FW
Production of nonwovens in Europe grew 2.5 per cent in 2016. While output growth in the European Union outperformed Greater Europe, some countries demonstrated impressive development. Germany, Italy and Spain all witnessed growth, with Spain being particularly impressive at five per cent while recent star performer Turkey remained stable, more than compensating for the minor decline recorded in some other European markets.
Although the primary end-use of nonwovens continues to be the hygiene market, with a 30.7 per cent share of deliveries (by weight), significant growth areas for nonwovens were recorded in other sectors like agriculture and garments (both recording double digit growth), air filtration, construction and food and beverage.
Countering this, a minor decline was recorded in the automotive industry. Medical and personal care wipes sectors both remained stable with a slight fall of 0.4 per cent. Divergent trends were also observed between the various production processes of nonwovens. The production of fiber-based materials Drylaid and Short-Fibre Airlaid technologies recorded an increase of 2.2 per cent and 2.9 per cent, while Wetlaid remained relatively stable. Spunmelt nonwovens recorded a growth rate of 3.3 per cent. The highest growth rate was observed in material produced via the air-through bonding process, with a 13.1 per cent increase.
Italian textile companies working in the fashion and accessory space have come together to form a federation called ‘Confindustria Moda’. The federation represents more than 67,000 companies, having a turnover of more than 88 billion euro and employing more than 5,80,000 workers. It includes leather manufacturers, footwear manufacturers, jewelry manufacturers, optical manufacturers and tanners.
The associations will continue to maintain operational autonomy with regard to vertical and specific themes for each sector (for example, shows and exhibitions), whereas, for the moment, Confindustria Moda will provide transversal services such as legal advice, industrial relations management and a development office.
Confindustria Moda will allow what was previously a highly fragmented galaxy of manufacturers to speak with a common voice, gaining influence and visibility. It will battle counterfeiting and affirm points of view on distribution and industrial relations.
Italian products of the textile and apparel industry are known worldwide. This sector has attracted a great deal of attention because it is rare for a wealthy and developed country to specialize heavily in fashion-oriented as well as semi-customized industrial products and to base its production system on small and very small companies. Fashion companies in Italy keep the stock market at arm’s length — especially since they are able to finance themselves through their operations.
Apparel imports by the EU were up 0.22 per cent in December 2016. Full year imports reflect a rebound in clothing demand from EU buyers after the euro stopped falling from a year earlier. During 2016, the combined imports of woven and knitted apparels increased by 5.53 per cent compared to 2015.
Bangladesh, Pakistan and Vietnam registered positive hikes in both value-wise and volume-wise apparel exports to the EU whereas India and China recorded a drop in their value-wise apparel exports to the EU in 2016.
The EU is one of the largest importers of textiles and garments in the world. China is the largest exporter of apparels and clothing to the EU followed by Bangladesh, Turkey, Cambodia, Morocco, Tunisia, Sri Lanka, Pakistan, and Vietnam. India's readymade garment sector will continue to enjoy 20 per cent duty export preference for the next three years to EU markets.
The EU itself has a vibrant textile and clothing industry. It covers a wide range of activities like transferring raw fiber into yarns and then yarns into fabric and then finally using the fabric to produce a wide range of finished products such as wool, bed-linen, geo-textiles, clothing, and synthetic yarns.
Camira’s wool and polyester products have been awarded the EU Ecolabel. Camira is a UK-based textile group known for its fabrics Patina, Synergy, Synergy 170, Individuo and Rivet. Camira has 20 years’ experience in designing and manufacturing recycled fabrics. It’s known for classic 100 per cent recycled polyester fabrics like Xtreme and Lucia, and other products such as Aspect and Era.
Patina is Camira’s newest performance wool and flax blend available in 43 different color ways. Synergy is made from premium New Zealand wool and available in 75 shades. Panel fabric Synergy 170 is available in 24 carefully selected Synergy colors and Individuo has a fluid, graduated appearance where no two areas of the fabric are same.
Rivet is made from 100 per cent Repreve, a brand of recycled polyester made from used plastic bottles. EU Ecolabel is an independent label administered by the European Union which accredits the environmental sensitivity of products throughout their lifecycle.
Camira has also been awarded Oeko-Tex Standard 100 certification for 13 different polyester fabrics. Oeko-Tex Standard 100 is a worldwide testing and certification scheme for textiles which focuses on chemicals of concern within textile supply chains and end products to ensure the protection of human health.
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.
