FW
The Philippines is aiming at a free trade agreement with Turkey. The aim is to help revive the garment industry and take advantage of Turkey’s weak currency. The Turkish lira has suffered a major beating following the country’s trade standoff with the United States. The Philippines sees this is an opportunity for garment manufacturers because Turkish textiles have become more price competitive with the depreciation of the exchange rate.
The free trade agreement could introduce a zero-tariff regime. Rates are between 10 and 20 per cent currently. Since the abolition of textile quotas by the World Trade Organization in 2005, garment and textile enterprises in the Philippines which relied on quotas faced difficulties leading to closure of factories and downsizing.
Spinners, who turn raw material to yarn then to fabrics for garment factories, have dropped in numbers. Out of more than 30 spinner companies, only two have remained. At present, 39 per cent of the industry is composed of exporters, and 61 per cent is subcontractors, which include small contractors catering to garment exporters, or backyard businesses.
The industry is gearing up to jumpstart its resurgence and gain back its reputation as a competitive player in the domestic and international markets.
The Bangladesh readymade garment industry is undoubtedly safer, and lives have been saved. After the 2013 Rana Plaza tragedy, global apparel brands no longer ignore dangerous working conditions at their supplier factories.
The Bangladesh Accord on Fire and Building was an unprecedented, independent, legally binding agreement between trade unions and brands. Expert fire and building safety engineers working for Bangladesh Accord have inspected more than 1,600 factories making garments for over 200 brands and retailers. Initial inspections identified 1,18,500 fire, electrical and structural hazards of which 84 per cent have been corrected. The Accord training team has conducted 2,838 safety committee training sessions with workers at over 1,000 factories.
Five years on, Bangladesh Accord stands as a model for industrial relations, and shows that brands and unions can work together to solve systemic problems. However, the work of the accord, which expired at the end of May 2018, is not complete. Too many life-threatening hazards at supplier factories remain, which is why more than 180 brands have signed the new Transition Accord.
This accord has greater scope to cover home textiles and footwear and, crucially, gives more power to workers. The new agreement recognises workers are not peripheral to the due diligence process, but core to it. It upholds the importance of freedom of association in ensuring workers have a genuine say in protecting their own safety. It will also establish a training and complaints protocol to ensure that this right is respected.
Kornit’s direct to garment machines, inks and consumable spare parts and other relevant products will now be distributed in India by Arrow Digital, which will also provide service and application support to Indian customers. Kornit is a digital textile printing company. It’s looking at increasing its presence in India’s the digital printing segment. Kornit’s portfolio of direct-to-garment products is the perfect fit for its aggressive growth strategy in the digital textile market. Its goal is to continuously improve its customers’ experience in every aspect. Expanding its network of sales and support personnel and being close to where its customers are located is a key initiative towards achieving that.
Arrow Digital is a distributor of materials and equipment for the digital printing and cutting markets. Arrow aims at taking the direct-to-garment market to the next level, combining its support and expertise with Kornit’s cutting-edge technology for this segment.
The Indian garment industry, with the rise in the skilled labor market, is now moving towards mass customization. Also people are now switching from screen to digital printing. Green technologies, better quality and on demand short runs are now the trend. Social media and e-commerce are contributing to the demand for digital technologies.
Indorama is investing in modern cotton and textile production in Uzbekistan. This will include the cultivation of raw cotton, corn, or another crop on crop rotation basis. It also includes the organization of deep processing of raw cotton and the production of cotton yarn.
Indorama, based in Singapore, is one of Asia’s leading chemical holding companies. It started in 1975 as Indo-Rama Synthetics, which was a yarn spinning company and manufactured cotton yarn. During the 1990s, the company diversified into the production of synthetic spun yarns and polyester fibers. Its strategy to drive sustainable and profitable growth in both high-volume necessities and the stable but high margin and high value-added HVA business continues.
Currently, Uzbekistan is the world’s sixth-largest cotton producer among 90 cotton-growing countries. It produces about 3.5 million tons of raw cotton annually and 1.2 million tons of cotton fiber annually.
Uzbekistan accounts for about six per cent of global cotton production and about 50 per cent of the cotton fiber produced is shipped for export. One of the policy priorities of Uzbekistan is further development of its textile industry. Uzbekistan takes consistent steps to increase the volume of cotton fiber processing. Investors from Germany, Switzerland, Japan, South Korea, the USA, Turkey and other countries have invested in its textile enterprises.
Following China’s trade war with the US, India can export more cotton, corn, almonds, wheat and sorghum to China. In fact, there are at least 100 products where India can replace US exports to China by benefiting from the higher import duty China has imposed on products originating in the US.
Fresh grapes, cotton linters, fluecured tobacco, lubricants and certain chemicals, including benzene, are a few products which the US has been exporting to China. India too has been exporting these products to China but now there is scope for India to increase exports of these products because of the tariff differential and the substantial demand in China.
While China has imposed 15 to 25 per cent tariff on these goods coming from the US, other countries are subject to a five to a 10 per cent duty. Moreover, India has been granted additional duty concessions under the Asia Pacific Trade Agreement, making its exports more competitive.
Corn is of specific interest to India as the country is a huge corn exporter. While American corn is subject to 25 per cent duty, APTA countries can get up to 100 per cent concessions on corn exports to China.
Cotton industry experts say, the cotton season in Gujarat is likely to affected due to irregular rains. The season is likely to begin a month late. Even the plants are likely to be smaller than the normal. Some places in the state received high and some had poor rains. This has affected the growth of cotton plant.
As per the data of Gujarat Agriculture Department, cotton sowing in the state has reached over 2.71 million hectares, about 2.33 per cent higher than last year’s 2.65 million hectares. Though, sowing has increased, it is much lower than industry expectations. Normally, the new cotton season in Gujarat begins in October and ends in September every year, but this time the season is likely to start from October end or in November due to abnormal monsoons in the state.
In fiscal 2018, Bangladesh’s readymade garment exports to India were up 115 per cent compared to exports in fiscal 2017. Of the total amount, earnings from knitwear products were 89.75 per cent higher than the same period a year ago. Earnings from woven products were up 124.79 per cent.
Also, since India has raised duties on clothing imports from China, this has opened an opportunity for Bangladesh readymade garment exporters. India has doubled import duty on about 328 textile and apparel products from China. As a non-traditional export destination, India is a potentially great market for Bangladesh. It is logical if India’s textile products imports from China decrease, Bangladesh can grab the space.
Since India has a large population and a growing middle-income group, there is scope for exports from Bangladesh to Indian markets to see a sharp rise. Bangladesh already enjoys duty and quota-free market access to Indian markets. Now Bangladesh manufacturers have to develop good relations with global retailers, who are opting to open outlets in India. Non-tariff barriers are a great challenge for Bangladesh in penetrating Indian markets.
In the last fiscal year, Bangladesh’s export earnings from the apparel sector were 8.76 per cent higher compared to previous year earnings.
Readymade garment manufacturers from Bangladesh and Sri Lanka teaming up to develop eco-friendly jute-based garments with help from a design school. Known to be competitors in the apparel industry, Sri Lanka and Bangladesh are currently discussing how the clothing market is evolving beyond polymer. These have reportedly been initiated by MAS’ Mahesh Amalean and Brandix’s Ashroff Omar, the two largest apparel exporting companies in Sri Lanka with operations in India, Bangladesh, Vietnam and the USA.
The discussion between industry leaders of the Sri Lankan and Bangladeshi apparel sectors is a positive sign on increasing trade between them. Manufacturing jute-based apparels would undoubtedly result in an expansion in Sri Lanka’s apparel sector into other markets of South Asia. Foreign companies interested in doing business in Sri Lanka could explore opportunities in the country’s apparel sector and also look at setting up base to venture into the Bangladeshi apparel sector.
Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA), has urged Prime Minister Imran Khan to declare ‘export emergency’ in the country to control the decline in export sector. Pakistan’s current account deficit surged over 40 per cent in fiscal year 2018-19 to $18 billion. Low export is a major reason for the growing trade deficit, with the prime minister forming committees to address the deficiency. Value-added textile exporters want the federal government to formulate separate policies for various sub-sectors of the textile industry in order to resolve their sector-specific issues and problems.
As per Sheikh Luqman Amin, Senior Vice-Chairman, PRGMEA, different sub-sectors of the country’s textile industry cannot be treated equally due to their varying needs and requirements. Hence, the new government and textile ministry should formulate separate policies for the value-added and other sub-sectors of the industry in order to facilitate improved production and export.
Amin believes value-added textile exporters are facing a severe problem in meeting the export orders due to multiple reasons. These include: seeking the attention of the government on issues of ease of doing business; cost of doing business, one window operation, minimum interference of bureaucracy and formulation of a counsel of all stakeholders to resolve the issues of exporters. He stressed on the need for early clearance of outstanding refund cases.
"As India aims for 20 per cent yearly growth in exports over the next decade, Indian manufacturers need to develop a business strategy that can help the country to succeed in the US and European markets. In 2025, global trade in the textile and apparel market will cross $1.2 trillion. China has nearly 40 per cent share in global exports. However, in the past few years, the country is experiencing a downward trend in apparel exports and has vacated nearly $30 billion worth of space in global trade. Growth in global trade and China’s shrinking exports share present a lucrative opportunity for other countries with competitive manufacturing facilities. India can become one of the biggest gainers in the changing landscape of global apparel trade. Drip Capital offers insights into some of the intriguing aspects that can make India a global textile destination."
As India aims for 20 per cent yearly growth in exports over the next decade, Indian manufacturers need to develop a business strategy that can help the country to succeed in the US and European markets. In 2025, global trade in the textile and apparel market will cross $1.2 trillion. China has nearly 40 per cent share in global exports. However, in the past few years, the country is experiencing a downward trend in apparel exports and has vacated nearly $30 billion worth of space in global trade. Growth in global trade and China’s shrinking exports share present a lucrative opportunity for other countries with competitive manufacturing facilities. India can become one of the biggest gainers in the changing landscape of global apparel trade. Drip Capital offers insights into some of the intriguing aspects that can make India a global textile destination.
The prerequisites
Today, fair trade has become a prerequisite to sustain globally. Fair trade advocates expect that everyone in the
value should earn enough to fulfill basic household needs, regardless of volatile market prices. Environment sustainability is also a big concern and consumers in the West want products that are made judiciously. Indian manufacturers can stand out by positioning themselves as practitioners of Fairtrade. Environmental stewardship and labour-friendly working conditions can become India’s USP.
If India is to achieve close to 20 per cent yearly growth in apparel exports, manufacturers have to invest in skills training and process improvement to match global competitiveness. In recent times, there has been increased focus on skill development but these initiatives need to scale up. If the Indian garment industry remains at same productivity levels, they would need 35 million more workers to fulfill the new demand, which is nearly impossible. The objective should be to match the productivity levels of China in a few years, average output per hour and per machine output both in terms of quality and quantity. Indian policies make it difficult to import the fabric needed to produce winter or some specific garments. Locally, the textile industry is focused on cotton which leaves the exporters with no material to produce such products. This policy to protect the demand for local cotton producers is perhaps doing more than good.
