FW
The United States is the number one importer of Indian textile products. The European Union ranks second. While the US has a 17 per cent share of India’s total textile imports, the EU has a 15 per cent share. Global textile and apparel hubs like Bangladesh and China are also in the top five list.
The US, the EU and Bangladesh jointly have a share of 42 per cent in India’s total textile exports. Sri Lanka, Brazil, and South Korea figure among the top 10 textile importers from India.
India’s textile products face an average tariff of 5.9 per cent and 6.2 per cent in the US and the EU respectively. Bangladesh and Pakistan have nil tariffs on exports to the EU. When it comes to the US, Bangladesh has to pay 3.9 per cent tariff and Pakistan pays 5.3 per cent tariff.
Interestingly, 38 per cent of India’s exports of textile are to the rest of the world, which are not majorly known for their textile or apparel markets. India is the second largest textile exporter in the world. Cotton yarn and fabric account for over 23 per cent of India’s total textile and apparel exports.
For India the outlook for cotton and synthetic textiles is expected to remain stable for the year 2019. This is in view of stable cotton prices and improved consumer spending outlook in key user countries. Measures have been taken to curb imports and promote domestic manufacturing.
Basic customs duty has been raised from 10 to 20 per cent on several items including 298 manmade fabric lines, five silk fabric lines and 22 fabric lines. Antidumping duty has been imposed on import of linen yarn from China and nylon filament yarn from Vietnam and the European Union.
During April to October 2018, the rupee depreciated by 6.7 per cent as compared to the same period the previous year. Imports of intermediate goods viz. fiber and yarn have a share of 43 per cent in India’s overall textile and apparel imports. These are raw materials for manufacturing value added products and imports are primarily need-based.
The country’s textile and apparel imports stood at $7,339 million in 2018 as compared to $6,293 million in 2017. From April to October 2018, India’s textile and apparel exports were $22.9 billion as compared to $22.3 billion during the same period last year.
Oeko-Tex has updated its standards for chemical use in textiles and leather
The new regulations will come into effect on April 1 after a three-month transition period.
Important changes for companies that are part of Oeko-Tex’s various certification programs have the substance benzene and four amine salts being included in the Standard 100 by Oeko-Tex and Leather Standard by Oeko-Tex programs with limit values defined. The substance quinoline, which has been under observation by Oeko-Tex since 2018, is now also regulated with a limit value.
Limit values have been made stricter for Standard 100 by Oeko-Tex for phthalates (softeners), alkylphenols and alkylphenol ethoxylates, as well for perfluorinated and polyfluorinated compounds.
The even more stringent requirements for residues in textile materials will result in an overall lower impact on the environment, workers and consumers.
Standard 100 by Oeko-Tex is a worldwide consistent, independent testing and certification system for raw, semi-finished and finished textile products at all processing levels, as well as accessory materials used.
For over 25 years, Oeko-Tex’s strategy has not been to wait for legislation but to be proactive in the field of consumer protection as a pioneer.
Oeko-Tex’s STeP assessment will be extended to leather production facilities in 2019.
Moral Fiber, formerly Ambercycle Inc, is pioneering an eco-friendly polyester textile as part of its plan to combat marine plastic pollution. The business is also working on its first clothing collection. The polyester is the world’s first textile product made entirely from old clothing and was invented by Indian scientists Akshay Sethi and Moby Ahmed experimented on using microbes to break down polyesters and created a three step process.
The business is currently testing its three step textile process at a plant in Los Angeles and the plant itself is powered by incinerating left over materials from processing. Sethi and Ahmed also aim to switch to solar power to run the plant in the future.
By 2020, the business aims to start distribution of the textile. Made by extracting the polyester at a molecular level from mixed cotton-poly blend fabrics, the business produces a new yarn. The plant currently processes around 100 kg of fabric scraps a day and aims to scale up production. The business is also working on its first clothing collection using the eco-friendly fabric.
"Preferred by major consumer markets due to their cheaper costs, the Asia-based supply system is undergoing a major change. As a recent McKinsey Global Institute’s report indicates, large consumer markets are turning towards new and closer manufacturers."
Preferred by major consumer markets due to their cheaper costs, the Asia-based supply system is undergoing a major change. As a recent McKinsey Global Institute’s report indicates, large consumer markets are turning towards new and closer manufacturers.
US and European apparel companies had earlier shifted most of their production to China and other Asian countries to benefit from the low labor costs that these countries offer. However, these countries cannot satisfy the requirements for quick product delivery as it takes at least 30 days for a product to be shipped from Asia to the Western markets. Geopolitical tensions that increase trade restrictions and uncertainty in exchange rates also reduce the benefits of this model.
Geographical proximity gains importance
Assessing this situation, McKinsey Turkey Country Director Can Kendi states the textile and apparel sector,
earlier based on raw materials and labor-intensive production, has changed significantly due to globalisation, new technologies, brand and designs. Geographical proximity and technology are some of the other factors that have gained importance in the market. Taking these factors in account South East Asian markets like Turkey are emerging as a favorite production destination for these manufacturers.
Automation reduces delivery time
Products manufactured in the Asian countries for the European market can be delivered in 30 days by ship, whereas those manufactured in Turkey can be delivered between 3 and 6 days. Advanced automation in Turkey makes it possible to reduce apparel production by 40-70 per cent. Labour costs in Turkey were five times higher than in China in 2005; this difference decreased to 1.6 times as of 2017. Geographical proximity also brings significant savings in transportation, bringing production costs to lower levels.
Labour wages and production costs are increasing across Asia. For example, in 2005, the cost of labour in China was one-tenth of the cost in the US; but today it is one-third. Mexico, which is close to the gigantic US market, now offers lower labour costs than China. Although the costs of manufacturers close to the European market are still higher than China, this difference is decreasing. On the other hand labor costs in Turkey, which were five times higher than in China in 2005; decreased to 1.6 times as of 2017. Its geographical proximity also brings significant savings in transportation, bringing production costs to lower levels.
European companies can reduce their production costs by 3 per cent if they manufacture their apparels from Turkey instead of China. Automated production in Turkey is expected to provide between $1:30 to $2 cost savings per piece. It can also provide a margin improvement of between 3 per cent-4 per cent.
With a fall in output, India’s cotton imports will rise to a record high this year. Mills will be forced to import at whatever cost to keep their factories running. Exports are also expected to shrink. However, in view of the lower crop, if exports take place as estimated, prices of domestic and imported cotton will remain firm.
Prices in the international market have fallen sharply the past one month, which raises concerns about exports in the immediate future. However, prices in India are not falling in tandem. Global cotton fundamentals suggest world cotton prices are at seasonal low. However, there is a high chance that the benchmark US cotton futures contract has decoupled from the global cotton valuations as a direct consequence of the ongoing trade war.
If the last season’s low levels are breached, it would be due to factors outside the fundamentals of the commodity. The ongoing trade war between the world’s two biggest economies has brought the global economy on the verge of another financial meltdown. This has a direct bearing on cotton textile consumption and demand. If global cotton prices breach and sustain at last year's low levels, there is a high chance of this event materializing.
In such a scenario, if India’s exports also remain lower than estimated, imports will also not rise as mills will get domestic cotton.
Lenzing and Hyosung have collaborated on a new sustainable fabric collection. This new collaboration will showcase the sustainable benefits of the two companies’ leading brands, Tencel Modal from Lenzing and creora elastane from Hyosung, and offer brands and retailers new levels of performance and innovation.
The combination of natural softness, comfort and performance from Tencel and the power, fit and recovery of creora elastane offers customers new products for sports and leisure clothing with unrivalled sustainable credentials.
The collection offers Lenzing Ecovero with creora eco-soft for a softer touch, whiter whites and low heat settable for reduced energy consumption, Tencel Modal and creora PowerFit for smooth, natural feel with superior shaping and compression, and Tencel Modal and creora Black for breathable, softer touch and deeper black.
This innovative fabric collection delivers enhanced performance with products that use less energy and water and improved environmental care that today’s informed consumers demand. Collaboration is the way forward for the textile industry which seeks creative and performance solutions throughout the value chain and to meet changing market dynamics.
Hyosung is the largest elastane producer in the world. Lenzing is currently operating in a challenging environment. The group will put all its effort to readjust the execution of its growth plan to meet the strong market demand for its lyocell fibers.
Michael Kors, the 59-year-old designer acquired the luxury fashion brand Versace in September 2018 for $2.7 billion. His company, Michael Kors Holdings also officially changed its name to Capri Holdings and will trade under the new stock market ticker CPRI. However, despite its acquisition, Versace will remain Italian and retain its glamour, daring and inclusive attitude.
Michael Kors Holdings also purchased luxury footwear brand Jimmy Choo Ltd, for $1.35 billion in 2017 as part of his plan to break into the high-end fashion market. While Michael Kors is associated with all-American style and mass appeal, Versace is inextricably tied to Italian design and luxurious high-fashion flair.
According to design themes predicted by the home and contract textile tradeshow Heimtextil, to be held in Frankfurt from January 8 to 11, 2019, the urge to escape dominates textile trends in today’s digital world.
Three of the five trends: Seek Sanctuary, Escape Reality, and Go Off-Grid—focus on retreating from the chaos of everyday life. According to the report, a minimalist color palette with carefully selected structural details, curvy shapes, and upholstery gives rise to comfort and warmth in the Seek Sanctuary trend. In Escape Reality, shimmering iridescent surfaces combine with mother-of-pearl effects and high gloss for a surreal journey into an alternate world.
Chasing a return to the natural world, Go Off-Grid is all about outdoor textiles that are durable, sophisticated, and inspired by nature and its beautiful imperfections. The remaining trends, Pursue Play and Embrace Indulgence, focus on enjoyment via color and geometry—either playful and bold or soothing with a focus on high-quality, honest materials, respectively.
Apparel sourcing won’t catch a break in the coming year where costs are concerned. As companies look to scale back China sourcing to mitigate the impact of the US-China trade war, and higher tariffs and costs of uncertainty that have come with it, they’ll also be grappling with higher costs in alternative sourcing countries.
Vietnam, perhaps the biggest beneficiary of the US-China trade fallout, will see its minimum wage increase in 2019, adding costs for companies looking to find sourcing solace away from China. In Bangladesh, factory owners are working on the new pay structure and are expected to implement the wage hike in January. If so, it will mark a 51 per cent increase in labor costs for Bangladesh.
In October, garment workers in Cambodia got a seven per cent increase to their minimum monthly pay. The increase is smaller than the 11 per cent increase in October last year. However, conditions in Cambodia’s garment and footwear sector have improved, with areas like child labor and payment of wages showing progress, though sustainable change is still required. As of April this year, the minimum wage in Myanmar went up 33 per cent.
