FW
"The Union Cabinet, has approved incentives to boost job creation, manufacturing and exports in the labour-intensive textile sector. The move comes in the backdrop of the package of reforms announced by the government for generation of one crore jobs in the textile and apparel industry over the next three years. It includes a slew of measures that are labour friendly and would promote employment generation, economies of scale and boost exports."
The Union Cabinet, has approved incentives to boost job creation, manufacturing and exports in the labour-intensive textile sector. The move comes in the backdrop of the package of reforms announced by the government for generation of one crore jobs in the textile and apparel industry over the next three years. It includes a slew of measures that are labour friendly and would promote employment generation, economies of scale and boost exports. The steps will lead to a cumulative increase of $30 billion in exports and investment of Rs 74,000 crores over the next three years.
What’s more the majority of new jobs are likely to be for women since the garment industry employs nearly 70 per cent women in their workforce. Thus, the package would help in social transformation through women empowerment.
The salient features of the package are:
EPF scheme reforms: Under this the government will bear the entire 12 per cent employers’ contribution to EPF scheme for new employees of garment industry for first three years who are earning less than Rs 15,000 per month. At present, 8.33 per cent of employer’s contribution is being provided by government under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY). The ministry of textiles will provide additional 3.67 per cent of the employer’s contribution amounting to Rs. 1,170 crores over next three years.
Overtime hours for workers not to exceed 8 hours per week in line with ILO norms. This will lead to increased earnings for the workers.
Introduction of fixed term employment: With seasonal nature of the industry, fixed term employment shall be introduced for the garment sector. A fixed term workman will be considered at par with permanent workman in terms of working hours, wages, allowanced and other statutory dues.
The package also breaks new ground in moving from input to outcome based incentives by increasing subsidy under amended-TUFS from 15 per cent to 25 per cent for the garment sector as a boost to employment generation. A unique feature of the scheme will be to disburse the subsidy only after the expected jobs are created.
In a first of its kind move, a new scheme will be introduced to refund the state levies which were not refunded earlier. This is expected to cost the exchequer Rs 5,500 crores but will boost competitiveness of Indian exports. Drawback at All Industries Rate to be given for domestic duty paid inputs even when fabrics are imported under Advance Authorization Scheme.
The provision of 240 days under Section 80JJAA of Income Tax Act would be relaxed to 150 days for garment industry.
"In his letter, Jain describes the last two years as the worst ever period for spinning industry despite cotton prices being reasonably low due to a demand supply imbalance created out of new spinning mills coming up in some States (viable due to incentives rather than fundamentals) and slow demand locally due to two successive poor monsoons and overall subdued sentiments in the globe."
The spinning industry in India is going through a tough patch and many players are feeling the heat due to various reasons. To share his mind, to get the industry out of the crisis and to initiate a starting point for discussion, Sanjay K Jain, Managing Director of T T Ltd and Deputy Chairman NITRA has written an open letter to industry colleagues.
In his letter, Jain describes the last two years as the worst ever period for spinning industry despite cotton prices being reasonably low due to a demand supply imbalance created out of new spinning mills coming up in some States (viable due to incentives rather than fundamentals) and slow demand locally due to two successive poor monsoons and overall subdued sentiments in the globe. Exports have failed to cheer the industry up due to the disadvantage created by FTAs.
Cotton yarn has suffered further as the government felt yarn needs no incentives. “It’s true that yarn needs no more any investment incentives but it surely needs incentives to export. Requests went unheeded by the government from various associations because they didn’t go into the details of demand – supply minutely or tried to understand the plight of spinning industry (though its classified as a stress industry by the Banking sector),” he writes.
He explains further that in his business life, he has not seen a worse situation than this, where such a big disparity is there between spot cotton prices and yarn prices. The more disturbing fact is that no yarn buyer is hassled or is rushing to buy yarn - they know cotton prices have moved 30 per cent and yarn just 15 per cent - still no anxiety!
What led to this situation….
Unplanned and illogical incentives being given for building spinning capacities (so much that it's practically irresistible for one to not invest (central government has finally understood, but state governments still haven’t). “Lack of any authentic crop and stock data in India, despite being the second largest producer and consumer of cotton. Wrong and misleading cotton estimates from leading agencies /associations, gave a false notion that the country had enough cotton, indeed it’s difficult to estimate, but if so then better not to give estimates. Crop size in 2015-16 season is turning out to be substantially lower than estimated, catching spinners on the wrong foot,” says Jain in the letter.
He rues the government turning a blind eye to the spinning industry without understanding the facts and delay in TUF payments and being companies penalised for system errors by banks in filing TUF claims. Retrospective amendments made to deny benefits under Incremental Export Incentives – industry had to go to court for justice. “Export incentives given to all segments of the industry except yarn under MEIS and subvention - does the end user industry in India have the capacity to consume Indian yarn? India leads in exports not because we are the best, but because spinners have no choice but to undercut and sell yarn in exports to offload the 30 per cent excess spinning capacity,” says Jain.
Moreover, the rupee has weakened much less than most other currencies, even Yuan has depreciated more over the last one year. And domestic consumption has remained muted due to two consecutive poor monsoons, fabric imports, and overall low sentiment in the economy.
What spinners need to do? Jain says, there are no easy answers or perfect solutions. And it would depend on the situation of a mill but yes those with cotton should capitalise on this opportunity to make handsome profits and strengthen their balance sheets. However, the reality is that most mills are not well covered and the median of mills coverage would be from 15 days to 45 days. Adjusting for yarn sold, the cotton available will be for maximum 15 days.
However he does have some suggestion for mills to reduce the impact of crisis.
• If yarn is available or selling at cash loss position - isn’t it better to stock yarn instead of cotton? Sounds absurd, but do give it a thought. Cotton can be stocked to push up prices, why can’t yarn be stocked! Why can’t the industry use their cotton limits for yarn?• If all mills decide to keep 15 days yarn stock - it would have a double impact - yarn prices would move up and mills would stock less cotton leading to less pressure on cotton demand.
• Spinners need to push their respective associations to knock at the Government door loudly and show them the truth. The industry need to demand for similar benefits as the rest of the Textile Chain - don’t support further investments but save those who are there.
• State governments need to be approached by the Textile Ministry to create a balanced policy - Governments are telling farmers to reduce cotton production, but are incentivising mills to come up. A serious look has to be taken at the overall Balance sheet of the country.
• There are various rumours floating in market that we shall not have cotton in August/September to run the mills - due to lack of information, no one can be sure of exact situation.
And Jain gives his own calculated balance sheet (October 2015- September 2016) in lakh bales.
He says the situation is surely tight, but not so bad that mills have to close down due to cotton prices. Today, cotton going up due to sentiments, as buying demand isn’t more than 50000 to 60000 bales per day while stock in hand is not less than 40 lakh bales – it’s just a matter of perception as to who feels when they should offload. The day 10 per cent of the stockists decide it’s time to sell, the industry shall see a correction.
A cautious cotton purchase and using the limits for stocking yarn till it reaches a reasonable level, could be the answer to save the industry. Unfortunately the cotton trade keeps floating news but spinner stay muted and just looking in despair and complaining amongst themselves without taking any concrete action, he concludes by urging the spinners to join together and see what best can be done to get out of the situation.
Worldwide shipments of wearable devices are expected to grow by 29 per cent in 2016 over 2015. Unlike the smart phone, which consolidated multiple technologies into one device, the wearables market is a collection of disparate devices. Watches and bands will be popular, but additional form factors like clothing and eyewear are delivering new capabilities and experiences.
Traditional fashion and fitness brands are quickly partnering up with tech companies to deliver smarter clothing. Companies like Lenovo and Samsung are beginning to dabble in this space, revealing prototypes of shoes or belts. The category stands to capture 7.3 per cent of the market by 2020 as consumers and athletes integrate fashion-tech into their daily lives.
Two other factors driving the wearables market forward are cellular connectivity and applications. Cellular connectivity essentially frees the wearable from being tethered to a smart phone. Cellular connectivity on a wearable can transmit and receive data, including time, location, and other data about a user and his or her surroundings.
Applications increase the value and utility of a wearable, and users want to see more than just their health and fitness results. News, weather, sports, social media applications will all have a place on a wearable. And, when combined with cellular connectivity, users will not have to take out their smart phones to get the latest information. All they will need to do is glance at their wearable.
Apparel Sourcing and Texworld will be held in the US, July 12 to 14, 2016. Together they will host over 700 international exhibitors.
Apparel Sourcing is the only event on the East Coast to focus on finished apparel, contract manufacturing and private label development. It will connect attendees with suppliers specialising in ready-to-wear for men, women, children and accessories. It is an opportunity for visitors to source complimentary products and manufacturing services from over 220 exhibitors representing nine countries including USA, China, Bangladesh, Kenya, Taiwan, and more.
The Fashion on Display Trend Café will provide attendees with a preview of the best of exhibitors’ manufacturing capabilities and finished apparel products.
Texworld USA is the premier North American fabric sourcing show. It has the most diverse product group offering to date and a dedicated focus on sustainable and eco-friendly products. This edition will feature over 500 international exhibitors representing 15 countries, including USA, United Kingdom, China, Indonesia, Lebanon, Japan, Canada, Colombia, India and more. Alongside the returning Turkey and Taiwan pavilions, a brand new Korea pavilion will make its debut. Attendees can source fabrics, trims and accessories for every type of product line – women’s, men’s, and children’s wear – across a total of 16 product groups, including the brand new faux fur category and an expanded functional fabrics category.
To be held from July 7 to 9, the 2016 edition of Intertextile Pavilion, Shenzhen is entering its final stages of preparation. Approximately 700 exhibitors from China, Hong Kong, India, Japan, Korea, Taiwan and the UK will cover a wide range of sourcing optionsat the Shenzhen Convention & Exhibition Center. Wendy Wen, Senior General Manager, Messe Frankfurt (HK) says, “As the South China apparel market is increasing in importance within the country, more overseas suppliers are eager to expand their business in this region, and we are pleased to see that many of them are utilising Intertextile Pavilion Shenzhen to do so.
Amongst the many overseas exhibitors are two debut UK design studios. Fairbairn & Wolf Studio will showcase its newest Van Gogh inspired oil painted floral, Chinese calligraphic inspired, conversational landscape and constellation print collections, as well as special collections of creative screen prints and fabric developments which are tailored to the Chinese market. The second design studio, Liberty Art’s print designs are created in collaboration with famous artists, writers, craftsman, architects and illustrators. A series of collections including Contemporary Classic, Asia and 2017 Spring Summer will be presented in the fair.
Both studios are enthusiastic about joining the fair for the first time. As Rachel Huang, Regional Sales Manager of Liberty Art avers, “Shenzhen is the world’s garment making powerhouse as it contains a number of garment manufacturers and accounts for 15 per cent of China’s total textile exports. Plus, Shenzhen, being adjacent to Hong Kong, is also a hub for trade, export and clothing design. Therefore, Intertextile Pavilion, Shenzhen can be a good platform for us to explore more opportunities.”
Returning to the Javits Convention Center in New York City from July 12th to July 14th, will be Apparelsourcing USA. The event will once again open its doors to both exhibitors and attendees alike. The show will feature over 220 international exhibitors from nine countries. As the only event on the East Coast to focus on finished apparels, contract manufacturing and private labels, Apparelsourcing USA connects suppliers specializing in ready-to-wear for men, women, children and accessories. The summer’s edition promises to be the most exciting, with the debut of a new Mexico pavilion, a revamped show floor layout and the new Fashion on Display Trend Cafe.
Apparelsourcing USA gives the perfect opportunity to source complimentary products and manufacturing services from over 220 exhibitors representing nine countries, including: USA, China, Bangladesh, Kenya, Taiwan, and more. Alongside returning pavilions from Turkey and Pakistan, a brand new Mexico Pavilion will debut on the show with several exhibitors specializing in lingerie and active wear for men and women. Over three show days, visitors will have the opportunity to explore products across 12 end-use groups, including: women’s wear, menswear, active wear, knits, woven, denim, childrens wear, intimates and more.
In addition to exploring services and resources from a variety of global suppliers, attendees will experience new product category designations viz. ‘casual’ and ‘formal’. This new and simple categorization of product offerings will allow visitors easy navigate on show floors. New to Apparelsourcing USA, the Fashion on Display Trend Cafe will provide a preview of the best of exhibitors’ manufacturing capabilities and finished apparel products. In addition, the Fashion on Display Trend Cafe will offer a convenient rest area.
Textile spinning mills in India have started importing cotton as prices of the commodity are ruling higher in the local market compared to the international market. Mills have started buying West African cotton as costs are lower. Two leading textile mills in south India have bought about two lakh bales each of West African cotton in the past two or three months.
With imported cotton, mills get better credit facilities and lower interest rates. Yarn productivity is also good with imported cotton. The cost of imported cotton is lower by at least Rs 2,000 per candy. Moreover the quality is also better. Many spinning mills, including smaller ones with a capacity of 10,000 spindles, are importing cotton now.
While local cotton prices have surged by 12.9 per cent between April and mid-June, they have increased by only six per cent in the international market. Textile mills in the country consume around 25 lakh bales of cotton per month. Mills in the south alone use about 10 lakh bales a month. With the area under the crop declining on the back of a drought in Maharashtra and Karnataka, and pest attacks affecting output in Gujarat, Punjab and Haryana, cotton production is expected to fall to a five-year low of 352 lakh bales for the 2015-16 season.
The Indian textile industry is facing tough challenge from China and Pakistan. Mills have been suffering from inadequate working capital and have been virtually pushed to a corner with raw materials becoming scarce. As cotton prices shoot up to Rs 5,800 a quintal, the textile industry is reeling under severe pressure and facing scarcity of raw material. The export market is not-so-favorable and cost of operations is rising.
The situation is virtually the same in all textile industry hubs in the country. Gujarat is somewhat better off but the situation in Telengana, Andhra Pradesh and Tamil Nadu is quite bleak.
Therefore, the industry demands an increase in export incentive to seven per cent from the present three per cent and finance at seven per cent in order to survive and remain competitive in international markets. The industry fears that if it fails to be competitive globally, the commodity will have to be sold domestically, triggering a glut. This could lead to huge losses for the industry and a drop in cotton prices in the ensuing season.
The textile industry wants a three per cent incentive for yarn, five per cent for fabrics and seven per cent for garments.
According to Roger Hubert, Chief Representative of Swedish retail giant H&M Group in Bangladesh, remediation or relocation of units will not take place in, if there is no guaranteed loan from the government. As of today, there is no such fund or guarantee provided to the commercial banks, so they can issue low-cost loans to small and medium factories under a covered risk, he added.
At the launch of ‘Remediation financing in Bangladesh's readymade garment sector’, he said 71 per cent of remediation work has been completed in more than 250 factories that H&M sources from. The International Labour Organisation (ILO) and International Finance Corporation (IFC) jointly launched the report, while retailers, garment makers, exporters and diplomats were present.
The rest 29 per cent of remediation work is in progress as the factory owners have opened letters of credit to import safety equipment, added Hubert. Owners of about 3,800 factories in the country are now remedying their units as per the recommendations made by the engineers of Accord, Alliance and government sponsored inspections, to strengthen workplace safety. So far, more than 60 per cent of the work is complete, according to data from the Department of Inspection for Factories and Establishments (DIFE). The relocation of factories from Dhaka to nearby areas is not an easy task, but it is possible, said Hubert.
Indian employees are more confident about the state of their economy than the Chinese. Nearly 50 per cent employees in India rate the economy good to excellent compared to 28 per cent Chinese employees rating their economy good to excellent. Employees in India are more optimistic about the next 12 months with regard to skill development and career progression. India and China are competing with each other to retain the fastest growing economy tag.
However, Indian employees are less satisfied about certain aspects of their job compared to their counterparts in China. They are less satisfied about salary, opportunities for promotion and job security. About 44 per cent Indian employees cite new skill development as the top reason for conducting a job search, while 43 per cent of employees in China seek work-life balance. In China, keenness to attain a healthy work-life balance is prioritised over new skill development, which seems to be of greater significance to Indians. Both countries showcase a willingness to explore working abroad.
Overseas employment is generally seen as an attractive option across both nations. In India it’s 64 per cent while in China it’s 59 per cent. Indians continue to be positive about the opportunity to develop new skills and the possibility of getting a promotion this year. In contrast, employees from China are slightly less confident.
