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The Trans-Pacific Partnership (TPP), which includes 12 nations such as United States, Australia, Brunei, Chile, Canada, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, has been concluded successfully. Almost 40 per cent of global gross domestic product is represented by these countries.
Responding to the announcement that the Obama Administration successfully concluded the Trans-Pacific Partnership (TPP), NCTO expressed gratitude to US negotiators for their close cooperation on key issues in the textile segment.
NCTO is anxious to learn the exact details of the final TPP agreement just like all private sector stakeholders. NCTO will undertake a thorough analysis of the text to assess the impact of the agreement on domestic textile manufacturers after it’s released to the public.
Augustine Tantillo, NCTO President, who was in Atlanta for the talks said that they thanked Ambassador Michael Froman and the US government for working closely with NCTO throughout the TPP process. Their briefings at the Atlanta TPP round made them believe that US negotiators were able to achieve a well-balanced and reasonable outcome for US textile manufacturers and their partners within the Western Hemisphere, although they are waiting to examine the final details.
Tantillo said that textile and apparel exports from the current TPP countries to the US totalled $19 billion last year. Thus, there was a need for TPP to establish a yarn forward system, which would form the basis for rule of origin determinations and the setting of multi-year tariff phase-outs on sensitive textile and apparel products.
Ustr.gv/tpp
Inlegmash, the international exhibition for textiles manufacturing and processing and Techtextil Russia, the international trade fair for technical textiles, nonwovens and protective clothing will be held on the same dates from February 24 to 26, 2016 at the Expocentre fair grounds in Moscow.
The visitors and exhibitors will be acquainted with all the key aspects of the industry in the same place and at the same time to provide a unique business platform. The decision to hold both these fairs together was taken since Techtextil Russia and Inlegmash have longstanding professional experience and deep knowledge of the market. As both exhibitions are mutually supported events in the industry, they successfully complement each other.
Besides, the whole spectrum of equipment, raw materials, component parts, innovations and integrated products and services for the light industry and technical textiles in particular is represented by both the exhibitors. Russian and foreign exhibitors can use these opportunities for further development of business processes as there would be world-renowned brands at the fairs and professional organisation, beneficial terms of participation and a strong fringe programme.
Both the exhibitors are a perfect combination to lend success to the projects and represent excellent prospects for the future development of the shows on the Russian exhibition market, believe the organisers of the event, Messe Frankfurt RUS and IEC Expocentre.
www.techtextil-russia.ru
The Indian textile machinery industry is expected to touch Rs 45,000 crores by 2022. Right now the industry is worth Rs 22,000 crores. It grew by 8 to 10 per from 2013 to 2014.
The textile and apparel market in the country is growing. New projects are being planned and there is an emphasis on setting up textile parks. For textile machinery manufacturers from Switzerland, Germany, Belgium, Italy and Spain, India remains a very important market.
India is expected to be a leading textile producing country in the world by 2020. The Make in India program is expected to help the textile sector by way of increase in demand for modern machinery. The country has the potential to become a manufacturing hub in textile machinery and has an abundance of skilled low cost labor and natural resources. But for this, sufficient focus has to be given to research and development in order to ensure that modern and innovative technologies are developed in the country.
The tenth India International Textile Machinery Exhibition will be held in Mumbai, December 3 to 8, 2016. This is the largest textile machinery and accessory exhibition in the country. It will be spread over 1,50,000 sq mts and is expected to witness participation from 93 countries.
The monthly minimum wage for Cambodia’s garment workers in 2016 is yet to be decided and workers will have to wait to know what it would be. The provisional deadline to decide how much to hike the sector’s $128-a-month pay was missed by the Labor Advisory Committee (LAC), as employer and trade union representatives continued to disagree on a number to present to the Labor Ministry. The tripartite negotiations are ongoing still.
After weeks of demands ranging from $158 to $178, most of the unions representing more than 700,000 garment workers in the Southeast Asian nation are stuck to the $168 figure proposed by them. Citing the National Social Security Fund’s increasing costs, factory owners, increased their suggestion by 0.25 per cent to propose a 3.75 per cent wage increase. Union leaders, however, were not pleased with this.
Labor Minister Ith Sam Heng’s October 5, 2015 deadline was missed by the LAC. Heng Sour, ministry spokesperson, though said the government did not force a decision in the hope that the employers’ and unions’ interests would be in sync.
Cambodia’s textile and garment manufacturing is huge—around 80 per cent of the country’s exports, and they are worth more than $5 billion per year. Big, international brands such as H&M, Inditex, Primark, C&A, and Topshop go to Cambodia for supplies.
Ustr.gov
Bangladesh's exports rose 2.5 per cent in September from a year earlier driven by an increase in garment shipments. Garments are a key foreign-exchange earner for Bangladesh, where low wages and duty-free access to western markets have helped make it the world’s second-largest apparel exporter after China.
For the first quarter of the 2015/16 financial year, exports rose nearly one per cent from the previous year. Sales of readymade garments, comprising knitwear and woven items, were up 3.3 per cent in the July-September period from the year-earlier period.
Exports in the fiscal year ending in June rose 3.35 per cent from a year earlier, but that was the slowest growth since 2002, and garment sales, while higher, missed their target.
In a disturbing development, two foreigners were shot dead a few days ago in Bangladesh. There are some fears that the violence could threaten the garment industry, with exporters saying western buyers had begun to cancel visits. The garment industry, which supplies to many brands such as Walmart, JC Penney and H&M, has already been in the spotlight over several fatal accidents, such as the 2013 collapse of a building housing factories that killed more than 1,130 people and fire calamity that again claimed several lives.
Prime Minister Narendra Modi has received an appeal from the Tirupur Exporters Association (TEA) to restart the held up negotiations with the European Union (EU) to formalise a Free Trade Agreement (FTA) urgently. Resuming talks would help double garment exports to EU in the next three years and create more jobs.
TEA’s President Dr A Sakthivel has written to the PM stating that the EU is a traditional market for India's garment exporters, which comprises of 43 per cent of total garment exports from India. The garment sector exported readymade garments (RMG) worth $16.82 billion in 2014/15, out of which garments worth $7.16 billion were exported to the EU, he said. There is still potential to boost exports to the EU once a level playing field is provided to the sector, which can be double of what it is now in the next three years, from the existing US $7.16 billion, Sakthivel added.
He explained that with more exports to the EU, more employment will get created in the domestic market, mainly women workers and semi-literate workers from rural areas. He mentioned that being compliance oriented units, TEA is confident that the Indian RMG sector has an advantage over other competing countries and that India's market share would rise significantly once FTA is implemented.
www.tea-india.org
India will offer exporters an interest subsidy scheme for a period of five years. The move is expected to provide relief to exporters after shipments contracted for the ninth consecutive month in August.
Labour-intensive exporting sectors such as handicrafts, handlooms, small and medium enterprises, readymade garments, processed agriculture goods, sports goods and toys, and many engineering items are likely to be provided a two to three percentage point interest subsidy per annum. With the Reserve Bank of India also reducing its benchmark lending rate, credit costs for exporters are expected to substantially come down, once banks transmit the rate cuts.
Exports contracted 20.7 per cent and imports shrank 9.95 per cent in August. In all, shipments of 23 out of 30 commodity groups contracted in August. Contraction in exports of engineering goods and readymade garments is particularly worrying as both had shown signs of a recovery in July with positive growth rates.
But there is a view that an interest subsidy for exports is not enough since high transaction costs and intermediary charges also contribute significantly to the cost of exporters, making them uncompetitive. In fact 2015 will mark the fourth consecutive year in which annual trade growth has fallen below three per cent. India wants to raise its share of world exports to 3.5 per cent by 2020 from two per cent now.
Vietnam's garment and textile industry is facing challenges. A shortage of capital and backward technology, along with weak management capacities, has created difficulties for businesses.
Vietnam has some 5,000 businesses in the sector. Most of them are small- and medium sized enterprises. They work with machines purchased 20 years ago. In the first half of the year, Vietnam’s garment exports to markets participating in the Trans Pacific Partnership accounted for 70 per cent of its total export value. But domestic garment and textile companies have not been able to invest in modern technology lines to enjoy benefits of the free trade agreement.
There are just a few enterprises engaged in all stages of manufacturing, from cotton to finished product. Local firms depend a lot on imported materials, and this in combination with low productivity makes it difficult for them to enjoy the benefits from FTAs. The value added in garment exports is still limited, despite high growth rates of 15 to 20 per cent a year. Domestic garment and textile companies have not been able to develop their own markets and products.
Businesses need to restructure to improve their competitiveness. Experts point out that the Trans Pacific Partnership would bring a wave of foreign investment in the garment and textile industry in Vietnam. The country would have a wider market and investors would gradually shift their production to the country.
Nandan Denim started in 2004 and since then has been constantly expanding it production capacity. By next year, it would be one of the largest denim players in the country and globally would probably be among the top five denim players.
The company has implemented a Rs 612 crores expansion plan which would take its capacity to 110 million meters a year. A lot of investment is being done, not only on hardware, but on software, market research, understanding and delivering fashion.
Nandan Denim is part of the Rs 3,000-crores Ahmedabad-based Chiripal Group. It markets 85 per cent of its denim fabrics for the Indian market, with the balance being exported to several countries. Going ahead, the company wants to hike its share of exports to 25 to 30 per cent of overall production. The company has clocked a CAGR of 25 per cent since inception and hopes to maintain it till it commissions the new capacity.
Nandan produces denim fabrics beginning from four ounce fabrics right up to 15 ounce fabrics, which find applications in a range of apparels like trousers, jackets, shirts, skirts, and school uniform wear.
www.nandandenim.com
Impact on the global economy
The devaluation was largely a result of technical adjustment by the People's Bank of China (PBoC). It was aimed at determining the daily reference rate of the Renminbi (yuan) against the dollar in the interbank foreign exchange market.
The daily reference rate is set based on the previous day's closing rate rather than fixed by the PBoC, as per the new policy regime. This allows the market to play a bigger role in determining the exchange rate. The daily trading band around the central reference rate remains two per cent. However, as this move followed the release of July data showing weaker growth of retail sales and industrial output and merchandise exports dropping by 8.3 per cent (in value terms), the devaluation, says many analysts was a policy to stimulate the economy. The IMF welcomed China's latest exchange rate regime.
However, the adjustment of the exchange rate regime in China and the subsequent fall of the yuan against the dollar may directly impact those trade partners whose export sectors are increasingly dependent on China. For instance, last year, over 30 per cent of least developed countries' shipments went to China.
Besides, China also accounted for over 30 per cent of total merchandise exports for several economies in Asia and the Pacific, including Australia, Laos, Mongolia and the Republic of Korea. Moreover, the currency regime adjustment has implications for those economies that compete with China in the global export market. Many economies in East and Southeast Asia, such as Malaysia, the Republic of Korea, Taiwan, Thailand and Vietnam, had a trade structure quite similar to China, according to the UNCTAD indicator of similarity in merchandise trade structures for 2013. For those developing countries with US dollar pegs, this move by China, pushed adjustments further downward.
Weak yuan affects Bangladeshi exports
Bangladesh has also been affected by this move by China causing concerns to the country's export industries. Economists suggest that the Bangladesh Bank and the government needs to act immediately to offset the damage that would be caused to the exporters in a period of negative export growth.
In the global market China’s readymade garment (RMG) product would be cheaper which would increase the possibility of losing the market share for Bangladesh, as it has to compete with China. Last year, China’s global apparel market share was 37.5 per cent followed by Bangladesh’s 4.85 per cent or worth US$ 25.50 billion.
Industry analysts said that the 'Made-in-China' apparel products are the main competitors of apparel products originating from Bangladesh in the European and US markets. Bangladesh majorly exports RMG products to the US and certain countries of Europe where China is a big competitor. Here, the weakened Yuan will help China to sell its product at cheaper price than Bangladesh. Besides, some apparel exports that fetched Bangladesh around $ 241.37 million in 2013-14 may face trouble.
Some economists, though said that the devaluation of Chinese currency against the US dollar will not harm Bangladesh's external trade; rather this move will help through cheaper import of raw materials from the giant economy. However, the concerned authority of the Bangladesh Bank said the country it is not taken in by the depreciation because of the strength of its garment export industry, where it is the global leader after China.
