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A Japanese company is helping revive silk production in Cambodia. II Brille will invest in Cambodian silk production to supply the local market and export to Asia and the United States. Il Brille specializes in silk products including lotions and shampoo. Investment from the Japanese company is expected to help diversify Cambodian silk production and generate more jobs for women in rural areas.
Mulberry trees are now a rarity in Cambodia as most of them were destroyed during the Khmer Rouge era. So, silk weavers in the country have to depend on imports of raw silk from either Vietnam or Thailand. Il Brille has already sent staff for training in Thailand on growing mulberry trees and raising silkworms. The training will help reduce reliance on imports of raw silk from Thailand and Vietnam in future.
There is also a lack of skilled workers because many Cambodian silk producers have migrated to work in neighboring countries. Silk producers in Cambodia will be taught how to feed silk worms, maintain a healthy environment for worms to grow, and ensure silk production is of a high enough quality to satisfy local and export markets.
Demand for raw silk in the country’s cottage silk weaving industry is about 100 metric tons a year while local production is only one metric tons a year.
The net effect of Brexit may be positive for India. After leaving the EU, the UK would want to develop trade relations with emerging markets from around the world. India, with its strong economic fundamentals and a large domestic market, is in a better negotiating position. India’s high proportion of skilled working-age population and high growth rate will be of particular interest for the UK.
Potential sectors to benefit from a FTA between the UK and India include textile, machinery, engineering goods, information technology and banking. India could emerge as a major source of high tech exports for the UK. The country’s BPO market could see strong growth prospects if the FTA between the two countries fosters an easy visa regime and greater market access for Indian firms.
The UK’s currency is expected to remain weaker, so it would be less expensive for Indian firms to import from their subsidiaries in the UK. Brexit opens substantial opportunities for the Indian education sector. Educational institutes in the UK might offer more incentives, which could essentially make education in that country less expensive. Importantly, in the post-Brexit world, Indian students studying in the UK might get a more level playing field compared with other EU students who until now enjoyed an advantageous position.
Brazilian textile and clothing exports to the Arab world increased 87.5 per cent in January and February this year compared to the same period last year. The increment was almost exclusively a result of synthetic fabric and sisal rope for use in ships and rigs. Exports of beachwear, textile yarns and intimate wear also went up in the first two months of the year.
The United Arab Emirates bought the most from the Brazilian textile and apparel industry in January and February. Next come Algeria, Egypt, Morocco, and Lebanon. Arab countries are important buying markets for Brazilian companies, especially in party wear, children’s wear, and beachwear.
Brazil has the know-how across the value chain from textile to clothing, i.e. from fiber to design. Brazil is the eighth largest producer of yarns, fabric, and knitwear, and ranks seventh in the production of apparel. The Brazilian economy is characterized by moderately free markets and an inward-oriented economy. Brazil’s economy is the largest of Latin America and the second largest in the western hemisphere. It is also recognized for complying with labor laws and environmental sustainable production. Brazil is fast becoming a hub for leather manufacturing.
‘Better Work’ program is helping in improving working conditions in garment factories of Bangladesh. The program is helping shift the mindset of garment employers in from seeing compliance as an obligation to being a business necessity that makes them more competitive. The challenge is to bring more factories under the program and convince individual factory owners. Another challenge is to ensure global brands and retailers implement compliance in their supplier factories across the country.
Currently it works with 120 factories, which employ over 2, 41,000 workers and cooperates with 34 international brands and retailers. Better Work, launched in 2014, is a joint initiative between ILO and IFC. It helps ensure compliance on issues like welfare funds, vacation and maternity leave in factories. It has introduced a new concept of supporting readymade garment factories to boost their compliance while enhancing productivity. It hopes to make a contribution to the working conditions and competitiveness of individual factories and help take the industry to the next level.
Bangladesh’s $28 -dollar-a-year garment export industry includes 4,500 factories, employing some four million workers. The country is the second-largest apparel and textile exporter in the world, only after China. Bangladesh aims to be a middle-income country with a $50 billion export sector by 2021.
"While the government is pushing hard to make India a preferred global destination for investment, exports is an area which still needs to grab the attention of the powers that be. Till August 2016, India’s exports had declined continuously for 18 months. There seems to be relief post August with exports starting a modest recovery month after month. In February 2017, exports grew by a healthy 17.5 per cent."
While the government is pushing hard to make India a preferred global destination for investment, exports is an area which still needs to grab the attention of the powers that be. Till August 2016, India’s exports had declined continuously for 18 months. There seems to be relief post August with exports starting a modest recovery month after month. In February 2017, exports grew by a healthy 17.5 per cent. Early estimates indicate that fiscal 2016-17 as a whole will register a positive growth, though not posting a sharp recovery. This growth is largely driven by engineering goods segment, particularly to Southeast Asian nations.
A reality check
The Economic Survey highlights the policy constraints (failures) in a significant manner. Tracing history, during the electoral promotional campaigns in 2014, our PM had promised a transformation of Indian economy. One of the famous slogans was: ‘Five F’ principle. The Five F, which stood for farm to fibre to fabric to fashion to foreign. The Survey also highlighted the tremendous potential of the textiles sector (along with footwear) to not just trigger sustained growth in exports but also create large scale employment. The Survey highlights the apparel sector is the most labour-intensive, followed by footwear. Apparels are 80-fold more labour-intensive than autos and 240-fold more jobs than steel. The comparable numbers for leather goods are 33 and 100, respectively. Note that these attributes apply to apparel not the textile sector and to leather goods and footwear not necessarily to tanning. Drawing upon the World Bank employment elasticities, one estimates rapid export growth could create half a million jobs annually.
However, the Survey admits Indian economy is unable to take advantage of this unique opportunity. India has an opportunity to promote apparel, leather and footwear sectors because of rising wage levels in China that has resulted in China stabilising or losing market share in these products. India is well positioned to take advantage of China’s deteriorating competitiveness because wage costs in most Indian states are significantly lower than in China. This is not happening, or at least, not enough. The space vacated by China is fast being taken over by Bangladesh and Vietnam in apparels; Vietnam and Indonesia in leather and footwear. Indian apparel and leather firms are relocating to Bangladesh, Vietnam, Myanmar, even Ethiopia. The window of opportunity is narrowing and India needs to act fast if it is to regain competitiveness and market share in these sectors.
The country’s textiles exports dipped by about 4.5 per cent to $26 billion during April-December of this financial year. Exports of textiles during 2016-17 (April-December) were $26 billion compared to $27.2 billion during 2015-16 (April-December), Minister of State for Textiles Ajay Tamta said in Rajya Sabha. In fact, exports from countries like Vietnam and Bangladesh now exceed than that of India. Additionally, despite higher wages, overall textile exports from China still touch $200 billion. More than 10 years ago, textile exports from Bangladesh were a fraction of that from India. But for policy analysts, there is a silverlining at the end of the tunnel.
Labour laws – the biggest cause of concern
The biggest policy hurdle is the rigid labour laws in the country. While some states have started becoming flexibile, labour laws still dictate that a factory owner simply cannot let go of workers without prior government approval. Across the world, factories dedicated for exports enjoy tremendous resilience when it comes to hiring and firing workers or taking them on contractual basis depending on orders from overseas clients. The total workforce in India is about 500 million. Of this, only about 10 per cent are in the organised sector and enjoy the protections provided by labour laws. The balance 90 per cent are at the mercy of market forces and employers. For them, flexible labour laws could be a boon. It is projected that if labour laws are made flexible, then India can be home to global giants such as Walmart, Target, Tesco, Adidas, Nike and a host of others for manufacturing outsourcing.
Ease of doing business
Though the government has been making rapid strides in this matter, yet a lot needs to be done to be at par with the global counterparts. There have been issues such as red tape and bureaucratic apathy, which are plaguing the growth. Earlier, an exporter had to tackle more than 80 forms and documents. It has brought the number down to about 8 now. With the implementation of GST, things seem to be moving in the right direction. As commerce minister Nirmala Sitharaman puts it, GST gives a feeling that market in India is one now and there are no barriers between regions or provinces. Even within the country, the value chains — which will get integrated — will have a simpler and straightforward flow (of goods) and therefore, it should make exports more competitive rather than expensive.
Textile and apparel parks in Andhra Pradesh have yet to fulfill their objectives. The establishment of textile and apparel parks aimed at increasing employment and textile and apparels exports. However, there have been delays ranging from 23 to 156 months in the establishment of parks due to improper selection of site, delays in transfer of land to the Department of Handlooms and Textiles, incomplete infrastructure facilities and amenities.
There has been a 24 to 100 per cent shortfall in setting up of units in these parks while the shortfall in employment generation is around 74 to 100 per cent. From 2002-03, Andhra Pradesh made efforts to develop 11 textile and apparel parks, some aimed at exports and some focused on the domestic market. Some parks are not located at the right site while others don’t have access to water and have to depend on borewells. Some parks have yet to attract a significant number of units. Some have none at all.
Several crores spent by the state government for land acquisition, creation of infrastructure and for paper work remain unfruitful. The idea behind developing textile and apparel parks was to help weavers and several others who are dependent on them.
The second edition of Denimsandjeans Trade Show will be back in Vietnam’s capital Ho Chi Minh City on June 7 and 8, 2017. It will bring together leading denim jeans and fabric companies besides chemical, accessory and other suppliers in the denim supply chain under one platform.
Over 50 companies from Vietnam, China, Indonesia, Hong Kong, India, Pakistan, Bangladesh, Brazil, Italy, Switzerland, Japan, Thailand, Taiwan and some other countries are expected to participate in the show. The theme of the show is ‘Street Style’. It seeks to highlight the importance that denim holds in the realms of street play. The trend area, the booths and the whole look of the show would reflect the importance of denim clothing in street wear styling.
Vietnam is the fastest growing apparel exporting country in the world. The country exported apparel and textiles worth $27 billion in 2016 and is expected to grow to $30 billion by the end of 2017. Upcoming free trade agreements with Europe and other regions are expected to boost apparel exports from Vietnam.
For 2017, Vietnam’s textile and garment sector aims for a growth rate of seven or eight per cent. The US and Japan are the two main export markets of Vietnam’s garments and textiles.
One of the factors that have driven Bangladesh’s textile and garment industry over recent years is the growing foreign direct investment in the industry. The country’s cheap labor, preferential location in the heart of Asia-Pacific and government support are some positive reasons.
Foreign direct investment in Bangladesh’s textile and garment industry increased by 11 per cent in 2016 compared to the previous year. South Korea was the largest investor in fiscal year 2016. South Korean apparel companies share was over 32 per cent in total FDI followed by Hong Kong. FDI from the United States stood at a modest $33.02 million.
An increasing number of international investors and famous fashion brands, such as Zara, H&M, Gap and Levi’s, are manufacturing and importing clothes from Bangladesh. Bangladesh is the world’s second largest garment exporter and is expected to export over $50 billion worth of garments by 2021.
The South Asian country also enjoys tariff-free market access in EU, Canada, Australia and some other major textile and garment markets in the world. In order to further increase FDI in the sector, Bangladesh is promoting investment opportunities not only in the textile sector but in the allied energy and infrastructure sectors that will help boost volumes in the textile trade.
Japan-based company Adastria has bought Velvet, an US-based apparel company. Adastria operates 21 brands and has a strong expertise in retail operations with more than 1,400 retail stores and e-commerce operations throughout Japan and Asia.
Velvet is known for the brand Velvet by Graham and Spencer. It is known for its modern, sophisticated staples with a laidback California attitude, both for women and men. Velvet has eight retail stores in the US, with a strong market presence through premium department stores and high-end specialty stores both in the US and abroad.
The acquisition allows Adastria to establish a strategic presence in North America, in the world of contemporary fashion. Adastria has a successful track record growing brands and businesses by leveraging its strong value chain management and brand management strategy. By working with Velvet’s management team, the company hopes to accelerate growth, especially in the direct-to consumer channels as it apply its expertise in retail and value-chain management.
Velvet is the second investment for Adastria in the US market. In April 2016, Adastria acquired a minority interest in Marine Layer, another apparel company. Building upon investments in Velvet and Marine Layer, Adastria aims to strategically enhance its global brand portfolio moving forward.
The value of Tanzania's cotton exports rose 55 per cent last year. The increase was propelled by an increase in both export volume and unit price. Farmers are opting for contract farming. While early season drought impacted the actual area germinated and established, it is clear if farmers are assured of support, they want to grow cotton.
In contrast, non-contract farming areas continued to decline in areas planted -- in some cases by as much as over 60 per cent. Through contract farming, cotton buyers agree to provide inputs, finance and advice on credit to primary producers of the product in return for having exclusive rights to purchase the crop at harvest time.
Contract farming areas have already doubled the levels of pesticide distribution that were recorded for the whole of the 2015-16 season. This is largely because ginners are procuring their own pesticides without relying on the limited stocks available from the Cotton Development Trust Fund. In non-contract farming areas the reverse is the case and farmers are struggling to obtain the pesticide that they require.
Cotton yields are set to increase further this year. The area under cotton has increased from 66 per cent to 77 per cent depending on the region.
