FW
Bangladesh has become the largest denim supplier to the European Union. The country secured a 21.18 per cent denim market share in the 28-nation bloc during January to June 2016. In contrast, Bangladesh’s denim shipments to the US have seen a dip for the last seven years. One reason is the US has increased denim imports from Mexico due to competitive prices and shorter lead times. Besides, American retailers get duty benefits for sourcing from Mexico. Bangladeshi garment imports are subjected to a 15.62 per cent duty upon entry to the US, while Mexico's wares get duty-free access. Moreover the US itself produces a lot of denim garments.
Another important reason for the slow growth of denim exports is that US retailers purchase low-cost denim products in bulk from China. Despite the slow growth in denim exports, Bangladesh still remains the third largest supplier in the US market.
Currently, Bangladesh has 30 denim mills. The collective production capacity of the mills is 435 million yards a year. In terms of denim sales, the US and the UK are two major markets of Bangladesh. Bangladeshi entrepreneurs supply denim products to major global retailers including Levi's, Diesel, G-Star RAW, H&M, Uniqlo, Tesco, Wrangler, s.Oliver, Hugo Boss, Walmart, and Gap.
The performance sports apparel market is expected to grow at a CAGR of 4.3 per cent during 2015-20. The athleisure segment has seen a huge increase of 42 per cent over the last seven years and is predicted to grow another 30 per cent by 2020, especially in Asia and the US. In fact, US active wear apparel sales in 2016 were up 11 per cent from last year, far outperforming traditional apparel sectors.
From 2015-16, the Indian sportswear market grew 22 per cent, outpacing the segment’s global increase of seven per cent. By 2020, it is expected to grow at an additional 12 per cent CAGR. By 2018, Asia Pacific is expected to emerge the largest sports apparel market. While most international brands are already present in India, domestic start-up brands have made their mark.
Increased mass interest in active sports and outdoor leisure activities such as running, sailing, climbing, cycling, etc, has led to immense growth in consumption of textile materials needed for manufacturing active sports related goods and equipment. Meanwhile increasing disposable income and a surge in female participation in sports are major factors driving growth of world sports apparel market.
The textile industry in Bangladesh has established a basis for responsible garment manufacturing in the long term. For the first time businesses as a group will state which factories produce their clothing. They have also drawn up specific improvement plans to tackle poor working conditions, human rights and environmental and animal abuses. A further step is the appointment of an independent disputes committee with the power to issue binding rulings.
The entire initiative is the result of a collaboration that began a year ago under the terms of a garment and textile agreement. Partners in the agreement have worked out a structure for identifying risks and launching improvements. Businesses have submitted plans with targets for the years ahead. The real work will begin in the coming year. The agreement will remain in effect for a five-year period.
The agreement puts the focus on collective projects and cooperation, increasing the chance of success. It concentrates the agendas and efforts of different parties. More than 60 businesses have signed the agreement so far, representing about 80 different consumer clothing and textile brands. This multi-stakeholder approach is unique in the world and has attracted the attention of Germany, Denmark, the UK and other countries.
More than 50 per cent of Việtnam’s garment and textile producers are making full use of opportunities provided by FTAs but these are mainly FDI companies. Domestic garment and textile firms have, for the most part, missed out on the much-touted benefits of FTA that Việtnam has signed. Việtnam has signed about a dozen free trade agreements. Some of these are with India, Australia, New Zealand, South Korea, China, Japan, Chile and South Korea.
Garments and textiles are key export items for the country. If enterprises can take advantage of FTA opportunities, the country will be able to increase export revenues as well as expand markets. But to be able to enjoy preferential tariffs under FTAs, the products must meet the requirements under rules of origin. With weak materials supply and supporting industries, businesses in the garment and textile industries face a big challenge in complying with rules of origin.
Domestic garment and textile businesses have not taken much advantage of FTAs since they cannot meet rule of origin requirements. And one of the main reasons for this is that Vietnamese firms lack knowledge on this issue. In the first half of the year, Vietnam’s garment and textile exports increased by 11 per cent year-on-year.
American Eagle Outfitters has come out with a denim hijab made with Tencel fibers. The hijab is a head covering that is traditional dress for many Muslim women. As Muslim women worldwide are increasingly demanding both performance and style from their garments, designers, manufacturers and retailers are responding.
In order to raise demand of fashion and function, denim over the years has benefited from fabric blends that help bring its indigo character to many varieties of clothing. Few have been as advantageous as Lenzing’s wood-based Tencel lyocell branded fibers, which help impart a softness and drape that isn’t always possible with other denim fabrics.
For decades, denim has crossed multi-cultural lines, long ago expanding from its original, limited utility as men’s work dungarees to also encompass apparel for all genders, ages and vocations. Designers borrow from other cultures when it comes to color, cut, fabric and technique. And textile makers add to the mix with manufacturing, spinning and weaving advancements that enhance performance, color and all manner of possibilities in design.
American Eagle Outfitters offers high quality, trendy clothing, accessories and personal care products for men and women under two brands: American Eagle Outfitters and Aerie. They targets men and women 15 to 25 years but provide high quality apparel that can appeal to all demographics.
"In order to assess the overall financial performance of Indian textile sector on a continuous basis, Wazir Advisors has developed the Wazir Textile Index (WTI). This index gives the collective performance of select top 10 listed textile companies (by sales) of 2015-16 as the base/benchmark, represented by the base Index number 100. The base is taken for each quarters and full financial year performance of the companies in 2015-16. "
In order to assess the overall financial performance of Indian textile sector on a continuous basis, Wazir Advisors has developed the Wazir Textile Index (WTI). This index gives the collective performance of select top 10 listed textile companies (by sales) of 2015-16 as the base/benchmark, represented by the base Index number 100. The base is taken for each quarters and full financial year performance of the companies in 2015-16. Financial performance of the textile industry will be benchmarked on this base number to assess quarterly (Q1), half yearly (H1), nine monthly (9M) and yearly performance (FY) for future years against the set benchmark. WTI includes the following three components: WTI Sales, WTI EBITDA, and WTI Cost.
Marginal improvement
As per latest WTI, India’s real GDP increased from Rs 114 lakh crore to Rs 122 lakh crore, in 2017, with a growth rate of 7.1 per cent. Textiles saw an IIP increase of 1 per cent from 156.4 to 158 while IIP for apparel dipped by 1 per cent from 192 to 189.6 in FY17 compared to FY16. With an increase of 1 per cent, WPI stood at 141.8 in FY17.
Stagnant exports
Textile and apparel exports in FY17 declined at the rate 0.2 per cent from previous year, to reach $36.6 bn. Apparel had majority share in exports valued at $17.4 bn. Exports of filament yarn, apparel and home textile categories registered a growth in FY17. Highest growth was observed in filament yarn exports which grew at 9 per cent from $1.01 bn to $1.11 bn in FY17. However, exports of fibre, spun yarn, fabric et al declined. Highest fall was registered by fibre, a decrease of 8 per cent from $2.7 to 2.5 bn in FY17. Exports of both yarn and fabric categories fell by 5 per cent each in FY17. The US and UAE stood as the largest export markets for India, with a cumulative share of 34 per cent, a 2 per cent rise over last year. Exports to UK and China & Hong Kong decreased 1 per cent in FY17 while exports to Bangladesh remained the same.
Increased imports
Clocking in $6 bn, textile and apparel imports in FY17 increased at 3.1 per cent from previous year. Growth was due to a significant increase in fibre imports by 41 per cent over FY16. However, imports of other major categories like yarn, home textiles & fabric declined at 26 per cent, 23 per cent and 8 per cent respectively. China continued to be India’s largest import partner, however, its share in total imports fell 6 per cent while Australia’s import share increased significantly from 3 to 7 per cent due to an unprecedented 845 per cent growth in cotton fibre imports. Imports from the US also increased at 3 per cent while imports from Vietnam remained the same.
Raw material price hike
On an average, raw cotton and viscose staple fibre prices increased 19 per cent and 7 per cent respectively while polyester staple fibre prices declined by 2 per cent in FY17. There was an increase in cotton yarn and polyester viscose blended yarn average prices growing at 5 per cent and 6 per cent respectively in FY17. However, polyester cotton blended yarn registered a decline of 7 per cent in FY17 compared to FY16.
Following this performance evaluation, it remains to be seen how the industry battles the GST demon
"If researches are anywhere to go by, soon we are going to see wool knitwear and bedding that enhance sleep pattern and also aid in relieving chronic skin conditions. As wool can be recycled, research shows wool garments are worn for longer and retained longer than those made of other fibres. In order to sustain properties, wool growers work hard to care for their sheep and land on which they graze, and there is evidence of significant carbon sequestration in the trees and shrubs on sheep farms, which mitigates the effects of greenhouse gases."
If researches are anywhere to go by, soon we are going to see wool knitwear and bedding that enhance sleep pattern and also aid in relieving chronic skin conditions. As wool can be recycled, research shows wool garments are worn for longer and retained longer than those made of other fibres. In order to sustain properties, wool growers work hard to care for their sheep and land on which they graze, and there is evidence of significant carbon sequestration in the trees and shrubs on sheep farms, which mitigates the effects of greenhouse gases. Holistic land practitioners will also tell you how livestock like sheep promote biodiversity and prevent desertification.
But the recent Pulse Report offers a completely different picture. The report ‘scored’ the industry on its environmental and social performance. The overall score received by the industry was 32 out of 100. The report calls for a replacement of ‘conventional cotton’ with polyester. Other suggestions include persuading consumers that polyester is as appealing as cotton, it should develop more man-made fibres, and continue to enhance polyester.
IWTO viewpoint
According to PCI Fibres, anyone in the fibre business has to be aware that polyester producers are constantly looking at other fibres and their markets to determine if polyester can take further market share.
Owing to certain disputed conclusion, the report has been a matter of debate. Geoff Kingwill, Chair, Sustainable Practices Working Group of the International Wool Textile Organisation (IWTO), highlights the most serious problem with the Pulse Report is it presents a ranking of fibre types without required data and analysis. There are clear rules about how to make comparisons of fibre products, particularly to the public. This problem is compounded by failure to make clear that the data the ranking relies upon is based in part on preliminary data. In addition, the ranking is based on just one stage – the first of several stages – of the life cycle of the fibre.
The Sustainable Apparel Coalition (SAC), which supplied the data for the report, is aware that overall impact ratings cannot be inferred from this one portion of data. It is particularly erroneous because while recycled polyester is included in the data used, recycled wool has yet to be incorporated, Kingwill added.
Need additional data to back report
Kingwill points out, the report is based on SAC’s supplied data through Higg Index. But this index itself is a work in progress, which makes the authenticity of data under spotlight. If there is any other tool that can offer authentic data is IWTO, which collects data through research projects and can support development of the Footprint Tool for wool and across fibres. Having said that the data and methods are still under development.
There are stringent rules about comparing fibre types, which are governed by the ISO. The ISO standard – ISO 14040 to be exact – requires that public comparisons be based on a full life cycle assessment. Without including all impact categories, the picture created is incomplete. Such rankings have the potential to mislead consumers and risk a loss of faith in the industry and data provider. Dalena White, IWTO’s Secretary General, said that a loss of credibility like that would be a shame. SAC and its members have worked hard to develop an objective tool that can be used to make positive change. IWTO was not consulted for the Pulse Report, which is disappointing because wool is a meaningful part of the fashion apparel industry.
The president of the Tirupur Exporters' Association (TEA) Raja M Shanmugham has appealed to banks to pass on the rate cut benefits to exporters, who have been allegedly struggling and facing hiccups post GST. Exports' associations in the region have welcomed the monetary policy committee's move to bring down repo rate from 6.25 per cent to 6 per cent.
Shanmugham has said the association had made representations to all banks for enhancing the limit to ease the working capital blockage. The entire business community expected it, as inflation is coming down, said Sakthivel and urged the RBI governor to take necessary steps to see all banks cut lending rates immediately as there is scope for the banks to reduce interest rate further beyond RBI rate cut.
A reduction of 50 basis points in key lending rate has been announced this time, as inflation has come down to 1.54 per cent in June. Inflation in May 2017 was 2.18 per cent, in June 2016 it was 5.77 per cent, says Sakthivel.
Economic growth unexpectedly slowed to its lowest in more than two years. Manufacturing sector contracted in July following the GST. Exporters are facing serious working capital crunch and hence adequate availability of cheaper fund, especially for MSME sector, is the need of the hour to make products competitive in the international market, Sakthivel added.
A group of cotton ginners from Maharashtra will visit Singapore to explore possible deals for Indian cotton. They will visit a couple of the world’s largest agri-commodities companies based in Singapore. The aim is to attract large buyers to Indian cotton. Asian heads of these companies will be invited to India so that they can see the quality of Indian cotton for themselves.
Similar visits have been made to potential buyers in Bangladesh, Pakistan, Vietnam and China. A team visited Chinese buyers, traders, ginners and warehouses and provided samples of their cotton which was tested by Chinese experts. This was followed by a visit to the Jalgaon region by Chinese traders and ginners as well as their visits to Indian farms. China has been the biggest importer of cotton from India until now.
Contracts have been struck with buyers in China, Vietnam, Pakistan and Bangladesh. There has been an effort to improve the productivity of cotton. What began as an effort to mentor some 40 farmers in 10 talukas of Jalgaon district resulted in a 50 to 70 per cent improvement in productivity.
India’s cotton production in 2017-18 is likely to be 375 lakh bales, up 12 per cent from the current season. In the current year, cotton exports from the country are likely to touch 63 lakh bales, lower from 72 lakh bales in 2016-17.
GSP has not really helped Sri Lanka enhance its exports to the EU. Production and labor costs remain high compared to competitors’, and it is doubtful if the country can meet its goal of doubling exports by 2020.
Bangladesh, for instance, has moved ahead in textile and apparel production in the last few years. Bangladesh accounts for 6.4 per cent of global clothing exports compared with Sri Lanka's 1.2 per cent. The EU, which is Sri Lanka's biggest export destination, absorbing some 36 per cent of total shipments, reinstated the country into the GSP Plus program in mid-May, removing import tariffs on more than 6,000 products, including clothing.
Sri Lanka was dropped from GSP Plus in 2010 for human rights violations, but remained in the less-favorable GSP program, under which its exports were taxed at 9.6 per cent. Wages in Sri Lanka are typically higher than in Bangladesh and Vietnam, making the country better suited to producing high-end garments such as swimwear, trousers and underwear, including lingerie for top brands such as Victoria's Secret. Sri Lankan labor laws also limit factory workers to 57.5 hours per week, with fixed weekly holidays. This compares with Bangladesh's working limit of 60 hours and Vietnam's 64 hours.
