FW
Realizing India’s potential as a future trade partner in the fashion industry, the Paul Alger, Director-International Business, UK Fashion and Textile Association (UKFT) has urged the government to strike a deal that would allow it access the £2trillion Indian market comprising 1.4 billion consumers.
The UKFT believes, such a deal would have a huge impact on the UK fashion and textile industry as India is not only the largest country in the Commonwealth, but also a part of the world with which UK would like to have an FTA. Also, India’s strong links to the UK and its proficiency in English language makes it the most likely beneficiary to the UK.
Protectionism hinders India-UK exports
However, the road ahead might not be easy as India is known for its protectionist attitude towards world trade, warns Drapers Online. The country
emphasizes on manufacturing its raw materials rather than importing them. This makes it very difficult for UK brands to export their materials to India.
Also, India’s business culture does not support fashion and textile imports. Several brands have had to either relocate their manufacturing to nearby countries or readjust production according to local demands. A case in point is menswear brand Simon Carter which could build a fantastic business in India only after adjusting to local production standards.
To increase exports of luxury goods to India, UK first needs to reduce its imports from the country. UK imports a lot of fashion and textiles from India which are taxed at 13.8 per cent import tariff rates owing to India’s status as the most favored nation.
Explore opportunities with other trade partners
To reduce tax rates, UK needs to explore more trade opportunities with other emerging economies like Pakistan and Bangladesh who benefit from the preferential tariffs on exports to UK.
Currently, UK companies are cautious about investing in India. A trade deal between the two will encourage more UK companies to do business with India. These companies can explore the Indian embroidery sector to boost its exports.
Experts feel, India-UK deal should focus on protecting British jobs and employment besides enhancing mutual trade between the two countries. It should also support British businesses and encourage them to step up their investments in India.
Walmart Inc has retained its top spot in market research organization Euromonitor International’s India Retail Rankings for 2020 with rival Amazon taking the second place.
As per Live Mint, the rankings of the Tata group dropped from five in 2019 to number six, while the Aditya Birla Group dropped from number seven in 2019 to number eight in the same period Euromonitor’s annual rankings were based on the value of goods sold by Indian retailers across segments such as grocery, apparel, lifestyle, and pharmacy from January to December 2020. Overall retail sales declined in 2020, the market research organization said, without revealing numbers.
Reliance Group, which runs Reliance Retail with presence across online and offline retailing in multiple categories ranked third, the same as a year ago. Avenue Supermarts, which runs the DMart chain of supermarkets, improved its rankings moving up to the fifth spot from sixth in the previous year. Paytm parent One97 Communications Ltd moved up one spot from its earlier rank.
The India-specific list is part of the ‘Top 100 Retailers in Asia 2021; rankings released by Euromonitor International. The report covered the overall retail industry in the Asia-Pacific including markets such as Indonesia, China, Thailand, Taiwan, Vietnam, and India.
India reported a decline in overall retail sales in 2020 after registering double-digit value growth over the last few years, the research organization said.
After a year of decline in 2020, retailing in India is set to report an “immediate strong rebound" to growth in current value terms in 2021, said analysts at Euromonitor. This, they said, will be driven by expansion led by large format stores and investments in e-commerce.
As per the British Retailer Consortium (BRC), British retailers reported a big boost in sales in May, after lockdown measures ended the month before and a relaxation of COVID restrictions on hospitality drew more shoppers into town centres.
Total sales among the consortium’s members, who include supermarkets and high-street chains, increased by 10 per cent last month than in May two years ago.
This was the biggest increase in sales compared with 2019 for any month since the start of the pandemic.
Compared with May 2020, when most non-food retailers were shut due to lockdown restrictions, total sales were 28.4 per cent higher.
Sales of clothes, shoes and furniture benefited from shoppers being able to view goods in person since non-essential retailers were allowed to reopen in April after months of closure, said BRC.
Relaxed restrictions on socializing also encouraged shoppers to buy new summer clothes.
Payment processor Barclaycard, which sees almost half of credit and debit card transactions, said consumer spending was 7.6 per cent higher than in May two years ago.
However, spending at restaurants declined by 54 per cent while that at pubsand bars declined by 19 per cent from two years. Foreign travel remains highly restricted. Spending with airlines was 74 per cent lower than in May 2019, little better than April.
The government has permitted export units in Tirupur to resume operations in compliance with COVID-19 guidelines. The government has allowed export units and their vendors to operate with 10 per cent workforce. Welcoming the decision, Raja Shanmugham, President, Tirupur Exporters Association said, exporters in the city have decided to focus on completing pending orders and preparing samples. Other industries in the garment cluster, like knitting and dying also plan to simultaneously resume operations within a few days
On the other hand, Tirupur Exporters and Manufacturers’ Association (Teama) has advised members against resuming business for a week. GR Senthilvel, Secretary said, the association can make alternative transport arrangements even if exports are delayed for a week. Meanwhile, the South India Spinners Association (Sispa) has urged chief minister MK Stalin to allow them operate spinning mills with workers staying on mill premises.
Industry insiders and industry watchers strongly believe Indian manufacturers, especially small and medium-size, should focus on small/emerging buyers or buyers having small orders and high stock keeping capabilities, as they are not preferred by other apparel exporting countries. Such buyers wish also to source more from India, mostly because of flexibility in order sizes and production capabilities.
As per Apparel Resources, there are thousands of buyers who source less than $1 million annually from India. There is also a segment of retailers that have their liaison offices in India but their sourcing from India is only around $1 million or even less on an annual evaluation. A case in point is Netherlands-based The Sting Company, known for its men and women products, which owns around 160 stores with a turnover of €400 million but its sourcing from India is just Rs 50 crore. Indian MSMEs should tap such companies regularly as they provide good round-the-year business for small manufacturers, say experts.
LVMH is partnering award-winning environmental not-for-profit Canopy to explore its Pack4Good (packaging) and CanopyStyle (fashion) initiatives to transform supply chains, save forests, and bring alternative NextGen Solutions to the mainstream. By exploring these initiatives, LVMH aims to prevent its paper, paper packaging and fabric making factories from using fibers made from world’s ancient and endangered forests by the end of 2022.
LVMH also aims to influence its supply chains to protect the world’s remaining forests and endangered species habitat and forward the Free, Prior and Informed Consent of communities and Indigenous rights and title. LVMH and its maisons will also support the development of Next Generation Solutions such as smart designs and use of agricultural residues, recycled textiles, and microbial cellulose to manufacture paper, packaging, and textiles instead of endangered forest fiber.
LVMH’s commitments will contribute significantly to the transformation of unsustainable supply chains and the development of life-affirming value chains.
The International Islamic Trade Finance Corporation (ITFC) and the United Nations Industrial Development Organization (UNIDO) have partnered to develop new projects in the industry. One of these projects has been initiated by the Better Cotton Initiative. It aims to revive the Egyptian cotton industry by supporting growers to cultivate sustainable cotton. ITFC and UNIDO will undertake this project to ensure that Egyptian cotton sector remains resilient with increased production, easier access to finance and an enhanced safe operating environment for workers.
Through its strategic partnership with ITFC, UNIDO will also promote industrialization, trade, and sustainable development for common member countries towards achieving the Sustainable Development Goals in general and SDG 9, in particular, says Li Yong, Director General, UNIDO.
UNIDO will also participate in the development of the second phase of Aid-for-Trade Initiative for Arab States (AfTIAS 2.0). The initiative aims to enhance the environment for international trade in the Arab region by making it more efficient and inclusive, thereby creating opportunities for employment and contributing to sustainable development.
India and Australia plan to resume negotiations to renew the Comprehensive Economic Cooperative Agreement (CECA). As per Apparel Resources, the agreement will boost India’s apparel exports to Australia by $500 million. Besides having preferential agreements with China and Vietnam, Australia also gives GSP benefits to Bangladesh, resulting in a 5 per cent duty advantage for these countries vis-à-vis India.
In fiscal 2021, India’s exports to Australia had been priced at $4.04 billion, while imports were priced at 8.24 billion. Australia imports around $6.6 billion worth of apparels from across the globe. However, India’s share in these imports is just 1.2 per cent. The resumption of trade talks is likely to boost these figures. .
Last month, EU and India had agreed to restart the free trade agreement to strengthen the economic cooperation especially amidst the fast growing influence of China. On India’s production-linked incentive scheme geared towards strengthening manufacturing within the nation, Tim White, Commerce and Funding Commissioner, Australia, said the deal might boost India’s infrastructure sector.
As per a report by Fash465, more US apparel companies are consolidating their existing sourcing base more than they did during the pandemic. Nearly half of the top 30 US apparel companies have either sourced from fewer countries or worked with fewer vendors in 2020 than 2017-2019 before the pandemic. In comparison, only about one-third of respondents sourced from more countries in 2020 than two years.
As per the report, the consolidation strategy of these US apparel companies focus on forming a closer relationship with key vendors and ensuring social and environmental compliance. Apparel companies are leaning more heavily on suppliers that have proven to be reliable, capable, and flexible. They are working closely with these suppliers to build an efficient and trust-based supply chain, the report adds.
Companies are also cutting ties with vendors not adhering to government mandates and proprietary codes of conduct. They are also diversifying away from China to its competitors in Asia. In response to COVID-19 and the new business environments, US brands and retailers are also committing to innovations in sourcing and supply chains.
A recent ranking of UK's 18 most influential high street and online fashion retailers by the Alva Group portrays a sad picture of the labor practices and supply chain worker conditions across brands with half of them generating a negative impact. It states, the ranking contains an overall ESG score for each company based on information across 10 metrics. It covers issues such as diversity and inclusion, community relations, labor practices, product safety and quality and environmental impacts. The ranking derives the data for performance on these metrics rom a range of sources, including brands’ own reports, investor relations, government inquiries and NGOs.
As per these rankings, while brands have made strong progress on employee engagement, diversity and inclusion and community relations in recent months, most of them lag on labor practices and safety. According to the rankings reports, Primark and Boohoo Group are the worst performers with Boohoo Group being at the centre of a worker rights scandal in recent months.
Other brands scoring below the league table’s average were H&M Group, Next and TK Maxx’s parent firm TJX Companies. These firms, along with Boohoo Group and Primark, were deemed by Alva to have a net negative impact on ESG issues. Brands that failed to meet the sector average but recorded a positive score were New Look, ASOS and Frasers Group, the parent company for Sports Direct.
In the report, Alva warns that issues regarding labor practices and product quality and safety are becoming more visible to investors and consumers in the current context.
