FW
Amid the corona virus gloom, the multi-crore knitwear industry in Tiruppur has turned into a major centre for manufacturing protective medical gear like face masks, gloves and personal protective equipment (PPE).
The industry, which was suffering due to a slew of factors including tough competition from countries like Bangladesh and Vietnam in apparel export, feels manufacturing of technical apparel could be a viable option to survive in the future.
Swell Knit has bagged an order for making 20 lakh fabric masks which are reusable from Seva Bharti. The firm will supply 3 lakh masks to be sent to Meghalaya and other north-eastern states. These fabric masks are designed as two-layer masks and all of them were approved by a leading textile testing lab
Loyal Textile Mills, which has manufacturing units across the state, produces 4,000 PPE kits and 1 lakh surgical masks a day. The firm has been supplying protective medical gear to hospitals, rotary clubs and several pharmacies across the country. It follows the standards prescribed and we ensure that every rule is complied with.
The BGMEA states, Bangladesh monthly garment exports are likely to decline by 70 percent in April to $972.95 million compared to April 2019. In April last year the earning from the apparel export was $2.53billion. The data projected shows in May it will be the same, with monthly export set to fall by 70 percent to $972 million, compared to $3.24 billion in May 2019.
The cumulative export of garment items in the three months between March and May this year will see a 56.93 percent drop from the corresponding period in 2019 to $3.70 billion compared to the same period last year, when the three months netted $8.60billion.
The loss of export in three months is set to be $4.90 billion -- a 40 percent export loss year on year will also affect the settlement of back to back LCs by $1.96 billion, the BGMEA data also said.
Factories will have to carry unsettled liabilities for the export which have been forecast to be cancelled.
Primark owned by Associated British Foods Plc will cover the wage component of clothing orders that were scheduled for shipment within 30 days after it called off all deliveries. The fund will support workers in Bangladesh, Cambodia, India, Myanmar, Sri Lanka and Vietnam.
Primark has closed all its shops across the UK, Europe and the US following the outbreak of the virus, costing it £650 million ($796 million) of lost revenue a month. After store closures, it asked all suppliers to stop production. The retailer has already paid for £1.6 billion of stock that was in stores, in depots, or in transit before it took the decision to scrap further orders. Its payments to workers will be adjusted to reflect any government support packages provided in each of the countries.
The International Labour Organisation (ILO) and the United Nations Children's Fund (UNICEF) has issued new guidelines for businesses to help them support working families during the COVID-19 pandemic. The preliminary guidance urges employers to consider the impact of business decisions on workers’ families and support greater social protection wherever possible.
The extra support, particularly for those with low incomes, is essential to minimise the negative consequences of the outbreak for workers, employers, their families and children. ILO and UNICEF also called on governments to support employers and strengthen social protection, especially for vulnerable families.
Family-friendly policies and practices, including employment and income protection, flexible working arrangements, paid leave to care for family members and access to quality, emergency childcare can make a critical difference and help stabilize labour markets, families and societies.
The preliminary guidelines for employers include monitoring and following advice from local and national authorities and communicating that to the workforce; reviewing existing workplace policies to ensure those offer sufficient support to workers and their families; following sound practices when implementing policies based on social dialogue, national labour laws and international labour standards; and ensuring workplace support measures are available to all, without discrimination, and that all workers know, understand, and are comfortable with them.
COVID-19’s is forcing Cambodia to refocus on expanding its highly concentrated export market. According to a spokesperson for the Ministry of Commerce, diversification has been one of the ministry’s highest priorities and the ministry understands the devastating effect COVID-19 has had on these two major trading partners.
To achieve this, the ministry has outlined an enhanced focus on free-trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP) between Asean nations and their partner states Australia, China, Japan, New Zealand and South Korea, as well as the continued FTA negotiations with China that are expected to be finalised by the end of the year. India, which is also an Asean FTA partner, opted out of RCEP in November last year.
Export diversification has been a long-term policy for the Ministry of Commerce since the ministry released its 2019-2023 Cambodia Trade Integration Strategy, with its Minister Pan Sorasak stating upon the release of the report the need for a new strategy that focuses on strengthening the country’s competitiveness to support its transition into a developed economy and to benefit from new sources of growth, particularly from the so-called Fourth Industrial Revolution, involving 5G, artificial intelligence and the internet of things.
The Synthetic and Rayon Textiles Export Promotion Council (SRTEPC) representing the Manmade Fibre (MMF) textile fraternity has requested the government for a separate relief package for MMF segment. The council urged for special export incentive of 3 per cent on fibre and yarn, 4 per cent on fabric, 5 per cent on made-ups for at least 6 months or till the impact of Coronavirus subsides and global markets stabilise.
Apart from its long-pending demand, the council also urged permission to allow the textile industry to resume functioning of the units for at least 50 per cent of the essential working staff. It also urged to include documentation/ paperwork, Certificate of Origin, Testing Reports, etc. also in the ‘Essential Services’ category and issue e-passes to the employees, CHA, officials of EPCs, Testing Agencies/organisations, etc. who are associated with paper-work and documentation such as testing reports, Certificate of Origin, etc. that are essential for export shipments.
Looking at the current scenario, it is a must that the period of export payment realisation should be increased from 270 days to 365 days and in case of delay in payments beyond the due date, no penal rate of interests should be charged by the banks. It is pertinent to mention here that the MMF segment has already been going through inverted duty structure, due to which huge amount of ITC has been accumulated which is neither refunded nor utilisable.
The Shanghai New Union Textra Import and Export Co says, Chinese textiles and apparel exporters have taken a heavy hit from COVID-19, with most international orders postponed and profits expected to slump around 50 percent. The company reported no new orders, while deliveries of some orders have been postponed. It noted that prospects for the second half are also very pessimistic. The severe situation is more apparent in Keqiao District in East China's Zhejiang Province, dubbed the international textiles capital.
The company currently holds overseas orders for 500,000 to 600,000 garments, but he faces the dilemma of whether or not to carry out the orders. It exported a 20-foot-equivalent-unit (TEU) of clothes every one to three days before the virus, but now it only exports 1 TEU every one to two weeks.
According to a report from the China Federation of Logistics & Purchasing, China's textiles industry has seen overseas orders canceled on a large-scale as the global situation deteriorates, and domestic machinery, auto and home appliance exports may also be impacted in the future.
Faced with this plight, some have supported favorable policies like a low interest rate to avoid credit risks, but many have chosen to rely on themselves. Some apparel exporters that have had no orders are idling employees and paying minimum salaries.
The textiles ministry has roped in the Indian Institutes of Technology (IIT) to address both immediate and medium term action plans for the industry in the post-COVID-19 for the textiles industry. Textiles minister Smriti Zubin Irani has constituted five Technological Task Forces led by various IITs for the entire textiles value chain.
IT Madras would lead the group on indigenous machine manufacturing and machine tools while the setting up of local labs and promoting local technology is to be coordinated by IIT Bombay. The taskforces were setup after Irani held discussions with Principal Scientific Adviser, scientists, technologists and academicians on technological and manufacturing interventions in post Covid-19 situations in the textiles sector.
Another task force will work on raw materials and waste product utilisation technology in IIT Delhi while boosting textiles MSMEs and large data analytics for traditional sectors would be the responsibility of IIT Kharagpur. IIT Kanpur, on the other hand, would focus on reorienting technology for weavers and handicraft artisans.
Similarly, IIT Bhubaneswar will take up pilot studies for post Covid-19 handloom and handicraft reorientation, data integration of artisans and weavers and technological interventions in Odisha.
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) recently suggested a 16-point agenda and a stimulus package of $200-$300 billion over the next 12-18 months to thwart the recession resulting from COVID-19. Out of the corpus, $50-100 billion needs to be infused in three months to arrest job loss and compensate for loss of income.
According to ASSOCHAM, the government should proceed with three objectives including immediate assistance to employees and labour through direct transfers and through employers, ensuring companies have enough cash flow to survive the downturn, and stimulating demand and investment to revive the economy through fiscal and tax measures.
The government also needs to modify the Fiscal Responsibility and Budget Management Act (FRBM) Act, 2003, to consider the debt to gross domestic product (GDP) ratio, and not fiscal deficit, as a metric, according to an ASOCHAM press release.
With deflation expected in overall demand, the government should implement the National Infrastructure Plan once immediately after the lockdown is over. ASSOCHAM also recommended reduction in GST across the board by 50 per cent for three months and 25 per cent for the current fiscal.
Corporate tax for all entities in India should be reduced to 20 per cent, ASSOCHAM suggested, apart from recommending 125 per cent weighted deduction for labour and wage costs if employment continues for two years, i.e. till March 31, 2022.
The trade chamber also suggested that several selective but key sectors, including retail, essential manufacturing, large construction and infrastructure projects, should be allowed to resume operations, with strict adherence to social distancing norms and other precautionary measures. This would help mitigate the business and job loss.
As the rapid spread of Covid-19 across all countries has led to the cancelation of export orders for apparel in China’s factories, cotton demand is expected to decline by 0.6-1 million tonne in 2019-20.
This was recently expressed in China’s cotton futures market. The most actively traded May cotton contract dipped below 10,000 yuan/mt on Zhengzhou Commodity Exchange on March 24, once to the lowest of 9,935 yuan/mt, which was close to the historical low of 9,890 yuan/mt and has declined by 4,515 yuan/mt from 14,450 yuan/mt appeared on January 14 before the Chinese Lunar New Year.
Chinese domestic cotton consumption, influenced by the export orders, is expected to fall by nearly 1 million tons soon. If the state reserves of cotton do not persist, the stock / consumption ratio is estimated at 55 per cent, up 7 per cent from the previous season. With the ongoing pandemic, global cotton consumption may also see a significant reduction.
