FW
The textile sector nearly came to a standstill in the first few weeks after demonetization. As an after effect, many small garment units were unable to pay wages to workers and production. However, with the situation improving steadily and the Union Budget coming up, the industry is optimistic about the year ahead. What Arun Jaitley announces on February 1 will determine whether the industry’s optimism is warranted.
A Sakthivel, Chairman, Federation of Indian Export Organisations and textile industry veteran says, the industry does not expect too many sops from the Budget. After the big Rs 6,000 crores special package announced last June, the industry does not expect major sops. The two key demand from the industry, submitted to the government, concerns the Goods and Services Tax (GST).
Analysts say the industry is lobbying hard for export tax exempting. Another issue is that a lot of products are transported right through production. Something goes for printing outside of the primary factory and then comes back. The government should exempt the industry from the tax as well, Sakthivel felt.
Others however, have more specific suggestions on what the budget’s thrust should be. V D Zope, Chairman of The Textile Association (India), stressed that more focus needs to be put on the garments segment, to boost exports. The industry should also push for more polyester cotton consumption, he believed. But more important is what Jaitley is expected to give to exporters. Vope says, the focus should be on exports and more incentives needs to be given.
Gokaldas Exports, a well know manufacturer and exporter of men’s, women and children’s apparel and outerwear, has entered into a MoU with the government of Andhra Pradesh for setting up of four apparel manufacturing units in the next three years in Chittoor District. This will involve an investment of approximately up to Rs 200 crore which is likely to generate approximately 5,000 new jobs.
The company says the investment is however, subject to terms and conditions as requested and sought by GEL including appropriate infrastructural support and relevant incentives and subsidies being made available to GEL with the government of Andhra Pradesh.
In terms of skill base in the garment industry, Pakistan is way behind Sri Lanka and Bangladesh, Firoz Rasul, the president of the Aga Khan University, says. He was speaking as the chief guest at the 17th convocation of the Textile Institute of Pakistan (TIP) held at, Bin Qasim (Ghakkar Phatak). Rasul said he admired TIP’s work, significance and its impact. He added that textile was one of the most important sectors of the country and considered the backbone of Pakistan’s economy.
Pakistan was the eighth largest exporter of textile in Asia, fourth largest producer of cotton and third largest consumer of cotton in the world. It is also the world’s second largest cotton yarn exporter and third largest cotton cloth manufacturer and exporter, he informed. He appreciated the fact that the sector provided employment to about 40 per cent of the industrial labour force and accounted for eight per cent of the total GDP.
However, Pakistan lacked quality and innovation in engineering and technology development. Rasul also highlighted the energy crisis, shortage of gas supply and power cuts for the reducing number of textile mills in the country. He observed production capability was low because of obsolete machinery and technology while in the long term, cotton as a crop would not be viable in Pakistan with its scarce water resources.
Denim designer Maurice Malone of Williamsburg Garment Company (WGC) believes the US garment manufacturing industry is poised for growth driven by small to mid-sized brands. WGC is an American denim brand manufacturing in US Malone is a 30-year veteran of clothing design and production. WGC is doing its part to drive American infrastructure as it expands into manufacturing its own knit products and establishing a manufacturing line for others to utilize.
On why denim manufacturing has moved overseas, Malone says it was not fair to say automation and foreign production didn't erode the American garment manufacturing industry, on the contrary it were manufacturers themselves. The goal of corporations is to maximize profits for investors. In contrast this was against the Chinese philosophy of keeping people working by choosing larger volumes for smaller margins while sacrificing higher profit per piece.
On why manufacturing units moved overseas, the Malone opines Americans almost always choose to buy cheaper textiles than buying American. That is why American producers not claiming the luxury sector must find ways to steam line production process and offer a better product at competitive prices as per the WGC goal. Consumers seek lower cost products, companies move production to lower cost areas to stay competitive. This happens even if people want to see products made in America.
Aiming to reverse the snowball effect, Malone believes Americans should start small and develop their own production chains within the US. This would help reverse the outflow. For consumers, the goal of the manufactures must be to produce reasonably priced, completive goods.
Is it possible to grow an exclusive brand in the digital world? That in short is the whole idea of a debate staring at the luxury fashion industry where growth has slowed. This at a time when digital technologies have allowed other sectors to expand globally. The mood in the luxe sector is grim. Global volatility and stock market uncertainty have led to an overall slowdown. A report by McKinsey and London-based publication Business of Fashion last month revealed, nearly 70 per cent of surveyed fashion executives, investors and industry observers believe conditions for the industry have become worse.
According to Achim Berg, a lead author of the McKinsey report and leader of the firm’s apparel, fashion and luxury practice, the key message is that 2016 was a really bad year for the industry, probably the worst one since the financial crisis. That was especially true for the luxury part of the industry which was a bit surprising because everyone knew that the year gone by was bad. But it was never expected to be so bad.
Some brands have turned to new technologies to connect with an increasingly digital consumer who demands immediate gratification, quick service and ever-new ways to interact with old brands.But the luxury world, by its very nature, can seem out of place with trends in today’s marketplace.
Many brands are trying anyway, though for now success seems limited. The McKinsey and Business of Fashion report forecasts annual online sales of luxury fashion will increase fourfold to 12 per cent of total sales in 2020 from an anaemic 3 per cent in 2010. Perhaps no other innovation has garnered more attention in recent years than the “see now, buy now” process in which a designer’s collection is presented on a fashion show runway to the usual select cadre of press and retailers, but also streamed on the web.
In a move that could help further development of Cambodian apparel industry, Phnom Penh, the capital of Cambodia was host to an exhibition and conference for a visiting delegation of Bangladesh companies. Talking on the occasion, Abdul Ahmad, President of the Federation of Bangladesh Chambers of Commerce and Industry said there are several opportunities for investment and trade in various sectors for each member of the Bangladeshi delegation. In fact, they were eager to hear from Cambodia on what it can offer and where Bangladesh companies could invest.
Bangladesh’s envoy to Cambodia, Saida Tasneem said although trade between the two countries was minimal at just $6.7 million per annum, there was potential for cooperation between the countries which could benefit both.
Kumar Mangalam Birla, owner of diversified conglomerate Aditya Birla Group has increased his shareholding in Aditya Birla Nuvo by purchasing shares from minority investors including 3.86 per cent from Anil Ambani-owned Reliance Mutual Fund for Rs 775 crores. The merger will make Grasim one of India's largest diversified companies with a healthy mix of business with steady cash flows and long-term growth opportunities.
The plan includes listing the financial services company, with Grasim owning 57 per cent, the promoters 16.6 per cent and the rest by the public. With this, Aditya Birla Nuvo will merge with Grasim Industries. The stake purchases that boosted Birla's holdings to 62.77 per cent from 58.39 per cent, invited criticism from proxy advisory firms and local investors, who said it was against interests of minority shareholders. Reliance MF, the second-largest shareholder after Life Insurance Corporation of India, sold almost its entire stake.
Birla's unlisted private firms Turquoise Investments & Finance and IGH Holdings bought about 57 lakh shares between December 2016 and January 2017. Apart from Reliance Mutual Fund, the identity of the other sellers could not be ascertained. It has been also noted that the acquisition is part of its plan to increase shareholding in group companies under the creeping acquisition route allowed by the Securities & Exchange Board of India.
For companies in the textile chain that want to analyze, certify and optimize their production sites in terms of sustainable and socially responsible production conditions, it is Step by Oeko-Tex that is an independent certification system. The said certificate is awarded by the Oeko-Tex Community which is part of the Hohenstein Institute, one of the most respected research facilities in the German textile industry.
Step by Oeko-Tex was launched in 2014 that replaced Oeko-Tex Standard 1000. More popular than that is Standard 100 by Oeko-Tex, although this only tests the health safety of products and not the entire production chain like what Step by Oeko-Tex does.
The Oeko-Tex Step stands for Sustainable Textile Production and is used to certify production plants at all processing stages from fiber production to spinning and weaving/knitting, all the way up to refinement plants and manufacturers. The Step by Oeko-Tex certification divides the topic of sustainability into six different modules: chemicals and their use, environmental performance, environmental management, social responsibility, quality management, and occupational health and safety.
Archroma, a global leader in color and specialty chemicals that pioneered custom color engineering in textile and fashion, recently sponsored a seminar with founder of Design Seeds, Jessica Colaluca, during this year’s PrintSource New York exhibition. The said exhibition that focused on the use of Color Anthropology and how recent global political events including the election of Donald Trump and the passing of Brexit may alter the already established fashion industry color palette for the upcoming season.
Colaluca avered that the US election of Donald Trump impacted the colors we are - and will be - wearing this upcoming season. While not in the literal sense of red, white and blue being patriotic, but the notion of Americana and how people want to relate to it was shaken. In many ways, the modern folk/hipster aesthetic was born in reaction to consumerism gone wild which made natural colors make sense the past three years. But with the volatility of politics, nationally and globally, it makes sense the aesthetic will evolve dramatically once again.
Allowing for a feeling of empowerment, optimism and selfexpression, Colaluca pointed to strong fashion trends like flannel shirts and red dad caps that have dominated the market such as Modern Folk and Americana start blurring political lines of very different people with distinctly different ethos.
As early as Q4 2016, color anthropologists could see a fallout coming on this trend aesthetic in the hipster and early adopter segments because the aesthetics cross over with people of very different political and cultural beliefs, therefore separating themselves from a belief system they don't share. To address the fast pace of these shifting color trends, Colaluca highly recommends that fashion designers and brands leverage tools like Archroma's Color Atlas system. “The Color Atlas has beautiful modern colors that are constantly relevant, maintained Colaluca.
The Apparel Export Promotion Council (AEPC) has said that the cap of Rs 50 crore should be removed under the Amended Technology Upgradation Fund Scheme (ATUFS) in the upcoming Union Budget 2017-18 in order to attract more investments in the textile industry. It has also suggested the government to avoid changing drawback benefits and procedures under the GST regime.
Ashok Rajani, Chairman, AEPC said that the industry has been benefitted by the Rs 6,000-crore special package for the garment industry announced in June 2016 which aims at facilitating new investment, exports and employment. He further said that the AEPC expects the budget to supplement it taking the introduction of GST also this year.
He also said that the companies that are scaling up should be given some sort of incentive and the condition of term loan component of 50 per cent should not be imposed since there is no interest subsidy for the loans being taken from the banks. Clubbing of license should also not be permitted under annual advance license for the enhanced Duty Drawback Scheme, he observed.
Talking about the apparel market, Rajani said that the global apparel markets have been stagnant since 2015. For India, the growth in 2015-16 was a nominal 0.2 per cent while in 2016-17 it is expected to be similarly modest. However, India's domestic market is growing, which is an opportunity for the apparel manufacturers.
