FW
US cotton producers aren’t projected to receive any government farm payments in the current fiscal year. In contrast, producers of corn, the biggest US crop, may receive $4.2 billion in aid this year. Globally, cotton is a heavily subsidized crop, with 71 per cent of world production receiving direct aid.
China is the world’s biggest subsidizer, giving $5.3 billion in aid. India’s aid is less direct, coming in the form of subsidies for farmers to cover fertilizer, electricity and other costs. Though China has been cutting back on price supports over the past three years, and reducing production incentives, and creating opportunities for exporters in the US, Brazil and Thailand, the support still isn’t zero.
Subsidies were cut because of a World Trade Organization ruling against the US cotton program, which lawmakers will need to tiptoe around while creating new aid. Cotton farmers in the US facing low prices are clamoring for assistance. They have experienced three or four years of hard times with a worldwide glut of major crops. The surpluses are curbing the outlook for American exports just as some farmers in the south are moving away from growing corn in favor of cotton, a trend that’s boosting domestic production of the fiber.
With a focus on supporting the implementation of the government’s Industrial Development Policy as well as other socio-economic projects the World Bank will disburse $540 million from 2018 to 2021 to finance economic development in Cambodia. The Finance Ministry committed financing was revealed between the newly appointed World Bank representative to Cambodia, Ellen Goldstein, and Minister of Economy and Finance Aun Pornmoniroth. Cambodia has seen the fastest economic growth in East Asia. Through this partnership, the World Bank will continue to support inclusive growth that benefits the poor, says Goldstein.
The World Bank is committed to help and cooperate with Cambodian government and the $540 million financing from 2018 to 2021 will be used to boost Cambodia’s economic development and other social development projects, she added.
Goldstein says that the funds would be prioritised to meet the needs of the government following their strategic development plan and the 2015-25 Industrial Development Policy. Cambodia’s 2015-2025 Industrial Development Policy aims to transform and modernise the country’s industrial structure from a labour intensive industry to a skills-driven. The IDP also promotes the development of the manufacturing sector and agro-processing industry through integration into regional and global production chains. Pornmoniroth says funds will contribute a lot to Cambodia’s development and give access to implement many other projects to boost growth and poverty reduction.
Nigeria is opening production hubs and most of the sophisticated equipment to start the production hubs is being put together in China and Italy. These will showcase the country’s professionalism in tailoring. Nigeria doesn’t have any tailoring that is mass produced.
South Africa has three such production hubs, each with a capacity of about 5000 to 6000 workers. In Nigeria, textile manufacturing is a key local industry, supported by a chain of suppliers such as cotton growers and natural dye makers. However, traditional methods of dyeing fabrics are threatened by cheap imports from abroad.
Nigerians have a love of naturally dyed fabrics with many prints based on traditional motifs. In northern regions, it is common for cloth to be a single color, such as indigo. Dyers use dye-pits (two or three meters deep). The cloth is left in these for a day or two, before being rinsed and left to dry. Sometimes, indigo cloth is beaten and given an extra coating of indigo powder to give a deeper shade and a glossy shine or sheen.
Nigeria's textile industry used to be the third largest in Africa. Now the country spends about 100 billion naira annually on importing clothing materials. If half of this could be made locally, the drain of foreign exchange could be stopped. Jobs could be created. Buying home made goods can stimulate the domestic economy.
Sri Lanka's apparel sector is heading for a major crisis due to an acute labor shortage. This needs to be addressed by using latest technology. Apparel is a labor intensive sector and the current labor shortage will be a challenge for the sector.
In 2016, half of Sri Lanka’s total revenues were from the textile and garment sector and this ratio has remained the same for several years. Sri Lanka's export basket has not changed much since the 1990s. If the country is to substantially increase export revenues, diversifying to new sectors is key. Similarly diversification of markets is also a priority for Sri Lanka.
With GSP Plus trade arrangement Sri Lanka has a great potential to export apparel to EU countries duty free but the skill labor shortage would hamper the opportunity to tap that lucrative market. The EU aims to support Sri Lanka’s economic growth by launching a series of initiatives which includes support to design and implement a coherent trade strategy for export competitiveness, support for trade policy development and regulatory reforms, enhancement of Sri Lanka's WTO trade negotiations capacity, support Sri Lanka's regional integration process and help Sri Lanka maximize the use of the EU GSP Plus scheme when it is granted.
Iran is mulling importing garments from Bangladesh directly. Right now, Iran imports most of garments it needs from countries like China and Turkey and sometimes buys Bangladeshi garments from third countries. Iran is working to open its markets to Bangladeshi garments. There are some barriers, including high tariffs and duties, Iran will progressively reduce them.
Iran is a country of over 79 million people and could be a big market for Bangladeshi garments. Bangladesh and Iran are connected historically and culturally. The two nations now have relations in all major fields. Bilateral relations are deep and based on mutual interest and will be strengthened in all fields through the opening up of new avenues in the coming days.
Iran has a plan to import rice from Bangladesh. The countries are thinking of establishing a direct Dhaka-Tehran air link, which will benefit Bangladeshi migrant workers and businesses of both countries. At one time Iran was one of the world’s premier exporters of textiles and silks to Europe, Asia and the rest of the world. Iran’s textile exports include garments, cotton and cotton blended fabrics and floor coverings including carpets. Compared to other countries Iran has a very small clothing industry.
Nandan Denim’s fabric manufacturing capacity is 110 million meters per annum. Going forward, emphasis will be laid on fashion denim fabrics to target better realizations compared to regular denim material.
A combination of higher sales volumes and value added products is likely to fuel top-line growth in the coming fiscals. Denim fabric contributes 80 to 90 per cent to Nandan’s annual turnover.
Spinning capacity has more than doubled. This will ensure adequate availability of yarn for the company’s fabric manufacturing unit besides reducing the degree of dependence on outside suppliers of raw materials and facilitating margin accretion.
The shirting fabric facility, which handled manufacturing of grey shirting fabrics until now, has been equipped to manufacture superior variants. The average selling price per meter of the new fabric type is 60 to 400 per cent higher vis-a-vis grey shirting fabric. A new yarn dyeing plant has been commissioned to meet input requirements of the shirting fabric department. The costlier dyed yarn, in comparison to non-dyed, would consequently help the company to command a premium pricing on its shirting material, eventually causing margins to go up.
With cotton prices now stabilizing, the company can look forward to gaining some momentum in terms of its earnings. Nandan is gradually steering the business towards the value added denim category.
"During a recent meeting with the Finance Minister Arun Jaitley, GST Sangharsh Samiti, the textile traders’ body, leading the strike that had shut down a four-km stretch of the country’s biggest cloth market on Surat’s Ring Road, asked for exemption from the Goods and Services Tax (GST) — or at least, an 18-month GST holiday. It seems they have been assured by the government that the matter would be taken up at the next meeting of the GST Council on August 5."
During a recent meeting with the Finance Minister Arun Jaitley, GST Sangharsh Samiti, the textile traders’ body, leading the strike that had shut down a four-km stretch of the country’s biggest cloth market on Surat’s Ring Road, asked for exemption from the Goods and Services Tax (GST) — or at least, an 18-month GST holiday. It seems they have been assured by the government that the matter would be taken up at the next meeting of the GST Council on August 5.
GST aims to bring every link in the chain of transactions on record, possibly raising the price of the cheapest saris and dress materials from Rs 70 to Rs 150-200, say experts. Ashok Jirawala, President, Federation of Gujarat Weavers’ Association, points out between 3.5 crore and 4 crore metres of cloth is woven in Surat every day on an average, and sold to other states and even foreign countries. While most saris are unbranded local products, Surat is also home to big brands like Rachna, Prafful, Parag and Garden Vareli./span>
The problem areas
Till date, the textile supply chain was exempted from indirect taxation. Ashish Gujarati, President, Pandesara Industrial Association, says pre-GST cost arithmetic was as follows: Yarn manufacturers, who paid 12.5 per cent VAT and 5 per cent excise duty, sold 1 kg of yarn to weavers for Rs118. A kg of yarn yields around 15 m of woven grey bale (about two retail saris). The textile trader purchases this bale for Rs16 per metre on average — or Rs 240 for 15 m of cloth. The mills that process (dye and print) the bale, charge Rs 12 per metre on average — so, for 15 m, the textile trader has to pay Rs 180 to the mill owner. Thus, the total cost of the finished cloth from 1 kg yarn is Rs 420 for the textile trader. The textile trader sells his material to wholesalers in other states and cities, keeping a profit margin of around 15 per cent on the cost price. The wholesaler sells it to the retailer, again keeping a margin of 15 per cent, and the retailer keeps a margin of between 10 per cent and 15 per cent while selling to the customer.
Post GST, there is 18 per cent GST in place of the combined VAT and excise on yarn. When the weaver sells the bale to a textile trader, the trader is liable to pay 5 per cent GST. As the textile trader sends the bale to a mill for dyeing and printing, he will pay processing charges with 5 per cent GST. After the cloth is dyed, printed and returned to the textile trader, he sells it to the wholesaler, again with 5 per cent GST. The wholesaler adds his profit margin and sells it to the retailer with 5 per cent GST.
GST gives weavers, mill owners and traders input credits at different levels. As per the pre-GST tax structure, a combined excise duty and VAT meant 18.16 per cent tax imposed on yarn manufacturers, which the weavers would pay during purchase of stock. Under GST, weavers stand to receive 12 per cent input credit, thus bringing back benefits. This benefit will be passed down the chain. The textile traders and processors also stand to benefit from input credit options as traders get an input credit of 5 per cent, and processors will receive input credit for chemicals and dyes, which form almost 30 per cent of the business, 5 per cent input credit for coal for powerlooms, and so on, explains Jitendra Vakharia, President, South Gujarat Weavers’ Association. Ultimately the chain of traders will also have to pass on the benefit to the consumers.
Tax experts perspective
Ahmedabad-based tax expert Monish Bhalla feels tax calculations after GST put a liability of only 0.5 per cent tax on the traders. So far, only manufacturers and service providers of the industry fell under the purview of taxes, which added up to 18 per cent pre-GST. In fact, with input credit system under GST, the chain of textile processors stand to gain at least 5 per cent input credit at various stages. But on traders who were out of the purview of excise and other taxes, GST will impose a liability. This protest is not against GST, but against getting accounted.
Traders acknowledge that most of their business was unaccounted for them to avoid income-tax. With GST, accounts will also lead to higher income-tax for traders with bigger turnovers. A trader who has been supplying saris to south Indian states for over two decades, said we have always showed only a part of the transaction in the books, and the rest of the trade has been trust-based. But with GST, the entire business has to be put on the books. It will be difficult to hide volumes, and we will be liable to pay higher income-tax on our turnovers. That’s what is worrying the industry and the strike is the outcome of that, which is hampering the livelihood of many workers.
In order to deliver improved garment performance, US fiber producer Invista has unveiled a new tool that helps casual bra designers select the best fabric. The Lycra bra fabric finder technology has been developed in response to consumer-driven shift towards casual bras including wire-free bras, sports bra, bralette or bandeau.
The new platform can help designers easily identify the best fabric construction and add functionality to any casual bra collection. Fabric selection is critical when it comes to deconstructed, casual bras as the garment.
The technology works by encouraging casual bra designers to identify the desired comfort and support level they need to develop the bra in question, before choosing the shaping type, be it natural for a softer silhouette or power shaping for more defined curves.
Designers then select the appropriate certified fabric, which goes through a rigorous testing process to ensure it meets the predetermined parameters. Designers will be able to create the perfect casual bra that delivers the shape and support women need, and the comfort they want. Casual bras have a widespread, global appeal and represent a style evolution. The Lycra bra fabric finder will make it easier for brands to meet this growing demand and gain market share.
As per latest ‘Cotton and Wool Outlook’ report released by the Economic Research Service of the USDA, India is the largest cotton producer in the world accounting for 25 per cent of the 2017-18 global crop estimate, while China and the US are expected to contribute 21 per cent and 16.5 per cent, respectively.
Global cotton production remains concentrated among a handful of countries, and the top five cotton-producing nations are forecast to account for more than 76 per cent of total production, similar to last season but slightly below the 2013-14-2015-16 average.
India is projected to produce 29.0 million bales of cotton in 2017-18, 7 per cent above 2016-17. Although the yield is forecast lower (near the 5-year average), an area rebound of 14 per cent is expected to push the 2017-18 crop to its highest in 3 years.
China’s, cotton production is projected to rise 5.5 per cent (1.25 million bales) in 2017-18 to 24.0 million bales. Area devoted to cotton is forecast to return to the 2015-16 level of approximately 3.1 million hectares. Meanwhile, the China national yield is projected at a record 1,713 kilograms per hectare, as area is heavily concentrated in the high-yielding Xinjiang region.
The report says each major producing country is expecting larger crops, 2017-18 global cotton production is forecast at its highest level in 3 years at 115.4 million bales, 8 per cent (8.8 million bales) above 2016-17 and 19 per cent above 2015-16’s 12-year low.
The world cotton yield is estimated at 775 kilograms per hectare (691 pounds per acre) in 2017-18, 2 per cent below a year earlier.
Huntsman Textile Effects has won awards from the Dyestuff Manufacturers Association of India (DMAI) for performance in exports of dyestuffs by a large scale unit and performance in pollution control by a large scale unit. The awards are presented for outstanding contribution in supporting environment, health and safety and sustainability for the textile industry. Huntsman Textile Effects received the awards based on criteria such as innovation, creativity, development and quality.
Winners of the DMAI awards were determined by a judging panel from the chemical, pharma, dye and dye intermediates manufacturing industries. Huntsman Textile Effects is the leading global provider of high quality dyes and chemicals to the textile and related industries. It has operations in more than 90 countries and seven primary manufacturing facilities in six countries (China, Germany, India, Indonesia, Mexico and Thailand).
The company uses cutting edge technology to develop solutions and create innovative products with intelligent effects such as durable water repellents, color fastness, sun protection or state-of-the-art dyes which reduce water and energy consumption. The Dyestuffs Manufacturers Association of India (DMAI) was set up in 1950 to promote and protect trade, commerce and industries connected with dyestuffs. DMAI participates in international chemical mega events such as India Chem, Chem Expo, Chemspec as co-sponsor.
