The commerce and industry ministry is finalizing the national e-commerce policy. The policy will be presented to the highest levels of government for final approval. It will consider the interests of all stakeholders, including investors, manufacturers, MSMEs, traders, retailers, startups, and consumers. The policy will aim to create a conducive environment for the holistic and harmonious growth of the e-commerce sector. It will also address data localization and other regulatory concerns.

Background

The ministry had previously released two drafts of the national e-commerce policy in 2018 and 2019. The 2019 draft covered six key aspects of the e-commerce ecosystem: data, infrastructure development, e-commerce marketplaces, regulatory concerns, stimulation of the domestic digital economy, and promotion of exports through e-commerce. 

The draft included discussions on measures such as cross-border data flow restrictions, handling sensitive data locally before storing it abroad, measures to combat the sale of counterfeit goods, restricted items, and pirated content.

Current status

The ministry has held extensive discussions with representatives from e-commerce companies and a domestic traders' association on the proposed policy. A significant level of consensus has been reached among the concerned parties. The focus is now on obtaining final approval for the policy.

Next steps

The policy will be presented to the highest levels of government for final approval. Once it is approved, the policy will be implemented.

Epilogue

The national e-commerce policy is a significant step towards regulating the e-commerce sector in India. The policy is expected to create a conducive environment for the growth of the sector and protect the interests of all stakeholders.

Here are some of the key points of the policy:

• The policy will consider the interests of all stakeholders, including investors, manufacturers, MSMEs, traders, retailers, startups, and consumers.

• The policy will aim to create a conducive environment for the holistic and harmonious growth of the e-commerce sector.

• The policy will address data localization and other regulatory concerns.

• The policy will be presented to the highest levels of government for final approval.

• The policy will be implemented once it is approved by the government.

The heightened customer awareness about wearing sustainable and environment-friendly apparels is helping drive up demand for clothing repair and re-wear by premium brands around the globe. With an underlying concept of a stitch in time saves nine, many leading garment companies are creating a scalable and profitable after-sale repair service business to make them last a lifetime, while overcoming tricky logistical and workforce challenges in doing so.

A recent study by the Massachusetts Institute of Technology (MIT) has shown that for a global population of 8 billion, around 19 pieces of clothing per person are manufactured yearly and the emissions generated throughout the lifecycle of clothing are just massive and unaccounted for.

It’s not just about nostalgia and re-wearing favorite clothes, but a newer way of enjoying fashion over a longer period versus fast-fashion where clothes are bought and thrown away post use. From receiving alteration orders from textile trading firms that wholesales products to apparel makers, fixing clothing damaged during the production process to make it sellable as well as after-sales paid service of reworking embroidery, buttons and embellishments with bespoke tailoring, the repairing and recycling apparel segment is a versatile one.

Japan leads the way

Japan has always led the way in the repairing garment segment with many local brands having in-house services to remake and repair their traditional kimonos. They are now going global in expanding their mending services with global brands. Some repair and tailoring companies such as Japan Apparel Quality Center founded the Shibaura Repair Workshop to provide such services for its corporate customers around the world. The services include alteration to accepting orders from individual customers.

“The negative environmental impacts of the fashion industry became widely known, prompting eco-friendly ethical consumption behaviors to rapidly become widespread among them. There is a new view among consumers, too, that it’s cool to upcycle favorite clothes and wear them longer,” says Noriko Saiki, Senior Manager, Japan Research Institute and an expert on the relationship between fashion and the United Nation’s Sustainable Development Goals.

Globally, premium brands such as Patagonia, Nudie Jeans, Zara, Levi’s, and Uniqlo among others are stepping in with repair services that are focused on sustainability and waste reduction. Fast-fashion brand Uniqlo now has repairing services at three Uniqlo shops in Japan, which specialize in repairing and remaking products such as fixing tears, adding embroidery to old clothing, alteration services, and accepting orders to fix puffer jackets and damaged crotch area of jeans, among other repair types.

Brands launch innovative apparel re-use schemes

Not just Japan. similar global efforts are in place in Europe with the French government recently announcing it will subsidize clothing and shoe repairs to reduce waste starting in October 2023. Spain’s Inditex, which operates Zara stores globally, has plans to launch repairs in major markets and has already launched a mending service for its products in Britain in November 2022. H&M has collaborated with a startup to help fix damaged apparel with a scheme called ‘Close the Loop’ which encourages customers to deposit their used clothing in in-store recycling bins and receive a coupon for their next purchase. On same lines, cosmetics giant Sephora has introduced a program called ‘Beauty (Re) Purposed’, which focuses on hard-to-recycle packaging waste in the beauty industry, which has managed to reach its target consumers and bring in profits. 

However, most big retailers are facing a labor shortage as they try to keep up with the rising repairing and rewear garment demand as it’s a difficult segment that takes concentrated effort and high skill set and many young staffers are not interested. Also, the popularity of cheap fast fashion has ensured the average middle-class shopper will not have the money or interest to invest in repairing old clothes. The repair-and-wear apparel segment does build brand loyalty and longevity but it’s a niche one that is just at the starting line still waiting to get up and go fast.

The fashion sector is always haunted at the prospect of yet another allegation from social activists or laws passed against its dubious sourcing practices, leaving the sector defensive and running for cover. These are not without reason as for decades the fashion sector has exploited underdeveloped countries’ cheap labour forces for financial gains, at the expense of mostly women and children. The garment industry, a significant source of employment, provides jobs to around 94 million workers globally. 

While trends vary by region and country, nearly 60 per cent of garment workers globally are women, reaching nearly 80 per cent in some regions. Although completely illegal in most countries, according to International Labour Organisation (ILO), around 11 per cent of the readymade garment industry workers worldwide are children. 

Fast fashion had deteriorated the labour rights situation even further as it continuously looks for the cheapest source – giving unscrupulous RMG manufacturers a field day as they lure in people eager to find employment with false offers of a better livelihood.  Sofie Ovaa, global campaign coordinator of Stop Child Labour at UNICEF explains, “There are many girls in countries like India, Cambodia and Bangladesh, who are willing to work for very low prices and are easily brought into these industries under false promises of earning decent wages.”

Weak anti-slavery laws a bane

Meanwhile many countries have passed anti-slavery laws for compliance. For example, Canada has the ‘Fighting Against Forced Labour and Child Labour in Supply Chains Act’. But there are questions if the law is really effective and how robust it is. Going by the lax law, it hardly comes across as a fight for betterment that a first world economy would uphold and turns out to be more a moral code of conduct that should be followed. This Act does not make it mandatory for large Canadian companies that are outsourcing from various developing and under-developed economies where the chances of labour exploitation are on the higher side. It is entirely at the discretion of these organisations to choose to follow the Act as an ethical guideline or not. 

Similarly, the State of California has very weak and vague disclosure laws that enable large importers to carry on doing business with dubious suppliers, as do Australia and the UK. What is surprising is that in these countries, the movement towards ending labour exploitation in the fashion industry is led by individuals and groups of the public rather than their governments. 

Popular high street brands continue using child labour

Shocking as it may be, the list is a long and disturbing one as these are much-loved labels – H&M, Zara, Uniqlo, GAP, Nike, Aldo, Aeropostale, Urban Outfitters, Primark, Walmart and Forever 21, Victoria’s Secret and La Senza to name some of the many. Whilst most of these brands often espouse social causes such as sustainability, LGBTQIAA+ rights, etc., when it comes to speaking out about child labour, they remain vague. 

Child labour has been advantageous for the readymade garment and textile sector because most of the tasks involved require low skill and according to industry experts, little fingers pick better cotton because they don’t damage the fluff! According to SOMO, the Netherlands-based independent research company, the worst offenders happen to be Egypt, Uzbekistan, Pakistan, India, Bangladesh, Thailand and China. One can’t of course put the blame squarely on brands exploiting children for financial gains – the fashion supply chain is nearly impossible to control as of date because of the multiple sub-contractors in it who fly below the radar and buyers don’t have any idea about them. 

In April 2023, cotton yarn prices stood at $5,651 per tonne (CIF, Italy), down -9.8% from the previous month. The import price displayed a consistent decline, with August 2022 marking the highest growth rate at 14%, reaching a peak of $7,772 per tonne. However, from September 2022 to April 2023, average import prices remained stagnant.

Diverse price trends across nations

Significant price disparities were evident among major cotton yarn providers. Egypt commanded the highest price at $9,706 per tonne in April 2023, while Spain offered some of the lowest rates at $3,348 per tonne. Spain experienced the most growth from April 2022 to April 2023 (+0.8%), while other primary suppliers observed declines.

Variability in Italian cotton yarn import prices by type

The price of cotton yarn not intended for retail sale, containing 85% or more cotton, stood at $6,181 per tonne, while yarn with less than 85% cotton was priced at $3,370 per tonne. Notably, price fluctuations were notable based on product type, with retail-ready cotton yarn showing a slight growth rate (-0.6%) compared to falling prices of other items.

Italy's fluctuating cotton yarn imports

Italy's cotton yarn imports surged to 5.6K tonnes in April 2023, a 7.2% rise from March 2023. This growth was most pronounced in September 2022, with a 101% increase compared to the previous month. While the April 2023 imported cotton yarn value was $32M (IndexBox estimates), overall imports saw a notable decline. The exceptional 66% m-o-m growth in September 2022 marked the highest rate.

Dominant cotton yarn imports by type in Italy

In April 2023, Italy's prime import was cotton yarn (other than sewing thread), with 85% or more cotton content, accounting for 77% of all imports (4.3K tonnes). This significantly exceeded imports of cotton yarn with less than 85% cotton content, at 973 tonnes. Between April 2022 and 2023, imported cotton yarn not intended for retail sale declined at an average monthly rate of -3.6%. Other types displayed varying growth: cotton yarn (other than sewing thread), less than 85% cotton, not for retail sale (+0.7% per month), and retail-ready cotton yarn (+13.8% per month).

Germany has expressed firm support for the revival of negotiations concerning a free trade agreement between the Philippines and the European Union (EU). The German ambassador to the Philippines, Andreas Michael Pfaffernoschke, emphasized the nation's keen interest in exploring new business opportunities and fostering bilateral ties. The envoy noted the potential for increased exchanges of skilled workers and collaboration on various fronts.

Promising Prospects Ahead

Andreas Michael Pfaffernoschke, the new German ambassador to the Philippines, lauded the initiative to reopen discussions on a Philippines-EU free trade agreement. He underscored the significance of mutually beneficial economic prospects for both nations, including strengthened people-to-people relations. The exchange of skilled workers and expanding business avenues could further enhance ties between Germany and the Philippines.

Collaboration Beyond Trade

President Ferdinand R. Marcos Jr. and Ambassador Pfaffernoschke have extended their collaboration to areas beyond trade and investment. They have pledged to work closely on climate change mitigation and adaptation efforts. This collaboration underscores the shared commitment of both nations to address pressing global challenges and work towards sustainable solutions.

Trade Ties in Numbers

In the past year, Germany retained its position as the Philippines' 12th largest trading partner, 10th biggest export market, and 15th import supplier during January-October. The bilateral trade volume between the two countries amounted to $4.7 billion, encompassing $2.8 billion in exports and $1.9 billion in imports. Moreover, Germany stands as the Philippines' primary trading partner within the EU.

In a dynamic move, Germany reaffirms its support for reinitiating talks on a Philippines-EU free trade agreement, poised to invigorate trade relations and foster collaboration on multifaceted fronts.

A recent survey found that over 80% of consumers in the UK, France, and Germany expect the economic downturn to last more than a year. In response, more than 90% of shoppers are changing their spending habits.

Specifically, consumers are spending less (54%), eating out less (49%),  purchasing fewer non-essential items (51%), shopping with less expensive brands (44%) and limiting spending on clothing, footwear, and accessories (54%) 

Consumers are also more likely to shop with retailers that offer exclusive community discounts (63%). This is especially true for students (89%), healthcare workers (81%), and teachers (73%).

Loyalty programs are also becoming more popular, with over 70% of consumers interested in joining programs that offer exclusive benefits. In particular, 7 out of 10 consumers within identity-based communities are more loyal to brands that offer exclusive advantages.

These findings suggest that consumers are becoming more price-conscious and are looking for ways to save money. Retailers that can offer exclusive discounts and create emotional connections with consumers will be well-positioned to succeed in the current economic climate.

Yarn consumption in Bangladesh's Ready-Made Garments (RMG) sector declined by 31.55% in the first half of the fiscal year 2022-23, as compared to the same period in the previous year. This was due to a decrease in orders from international buyers, as well as an increase in fabric imports.

According to data from the Bangladesh Textile Mills Association (BTMA), local garment factories purchased 809,351 metric tonnes of yarn during the January-June period of the previous fiscal year, reflecting a decrease of 373,080 tonnes compared to the same period in the previous year.

The decline in yarn consumption was despite the fact that the RMG sector's export earnings increased by 1.19% year-on-year in the latter half of the previous fiscal year. This was due to a shift towards producing higher-value clothing items, which led to higher prices per clothing item despite a decrease in unit exports.

The BTMA has urged the government to consider the textile sector and reduce gas prices, given that the spot market LNG rate has decreased.

The decline in yarn consumption is a worrying trend for the RMG sector, as it could lead to job losses and factory closures. The government and the industry need to work together to find ways to reverse this trend and ensure the continued growth of the RMG sector.

Bangladesh is the second-largest exporter of ready-made garments (RMG) in the world, but it faces a price disadvantage in the US and EU markets compared to its competitors.

In 2022, the average price of Bangladeshi RMG exports to the EU was USD 17.27 per kg, while India and Sri Lanka secured prices of USD 23.27 and USD 28.54 per kg respectively. 

In the US market, Bangladesh's RMG exports were priced at USD 3.10 per square meter, while India and Sri Lanka commanded prices of USD 3.80 and USD 4.26 per square meter respectively.

There are several reasons for this price disadvantage. One reason is that Bangladesh's RMG industry is heavily reliant on a few sectors, with approximately 80 percent of apparel exports originating from five specific segments. This makes it difficult for Bangladeshi exporters to negotiate higher prices.

Another reason is that Bangladesh lacks a deep-sea port, which makes it difficult and expensive to export goods. This also gives foreign buyers an advantage in price negotiations.

Finally, Bangladeshi RMG factories have not invested enough in research and development, which has limited their ability to produce high-value garments.

To address these challenges, Bangladesh needs to diversify its export portfolio, invest in research and development, and improve its negotiation skills.

Swedish fashion retailer H&M has announced that it will phase out its manufacturing operations in Myanmar due to reports of labor exploitation. This move is likely to shift the focus of global retailers to neighboring markets like India, which has been actively enticing them to increase their sourcing from the country.

India is a major player in the global apparel industry, and its domestic market is five to six times larger than its export market. The country has a large and skilled workforce, as well as a favorable regulatory environment for businesses. In addition, India is increasingly seen as a reliable and ethical sourcing destination.

H&M and other global retailers are already increasing their sourcing from India. For example, Uniqlo India is on track to achieve 30% domestic sourcing, while H&M India plans to add six new stores in the current year.

The exit of H&M from Myanmar is a setback for the country's apparel industry. However, it is also an opportunity for India to emerge as a leading sourcing hub in the region.

The Indian government has been taking steps to make the country more attractive to foreign investors, such as simplifying the regulatory environment and providing incentives for businesses.

Bangladesh is on the verge of surpassing China as the world's leading exporter of cotton with global demand for cotton apparels increasing. The World Trade Organization had already identified Bangladesh as the world's second-largest garment exporter after China in 2022 and the quick upsurge has continued steadily over another year to make it the first. 

One reason for this is that most American fashion apparel companies after Covid years, have reduced their sourcing from China, reallocating their sourcing to three other primary South East Asian markets: Bangladesh, India, and Vietnam. However, Bangladesh has emerged as the strongest and most competitive apparel supplier price-wise as with government help and the expertise of specialized apparel agencies, more and more spinning mills with high-tech manufacturing are being set up.

Growing cotton consumption 

According to a study by the US Department of Agriculture (USDA) titled ‘Cotton: World Markets and Trade,’ Bangladesh total cotton consumption is up 800,000 bales to around 8 million, because of rising apparel exports to some of the world’s largest importing markets of the US and European Union. “Spinning mills’ operating rates in 2023-24 are expected to rise as the textile supply chain replenishes depleted stocks of yarn, fabric, and apparel; this past marketing year witnessed textile manufactures destocking and maintaining low inventories across the supply chain,” says the report.

This forecast prediction of 800,000-bales or 10 per cent, year-on-year increase in Bangladesh's cotton consumption due to escalating apparel exports in 2023-24, is expected to grow further in future.

Apparel contributes over 80 per cent to the country's total annual exports. The current export value of nearly $47 billion in woven and knitwear shipments in the fiscal year 2022-23, is almost double that of a decade ago. Besides these apparel categories, T-shirts, trousers, and sweaters continue to dominate the country’s exports and the iconic cotton T-shirt has accounted for around one-fifth of the value of Bangladeshi garment exports to Europe over the recent past.

Factories in Bangladesh are focused on making cotton-based garments and more than 70 per cent shipments comprise cotton apparel such as knitted cotton shirts and sweaters, which are helping drive record high values. The USDA report has highlighted the fact that Bangladesh will now aim to achieve more than $50 billion in apparel exports in the fiscal year 2024, which will be far more than the previous years, as the government is positive about sustaining the increased demand over the near future.

Knitted garments the most popular segment

The exports of knitted garments for men, women, and children have been the mainstay of the recent quick growth. “Apparel exports are pivotal to Bangladesh’s economic growth and stabilizing the value of the domestic currency, specifically by obtaining US dollars through foreign sales. Exports of knit apparel have been crucial to recent growth with a value that nearly tripled over the past decade. According to the Bangladesh Textile Mills Association, local textile mills meet 85 per cent of the demand for knit fabrics and about 40 per cent for woven fabric, which is mostly imported from China,” points out the USDA report.

Bangladesh has always been an attractive apparel-sourcing destination, although the challenges of the pandemic affected the country greatly. However, in recent years, the Bangladesh garment sector has been greatly helped by the government to follow an environmentally-friendly green policy, with factory buildings having become safer while turning to compliance, factory and occupational safety, and minimizing waste and excess production.  Currently Bangladesh has more green garment factories than most other countries, but these factories’ share of the country’s apparel exports remains low as the other more established factories continue to hold sway.

With the odds against China, Bangladesh focuses to make cotton while the sun shines to boost its survival in an economy dependent on all kinds of global exports to survive economic downturns and impending recession.