Tightening of purses by German consumers is likely to affect Bangladesh’s RMG exports to the country, says Achim Troster, German ambassador to Bangladesh. Germany has been affected by the Russian war in Ukraine and rising inflation across the world, says the ambassador. To benefit from the GSP+ status, Bangladesh needs to comply with human rights, labor rights and environmental standards, adds Troster

Germany’s RMG orders from Bangladesh have declined significantly in the past months as warehouses across Europe are still stocked with unused inventory. To tide over this, the Bangladesh garment industry needs to diversify and concentrate more on high-value products, Troster opines.

Compliance to GPS conventions required

He warns, Bangladesh should not take GSP+ facilities for granted as EU is likely to insist on the nation’s compliance to all 27 conventions linked to the facility. The 27 international conventions that need to be complied by Bangladesh include: compliance to human rights, labor rights and environmental standards. Bangladesh does not need to comply completely with all the rules but needs to demonstrate an ability to improve.

Domestic analysts believe, this could be challenging for Bangladesh and requires the government to actively implement it. Bangladesh needs to ensure compliance with these conventions by 2029 as EU might be inflexible by then, says Troster. A majority of the parties concerned in the EU organizations urged Bangladesh to comply, while a few analyst recommended the country to continue the current status quo. The extensive sanctions levied against Russia have caused immediate economic blows to the Western countries. They may also impact Bangladesh as it graduates from least developed status, warns Troster

EBA scheme boosts Bangladesh-Germany trade

One of the biggest export markets for Bangladesh, Germany’s bilateral trade with the country is increasing gradually. Trade is getting a boost by the EU tariff preferences granted under the "Everything but Arms" arrangement. Bangladesh mostly exports textiles to Germany while it imports machinery as well as chemical products and electrical goods from the country. The German government is focusing on renewable energy, and is committed to positive climate action despite the Russia-Ukraine war. It is negotiating with the Bangladesh government on the matter. In March, a German delegation offered Bangladesh privileged partnership on climate and development. The partnership will concentrate on adaptation and mitigation, and emphasize on renewable energy, says Tröster.

The entire textile value chain in Gujarat has been reeling under the effects of rising cotton prices that has reached almost Rs 1.1 lakh per candy (365kg). The price rise has eroded the profit margins of almost all spinning mills in the state. In fact, three mills have already been sold since Diwali 2021 and another four in Saurashtra are up for sale.

Low yarn prices pressurize input costs

Despite a rise in cotton prices, weak demand in the domestic and export markets has not caused yarn prices in the state to rise, leading to a rise in input costs of spinning units. Most yarn manufacturers in the state are facing losses of around Rs 30-50 per kg depending on the quality of their yarn. The unprecedented hike in cotton prices followed by a decline in demand is pressurizing the industry, says Jayesh Patel, Director Omax Cotspin.

Having a capacity of 70,000 spindles, the Dhrangadhra-based company recently acquired a spinning unit in Rajula region of Amreli district. The spinning unit, with a capacity of 51,000 spindles, was under pressure even before the hike in cotton prices. Its owner wanted to exit the business completely and sold the unit to Omax Cotspin. The acquisition will enable Omax Cotspin double its capacity, says Patel.

Likewise, Jasdan-based MM Group has acquired two spinning mills in the past one year. The group added 53,000 more spindles besides acquiring mid-size units, adds Natvarlal Navadiya, Director, MM Group.

Weak demand leads to 15% less valuations

More spinning units in the state are likely to be sold if the situation does not improve, explain experts. Unable to meet input costs due to rising cotton prices, mills are reducing capacity utilization over the past four months. Some have finally decided to sell off and diversify business.

Spinning mills in Gujarat have been affected by a continuous weak demand. Their valuations have reduced almost 15 per cent. With the situation showing little signs of improvement, potential buyers are adopting a wait and watch policy. Weaving units face heat of rising costs

Textile weaving and processing units in Gujarat have also been affected by the rise in input costs and a dip in demand. The state has around 200 cotton weaving units that are currently running at low capacities. Demand for grey fabrics in the state is low, making prices volatile. Operation of spinning units at low capacities is impacting weaving units in the state, claims Bharat Chhajer, Former Chairman, Powerloom Export Development Council

China’s current textile troubles can bring new opportunities to India’s exporters as demand for cotton from China has dropped this year. A few Chinese companies have lost up to 30 per cent orders, as per Beijing Cotton Outlook, the South China Morning Post. The number of textile factories with operational machines has also declined 13.3 per cent, as per the China National Cotton Information Centre. Experts believe, this could worsen as more countries stop buying cotton from East Asian countries.

Step up exports to China

KK Lalpuria, the Executive Director and CEO, Indo Count Industries, opines, India should take this opportunity to increase textile exports to China. India currently holds about 6 per cent market share. The government should aim to increase textile exports to $100 billion by 2030. To reach this goal, Indian exporters need to overcome numerous bugbears indicates a CRISIL Ratings report. Cotton prices have more than doubled in one year, making the situation even worse. Rise in domestic cotton prices has led to exports becoming less competitive.

Gautam Shahi, Director, CRISIL Ratings, attributes this to an increase in the price of raw materials like cotton due to a US ban on cotton produced in Xinjiang, China which is the biggest producer of the fiber. He urges the government to help players in the sector achieve steady growth. Experts also advise the government to introduce policies that encourage diversification of textiles portfolios, capacity building, and competitiveness. Also, there is a need to focus on new foreign trade agreements (FTAs).

Include textiles in FTAs

Anand Ramanathan, Partner, Deloitte India, urges the government to include textiles into all FTAs. These agreements can significantly impact India’s textile industry. For example, the India-UAE trade pact will help lower import duties for Indian exporters. This will boost trade between the two countries besides making the textile industry more competitive and help create jobs. As per a report by the Press Information Bureau, India’s textile and clothing industry adds about 2 per cent to the country’s GDP. Before COVID began, it employed close to 105 million people. Hence, the government needs to help the sector by adopting the ‘China Plus One’ strategy to get a more significant share of the global textile market. Lalpuria says, India can benefit from this policy as many international brands have diversified to other places instead of China.

Boost prices cotton through mechanization

India can also benefit from its huge cotton production and a well-established industry that makes all kinds of fabrics and yarn. Schemes like the Production-Linked Incentive (PLI) scheme and the Interest Equalisation Scheme have helped make the country more competitive. Growing at a 6.2 per cent CAGR from 2020 to 2025, India’s technical textiles exports are worth $2 billion with the country aiming to reach a goal of $10 billion exports in three years.

Cotton prices can be fixed by increasing the number of cotton crops and using machines, says Ramanathan. He advises farmers to connect with banks to get money and ensure more mechanization and investments in new technologies.

Adopt sustainability

Farmers also need to monitor new trends catching on around the world. They need to learn about sustainable ways to make things. RK Dalmia, Senior President and Director, Birla Century says, they aim to integrate sustainability throughout the entire value chain. About 84 per cent of trash being produced by them is being recycled or reused. It recently also started recycling of fly ash from power plants to make factories more in line with international standards, he adds. Ramanathan opines, ensuring responsible production of fabrics can help boost exports. It can also help manufacturers procure all raw materials from one place. This can give India a big advantage over Bangladesh and Vietnam, he adds. Thus, to achieve the $100 billion export goal, Indian government and players need to focus on resolving the current problems, adds Ramanathan.

During the first half of 2022, the US apparel imports increased by 40.14 Y-o-Y to $49.58 billion.

Particularly in June ’22, the imports grew by 40.30 per cent Y-o-Y to $8.64 billion, while the growth noted on monthly basis over May ’22 was 1.52 per cent.

As per OTEXA data, analyzed by team Apparel Resources, top six Asian countries (China, Vietnam, Bangladesh, India, Indonesia and Cambodia) together exported garments worth $32.82 billion to the US in H1 ’22, which is 66.20 per cent of total import values of the US.

China remained the top shipper to the US in the period with $10.25 billion worth of apparel exports, growing by 40.15 per cent on yearly basis.

Vietnam exported garments worth$9.19 billion to the US in H1 ’22, noting 35 per cent yearly growth, while Bangladesh and India upped their shipment by 60.30 per cent and 57.27 per cent, respectively.

Indonesia stayed on fifth position and shipped $3 billion worth of garments to the US, noting 60.27 per cent yearly jump.

Revenues of China’s textile machinery firms surged in the first half of the year, according to the China Machinery Industry Federation (CMIF).

The operating revenue of firms in the sector grew by 5.44 per cent to 12.95 trillion yuan (about $1.9 trillion) during the period. The added value of the sector rose 0.7 percent Y-o-Y during the period, the data showed.

The federation attributed the expansion to a package of pro-growth measures since the beginning of the year.

The total export volume of the machinery industry also saw a year-on-year increase of 10.41 percent, showing the resilience of the sector, says Chen Bin, Executive Vice President

Looking ahead, more efforts should be made to ensure solid implementation of the pro-growth policies, stabilize industrial chains and solve the difficulties facing enterprises, he adds.

Spanning the fiber, yarn, fabric, and finished product textile industries, North Carolina textile executives participated in a roundtable discussion with Representative. Kathy Manning (D-NC) to highlight innovative achievements and competitiveness of the domestic industry and outline priority issues in Washington that impact their daily operations.

Hosted by Unifi Inc. and sponsored by the National Council of Textile Organizations (NCTO), the roundtable discussion was held at Unifi’s headquarters in Greensboro, North Carolina.

During the roundtable, North Carolina executives showcased the industry’s important contribution to the state and the US economy as well as its advanced sustainability initiatives. They also outlined critical policies, such as the importance of Buy American and Berry Amendment government procurement policies, maintaining strong rules of origins in free trade agreements, supporting a domestic PPE production sector, and the need to address larger systemic trade issues with China.

India’s largest farm-to-fashion natural fibre digital ecosystem, ReshaMandi launched its new venture ReshaMudra to offer personalized credit solutions for the textiles industry. ReshaMudra will give business partners across the ecosystem access to working capital solutions as well as long-term loans, enabling them to secure crucial funding to help them grow their businesses or tide over challenging times. All of these offerings are subject to regulatory approvals from respective authorities.

The suite of services offered by ReshaMudra are aimed to be cost-effective with quick turnaround time, thereby creating an engaging customer experience.

A majority of India’s micro, small and medium enterprises currently face working capital pressures as they lack access to credit. Today, only 20% of their credit needs are met by the formal sector and 40% by the informal sector. ReshaMudra aims to bridge this need gap, enabling MSMEs to expand their operations and thereby boost revenues, margins and profits.

ReshaMudra with its strong focus on PSL and MSME segment for lending across Tier II - IV cities aims to have exclusive tie- ups with banks and NBFCs to facilitate business growth with moratorium period upto 3 months, attractive interest rates and a turnaround time of seven days for farmers, yarn manufacturers, manufacturers, exporters, traders/distributors and mill owners.

In an industry-first, ReshaMudra will also offer short-term financing in the form of the Buy Now, Pay Later (BNPL) scheme. This is a type of financing that allows consumers to make purchases and pay for them at a future date. Buy Now, Pay Later in B2B is the key to unlocking SME growth, as it frees up inclusive credit to the underserved SMEs in India.

A denim-manufacturing facility established in 2007 under RSWM LNJ Denim showcased its new active wear themed autumn winter 2023 collection at the Denim Show at Gartex. The collection featured denim fabrics with multiple blends, exclusive and specially designed sustainable products using fibres like recycled yarns, post-consumer waste, hemp yarns, etc. The collections included; Arrow-a range of vintage garments assimilated with various blends and in different weights suitable for various silhouettes;

Club: a premium collection of various blends and technologies curating special fabrics for niche looks; Googly: a collection including unique faux knit patterns using complex weaving techniques creating products; Shaft: an exclusive range of high fashion lightweight fabrics in various designs and shades and Somersault: a varied feminine collection from LNJ with a great range of super-flex denims

Revenues and profits of China’s garment enterprises reported stable increases in in the first half of the year, shows official data from the Ministry of Industry and Information Technology.

As per a Macau Business report, the combined revenue of around 13,000 main garment enterprises surged by 4.5 percent year on year to 688.5 billion yuan (about $102 billion), in the first six months of the year.

The companies’ profits rose by 4 per cent to 30.7 billion yuan during the January-June period, from a year ago. The proportion of loss-making enterprises in the sector declined by 0.9 percentage points to 27 per cent.

Meanwhile, their combined output edged down 1.5 per cent Y-o-Y to 11.3 billion pieces. The exports of garments and accessories rose by 12 per cent to $80.2 billion.

Colombian fashion textile group, Manufacturas Eliot SAS has collaborated with Coats Digital’s FastReactPlan to digitally transform its supply chain. This will enable the company to respond in an agile and integrated way to growing market requirements, reduce its manufacturing lead times and manage its complex network of sewing manufacturers effectively.

Established in 1957, Manufacturas Eliot designs and produces fashion goods for its Patprimo, Seven Seven and Facol brands. The vertically integrated manufacturer produces more than 20 million garments per year and employs over 4,500 workers across Colombia.

The implementation of FastReactPlan is part of Manufacturas Eliot digitization strategy to re-engineer its entire supply chain. The project will include automatic planning of sewing and embellishment processes, as well as provide greater visibility to over 200 workshop teams across the company. The expansion of the project to the denim factory will be factored in as a second project phase, later in the year.