Mumbai: Around 1,335 industrial units including manufacturing, foundries and textile have received approval from the Maharashtra Industrial Development Corporation (MIDC) to restart operations. These industrial units in response to the government's call in the wake of partial relaxation in lockdown from April 20 had made self-certification and sought MIDC’s nod to reopen. MIDC has received well over 3,000 online applications seeking restart of the operations. Of the 1,355 units, 752 were located within MIDC industrial estates, while remaining units were outside its limits. Industries Minister Subhash Desai told FPJ,’’ MIDC has launched online portal to obtain zero contact self-certification and permission for commissioning of factories during the COVID 19 lockdown. However, manufacturing activity is permitted to operate in non-containment zones and vehicle passes for employees’ commute will be issued online by the authority.’’ MIDC officer hoped that with the reopening of 1,335 units about 25,000 to 30,000 employees will be able to resume their duties. The industrial units will have to provide accommodation to at least 6o to 70 per cent employees within their premises or near their units. “MIDC has shown willingness to provide nearby land especially to small scale units to house employees during the lockdown,’’ he said. As reported by the FPJ last week, it is binding on the industrial units to strictly observe COVID 19 norms with regard to social distancing at work. They will have to provide sanitizers to employees and clean workplaces, toilets and entry and exit gates. Large industries will have to operate with only 50 per cent of staff, while medium and small-scale companies can operate with full capacity
Source: Free Press Journal
The Indian government has initiated Sunset Review investigation on imports of all fully drawn or fully oriented yarn/ spin drawn yarn/ flat yarn of polyester from China and Thailand. The review is being undertaken based on an application filed by the Association of Synthetic Fibre Industry on behalf of Reliance Industries Ltd and Wellknown Polyesters Ltd. "The product under consideration, as in the original investigation and the first Sunset Review, is fully drawn/ fully oriented yarn/ spin drawn yarn/ flat yam of polyester (nontextured and non-POY) and other yams conforming to the tariff description of Customs Heading 5402.47. The product in market parlance is generally known as 'Fully Drawn Yam' or FDY. Technical specifications of the subject goods are defined in terms of their deniers, tenacities, lustres, colours (like semi dull, bright, super bright, full dull, Dope dyed), cross section and shrinkage," directorate general of trade remedies, department of commerce, said in a recent notification. The original anti-dumping investigation concerning imports of the subject goods from China and Thailand was initiated in May 2008, and anti-dumping duties were imposed next year. Subsequently, a Sunset Review investigation was initiated in 2014, and extension of anti-dumping duties was imposed in October 2015. The current anti-dumping duty is valid up to October 20, 2020. For the second Sunset Review, which is carried out at the expiry of five years from the date on which the duty was imposed, the period of investigation is from January 1, 2019 to December 31, 2019. The injury investigation periods will be from April 1, 2016 till December 31, 2019. Submissions relevant to the investigation in the prescribed form and manner has to be done before June 14, 2020 to the designated authority, directorate general of trade remedies, under the ministry of commerce and industry.
Source: Fibre2fashion
India’s new rules for foreign investment, introducing ‘additional barriers’, violate World Trade Organisation (WTO) principles of non-discrimination and are against free and fair trade, a Chinese embassy spokesperson in New Delhi said yesterday. India's action is also against the consensus arrived at the G20 to realise a free, fair and non-discriminatory environment for investment, he said. The impact of the policy on Chinese investors is clear, said counsellor Ji Rong. India last week stepped up scrutiny of investments from companies based in neighbouring countries, in what is widely perceived as a move to prevent takeovers by Chinese firms during the COVID-19 outbreak. Rong said China hoped that India would revise the ‘relevant discriminatory practices’ and treat investments from different countries equally while fostering an ‘open, fair and equitable’ business environment. India’s trade ministry said in a notification dated April 17 that the changes to rules on investment were meant to curb ‘opportunistic takeovers/acquisitions’. It did not mention China. The spokesperson said China's cumulative investment in India has exceeded $8 billion, noting it is far more than the total investments by countries sharing border with India. She said India's new policy will make it difficult for companies from countries sharing land border with India, including China, to invest in India, adding decisions by companies to invest depends on a country's economic fundamentals. "Facing the economic downturn caused by COVID-19, countries should work together to create a favourable investment environment to speed up the resumption of companies' production and operation," she added.
Source: Fibre2fashion
Indian textile exporters, which employ about five million workers, have sought government aid to pay wages after cancelling about $4 billion in overseas orders amid a nationwide lockdown to combat the coronavirus In a letter written to Prime Minister Narendra Modi on Monday, the Apparel Export Promotion Council (AEPC), representing about 8,500 exporters, urged the government to pay workers' wages for at least April and May from the social security fund, set up with contributions of workers and employers. Millions of workers in India employed by small manufacturers are staring at losing their jobs after the lockdown imposed by the government late last month. India had 17,264 cases of coronavirus infections and 543 deaths as of Monday. The government unveiled a fiscal package of 1.7 trillion rupees last month to provide food and cash to the poor and is widely expected to announce a second stimulus package in the next few days. "We are in a real crisis," AEPC chairman A. Sakthivel told Reuters, citing cancellation of orders by buyers from Europe and the United States - the biggest markets for India's $15 billion annual garment exports. "The sector urgently needs a big stimulus package from the government," he said, adding that many factories, already facing a slowdown after a dip in global trade due to U.S.-China trade frictions, could soon close. The lockdown has resulted in stoppages in thousands of garment factories on the outskirts of Delhi, Mumbai, Chennai, Kolkata and other cities, he said. The government should pay wages as an unemployment allowance from the Atal Bimit Vyakti Kalyan Yojana (ABVKY), part of a social security fund run by the labour ministry, the AEPC letter said. Last year, the government told parliament that in an emergency, the workers were eligible to get an unemployment allowance for up to three months under the scheme run by the Employees' State Insurance Corp, having cash reserves of 743 billion rupees ($9.72 billion) as of March 2018. On Monday, the government eased some restrictions and allowed some businesses to open in rural areas and special economic zones while following social distancing and other guidelines.
Source: VCCircle
Manufacturing units in special economic zones (SEZs) and export oriented units (EOUs) were not able to restart operations from Monday as they did not receive permissions from authorities in their respective states, according to exporters. On April 15, the Home Affairs Ministry issued guidelines stating that manufacturing and other industrial establishments with access control are allowed in SEZs, EoUs, industrial estates and industrial townships after implementation of standard operating protocol for social distancing. Export Promotion Council for SEZ and EOUs (EPCES) Vice Chairman Bhuvnesh Seth said that in most of the states such as Maharashtra, Gujarat, Telangana and Karnataka, there was complete lockdown. "Today no EOU and SEZ is operational. Units making essential items and agriculture goods are working since day one. Units are facing problems of cash flow," he told adding that there is no hope till May 3. Seth said that as the day passes on Monday, there was complete lockdown in Tamil Nadu, Telangana, Karnataka, Maharashtra, Gujarat, and Uttar Pradesh. Noida and Greater Noida have been declared hot spots, but he is hopeful for Haryana as majority of areas were in green zone. Few cases were found near Kundli, Sonepat and Narela, where lockdown was strengthened on April 19. Units can apply but permission will be given in phased manner, as per our discussions with officials," Seth said He added that on April 19, anxiety was there since morning in units as everybody was calling to check status of online portals so that the units can apply for necessary permissions. "We got the information yesterday night from state government officials of industrial department that they will start portals and units can seek permission on April 20," he said. He also said that EoUs and SEZs have lost 50 per cent of their orders and they need to start their factories to execute balance orders, retain clients and protect themselves from losing business to China. He added that industries in Italy, Spain and the UK have started working with minimum workforce. An apparel manufacturer from Madurai said that they have not started operations on Monday as they have not yet get the required permissions. "We all have applied for permissions, but no permission. So we were not able to start operations from Monday," Penguin Apparels Managing Director Anbukani said. He has a unit in an EOU in Madurai industrial estate. Commenting on the situation, Aqeel Ahmed Panaruna, Chairman, Council for Leather Exports said that majority of the leather products and footwear exporters are located in the urban areas and not located in the industrial zones, except few industries. "About 92 per cent of the units in the sector are in the MSME segment. The industry is strictly following guidelines of central and state governments and we will wait for further information on the lockdown, as many countries like USA, UK, Spain and Italy are also under the lockdown," he said. Federation of Indian Export Organisation (FIEO) President Sharad Kumar Saraf said that the protocols made by the government is difficult to implement and it will significantly increase compliance cost for MSME units. FIEO Director General Ajay Sahai said that in the green areas, units have started applying for permissions and are expected to soon get the clearance to commence operations.
Source: Economic Times
As many as 4,000 industrial units in Gujarat were given permission to resume operation from Monday by the state government. These industries include small, medium and large firms in various sectors like chemicals, engineering, textiles, plastics, packaging and automobiles, said Ashwani Kumar, secretary to Gujarat chief minsiter Vijay Rupani in a statement. The industry associations have welcomed the state government decision of allowing about 4,000 industrial units to resume operations. In Ahmedabad’s Changodar industrial area, around 500 units are keen to restart and they will commence operations as they get permissions. It may take a week to normalise things. “Around 20-25% of the industrial units in Changodar industrial area began operations on Monday. More units will start functioning from Wednesday as the industrial activity remains suspended on Tuesday due to load shedding,” said Rajendra Shah, president, Changodar Industries Association. Ajit Shah, president of Sanand Industries Association (SIA) said, “A few pharmaceutical companies were already operational. Over and above, some five MSMEs have also resumed operations, with an average 35% staff. Some 700 workers are back on job at the estate.” In South Gujarat, the food processing units located in Surat and Navsari districts respectively are facing the acute shortage of labourers, transportation and the export of the finished products from Hazira port due to the huge pile up of the containers awaiting export clearance from the port. Chairman and managing director (CMD) of Patsons Food in Navsari, Suraj Savaliya said, “We are exporting mango pulp and mango pickle to UK and USA. Even if we start production, there is a heavy traffic at the Hazira port due to the pile up of the export containers. Talking with TOI, Surat collector, Dhaval Patel said, “The industrial units located in the rural areas have been allowed to start operation after submitting affidavits and with strict implementation of the guidelines issued by the government.” Meanwhile, Valsad district administration has given permission to 760 industrial units till April 20 to reopen their operations. “We have given permission to 760 industrial units in the district to reopen. Most of these units are pharmaceutical, packaging and allied industries,” C R Kharsan, collector, Valsad, told TOI. Vapi Industries Association (VIA) President Prakash Bhadra said, “Since Valsad district is in green zone as not a single Covid-19 positive case has been reported till now, industries have started operations but some industries like paper mills which are dependent on import raw materials or their business channels are connected with Mumbai have not started their operations.” Officials in the Panchmahal district administration said that 131 units had sought permission for beginning operations. They added that 9,593 persons had joined work in the district. The units have already been asked to take necessary precautions to ensure Covid-19 does not spread.
Source: Times of India
India does not consider it has acted in contravention to World Trade Organization (WTO) rules as it has only specified a different approval process for investments from countries with which it shares land boundaries including China, highly placed sources told ET. All India has done is put Chinese investments through government route instead of automatic route, said the people. China has itself put restrictions for entry of firms including from India - IT and pharmaceutical, among others in its own interests. India has raised with China in the past, both at political and industry levels, the issue of restrictions on market access. China claimed on Monday that India’s decision on scrutinising investments from countries with which it shares land boundaries violates the WTO’s principle of nondiscrimination and consensus among G20 leaders and trade ministers “to realise a free, fair, nondiscriminatory, transparent, predictable and stable trade and investment environment”. “On April 18, India’s Department for Promotion of Industry and Internal Trade (DPIIT) revised its foreign investment policy, making it much difficult for companies from countries sharing land border with India, including China, to invest in the country,” said a statement issued by the Chinese embassy in India. “As of December 2019, China’s cumulative investment in India has exceeded 8 billion US dollars, far more than the total investments of India’s other border-sharing countries.” The statement came after India decided last Friday that investments from all countries sharing land boundaries would come through government route, a move aimed at deterring China from distress buying of Indian businesses or investment in enterprises which may be facing financial crunch owing to the pandemic. The embassy issued the statement even as India continued to receive supplies from China to fight Covid-19. A senior official told ET on condition of anonymity that between April 4-19, around 24 flights took off from Shanghai, Guangzhou, Shenzhen, Xi’an and Hong Kong to India. These flights carried more than 390 tonnes of medical supplies, including RT-PCR test kits, rapid antibody tests, thermometers and personal protective equipment (PPE). The major consignees of these goods were HLL, Imperial Life Sciences, Reliance, Matrix Labs, Invex Healthcare, Tata, Adani, Birla and Max, according to the official. State governments of Karnataka, Assam, Tamil Nadu and Rajasthan were also among the recipients of goods from China. “For the coming week (between April 21 and 27), around 20 flights have filed for permits with Chinese authorities,” said the official. In its revised policy guidelines issued last week, the Indian government had said, “A non-resident entity can invest in India, subject to the FDI policy except in those sectors/activities which are prohibited. However, an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route.” “Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment.”
Source: Economic Times
China has taken on India for imposing additional restrictions on investors from the country and has said that the barriers directed only at a few nations violated World Trade Organisation's (WTO) principle of `non-discrimination'. "We hope India would revise relevant discriminatory practices, treat investments from different countries equally, and foster an open, fair and equitable business environment," according to a statement by the spokesperson of the Chinese Embassy in India on Monday. The statement asserted that Chinese investment had driven the development of India’s industries, such as mobile phone, household electrical appliances, infrastructure and automobile, creating a large number of jobs in India, and promoting mutual beneficial and win-win cooperation "As of December 2019, China’s cumulative investment in India has exceeded $ 8 billion, far more than the total investments of India’s other border-sharing countries," the statement pointed out, adding that the impact of the policy on Chinese investors is clear.
Revised FDI policy
The Department for Promotion of Industry and Internal Trade (DPIIT), on Saturday, revised its foreign direct investment (FDI) policy, making it mandatory for all foreign investments from countries with which India shares a land border with, to come through the government approval route. This was done based on apprehensions that if investments were allowed to be made freely from the neighbouring countries without checks there could be hostile takeovers because of the deteriorating market and economic conditions in India due to the spread of COVID-19. This means that while FDI from rest of the countries could come in through the automatic route in sectors where it is allowed such as automobiles, auto parts, construction, asset reconstruction, agriculture, single brand retail, manufacturing, coal, gems & jewellery, and textiles, capital goods, pharmaceuticals,electronic systems and ports and shipping, if it is made from investors in China and six other neighbouring countries it will need to have prior government approval. Earlier, these restrictions were applicable only on Pakistan and Bangladesh. "Where companies choose to invest and operate depends on the country’s economic fundamentals and business environment," the statement said. Facing the economic downturn caused by COVID-19, countries should work together to create a favorable investment environment to speed up the resumption of companies’ production and operation, the spokesperson added. India's new FDI restrictions not only violated WTO norms but more importantly, they do not conform to the consensus of G20 leaders and trade ministers to realise a free, fair, non-discriminatory, transparent, predictable and stable trade and investment environment, and to keep our markets open, it said.
Source: The Hindu Business Line
Indian Textiles and Apparels (T&A) industry accounts for approximately 4% of the global T&A market. The T&A industry is one of the largest and the most important sectors for the Indian economy in terms of output, foreign exchange earnings and employment. The industry contributes approximately 7% to industrial output in value terms, 2% to the GDP and 15% to the country’s export earnings. The Indian economy has been hit hard by COVID-19. Due to the countrywide lockdown various transport facilities including trains and flights are suspended which is expected to hurt domestic operations in India With the virus now also affecting and disrupting global supply chains and economy for almost 3 to 6 months now, the situation is having a severe implication on the Indian economy as well.
The areas that would face the crisis created by Covid 19 pandemic are:
Labour force and employment:
T&A provides direct employment to over 45 million people but the nationwide lockdown have led to a temporary closure of factories and lay-offs have already begun among low wage worker.
Import & Exports of raw material and readymade garment:
The COVID-19 pandemic is primarily expected to adversely impact exports and with second-order impact on the domestic markets with both exports as well as domestic sales falling. The pandemic has affected the majority of India’s export market (the US and EU together constitute for approximately, 60% of the total apparel exports from India in value terms), causing order cancellations/deferral of order leading to inventory build-up and expectation of slower realization of export receivables leading to higher working capital requirements. Apparel exports are expected to fall due to drying up of order in the last quarter of FY20, working capital issues and lack of clarity on the duties and incentives especially when exporters from Bangladesh, Sri Lanka and Vietnam receive preferential access. Additionally, domestic consumption is also getting impacted due to all India closure. New store openings have stopped and even domestic stores are facing an inventory build-up due to apparel sources for the upcoming summer season, Further, domestic prices could be negatively impacted if exporters dump their inventories in the domestic market leading to even reduced margins. This could lead to short term blips such as reduced employment of casual labour (factory closures and people moving back to their home towns) and reduced consumption.
Cash flow constraints:
The sector has been grappling with profitability issue due to a sharp decline in yarn exports, cheaper imports etc. these issues only look to get aggravated further with the current crisis.
Supply chain disruption:
The Garment manufacturers need to look at local sourcing opportunities, due impact on import and export.
Consumer sentiment:
If nationwide lockdown continues and the situation persists, will impact consumer sentiment on the higher side, due to closure of market and mall also to maintaining the social distancing, safety and health. The extent of the outbreak and lockdown would directly impact the length of the recovery cycle. However, to minimize the impact the Confederation of Indian Textile Industry (CITI) has requested the government to immediately announce a relief package for the textile and apparel sector to mitigate the crisis being faced by the capital and labour-intensive textile Industry, post the coronavirus spread.
Source: Business World
Through the SEIS, the government offers domestic exporters duty credit scrips at 5-7% of the net foreign exchange earned, depending on the nature of services. The government will likely rethink its position and grant exporters benefits under the Service Exports From India Scheme (SEIS) for some more time to help them tide over the pandemic impact, an official source told FE. It may also use incentives under the scheme to promote sectors like tourism, battered by coronavirus pandemic, he added. Through the SEIS, the government offers domestic exporters duty credit scrips at 5-7% of the net foreign exchange earned, depending on the nature of services. Trade analysts say the actual outgo under the SEIS could be around Rs 3,000-4,000 crore a year, although latest official data are not available. Before the Covid-19 spread, commerce and industry minister Piyush Goyal had in February warned of abolishing the SEIS, saying the scheme hadn’t contributed to a rise in services exports and that a few players were cornering a major chunk of the incentives. Recently, when the commerce ministry extended the validity of the foreign trade policy (FTP) for 2015-20 by a year through March 2021, benefits under a similar scheme for merchandise exporters — MEIS — were allowed to continue. But it said a call on whether to extend the SEIS validity would be taken soon. However, given that the US and the EU, India’s top two services export markets, have been hammered by the pandemic, the government is contemplating easing its stance temporarily, possibly with tougher riders, according to the source cited earlier. A senior commerce ministry official, however, said a decision on this matter would be finalised soon. India’s services exports rose just over 4% year-on-year in FY20 to $214 billion, while merchandise exports contracted by close to 5% to $314 billion, according to a quick estimate by the commerce ministry. While merchandise trade witnessed a deficit of $153 billion in FY20, the surplus in services trade was to the tune of $83 billion, which narrowed the overall trade deficit to $70 billion. A recent RBI survey suggested the US (and Canada) and Europe made up for 61.2% and 25.6%, respectively, of India’s exports of software and ITeS — the largest services segment — worth $118 billion in FY19. Highlighting that industry has to get out of the mindset of subsidies, as these are detrimental to the country’s long-term interests, Goyal had in February made a case for discontinuing the SEIS at the earliest possible opportunity: “For example, we now give subsidies on services exports. I have gone through the list in great details, barely 2,200 companies take that subsidy. Some of them are such large names, making 1000s of crores of rupees of profit, that there is no business of giving them a subsidy,” he said. However, given the changed scenario, services exporters need continued support to survive. Analysts say the government must come out with a revamped SEIS, if it so desires, only when it announces the next FTP. Until then, any decision to continue with the current policy will be good, as it will lend stability and predictability in the policy regime for these exporters. After a mid-term review of the current FTP, the government had in December 2017 announced additional incentives worth Rs 8,450 crore a year to boost both merchandise and services exports. The higher incentive under the SEIS for services like business, legal accounting, architecture, engineering, education, hospital, hotels and restaurants would cost the exchequer Rs 1,140 crore a year, the commerce ministry had said.
Source: Financial Express
A survey by industry body FICCI has "revealed sharpest moderation" in the confidence level of India Inc since the global financial crisis of 2008-09 as the coronavirus outbreak has adversely affected their businesses. The industry chamber said that as per its Business Confidence Survey, timely action by the government will enable quicker return to normalcy for the domestic economy. It also demanded a further 100 basis points reduction in the repo rate by the RBI. Global economic prospects have worsened conspicuously with the outbreak of coronavirus. Many countries, including India, have had to adopt strict social distancing norms and lockdowns to prevent the pandemic from spreading resulting in a near halt of economic activity. "The Overall Business Confidence Index stood at 42.9 in the current round vis-à-vis an index value of 59.0 reported in the last survey," FICCI said. The index value had slipped to a low of 37.8 in the second quarter of 2008-09 – at time of the global financial crisis. Sharp moderation both in current conditions as well expectations about the future were responsible for pulling the overall index value down during the quarter, said the industry chamber. It also made a case for financial package for the entire industry (especially micro, small and medium enterprises) from the government in the form of subsidies, policy support, tax holidays, and special dispensation of funds to sustain employment levels before the COVID-19 pandemic. "Immediate measures need to be taken to instill confidence in decision makers of banks. Simultaneously, efforts must be made to make the entire lending process foolproof which will ultimately enable swifter decisions," it said. Labour market reforms is the need of the hour and must be taken up on priority. FICCI further suggested that the Reserve Bank of India (RBI) should undertake direct purchase of corporate bonds and reduce the key short-term lending rate (repo) by another 100 basis points. The Survey drew responses from about 190 companies with a turnover ranging from Rs 1 crore to Rs 98,800 crore and belonging to a wide array of sectors. The survey gauges expectations of the respondents for the April-September 2020 period. Multilateral institutions have revised down the growth and trade forecast for the year 2020 considerably. The International Monetary Fund (IMF) in its recent release has downgraded global growth forecast and placed it in the contractionary zone for the year 2020. WTO also projected global merchandise trade flows to plummet anywhere between 13-32 per cent during 2020. "India's economy is also facing a triple shock through the demand, supply, and financial channels," FICCI said. In fact, most of the companies participating in the Survey indicated that the spread of coronavirus has had an adverse impact on their businesses. Around 72 per cent of the respondents said their operations have been hit hard by the virus outbreak. "Only 5 per cent of the respondents were not impacted by the pandemic. In addition, 90 per cent of the respondents of the Survey said that their supply chains have been impacted," said the industry body. FICCI said participating companies were less optimistic about their forecasts for operational parameters over the April-September 2020 period. In the current survey round, a sharp increase was noticed in the proportion of respondents anticipating lower sales in the next six months, it said. About 53 per cent respondents expected lower sales over the next two quarters. Likewise, an increase was noted in the proportion of respondents citing decline in investments going ahead. With consumption demand plummeting amidst the nationwide lockdown, companies are seeing freeing up of their existing capacities and the present environment is not conducive for undertaking fresh investments, said the Survey.
Source: Economic Times
The Reserve Bank of India has increased the short-term borrowing capacity of the central government by over 65% to temper market fears that excessive borrowing by the government to fight Covid-19 could put pressure on interest rates. Investors feared that the fiscal deficit could be far worse than what was projected at the time of presenting the budget in February. In the first half of the fiscal between April and September, the central government can borrow from the RBI as much as Rs 2 lakh crore, up from Rs 1.2 lakh crore limit fixed in March, through the Ways and Means Advances (WMA) that could relieve the pressure on bond markets. This is the second move in less than a week by the RBI to prevent a yield spike due to government borrowings. Last week, it raised the limits of short-term borrowings of states by 30% for the first half of the fiscal over and above the 30% it had raised in April. The RBI has been easing up borrowing norms and pumping in enormous amount of liquidity into the market to counter the investor risk aversion that is leading to a rise in yields despite a 75 basis points cut in the key policy rate on March 27. A basis point is 0.01 percentage point. Yield on benchmark government bonds rose back to 6.5%, the level seen on February 6 this year after plunging to a low of 5.98% after the cut in repo rate. States such as Rajasthan and Kerala paid about 150 and 200 bps more than normal spreads over the sovereign bonds because of the fears of heightened borrowing that probably led to last week’s raising of limit for states, and now for the central government.
Source: Economic Times
The design industry runs on fabric, and with showroom shutdowns and looming uncertainty around international supply chains, designers are anxiously wondering about their favorite prints, patterns and weaves in the days ahead. Two leaders from the textile industry—Schumacher CEO Timur Yumusaklar and Kate Temple Reynolds, who founded the New York showroom Temple Studio to represent independent fabric, wallcovering and rug lines—chatted with Business of Home editor in chief Kaitlin Petersen in today’s Community Discussion to offer insights into how the textile industry is being affected by COVID-19. Watch the recorded conversation here or check out some of the top takeaways from Yumusaklar and Reynolds—from the perfect sample size (a six-inch square, both agree) to how their businesses are faring, what they've learned from more than a month working remotely and what the future will hold for showrooms.
THINGS AREN'T AS SLOW AS THEY SEEM
When the first shutdowns arrived in March, Yumusaklar forecasted that April would be the toughest month of them all. His predictions weren’t off the mark, but he says Schumacher is already seeing an uptick in sample requests again. In early April, sales were initially off last year’s numbers by more than 30 percent. “Sample orders dropped significantly, but [now] they’re starting to rise,” he says. “Designers are scheming again, maybe it’s all the Zoom presentations, but things are on the rise again.”
IS IT TIME TO LAUNCH?
With time inside has come extra, well, time. Many designers have used that additional space for teasing out ideas and dreaming up new collections. But how might someone go about launching a new collection right now? Some of Reynolds’s friends and colleagues have postponed their launches, but others are forging ahead—including brands she represents, like Brook Perdigon Textiles and Marika Meyer Textiles, which recently launched new lines and have been relying heavily on Instagram to show their new work. “It’s such a tactile industry—it’s not as easy to launch [in this climate],” agreed Yumusaklar. Though Schumacher is moving forward with some of its new introductions, other soon-to-launch lines are currently held up in color trials, with the company’s designers waiting on new colorways of their designs from mills that aren’t currently open. “In terms of supply chains, our warehouses are open, we’re open five days a week overall,” he says. “We do see that some supply chains are a little trickier than others. We do have a little bit of concern around India, but our stock levels are fine—there are no immediate interruptions yet.”
BEWARE OF BACKLOGS
Many mills are still working, albeit at a reduced capacity and with longer lead times. Operations will eventually ramp up again—but even when the time comes, both Reynolds and Yumusaklar agree: At some point, there are going to be serious delays. “The majority of [textile artists] have some stock available, so when designers reach out [right now], it’s fine, but [eventually] it will be depleted,” says Reynolds. The fabric you love is probably in stock now, but by this summer it might not be. “The backlog is something to be mindful of—you’ll have to get in the line. It’s like grocery stores right now—I’m stuck with all the food that no one wants.”
THE FUTURE OF SAMPLES—AND SHOWROOMS
Now that showroom spaces have been shuttered, Yumusaklar hopes that their reopening will hasten a transition that’s been a long time coming. “Showrooms have been changing for quite a while,” he says. “Everybody said traffic in design centers is going down, and that's been a trend for a long time.” Though he says the showroom will remain an essential resource, Yumusaklar sees websites playing an increasingly important role in the way textiles are specified. Schumacher already offers everything from memo ordering to inventory checks online; in the future, “the website is going to be the first go-to,” he says. Most decorators come to the showroom once a quarter—and that’s OK with Yumusaklar, as long as the metrics of showroom success adjust too. “I don’t think you can measure [a showroom’s success] in traffic,” he adds. For Reynolds, whose showroom opened the week of March 9, just as life in New York was grinding to a halt, the physical space was designed to be a place for artistic expression, activations and installations—in short, a lot of in-person discovery and delight. In the meantime, her focus has been on connecting with designers digitally—and resisting the urge to sample indiscriminately. “What happens sometimes in showrooms is lots of bags of samples get messengered around from office to office. That can be overwhelming—designers don’t always want that 50-pound bag,” she says. For existing clients, she often shares new products digitally to gauge interest first, then sends samples of what her clients really love.
WE’RE ALL IN IT TOGETHER
One silver lining of COVID-19 on the fabric business? “Constraint brings on creativity. It’s hard to sit down and get creative, but when you don’t have much else to do, whether it’s with your hands or with your mind, it’s nice to know those tools are in me,” says Reynolds. And when it comes to her partners, “You choose the ones you work with for a reason—the relationships are more than financial,” she says. Yumusaklar sees this as a moment for solidarity for normally competitive fabric brands and their suppliers: “We’re like Scottish clans. We just have to stick together—we’re stronger together than by ourselves.”
Source: Business of Home
THE Malaysian Plastics Manufacturers Association (MPMA) and the Federation of Malaysian Fashion, Textile and Apparel (FMFTA) are stepping up to fill a critical gap in the supply chain for personal protection equipment (PPE) in Malaysia. A joint statement today said MPMA was working with its members to repurpose their machines to overcome a global shortage of non-woven materials to make much-needed PPE while FMFTA members are working on sewing jumpsuits, isolation gowns, head covers and boot covers.
Source: The Malaysian Insight
Vietnamese brands are expected to shine in the global supply chain, said Minister of Industry and Trade (MoIT) Trần Tuấn Anh in a letter of congratulations to the country’s business community on Việt Nam Brand Day. Prime Minister Nguyễn Xuân Phúc on 2008 agreed to mark April 20 every year as Việt Nam Brand Day, with an aim to honour and promote the nation’s brand and image in the context of international economic integration. However, the ministry and the National Brand Council decided not to hold the commemorative activities this year due to the COVID-19 pandemic. Anh in the letter said that the country has maintained high and sustainable economic growth. Last year, Việt Nam achieved impressive GDP growth of 7.02 per cent, surpassing the set target by the National Assembly and bringing the economy scale to more than US$262 billion – the highest level so far. The achievement was partly attributed by the Vietnamese business community to build brands and reputation for the country’s goods and services to the regional and global levels. However, the novel coronavirus outbreak has had impacts on the global economy in general and Việt Nam in particular, especially production, business, investment and trade activities. Anh therefore expected that the business community should maintain unity to surpass the difficulties and stabilising production as soon as possible. Meanwhile, they should maintain and protect their brand names, contributing to enhance the Vietnamese trademark in the global supply chain. The ministry has given support to firms in building, developing and improving their brand names, thus creating momentum for export activities and boosting production after the pandemic. Many local companies found opportunities amid the COVID-19 pandemic to gradually affirm their brand names both in domestic and global markets. For example, VNPT e-learning has provided a programme to nearly 12,000 schools nationwide with more than 400,000 teacher accounts and five million student accounts. Meanwhile, many garment and textile companies, such as Vinatex and TNG, have affirmed their brands with face mask products in the local market and export to other countries. Though the country now has 97 firms recognised as national brands out of 700,000, the number of such enterprises has been on the rise, showing their increasing interest in the programme. Last year, the world’s leading independent brand valuation consultancy Brand Finance said Việt Nam National Brand was valued at $247 billion.
Source: Vietnam News
ITMF has revealed the devastating effect of the coronavirus outbreak on the textile value chain through two market studies. Accordingly, while orders are cancelled or postponed by more than 30%, 2020 turnover is expected to be 28% less than in the previous year. Coronavirus outbreak (Covid-19) continues to affect the world, people and economies deeply as a pandemic. A process that has never been experienced in modern economic life shows itself in all economies. Textile and ready-to-wear industries take their share from this situation. Studies on this issue already show serious shrinkage. The International Textile Manufacturers Federation (ITMF) revealed the negative impact of the outbreak on orders and turnovers by two consecutive studies conducted with its members and companies. Following the rst research, which took place on March13-25, the second research took place between 28 March and 6 April, and was carried out with the participation of 700 companies. According to the results of the research, orders in the global textile value chain were cancelled or postponed by an average of 31%. In connection with this, turnover is expected to decrease by 28% in 2020 compared to the previous year.
Order drop
The results of ITMF’s study of the effects of the Corona pandemic on the global textile industry, show that companies in all regions of the world suffered signicant numbers of cancellations and/or postponements of orders. Globally, current orders dropped by -31% on average. The severity of the decrease ranges from -20.0% in East Asia to -41% in South America. On world average, the turnover in 2020 is expected to be -28% lower than in 2019. While in South Asia the expected turnover will fall by -15%, companies in Africa are expecting a drop of -45%. While some regions were not fully affected by this process in the rst weeks of the outbreak, the negative picture in orders and turnovers in the following period covered all markets. The uncertainty about the duration of the crisis weighs heavily on the industry. The main challenges for companies are highlighted such as; employee safety and health protection, decrease in supply and demand, and lack of liquidity. On the other hand, it has been stated that textile products that have health and protection effects draw attention and become advantageous products due to the coronavirus outbreak. In this process, it was argued that companies could become stronger for the next period by focusing on their internal organizations.
ITMF urges governments to support industry
In the statement made after the survey, ITMF urged governments to increase their support in the context of the coronavirus outbreak, which has spread all over the world, to overcome an unprecedented period of demand and supply shock. Kihak Sung, ITMF President, said that there has not been such a demand shock until now; “Textile and apparel companies in the world are ghting with millions of workers and employees. At this time, both the public and private sectors have to work together to avoid economic and social meltdown”. It was stated that there are developed tools such as short work in some industrialized countries, and rms have reduced working hours and wages instead of ring. On the other hand, Sung stated that these mechanisms are not available in developing countries; “That’s why it’s important to nd creative solutions that can be implemented quickly across the government, international institutions, and the private sector”.
The survival of companies
Noting that job security and nding sucient liquidity are two main problems for companies; Sung emphasized that both issues are essential for the survival of companies. Sung said it is important for governments to take steps; with the support of international nancial institutions such as; the International Monetary Fund (IMF) and the World Bank to provide nancial assistance to bre, textile and apparel companies. Sung said; “In order to provide companies with enough liquidity to overcome this critical process; ITMF asks governments to provide additional credit opportunities to banks; supported by guarantees of governments and/or international institutions; and to suspend other forms of social assistance and contributions”. On the other hand, Sung expressed that all stakeholders in the supply chain should work together. First of all, ITMF wants retailers and brands to avoid using any ‘force majeure item’ in their contracts with suppliers; causing cancellation of prepared orders. It is emphasized that in case of bankruptcies due to the deterioration in the supply chain; there will be problems in the supply of products in the next period.
Source: Textile Gence
To soften business burdens from COVID-19, the federal government today launched a deferment program for certain duties, taxes and fees. President Trump issued an Executive Order late Sunday that granted the Secretary of Treasury the ability to defer some of these payments. The Department of Treasury and U.S. Customs and Border Protection (CBP) have issued a Temporary Final Rule, which provides details on how affected parties qualify for the new deferment program. The joint statement can be accessed HERE. National Retail Federation’s president and CEO Matthew Shay issued a statement today in response to the limited duty deferral for importers, encouraging Trump’s administration to “broaden these deferrals for additional relief.” He continued: “Retailers don’t build stores, buy products and hire associates only to close their doors for weeks at a time. The challenges to the retail industry brought on by this pandemic are severely acute, at best. This deferral provides some retailers with additional liquidity and better cash flow, giving hope for business continuity and a faster recovery once the pandemic has passed.” In an email sent today to members, Home Fashion Products Association legal counsel Robert Leo warned of the program’s caveats and exceptions. “This temporary postponement applies to formal entries made in March or April 2020,” said Leo, a partner at Meeks, Sheppard, Leo & Pillsbury. “This temporary postponement does not apply to entries that includes merchandise subject to a trade remedy action (AD/CVD, 301, 201, 232).” While it does apply to the regular duties paid, the program is not applicable to the additional tariffs on products from China, he noted. In order to qualify for the program, an importer must demonstrate a significant financial hardship. “The operation of an importer is fully or partially suspended during March 2020 or April 2020 due to orders from a competent governmental authority limiting commerce, travel, or group meetings due to COVID-19,” Leo explained. “And, as a result of such suspension, the gross receipts of such importer for March 13-31 or April 2020 are less than 60% of the gross receipts for the comparable period in 2019.” It will be necessary to provide CBP with documentation supporting a request for duty deferral demonstrating the aforementioned significant financial hardship criteria. CBP has issued a set of CSMS messages on with the program overview and payment instructions:
Source: Home Textiles Today
