FW
Multi-stage and different tax slabs are affecting the Indian manmade fiber sector. In the international market Indian manmade sector is expensive by five to eight per cent compared to East Asian countries, mainly because of multi-level taxes that are not fully rebated and high interest rates.
The sector saw almost nine per cent per annum growth in the domestic market but exports have stagnated for the last couple of years. Accumulated credit under GST from raw materials and capital goods investments are affecting the industry and blocking investments. Though the actual production cost for the manmade fiber sector is lower compared to China, India is not competitive because of taxes.
India can capture the space vacated by China in the international textile market by focusing on manmade fibers. Synthetic textiles made from manmade fiber account for 70 per cent of the world textile supply. Contrary to the global trend, cotton still commands more than 50 per cent of India’s textile production.
India is already reeling under a huge competitive disadvantage in the international textile market when it comes to manmade fiber based textile products. Competitors like China, Vietnam and Bangladesh are ahead in global exports of manmade fibers.
Kering, a French luxury goods group has fulfilled its tax obligations in Switzerland. It stated that the company used a Swiss-based scheme to evade taxes on earnings from brands such as Gucci and Yves Saint Laurent. Kering had saved on taxes it should have paid in countries such as Italy by billing some business carried out elsewhere to a Swiss site as per France's Mediapart and Germany's Der Spiegel.
Mediapart, which cited documents linked to an Italian tax investigation, says that it estimated that since 2002 Kering had saved 2.5 billion euros (2.20 billion pounds) in tax in this manner. Kering says all its companies there carried out tangible business activities its Swiss businesses, home to more than 600 employees, were an important part of its inventory management, billing and supply chain logistics and that their activities were directly linked to its brands. The group pays its due taxes in Switzerland, in compliance with the law and the fiscal status of the company. This business operating model is known by French and other competent tax authorities, says Kering in a statement.
The bulk of the allegations are centred on Italian fashion brand Gucci, which is subject to a tax investigation by prosecutors in Milan. Police raided Gucci offices in Milan and Florence late last year. The group run by French billionaire Francois-Henri Pinault, scion of Kering's founding family, stated it had yet to set aside funds linked to the investigation. No specific provision was recorded in 2017 as the related tax risk cannot be measured reliably at this point in the proceedings.
Pakistan aims to boost cotton production and increase its cultivation area by 45 per cent by 2025. Research funding will be provided and cotton research will be revitalized. Partnerships may be initiated for variety development and marketing. The Seed Act and the Plant Breeder Rights Act may be implemented. Sub-standard cotton seed and BT cotton varieties may be regulated. The cotton sector may be regulated by rationalizing over 700 seed companies and disallowing cotton imports during the cotton picking season.
Spinning and ginning may be improved through better technology, shifting of the current weight based pricing to a quality based system, and bale labeling by ginners showing quality features. The existing excessive incentives for sugarcane may be rationalized by replacing its current pricing mechanism with a new plan linking sugarcane price to the wholesale price of sugar in order to ensure a level playing field for all commodities.
Cotton production in Pakistan has faced virtual stagnation since 1991-92. Reasons include the use of inappropriate first generation, rather than fourth generation BT technology, absence of quality seeds and the low quality of ginning. There has been a 20 per cent decrease in cotton area between 2004 and 2016. However, cotton consumption has made Pakistan a net importer of cotton.
Three-day Asia Fashion Fair (AFF) will be held in Japan from April 10 to 12, 2018. This is Japan’s biggest event for original equipment manufacturers and original design manufacturers in the textile and garment industry. The expo has been widely recognized and highly praised by global industry players. The show will be attended by 323 exhibitors, including 258 ready-to-wear manufacturers, 27 fashion accessories companies, 20 fabrics suppliers, 14 home textiles producers, three auxiliary materials makers and one samples supplier, with many of the exhibitors originating from Bangladesh, Cambodia, China, Japan, Laos, Myanmar, Pakistan, the US and Vietnam.
Exhibits will be grouped together in zones according to the exhibitor's specialty, with zones for knitting, tatting, Southeast Asian factories, fabrics and auxiliary materials, home textiles, ODMs, furs and down, underwear, children's wear as well as fashion accessories. Most exhibitors have longstanding trade relationships with Japan and are able to address demands in terms of original equipment, original design, quality, limited quantities and low cost.
AFF has brought together more than 3,000 exhibitors from China and over 1,00,000 buyers over the past 15 years. This is a biannual event which debuted in 2003 and which holds its spring edition and autumn edition each year.
India has cut royalties seed companies pay to Monsanto by 20 per cent. This is the second time in two years such a cut has been made. The first time it happened, in 2016, the US company had threatened to leave India. At that time Monsanto's royalties were cut by more than 70 per cent.
Besides cutting Monsanto's royalties, India has also lowered prices of GM cotton seeds by 7.5 per cent to help farmers struggling with pest infestations. Farmers buy GM cotton seeds from Indian seed makers who pay to use Monsanto's proprietary technology to produce them.
The National Seed Association of India (NSAI) has threatened to halt supplies to eight million cotton farmers to protest the planned move to reduce seed prices. NSAI says the new, low price would impact seed supply and seed availability this year and also next year's seed production. It says seed prices have fallen since 2011 but fuel, labor and other supply chain costs have risen. NSAI had advocated for an increase in cotton seed prices but the suggestion was ignored. Last year India kept both royalties and the retail prices of GM cotton seeds unchanged.
Now Adidas has made shoes out of ocean plastic. These are wearable and stylish sneakers. Each pair is made from 11 reused plastic bottles, with the laces, heel linings and sock liner covers all made from other recycled materials. The shoes come in men’s and women’s sizes.
Adidas made the shoes in collaboration with the environmental initiative Parley for the Oceans. Shoes made from ocean plastic are just the beginning for the brand. Two years ago, Adidas switched from plastic bags to paper in its retail stores and as a result it has now eliminated about 70 million plastic shopping bags.
Adidas has also made headway in its efforts to cut per-employee water use and use more cotton sourced in an environmentally friendly way. Parley for the Oceans and Adidas have also collaborated to make other products such as tank tops, which are made from yarn that features Parley Ocean Plastic that’s created from recycled waste and leggings that are made of fabric that features Econyl regenerated yarn. With Adidas and other sports companies leading the way in creating a better environment, hopefully other brands will join too.
More than eight million tons of plastic are dumped into oceans every year. It’s feared that by 2050 there will be more plastic than fish in the sea.
Indorama Ventures is buying Brazil-based M&G Polimeros. M&G Polimeros produces PET resins for packaging applications. The plant is the largest PET facility in Brazil, with a capacity of 5,50,000 tons a year. The plant is strategically located and benefits from virtual integration with a manufacturer of Purified Terephthalic Acid (PTA), a key feedstock to PET.
Indorama is a petrochemical producer. The acquisition in Brazil is in line with the company’s strategy to further extend its market position and expand its global footprint in key markets with high growth potential. This strategic position allows Indorama Ventures to deliver products to key customers in Brazil and elsewhere in a cost-effective and efficient manner.
Indorama Ventures is well positioned to service its current global client base and M&G’s existing customers once this acquisition is complete and the plant is fully operational. The company expects immediate incremental revenues and cost synergies, driven by a substantial volume increase and potential value add through backward integration.
The acquisition will significantly advance Indorama’s strategy in its necessities business, where the company aims to deepen its global footprint and build scale in key markets.
Indorama now has unrivalled scale and global reach, being present in five continents with a uniquely balanced and integrated business model.
India has clarified that programs such as the Export Promotion Capital Goods Scheme offered to exporters are not subsidies.
These are given mainly to equalise the costs incurred by the industry with international costs and to induce adoption of better technology.
The US had challenged these schemes at the World Trade Organisation.
Industries face high logistics costs and state levies and these are not reimbursed. Schemes such as the Merchandise Exports From India are to offset these costs.
Total textile exports this financial year are expected to be about 40 billion dollars, almost the same as last year. But there are several reasons that are affecting exports such as contraction of international demand.
Apart from investments in the spinning and ginning segments, investments of more than Rs 30,000 crores happened in the last three to four years across the value chain under the Technology Upgradation Fund Scheme.
With the special packages announced for made-ups and garments, five lakh to seven lakh new jobs (direct and indirect) have been created.
Exports of value-added products such as garments, made-ups and technical textiles could help in pulling up the downstream segments of textiles and India is encouraging investors to invest in these sectors.
The United States has challenged India’s export subsidy programs. This has to be seen in the light of the US’ vocal opposition to the 50 per cent duty on Harley Davidson bikes levied by India.
Under WTO rules, countries with a per capita income of less than 1,000 dollars can provide export subsidies for particular sectors only until their share of exports is below 3.25 per cent of global trade. Once a country’s exports crossed this threshold and remained above it for two consecutive years, subsidies for that particular sector would have to be phased out over eight years, even if the per capita GNI of the country is below the 1,000 dollar threshold.
India’s textile exports crossed this 3.25 per cent threshold in 2010 and export subsidies will have to end this year. But the textile sector is hardly ready for a life without such schemes. It has lost the wage arbitrage advantage to countries like Bangladesh, Vietnam, Myanmar and Laos.
Withdrawing export subsidies will be politically difficult for the government in an election year and considering the fact that the exports sector as a whole is going through a difficult time. But one thing is clear: India will have to drastically change the way it helps its exporters.
India aims at doubling the annual revenue of the textile industry in the country by 2025. The country’s textile industry currently generates about 150 billion dollars in annual revenues — 110 billion from the domestic market and 40 billion through exports.
To achieve the target, production of synthetic clothes will have to be increased manifold.While the annual production of cotton textiles is pegged at 6.5 billion kgs, about 2.5 billion kgs of synthetic textiles are made.
About 2.5 lakh new jobs were created in the garments and made-ups sector since June 2016. Garment makers were able to get benefits to the tune of Rs 55 lakhs for every crore in new investments committed under the package. The capital subsidy under the amended technology upgradation fund scheme was increased to 25 per cent from 15 per cent. A new scheme was introduced to refund state levies which were not refunded earlier. The move cost the exchequer Rs 5,500 crores but it helped in boosting the competitiveness of Indian textile exports in foreign markets. Overtime hours were increased from three hours to eight hours a week. EPF was made optional for workers earning less than Rs 15,000 a month.
The readymade garment industry is the largest contributor to the country’s textile exports and employs about 12 million persons now.
