Pakistan’s textile exports plunged by 19 percent in November 2022 as compared to the corresponding period last year. So says All Pakistan Textile Mills Association (APTMA).

At a time when the country is faced with immense economic challenges and looking toward the IMF and friendly countries for inflows of dollars to meet its external liabilities, the continuous fall in textile exports is alarming and expected to add to its economic woes.

The textile sector plays a significant role in supporting the economy and continues to be in the spotlight owing to country’s dependence on foreign exchange.This vital sector, which also provides massive job opportunities, contributed around 60 percent to total exports during the last fiscal year. The devaluation against the dollar which would have given Pakistan’s textile exporters a competitive advantage over its competitors in terms of pricing has not helped. Instead the sector is faced with a crisis that includes liquidity constraints, energy shortages and non-functioning of new projects.The recent floods also destroyed the cotton crop with only five million bales available this year while the demand of the industry is above 14 million bales.

Also foreign exchange issues have curtailed the import of cotton and other essential inputs.

Pakistan’s cotton production for the year 2022-23 is estimated to fall by 43 per cent compared to the past year.

The primary reason for this year’s situation is the devastating monsoon floods that damaged major cottongrowing regions. Pakistan is the fifth largest cotton producer globally but the country will need to import at least five million bales in the ongoing fiscal year to meet the demand from the textile sector.

Farmers in Pakistan have continued to grapple with severe droughts and catastrophes like floods. Sugar mills have come up in cotton growing areas. Sugarcane has proved a better alternative for farmers tired of failing to protect cotton from pinkboll worm and other constraints, but the reward cannot outweigh the cost borne by the country in terms of losing textile exports.

The country’s fields have been populated with biotechnology cotton, originally developed for temperate environments with lower pest infestations and never intended for subtropical climates like in Pakistan and India.Bacterial treated cotton doesn’t grow well at temperatures above 40 degrees, which are usually the average in summer. Given the year-long crop cultivation with no crop planning, insects stay in the field for the whole year. Transgenic varieties can prove to be the key in battling pests, weeds, and climate.

Vietnam’s textile and garment export turnover to Indonesia reached 10.057 million USD in September 2022, more than four times that of the previous month.

The figure was 2.354 million USD in August, 5.257 million USD in July, 3.801 million USD in June, 1.232 million USD in May and 2.719 million USD in April.The increasing trend was recorded in the third quarter of 2022 when the figure neared 17.7 million USD, up from 7.753 million USD in the second quarter, and 15.972 million USD in the first quarter.

Last year, the figure was 13.308 million USD in the fourth quarter, 51 million USD in the third quarter, and 12 million USD in the second quarter.Indonesia’s garment and textile imports from Vietnam reached 53.543 million USD in 2021 and 41.611 million USD in 2020.For the last few years,

Indonesia has been a net importer of clothing products from Vietnam. As it happens Indonesia is a significant importer of used clothes. Indonesia’s import value of used clothes skyrocketed 607 per cent year on year from January 2022 to September 2022.

The large import value of used clothes even beats the import value of knitted and non-knitted clothing and accessories.

Nearly 15 textile dyeing and printing mills in Surat have shut down. The reason is high costs and short supply of lignite coal and imported coal. Prices of lignite, imported coal, colours and chemicals have gone up.

The lignite price hike has affected the production cost of textile fabrics as it constitutes around 25 per cent of the production cost to the industry. This time, due to the extremely intense monsoon, the average allocation of 40 per cent of approved capacity (of lignite) has gone down to 20 percent. Due to the Russian invasion of Ukraine, the cost of imported coal has shot up to Rs 8,000 or Rs 9,000 a ton in December this year from Rs 5,400 in June last year.

The industry consumes 80 per cent of imported coal and 20 per cent of lignite in the boiler depending on the quality of textile products and the type of boiler.

Surat is known as India’s textile city. Every day over four crore meters of textile cloth are produced in Surat and passed through different processes of dyeing, printing and packaging. There are around 350 textile dyeing and printing mills in Surat that employ lakhs of migrant labourers.

Bangladesh's apparel exports declined in the first 21 days of December 2022.

This is attributed to inflation in the sector’s major export destinations fueled by the ongoing Russia-Ukraine war. Garment export earnings dropped suddenly in September after a long stretch of growth for the previous 13 months. Then they bounced back in October and November this year as some buyers received their deferred shipments of goods during that time. The slowdown of apparel shipments was expected this year as most factories have been receiving less work orders compared to previous years.

This situation is expected to continue till April-May 2023. Some factories are running factories at 90 per cent capacity. Garment prices have fallen about three per cent or four per cent compared to last year. Prices of raw materials like yarn have fallen but that is hardly enough to make any profit for most of the factories. Some usually receive a number of orders by December every year to keep them occupied for the next six or seven months but this year no orders have come after April.

Apparel exporters have been facing many challenges in running their units. For one they have been struggling to pay workers’ salaries regularly.

The eleven per cent import duty imposed on cotton last year should be withdrawn. So says the Cotton Association of India (CAI).

The import duty on cotton was imposed in February 2021 but it is said to have drastically eroded the competitiveness of India’s value-added products in the international markets, and sp the country’s textile industry, which is the second largest employment provider in the country, is now constrained to work with only 50 per cent of its installed capacity.

Expressing concern over the availability of extra-long staple (ELS) cotton in the country, the association says that every year India requires around 20 lakh bales of extra-long staple cotton but produces around five lakh bales. CAI adds that cotton farmers should be given higher minimum support prices to boost production of ELS cotton.

Cotton productivity in India is among the lowest in the world. As against the global average of 744 kg per hectare, India has an yield of 468 kg per hectare.This is below the cotton productivity of some of the smaller countries like Bangladesh, Syria, Sudan etc. The total cotton supply for the months of October 2022 and November 2022 in India is estimated at 84.68 lakh bales.

The Economic Cooperation and Trade Agreement (ECTA) with Australia is expected to benefit India’s apparel industry.

This deal is likely to benefit various labor-intensive sectors which are subjected to five per cent import duty by Australia currently. This deal will provide immediate market access at zero duty for 98.3 per cent of tariff lines which account for 96.4 per cent of India’s exports in value terms to Australia and the remaining 1.7 per cent lines over five years.

Overall, Australia is offering duty elimination on 100 per cent of its tariff lines which will ensure duty free access covering all labor-intensive sectors such as textiles and apparel. With the elimination of duty, India’s exports of textiles and apparels are expected to rise in the next three years. Additional capacity creation due to exports and re-investment is likely to create additional employment of 40,000 persons per annum.

This ECTA has a higher value addition of 35 per cent for specifying country of origin, which has been deliberately kept to avoid the leakages from other countries. India has a less than five per cent share in Australia’s imports. With the ECTA, India will have an advantage over Vietnam and Indonesia in the Australian market.

Gen Z’s much-loved ultra-cheap throwaway fashion brand Shein that has its origins in China is facing challenges from multiple competitors who have emulated this enormously successful business model. A fellow-Chinese cross-border platform Temu is also off to a promising start. Temu ranks 2nd in the shopping section of Apple’s App Store in the US, following Amazon Shopping with 3.8 stars ranked by 339 people, says Sensor Tower statistics released in October, 2022. The platform is regarded as a successor to Chinese online fashion retailer Shein. Shein now ranks lower than Temu in the shopping section.

Temu takes on Shein

On September 1, Pinduoduo, one of the most popular Chinese e-commerce companies, launched a cross-border e-commerce platform named Temu, marking the firm’s first attempt to target the US market. Temu means “Team Up, Price Down”. Similar to fast fashion retailer Shein, Temu offers goods at incredibly low prices, although Temu’s offerings go beyond clothing. Customers can browse through 12 different product categories, including men and women’s clothing, kids’ fashion, accessories and jewelry, and bags and shoes.

Unlike Shein, Temu can rely on Pinduoduo’s pool of over 11 million suppliers and manufacturers to expand the number of merchants and items on its platform. Chen Lei, Chairman and CEO of Pinduoduo says Pinduoduo “Will not repeat what others have done” but will create unique value from the needs of consumers. Nevertheless, while many consumers are motivated to purchase due to low prices, a portion of consumers may conversely become wary of these ultra-low price-points. This explains why Temu’s top selling items are mostly daily necessities and gadgets, these products themselves don’t cost much and their quality won’t mean a lot to the customers. Although Temu’s top selling items remain daily necessities and gadgets, its categories have been gradually expanding, with products from new sub-categories such as kitchenware and decorative goods also rapidly increasing in sales. Moreover, the arrival of the holiday peak season in the US also led to a boom in festival products sales, all for an astoundingly low price.

Big attraction of group buying

Group buying refers to a way of buying in which consumers unite to increase their bargaining power. Making the sacrifice of small profits for more frequent turnover, merchants can offer discounts for group purchases below retail prices. This is a win-win scenario where customers buy at a more favorable price, while merchants earn a smaller profit per unit but enjoy much quicker sales and an increase in sales volume and profit overall. Temu brings group-buying to the West. On the app, old users can get a 40 per cent by inviting their friends to join the platform through a provided link. By increasing total sales volume, Temu is able to keep the price of their products extremely low.

PDD Overseas Support Program 2022

Pinduoduo Overseas Support Program 2022 was created to help Chinese companies explore overseas markets and, to some degree, pave the way for Temu. In the plan, several measures were taken to attract sellers to Temu. According to Pinduoduo’s arrangement, Temu is not only using various promotional methods to attract new sellers, but also ensuring product quality and merchant diversity through China’s strong supply chain.

In addition to low prices and discounts, Pinduoduo also mimics Amazon’s two key features: free shipping and free returns. In order to attract customers to place orders, Temu launched a limited-time Free Shipping discount for all orders. Currently, the delivery time of Temu products is generally 7-15 days. If the actual delivery time exceeds the estimated one, the platform will refund the goods in full.

The maternity clothing market is growing at six percent a year. The market is expanding thanks to a growing number of working women who do so even while pregnant.

Modern mothers are increasingly choosing maternity clothes that are appropriate for the occasion and the location, thanks to the rising influence of fashion magazines, social media, and celebrity endorsements on millennials. Several clothing companies are concentrating on creating new and fashionable maternity collections in order to take advantage of the growing demand for maternity gear.

Maternity outerwear gear is anticipated to become the most appealing product type category. The growth of the category is being aided by the rising demand for fashionable outerwear items including jeans, skirts, shirts, dresses, and tunics that are sold under various brands.Key manufacturers place a strong emphasis on the release of cutting-edge and stylish maternity clothing to shield expectant mothers and babies from dangerous ultraviolet radiation. These outfits are being tailored with natural and environmentally safe materials.High convenience and the availability of a large number of unique brands, designs, and affordable prices with big discounts are increasing the sales of maternity wear through online sales channels.

The Economic Cooperation and Trade Agreement (ECTA) between India and Australia will come into force soon.

Under the deal, Australia will provide India duty-free access to more than 6,300 sectors on the day the agreement comes into force. India, for its part, will do away with customs duties on 40 per cent of products immediately and on 70.3 per cent of tariff lines over ten years.

Major labor-intensive sectors in India that will benefit from the elimination of five per cent customs duty include textiles and apparel, agricultural products, leather, furniture, jewellery, and pharmaceuticals.

ECTA will help in taking bilateral trade to $50 billion in the next five years and will also offer relief to Indian IT companies operating in Australia, as Australia has agreed to amend its laws to stop taxing offshore income of such companies. The determination of the origin of goods rules has been issued under the India-Australia free trade agreement. Each FTA has its own origin rules and nuances. The onus is on the Indian importer to ensure that the said rules are duly complied with.

For companies looking to take advantage of the Indian- Australia FTA, a detailed perusal and compliance of the origin rules remains indispensable. Strict rules of origin have been included in the ECTA to prevent third-party goods routing through Australia. Product-specific Rules of Origin (PSRs) have been agreed for 807 lines.