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The recently-negotiated Trans-Pacific Partnership (TPP) could boost Vietnam duty-free access to the US market. However, this may not be positive for the Indian textile and garment industry.
For Indian garment exporters, Vietnam could be the new Bangladesh. This is because of a massive duty disadvantage vis-a-vis competitors, stringent labour laws, poor infrastructure, and inadequate policy support in India. Due to the lure of duty-free access to the US and other TPP markets, some Indian companies may shift base to Vietnam, says analysts, just as they did some years ago to Bangladesh to grab duty advantage in exports and low labour costs.
Vietnam is now the world’s third-largest garment exporter. The US accounted for 22-30 percent of India’s garment exports in recent years and Indian exporters have to pay duty in the range of 14-32 percent for the shipment of textiles and garments there. Thus, the threat seems to be real.
As Shailesh Pathak, Executive Director, Bhartiya Group, says that they employ 6,000 people in their fashion business in Chennai and Bangalore, and there is a high probability that 4,000 of those jobs may move to Vietnam in the next one year. However, some other players, while recognising potential threat from Vietnam, chose to await the full text of the TPP.
Director, Arvind Mills and the newly-appointed Chairman of the Confederation of Indian Textile Industry, Naishadh Parikh, said that the pact suggests there is a potential risk of investment and employment moving to select TPP countries, especially Vietnam. However, he believes that until the full text is made public, it’s too early to say if Indian companies would shift base soon, as any such move depends on several other factors as well, including familiarity of the market.
VF, the American clothing company’s next generation of jeans is Cool Vantage and JadeFusion based on a marriage of market intelligence, textile and design innovation, which keeps you comfortable even in the height of summer. Stephen Dull, Vice-President, Strategy & Innovation, VF Corp, says their customers want performance comfort and style, which is a magic formula. And there are different ways to make denim, some of which are lighter and others heavier. Dull eplians first they did a global scan of technologies and fabrics, and took the most promising ones and tested. Consumer research said that burning, heaviness, wetness, were all problems and people wanted to be cooler, drier and more comfortable.
Dull stressed on consumer insight vehemently saying that VF was good at combining technology with design and consumer insight. With consumer research they got to ‘refreshment’ in denim; cool is a lower level benefit, he states.
However, it was not just about developing the fabric, design and fit were important too as eventually it is all about how comfortable and functional the garment is. Recalling the process Dull states that after they developed the fabric they used Kansai design techniques in Japan had Kansai consultants who helped with the design aspects of comfort.
Besides, the concept of this new denim was also a strong part of VF’s strategy. However, for the brand, it does not end with the product. They have a lab that uses cognitive neuroscience, so there was a lot of work involved through the commercialisation with a 360 marketing campaign, said Dull.
Pakistan's ready-made garment (RMG) industry will get a boost from the US through dedicated vocational centres and improvements in working conditions. Pakistan’s Prime Minister Nawaz Sharif and US President Barack Obama, during a recent meeting, reaffirmed that the two countries have a mutual interest in expanding bilateral trade and investment.
Prime Minister Sharif restated the importance of market access for Pakistan as the most effective, mutually beneficial, and durable form of bilateral economic partnership. President Obama, on the other hand indicated that the US would help Pakistan create conditions to expedite trade and investment-driven growth.
Thus, Pakistan’s RMG sector capabilities will be upgraded with the help of the US. This will be done by supporting dedicated vocational centres and improvements in industry labour conditions. Besides, Pakistan’s International Labour Organization International (ILO) Labour Standards Textile programme will also be enhanced by the help of the US and it will also support the launch of an ILO Better Work Programme. Moreover, an investment event in New York will be supported by the US to highlight opportunities in Pakistan’s RMG industry and other sectors.
Apart from this pledge, the US is also set to enhance outreach and training efforts to boost GSP (Generalized System of Preferences) utilisation, and support Pakistan’s efforts to sanction and implement the World Trade Organization (WTO) Trade Facilitation Agreement (TFA).
To set up a garments estate at a special zone in Chittagong, apparel manufacturers from the district have demanded allocation of land. Many industrial units were shifted to Dhaka and its adjoining areas due to the excessive price of land in Chittagong, say garment owners. Besides, the unavailability of a large chunk of land in the district was a major setback for them, they added.
Abdus Salam, Chairman, Chittagong Development Authority (CDA) met a delegation of the newly elected body of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) headed by Moinuddin Ahmed Mintu recently. Mintu urged Salam to cooperate to construct a separate industrial village for the apparel manufacturers outside the EPZ areas in Chittagong.
Apparel business in the port city dates back to 1978 when Desh Garments was set up. Also, the first and the largest, Export Processing Zone is situated in Chittagong. The apparel sector earned 40 per cent of its total export income from Chittagong at one time and now this has dipped to a mere 15 per cent. The sharp dip is due to multiple reasons, including gas and electricity crisis, absence of an industrial village outside the EPZ and the astronomical price of land in Chittagong, according to entrepreneurs.
Salam, on the other hand said they would consider the proposal put forth by the BGMEA. He added that the CDA reserves the power to acquire land anywhere in Chittagong and he has assured the apparel manufacturers that land for setting up a special zone could be acquired, but it is subject to the availability of land.
Kumar Mangalam Birla’s stake in Century Textiles and Industries could rise by almost five per cent in the next few weeks as he plans to convert warrants into equity before the deadline of December 18 when the instruments lapse. Century Textiles, founded by his grandfather Basant Kumar Birla, had issued 1.86 crore warrants to private companies owned by the Aditya Birla Group chairman last year.
Of this, 84.7 lakh warrants were converted into equity shares in March this year, taking the promoter stake in the company to over 45 per cent from 40 per cent in December 2014. Kumar Mangalam Birla now intends to convert the rest of the warrants into equity. After this, promoter group stake in Century will rise to 50.21 per cent from 45.22 per cent currently.
The promoter of Century Textiles had refrained from converting their entire warrants to equity in one go as it would have triggered an open offer. Sebi rules allow for creeping acquisition or buying shares from the secondary market only up to five per cent in a fiscal. The warrants were issued at Rs 355 each in 2014.
Century Textiles is known for cotton textiles and has a presence in yarn, caustic soda, salt, cement, pulp, paper, denim.
www.centurytextind.com/
Owner and Chairman of Welspun Group, B K Goenka has shed his operational responsibilities to take up more strategic and nurturing ones. This move is to empower professionals as the steel to home textiles conglomerate turns into a more customer-focussed group. Goenka stated that the group has become quite large with international operations and a need to be system-driven, with essential risk mechanisms and stronger corporate governance norms. His role will be more of a group trustee, he added. Goenka will now look into investing in start-ups aligned with the group's businesses.
Global consultant McKinsey has been hired by the $3-billion group to craft 'Vision 2020' and build a new organisational DNA for the group. The company earns most of its revenues from selling pipes to global oil companies and towels and bed sheets in both, local and overseas markets.
According to consultants, though the group has an advantage of a first generation entrepreneur managing the business with a big chunk of the revenues coming from overseas, a change in approach is needed for a transformation into a customer-centric business. Supporting this view, Arvind Singhal, Chairman and Managing Director at consultancy firm Technopak said that Welspun was more of a business-to-business group which, does not directly sell to consumers, and so the transition to a B2C (selling goods to retail customers) needs a different DNA.
Besides, the group needs to move steadily in terms of promoters getting out of operating roles so that the vision and entrepreneurial focus does not diminish, Singhal added. He also feels that Goenka has time and can comfortably make it a professionally led group in the next 5-10 years.
Demanding higher wages and bonus, a section of workers at textile major Arvind Ltd’s Santej manufacturing facility went on strike recently. Workers were at the company’s woven and knits division abstained from work and the state government’s labour department said that around 6,500 workers had gone off work. Company officials, however, claimed that the number of striking workers was not more than 1,000. D V Prajapati, a government labour officer said that approximately 6,580 workers had gone on strike at Santej plant of Arvind Ltd. Demanding a rise in wages.
However, Textile Labour Association (TLA) were not supporting the strike. Amar Barot, General Secretary, TLA, said that the agitating workers were demanding average salary should be increased to Rs 20,000 per month from the existing Rs 13,000 besides bonus of Rs 10,000.
In a statement, the company termed the strike as illegal saying they had tried to speak to the workers personally to persuade them to return to work, but all efforts were unsuccessful. The union, Majoor Mahajan Sangh, Kalol, that the workers are affiliated to, has also not authorised the agitation, stated the company. A company official said that the agitation had affected production.
Luxury market on the rise
The forum covered various topics like the issues faced by the industry—from the supply of raw material and consumer demand to retail strategies and new technologies applied to animal fine fibres. Speakers from across the globe put forth their views on the issues facing the industry. Networking and sharing of benefited everyone at this action-packed event
Anthony Keung, President and CEO, Fenix Group and an industry veteran gave the keynote address. He spoke about the future economy of China and the luxury market quite optimistically. As per studies the Chinese luxury market has grown over the years and with a huge customer base which is forecasted to grow further over the years. However, a fundamental shift is being seen in the region’s luxury market, due to evolving customer dynamics, economic slowdown, and an influx of new, emerging luxury labels
Nearly 45 percent of respondents plan to buy more emerging luxury brands in the next three years, as per a recent survey by Bain & Company. This is good news for upcoming cashmere and fine fibres enterprises such as Afghanistan-based Qaria, Belgium’s Madame Seguin and Tibeto-Italian Myak, who introduced their products at the forum’s exhibition floor
Luxury e-commerce is another fundamental shift, which is on the rise. Thibault Villet, CEO, Mei.com, said he expected online sales of luxury items to double from 6 to 12 per cent by 2020 as per a McKinsey survey. The total luxury online sales is said to double to 18 percent and be worth about €70 billion annually. According to the survey, this would make e-commerce the world’s third largest luxury market, after China and the US
New trends on the anvil
The increasing use of fine fibres for performance yarns used in the production of technical garments is another trend that is catching up. Luciano Bandi, Baruffa’s Managing Director, Sales introduced the H2Dry, a technical treatment developed by the Zegna Baruffa laboratories that makes yarns breathable, elastic and uncrushable. Bandi, however, said that whatever the level of technology and science involved in the production of yarns, what matters first and foremost is the quality of the raw material
Sustainability was another important topic discussed at the forum. Speakers from Nepal, Mongolia, India, Afghanistan, among others discussed sustainability issues. The general consensus was that producing 100 per cent sustainable fine fibres is challenging and that more should be done in this direction
Andrea Dominici, CEO, Myak said the impact of breeding of animals on grassland is measurable and relatively easy to evaluate and control. However, he added, controlling the impact on rest of production process is a demanding and testing task. Overall, most customers across the world are now concerned about the quality of garments they purchase over their price, and express interest about companies’ active citizenship and corporate social responsibility
Overall, it was found that most customers all over the world are now concerned about quality of the garments they purchase over their price, and express interest about companies’ active citizenship and corporate social responsibility.
Hosted by the Cashmere World trade event, Cashmere World Forum 2015 brought together about 20 speakers from across the industry and more than 60 delegates from across the globe
India is exploring investment and sourcing opportunities in Bangladesh’s textile and clothing sector. One area India is interested in investing in is the stitching and spinning sub-sectors of Bangladesh. Bangladesh is looking for investment in the backward and forward linkage industries, where it is lagging behind. It wants Indian businesses to set up industries and manufacture high-end and diversified products like suits, lingerie, design and manmade fabrics. The country would also welcome a fashion designing center.
Bangladesh has a strong capacity in producing cotton fabric. It wants foreign investors to set up non-cotton fabric-making units like polyester, filament, design fabric or other manmade fabrics as there is a huge opportunity to invest in these areas.
There is a special need for investment in the weaving sector as weavers in Bangladesh cannot meet the demand for fabrics due to inadequate production capacity. While spinners are able to supply 90 per cent of the yarn needed for the knit sector, weavers can meet only 40 per cent of the demand for fabrics in the woven sector.
Bangladesh has a plan of making garment products using Indian fabrics and then exporting the finished products to the world. Bangladesh exported apparel products worth 104.25 million dollars to India in 2014-15 fiscal year.
World cotton production in 2015-16 is expected to be 10 per cent below the previous year’s levels. Global harvested area in 2015-16 is expected to be 8 per cent below 2014-15, the lowest since 2009-10. For China, 2015-16 cotton production is forecast at 16 per cent below 2014-15 and the lowest crop estimate since 2003-04. The smaller crop stems from reduced incentives to plant cotton nationally and lower Xinjiang yields resulting from adverse weather. For Pakistan, 2015-16 production is projected at 10 per cent below the previous season, as pest problems are reported to have reduced the cotton crop.
For India, the world’s leading producer in 2015-16, production is forecast at 29 million bales, 5,00,000 bales below last season lower area and a higher yield will keep India’s crop near the five-year average.
Global cotton mill use is forecast to rise less than two per cent in 2015-16. Despite a fourth consecutive annual increase, cotton continues to face strong price competition from manmade fibers; the battle for fiber share in many apparel products is expected to limit cotton mill use growth once again in 2015-16.
While cotton consumption improves slightly in 2015-16, cotton trade is forecast to decline for the third consecutive season.
