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In 2016, 40 per cent of European e-shoppers purchased goods or services from a vendor located in an EU country different from theirs. There is still a significant growth margin, especially considering the high number of European small businesses and SMEs which sell internationally in France alone, the national e-commerce and distance selling federation FEVAD estimates that 55 per cent of them presently do.
In terms of cross-border purchases the Spanish market has 58 per cent of local e-shoppers spent money abroad last year. A practice, which is popular in Italy too, with 47 per cent of consumers going cross-border. On the other hand, the huge German market, home to many European e-tail leaders, has a different approach, with only 26 per cent of consumers going cross-border. As for the UK, the largest e-market in Europe, its figure is consistent with the European average, at 40 per cent.
In 2016 the European e-tail market was worth €530 billion, and UK e-tailers were with €174 billion, a figure which is expected to come close to €200 billion in 2017. Germany follows the UK at a distance, with an e-tail market worth €77.9 billion, and France is third with €72 billion.
At the end of 2015, only 7.5 per cent of Eurozone e-tailers were selling abroad. According to FEVAD, 68 per cent of leading websites are now retailing internationally. In early 2017, a report compiled by e-commerce market researcher yStats revealed that more than 50 per cent of online shoppers worldwide make transactions via e-tailers located in a country different from theirs.
EU for a long time has worked on harmonising community regulations regarding e-commerce. Initially, the regulators had to deal with the free-returns policy adopted universally in Germany, which the country's e-tailers are keen to preserve. At present they are faced with another huge challenge in the form of Brexit, with its as yet undefined impact on transaction duties.
Iconic denim brand Wrangler has joined Field to Market: The Alliance for Sustainable Agriculture, a multi-stakeholder initiative working to unite the agricultural supply chain in defining, measuring and advancing the sustainability of food, fiber and fuel production in the United States. It engages in broad communication and collaboration with agricultural stakeholders to ensure a coordinated, outcome-based approach to sustainable agriculture grounded in science. By providing useful measurement tools and resources, Field to Market helps brands and growers track and promote continuous improvement at the field level.
Wrangler is the first major apparel brand to join the initiative, as an associate member working to help increase the supply of sustainable cotton. The brand buys roughly 50 per cent of its cotton from US growers. Wrangler is taking a leadership role in catalyzing continuous improvement in the sustainability of US cotton.
Wrangler will coordinate with Field to Market to focus on cotton-growing practices that not only reduce environmental impacts but also improve profitability for growers. Wrangler plans to work with Field to Market to create a program that includes scores of growers who are focused on journeys of continuous improvement for healthy soils, collectively focused on achieving the best possible results for yield, irrigation water use, efficient input use, soil conservation and reduced emissions.
The China Cotton Association (CCA) and Cotton Association of India have signed an MoU for co-operation on a host of matters relating to cotton, including regular exchange of delegations between the two trade bodies, training, information exchange and dissemination and speedy resolution of member’s issues, among others. The partnership will go a long way in making cotton trading safer in both countries, says CAI. Nayan C Mirani, President CAI says, India and China are the largest cotton economies, and signing this MoU will go a long way in resolving the issues faced by traders in both the countries.
This MoU will promote Indian cotton in China and cover the way for good trade practices and cooperation between both.
The Garment Manufacturers’ Association of Cambodia (GMAC) has officially launched the GMAC Human Resources Club to build a knowledge bank, share information, experience and expertise improve the industry. Kaing Monika, Deputy Secretary-General of GMAC, says the administration and human resources management of the industry are important. They are relevant to people management, policy, rules and regulations of the country. The club is open to all GMAC members. This is the part of the initiative to collect all industrial insiders at management level from the administration and human resources department of all garment, footwear, and travellers’ goods sectors to come together to exchange experience, knowledge, and information, he stated.
Members feel the club will play an important role to build more capacity for industry insiders. GMAC HR Club has also laid out some policies, training activities, knowledge sharing and information sharing that’s critical to improve the skills and make decisions in the job. He feels the club is important especially for those who have just joined at the management level as it helps to solve issues in the daily work.
Nou Mun, human resources manager of Master King, he is glad to be a member of the club as it will give him more experience and knowledge from the peers in the industry. Around 512 garment export-oriented factories, 59 footwear factories and 48 sub-contracting factories have come together to share experiences, information and knowledge for the improvement of the industry says Monika.
Bangladesh may permit foreign direct investment (FDI) in the readymade garment sector. Japan is particularly interested in investing in Bangladesh’s apparel sector both in high end and basic garments. Foreigners usually want to invest in high end fashion garments where local manufacturers hardly have any stake.
Local manufacturers oppose foreign investment in the apparel sector outside export processing zones (EPZs) fearing a chaos in the industry as foreign companies will employ workers paying higher wages compared to them. Over 300 foreign-funded apparel factories are being operated inside the EPZs.
When a joint venture factory offers wages higher than the government wage structure, workers in local factories also demand the same. Local manufacturers are not against allowing FDI in the apparel sector but they say foreigners should also invest in the backward linkage industry.
They reiterate that Bangladeshi manufacturers are good enough to invest in basic garments and don't want any competitor in these products. They add that they have built the apparel industry with great effort and over a long period and that any foreign investment would undercut their main competitive advantage, which is low wages.
Apparel is the main exports in Bangladesh. In fiscal 2015-16, Bangladesh’s earnings from the export sector was $31.21 billion of which over $28 billion was from apparels.
The global textile staple market is expected to expand at a CAGR of 4.9 per cent from 2017 to 2027. Growth in per capita spending in the Asia Pacific region will boost the textile staple market.
Textile components are widely used in transportation vehicles and systems including cars, trains, buses, airplanes and marine vehicles. The automotive sector is witnessing rapid development in China along with parts of Southeast Asia. In a fluctuating economic environment, the Chinese automotive industry has registered steady sales growth. Also, India’s economy is expected to grow at a robust pace in the coming years as most economic indicators predict a positive outlook towards the automotive industry, driven by strong consumer demand. This in turn will have a positive effect on the textile staple market during the forecast period.
China and other developing countries such as India are significant producers of textile staples. However, the region is slowly becoming an important consumer as well, because of consistent growth in incomes driving demand for textile staples. In recent years, there has been a rapid increase in household cotton consumption in developing regions than in other parts of the world. The increased penetration of organised retail is also likely to boost the consumption of textiles in domestic markets, especially in India.
Alessandro Zucchi is the new president of the Association of Italian Machinery Manufacturers (ACIMIT). He succeeds Raffaella Carabelli. Zucchi has many years experience in the textile machinery sector, and is currently managing director and a partner at Ferraro, a manufacturer specialising in finishing machinery. In addition, he is a shareholder in another company in the sector, Burocco Valvole, of which he is executive vice president.
Since 2015, he has been involved with ACIMIT’s delegation at Cematex, the Committee of European Textile Machinery Associations. ACIMIT represents 300 manufacturers, employing close to 12,000 people and producing machinery for an overall value of about euro 2.7 billion, with exports amounting to more than 85 per cent of total sales.
Along with the new president, the assembly also elected new vice presidents Federico Businaro (Isotex, Santex Rimar Group), Cristian Locatelli (Marzoli, Camozzi Group), Andrea Piattelli (Unitech) and Michele Riva (Reggiani Macchine).
Italy is the world’s second largest producer of machinery for the textile industry. In the production of machinery for tanning, and for the footwear and leather goods industry, Italy accounts for over 50 per cent of world production. A renewed climate of enhanced trust is currently perceived in the textile sector, triggered by the government’s commitment to enact a range of significant incentives for the country’s manufacturing system.
"The cotton supply situation is expected to improve in the next one year, supported by favourable weather conditions and prevailing remunerative cotton prices, which are expected to trigger an increase in cotton sowing for CY2018, highlights recent report on the Indian Spinning Sector by ICRA Ratings. A few initial weeks of the cotton sowing season have already witnessed increased acreage vis-a-vis last year and the trend is expected to sustain."
The cotton supply situation is expected to improve in the next one year, supported by favourable weather conditions and prevailing remunerative cotton prices, which are expected to trigger an increase in cotton sowing for CY2018, highlights recent report on the Indian Spinning Sector by ICRA Ratings. A few initial weeks of the cotton sowing season have already witnessed increased acreage vis-a-vis last year and the trend is expected to sustain. This is likely to be complemented by the forecast for normal monsoons, with the possibility of El Nino formation gradually waning.
As per ICRA estimates, domestic cotton output is expected to increase by 6 per cent to 36 million bales in CY2018. Says Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, “The expectations of higher output in the upcoming cotton season supported by increased sowing and a favourable monsoon forecast is likely to create a downward bias in cotton prices from Q2 FY18 onwards, vis-a-vis the peak levels witnessed during the past one year. This augurs well for the domestic cotton spinning industry.”
Withstanding challenges
The Indian cotton spinning industry has been facing twin challenges of subdued demand and high cotton fibre prices as a result of tight cotton availability since Q2 FY17. Amid a decline in exports to China and subdued domestic demand following the demonetisation drive, the growth in total spun yarn production declined to a five-year low in FY17. On demand side, the weak trend in production during FY17 was primarily due to a steep decline in cotton-yarn exports, which typically account for roughly one-third of India’s total cotton yarn output. The cotton yarn export quantity was lower by 12 per cent on a y-o-y basis, primarily driven by a steep decline in overall yarn imports by China.
“As the previous round of reserve cotton auctions in China ended, India’s cotton yarn exports recovered temporarily in Q3 FY17. The trend, however, was not sustainable as the commencement of fresh reserve cotton auctions in China from March 6, 2017 again resulted in a steep decline in yarn exports from India in the months of March and April 2017,” Roy added.
Despite the weakness in production and sales volumes, domestic cotton yarn prices continue to be firm following the high cotton prices. However, the possibility of a further increase in cotton yarn prices is low due to weak export prospects. Further, the likely downward bias in cotton prices from Q2 FY18 onwards may soften the domestic cotton yarn prices on a y-o-y basis. Given the weak prospects for exports, yarn demand is expected to remain subdued. Accordingly, capacity utilisation and hence, profitability of spinners is likely to remain range-bound at a modest level sustained during the past three years.
In a partial relief for manmade textile units, GST on texurising, twisting, weaving and yarn dyeing has been reduced from 18 per cent to five per cent.
But despite the relief, several looms and fabric makers will still have unutilised credit on their books, raising the cost of fabric by eight to ten per cent.
Partially oriented yarn, polyester filament yarn and staple fiber manufactured by virgin chips/granules are covered under the umbrella of manmade fibers and liable to be taxed at 18 per cent under GST. But other processes of textile yarn units, such as twisting, warping, doubling, dyeing, printing, bleaching, mercerising, texturing, multi-folding, cabeling, air mingiling, air-texturising, sizing etc, are not covered under the umbrella of manmade fibers. The job work rate of such processes at textile yarn units falls under the five per cent GST slab.
Merchant exporters who make garments and buy fabric or do all the processes outside will also suffer as the duty refund will have to bear the burden of unutilised credit. They will be at a disadvantageous position as compared to composite mills that do all processes in-house.
The textile industry has a pivotal position in the Indian economy. It is strong and competitive across the value chain. India has an abundant supply of raw material like cotton, wool, silk, jute, and manmade fiber.
The Southern India Mills Association (SIMA) has welcomed the GST era for the textile industry.It says a seamless tax structure for the entire cotton textile value chain is a great step forward.
With the implementation of GST, all indirect taxes would be merged. So far the textile industry had been suffering with numerous taxes and different types of cess which were not duty drawback compatible and therefore adding to the cost, thus making the industry uncompetitive especially the micro, small and medium enterprises and decentralized segments.
Various exemptions and loopholes in the laws enabled a major portion of manufacturers and traders in the textile value chain to opt for tax evasion by mis-declaration and by various other methods but that would end. The country, after independence, for the last 70 years was struggling with a complex tax structure, rigid and antiquated laws that were major stumbling blocks to achieve a sustained economic growth rate.
Tamil Nadu accounts for a third of the textile business in India. SIMA feels 2017-18 will be a good year for the cotton textile industry with a sound tax ecosystem and real time governance coupled with availability of surplus cotton.
SIMA now wants certain taxes and levies that are not subsumed in GST like the market committee fee and various other municipal taxes to be similarly scrapped.
