A potential shortage of raw materials for sectors, ranging from pharma, chemicals, electronics and solar energy, loom as main raw material supplier China struggles to contain the Covid-19 spread. The commerce ministry on Thursday held a meeting with key industry bodies and various export promotion councils to gauge the impact of the coronavirus on trade, amid mounting fears over the damaging impact of the pandemic on Indian exports. Already, basmati rice exports dropped 20% year-on-year in January and non-basmati by 14%, oil meals by 64% and cotton garments by almost 4%. Overall merchandise shipments contracted by 1.7% y-o-y in January to $26 billion, the sixth straight month of contraction. On top of this, a potential shortage of raw materials for sectors, ranging from pharma, chemicals, electronics and solar energy, loom as main raw material supplier China struggles to contain the Covid-19 spread. The situation is expected to have only worsened in FebruaryThe meeting was chaired by the minister of state for commerce and industry Som Parkash and attended by commerce secretary Anup Wadhawan and senior officials of the ministry. Representatives of industry chambers such as CII, Ficci and Assocham, exporters’ body FIEO and export promotion councils attended the meeting and shared their concerns. Earlier this month, India restricted exports of 26 drug formulations and active pharma ingredients (APIs) 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.
Source: Financial Express
GST Council will take up tax structure rejig on March 14 to correct the inverted duty structure in many sectors. ET looks at the reasons as to why there is a case for correcting the structure.
Source: Economic Times
Government is formulating a New Textile Policy for overall development of the sector. Inputs from all the state governments, individuals through e-portal and different associations are being solicited under broad topics like cotton, silk, jute, wool, man-made fibre, handloom, handicrafts, powerloom, technical textiles, technology & machinery upgradation, infrastructure (spinning, weaving & processing) and human resource development. Over a period of time, textile industry is facing some problems like technological obsolesce, high input cost (power & capital), poor access to credit, fragmented units, absence of fiber neutrality etc. In order to address these issues/problems, Govt. has implemented various schemes to provide support to Textiles & Apparel Sector:-
(i) Knitting and Knitwear Sector scheme: Government has launched a separate scheme for development of Knitting and Knitwear Sector to boost production in knitting and knitwear cluster at Ludhiana, Kolkata and Tirupur.
(ii) Government is implementing Amended Technology Up-gradation Fund Scheme (ATUFS) for technology up-gradation of the textile industry to incentivize production with an outlay of Rs.17,822 crore during 2016-2022. It is expected to attract investment of Rs.1 lakh crore and generate 35.62 lakhs employment in the textile sector by 2022.
(iii) Government has launched a special package of Rs.6000 crore in 2016 to boost investment, employment and exports in the garmenting and made-ups sector with the following components viz., (i) full refund is provided under Remission of State Levies (ROSL) to the exporters for the State level taxes; (ii) production linked additional incentive of 10% is provided under the Amended Technology Upgradation Fund Scheme (ATUFS).
(iv) National Handloom Development Programme, Comprehensive Handloom Cluster Development Scheme, Handloom Weaver Comprehensive Welfare Scheme and Yarn Supply Schemes.
(v) National Handicrafts Development Programme (NHDP) and Comprehensive Handicraft Cluster Development Schemes.
(vi) Power Tex India: A comprehensive scheme for Powerloom sector.
(vii) Silk Samagra – An integrated Scheme for development of silk.
(vii) Jute ICARE for increasing the income of farmers through different interventions.
(ix) North East Region Textile Promotion Scheme (NERTPS) for promoting textiles industry.
This information was given by the Minister of Textiles, Smriti Zubin Irani, in a written reply in the Rajya Sabha today.
Source: PIB
NASHIK – An Indian-based synthetic yarn supplier has started the production of recycled polyester FDY (fully drawn yarns) at its facility in Nashik using a new Oerlikon Barmag direct spinning system. As a result, Polygenta is now able to produce a wide range of both draw textured yarn (DTY) and fully drawn yarns (FDY) that comply with the Global Recycled Standard (GRS). Fully drawn yarns are made up of continuous filaments with highly oriented fibres that require high spinning and winding speeds. They are used as weft or weaves in knitted and woven fabrics with other filament yarns to produce a variety of different fabric effects. Polygenta has been making POY (partially oriented yarns) and DTY recycled polyester yarns from PET flake since 2014, but the upgrade allows it to make recycled FDY from post-consumer sources.
Source: Eco Textile
The Northern India Textile Mills’ Association (NITMA) has called upon the government to exclude polyester spun yarn from ASEAN FTA agreements with Indonesia and Vietnam. In a recent meeting with Mr. Piyush Goyal, Union Minister of Commerce and Industry and Mr. Som Parkash Gupta, Minister of State, Commerce and Industry, NITMA urged for a level playing field for Indian Manmade fibre Industry by removing the anomaly in the ASEAN FTA agreements with Indonesia & Vietnam under which 100% Polyester Spun yarn is being imported @ zero duty into the country, leading to closure of medium & small scale Textile spinning mills. The delegation led by Mr. Sanjay Garg, President, NITMA highlighted that currently, the textile spinning mills are in huge trouble due to free trade agreements (FTA’s) with Indonesia & Vietnam as the finished product of the mills, that is, polyester yarn – 55092100 is included in the list of items being cleared with ASEAN certificate @ zero duty. Whereas the raw material, that is, polyester staple fiber (PSF) - 55032000 is not included in this list & hence cleared at full duty rate of 5.5% as a result of which domestic mills do not have a level playing field as compared to the Indonesian spinning mills. It was mentioned by the NITMA President that post GST, polyester yarn is being cleared @ zero duty with the removal of CENVAT @ 12 % & SAD @ 4 %. These duties were a sort of protection against imports of yarn in the pre-GST regime against the clearance @ zero duty under FTA’s. Presently with nil duty there has been a surge in imports of the spun yarn, especially in the post GST, more so quantity that was being imported annually (FY16-17- i.e. 6944 tons) is now being imported on monthly basis which reflects an 1100% increase in imports. This is creating a stress and could severely affect the very survival of the spinning units. Mr. Garg also mentioned that yarn manufacturing requires 50 times more workers than manufacturing the same amount of fiber. Currently, due to this anomaly, the industry that is more labour intensive is at a disadvantage. If left unchecked, this figure, on account of the huge size of the spinning mills in Indonesia, will surely increase even further thereby threatening the survival of this labor intensive industry, he added. NITMA Chief further suggested that to protect the domestic industry from closure & further job cuts there is an urgent need to exclude Polyester Yarn from the list of items is being cleared @ zero duty under ASEAN or alternatively, urgent inclusion of PSF to the list of items being cleared @ zero duty under ASEAN. The NITMA Delegation has also requested the Union Minister to champion their cause and save the spinning industry by excluding Polyester Spun Yarn from the list of items being cleared @ zero duty while the Ministry is undertaking the review of the ASEAN FTA with Indonesia & Vietnam, in the near future, as it will give a level playing field to the Indian spinning industry. The NITMA Delegation led by Mr.Garg also recommended that a non-tariff measure initiative may be taken for imposition of BIS quality standard IS 17265 2019 on imports of PSY- HS code 55092100. This could help boost the high quality local manufacturing, as the domestic producers also need to follow this quality standard if it is making mandatory for the importing countries. This measure to an extent help regulate the quality of PSY coming into the country which is especially important because of the presence of heavy metal compounds like Antimony, Lead, Cadmium etc. in the polyester yarn which are released into the Indian water bodies when fabrics made of these yarns are dyed. The industry expressed their apprehension regarding the ability of small scale units to follow the standard. Mr. Garg informed that NITMA as a final resort had taken steps to file application with DGTR for imposing antidumping duty to protect against surge Polyester yarn. It was mentioned that for this to be undertaken successfully urgently support from the Commerce Ministry is very important. While responding to the concerns raised by the NITMA Delegation, Mr. Piyush Goyal said that it may be difficult to ensure exclusion of certain tariff lines while undertaking review of the ASEAN FTA, which may also take more time. Mr. Goyal has suggested that taking initiative for antidumping duty to arrest large imports is the most appropriate resort & directed the officials in the Commerce Ministry & also the DGFT to speed up the process & take decisions purely on merit basis so that spinning mills are saved from closure. The Finance Minister has also asked to obtain report from the Textile Ministry. He said that providing level playing field for the manufacturing industry is important for growth. Mr. Goyal informed that he is of the opinion of imposing quality standards for stopping huge low quality imports of products into India. Mr. Goyal if of the opinion that NITMA needs to take initiatives to encourage small units to adhere to high quality production and if we take the path of producing quality products, in the long run it will be beneficial for units and also for the country as it helps improve our export share in the global market.
Source: Tecoya Trend
The Government is implementing Amended Technology Upgradation Fund Scheme (ATUFS), a credit linked Capital Investment Subsidy (CIS) scheme during 2016 to 2022 with an outlay of Rs. 17822 crore to catalyze capital investments for technology upgradation and modernization of the textile industry. The scheme promotes ease of doing business in the country and achieve the vision of generating employment and promoting exports through “Make in India’’ with "Zero effect and Zero defect" in manufacturing. The scheme facilitates augmenting of investment, productivity, quality, employment, exports along with import substitution in the textile industry. It also indirectly promotes investment in textile machinery (having benchmarked technology) manufacturing. Every eligible individual entity (not the unit) will be entitled for reimbursement of Capital Investment Subsidy (CIS) under this scheme, as per the following rates: In case the entity had availed subsidy earlier under RRTUFS, it will be eligible to the extent of balance subsidy for new or existing units within the overall ceiling fixed for an individual entity. Ministry has also notified the Scheme for Production and Employment Linked Support for Garmenting Units (SPELSGU) under ATUFS to incentivize production and employment generation in the garmenting sector vide Resolution dated 25.07.2016. The Government has also approved reforms inter alia to boost Employment Generation and Exports in the Made-Ups Sector vide Resolution dated 10.01.2017. The additional incentive of 10% is provided to both the garmenting and made-ups units registered under ATUFS on achievement of employment projected by them. With a view to position the country as a global leader in Technical Textiles, the government has approved the proposal for creation of National Technical Textiles Mission at a total outlay of Rs.1480 Crore, with a four-year implementation period from FY 2020-21 to 2023-24. Under Component-I (Research, Innovation and Development) a category of research and development activity is planned to be taken up for development of machineries, test-equipment concerning technical textiles, and to enhance indigenous manufacturing of technical textiles machinery in the country. This research is planned to be coordinated at Central Manufacturing Technology Institutes. This information was given by the Minister of Textiles, Smriti Zubin Irani, in a written reply in the Rajya Sabha today.
Source: PIB
Domestic textile clusters are promoted through various Government initiatives. The concept of setting up of Mega Textiles Parks by Ministry of Textiles is at stage of discussion. Products like fibre, yarn and fabric in the textile value chain are being strengthened and made competitive through various scheme like Powertex for fabric segment, Amended Technology Upgradation Fund Scheme (ATUFS) for all segments except spinning and Scheme for Integrated Textile Parks (SITP) for all segments. Government has removed anti-dumping duty on PTA, a key raw material for the manufacture of MMF fibre and yarn. To enhance local sourcing, the consolidated FDI policy s effective from August 28, 2017. According to this policy, for Single Brand Product Retail trading, in respect of proposals involving foreign investment beyond 51%, sourcing of 30% of the value of goods purchased, will be done from India, preferably from MSMEs, village and cottage industries, artisans and craftsmen, in all sectors. For Multi Brand Retail trading, at least 30% of the value of procurement of manufactured/ processed products purchased will be sourced from Indian micro, small and medium industries, which have a total investment in plant & machinery not exceeding USD 2 million. This information was given by the Minister of Textiles, Smriti Zubin Irani, in a written reply in the Rajya Sabha today.
Source: PIB
Inflation may continue to moderate as crude oil and vegetable prices remain subdued. But as Covid-19 outbreak spreads, IIP could remain under pressure. Industrial output rose 2% y-o-y in January, against a revised 0.1% in December 2019, but growth for October 2019 was revised down sharply to -6.6% from -3.8% reported earlier. Retail inflation hit 6.58% in February, having eased from a 68-month peak of 7.59% in January. Inflation may continue to moderate as crude oil and vegetable prices remain subdued. But as Covid-19 outbreak spreads, IIP could remain under pressure.
Source: Financial Express
Parliament on Thursday passed amendments to the insolvency law that will help ring-fence successful bidders of insolvent companies from risk of criminal proceedings for offences committed by previous promoters. The Insolvency and Bankruptcy Code (Amendment) Bill, 2020 was passed by voice vote in Rajya Sabha. It was approved by Lok Sabha on March 6. The Bill replaces an ordinance. Replying to a short debate on the bill, Finance Minister Nirmala Sitharaman said amendments are sync with time and also adhere to a Supreme Court order in "letter and spirit". The minister said need for amendment in the IBC arose because of "changing requirement" and "requirement of fine tunning" the law as several MPs wanted to know why the government was bringing in so many amendments to a new law. Stressing that the government is "very responsive" and has been talking to the industry, she assured the House that amendments to the IBC are are not being "unthinkingly done". The IBC, which came into force in 2016, has already been amended thrice. Sitharaman said the government was taking care of the interest of home buyers and the requirement of minimum number of home buyers in the IBC has been included to avoid "frivolous litigations". The bill seeks to remove bottlenecks and streamline the corporate insolvency resolution process. It aims to provide protection to new owners of a loan defaulter company against prosecution for misdeeds of previous owners. The latest changes pertain to various sections of the IBC as well as introduction of a new section.
Source: Economic Times
Trade, Imports, Exports for MSMEs: The number of MSEs benefitting from the public procurement programme was over 1.28 lakh including 5,030 MSEs owned by SC/ST entrepreneurs and 2,839 women-owned MSEs. Trade, Imports, Exports for MSMEs: While government buyers may not be the best customers for small businesses when it comes to making payments but a number of them seem to be ensuring the buying target from micro and small (MSE) enterprises in their annual procurement is met. According to the data available, for different ministries out of 54 ministries listed on the monitoring portal MSME Sambandh, in procuring minimum 25 per cent of the yearly buying from MSEs, 16 ministries have been able to cross the target as FY20 nears the end. The top ministries, which have bought the maximum amount of goods and also surpassed the 25% cap, were Ministry of Petroleum and Natural Gas, Ministry of Defence, Ministry of Power, Ministry of Atomic Energy, Ministry of Coal etc. The total procurement from MSEs so far stood at Rs 32,861.97 crore — 28.99 per cent of over Rs 1.13 lakh crore worth of overall buying in FY20 so far. While Petroleum ministry MSE buying stood at Rs 17,888 crore, Defence ministry procured goods worth Rs 2,664 crore followed by Rs 2021 amount of procurement made by Power ministry, Rs 800 worth buying from Ministry of Atomic Energy and Rs 628.6 worth from Ministry of Coal among the top five buyers. Other top buyers exceeding the 25 per cent minimum threshold were ministries of agriculture, commerce, housing and urban affairs, mines, minority affairs, railways, road transport and highways, science and technology, shipping, textiles, and tribal affairs. The number of MSEs benefitting from the public procurement programme was over 1.28 lakh including 5,030 MSEs owned by SC/ST entrepreneurs and 2,839 women-owned MSEs. The government’s online marketplace GeM for public procurement has 77,116 MSE sellers out of over 3.44 lakh sellers. However, MSE sellers account for a majority — 53.27 per cent of the order value on the portal so far. The total transaction value recorded so far was Rs 49,438 crore.
Source: Financial Express
Exporters are bracing for at least a $1 billion decline in outward shipments in February as countries close borders and order cancellations increase due to the spread of Covid-19. With labour intensive sectors like gems and jewellery, lifestyle goods, carpets and handicrafts expected to get impacted the most, traders expect the impact to come with a lead time of around three months. “If orders are not finalised now, then there will be a lead time of three months. Remittances will be affected since only essential purchases are happening,” said Ajay Sahai, director general, Federation of Indian Export Organisations. The association has cancelled already 10 of its international shows in March and April, and two in India. India on Wednesday suspended all tourist visas till April 15. “Our clients in the US have put their orders in abeyance. At present, orders worth Rs 1.5 crore have been put on hold for 20-30 days,” said Mahavir Sharma, founder of Jaipur-based Oscar Expo Design LLP, an exporter of wooden furniture, carpets and silver jewellery. Lower crude oil prices, too, are expected to impact the value of exports. “Though no orders are cancelled as of now, we are struggling to sell our goods and cancellations might start showing up in the next 10-15 days,” said Ashok G Rajani, founder-chairman of Mumbai-based apparel exporter Midas Touch Exports. Industry experts said the cancellation or postponement of exhibitions and conferences worldwide have hammered the $2.5 trillion trade show industry. Frankfurt's Light and Building has been postponed over coronavirus fears, and will now take place in September instead of March. Similarly, the Milan Furniture Fair, which was scheduled for the end of April has now been pushed to June. Demand is low on certain products such as steel and ferro-alloys because Italy is a major market,” said an Engineering Export Promotion Council official, adding that West Asia is seeking more Indian products. “Earlier the problem was the import side but with China now stabilising, they also will have inventory that would put pressure on prices. There is uncertainty,” the official added. On the food front, industry has seen a 12-15% decline in meat exports and slowing demand for rice.
Source: Economic Times
Meanwhile, Irdai was asked to review existing insurance products to ensure risk cover against loss because of abnormal delay in delivery of shipments. Industry and exporters bodies on Thursday sought logistics support and duty reduction from the government to withstand the onslaught of the coronavirus outbreak (COVID-19). At a meeting called by the commerce department, they said products that rely on imports have been affected by the outbreak. Meanwhile, the Department of Financial Services (DFS) has asked the Insurance Regulatory and Development Authority of India (Irdai) to review existing insurance products to ensure risk cover against loss because of abnormal delay in delivery of shipments. Irdai has also been asked to modify the terms and conditions of such policies, if necessary. Ravi Sehgal, chairman of Engineering Export Promotion Council, said there were about 30-40 per cent engineering products that were seeing increase in exports, but there were others that had imported components, and these were affected. Shipments to Iran, Italy or Southeast Asia were impacted, he said. Sources said that for auto parts, ships were taking too long and this was affecting the production cycle, and the industry would have to spend more on air freight. “We have sought 5 per cent duty reduction to offset part of air freight cost. As for electronics, the stock will be depleted by April and a plan needs to be drawn up now,” one of those who attended the meeting, chaired by Minister of State for Commerce and Industry Som Prakash, said. Sources said some firms had imported plant and machinery but could install these because of a lack of professionals thanks to travel restrictions. “Once it resumes, we request faster clearance for these professionals,” one person said. Meanwhile, DFS advised all public sector undertakings to set up special cells to provide full assistance to industry segments and micro, small and medium enterprises and process their requests with sensitivity. Banks were also requested to provide support to units that were identifying opportunities for import substitution.
Source: Business Standard
|
Item |
Price |
Unit |
Fluctuation |
Date |
|
PSF |
872.26 |
USD/Ton |
-1.93% |
3/13/2020 |
|
VSF |
1367.64 |
USD/Ton |
-0.21% |
3/13/2020 |
|
ASF |
2005.78 |
USD/Ton |
0% |
3/13/2020 |
|
Polyester POY |
895.11 |
USD/Ton |
-0.48% |
3/13/2020 |
|
Nylon FDY |
2084.30 |
USD/Ton |
-0.68% |
3/13/2020 |
|
40D Spandex |
4097.21 |
USD/Ton |
0% |
3/13/2020 |
|
Nylon POY |
5353.50 |
USD/Ton |
0% |
3/13/2020 |
|
Acrylic Top 3D |
1163.49 |
USD/Ton |
-1.21% |
3/13/2020 |
|
Polyester FDY |
1912.98 |
USD/Ton |
-0.74% |
3/13/2020 |
|
Nylon DTY |
2184.23 |
USD/Ton |
0% |
3/13/2020 |
|
Viscose Long Filament |
1049.29 |
USD/Ton |
-2% |
3/13/2020 |
|
Polyester DTY |
2341.26 |
USD/Ton |
-0.61% |
3/13/2020 |
|
10S OE Cotton Yarn |
1887.29 |
USD/Ton |
0% |
3/13/2020 |
|
32S Cotton Carded Yarn |
2947.99 |
USD/Ton |
0% |
3/13/2020 |
|
40S Cotton Combed Yarn |
3399.83 |
USD/Ton |
0% |
3/13/2020 |
|
30S Spun Rayon Yarn |
2027.19 |
USD/Ton |
0% |
3/13/2020 |
|
32S Polyester Yarn |
1613.19 |
USD/Ton |
0% |
3/13/2020 |
|
45S T/C Yarn |
2391.23 |
USD/Ton |
0% |
3/13/2020 |
|
40S Rayon Yarn |
2169.95 |
USD/Ton |
0% |
3/13/2020 |
|
T/R Yarn 65/35 32S |
1927.26 |
USD/Ton |
0% |
3/13/2020 |
|
45S Polyester Yarn |
1727.40 |
USD/Ton |
0% |
3/13/2020 |
|
T/C Yarn 65/35 32S |
2269.88 |
USD/Ton |
0% |
3/13/2020 |
|
10S Denim Fabric |
1.26 |
USD/Meter |
0% |
3/13/2020 |
|
32S Twill Fabric |
0.69 |
USD/Meter |
0% |
3/13/2020 |
|
40S Combed Poplin |
0.97 |
USD/Meter |
0% |
3/13/2020 |
|
30S Rayon Fabric |
0.54 |
USD/Meter |
0% |
3/13/2020 |
|
45S T/C Fabric |
0.67 |
USD/Meter |
0% |
3/13/2020 |
Source: Global Textiles
Note: The above prices are Chinese Price (1 CNY = 0.14276USD dtd. 13/03/2020). The prices given above are as quoted from Global Textiles.com. SRTEPC is not responsible for the correctness of the same.
The federal government is going to make fundamental changes in trade policies following the approval of the five-year Strategic Trade Policy Framework (STPF) by Prime Minister Imran Khan, said PM’s Adviser on Commerce Razak Dawood. The PM aide said the new policy will cover 26 sectors and the government will provide an incentive to the value-added sectors. He said the current average duty drawback is 3 per cent which will be modified for some traditional sectors, such as engineering, pharmaceutical, auto parts, processed food and beverages, footwear, gems, chemicals, meat and poultry, fruits and vegetables, seafood and marble. Under the new framework, the government has fixed the export target at $26 billion in 2021, $31bn in 2022, $35bn in 2023, $40bn in 2024, and $46bn in 2025. Speaking about the backlog of 17 per cent sales tax refunds, he said the government cleared a backlog of tax refunds that was pending since 2009 and it would also take measures to address the issue of pending dues soon. He said Finance Adviser Hafeez Sheikh, State Bank of Pakistan Governor Reza Baqir and himself will meet on Friday to chalk out a mechanism to transfer sales tax refunds subject to the State Bank of Pakistan in order to ensure speedy payment of refunds to the exporters. At present, the Federal Board of Revenue (FBR) deals with duty drawback and sales tax refunds whereas the Ministry of Commerce deals with Drawback of Local Taxes and Levies (DLTL). However, these subjects will be transferred to the State Bank of Pakistan under the new trade policy framework. He said that there was anti-export bias in the country, adding that there was no culture of taxes, levies and surcharges where export culture existed. The drawback has not been revised for the last eight years, he added. He mentioned that the incentives on duty drawback will not be available for the textile sector. “We have not witnessed growth in the textile sector,” he said, adding that the government will have to move away from the textile sector. The global textile volume amounted to $837bn whereas engineering and chemicals had $2 trillion volume each, he added.
Source: Profit by Pakistan
Proposed widening of Ecodesign Directive to tackle toxic chemicals in products. The European Commission has pledged a series of steps to combat the presence of REACH substances of concern in recycled materials and waste, as part of its new circular economy plan unveiled yesterday. The fresh initiative aims to accelerate the "transformational change" promised under the EU Green Deal, while building on the circular economy actions implemented since 2015, the Commission said. The new plan directly addresses the issue of banned chemicals that persist in recycled feedstock and promises to "increase the confidence" in those using secondary raw materials. To do this, the Commission says it will:
The Commission’s commitments are a precursor to "further measures" to be set out in the forthcoming chemicals strategy for sustainability, expected in the summer. This will address in more detail the interface between chemicals, products and waste legislation and strengthen synergies with the circular economy, it said.
Ecodesign
The action plan also includes a proposal for new legislation to widen the Ecodesign Directive to address hazardous chemicals in products. This will see the Directive extended beyond energy-related products to make it applicable to the "broadest possible range of products" and deliver on circularity. However, the Commission is already facing legal action from a trade group for using Ecodesign to impose a ban on flame retardants. The Ecodesign review will build on criteria and rules established under the EU Ecolabel and others, while the possibility to introduce requirements linked to environmental and social aspects along the value chain will also be "carefully assessed", it said. As part of the plan, the EU executive will introduce measures on key product value chains that will be prioritised, such as electronics, plastics, textiles and packaging. It follows a recent survey that found more than eight in ten EU citizens worried about the impact of toxic chemicals in everyday products.
Reaction
Monique Goyens, director general of the European Consumer Organisation (Beuc), welcomed the EU’s plan to prevent banned chemicals in recycled products. "Now we expect the Commission to honour its commitment through ambitious law proposals that kick harmful chemicals out of the environment and our everyday textiles." The European Environmental Bureau (EEB) said the plan was an "important step forward", but regretted a lack of concrete actions to tackle hazardous chemicals in the circular economy and in waste cycles. It should not exclusively rely upon the forthcoming chemical strategy to achieve a toxic free environment, the EEB said. Meanwhile, Cefic director Marco Mensink said the next step was to create the "right conditions" for industry to develop solutions, such as chemical recycling technologies, which could be "game changer".
Key actions
The new circular economy action plan establishes a timeframe for the execution of key actions by 2021. These include:
Source: Chemical Watch
China is slowly resuming manufacturing activities after weeks of factory shutdowns and logistical restrictions, but the impact on global apparel companies is likely to continue for the foreseeable future as the new coronavirus spreads globally. Although clothing companies have a large exposure to China, they have so far managed to limit the impact, industry observers say. Even before COVID-19 struck China, many businesses were shifting manufacturing to Vietnam, Cambodia and Bangladesh due to rising labor costs and uncertainty around the U.S.-China trade war. COVID-19 is the disease caused by the new coronavirus. In the fourth quarter of 2019, U.S. imports of apparel and textiles fell 25.4% year over year from China while rising 14.3% from Cambodia, 8.6% from Bangladesh and 6.0% from Vietnam, according to data from Panjiva. The pattern continued in January with Cambodian exports to the U.S. rising by 23.8% compared to a 31.7% slump in shipments from China, the data shows. However, these countries continue to rely heavily on China for "intermediate inputs" such as raw materials and unfinished goods and services. Once the additional stock imported from China in anticipation of factory shutdowns during the Lunar New Year holidays is depleted, the global textile and apparel industry is expected to face the brunt of the supply disruption. China is intricately woven into the global consumer supply chain fabric, not just as a manufacturer and a retailer but also as a supplier of intermediate inputs. As of March 4, about 20% of global trade in manufacturing intermediate products originated in China, according to the United Nations Conference on Trade and Development. The UNCTAD data shows that the European Union and Vietnam are expected to be the worst hit by the disruption in inputs for textile and apparel products. While Vietnam has managed to contain the outbreak, it imports about 55% to 60% of raw materials in the garment industry from China, according to the Vietnam Textile and Apparel Association. Hong Kong-listed Lever Style Corp., which manufactures for brands including Paul Smith and Hugo Boss, has set up a major production base in Vietnam. Executive Chairman Stanley Szeto said in an interview that although their factories have yet to experience any meaningful delays, it is not easy to find supply alternatives beyond China for factories that are based in Southeast Asia. "There may be a gradual shift in the supply chain. That gradual is going to be very gradual," said Szeto, adding that while raw materials from China are not necessarily more price competitive, the country's scale, capacity and fast turnover is unmatched by any alternatives. Uniqlo-owner Fast Retailing Co. Ltd. is particularly exposed to the outbreak, with more than half its sewing factories and fabric mills located in China and a quarter in Southeast Asia. Manufacturers in Vietnam warned that many sewing factories in the country would face a serious shortfall of raw materials starting April if shipments do not resume in March. Fast-fashion retailers, which rely on releasing new lines every few weeks and holding as little stock as possible, would be particularly vulnerable to supplier disruptions.
Spread your bets
The situation has brought to light the challenges manufacturers face in diversifying their supply chains. "For true risk mitigation, you have to think about the entire global supply chain, and not [just] the parties you deal with immediately … who they deal with and the knock-on effect on my supply chain," said Edwin Keh, CEO of Hong Kong Research Institute of Textile and Apparel. "Moving the final place of manufacturing doesn't mean you mitigate the total production risk in the supply chain," Keh said, emphasizing the need for manufacturers to have transparency and traceability in the supply chain. Unlike their Southeast Asian counterparts, South Asian countries such as India and Bangladesh have the entire value chain of textile products within their country. India was the third-largest textile exporter in 2018 after China and the EU, and its textile and apparel exports totaled $21.7 billion between April and November 2019. Bangladesh has emerged as the third-largest exporter to the U.S. after China and Vietnam. In the near term, apparel manufacturers may look at these countries to make up for the shortfall in supply, but China may still remain the top supplier once it recovers from the outbreak, said Bin Shen, associate professor in electronic commerce and logistics at Donghua University. Shen, however, noted that trade policies would be factored into manufacturers' thought processes when considering whether to diversify their source countries. For instance, China has a free trade agreement with the ASEAN, an intergovernmental body representing the Southeast Asian countries. Indian textile manufacturers, meanwhile, are worried that the country's existing free trade deals with Indonesia and Vietnam have disadvantaged local mills. The country also lacks free trade deals with the European Union, Canada and Australia. "Vietnam has a long-standing relationship with China in imports related to the apparel industry, through a complicated process via middleman companies. Since they are bound by contracts, it is not possible to switch supply on a whim as the fashion retailers would still have to carry out on-site visits and evaluation on the suppliers in a process that could take up to three months," said Shen.
East meets west
The spread of the contagion to Europe and other parts of the world will increase the threat to bigger players such as Industria de Diseño Textil SA and H & M Hennes & Mauritz AB (publ) that have fairly diverse supply chains. The two companies have had relatively little exposure to manufacturing shutdowns in China, with less than a third of their manufacturing facilities located in the country. In an emailed statement, an H&M representative said it is constantly monitoring developments and does not anticipate the coronavirus impact to cause significant delays to its supplies. The Swedish company has temporarily closed 41 of its more than 500 stores in China. "We are in close contact with our suppliers and evaluating the situation together with them," the representative said.
Inditex did not respond to requests for comment.
Salmon Lee, head of polyester at commodity consultancy Wood Mackenzie, said the simple lesson that can be drawn is that manufacturers should not put all their eggs in one basket. "I don't think anybody was able to imagine what has happened in the past one-and-a-half months. Suddenly one major source just disappears into thin air," said Lee. "The pragmatic will say, 'You can't forget about China, but you can lessen [the impact] and protect yourself if you do not only buy from China.'"Panjiva is a business line of S&P Global Market Intelligence, a division of S&P Global Inc.
Source: S&P Global Inc.
Indonesia plans to relax restrictions on importing goods as one of its fiscal measures to combat the harmful economic effects of the COVID-19 coronavirus. Finance Minister Sri Mulyani Indrawati said on Wednesday that the government plans to reduce the number of restricted import goods by up to 50 percent to spur business activities that have been hurt by the COVID-19 pandemic. As many as 749 harmonized system codes codes are to be scrapped, she added. “This aims to ease the importation of raw materials amid the spread of the coronavirus,” Sri Mulyani told reporters in Jakarta after a ministerial meeting. Items included in the list of restricted import goods include ceramics, soybeans, corn, textiles and textile products, vaccines, health equipment, telecommunication tools and equipment, footwear and food supplements, among many others, according to the Customs and Excise Office website. The government is to also relax regulations related to the Food and Drug Monitoring Agency, Sri Mulyani said without revealing more details. Manufacturing industries have complained of disruptions to their supplies of raw materials that have crippled factories across Indonesia. Twenty to 50 percent of raw materials for the country’s industries are usually sourced from China, Indonesia’s biggest trading partner. Coordinating Economic Minister Airlangga Hartarto said the government also plans to integrate the online Indonesia National Single Window system using Inaportnet to make logistical systems more efficient. “We are still finalizing it,” he added. The government is preparing several stimulus packages, including one that would expedite the import process for 500 importers with good reputations and another to reduce logistics costs in ports across the country. The Asian Development Bank (ADB) previously said Indonesia might not be affected severely by the global health emergency, thanks to its minimal exposure to global trade and its wide room to maneuver in monetary policy. “Indonesia isn't deeply integrated in the global supply chain, so it is still considerably fortunate compared to other countries,” newly appointed ADB president Masatsugu Asakawa said. He added that the Indonesian economy, which was primarily driven by domestic activity, had an advantage during the global health emergency. Indonesia is heavily dependent on domestic demand, with household consumption growing 4.97 percent year-on-year in the fourth quarter of 2019 to account for more than 50 percent of gross domestic product. The government unveiled a Rp 10.3 trillion (US$717.87 million) fiscal stimulus package to support the tourism industry and boost consumer spending to counter the economic impacts of the coronavirus outbreak. At least 34 individuals in Indonesia have tested positive for COVID-19 and one has died. The World Health Organization declared the coronavirus to be a pandemic as the outbreak has shuttered factories, disrupted travel and supply chains, delayed conferences and sporting events and infected more than 120,000 people worldwide. More than 4,600 people have died globally.
Source: The Jakarta Post
