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For the quarter ended June 30 Welspun India’s consolidated net profit rose 2.4 per cent. Total income during the quarter under review was up 1.6 per cent. The volume growth of eight per cent was mostly offset by a change in drawback rates resulting in a reported growth rate of 1.6 per cent.
The numbers were also impacted by an increase in cotton prices. Cotton and equivalent yarn make up for 45 per cent of the company’s cost. Cotton costs have increased substantially, from Rs 42,000 per candy to Rs 48,000 per candy.
The textile firm sees positive growth momentum in volumes and is confident of achieving its annual guidance for revenues and profits. Welspun continues to pursue its differentiation strategy based on branding, innovation, sustainability and its patented traceability solution.
Welspun India, part of the Welspun Group, will invest Rs 900 crores this year as part of its plan to set up a flooring textile facility in Telangana. The textile company has already invested Rs 70 crores of the total outlay in the first quarter of the year. The facility for flooring solutions is the first of its kind in India. The facility will be commissioned by December 2019 and is spread over 27 million sq ft.
The US is looking at rejoining the Trans-Pacific Partnership (TPP). The main aim is to counter China. The US intends to renegotiate the trade pact and sign revised free trade agreements with Japan, South Korea and Canada. TPP was proposed in 2010. As a multilateral trade framework outside the World Trade Organization, the TPP intends to further reduce tariff barriers and enhance unified market rules including intellectual property protection.
The trade pact was widely seen as a way to press China into further lowering tariffs, opening markets and complying with rules drafted by developed nations. However, the US decided to withdraw from the TPP in January this year. Also the United States and the European Union have agreed to avoid an all-out trade war and work towards zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.
The EU also plans to buy more US liquefied natural gas and soybeans. Both sides will also iron out disputes on steel and aluminum exports. The US is likely to sign trade pacts with other trading partners, including Japan, South Korea, and Canada. These agreements among developed nations would represent nearly 90 per cent of the global economy. In this way the US hopes to force China to make more concessions in lowering tariffs, reducing subsidies, opening up markets, and enhancing intellectual property rights protection.
Having spent $21.6 billion on Vietnamese products in the first half of the year, the United States remains Vietnam’s largest export market accounting for 19 per cent of the country’s total export value as of July 15.
However, the US now wants Vietnamese export businesses to improve their capacity and build new supply chains. In addition, Vietnamese enterprises need to expand scale and automate production line to ensure quality and quantity of supply. Also, the government needs to issue guidelines to minimise administrative costs and support enterprises through trade promotions.
The US also wants the National Trade Promotion Programme to identify players capable of adapting to the market, maintaining partnerships, being socially and environmentally responsible, building branding and sustainable development. In addition, changes to US trade policies need to be quickly understood in order to develop appropriate solutions to assist enterprises as they shift their production and business strategies in order to maintain their export advantage in the market.
Việtnam must also step up the process of building a fair and transparent legal system. This was a key factor to attracting foreign investment and creating favourable conditions for domestic enterprises to develop.
The United Kingdom has expressed interest in joining the revamped TPP trade deal, even before the 11 nation agreement has been ratified. Now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership it’s expected to come into force next year.
Japan and Mexico have ratified the treaty and it needs another four other signatories to ratify before it starts. The UK first wants to seek free trade deals with the United States, Australia and New Zealand. It sees these as crucial and strategic economic relationships that must continue on a sound footing after Brexit. It then wants to go further and break new ground and be at the heart of the world’s fastest growing region and be part of the CPTPP. This covers markets across the world from Canada to Chile, Mexico to Vietnam. The agreement reduces 95 per cent of tariffs along with other barriers to trade.
The UK is seeking public feedback on the idea, wanting to prevent its isolation from the rest of the world after it exits the European Union. South Korea is said to have contacted multiple members about joining, while Taiwan, eager to counter mainland China's push for its own trade sphere, has shown interest as well.
The Kerala government’s plan to implement a package to modernise and revive the ailing textile sector has failed to start. The government, despite resuscitating and taking over sick public sector undertakings, had not made any serious initiative for implementing the package.
An expert committee headed by P Nandakumar recommended a one-time fund infusion of Rs 494.81 crore of which Rs 317.89 crore was capital investment and Rs 176.92 crore was working capital — for reviving the 17 mills in the public and cooperative sectors.
The 17 mills together offer direct employment to 5,000 persons and indirect employment to 15,000 persons. The package had suggested a slew of reforms to give a fresh lease of life to the mills and optimise its employment potential. Implementation of the package is expected to address problems thrown up by demonetisation, inherent problems plaguing the sector such as lower capacity utilisation, and outdated technology.
Import of manmade fibers and yarns by India have risen since June 2017 when the goods and services tax was implemented. Import of polyester staple fiber and viscose staple fiber increased five per cent and 20 per cent respectively during the financial year 2017-18 including a similar increase in imports of other products in the polyester value chain.
A considerable drop in import duty was observed after implementation of GST, which encouraged cheap imports. This has come as a great relief to domestic manufacturers. The revision in import duty is positive for domestic polyester manufacturers. The demand for low price polyester has been constantly increasing which is expected to continue in the future as well. Thus the increase in import duty is expected to benefit domestic players at large.
In case of polyester spun yarn, viscose spun yarn and nylon spun yarn imports, the increase was 94 per cent, 526 per cent and 15 per cent, respectively, which is impacting domestic manmade fiber and yarn manufacturers in a big way. Indian polyester manufacturers including Reliance, Filatex and JBF have added heavily to their existing manufacturing capacities.
Indian traders in the textile value chain were importing a lot of apparel from Bangladesh due to the low labor cost there, the low customs duty.
Jeanologia will to introduce a new capsule collection called ‘Made in India’ at Denims and Jeans India show to be held on August 1-2, 2018. Produced through completely digital methods by using a combination of technologies, the collection offers a premium and commercial product at a competitive price while respecting the environment and workers’ health.
Jeanologia will also participate in ‘The dawn of a new era in denim’ panel, on August 2, 2018 where it will discuss the benefits of a digital revolution in bringing a radical change to denim production and making the whole production process sustainable and eco-efficient.
Operating in India for last 14 years, Jeanologia promotes the use of sustainability in the production of jeans in India. Nowadays, over 80 per cent of the sustainable production of garment finishing is done by this company. The company, owning to its experienced local technical service, is able to cater to its clients’ needs in a fast and efficient way.
Both the US and Indonesia have agreed to boost bilateral trade to $50 billion in the next few years, from nearly $26 billion last year. According to Geneva-based International Trade Centre, Indonesian goods and commodities accounted for only 0.88 per cent of overall American imports in 2017. Indonesia's annual exports to the US contracted 3 per cent between 2013 and 2017. In April last year, the Trump administration released a list of countries with which it has considerable trade deficits. Indonesia ranked 15 out of 16 countries.
Indonesia and the US trade complementary goods and commodities. In 2012, American airplane maker Boeing signed a $22.4 billion deal - its largest ever commercial airplane order - with Indonesia's Lion Air, the country's largest carrier by passenger volume. The Trump administration's move to impose 25 per cent import duties on steel will eventually push up aircraft production costs in the US.
Indonesia has benefited from significant tariff reductions under the Generalised System of Preferences (GSP) scheme since 1980. Last year, for instance, the facility led to reduced tariffs on $1.9 billion worth of Indonesian products. The trade delegation is expecting to expand its economic relations with the US through investments in areas such as the aviation sector.
HP Link Fashion, a trading and sportswear manufacturing company based in Vietnam, plans to expand its operations in India. The company believes new regulations in sportswear alongwith growing health consciousness among Indians have made the country a very attractive market. The Indian sportswear sector grew at an impressive 22 per cent in 2015-16, outpacing the 7 per cent surge of the segment globally. The segment, by 2020, foresees a growth of another 12 per cent compound annual growth rate.
By 2020, it foresees a growth of another 12 per cent CAGR. Additionally, India is set to be the world’s youngest nation by 2020 with 64 per cent of its population expected to be in employed group. This too is likely to provide a fillip to the market.
Indian companies are finding it beneficial to operate from Ethiopia. Some big textile and garment manufacturers have entered the African country in recent times, these include Raymond and Arvind.
Arvind has set up seven apparel factories at Hawassa Industrial Park in Ethiopia, covering a total area of 13.5 acres. Arvind has two more factories in Ethiopia outside the park. These facilities export products to the US and Europe. With the new facilities in the industrial park, the total output would go up to 30 million pieces of garments.
Several Tirupur-based garment manufacturers are also attracted by the prospects in Ethiopia. These include: SCM Garments, the export arm of Chennai Silks, Jay Jay Mills, Best Corporation and KPR Mills.
SCM Garments is setting up a 500-machine garment unit in Ethiopia. Best Corporation is also setting up a 1,000-machine factory at Rs 30 crores. Power and labor is cheap in Ethiopia. Moreover, Ethiopia has become proactive towards attracting investments. It offers a plug and play facility for investors and provides all infrastructure amenities, including buildings.
While exports from India invite duties ranging between 12 to 15 per cent, and in some categories, up to 25 per cent, Ethiopia has secured easy access to major markets like the US, Canada and the EU at lower or nil duty.
