the difficulties faced by taxpayers while filing returns and GST forms. “Instead of being apologetic, they were trying to justify their mistakes on the grounds that only 0.1% of the returns filed actually faced problems,” one of the people said. Voluntary uploading of e-invoices on the GSTN portal kicked off from January 1 for businesses having a turnover of over 500 crore. For businesses with annual turnover of over 100 crore it was made effective from February 1. From April 1, companies having an aggregate revenue of 100 crore or more have been mandated to upload e-invoices on the portal. Tax experts said that the deferment would be helpful for the industry, since various companies use different software to issue and upload invoices, which have to then be reconciled with the government’s core system. For the government, an additional three months can help create capacities for the mass digitisation exercise. “Deferring e-invoicing for a few months is necessary, as neither the industry nor the government seems to be ready for this huge change as of now. From industry's perspective, transitioning into a new system entails careful analysis of impact on all transactions, changes in IT systems and engaging with vendors and customers,” Pratik Jain, national indirect taxes leader at PwC, said. The deferment of e-invoicing would give the industry much needed time, as recent changes in the schema and alterations in mandatory fields needs time to be implemented, said Harpreet Singh, partner at KPMG. The schema for the invoice is not yet final and the new returns are also being simultaneously introduced, making the trade anxious about the impact on their already sluggish businesses, said Bipin Sapra, partner at EY. “The B2C requirement of the dynamic QR code also needs to be relooked as the current compliances do not require separate invoicewise reporting for B2C transactions,” he added.

Source: Economic Times

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More GST funds for states: New imposts, cess hikes preferred ways

As a comprehensive GST rates overhaul may be postponed for a later date — finance minister Nirmala Sitharaman recently said she preferred the system to stabilise before another major rates rejig. The Goods and services tax (GST) Council, at its next meeting likely by the end of this month, will devise a mechanism on how additional funds would be found to bridge the states’ GST ‘revenue shortfall’, given that the designated corpus has fallen short of the requirement, according to official sources. The obvious options are to restructure the GST slabs and raise the aggregate rate to the revenue-neutral level envisaged before GST’s launch or hike the cesses, through which the compensation funds for states are mobilised or introduce new such imposts. As a comprehensive GST rates overhaul may be postponed for a later date — finance minister Nirmala Sitharaman recently said she preferred the system to stabilise before another major rates rejig — there is greater chance of the Council resorting to the cess route. Speaking at the Indian Express group’s Idea Exchange programme recently, finance secretary Ajay Bhushan Pandey said the relevant law was clear that the Centre could make payments only from the compensation proceeds generated out of cesses levied on items under GST, for bridging the states’ revenue shortfall. “Whatever money comes in that (compensation) fund, only that money can be paid (to states). Now, if there is a shortfall (against states’ guaranteed revenue growth of 14%) which is more than what could be overcome by compensation fund, the GST Council will take a decision on what measures can be taken to either increase the cess amount or consider the rates or take any other measure”. The Centre has recently said it will use about Rs 28,000 crore of the Rs 47,271 crore absorbed by the Consolidated Fund of India in FY18-FY19 period as ‘surplus’ revenue from the GST compensation cess to reduce the state governments’ GST revenue shortfall in FY20. Even after this, the states’ GST revenue (SGST) in FY20 will be some Rs 28,000 crore short of the level they would have achieved under the 14% guaranteed annual growth formula. Some Rs 20,000 crore of the surplus that merged with the CFI was used to bridge states’ shortfall in the final months of FY19. While states wanted the Centre to meet its ‘constitutional obligation,’ the Centre remained ambivalent on how the issue would be tackled. Clarity on the Centre’s stand emerged when, in her Budget speech, finance minister Nirmala Sitharaman said: “It is decided to transfer to the GST compensation fund balances due out of collection of the years (2017-18 and 2018-19), in two instalments. Hereinafter, transfers to the fund would be limited only to collection by way of GST compensation cess.” Some states are threatening to move the Supreme Court against the Centre’s decision. Kerala finance minister Thomas Isaac said the state government would approach the apex court under Article 131 to secure the pending GST compensation from the Centre. West Bengal finance minister Amit Mitra had said it was for the Central government to devise a mechanism for payment of compensation to states under GST, if the fund set up for the purpose ran dry, given the silence of the relevant law on an alternative mechanism. The guaranteed level of SGST revenue in the current fiscal is Rs 6.70 lakh crore. The Centre’s budgeted GST revenue (CGST, compensation cess), according to the revised estimate, is Rs 6.12 lakh crore, against the original estimate (BE) of Rs 6.63 lakh crore. The collections fell woefully short of estimates in earlier months, but have picked up in December-February. In aggregate, GST collections are still way below the targets set by the authorities, but their efforts to improve compliance, check excessive use of input tax credits and frustrate frauds like fake invoicing are paying off, albeit gradually. Since the Centre cut its own budget estimate for GST by over 8%, it would likely meet the revised estimate, even with the current pace of collections; but in order to be able to meet the gross collections target, which includes fully compensating the states for any revenue shortfall from the assured annual growth level of 14%, the March mop-up requires to be an impossibly high Rs 1.4 lakh crore. Some of the suggestions presented before the Council in last meeting included rationalising GST rate structure to just two rate slabs of 10% and 20%, and a special higher rate on sin and luxury goods and imposing cess on additional items like cosmetics, gambling and recreational services. Further, a committee of officials suggested that some of the items currently exempt like health and education could be selectively taxed. Another option of revisiting rates of certain items that were brought to 18% from 28% earlier. However, while the committee presented an analysis of different options for the Council to augment revenue collection, it said any increase in compensation cess rate or base would not yield significant revenue if collection growth remained subdued. The Council, according to sources, could look at imposing cess on items in the 18% tax bracket if there is a consensus that these items can be classified as non-essential. Nearly half of GST revenue comes from items in the 18% slab. The cess is now there on a handful of items that aren’t in the 28% tax slab while all items in the 28% slab attract cess.

Source: Financial Express

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Trade talks with the US are to India's advantage: Piyush Goyal

Commerce and industry minister Piyush Goyal on Saturday said that India’s trade negotiations with the US are beneficial for the country as it would open more opportunities for exports. “Negotiations with the US are to India's advantage because we have a trade surplus (with the US)... it opens up more opportunity for our exports in a big way,” Goyal said at the Economic Times Global Business Summit here. Terming the negotiations ‘complex', the minister said a big win would be when Indian people can benefit from it and innovation, research and development, and better technologies are the areas that New Delhi is focusing on. “And I can assure you that negotiations are in a very friendly, extremely positive approach,” Goyal said. Goyal’s statement comes almost a fortnight after US president Donald Trump met Prime Minister Narendra Modi and both leaders agreed to promptly conclude the ongoing trade negotiations that would become phase one of a comprehensive bilateral trade agreement. Goyal added that not only a short term engagement, but India should look at a larger engagement with the US which has huge imports and a huge potential for many of Indian products like textiles, gem and jewelry, chemicals, medicine, and pharmaceuticals. The minister said the bonhomie and trust between the two leaders will “hold us in good stead in our negotiations”. Referring to the Regional Comprehensive Economic Partnership trade pact which India opted out of last year, Goyal said any other government would have possibly also signed the pact that would have threatened Indian domestic industry.

COVID-19-India’s resilience

Allaying fears about the impact of the corona virus on the economy, Goyal said the numbers do not reflect any immediate cause of concern and India’s import and exports in February have slightly increased. He said India is quite insulated and the country’s interdependency is leaser than other parts of the world, he said: “We are in fairly good shape”. The minister said that his ministry is engaging with industry to see the gaps in the global supply chain which India can fill and also scouting for alternate sources to meet the country’s need for inputs. “Our bigger focus is to ensure that we sensitise our population to preventive healthcare,” he said on being asked if India is trying to attract manufacturers with China being the worst affected by the virus. Terming Swachh Bharat Abhiyan and Ayushman Bharat the ‘unsung heroes’, he said sanitation and clean India have a huge dimension on the health of the nation.

Source: Economic Times

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WTO focus on trade benefits to developing nations at key meet

Special and differential treatment for developing countries like India will figure prominently in the World Trade Organization’s (WTO) 12th Ministerial Conference meet in June in Kazakhstan, an official said. The Ministerial Conference is the highest decision-making body of the 164-member WTO. Trade ministers of all the member countries participate in the deliberations. The 12th Ministerial Conference will take place from June 8-11 this year at Nur-Sultan in Kazakhstan. “This time, besides fishery subsidies, special and differential treatment and investment facilitation will figure in the meeting,” the official said. As part of reforms at the WTO, the US wants the formulation of some guidelines that countries with high economic growth are prevented from taking benefits of special and differential treatment (S&DT), which is meant for developing and poor nations. The S&DT allows developing countries to enjoy certain benefits, including taking longer time periods for implementing agreements and binding commitments, and measures to increase trading opportunities for them. Currently, any WTO member can designate itself as a developing country and avail these benefits. The US had submitted its suggestions to the WTO that states that self-declaration puts the WTO on a path to failed negotiations and it is also a path to institutional irrelevance. India is of the view that the matter needs to be negotiated comprehensively in the WTO and a consensus-based decision needs to be taken on S&DT. Further, on fishery subsidies, India wants an equitable and balanced outcome in the negotiations as the country provides support to its small and marginal fishermen who depend on the sector for sustenance.

Source: Economic Times

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Exporters must leverage gains quickly

The fast spreading coronavirus could help India to strengthen its position in the global supply chain but the decisions have to be taken at a faster pace to make inroads, according to corporate leaders and industry observers. China commands around 12 per cent of the global trade compared with India’s share of 2.1 per cent, making it a much larger supplier to the world than India. “One of the beauties of globalisation is that the world has got connected supply chains and China took a pole position in becoming a key part, especially in the manufacturing sector. Almost no vertical in the world can do without China in making some components,” said Sunil Kant Munjal, chairman of Hero Enterprises. Speaking at the launch of his book — The Making of Hero: Four Brothers, Two Wheels and a Revolution that shaped India — in Calcutta, Munjal said companies and countries were devising a strategy not to depend on a single supplier even though it is the cheapest. “The positive side is people are now creating a strategy called 1+1. Many global companies are saying that they will not depend on any one single source for anything at all. So, this is an opportunity for a country like ours to go out and take advantage,” said Munjal.

T. V. Narendran, MD and CEO of Tata Steel, concurred.

“I think the virus could be an opportunity for India because it accelerates the derisking of supply chains that originate from China,” Narendran said.  “The journey had started with the trade issues between US and China and now with the virus, there would be even more reason for people to not be over-dependent on the country. From an electronics or auto component point of view, many sectors will benefit as a consequence of this,” he added. The company already follows the 1+1 model where it buys consumables from countries other than China. India’s chief economic advsior Krishnamurthy Subramanian had earlier said that the virus outbreak was an opportunity for India even as China recovers from it. “This is a good opportunity. India can follow up an export driven strategy integrating the assemble-in-India model,” Subramanian had said at an IIM, Joka, event last month. According to Crisil, local manufacturers which compete with the Chinese in sectors such as ceramics and plastics are expected to benefit, with falling imports. Moreover, India’s steel, paper, leather and textile readymade garment segments have an opportunity to expand exports. “Last time, when the US-China trade war began, people said textiles and garments are businesses for us to tap. But Vietnam, Indonesia and Bangladesh did better than us. This time around there is a unique opportunity,” said Munjal. However, sectors such as aluminium, electronics, and pharma bulk drugs in India will be unable to meet the void created in global trade by China’s virus problem as they are either running at peak utilisation or face capability issues, the Crisil note added.

Source: The Telegraph

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Industry 4.0 Ready: Modern tech for modern manufacturing

Data-led core applications are driving digitalisation; biggies like Hindalco, Unilever and Apollo Tyres are leading the transformation. With Industry 4.0 on the horizon, it is now the turn of manufacturing companies to speak about the massive impact of modern technologies—Internet of Things (IoT), 5G, Artificial Intelligence (AI), Enterprise resource planning (ERP) and virtual reality/ augmented reality (VR/AR). The manufacturing sector is looking at stiff competition in terms of cost cutting, enhanced efficiency and quality. There is no surprise that they see these technologies as their lifeline, using them optimally to survive and thrive. India is home to some fascinating stories where some biggest manufacturing brands have turned a new leaf by re-inventing themselves via digital transformation while keeping their ground values intact. One of them is Hindalco, the world’s largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. This 62-year-old company understood that being digital means being data-centric and hence the leadership at Hindalco gave their people technology that will help one and all—be it in HR, supply chain or their factories. Their philosophy is simple: Do not start digital if you do not have a problem to solve. Jagdish Ramaswamy, CDO, Hindalco Industries, says, “It’s important to start with point solutions but very soon look at how this technology will help improve business efficiency or customer experience. So, technology is good to learn but it’s not good as a solution for the problem. So, start with what problem you are trying to solve and find the right technology which gives you benefit. So it’s important to move from point solution to end-to-end business value and with this we’ve started the journey with Oracle in a big way.” Another well-known Indian success story is Apollo Tyres. The company has come a long way from its first plant in 1977 to four manufacturing units in India and two units on foreign soil (Netherlands and Hungary). Apollo Tyres migrated its IT operations from legacy system to Oracle SCM cloud. Talking about the transformation, Satish Sharma, president, Asia Pacific, Middle East & Africa, Apollo Tyres, says, “Cloud has given us scale, security, and uptime. Being on the cloud has given us the flexibility of seamlessly managing our business without any disruptions even when we are expanding rapidly. It is available as pay per the use.” Unilver, a multibillion-dollar multinational consumer goods company operating in 190 countries, is on its way to create a data intelligent work culture, which is a humongous task. The company implemented Oracle Transportation Management (OTM) to revamp its transportation strategy with a view to improving the ‘3Cs’ of logistics—customer service, reducing delivery costs and cutting CO2 emissions, which is in line with its wider corporate social responsibility strategy through Unilever Sustainable Living Plan. The technology world is abuzz with terms like Blockchain, AI, Machine Learning. How can companies map their requirements against ever-changing criteria? According to Ramaswamy, first and foremost the business needs to run, which would include ERP, as it is the transaction engine for any business. Then comes the technology that will help people make better decisions and after that AI, ML comes, which can take routine decisions and can help people to concentrate on making business better. Last but not least, is uptime, which gives much more reliability.  “Technologies like AI, Automation, IoT are changing the businesses as we speak. Almost all our customers are using these technologies in some form or other depending upon their maturity. We have customers ranging from some big names like Airtel, IOCL, SBI Card to startups like Klay Playschool, Oyo Rooms, etc,” says Prasad Rai, vice-president, applications, Oracle. “When a company is looking for business transformation, it is looking for efficiency gain, change in the way they deliver their product – whether it is a product as a service or a traditional way of delivering the product. These technologies help organisations to gain end-to-end visibility across the supply chain, right from sourcing a supplier, uploading tender till the product is delivered to end customers. The biggest change that these technologies have brought in is data-driven decisions.”

Source: Financial Express

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Doing business with Bangladesh

With Bangladesh welcoming Indian investment, embassy officials visited the state recently to look for potential tie-ups between Goan and Bangladeshi businesses. “Priority sectors for Bangladesh are garment manufacturing, Information Technology, pharmaceuticals, shoes and leather, agro, furniture, home textiles, ceramics and light engineering,” said Md. Lutfor Rahman, Deputy High Commissioner, Bangladesh Deputy High Commission in Mumbai. He said that, about 100 Special Economic Zones (SEZ) are being set up in Bangladesh of which work has already commenced on 66 SEZs. Urging Goans to invest, the Deputy High Commissioner pointed out that, Indian businessmen such as the Adan’s and Hiranandani Groups are developing around 82,000 acres of SEZ land. “Tax holiday for 10 years, 100 per cent repatriation of royalty and protection of investment by law were some of the incentives that Bangladesh is offering for attracting investment,” said Rahman. With investor friendly initiatives India- Bangladesh trade is expected to exceed US $ 10 million, said the Deputy High Commissioner, at a World Trade Center- Goa, organised interactive session titled Doing Business with Bangladesh: Opportunities and Way Forward. The meeting had businessman Ankit Pandit, founder, Ankit Pandit Group, speaking on his experiences of doing business in Bangladesh. Pandit said that, he hopes to promote Goan homes of Portuguese architecture in Bangladesh. Earlier in the event, Anil Velde, Joint Director, World Trade Center Goa, in his welcome address spoke on the strong emerging business environment in Bangladesh. Sekhar H, partner, Unique Equipments Goa, highlighted his company’s foray into the Bangladesh market where it is promoting food processing solutions as well as other solutions especially in the metal detection systems which he said had a very high potential. Cyril Desouza, assistant director, trade promotion, WTC, in his vote of thanks, hoped that, more local companies would be encouraged to look at Bangladesh as a viable investment destination.

Source: Nahind Times

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Coronavirus Impact: Exports of key intermediate goods to China falter in January

Of course, there were certain other raw materials, such as cotton and iron ores, that defied this trend and witnessed a healthy rise in January, partly due to seasonal factors and favourable base. India’s overall merchandise exports to coronavirus-hit China may have risen by almost 24% year-on-year in January, aided by a favourable base, but growth in the outbound shipment of certain key raw materials/intermediate goods and food items, including organic chemicals, plastics and marine products, did falter during the month. This was the time when the world’s second-largest economy was struggling to contain the epidemic within its shores and the outside world was largely unfamiliar with its ferocity. With the epidemic spreading its tentacles far and wide now, both within and outside China, prompting India to curb pharmaceutical exports, growth in its outbound shipments to the giant neighbour is all set to decline from February/March onwards, traders say. Official data showed exports of organic chemicals to China dropped almost 15% y-o-y in January, dragging down such despatches in the first 10 months of this fiscal by 11.6% to $2.3 billion. Organic chemicals are India’s largest export product. Similarly, Indian exporters blame the fears of the epidemic in China and consequent drop in fish consumption there for lower marine product purchases by the Chinese. So growth in India’s marine product exports to China dropped to a mere 3% y-o-y in January. Still, thanks to the rapid growth up to December 2019, such exports recorded a 114% y-o-y jump in the April-January period. Plastic exports crashed 43% in January, which exacerbated the fall in such shipments to China to 19% up to January this fiscal. Even iron and steel exports to China plunged by almost 40% in January, dragging down growth in such supplies to 98% up to January this fiscal. Of course, there were certain other raw materials, such as cotton and iron ores, that defied this trend and witnessed a healthy rise in January, partly due to seasonal factors and favourable base. Having contracted for months, cotton exports rose 13.3% in January. Still, the exports in the first 10 months saw a contraction of 53%. Similarly, ore exports jumped 174% in January, pushing up such supplies by as much as 120% in the April-January period. Earlier this month, India restricted the exports of 26 drug formulations and active pharma ingredients (APIs) – including paracetamol, tinidazole and metronidazole – to keep domestic supplies steady. The Indian pharmaceutical industry is both an exporter to as well as importer of bulk drugs (active pharmaceutical ingredients and intermediates that give medicines their therapeutic value) from China. As much as 68% of these raw materials were imported from China last fiscal. India’s exports to China rose to $1.5 billion in January, against $1.2 billion a year before, partly due to a favourable base. In the April-January period, however, the growth was only 4.8% y-o-y to $14.4 billion.

Source: Financial Express

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Coronavirus: Moody's cuts India growth forecast to 5.3% for 2020 on dampened domestic demand

Moody’s Investors Service on Monday cut its growth forecast for India to 5.3 per cent for 2020 from 5.4 per cent estimated earlier, as it expects the coronavirus outbreak to dampen domestic demand globally. In its update on Global Macro Outlook for March, Moody's said the virus outbreak has spread rapidly outside China to a number of major economies. "It now seems certain that even if the virus is steadily contained, the outbreak will dampen global economic activity well into Q2 of this year," it said. Moody's baseline forecasts assume that the number of cases would keep increasing globally and there would be travel restrictions through the April-June period. Apart from supply chain disruptions, it also expects consumption and investment to be affected and prices of oil and other commodities to remain around current lows until the end of June. Accordingly, Moody's has revised growth forecasts for G20 economies to 2.1 per cent, 0.3 percentage point lower than the previous baseline. China's 2020 growth forecast has also been reduced to 4.8 per cent from the previous estimate of 5.2 per cent. For the US, growth of 1.5 per cent is now expected, down from the previous estimate of 1.7 per cent. For India, Moody's has projected growth at 5.3 per cent for 2020, lower than 5.4 per cent GDP expansion projected in February, taking into account baseline scenario of significant global disruption. Moody's said baseline forecasts for this year are based on two assumptions-- the disruption of economic activity in the first half of this year will be followed by some recovery in global factory production and consumer demand in the second half; and warmer weather in the Northern Hemisphere in the spring and summer will weaken the spread of the virus. "Since the publication of our last Global Macro Outlook update in mid-February, the coronavirus outbreak has spread rapidly outside China to a number of major economies including Korea, Iran, Italy, Japan, Germany, France and the US. "Previously, we assessed the effects of the virus mainly on aggregate demand in China, global travel and global factory output resulting from disruptions in supply chains through East Asia," Moody's noted. It is now clear that the shock will additionally dampen domestic demand globally, which will affect a wide range of non-traded activities across countries and regions simultaneously, it said. Further, Moody's has also analysed the downside scenario of 'extensive and prolonged slump' in case of significant increase in coronavirus cases or increasing public fear that the virus will not be contained and oil price stays around USD 40-50 for 2020. In such a downside scenario, Moody's expects India's growth to fall to 5 per cent in 2020, China (3.7 per cent) and the US (0.9 per cent). Stating that global recession risks have risen, it said that the longer the outbreak affects economic activity, the demand shock will dominate and lead to recessionary dynamics. "In particular, a sustained pullback in consumption, coupled with extended closures of businesses, would hurt earnings, drive layoffs and weigh on sentiment. Such conditions could ultimately feed self-sustaining recessionary dynamics. Heightened asset price volatility would magnify the shock," Moody's added.

Source: Economic Times

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Global Textile Raw Material Price 11-03-2020

Item

Price

Unit

Fluctuation

Date

PSF

913.38

USD/Ton

0%

3/11/2020

VSF

1383.74

USD/Ton

0%

3/11/2020

ASF

2020.95

USD/Ton

0%

3/11/2020

Polyester    POY

913.38

USD/Ton

-0.47%

3/11/2020

Nylon    FDY

2128.83

USD/Ton

0%

3/11/2020

40D    Spandex

4128.21

USD/Ton

0%

3/11/2020

Nylon    POY

1085.99

USD/Ton

-0.66%

3/11/2020

Acrylic    Top 3D

2373.36

USD/Ton

-0.60%

3/11/2020

Polyester    FDY

5394.00

USD/Ton

0%

3/11/2020

Nylon    DTY

1193.87

USD/Ton

0%

3/11/2020

Viscose    Long Filament

1956.22

USD/Ton

-0.37%

3/11/2020

Polyester    DTY

2200.75

USD/Ton

0%

3/11/2020

30S    Spun Rayon Yarn

2042.53

USD/Ton

0%

3/11/2020

32S    Polyester Yarn

1625.39

USD/Ton

0%

3/11/2020

45S    T/C Yarn

2409.32

USD/Ton

0%

3/11/2020

40S    Rayon Yarn

1754.85

USD/Ton

-0.81%

3/11/2020

T/R    Yarn 65/35 32S

2287.06

USD/Ton

0%

3/11/2020

45S    Polyester Yarn

2200.75

USD/Ton

0%

3/11/2020

T/C    Yarn 65/35 32S

1941.84

USD/Ton

0%

3/11/2020

10S    Denim Fabric

1.27

USD/Meter

0%

3/11/2020

32S    Twill Fabric

0.70

USD/Meter

0%

3/11/2020

40S    Combed Poplin

0.98

USD/Meter

0%

3/11/2020

30S    Rayon Fabric

0.54

USD/Meter

0%

3/11/2020

45S    T/C Fabric

0.67

USD/Meter

0%

3/11/2020

Source: Global Textiles

 

Note: The above prices are Chinese Price (1 CNY = 0.14384 USD dtd. 11/03/2020). The prices given above are as quoted from Global Textiles.com.  SRTEPC is not responsible for the correctness of the same.

 

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Coronavirus challenge and Pakistan’s exports

Year 2020 has brought a major challenge in the form of COVID-19, more commonly referred to as the coronavirus disease, which has sent shockwaves to economies around the world. The virus has killed more than 3,000 people since its outbreak in Dec 2019 and is rapidly spreading across different regions of the world. China has been the most affected. The epicentre of the virus is Hubei province. With a GDP of more than $500 billion, Hubei’s economy is nearly as large as that of Thailand, Belgium or Sweden. According to a recent report published by Bloomberg, Hubei contributed 39.4% of the total phosphorus mining in China, 11.9% of cloth produced in China, 11.6% of fertiliser, 8.9% of cars and 4.9% of cement between January and October 2019. China exported approximately $2.5 trillion worth of goods in 2018. Although China’s exports lost steam in 2019 due to US trade sanctions, 2020 can be worse if the impact of coronavirus is felt as expected. According to the World Economic Forum, China’s growth in the first quarter of 2020 is likely to slow down to 4.5%, while global oil demand is also likely to decrease. Car manufacturers Nissan and Hyundai are facing significant delays in the procurement of parts and accessories. Foxconn, a major manufacturer of Apple products, is also reporting delays in production. The pharmaceutical industry is likely to suffer a major setback as Hubei has a significant number of contract manufacturers in the pharmaceutical industry, providing raw material and intermediate goods to producers around the world. According to the International Trade Centre’s Trademap.org, the United States imported more than $472 billion worth of goods from China in 2019. Although the value of imports dropped 16.1% since 2018, China remained by far the largest source of imports into the US. Mexico, Canada and Japan ranked as the next three largest source countries. The value of imports from each of the three countries showed lower variation between 2018 and 2019. In essence, Trump administration’s restrictions on imports from China took a significant toll in 2019. Approximately, 45% of goods imported into the US from China belonged to the broader category of electrical machinery and equipment, machinery, mechanical appliances, nuclear reactors and boilers. More than 36% of the electrical machinery imported into the US is sourced from China. Furthermore, the US imported more than $35 billion worth of clothing apparels and made-up textile products from China in 2019. A significant proportion of total imports of clothing apparels and made-up textile articles is sourced into the US from China. Approximately, $506 billion worth of goods were imported from China into the European Union in 2019. About $245 billion of imports was of electrical machinery and equipment, machinery and mechanical appliances. Approximately $42 billion of imports were of articles of clothing. In essence, China is a large supplier of textile products to both the US and the EU. According to the latest statistics published by Unctad in an article titled “Coronavirus outbreak costs global value chains $50 billion in exports”, the slowdown of manufacturing in China can result in a loss of $50 billion worth of exports. China’s Purchasing Managers Index fell 22 points in February 2020, the lowest since 2004. The United Nations estimates that global trade in precision instruments, machinery, automotive and communication equipment will be the most affected. Trading partners likely to report the largest impact from a 2% reduction in Chinese exports of intermediate inputs are the EU (estimated at $16 billion), US ($5.8 billion), Japan ($5.2 billion) and South Korea ($3.8 billion).

Opportunities for others

As every global challenge can result in opportunities for other countries, Pakistan can benefit from the slowdown in trade flow between China and the US as well as the EU in textile products as it can capture some of the low hanging fruits in apparels and other made-up textile articles. Between 2013 and 2018, approximately $1.1 billion was added to the exports of articles of apparel and clothing to the EU. Furthermore, exports of made-up textile articles increased $650 million between 2013 and 2018 due to the GSP Plus preferences. According to statistics released by Pakistan Bureau of Statistics, exports increased 13.82% year-on-year in February 2020. Amid a global slowdown in trade, exports from Pakistan have increased by 3.65% in the current fiscal year. Imports have continued to decline, registering a decrease in value of 14.06%. The trade deficit in the first eight months of FY20 was 26.52% lower than the same period of FY19. Interestingly, although exports increased sharply in February 2020 in terms of year-on-year and month-on-month growth, the decline in imports became much more subdued. Imports decreased 1.71% only over the same period of previous fiscal year. Therefore, as the value of imports stabilises after reaching its apparent trough, the linkage between exports and imports must be maximised in order to ensure that Pakistan optimises its participation in international trade activities. In essence, exports from Pakistan have shown a reversing trend as a general declining trend has now turned positive. Exports had declined from $25.1 billion in 2013 to $23.6 billion in 2018. On the other hand, exports to the EU increased from $6.3 billion in 2013 to $8 billion in 2018. This suggests that the unilateral trade incentives provided by the EU to Pakistan in the form of GSP Plus status did help boost export sales to the region and limit what otherwise could have been a complete decay of the export sector between 2013 and 2018. The trade linkages established between Pakistani exporters and their clients can help increase exports and tap newer markets as supply chains are threatened due to the spread of the coronavirus. Pakistan must continue with its policies to boost total exports. Although the growth in global trade is likely to slow down this year, Pakistan must consider developing its export sector to take advantage of opportunities as a result of challenges reported by the large manufacturing powerhouses. The writer is the Assistant Professor of Economics and Research Fellow at CBER, IBA

Source: The Tribune

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Businessmen hail govt for retaining GSP Plus status for another 2 years

Appreciating the role of commerce ministry, buisnessmen on Sunday welcomed the European Union decision to retain the GSP plus status for Pakistan for another two years, stressing the need for an aggressive marketing plan to exploit this huge opportunity of enhancing exports to EU countries. “The apparel sector appreciates the efforts of Advisor to Prime Minister on Commerce and Industry Razzak Dawood, Secretary Commerce Sardar Ahmad Nawaz Sukhera and the whole team of Commerce Ministry,” said PRGMEA Chief Coordinator Ijaz Khokhar. Ijaz Khokhar said that the International Trade (INTA) Committee of EU Parliament has extended the Generalised System of Preferences (GSP) Plus status for Pakistan, enabling the country to continue to enjoy preferential duties on exports for the next two years. While this facility has been available to Pakistan since Jan 2014, its continuation is an award for Pakistan’s progress in enacting new laws and developing new institutions for implantation of 27 core conventions of GSP-Plus, especially the National Action Plan for human rights. He said that in view of the outcome of 3rd Biennial Review of GSP so far, the PRGMEA would like to commend the efforts of the government especially the commerce ministry, which coordinated with other ministries, federal and provincial departments to formulate policies and laws so that 27 conventions related to GSP Plus could be fully implemented. He said that Pakistan’s exports to the European Union have enhanced from 4.538 billion Euros since the grant of GSP Plus in 2014 to 7.492 billion Euros in 2019, registering an increase of 65% which is not so significant. “We could not take full advantage of the GSP plus benefit, primarily due to lack of solid marketing plan to improve our exports.” PRGMEA coordinator said that the renewal of GSP+ status for another two years is a golden opportunity which our exporters could exploit and make most out of it in order to meet export target. He said that value-added textile sector has been the main driver of the economy for the last 50 years in terms of foreign currency earnings and jobs creation. There is no alternative industry or service sector other than textile that has the potential to benefit the economy with foreign currency earnings and new jobs creation. “We have not made any marketing plan before and after granting of the GSP facility. We have no clear road map to increase our share under GSP facility available.” The PRGMEA chief coordinator said that a close consultation with the stakeholders needed to determine issues being confronted by the industry and then to suggest measures to ensure its viability and competitiveness in the international market. Ijaz Khokhar also stressed the need for enhancing the product lines of our exports and for that purpose some incentives should also be announced by the government for the motivation of our exporters, he added. “Currently the garment sector has a limited product line for export market due to non-availability of the latest fabric locally. Foreign buyers demanding new garments based on G3, G4 and Technical fabric material. We need to offer more diversified products to take benefit from the GSP Plus.” Ijaz Khokhar said. Another key challenge is the 17% sales tax on exporters, as almost every exporter’s 45-60% cash liquidity is blocked due to this taxation, which is major hurdle in exports growth. Value-added textile sector leader urged the Prime Minister to immediately restore zero-rating of sales tax to fully exploit the GSP Plus facility for the country. Also, he appealed to the PM to direct the FBR for instant release of refunds otherwise thousands of SMEs will close down, which will create an economic fiasco affecting all segments of the economy. He asked the government to identify textile as a key priority area, setting the right policies and incentives that encourages private sector investment in value addition. Regarding extreme cash flow crunch he observed that the government has given assurance to clear all pending claims, but the factual position is that more and more refund claims are piling up. The government should announce a clear policy to finally clear all the pending refund claims, he demanded.

Source: The Nation

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Decline in China’s exports: Opportunity for Pakistan’s textile sector – II

Coronavirus has brought the Chinese economy and polyester and textile industries in the country under pressure. Parallel to the 2003 SARS crisis, polyester demand could decrease as business activities stopped. There are common fears among the business operators of the polyester chain. Central China, where Hubei is the center of the network, is practically at a standstill. Hubei is a major manufacturing centre for the textile industry, with a large number of apparel, print and dyeing firms. Long-term paralysis of transport will mean that no fibres or fabrics products produced in the main production sites in the coastal regions of China will be sent inland. The shipment to other parts of China and shipments of garments and other finished textile goods could also come to a halt. While China encourages the reopening of factories, coronavirus consequences have already become inevitable for producers abroad. South-East Asia has faced the major consequences, where raw material industry which rely on China is struggling as its suppliers are drying up. Buyers from the Western markets are heading to China for the next season to deal with garment exporters. As a result of the spread of coronavirus, most of the trips have been cancelled and the buyers have started to make contacts with other countries. It is the time now to analyze markets to find gaps that can be filled by Pakistan. China's exports to the US in textile sector were almost USD 46 billion in 2018. The top 3 major export items are Articles of Apparel and Clothing Accessories, Knitted or Crocheted, Articles of Apparel and Clothing Accessories, not knitted or crocheted, and other made up textiles which have exported values of USD 17.6 billion, USD 14.5 billion and USD 8.8 billion. Interestingly, Pakistan's top 3 major textile exports item to the US are also these three products that have been mentioned earlier and their export values are USD 1 billion, USD 0.6 billion and USD 1.38 billion, respectively. So the data shows a large market size is going to be available for grabs in coming days and we should avail this chance to enhance our exports and capture market. In the 1990s the global demand for man-made fibre (MMF) was 19,000 KT, which reached 60,762 KT in 2015. In last three decades, the demands for fiber has increased enormously due to increase in population which is nearly equal to 84,870 KT. This increase in demand is not only associated with the increasing growth of population but also other factors such as rising incomes, change in demand of traditional textile products, affordable fibers; textiles and apparel products have also played an important role in the progression of global textile fibers. World textile market consists of 26% cotton and 62% Synthetic whereas Pakistan's textile has a ratio of 79% cotton and 19% synthetic. Out of Synthetic global export market of USD 489 billion, Pakistan has secured only 0.8%. According to the United Nations, the world population is expected to touch 8.1 billion by 2025 and is moving up the food chain, producing over 35 percent of the potential food market, heading to tough competition among other arable land crops. In comparison, this increase in population will decrease the limited availability, by causing a food crisis, of arable and cultivated land and, thus, restrict access to arable land and production of cotton. As a result of the increased consumption of MMF, the increasing demand for natural and man-made fiber textiles is expected to grow at almost 60%. This is because, in the coming decades, the raw material supply for MMF production is predicted to be nearly limitless and significantly lower than the cost of natural fibres. Therefore, the use of MMF against natural fibre, as well as the unrestricted use of these fibres in research and production, to change properties so that it can be optimized for new applications, is another aspect that guarantees this limitless supply. In the near future as well as in the long term, these factors will be a major driving force in MMF demand. World textile preferences are enormously changing in favour of synthetic textiles with current ratio of consumption of synthetic fibres against natural fibres at 70:30, with synthetic fibres having the lion's share – a decade ago it was 30:70. Pakistan is fighting for a larger share of a shrinking market by sticking to natural fibres. Our entire value chain needs to be revamped with focus on Man-made fibres growth to capture additional market share. There is 7% customs duty on the import of polyester staple fiber with total import expenses in the range of 20% including antidumping duty. So even if import duty is finished, protection in excess of 10% will still remain. This is against the principle of cascading. The irony is that if you import directly MMF yarns you will be subject to a reduced import tariff of 5% (under the South Asian Free Trade Agreement) to 10%, in Chapter 55, for MMF yarn imports, resulting in a synthetic yarn industry unsustainable. In the last year alone, MMF yarn production capacity decreased by 36%. As a result, imported PSF (Input into our spinning mills) is higher than world prices. The domestic MMF yarn production remains uncompetitive even in the domestic market as a result of the aforementioned regulatory failures. Historically, the local producers in chemical industries (PTA & PSF) have enjoyed a high level of protection. A 25 percent import tariff was introduced in 1998-99, when MMF-based textiles became a major factor in the textile sector worldwide. Later it was reduced to the current levels of 7% duty plus 11% anti-dumping. Unlike emerging competitors in Vietnam and Cambodia, RMG manufacturers import more MMF fiber than fabric. In order to be relevant and competitive, Pakistan is required to produce a 50:50 cotton-to-synthetic fibre mix, while it is currently at 80:20. In the misplaced protection, the government of Pakistan has placed duties on MMF imports to protect PTA and PSF plants in a country working on arguably outdated and inefficient plants. If the government wants to protect these plants, it should not be done at the cost of the entire textile value chain. Policies like in 2003, of deemed duty drawback, can be reintroduced. The entire textile industry should not be forced to cross-subsidise PTA and PSF plants in Pakistan. On the domestic front, our policies are distorting both cotton and synthetic fibre market. The share of Pakistan in 2019 for the US overall imports of textiles and apparel was 2.69 percent, as per the Textiles and Apparel Department, the US, and 5.7 percent for cotton-based products. The gross imports of man-made fiber of the United States in 2019 was of $50 billion in which Pakistan's share was of $221 million. This means that our global market share will continue to decrease if we fail to live up to new world preferences. Currently, polyester is the most widely consumed man-made fabric. Meanwhile, polyester is in effect heavily taxed at the input level. The National Tariff Commission had, in the second quarter of 2016, imposed anti-dumping duties on PSF from China. PSF imports from China had declined since the imposition of provisional duties in October 2016, resulting in healthy demand from the downstream PTA industry. Given the importance of taking into account consumer preferences in an industry such as textiles, Lotte's protection needs to be reduced to an appropriate level and duty on MMF yarn must be adjusted in order to encourage the domestic MMF industry to grow and meet the requirements of the industry. Our policies have been retrograde in the last years that even the “cotton" perceived to be the bedrock of our textile industry is levied 11% import duty given the steady decline over cotton production over the last three years. During the current crisis, foreign exchange from Indonesia, China, Thailand and India expends between Rs 12 to 16 billion on the import of MMF yarns. In Pakistan, the local production of polyester viscose mixed yarns is approximately 165,000 tons per year. Around fifty thousand tons of PSF yarns are imported annually. This is equivalent in production of 100% polyester, viscose or polyester yarns, polyester viscose mixed, and other synthetic fiber blended yarns of around 15 to 20 domestic mills spun out of a total of 45-50 mills. These mills provide employment to more than 100,000 people. The cheaper import of PSF yarn has shut down 36 percent of domestic PSF yarn production capacity. Importers of synthetic mixed yarns not only remove local industries from the market, they also use it to sell the product at a low price equal to India's. The worst damage to the local synthetic fibre industry is the absence of equal opportunity with higher tariff barriers on imports of raw materials and nominal import duties on MMF yarns, which leads to the pervasive dumping of MMF yarns and fabrics in the market. As due to coronavirus MMF imports from China will also decline, which is a golden opportunity for local MMF manufacturers to fill the market gap. The imposition of an appropriate regulatory duty on imports of $687 million of MMF material can save employment for well over 100,000 people working in our spinning industry; however, this is not the ideal solution as the best solution would be to establish Pakistan as duty free zone for any MMF product to support the local garments. Moreover, the government would be required to provide rebate on export products where local MMF is used to ensure backward integration. This will encourage establishment of an indigenous MMF value chain. This would ensure that Pakistan can internationally compete in the MMF sector. It is about time the government showed its commitment towards enhancing exports. It can start by rationalizing irrational duty structures imposed on raw materials which are already short in the country.

Source: Business Recorder

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China Jan-Feb exports tumble, imports slow as coronavirus weighs heavily

The gloomy trade report is likely to reinforce fears that China's economic growth halved in the first quarter to the weakest since 1990. China's exports contracted sharply in the first two months of the year, as the fast spreading coronavirus outbreak caused massive disruptions to business operations, global supply chains and economic activity.

Imports also fell but were better than analyst expectations.

The gloomy trade report is likely to reinforce fears that China's economic growth halved in the first quarter to the weakest since 1990 as the epidemic and strict government containment measures crippled factory production and led to a sharp slump in demand. Overseas shipments fell 17.2 per cent in January-February from the same period a year earlier, customs data showed on Saturday, marking the steepest fall since February 2019. That compared with a 14 per cent drop tipped by a Reuters poll of analysts and a 7.9 per cent gain in December. Imports sank 4 per cent from a year earlier, better than market expectations of a 15 per cent drop. They had jumped 16.5 per cent in December, buoyed in part by a preliminary Sino-US trade deal. China ran a trade deficit of $7.09 billion for the period, reversing an expected $24.6 billion surplus in the poll. Factory activity contracted at the fastest pace ever in February, even worse than during the global financial crisis, an official manufacturing gauge showed last weekend, with a sharp slump in new orders. A private survey highlighted similarly dire conditions. Though the number of new virus cases in China is falling, and local governments are slowly relaxing emergency measures, analysts say many businesses are taking longer to reopen than expected, and may not return to normal production till April.

Those delays threaten an even longer and costlier spillover into the economies of China's major trading partners, many of which rely heavily on Chinese-made parts and components.

Source: Reuters

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Design innovations in Kyoto's textile industry pave the way forward

A new generation Dutch textile designer with an intuitive eye for color and modern lines, and a centuries-old Kyoto company famed for its exquisitely rich kimono artisan heritage: The seemingly contrasting worlds of Holland’s Mae Engelgeer and Japan’s Hosoo have overlapped to ethereal effect in an exhibition in Kyoto exploring a nuanced spectrum of colors and textiles. “Colortage,” the title of the show hints at its concept: a mix of “color” and “heritage.” Center stage are 30 fabrics that make up the Hosoo 2020 Collection, crafted by Nishijin (Kyoto-specific) textile artisans with color combinations directed by Engelgeer, neatly displayed on minimalist white blocks. An installation of new textiles, designed by Engelgeer during Hosoo’s first artist-in-residence program last summer, are also festooned on traditional bamboo displays known as shinshi. There are few more appropriate settings for such a collaboration than Hosoo Gallery, located in the Hosoo Flagship Store, which opened on a quiet lane in Kyoto’s central Karasuma Oike district last autumn. Hosoo is a shining example of a traditional Kyoto artisan company that is thriving in contemporary times. Founded in 1688, the textile company has been steered by 12th-generation Masataka Hosoo for the past 12 years — and he has navigated a measured balance between maintaining its traditional craftsmanship roots and forging an innovative path into the future. Pushing a raft of creative boundaries, projects (among many others) include creating bespoke Nishijin fashion textiles for luxury clients such as Chanel and Dior; gallery installations inspired by filmmaker David Lynch; a recent 3D-effect collection of modern sashiko-ori (pattern stitched) textiles with designer Nendo; furniture collections with Copenhagen-based OEO Studio; plus regular exhibits at global design events including Milan’s Salone del Mobile. The five-level Hosoo Flagship store confirms a contemporary spirit rooted in heritage (it’s also home to a lounge, a lifestyle boutique and a “kimono cellar”). Designed by architect Naohisa Hosoo (Masataka’s brother), it’s a textbook-perfect showcase of 21st-century Kyoto architecture, from its signature rammed-earth walls in layered shades of peach and clean-lined OEO Studio seating to the smooth expanses of ink-black dyed plaster sliced with delicate gold lines. Its second-floor houses Hosoo Gallery, home to “Colortage.” “One of the main reasons to open a gallery space was to provide an opportunity for the general public to learn about the history and characteristics of traditional Japanese dyeing and weaving that have been passed down from generation to generation,” Hosoo explains. “It is important for us in the dyeing and weaving industry to pass this knowledge and know-how to generations to come. We also want to stimulate discussions on concepts of ‘beauty’ and ultimately ‘what it is to be human.'”  “Colortage” is an example of this. It was during Engelgeer’s first trip to Japan in 2015 that her path first crossed with Hosoo when she visited the Kyoto store with an architect contact. “The first time I set foot in the showroom and talked with Hosoo, I dreamed of working with them,” she says. “I felt so impressed by the heritage and the special look of the fabrics.” After an initial collaboration working on Hosoo’s 2017 Collection, the partnership deepened last year, when Engelgeer art directed colors for its new 2020 Collection. Furthermore, as Hosoo’s first artist-in-residence, she spent a month creating new textile designs while staying in the company’s beautifully renovated machiya townhouse House of Hosoo. The fruits of the collaboration evolved into “Colortage.” Here, visitors can see at firsthand — and even touch — textiles from Hosoo’s 2020 Collection. Thirty low-level white blocks individually showcase the colored fabrics, with each row depicting one single design in six different shades. The textiles — some glistening sharply, others blurred to abstraction — feel as clean and modern as the quality is luxuriously rich in craftsmanship. Among them, are “Hash” in ivory cream, with its grid-like sheaves of effervescent gold; “Haze” in an ethereal blue with subtly sparkling sky blue threads; and “Fizz,” in silver gray, with delicately flowing lines catching the light. “We really give the focus to the overall feel and color experience with these display blocks,” says Engelgeer. “People can constantly see the textiles and the combination from a different perspective and also zoom in on a single fabric and explore the backsides, which are also special.” She adds, “From what I have heard, I was the first designer to really work this closely with their artisans. I am extremely happy to have had the opportunity to stand next to the machines while weaving, discussing what we see happening and adjusting in the moment. As a designer I am always keen to see the production place, talk to weavers and be involved from the start.” The hammock-like displays of textiles for the “Sinuous” installation — created during her residency — are no less eye-catching. Inspired by patterns hand-drawn by Kyoto artisans, the four textiles fuse Engelgeer’s contemporary designs with soft hues — resulting in delicately nuanced shades of peaches and silvers perfectly aligned with organically flowing curves and brush-stroke motifs. “Our approach has always been more focused on structure. We use sakizome (pre-dyed yarn) technique. But usually, we’d focus on one textile and work on it starting from the weave pattern,” Hosoo says, commenting on working with Engelgeer’s “incredible sense of color” mixed with a “feminine quality.” “This time, from the construction of each thread, we’ve incorporated the color scheme into the process. This was our first time using this approach, so working with Mae was very important,” he adds. “She introduced a unique approach that had not existed in Nishijin heritage until now.” The exhibition appears to consolidate the bold new direction Hosoo is embracing as it moves forward. “The incorporation of new ideas through collaborations with contemporary designers is an important step towards innovation and development,” says Hosoo. “It provides us with new perspectives and opportunities that add to our traditions, encouraging change and benefiting us for the next 100 to 200 years to come. In a sense, change itself continues traditions.”

Source: Japan Times

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EU Industrial Strategy: Getting from principles to practice

EURATEX says it welcomes the proposed new EU industrial strategy but wonders how the proposed principles will be put into practice. “Reality checks and close monitoring of the implementation of the strategy will be essential to make a positive and sustainable impact,” EURATEX said in a statement to the press earlier today. “The European textiles and apparel industry, worth nearly €180 billion and including 171,000 companies, is an essential pillar of the European industry. It is a very globalised industry with extensive value chains across different continents. Over the last 10 years, real changes have been made to innovate and increase sustainability of its products, starting from traditional clothing to smart and medical textiles, industrial applications in the automotive and aerospace industry, to protective wear and high-end fashion,” the voice of the European textile and clothing industry said. “Against this background, EURATEX welcomes the launch of a new comprehensive EU industrial strategy. It is high time for Europe to embrace its industry again, as a source of welfare, innovation and employment. The proposed strategy is rightfully putting emphasis on economic sovereignty, without falling into the trap of protectionism.” According to EURATEX, the strategy should include some important elements, essential for its success:

  • Any proposed measure must be assessed in a global context, i.e. European companies cannot be subject to new rules, standards or regulations unless all players do play with the same rules. Measures to ensure a level playing field must be realistic and effective.
  • Innovation into a more sustainable industry has an important cost, and the end consumer is not always willing to pick up that cost. This may jeopardize the financial sustainability of our industry, especially for smaller companies. Accompanying measures should be taken to alleviate the burden of green investments, especially for SMEs.
  • Labour force shortage is an important barrier to the development of our industry. In 2018, 34% of the Textile and Clothing workforce was over the age of 50 (a steep increase from the 22% just 10 years ago). It is therefore urgent to make a common effort to both upskill and reskill the current workforce and to attract young talent.

While the principles mentioned in the strategy are sound, EURATEX says, effective implementation of such principles into practical measures will be critical. “Too often in the past, the EU has presented ambitious plans, but failed to deliver on their implementation, either by lack of resources or political will from member states. EURATEX therefore calls for a strict ‘governance’ of this new strategy, introducing measurable targets, which can be monitored by relevant stakeholders.” “We should be vigilant that proposed measures are realistic and effective, and actually support industrial competitiveness, rather than adding a regulatory or financial burden,” commented Director General Dirk Vantyghem on the proposed strategy. EURATEX says it stands ready to contribute to a positive and effective implementation of the strategy, making sure the European economy can regain its competitiveness, create jobs and welfare.

Source: Innovation in Textiles

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New initiative revs up textile circularity

Textile Exchange is working with some industry heavyweights on a new initiative to move textiles from linear to circular by mapping and identifying the required links from waste textiles to chemical and mechanical recycling. The project, Accelerating Circularity, involves founding partners Gap Inc., Target, Lenzing, Giotex, Gr3n, VF Corp., Unifi, Revolve Waste and Fabrikology International Inc. Karla Magruder, who is the founder of Fabrikology, a textile consulting company based in the New York area, is heading up the initiative. Board members include Magruder, along with Tricia Carey of Lenzing, Eileen Mockus of Coyuchi, Alice Hartley of Gap, Beth Jensen of VF and Laila Petrie of 2050. Quoted in California Apparel News, Magruder said: “If we’re going to have circularity, textile waste will be the new raw material. We’re going to have to find out how to get from point A to point B. Less than 1% of textile waste gets recycled into new textiles. It’s nothing.” California Apparel News reported that the group’s first project will include research into mechical and chemical recycling of cotton, viscose and polyester textile waste, with its first report coming in late April on the acceleratingcircularity.org website. The project received a grant from the Walmart Foundation to help with its launch. Other organizations participating include the American Apparel & Footwear Association, Apparel Impact Institute, Circle Economy, Outdoor Industry Association, The Renewal Workshop and United States Fashion Industry Association.

Source: Home Textiles Today

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