NATIONAL

• Export ‘incentives’ or fixing disabilities?
• With eye on China, India looks to increase barriers on imports from Asia
• Factory output contracts for four months in a row in July; manufacturing PMI tumbles below June-level
• CMAI survey projects grim Q2 for garment industry
• Govt appoints 3 new members of Central Board of Indirect Taxes and Customs
• Siyaram’s launches anti-corona fabric

INTERNATIONAL

• Global Textile Raw Material Price 04-08-2020
• Textiles industry faces scrutiny after Leicester outbreak
• Oil prices fall on fears about economic fallout from rising Covid-19 cases
• Chinese team makes fabric to cool without electricity

Export ‘incentives’ or fixing disabilities?

Given that 22 firms, both Indian and local, have applied to produce under its production-linked-incentive (PLI) scheme—they will produce goods worth Rs 11.5 lakh crore over five years, of which Rs 7 lakh crore will be exported—it is not surprising the government is looking to see if this can be replicated across sectors. Indeed, one such scheme has already been notified to boost domestic production of Active Pharmaceutical Ingredients (API), though this is hardly as generous as the one for mobile phones because, in the case of the latter, a clear-cut—and large—export benefit is visible while, in the case of API, this is not the case. More worrying, however, is that a cash-strapped government is playing fast and loose with various export incentives and, as a result, exporters are left stranded. Payouts under the Merchandise Exports from India Scheme (MEIS) scheme were, for instance, Rs 43,500 crore in FY20—they were Rs 20,232 crore in FY16—and these have abruptly been reduced to just Rs 9,000 crore for April to December this year; so exporters who quoted prices to foreign buyers on the assumption they would get around last year’s level of incentives suddenly find themselves staring at a 75-80% shortfall. How are they to do business in an environment like this where there is no certainty over how much money they will get to compensate them for various costs? Indeed, last year in September, finance minister Nirmala Sitharaman spoke of a Rs 50,000-crore Remission of Duty or Taxes on Export Products (RoDTEP) scheme that was on the anvil to replace existing export schemes. A few months later, in the case of mobile phones, the MEIS for phones and chargers was cut from 4% to 2%; it was raised from 2% to 4% in December 2017. And, in April this year, exporters were told the MEIS would be valid till just December 31, 2020, instead of March 31, 2021; last week, they were told the scheme would be curtailed at just Rs 9,000 crore for even this period! But surely if RoDTEP is to start from January 1, the industry should know what are the amounts it will get, and on what products? And, on what basis is this being fixed? Indeed, there is even more confusion now as there is, at a conceptual level in the government, a lack of clarity on what is an incentive and what is a payout to take care of a ‘disability’; nor is it clear how much money is to be allocated to either. In the weeks after the abrupt decision to restrict MEIS, officials were giving off-record briefings on how MEIS had failed to boost exports and even on how the money saved from schemes like MEIS could be used to fund more PLI-type schemes for sectors where—like mobile phones—large imports took place, and this could be more than neutralised by large exports. The PLI scheme, as it happens, is a payment being made to make up for the problems or the costs associated with doing business in India. The way it has been structured—PLI-incentives are to be given only for phones that cost more than $200 ex-factory—though, makes it an export-incentive scheme for all practical purposes since few phones that cost so much can be sold in the country. But the problem is, it is not possible to design a similar scheme for all products that are exported; how do you design such a scheme for garments? Meticulous groundwork by the mobile phone manufacturers, for instance, helped work out how much cheaper it was to manufacture in Vietnam, and how much of this was due to higher electricity costs in India, how much due to the R&D subsidy offered there (versus that in China and India), how much due to government subvention to lower costs of working capital, lower costs of productivity-adjusted wages, etc. But, surely it cannot be the government’s case that such ‘disabilities’ apply to only the mobile phone or electronics’ manufacturers? So, on what basis is it planning to restrict incentives to just a few sectors like mobile phones or API? And, what happens to the export potential of sectors that do not get this benefit? If their exports fall, as they will, the trade deficit will rise. So, the government needs to come up with a scheme to see how it is going to counter the disadvantages associated with manufacturing in India. And, while RoDTEP will fix some of the issues, by its very definition, this is about unrebated taxes, not the higher costs of labour in India or those related to poor infrastructure or low ease of doing business. Ideally, as was done by the mobile phone manufacturers, the industry needs to do very detailed calculations to prove its cost disadvantage—per unit of their production—and the government then has to come up with various schemes to address each one of them, whether by way of RoDTEP, reduction in corporate tax rates, reduction in the cost of electricity and real estate, etc.  Failing a comprehensive exercise—and solution—the government keeps coming up with patchwork solutions like raising import duties on select products; since the underlying problem like high electricity or labour costs is never addressed, all this results in is India becoming a high-cost economy. So, even as the government comes up with temporary solutions like MEIS or PLI or RoDTEP—and it needs to ensure it has enough money for all, unlike what is happening now—it needs to come up with a more permanent solution. India does not have the money, in either the short- or the long-term, to keep paying PLI-type incentives to make up for the disadvantages caused by poor policy decisions.

Source: Financial Express

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With eye on China, India looks to increase barriers on imports from Asia

New Delhi is considering measures to prevent trade partners mainly in Southeast Asia from re-routing Chinese goods to India with little added value, two government sources said, amid strained ties with Beijing and a push for self-reliance. India is planning to raise quality standards of imports, impose quantity restrictions, mandate stringent disclosure norms and initiate more frequent checks at ports of entry for goods coming from many Asian countries, the officials said, declining to be named as they were not authorised to talk to the media. The moves will mainly target imports of base metals, electronic components for laptops and mobile phones, furniture, leather goods, toys, rubber, textiles, air conditioners and televisions, among other items, the officials said. Last week, India's trade ministry issued a notice to restrict inbound shipments of TVs by requiring importers to get a special licence. The moves are expected to primarily hurt Malaysia, Thailand, Vietnam and Singapore - members of the Association of Southeast Asian Nations (ASEAN) with which India has a free trade agreement (FTA). India is also worried about heavy trade flows from South Korea. "Raising duties has a limited impact," said one of the officials. "Now we want to raise quality standards and also make sure that goods in FTA routes have roots in those countries. So customs would be more vigilant than before."

India's trade ministry did not immediately reply to an email seeking comment

The government will also discuss raising the value-addition requirement for products imported from those countries from the current level of 20 per cent-40 per cent, the official said, adding FTAs could be reviewed too. "A lot of the Asian partners have become a place from where just Chinese goods are routed. We are going product by product to design various kinds of action, most of which will be on non-tariff lines," the official added. India has long had an uneasy relationship with China and a Himalayan border dispute escalated into the worst clash in decades in June. India said 20 of its soldiers were killed. China is also India's second-biggest trading partner, with trade worth $87 billion in the fiscal year ending March 2019, and a trade deficit of $53.57 billion in China's favour, the widest India has with any country. Thai and Malaysian authorities said they had not received any official communication on the issues of raising non-tariff barriers or re-routing of goods. Thailand’s trade ministry said in a statement to Reuters that the ASEAN treaty should be reviewed to make it more liberal in terms of tariff liberalization and rules of origin and to have simpler customs and verification procedures. Meanwhile, Indian officials said the government was inclined to only stick to those FTAs that it deems mutually beneficial. India has a trade deficit with most of the countries it has signed FTAs with. "Very clearly in ASEAN agreements India has got, in many respects, the bad end of the stick, particularly in the field of electronics where we now find a number of products are being routed through the ASEAN economies to India," said George Paul, CEO of the Manufacturers' Association for Information Technology.

Source: Business Standard

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Factory output contracts for four months in a row in July; manufacturing PMI tumbles below June-level

The Indian manufacturing sector started to recover after it stepped out of the strict nationwide lockdown, however, it has once again lost balance. The manufacturing PMI, which fell to a record low in the month of April, showed some recovery in May, and further in June 2020, but it once again slipped in July. The manufacturing PMI stood at 46 in July, which was 47.2 in June 2020, and 30.8 in the month of May. Business conditions continued to deteriorate in July amid prolonged closures and the health of the manufacturing sector declined at a slightly quicker pace, said the IHS Markit report. Both output and new orders continue to fall markedly and business sentiment remained historically subdued despite improving, it added. “Latest PMI data from Indian manufacturers shed more light on the state of economic conditions in one of the country’s worst affected by the COVID-19 pandemic. The survey results showed a re-acceleration of declines in the key indices of output and new orders, undermining the trend towards stabilisation seen over the past two months,” said Eliot Kerr, Economist at IHS Markit. Anecdotal evidence indicated that firms were struggling to obtain work, with some of their clients remaining in lockdown, suggesting that we won’t see a pick-up in activity until infection rates are quelled and restrictions can be further removed, Eliot Kerr added.

Source: Financial Express

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CMAI survey projects grim Q2 for garment industry

The 3rd survey conducted by Clothing Manufacturers Association of India (CMAI) amongst its members indicates a disastrous first quarter for the domestic garment industry with 74 per cent respondents showing 90 per cent drop in sales. The second quarter projections are no better as 95 per cent respondents expect operating at less than 50 per cent of capacity. In the first quarter of 2020-21 ending June 30, the domestic garment industry saw a more than 75 per cent drop in their revenues, the survey indicated. For the July-September quarter, as many as 68 per cent of the respondents anticipate using less than 25 per cent of their production capacities in the next three months, CMAI said in its survey results. The respondents do not see much improvement in the next 12 months either, as 21 per cent of the respondents expect to operate at less than 25 per cent of their capacity in the coming 12 months, and 46 per cent expect to operate at between 25 per cent and 50 per cent. "This means almost half of the industry expects to operate at less than 50 per cent of capacity in the coming 12 months," CMAI said in its findings of the survey.  What is obviously adding to the worries of this largely MSME dominated sector, is the drying up of working capital funds, with manufacturers not receiving payments from the equally stressed retail sector. It is because 91 per cent of the respondents have received less than 25 per cent of their dues in the last quarter – and close to 85 per cent are not expecting their dues to be cleared in the next 3 months. In fact, 44 per cent of the respondents fear that 20-50 per cent of their dues will turn in to bad debts, and another 10 per cent expect even a higher percentage of bad debts.   “All these findings reflect an extremely grim future for the garment industry, and survival of many of the smaller players looks extremely doubtful’, said CMAI president Rakesh Biyani. “It will take at least another year for our members to reach back to the normal business conditions,” Rajesh Masand, vice president, CMAI, added. CMAI chief mentor Rahul Mehta cautioned about the severe job losses in the industry. “Looking at the survey results, I would not be surprised if close to 25 to 30 per cent of units shut down. I am also expecting job cuts of 25 to 30 per cent even in the companies that somehow survive this year.” The Indian garment industry currently has around 85,000 factories, largely in the MSME sector. The industry employed around 12 million workers in the pre-COVID era.

Source: Fibre2Fashion

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Govt appoints 3 new members of Central Board of Indirect Taxes and Customs

Bureaucrats Ajay Jain, Vivek Johri and Sungita Sharma have been appointed as members of the Central Board of Indirect Taxes and Customs (CBIC), according to a Personnel Ministry order. Jain and Johri are Indian revenue service (customs and central excise) officers of 1985 batch. Sharma is a 1986-batch IRS (customs and central excise) officer. The appointments committee of the cabinet has approved the appointment Jain, Johri, and Sharma as CBIC members, the order said, without citing details. The board, top policy making body for indirect taxes, is headed by a chairperson. It can have a maximum of six members.

Source: Business Standard

Siyaram’s launches anti-corona fabric

The new anti-corona fabric provides a protection from the virus and is developed in association with HeatlhGuard, a global leader in non-invasive healthcare for 25 years dedicated to research and development of safe and innovative biotech solutions, the company said in a statement. The new fabric guarantees 99.94 per cent effectiveness against coronavirus and has non-leaching properties compared to other metal based chemistry products, making the treated layer of fabric to not dissolve in water, it added “We have launched our range of anti-corona fabric after conducting proper research and collecting data by testing the fabric at WHO certified and government approved Indian laboratory, reputed Australian laboratory using internationally accepted protocols. The tests conducted on the treated fabric establish that it comprises anti-viral and anti-bacterial properties and is also effective against corona viruses, by reducing the infectious viral load on the treated fabric. The ‘anti-corona fabric’ is made after treatment with technology from Australia’s HealthGuard Corporation Pty Ltd by applying HealthGuard AMIC which has proven effective against bacteria and viruses including the novel SARS-CoV2. It stops virus transmission through treated fabric to any surface,” Shridhar Soni, Vice President- Sales and Marketing, Siyaram Silk Mills Ltd said. “Siyaram’s has always believed in serving the Indian society by providing innovative products with complete dedication and honesty. As the world fights against an unusual situation, we hope that we play our part in overcoming these tough times with the best of our abilities,” he added.

Source: India Retailing

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Global Textile Raw Material Price 04-08-2020

Source: Global Textiles

Note: The above prices are Chinese Price (1 CNY = 0.14325 USD dtd. 04/08/2020). 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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Textiles industry faces scrutiny after Leicester outbreak

Earlier this summer Leicester, in central England, and its thriving textiles industry found itself in the spotlight for all the wrong reasons. As the government was starting to ease coronavirus lockdown measures, the city of around 355,000 people became a COVID-19 hotspot, prompting officials to reimpose the social distancing regime. This in turn led to renewed allegations modern slavery is rampant in its textiles sector -- and that it had continued to operate at full capacity during the pandemic, fuelling the local spread of the virus.  At an imposing, derelict-looking building in a district home to many fabrics factories, the sounds of sewing machines puncture the silence of the otherwise quiet street.

Outside, a handful of employees load dozens of boxes onto a truck. Faded signs elsewhere in the neighbourhood highlight the presence of many other clothes-making hubs and the extent of the industry in parts of Leicester. In total, the city has around 1,500 factories, employing around 10,000 workers. "Most factories in Leicester are small workshops, often housed in dilapidated buildings, with little investment in building safety and modern ventilation," said a June report by pressure group Labour Behind the Label. Some operators have even set up production in homes, as hinted at by one woman leaving a house carrying transparent bags packed with multicoloured fabrics, before a man loads them into a car. Around 75-80 percent of the city's textile production is intended for Boohoo, the British clothing group specialising in ephemeral and cheap "fast fashion", according to Labour behind the Label. With the pandemic coinciding with the summer holidays, many companies are said to have now shuttered their operations. But that appears to be a far cry from earlier in the lockdown, when there were reports of crowded workshops, despite the obvious health risks. During the peak of the outbreak between March and May, "some workers tested positive for coronavirus and were told to still come to work with their colleagues," Meg Lewis, the NGO's campaign manager, told AFP.However, public health bodies have said that no single source has been pinpointed as responsible for Leicester's previously higher case numbers. "The truth is there is no epidemiological evidence to suggest that the factories have been a major factor," said local councillor Adam Clarke.He cites the "nasty cocktail" of population density, poverty and the high proportion of ethnic minorities, who have been more impacted by COVID-19, as likely behind the city's virus woes. Investigations by Labour Behind the Label and several British media outlets found textile workers in Leicester could be earning as little as £2 ($2.63, 2.20 euros) an hour -- well below Britain's hourly minimum wage of £8.72. Boohoo has said it is "horrified" at the accusations and promised an investigation. This falls short of the demands of Lewis and her NGO, which wants the group to address its commercial practices. Some dresses are sold for less than £4.50 on its website. Meanwhile, publicly discussing wages with workers appears taboo, amid fears over the ramifications for their insecure jobs.” No English", said one young woman, of Asian descent, before quickly walking away. "I can't discuss (it)," replied another young man when asked about the allegations of illegally low pay.0"£10 (an) hour," he added, after a brief exchange with a colleague in a foreign language. However, it is common to find textile jobs in Leicester that pay £3-4 hourly, according to an Uber driver and former clothing company manager who said he quit the role over the issue. "Now, (it's) all illegals," he added of the workforce of around 30 employees in his former company, noting they came predominantly from India and Bangladesh. Vulnerable populations coming from such places and lacking legal protections are "easy targets" for rogue textiles bosses in search of cheap labour, according to Lewis. It is difficult to gauge the exact number of victims of this form of modern slavery. In mid-July, a local lawmaker from the ruling Conservatives said that up to 10,000 people -- practically all workers in the sector -- could be impacted. Responsibility for enforcing workplace rules in Britain rests with the Health and Safety Executive, which said it had carried out 51 inspections in Leicester between May 1 and June 20. "During this period we have not found any cases where the situation was so bad that it would justify taking a prosecution," it said in a statement.

Source: India Today

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Oil prices fall on fears about economic fallout from rising Covid-19 cases

Oil prices fell on Monday on fears about the economic fallout from rising Covid-19 cases around the globe and on oversupply worries as OPEC and its allies are set to wind back output cuts in August. Brent crude slid 40 cents, or 0.9%, to $43.12 a barrel by 0845 GMT, and US West Texas Intermediate (WTI) crude was down 46 cents, or 1.1%, at $39.81. In the last month, Brent has been trading in a range between $41 and almost $45. "Oil continues to trade in an incredibly rangebound manner," said Warren Patterson, ING's head of commodities strategy. "Speculators appear to be getting more nervous about the demand recovery, with the path much more gradual than market expectations coming into the second half of the year," he added. Coronavirus cases continued to surge in the United States and stood at almost 18 million globally. More countries imposed new restrictions or extended the current ones to control the pandemic. Amid slow recovery of fuel demand due to the resurgence of the virus, investors are also worried about oversupply, as the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will ease oil supply curbs from August. "Concerns appear to be developing that a rise in OPEC+ production will coincide with uneven recovery in oil demand due to localised setbacks following secondary waves of Covid outbreaks," said Harry Tchilinguirian, head of commodity research at BNP Paribas. OPEC+ members have been cutting output since May by 9.7 million barrels per day (bpd). From August, cuts will officially taper to 7.7 million bpd until December. However, oil prices found some support after a survey showed that manufacturing activity across the euro zone expanded for the first time since early 2019 last month. A Reuters poll on Friday indicated that oil is set for a slow crawl upwards this year as the gradual easing of coronavirus-led restrictions buoys demand, although a second Covid-19 wave could slow the pace of a recovery.

Source: Business Standard

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Chinese team makes fabric to cool without electricity

Scientists in China have developed a material that cools the wearer without using any electricity. The fabric transfers heat, allows moisture to evaporate from the skin and repels water. Thermal conductivity of the new fabric is higher than that of many other conventional or high-tech fabrics. The research is published in ACS Applied Materials & Interfaces. Cooling off a person’s body is much more efficient than cooling an entire room or building. Various clothing and textiles have been designed to do just that, but most have disadvantages, such as poor cooling capacity; large electricity consumption; complex, time-consuming manufacturing; and/or high cost. Yang Si, Bin Ding and colleagues from Donghua University, Shanghai, China, wanted to develop a personal cooling fabric that could efficiently transfer heat away from the body, while also being breathable, water repellent and easy to make.  The researchers made the new material by electro spinning a polymer (polyurethane), a water-repelling version of the polymer (fluorinated polyurethane) and a thermally conductive filler (boron nitride nanosheets) into nanofibrous membranes. These membranes repelled water from the outside, but they had large enough pores to allow sweat to evaporate from the skin and air to circulate. The boron nitride nanosheets coated the polymer nanofibres, forming a network that conducted heat from an inside source to the outside air. In tests, the thermal conductivity was higher than that of many other conventional or high-tech fabrics. The membrane could be useful not only for personal cooling, but also for solar energy collection, seawater desalination and thermal management of electronic devices, the researchers say. The research was funded by the National Natural Science Foundation of China, the Interdisciplinary Studies Programme for the Central Universities and the Fundamental Research Funds for the Central Universities.

Source: Fibre2Fashion

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