FW
Yarn manufacturers in Pakistan are accused of having formed a cartel across the country. Yarn rates have gone up to Rs 1,200 per 100 pounds bag from Rs 800 since the imposition of 10 per cent R&D on import of yarn and fabric, a hike of 50 per cent in a week.
Though the implementation of another 10 per cent duty on yarn would start from the next month, even the consignments booked in advance are being blocked, while local manufacturers have directed their dealers to stop floating new orders till the imposition of the additional tax.
Pakistan’s spinning sector makes a value addition of 59 per cent, while the performance of value addition by the woven garment sector is 846 per cent and hosiery and knitwear garments 616 per cent. The country’s exports have declined from 10 per cent in August 2015 to four per cent in September 2015.
The apparel sector already has a very limited production line owing to lack of latest fabric varieties at the local level. The harsh duties would result in a significant decline in apparel exports. Non-utilisation of cheap raw material from China and India will force foreign buyers to move to neighboring countries.
Fashion, a big pollutant
A few brands, such as Patagonia are truly committed to the cause of sustainability and ethical sourcing. Yet, most apparel chains today are no better than they were in the 90's, when sweatshop exposés triggered a wave of outrage among consumers. In fact, today, the supply chains are more replete with human abuse with most clothing products still being produced in horrendous and life-threatening conditions, and by exploited labourers who are often trafficked workers or children.
Besides, as per the World Bank, textiles are the second largest contributor to global water pollution. A 2013 report by Danish Fashion Institute had stated, the apparel industry is only second to oil when it comes to environmental impact as a whole. Natural fibres such as rayon and viscose contribute to the destruction of ancient rainforests, while synthetic fibres such as polyester are derived from petrochemicals. Thus, the problems are manifold in nature.
However, initiatives such as Accord on Fire and Building Safety in Bangladesh, and non-profits such as Canopy and Verité, campaigns such as Fashion Revolution Day, and a new documentary film, The True Cost, are creating awareness among consumers and are seeking change. Social entrepreneurs too are coming up with fresh approaches that could help the apparel industry truly clean up its act and achieve both style and substance.
Three points to help sustainability
Entrepreneurs have three reasons to be optimistic about the future of fashion. They believe that more industries can get involved in ending human trafficking in the industry. This means, more players, such as transportation, finance, health, and agricultural R&D, etc, if get involved in resolving this issue, it would work. They can activate a network of industries, solve sustainability issues in fashion, which could potentially be accomplished more effectively and with fewer resources.
Next, empowering workers to make supply chain traceability a reality would also help. Multiple tiers of contractors and brands that care about sustainability are a part of modern supply chains. These often only have full transparency with tier-one suppliers. The fourth and fifth tiers are almost impossible to track labour conditions. However, LaborVoices enables workers to send real-time data on working conditions through their mobile phones. The system, which is available in 50 countries, also helps workers access information on their rights and how to resolve workplace grievances.
Consumers have limited options when it comes to buying ethical clothing. Thus, at present, consumers have limited power to cast an economic vote for change, without the ability to access sustainability information and to make ethical point-of-sale decisions. There’s a way out though—the citizen advocacy organisation, PODER, for example, builds relationships with prominent investors and helps communities make a business case to them for sustainability. Then, investors can raise their voices to calls for better working conditions and monitoring programmes.
With the launch of a new global cotton futures contract soon, US cotton stands to lose its place as the sole pricing leader for cotton across the globe. The new contract begins trading on ICE Futures US exchange alongside the US ‘Cotton No. 2’ contract and will trade under the symbol WCT. The ‘Cotton No. 2’ contract is a physically settled contract for US origin cotton that has long provided the only hedging option for cotton traders.
India, Brazil, and Australia have emerged significant competitors in recent years investing in production while fewer US farmers plant cotton, though the US is still the world’s top exporter of the fibre. Benjamin Jackson, President and Chief Operating Officer of ICE Futures US, said that the new world cotton contract is not likely to replace the US contract, but would have a ‘smaller, complementary role’. Cotton of various origins will be priced at a premium or discount to US cotton under the contract.
The new world contract also allows delivery in Australia, Malaysia and Taiwan for cotton from the US, Australia, Brazil, India, Benin, Burkina Faso, Cameroon, Ivory Coast and Mali apart from US delivery points. According to ICE, collectively, those origins represent 73 per cent of world cotton exports.
The US accounted for 21 percent of the world’s cotton production and 39 percent of exports ten years ago. The US is expected to drop to 12 percent of cotton production and 30 percent of exports this year. The big textile mills are in India, Pakistan, Indonesia, and Bangladesh and in the physical market, cotton traders are transacting in these same locations.
Pakistan’s exports of readymade garments increased by 6.6 per cent during the first three months of the current fiscal year as compared to the same period last year. However, on a month-on-month basis, exports declined by 11.95 per cent from August to September 2015.
Towel exports witnessed an increase of 8.92 per cent in July to September against the same period of last year. On a year-on-year basis towel exports witnessed a slight decrease of 0.56 per cent. About 42,952 metric tons of towels worth $201.54 million were exported during the first three months of the current year whereas 39,016 metric tons of towels worth $185.029 million were exported during the same period last year.
On a month-on-month basis, towel exports were recorded at 14,183 metric tons worth $69.957 million in September 2015 as compared to 12,910 metric tons worth $64.464 million in August 2015. From January to July 2015, the value of Pakistan’s garment exports to the European Union witnessed a growth of 26.78 per cent in euro terms. In quantity terms, exports of garments increased by 6.48 per cent.
Textiles alone constituted around 80 per cent of total exports to the EU during January to July 2015.
The Trans-Atlantic Trade and Investment Partnership (T-TIP) will bring substantial commercial benefits to the EU textile and apparel (T&A) industry, if reached and implemented, according to the European Apparel and Textile Federation (Euratex). The T-TIP has great potential to help EU T&A expand exports to the US market, particularly in two areas: high-end apparels and technical textile market.
EU’s third largest apparel export market is the US, which is only after Switzerland and Russia. Apparel exports from EU (28) to the US exceed €2.5 billion and most products were much higher priced than those exported from elsewhere in the world, last year. When the high tariff facing EU apparel products in the US market is removed, such as 28 percent tariff rate for women’s jackets, and customs red tape is cut, Euratex expects several small and medium (SME) sized EU T&A companies to gain more access to the 300 million people US apparel market.
As for technical textile market, technical textiles, such as high functionality fabrics used for fire-fighters’ uniforms or airbags, comprise of half of EU’s textiles exports to the US. European home textiles too are greatly successful in the US more than €92 million of bed linen was sold last year. Also, transport, construction, agriculture, defence, personal protection, etc., which are all high tech textiles products cover a wide range of applications.
Besides, the US textile market seems to be very attractive for the EU textile industry currently protected by the Berry Amendment. Opening business opportunities in public sector for technical textiles is a must in T-TIP, states Euratex.
Vietnamese textile and garment stocks may receive a boost after Vietnam it completes free trade agreements with various countries and organisations. Textile-garment stocks were among the strongest gainers in the last 12 months with an increase of 27 per cent in value, behind only construction material producers.
Most local producers have fulfilled their production capacity until the end of this year and lower input costs had helped them increase profit margins. Many positive factors can boost the local market such as the price to earnings ratio. The country has a lot of investment opportunities compared to other markets such as Malaysia and Thailand.
Vietnam’s textile and garment industry would be among three industries receiving the most benefits from the free trade agreements that the country is now finalising, including the Trans-Pacific Partnership. Vietnamese textile-garment producers are now expanding production all around the country and some of them are completing procedures to be listed on the stock market in the near future. The industry has recorded a good annual growth rate of 17 to 18 per cent.
TPP is expected to help boost foreign direct investment in the industry. This in turn will help Vietnam’s textile-garment industry provide more job opportunities for local people and produce cheap and high quality products for both domestic and overseas markets.
Pakistan has imposed a provisional anti-dumping duty on imports of Polyester Staple Fiber (PSF) from China for the next four months. The National Tariff Commission has imposed a provisional anti-dumping duty under the relevant act on all imports of PSF, which is effective from October 2015 till February 2016.
Authorities have defined different duty rates especially for eight Chinese companies to dump PSF into Pakistan, which are from 6.41 per cent to 10.53 per cent while the rest of the others have to pay 14.92 per cent duty on their PSF imports dumped into Pakistan.
The provisional anti-dumping duty has been levied for a period of four months with effect from October 2015 to February 2016 and the customs department would collect it in a similar manner as customs duty collected under the Customs Act 1969.
Duties collected by customs department would be deposited under the head of civil deposits for further deposit in NTC's non-lapsable PLD account established with federal treasury office, Islamabad. The provisional anti-dumping duties would be in addition to other anti-dumping duties imposed earlier and taxes and duties levied under any other law. However it would not be imposed in terms of section 51(1) e of the act on imports that were to be used as inputs in products destined solely for exports.
The Cotton Textile Export Promotion Council (Texprocil) has welcomed the inclusion of exports of cotton fabrics and made-ups to leading markets, including African countries, under the Merchandise Exports from India Scheme (MEIS), which is expected to boost exports. It feels, exports of value added and labor intensive products like cotton dyed and printed fabrics and made-ups to different African countries like Mauritania, Mali, Dar Es Salaam, Burkina Faso, Guinea Bissaou, Niger, Benin, Angola, Senegal, Togo, Ghana, Kenya and Tanzania will receive a huge boost.
The inclusion of various categories of knitted fabrics under the MEIS will also encourage exports of knitted fabrics including knitted fabrics with Lycra. Exports of cotton fabrics would get a further fillip of 10 to 15 per cent and India would also link up with the global value chains by offering products at competitive prices.
If these measures are followed up by the much awaited announcement of the Interest Rate Subvention Scheme, and an increase in the drawback rates, exporters will be able to overcome the difficulties which they are currently passing through due to the slowdown in the world market.
The Director General of Foreign Trade had issued a notice recently for inclusion of exports of cotton fabrics -- both woven and knitted -- and made-ups to leading markets, including African countries, under the MEIS.
www.ieport.com/2015-2020/MEIS.htm
Window solutions for Indian households
In collaboration with more than 600 stores spread all over the country, Deco Window offers wide range of window solutions for Indian homes. The range includes classic to modern profiles. Each piece is engineered for durability, functionality and aesthetics, together with state of the art hardware and custom and automation solutions. “Our commitment to provide ‘complete window solutions’ lies in our expertise to decorate your windows in an affordable and user‐friendly manner, meeting the highest quality standards,” avers Jain.
Window segment is one of the categories, the company enjoys maximum expertise and specialisation in. At the time of the brand launch, 70 per cent of its products revolved around windows and 30 per cent was home décor. So Deco Window was by default the first brand that wanted to be dedicated to the products it had expertise in. “So while designing the brand, we kept the complete window category in mind and that’s why our tag line says ‘complete window solution’. The second focus area was pricing because pricing has to be affordable for the customers. The third area was the quality and the specification since at that point in time, the market wasn’t that matured about product quality. So we wanted to set a benchmark for the best quality available,” asserts Jain.
Jain is not averse to competition since he feels that there are no brands in the market that are selling the same quality at the price offered by Deco Window. “If you say competition in Delhi or Mumbai, yes there are a couple of brands but when you look at competition across India, there are so many places one can venture into,” he states.
Sub-brands to cater to different segments
The company has divided its brands into three segments. Earlier it had Deco Window but now it has launched a brand called Deco Window Essential and would soon be launching a brand called Deco Window Tailor-made. Deco Window Essential is a brand which is one level below Deco Window in price and specification. Deco Window Tailor- made is a brand which is a level above Deco Window in terms of price and specification. “So by dividing our offering under three segments, we would be able to push the matured customers into Deco Window Tailor-made, upcoming customers into Deco Window and completely price conscious or less matured customers into Deco Window Essential. We want to cater to the every section of the society with differentiated brand services to suit their needs,” explains Jain.
One of the biggest challenges in the Indian market, according to Jain is that there is nothing standard about window size. Worldwide the height of the window is pretty good. “But when we look at the windows in India, they vary in sizes. So now we are coming up with program called customisation and make curtains according to the window dimension and size. People who cannot use standard products can customize the curtains according to the size of their windows. Right now the program is only limited to couple of stores. We are planning to expand this program to other stores in the coming years. By 2018, we expect about thousand stores across India and across all partner website and our website to follow this concept,” he informs.The brand is available in 12 states. Now the company is looking at expanding its footprint all over the world under its own brand-name. Explaining, Jain says, “Targeting 120 per cent annual growth, we are looking at different levels of marketing, different levels of sales like you have mass retail, e-commerce, organised retail and we are also looking at creating partners in every society who would sell our products locally. We are branching into institutional sales like window requirement for hotel industry or other institutions like hostels, hospitals and offices.”
www.decowindow.in
Readymade garment exporters' association Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has sent a letter to the finance ministry and National Board of Revenue for reviving 10 per cent reduced income tax rate facility for RMG industry for next 10 years. In a letter to finance minister AMA Muhith, the association demanded a retrospective approval of reduced income tax rate at 10 per cent since July 2014 as the facility ended in June 2014.
BGMEA President Md Siddiqur Rahman said that income tax paid by the RMG exporters on export earnings will be calculated at the regular 35 per cent from the current fiscal year 2015/16 as the special income tax facility at 10 per cent for the export-oriented garment companies expired in June 2014. ‘If the export earnings are calculated based on the income tax at 35 per cent entrepreneurs will have no fund for reinvestment,’ he said in the letter.
Till the last financial year of 2013/14, the tax at source for apparel item exporters was 0.80 per cent on their export which was considered as final settlement under some conditions, according to a statutory regulatory order issued by the NBR in 2005. The conditions include that the revenue board will calculate the annual income of RMG products exporting companies assuming that they paid tax at the rate of 10 per cent on export earnings while their other income will be taxed at the regular rate for companies at 35 per cent.
On the other hand, NBR officials are of the opinion that RMG exporters could show income from export earnings several times than actual ones taking the advantage of the special tax calculation facility under which, from 2005 to June, 2014, taxmen calculated tax at an estimated 10 per cent at the annual tax assessment though exporters paid tax at the rate of 0.80 per cent.
www.bgmea.com.bd
