FW
It is known to all, that the denim fabric manufacturing industry is the sunrise industry of India. This has been proved by the fact that in the last decade, it has been growing at a healthy 15 per cent CAGR. Currently, the industry has an annual installed capacity of 1.4 billion meters which is supposed to be the world’s second largest after China. The sales turnover of the industry is estimated to be around Rs 15,000 crores, provides employment to approximately 4, 00,000 workers, besides the indirect employment.
However, with currency demonetisation the industry has been paralysed and 50 per cent capacity has shut down. The denim fabric is washed before it can be marketed, these upstream activities are majorly done in the unorganized sectors located in the SSI hubs of Gandhinagar and Tank Road, Delhi, Ulhasnagar in Mumbai and Bellary near Bengaluru. Since these hubs mainly deal in cash, they therefore have shut down due to the cash crunch. As 85 per cent of the fabric is sold in domestic market they are badly hit.
Experts fear, since upstream activities of garment sewing and washing in SSI hubs will take a while before they can change to working smoothly with the banking system, they are not foreseeing any short-term recovery of the market in the near future. This has led to shutdown of denim mills that has resulted in a loss of jobs. Considering the grave situation of the denim industry, it is likely that the government may announce immediate enhancement in present duty drawback rates and also extend some more benefits under focus product and focus market scheme so that mills can competitively try to shift to the export market.
The Bangladesh commerce minister Tofail Ahmed has said that the US excluded his country from duty privileges on political grounds, an assertion the US Ambassador to Bangladesh Marcia Bernicat publicly disagreed with. The minister said the US has reinstated Bangladesh's Generalised System of Preferences (GSP) status despite fulfilling all the 16 conditions laid out by the Obama administration in 2013.
After having met Bernicat to announce the postponement of this year's Trade and Investment Cooperation Forum Agreement (TICFA) meeting earlier scheduled for December 13, Tofail said there is no reason other than a political one for not giving back GSP to Bangladesh. Bernicat has said America absolutely disagrees that there was a political basis for GSP suspension.
The Obama administration suspended GSP status in the aftermath of the Rana Plaza building collapse, citing serious shortcomings in workplace safety and labour rights. Tofail said he does not agree with the claims that workers' rights in Bangladesh have not improved since the suspension of GSP.
Bangladesh amended labour lasw in July 2013 to allow workers full freedom of association at the factory level. But labour activists say they still face restrictions in entering factory premises and the government has failed to register their unions, which would have otherwise given them the legal right to represent workers.
With the Donald Trump declaring that the US will withdraw from the Trans-Pacific Partnership (TPP), this will boost competitiveness of Cambodia’s domestic garment and footwear industry, say senior official of the Garment Manufacturer’s Association of Cambodia (GMAC).
Trump’s lack of support for the TPP has caused other signatories to voice doubt over the partnership. On November 19, the Vietnamese government signaled that without US support, it would not seek to ratify the TPP in Parliament. Japanese Prime Minister Shinzo Abe has called the TPP meaningless, without the US on board. Kaing Monika, GMAC deputy secretary-general has said the US withdrawal would return Cambodia to closer parity with neighboring Vietnam, a signatory of the free-trade agreement. He clarified that if the US withdraws, the TPP would be dead because at least six member countries that account for 85 per cent of the combined GDP of the 12 nations must ratify the agreement. This needs both US and Japan.
In the absence of TPP, Cambodia is put back to the earlier position of competing against Vietnam, both on the FDI and export market fronts. But on the other hand, if the TPP is implemented it would not only affect Cambodia’s exports to the US but also other markets like Canada and Japan where the country similarly exports a substantial amount. The 12-country agreement was signed in February, a highlight of current US President Barack Obama’s time in office but is yet to be ratified by any country. If it comes into effect, 12 Pacific rim countries will enjoy free-trade arrangements aimed at boosting their economic partnerships, and it is seen by many as a check to Chinese influence in the region.
Pitti Bimbo, the trade show for children's fashion, that has evolved with time, has announced the creation of two new sections for its 84th edition, scheduled in Florence from January 19 to 21, 2017. According to Raffaello Napoleone, head of show organiser, the children's fashion industry is in a struggling stage when companies are going through a troubled period. That is the reason why the organizers keep on creating new initiatives to bolster the market and remain the benchmark trade show in the segment.
In the last edition held last in June, Pitti Bimbo featured for the first time the Fun Glasses section, with children's eyewear, while the one to be held in January next will mark the inception of two new projects. The first 'The Nest', a new section located in the basement of the venue's central pavilion, organised in collaboration with Berlin concept store Little Pop Up Berlin. It will showcase a selection of smaller, independent and emerging junior fashion labels, distinctive for their creativity and product innovation like Atelier Choux Paris, Cherry Papaya Kids, Garbo&Friends, Kalinka Kids, Lieblinge, Mara Mea, Monkind, Poupee, Robe of Feathers and Where is Marlo.
The second section named the 'Fancy Room' would feature children's lifestyle products from design items to small accessories, toys, portable technology and gadgets. The island-shaped section, distinctive for its amusing decor, would also be located in the central pavilion's basement, and will host brands like Caco Design, Cute Cute, Design Letters & Friends, Enfance Paris, Fior di Coccole, Hape, Lapin & me, Lullaby Road, LuckyBoySunday, Miss Nella, Nailmatic Kids, Noé & Zoé Berlin, Passapò, Papillon, Popqorn, Prestige, Rò.Rò and Vandoma. For the forthcoming edition, Pitti Bimbo has announced the presentation of 468 collections compared to 437 in January last year of which 250 came from outside Italy.
"As is well known now, a recent investigation on luxury beddings offered by Welspun India to Walmartm the world’s largest retailers, has dented the futures of Indian textile industry among global peers. As per investigation, major American retailers, including Target and Walmart, have been selling premium-priced sheets purportedly made with Egyptian cotton – a byword for luxury in linen – but that may be woven with lower-quality cotton blends in reality."
As is well known now, a recent investigation on luxury beddings offered by Welspun India to Walmartm the world’s largest retailers, has dented the futures of Indian textile industry among global peers. As per investigation, major American retailers, including Target and Walmart, have been selling premium-priced sheets purportedly made with Egyptian cotton – a byword for luxury in linen – but that may be woven with lower-quality cotton blends in reality.
Three law suits seeking to be certified as class-actions have been filed against supplier Welspun India -- and a separate one last week was directed at Walmart. The complaint, filed in New York by customer Dorothy Monahan, accuses the world’s largest retailer of questioning the fibre content of Welspun’s products as early as 2008 but not halting its sales until after Target did so in August. The other lawsuits, all filed in the US against Welspun, allege the company fraudulently labelled its bedsheets as Egyptian cotton. If all reports are to believed, it’s PR machinery which is to be blamed for placing high-quality cotton and Egyptian cotton as synonymous.
Target has already ended its partnership of its $90 million in annual business with the Indian supplier, and Walmart Stores has stopped selling Welspun sheets that had been labelled 100 per cent Egyptian cotton. Bed Bath & Beyond Inc. followed suit.
The fake Egyptian sheet episode came to light after exhaustive work by Target investigators who analysed sheet fibres under microscopes and tracked their journey through a global supply chain. The probe found that 750,000 of Target’s Egyptian cotton sheets, sold for as much as $75 a pop, didn’t contain any Egyptian cotton at all, but a mix of lower-quality fibers from cheaper sources. It may also create a dent for Indian textile manufacturers in the race to supply Western consumers with high-quality sheets and towels, thereby making way for its competitors such as China to take on business.
The sheets fiasco reflects a simple reality: There’s a scarcity of Egyptian cotton. It first became a key export product in the early 19th century, when it arrived in France and became sought after for its silky feel. Production has been falling since the 1990s, however, and last year Egypt’s post-revolutionary military government ended subsidies for cotton farmers to shore up the state budget. A gradual decline in output has become a precipitous plunge. The U.S. Department of Agriculture estimates there will be a 53 percent decrease in production this year, to an all-time low of 160,000 bales.
Egyptian Cotton Certification Scenario
The system for certifying Egyptian cotton is administered from Cairo by the Cotton Egypt Association, an industry group that grants stamps of approval to suppliers of 100 per cent Egyptian cotton products. To receive one, a manufacturer pays an initial fee of $5,000 and submits records of Egyptian cotton purchases and product samples, which undergo DNA analysis to identify whether the fibres were grown in Egypt or elsewhere. The companies are charged an additional $3,000 annually for the certification.
But once a certification is granted, producers are mostly left alone until they need to renew their label a year later. Typically, suppliers like Welspun purchase cotton in raw form from Egypt for import to Asia, where it is converted into finished products for sale in the US and elsewhere. The highest-quality Egyptian material costs twice as much as the standard grade sourced from India, providing a powerful incentive to cheat. Factories have mixed the Egyptian cotton with other low quality cottons to make profit, which has ruined the reputation of Egyptian cotton.
Blending blunder
Blending has been rampant in the industry and is quietly compromised by many retail chains. Sometimes that means mixing good-quality non-Egyptian cotton that maintains the same feel amid shortages of the real thing, but it also often includes using cheaper grades to save money.
The United States Department of Agriculture (USDA) says, on account of higher demand from spinners and garment makers in the country, this year’s cotton consumption in Bangladesh is expected to rise 4.91 per cent year-on-year to 6.4 million bales. The report predicts that in the current cotton year that begins on the first of August next year and ends on July 31, 2018, more than 430 spinning mills in Bangladesh will consume 6.4 million bales of cotton.
Vice President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Mahmud Hasan Khan adds cotton consumption and import in Bangladesh are related to the export of garment items. Since garment exports are increasing, cotton consumption and imports will also increase. Moreover, the country spends more than US $3 billion on import of cotton in a year. More than 80 per cent of its apparel products are cotton-based and the rest 20 per cent include viscose, polyester and other materials. Currently, local spinners can supply nearly 90 per cent of raw materials for the knitwear and 40 per cent for the woven sector. As a result of its geographical proximity and competitive price line in the category, Bangladesh imports 50 per cent of its total annual demand of cotton from India.
Most of the textile and apparel industry does not avail of CENVAT, says the Textiles & Apparel Achievement Report released by the Ministry of Textiles. It goes on to say that the CENVAT route will prepare the textile and apparel industry for GST when it comes into force. Central Value Added Tax (CENVAT) is a tax levied on the manufacture or production of movable and marketable goods in India.
The report released by Department of Industrial Policy and Promotion (DIPP) on November 24 shows that there has been an upward revision of duty drawback rates wherein All Industry Rates (AIR) of Duty Drawback has been revised for various products from November 23, last year (2015). The report also shows comparison of Duty Drawback rates when CENVAT is availed by exporters and when it is not.
In case of cotton yarn, when CENVAT was not availed, the duty drawback rates were in the range of 2.8-4.7 in the year 2014 and between 2.5 - 4.5 in 2015. However, when the CENVAT was availed, the duty drawback rate were in the range of 0.9 – 1.3 in 2014 and between 1.2 – 1.4 in 2015. In case of apparel, when the CENVAT was not availed the duty drawback rates were in the range of 7.2 – 10.5 in 2015 while when the CENVAT was availed, the rates were in the range of 2.0 – 3.5 in 2015. Similar were the cases with cotton fabric, man-made fabric and home textiles.
The report also highlights the textile sector in India accounts for 10 per cent of the country’s manufacturing production, 5 per cent of India’s GDP and 13 per cent of India’s exports earnings. Textile and apparel sector is the second largest employment provider in the country employing nearly 51million people directly and 68 million people indirectly in 2015-16.
The World Trade Organisation has issued new expanded editions of two of its annual statistical publications, Trade Profiles and World Tariff Profiles.
The revamped Trade Profiles provides a series of key indicators on trade in goods and services for 195 economies. For each economy, the data is presented in a handy two-page format, providing a concise overview of global trade. The profiles begin with a snapshot of the importance of trade for each economy — indicating its world ranking for trade in both goods and commercial services.
For trade in goods, data is provided by product category along with the major origins and destinations for these products. Also listed are the most exported and imported goods for each economy. For trade in commercial services, data is broken down by services category, major origins and destinations, foreign affiliates statistics and foreign direct investment in services.
World Trade Profiles has been expanded to provide information on tariff and non-tariff measures imposed by over 170 economies. The publication starts with summary tables showing the average tariffs imposed by each economy. This is followed by individual one-page profiles, providing a more detailed breakdown of tariffs. The profiles display the tariffs each economy imposes on its imports as well as the tariffs it faces for exports to major trading partners. A new section covers the use of non-tariff measures, which are becoming increasingly important in international trade.
The cash crunch triggered by the sudden withdrawal of high-value currency notes has crippled the economy of Tirupur that depends on thousands of labourers who earn their wages in cash. So much so that the year-end that is normally a cheerful time in Tirupur when holiday orders pour in from the US and Europe is now in a gloom.
As M P Muthurathinam, Owner of Rooban Clothing says he is currently working with 10 workers of the 90 he deploys. This is because the rest of the workforce have either gone on leave or have left jobs due to the cash crunch. Muthurathinam is not able to pay them.
His main worry now is that his clients may cancel a chunk of his export orders since he won’t be able to deliver the goods on time. Generally, November and December are happy months as good business orders flow materialise due to the Christmas and New Year season abroad.
The textiles cluster of Tirupur employs some 500,000 people directly and does an annual business worth Rs 40,000 crore. While Rs 25,000 crore comes from exports, the rest comes from the domestic business. The textiles belt, often referred to as the Manchester of south India, has remained to be crippled over the past 15 days and its impact will be felt for at least three to four quarters, factory owners and their association believe disputing claims that the pain will be short-lived.
Upbeat on the domestic textile sector, the Taiwan Textile Federation (TTF) is looking to export textiles products worth around $500 million to India in the next five years. According to Sean Tsai of Taiwan Textile Federation Overseas Market Development, India is a very dynamic market with lot of potential and scope for Taiwanese companies. The focus of Taiwan is to tap new business opportunities in India, Bangladesh and Sri Lanka where there is huge demand for innovative knit and woven textile products like synthetic, fancy, functional etc as well as garment accessories. Tsai was talking on the sidelines of a buyer-seller meet in Mumbai.
He further said Taiwan’s main aim was to export around $500 million worth of functional textiles in the next five years to India. This can be seen by the bilateral trade between the two countries that has grown from $1.19 billion in 2001 to $6 billion in 2014. For over 10 years, the TTF had been organising buyer-seller meets in India and has been quite successful in connecting and supplying innovative and trendy textiles to the leading fashion garment exporters' as well domestic brands in India.
Organised by the TTF and the Bureau of Foreign Trade and represented by Worldex India Exhibition & Promotion, Taiwan Textile Fair showcased Taiwan's innovative and value-added yarns, fabrics, trimmings and clothing accessories were displayed to apparel exporters, fashion brands and labels, retailers, importers, distributors based in Mumbai. Taiwanese textile industry is known in the world for its innovative and high-quality products and are sourced by leading global brands for sports and active wear, outdoor wear, functional wear, formal wear, suiting and shirting by leading global brands such as such as DKNY, S. Oliver, C&A, Victoria's Secret, GAP, Nike, Adidas, Calvin Klein, H&M, Marks & Spencer, Tescouk, Tommy Hilfiger among others.
