India's cotton sector, once a global leader, is struggling to hold onto its position. Policy decisions like the Minimum Support Price (MSP) for cotton and the Cotton Seeds Price (Control) Order, 2015 (CSPCO) are creating a tangled mess for the industry.

How MSP is sowing trouble

The government sets an MSP for raw cotton (kapas) to shield farmers from price fluctuations. However, this seemingly helpful policy becomes a double-edged sword when coupled with a Maximum Sale Price (MSP) for cotton seeds. This squeezes profit margins for seed companies, discouraging investment in crucial research and development (R&D) for high-yielding varieties.

The MSP for seeds acts as a disincentive for seed companies, say experts. Investment in R&D for better seeds suffers, hindering India’s ability to compete in the global market. We need cutting-edge seed technology to thrive.

Production in decline, imports on the rise

India's cotton production peaked at a staggering 390 lakh bales in 2013-14. Since then, it has witnessed a concerning decline of nearly 100 lakh bales annually. This shortfall is forcing textile mills to rely heavily on imports, which reached a value of Rs 10,353.96 crore in 2021-22. This import dependence weakens India's cotton export potential.

Is the CSPCO stifling innovation?

The CSPCO, by controlling seed prices, is seen as a potential roadblock to innovation. The order discourages companies from developing new Bt cotton varieties that can combat the ever-evolving pest landscape, explain experts, a seed industry representative. However, complete deregulation of the CSPCO raises concerns of exploitation by seed companies. Some farmer associations fear that without regulations, seed prices could skyrocket.

A market-driven approach

Countries like China and the US have adopted successful models that India can learn from. China's market-driven approach, coupled with strong intellectual property (IP) protection, fosters a thriving seed development ecosystem. This has resulted in high-yielding, pest-resistant varieties that give them a competitive edge.

Experts suggest a nuanced solution: delisting cotton seeds from the Essential Commodities Act (ECA) 1955. This would remove central control over seed pricing, paving the way for a market-driven system. Additionally, states could introduce regulations to ensure fair seed prices for farmers.

The revival of India's cotton sector hinges on a multi-pronged approach. The government should incentivize research in new technologies and promote Integrated Resistance Management (IRM) practices to combat pests. By fostering innovation, ensuring fair prices for farmers, and promoting a globally competitive seed industry, India can reclaim its rightful place as a cotton powerhouse.

At Drupa in Dusseldorf, BW Converting unveiled a fresh branding identity following its incorporation of leading print and industrial technology company Baldwin into its portfolio. Renamed from BW Converting Solutions, the company boasts a formidable lineup including Paper Converting Machine Company (PCMC), Winkler+Dünnebier (W+D), Hudson-Sharp, STAX Technologies, and Northern Engraving and Machine Company.

The rebrand emphasizes BW Converting's commitment to societal betterment beyond factory floors. Simon Blake, VP of Marketing, articulates their mission to bridge knowledge gaps and facilitate positive change. The new branding aims for a visually cohesive architecture, showcasing the company's comprehensive capabilities.

Stan Blakney, Group President, underscores the strategic fusion of knowledge, scale, and global reach across six robust product brands to support customer growth. This rebranding initiative aims to provide customers with clarity and recognition, facilitating easier access to BW Converting's diverse technologies and expertise.

The ASEAN International Fashion Week (AIFW) is set to make its triumphant return to Singapore from June 7th to 9th, 2024, with an innovative collaboration between Epson and the ASEAN Fashion Designers Showcase (AFDS). Hosted at Singapore's iconic ArtScience Museum, this year's event promises a fusion of high fashion and technological innovation.

Showcasing a diverse range of styles from avant-garde to haute couture, AIFW 2024 aims to push the boundaries of fashion while championing sustainability and circular fashion practices on a global scale. The three-day extravaganza will feature up to 40 international fashion designers from over 15 countries, including 11 ASEAN designers partnering with Epson to create sustainable fashion using cutting-edge digital textile printing technology.

Beyond the runway, AIFW will host a panel discussion on sustainability in the fashion and technology industries on June 8th. Led by industry experts such as Desmond Gay, Regional Manager of Epson Southeast Asia, and Hayden Ng, President and Founder of AFDS AIFW, the discussion promises valuable insights into the future of sustainable fashion.

Lenzing Group, a prominent supplier of regenerated cellulose fibers, clinched the prestigious Vienna Stock Exchange Vonix Sustainability Award, securing the top spot in the 'Industrials' category. This accolade, a testament to Lenzing's exceptional sustainability performance on the capital market, underscores its commitment to fostering sustainable practices within the textile and nonwovens sectors.

Christian Skilich, a member of Lenzing's Management Board, expressed gratitude for the recognition, emphasizing Lenzing's unwavering dedication to catalyzing the shift from a linear to a circular economy model in the textile industry.

Renowned environmental organizations and rating agencies have lauded Lenzing's sustainability endeavors. For three consecutive years, Lenzing secured a coveted spot on the 'A list' across all categories by CDP, a global non-profit environmental organization.

Additionally, Lenzing maintained platinum status in the EcoVadis CSR rating, ranking among the top one percent of companies evaluated worldwide. Furthermore, MSCI conferred an 'AA' rating on Lenzing for the third consecutive year, positioning the company within the top eight percent of rated peers.

These accolades underscore Lenzing's steadfast commitment to sustainability and its leading role in driving environmental stewardship within its industry.

Fashion for Good Museum, in reflecting on its impactful journey, celebrates achievements in transforming perspectives on clothing and inspiring sustainable change in the fashion industry. With 115,000 visitors, including 8,000 students from 200 schools, the museum curated 13 exhibitions and hosted over 75 events. Alongside launching four educational programs, Fashion for Good reached current and future generations, evidenced by its 250,000 social media followers and 15,000 newsletter subscribers.

Albert Brenninkmeijer, chairman of the board, notes the museum's mission to spark a global movement towards sustainable fashion, aiming to inspire and educate visitors. With an earned media value of over 46 million Euros, Fashion for Good's influence has been substantial. Brenninkmeijer envisions the museum's legacy enduring, motivating others to challenge the fashion industry's status quo for the planet's betterment.

Reflecting on the museum's journey, six key lessons emerged: First, there is a recognition of a broader shift towards sustainability within museums. Second, cultural institutions play a crucial role in driving societal change through storytelling. Third, embracing organizational limitations can lead to innovation. Fourth, understanding and expanding core audience engagement is essential for sustainability initiatives. Fifth, measuring impact presents challenges for socially-driven organizations, necessitating clear success criteria. Lastly, defining sustainability within an organizational context is fundamental for sustainability efforts.

As the museum transitions into a versatile space integrating various functions, Fashion for Good remains committed to revolutionizing the fashion industry. With a renewed strategy, the museum intensifies efforts in brand engagement, supplier integration, financing, and impact assessment through its Innovation Platform. This strategic evolution highlights Fashion for Good's dedication to fostering collaboration among sustainable fashion changemakers.

Katrin Ley, Managing Director, expresses pride in the museum's achievements and its enduring legacy. Despite physical doors closing, the spirit of Fashion for Good lives on, ensuring its vision for a more sustainable fashion industry inspires future generations.

The Q1, FY24 revenues of US-based PVH Corporation, parent company of globally recognised brands such as Tommy Hilfiger and Calvin Klein, decreased by 10 per cent to $1.952 billion from $2.158 billion revenue reported during the same period last year.

Of this, the revenues of the brand Tommy Hilfiger decreased by 10 per cent compared to the prior year period. The brand’s revenues from international operations fell by 14 per cent with revenues from Europe declining. In contrast, Tommy Hilfiger’s revenues from North America increased by 2 per cent.

On the other hand, the revenues of Calvin Klein remained flat compared to the prior year period but increased by 1 per cent on a constant currency basis. The brand’s international revenues declined by 2 per cent while revenues from North America increased by 4 per cent.

Further, PVH Corp reported a significant 65 per cent decline in revenues from Heritage Brands including a 47 per cent decline resulting from the sale of the Heritage Brands women's intimates business.

PVH Corporation’s earnings before interest and taxes (EBIT) increased to $205 million on a GAAP basis and $195 million on a non-GAAP basis, compared to $199 million in the prior year period. On a GAAP basis, its EPS increased to $2.59 from $2.14 in the prior year period. On a non-GAAP basis, EPS rose to $2.45, compared to $2.14 in the prior year period.

Besides strengthening its brand positioning and pricing power in the marketplace, PVH Corp generated growth for Calvin Klein and Tommy Hilfiger combined in both North America and Asia Pacific in constant currency, while successfully driving strategic quality of sales initiatives in Europe, says Stefan Larsson, CEO.

Sri Lankan manufacturing giant MAS Holdings has committed to purchase 4,000 tons of recycled polyester from LA-based start-up Ambercycle over the next three years. This deal highlights the increasing engagement by suppliers in promoting recycling innovations in the market.

The agreement aims to support Ambercycle's expansion of textile-to-textile recycling capabilities besides ensuring a steady supply of the material for MAS. The process is viewed as a more environmentally sustainable alternative to recycling polyester from repurposed plastic bottles.

However, still in early stages, commercialising of such technologies faces many challenges. For example, Swedish textile-to-textile recycler Renewcell had to be recently saved from financial breakdown by private equity firm Altor.

To bring new materials to market, binding purchase commitments, such as the one between MAS and Ambercycle, are considered vital. It is also important for manufacturers to pledge their involvement in such initiatives. While big brands like H&M Group and Zara-owner Inditex have already announced investments in innovative fibers, suppliers are yet to make such commitments.

Hence, MAS views its deal with Ambercycle as strategic, aligning with the growing demand for recycled materials from its customers and its own goal to generate 50 per cent of its revenue from lower-impact.

Struggling against ‘uneven’ competition with foreign counterparts due to rising production costs, domestic textile millers, particularly spinners, have been losing yarn orders, even from local ready-made garment (RMG) exporters. These exporters now prefer importing raw materials, stalling the growth of the local spinning sector.

As per data from the Bangladesh Bank, Bangladesh’s yarn imports increased by double digits during the first nine months of the current fiscal year (FY), while imports of other raw materials like raw cotton, textiles, and staple fiber declined. From Jul-Mar’23-24, Bangladesh’s yarn imports increased by 10 per cent to $2.32 billion from $2.10 billion during the same period last fiscal year, according to data from the Bangladesh Bank.

The imports of other RMG inputs decreased by 9.1 per cent during the first nine months of the year. For instance, raw cotton imports declined by 24.9 per cent, imports of textiles and articles lowered by 8.2 per cent, staple fiber by 6.1 per cent, and dyeing and tanning materials by 3.1 per cent. Bangladesh’s imports expenditure also declined to $12.17 billion during the year from $13.39 billion the previous fiscal year.

Exporters attribute this rise in popularity of imported yarn to its lower cost compared to locally produced yarn. On the other hand, high utility costs and unreliable gas supply are driving up local yarn prices, add textile millers. Syed Nurul Islam, Chairman and CEO, Well Group, notes, a decrease in raw materials imports including raw cotton and staple fibers inevitably led to an increase in yarn imports during the year.

Also a director of the Bangladesh Textile Mills Association (BTMA), Islam emphasises, the rise in Bangladesh’s production costs due to high utility costs and gas shortages is preventing textile millers from utilising their full production capacities, thereby reducing the competitiveness of local yarn. Consequently, garment exporters continue to source cheaper yarn from India, Pakistan, and China under bonded warehouse facilities.

For the sustainability of the garment industry, Islam emphasises on the need for strong domestic supply chain support and government policy intervention. Faruque Hassan, Former President, BGMEA, agrees, the industry needs to boost local consumption and attract more garment work orders, he says.

SM Mannan Kochi, President, BGMEA, explains, the rise in prices of local yarn makes them less competitive despite cash incentives from the local market. Mohammad Ali Khokon, President, BTMA, alleges, various policy supports from their governments and their own cotton production enables foreign competitors to sell yarn at ‘dumping prices.’

To retain US dollars within the country, the industry needs to increase local yarn sourcing, affirms Khokon. Many local textile mills may be forced to close if the current trend continues, he warns. Currently, local textile mills supply about 80 per cent of knitwear sector’s demand for yarn and 35 per cent of woven sector’s need for the material in Bangladesh, reveal industry insiders.

During Jul-Mar’23-24, Bangladesh exported RMG products worth $37.20 billion. Of this, knitwear exports contributed $21.01 billion and woven products $16.19 billion, data from Export Promotion Bureau (EPB) shows. The country exported RMG products worth $47 billion in FY 2022-23.

To boost the textile industry's contribution to the national economy through exports, investment, and employment, Asif Inam, Central Chairman, All Pakistan Textile Mills Association (APTMA), called for a reduction in the power tariff to 9 cents/kWh, a decrease in the interest rate to 12 per cent, and the restoration of zero-rating for the textile industry.

Addressing these demands during a press conference at the APTMA office in Lahore, Inam highlighted, the industry is currently burdened with Rs 240 billion in cross subsidies and over Rs 150 billion in stranded costs. Providing electricity at 9 cents/kWh would generate over 300 MW of additional grid demand and Rs 500 billion in revenue, he argued.

The press conference was also attended by Kamran Arshad, Chairman-North APTMA; Asad Safi, Senior Vice Chairman; and Mohammad Raza Baqir, Secretary General North. Inam also questioned the government over maintaining of the current interest rate at 22 per cent despite a decline in the country’s inflation rate to 11.8 per cent. Lowering the interest rate could save the government Rs 3 trillion in interest payments, he opined. Regarding the demand for zero-rating, Inam criticised the government for holding onto a Rs 300 billion float of industrial sales tax refunds and proposed that sales tax be collected at the retail stage, which could potentially yield over Rs 250 billion.

Kamran Arshad, Chairman, APTMA-North emphasised on the need to restore the zero-rating regime across all manufacturing stages of the value-added textile chain and levying of sales tax only on end products fit for consumer consumption. This would help arrest the decline in textile production and exports and improve the current bleak situation, he argued. Arshad advocated for levying sales tax on local consumption of textile products without disrupting exports, suggesting this would revive the economy, increase tax collection from the textile sector, and alleviate the liquidity crunch faced by exporters. He also highlighted that this change would curb malpractices such as fake invoices and tax frauds.

Regarding the reduction in markup, Arshad noted that overall inflation is projected to remain between 13-15 per cent in the next year due to falling global commodity prices, sustained domestic demand destruction, and modest currency depreciation. He urged the State Bank of Pakistan (SBP) to maintain positive real interest rates to ensure the continuation of declining inflation and to help achieve the SBP’s medium-term target of 5-7 per cent inflation by September 2025, making single-digit inflation a tangible possibility.

Asad Shafi, Senior Vice Chairman pointed out, the export sector had previously benefited from Regionally Competitive Energy Tariffs (RCET) of 9 cents/kWh in 2021-22, which led to a 54 per cent growth in textiles and apparel exports, from $12.5 billion in FY20 to $19.3 billion in FY22. However, he noted that power tariffs for export-oriented firms have since risen to approximately 17.5 cents/kWh (Rs 46/kWh), making production financially unfeasible. These tariffs are more than double those faced by competing firms in regional economies such as Bangladesh (8.6 cents/kWh), India (average of 10.3 cents/kWh; 6 cents/kWh for textile and apparel firms in Maharashtra), and Vietnam (7.2 cents/kWh).

Exports of clothing and footwear to the EU have been falling the enforcement of Brexit, says a recent study highlighting the impact of complex regulations and border red tape on businesses. Conducted by Retail Economics and online marketplace Tradebyte, the report reveals that exports of clothing and footwear to EU countries dropped from £7.4 billion in 2019 to £2.7 billion in 2023. This decline led to an 18 per cent overall decrease in sales of non-food goods exports to EU single market countries.

The report indicates, British brands and retailers have experiencing a significant drop in sales to the EU post-Brexit, despite the growth of the European e-commerce market. Particularly hit hard have been small and medium-sized businesses who have been bearing a larger burden from the increased red tape compared to multinational firms. Richard Lim, Head-Retail Economics and one of the report's authors, notes, some of this decline can be attributed to changes in trade routes. UK firms that previously repackaged Asian imports for sale in the EU have restructured their supply chains by establishing offices within the single market to circumvent border regulations.

The increased bureaucracy has also prompted many UK-based apparel manufacturers to relocate production to EU countries, adversely affecting UK jobs and skills. For instance, a long-standing sock manufacturer in Leicester has moved production to Italy, ending over a century of operations in the East Midlands.

The UK has also missed out on the surge in online goods sales in the EU since 2019. The report suggests, while the EU online retail market has added an estimated £323 billion in annual sales, Brexit-related trade complexities have hindered UK brands and retailers from capitalising on this opportunity. Lim describes this as a significant missed opportunity for UK brands.

The decline in trade value with the EU was partially mitigated by last year's inflation spike, which increased export goods' costs. Meanwhile, a separate report by the think tank ‘UK in a Changing Europe,’ highlights, while goods exports had declined, services exports had surged by nearly 30 per cent since February 2020. This growth has been driven by a boom in business services, making it the UK's largest export sector, surpassing manufacturing and transport equipment. The report notes, UK's services trade has not only recovered swiftly after the pandemic but has also exceeded pre-pandemic levels by late 2022, unlike services exports from France and Germany, which have declined.

The reason behind the resilience and growth of UK services exports, which were largely unaffected by Brexit rule changes, remains unclear, according to the report.

Rain Newton-Smith, Head, CBI, suggested reviewing the UK’s trading relationship with the EU as part of the business lobby group's wishlist ahead of the July 4 general election. She called for a ‘bold pitch’ to international investors and proposed that the 2026 review of the UK-EU trade deal could be an opportunity to reduce trading frictions affecting businesses.