FW
Specialised textile mills and powerloom industries in Bangladesh want policy support for setting up modern machinery, cheaper bank loans and a reduction of 15 per cent in VAT. About 70 to 75 per cent of the textile industry depends on powerlooms and the existing looms are all outdated. They want to replace existing powerlooms with modern ones like rapier, water jet and air jet looms. But modernisation of the textile sector is not possible without support because the high-tech looms are expensive.
Businesses say the 14 per cent bank interest rate is too high and if it is reduced to single digits, the local weaving sector can supply the required fabrics to garment exporters that will also help bring down import dependency and save a huge amount of foreign currency.
The 15 per cent VAT has been termed as suicidal. Weavers say they won’t be able to pay and the VAT would raise prices of locally-produced clothes, which are facing stiff competition from imported garments. They say if the 15 per cent VAT is not withdrawn, most small and medium-sized weaving mills will shut down and leave thousands of workers jobless. The powerloom sector supplies 7,400 million meters of fabrics but the requirement is for 14,000 million meters of fabrics.
After declining by about 2 per cent last year, textile exports are expected to increase by 6per cent year-on-year (y-o-y) to $40 billion in 2016-17 (FY-17). Higher fibre prices and expectations of growth in the apparel segment would lead to higher exports in FY-17, according to ratings agency ICRA.
For the second consecutive year, the estimated exports for FY-17 would fall short of the target and would almost be at the same level in value terms when compared to that of 2014-15. The government has fixed $50 billion as the export target for F-17. An earlier milestone was achieved in 2014-15 when textile exports fetched $40 billion.
Textile exports continued to slip by nearly 6per cent on a y-o-y basis and stood at about $5.7 billion in April-May this year. Exports stood at about $6.1 billion for the same period the previous year and around $6.4 billion in April-May 2015. Polyester and cotton prices were lower by 10per cent and 4per cent respectively (in dollar terms) till May this year.
According to ICRA, however, with the recent rise in domestic as well as international cotton prices, the growth in value terms is expected to turn positive in the coming months as the higher input costs will partially be required to be passed on to the buyers.
As per Anil Gupta, VP, corporate sector ratings ICRA, despite volume growth in most of the segments, de-growth in the value of textile exports during FY-16 was driven by lower fibre prices (cotton as well as polyester).
Apparel Sourcing Paris will be held from September 12 to 15, 2016. More than 550 exhibitors are expected to participate, an increase of 37.5 per cent compared to the 2015 edition. With new countries joining in and presentation of new products, Apparel Sourcing Paris is making its platform of expertise in ready-to-wear and accessories even more exhaustive. For the September 2016 edition, it will showcase apparels for men, women and children.
Apparel Sourcing Paris proposes effective and diversified solutions and is pursuing its mission thanks to the loyalty of exhibitors, particularly from Pakistan, Bangladesh, Tunisia and Morocco. Many Indian exhibitors present in September 2015 will be back for the 2016 edition in larger numbers, constituting a 20 per cent increase in exhibitors. Exhibitors from Vietnam have a preference for the September edition, because one trade show a year provides them with sufficient business for the whole year. Finally, Hong Kong will present 10 exhibitors.
China will be present with 426 exhibitors. The latest South American knowhow will be showcased through Guatemala, a country that has placed the textile industry at the heart of its economic boom. The show contributes to the competitiveness of apparel and accessories manufacturers.
The Southern India Mills' Association (SIMA) has welcomed the government order on sale of cotton stocks with the Cotton Corporation of India (CCI) to MSME spinning mills registered with the office of the Textile Commissioner. Thanking the Union Textiles minister for addressing the concerns of spinning sector that is already burdened with over capacity and reeling under rising prices of stock, the Secretary General of SIMA, Dr K Selvaraju expressed hope that the government would make the order permanent so as to limit the sale of CCI cotton stocks to spinning mills directly.
The industry body described the government order to this effect as proactive and said that the move would bring about stability in cotton prices during off season as well as satisfy the raw material requirement of small spinning mills.
Meanwhile, chairman of SIMA, M Senthilkumar advised spinning mills against resorting to panic buying. He said cotton prices would soften with the availability of 43 lakh bales of closing stock estimated by the Cotton Advisory Board (CAB) and imported cotton already contracted by some millers. Senthilkumar says, cotton imports in the next three months might exceed 15 lakh bales as large number of mills had already contracted for imports with African countries and Australia.
Giving the backdrop against rising prices, the release noted, that the spot price of benchmark cotton variety Sankar-6 which was ruling at Rs 33,000 per candy of 355 kg during first week of April 2016, had increased to Rs 34,700 per candy by the month end. It then further increased to Rs 36,800 by the end of May 2016 and to Rs 42,700 by the end of June. In July, prices had touched Rs 48,000 per candy, an increase of over 45% over the last three months. This translated into an increase of Rs 60 per kg of clean cotton cost used for combed count yarns.
The Southern Gujarat Chamber of Commerce and Industry (SGCCI) has sought financial assistance of Rs 400 crores from the Ministry of Textiles for setting up a state-of-the-art textile processing cluster at Pinjrat village in Olpad taluka of Surat district. SGCCI office-bearers submitted a letter to textile commissioner Kavita Gupta demanding a financial assistance of Rs 400 crores for the proposed textile processing cluster to be developed on 50 lakh sq. mt. of land at Pinjrat. With the total project cost for the cluster is pegged at Rs 800 crores, the SGCCI wants 50 per cent of the grant from the central government and 25 per cent each from the state government and the industry.
The SGCCI and some textile processors in Pandesara and Sachin industrial estates have come up with this ambitious project that would house around 100 dyeing and printing mills with state-of-the-art technology at Pinjrat. A proposal for allotment of government land at Pinjrat is under consideration of the Gujarat government.
According to SGCCI president B S Agarwal, the ambitious project will boost manufacturing capacity and quality of textile processing sector in Surat. At present, only eight to 10 textile processing units manufacture finished fabrics as per the requirement of the garmenting sector while the rest lack technical know-how. The SGCI wants to set up a processing cluster having big units with hi-tech technology and up gradation.
There are around 400 textile processing centres in Surat and Palsana of which 5 per cent are manufacturing finished fabrics for the garmenting sector, the others are manufacturing fabrics like saris and dress materials, home textiles among others. Agarwal further said that the textile processing units will be connected with a common boiler system thereby discouraging the use of chimneys emitting pollution. There will be a set-up for wind power and solar power generation, common drainage, CETP plant, tertiary treatment plant and other state-of-the-art facilities.
Following the recent terror attack in Gulshan, global buyers and brands asked Bangladesh’s RMG exporters to meet them outside Bangladesh for business deals for the upcoming season. Some buyers have already postponed their visit and scheduled their meeting in a third country on security grounds. The apparel makers apprehend that besides production cost hike, they might lose orders as well, if the current situation in the country continues unabated.
Moshiul Alam Sajal, managing director of Posmi Sweaters said that three of his buyers from Italy, France and Spain asked him to get ready for a meeting in a third country for negotiation of new orders for the coming season.
Like Sajal, a good number of manufacturers are facing the same problem. It costs over Tk4 lakh to meet the buyers in a third country, but the main problem is that a third-country meeting prevents the manufacturers from displaying a whole lot of samples since it is not possible to carry a good number of styles with them, they said.
For that the government has to take measures to ensure the safety of foreigners, Sajal said, suggesting that the government should unearth the root of militancy and bring them to book to prevent further attacks.
Bangladesh’s apparel sector have urged the government to fix 0.70 per cent tax at source on export as a final settlement instead of making it just a minimum rate. The call came from Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in a letter to the Finance Minister AMA Muhith. BGMEA President Siddiqur Rahman has said the rate was earlier reduced to 0.70 per cent from 1.50 per cent in the proposed budget.
The letter says that although the budget for the FY16-17 proposed to set tax at source on export to 1.5 per cent for apparel exporters, the rate was later reduced to 0.70 per cent following the intervention. If the tax at source of 0.70 per cent is considered as minimum tax, there are possibilities of imposing other higher taxes and there are also possibilities of harassment to entrepreneurs which will make the income tax return submission process more complex, it added.
Urging the Finance Minister to intervene in the matter, the BGMEA President also requested him for giving necessary instructions to the National Board of Revenue (NBR) for amending the income tax ordinance and issue necessary diktats to consider tax at source on export for the apparel makers as final settlement which the RMG makers enjoyed before. So far the apparel makers have enjoyed tax at source on export as final settlement. However, the FY17 budget turned 0.70 per cent tax at source on export as minimum tax. During the last fiscal year, the readymade garment (RMG) makers were enjoying 0.60 per cent tax at source on export which was considered as final settlement.
A United Nations research has found out that soaring temperatures, caused by climate change, may cost global economies more than $2 trillion by 2030. It would also restrict working hours in some of the poorest parts of the world. As many as 43 countries, mainly those in Asia, including China, Indonesia, and Malaysia, will experience decline in their economies because of heat stress, according to Tord Kjellstrom, a director at the Health and Environment International Trust based in Nelson, New Zealand. As a result, China’s gross domestic product would reduce 1 per cent and affect that of Indonesia by 6 per cent by 2030.
According to the paper published in Asia-Pacific Journal of Public Health Extreme, heat in Southeast Asia already curbs annual working hours by 15 to 20 per cent and that figure could double by 2050 as climate change continues. The study was one of six papers published by the UN University in Kuala Lumpur that details the impact of climate change on human health. From 1980 to 2012, the study said about 2.1 million people worldwide died as a direct result of almost 21,000 natural catastrophes such as floods, mudslides, extreme heat, drought, high winds or fires. The cost of those disasters exceeded $4 trillion, a sum comparable to the current GDP of Germany.
In 2030, in both India and China, the GDP losses could total $450 billion, it is being said. The impact could be reduced by making a major shift in working hours and changing the methods of how new factories are built to require less power to cool. Low and middle income countries are more likely to lose productivity Richer countries will largely avoid losses from heat, the study found. Russia, Norway and Sweden may see productivity dip as a result of colder winters.
Heat stress is more likely to restrict low-paid and low-skill jobs such as heavy labour, farming, and manufacturing. That has the potential to increase the gap between rich and poor. Demand for air conditioning in offices, shopping malls and homes are likely to soar as temperatures rise placing a strain on power supplies, according to the paper.
Fast fashion giants have ventured into textile recycling. Inditex, the parent company of Zar,a has committed to the circular economy model in all phases of the product cycle. Starting in Spain this September, Zara will offer shoppers free at-home collection of used clothing when delivering online orders. The company will put garment collection containers throughout its store network. The clothing will be recycled for the development of new textile raw materials.
Meanwhile Inditex has inked an exclusive agreement with Austrian fiber supplier Lenzing for the production of premium textile raw materials made from fabric waste generated by Inditex. Inditex will provide Lenzing with roughly 500 tons of textile waste, with the aim of raising this to around 3,000 tons within a few years. This will enable the Austrian company to produce around 48 million garments.
Closing the loop in textiles is a priority for Inditex—the company will support research into technology that will turn recycled garments into new textile fibers. Similarly, Swedish retailer H&M is also moving toward a 100 per cent circular business model, collecting more than 12,000 tons of unwanted garments in its stores in 2015 alone. Last year, it made more than one million products containing at least 20 per cent recycled material from collected garments.
Hundreds of thousands of garment workers in Tamil Nadu have got a pay rise of up to 30 per cent. The workers, including cloth cutters, tailors and button makers - will also get an additional inflation-linked allowance. In its July 13 ruling, the court asked manufacturers to immediately pay the revised wage as well as arrears backdated to December 2014. If this happens, workers would see their pay rise from a monthly average of Rs 4500 to Rs 6500.
But clothing manufacturers and exporters, who supply many international brands, said the new wages would be practically impossible to introduce given the tough global market conditions. They say the wage rise is unrealistic given the stiff competition they face from countries like Bangladesh and China.
India is one of the world's largest textile and garment manufacturers. The $40 billion a year industry employs around 45 million workers. Under the Minimum Wages Act, introduced in 1948, state governments are required to increase the basic minimum wage every five years, but textile manufacturers have repeatedly challenged these pay rises in Tamil Nadu. The last time the state government revised pay was in 2004. But the matter went to court immediately and the increase was not implemented.
