FW
India’s share in global textile exports has declined while that of other countries like Bangladesh and Vietnam is increasing. HK Magu, Chairman, AEPC expounds on the reasons for this decline in exports and strategies for their revival.
Due to the ongoing US-China trade war, the Indian apparel industry expected a lot of orders to be diverted to India. “However, buyers didn’t really flock to us due to the low scale of operations of our exporters,” says HKL Magu, Chairman, AEPC. “Most Indian exporters are either small or medium scale operators. Only a few of them can cater to big orders. Also, our exporters cannot ensure a speedy delivery as they have to wait for ROCTL and MEIS clearances,” he adds.
High GST rates, fund shortage affecting Indian exports
Another issue that hampers the growth of Indian exporters is high rate of GST. As Magu notes, “We pay GST at the rates of five percent, 12 percent and 15 percent. However, we get only a five percent benefit. The government blocks around 3-4 percent of this amount preventing us from giving better prices to our buyers. This makes it becomes difficult for us to retain these buyers,” adds Magu.
The apparel business has been declining in the last couple of months. “Clusters like Tirupur and Noida are closing down due to shortage of funds. Some banks have agreed to finance the export community through the GST input. However, they charge a heavy interest on this loan, which adds to the buyers’ costs,” adds Magu.
Indian exporters don’t get GST refunds for embedded costs like fuel. “But they have been assured that no further tax will be added on their exports. This benefit will be particularly given to the person who shows his GST inputs,” notes Magu.
FTA eliminates duty differences
AEPC does more of value addition. “Around 73 percent of our exports are 50 HS code items. To export technical textiles, we need infrastructure and finance,” he says further adding that “though India is working on a FTA with the EU, there are obstacles like duty free imports of wines and automobiles.”
According to Magu, FTAs are important as a buyer purchasing his goods from Bangladesh doesn’t have to pay duty whereas while purchasing from India, he has to pay a 10 per cent duty. This duty difference has enabled Bangladesh to double its exports in the last two or three years. “We need to build a better infrastructure and bigger clusters to compete with these countries,” adds Magu.
Imports from Bangladesh may hit the domestic industry in India but they will not affect its export industry. “Duty free exports from ASEAN or Bangladesh will certainly hit the domestic industry,” says Magu. Big chain stores in India also buy from Bangladesh affecting its manufacturing sector. To prevent this, the government should allow only products made in Bangladesh to be imported to India. It should not allow fabric imports from China.
Reforms needed for export growth
Across the world, polyester or viscose is more in demand. “Therefore, we should also start producing manmade fibers. We should set up weaving centers to enable our exporters to get a better price for their exports,” adds Magu.
In terms of exports, South is ahead of the north. Exports from Tirupur range from 25 percent to 28 percent, while those from NCR are just 21 percent. However, NCR is known for its value addition while Tirupur produces basic clothes .
“We should set up apparel parks near metro cities or ports. That will save our transportation costs,” says Magu. The need to spend on real estate can be eliminated by setting up plug and play facilities. “We should also reduce our electricity and transaction costs, which will enable us to produce and export more,” he sums up.
PVH Corp, owner of iconic brands, including Calvin Klein, Tommy Hilfiger, Van Heusen, Speedo and IZOD, has received approval of its absolute greenhouse gas (GHG) emission reduction targets by the Science Based Target initiative, furthering its commitment to a zero-carbon economy. PVH’s targets are in line with the most ambitious level of decarbonisation, 1.5 degrees Celsius, set out by the Paris Agreement, a United Nations-led agreement among nations to limit the earth’s rising temperature to fight climate change.
PVH established GHG emission reduction targets as a part of the Forward Fashion Corporate Responsibility strategy launched earlier this year. The strategy set out the ambition for business operations to generate zero waste, zero carbon emissions and zero hazardous chemicals, and to produce circular products among other social and environmental commitments. To continue reaching these targets, PVH pursues energy efficiencies and renewable energy deployment in line with its commitment to RE100, a global corporate leadership initiative moving businesses toward 100 percent renewable electricity.
In a letter issued to the union finance ministry A Sakthivel, Vice-Chairman, Apparel Export Promotion Council (AEPC) stressed that many exporters were not able to meet their working capital issues and are either forced to downsize or close their businesses. This relates to the decision of the Union government to scrap the merchandise export incentive scheme (MEIS) under which incentives of about Rs 500 crore was due for the units. The council has highlighted the government’s that this action would lead to many export units being forced to close down and subsequently spark an unemployment crisis.
APEC has pointed out that the Centre has yet to implement rebate of state and central taxes and levies (RoSCTL), launched in March, which is affecting the exporters. MEIS is one of the supportive schemes for the apparel industry to offset infrastructural inefficiencies and associated costs. It was suspended by the central government on August 1. As per industry sources, more than Rs 500 crore are outstanding in the MEIS for the apparel exporters in Tirupur alone.
Cambodia’s potential loss of preferential trade access to the European Union (EU) could weaken the country’s economic growth and undermine the price competitiveness of the country’s garment exports. Cambodia’s economy depends heavily on its garment and textile industry, and the EU is its largest export market. Loss of trade benefits would be a big blow to the sector. If the EU decides to suspend Cambodia’s EBA eligibility, apparel imports from Cambodia would be subject to the World Trade Organization’s most-favored-nation (MFN) tariff rate, which averages around 12 per cent.
Cambodia’s garment industry has many strengths. Garment production is well-established, and despite rising wages it has relatively competitive labor costs. Yet ongoing tensions and the government’s refusal to address the country’s human rights issues will only add to the sector’s weaknesses. Supporting industries, such as textile manufacturing, are still in their infancy, the sector is dependent on Chinese investment and the infrastructure is poor.
The European Commission has given Cambodia a one-month deadline to respond to its findings over alleged human rights violations in the country. It will then decide in February whether to temporarily withdraw the duty-free Everything But Arms (EBA) trade benefit. Based on Cambodia’s strength as an apparel supplier to the US without any trade benefits, there’s a chance the loss of EU benefits might not make a meaningful difference. In the first ten months of the year, US imports from Cambodia rose 10.84 per cent.
Trade show organiser Tranoi plans to launch its own space during the Shanghai Fashion Week. Tranoï strengthens its presence in the Asian market. The trade show organiser began testing the Chinese market last year with its participation in the OntimeShow fair. It will launch its own trade show next year with its local partner DFO during Shanghai Fashion Week.
The event will be called Nova by DFO & Tranöi, and will be held between March 27 and 30, 2020. The trade show organiser expects more than one hundred international companies to attend and will have fashion shows and spaces for emerging designers to present their work.
Tranoï is one of the leading tradeshows in France and takes place every year during Paris Fashion Week. DFO on the other hand, is a fashion management and market development group for China and operates with more than sixty international clothing brands.
The textile commissioner’s office will soon form of a technical advisory cell for the anti-dumping duty investigation regarding import of nylon filament yarn originating from countries like China, Korea, Taiwan and Thailand. The advisory cell will allow a level-playing field to the industry on deciding on the anti-dumping duty.
Yarn spinners in India have been lobbying hard for imposing anti-dumping duty on all the filament yarns including nylon to Federation of Gujarat Weavers’ Welfare Association (FOGWA). China and other countries are manufacturing new yarns to meet growing demand of the consumers. Imposition of anti-dumping duty on such yarns keeps the powerloom weavers away from getting quality yarn, which ultimately leads to increased import of fabrics and garments in India.
The textile commissioner has assured to release Rs 400 crore pending subsidy amount. Out of more than 9,000 files under TUF approval, the government has given approval to only 180 files.
Mothercare is closing all its UK stores and online platform. For the half year UK sales fell by almost 20 per cent. The brand’s UK retail business has failed to deliver annual operating profit in over 10 years. Besides facing the same headwinds as most retailers did, Mothercare struggled to deliver a stable gross margin as 70 per cent of the UK’s shop floor space was given to partner brands in the baby category. The margin and the contribution from these brands reduced over time, and when Mothercare started introducing more higher margin Mothercare-branded product, it realised its shops were too large to fill with its own product alone. In the face of severe competition, the company tried to provide a higher level of exclusivity, but despite its efforts most of its third party products could be bought elsewhere at cheaper prices. The store estate was reduced to 80 locations last year as part of a series of company voluntary agreement but not enough trade transferred to the remaining stores or move online. Meanwhile, cash constraints throughout 2018 hampered the firm’s ability to launch an effective marketing campaign to restore its tarnished image.
Mothercare is focusing on building its brand by working more closely with its franchise partners and designing its product with the global consumer in mind.
Zalando, a European e-commerce giant based in Berlin (Germany), is winding up its apparel sourcing from India. As of now, the firm’s private label zLabels is just sourcing men’s shirts from a Bengaluru-based vendor and knitted garments from a Tirupur-based exporter. From now onwards, the brand will source shoes from India and basic garments from Bangladesh.
In apparels, the brand used to source mainly high fashion garments (knitted as well as woven) from 8 to 10 exporters of India. Its sourcing amounted to about 20 million euros per year as every month it used to place an order of 300-400 SKUs (stock keeping units) and every SKU had a minimum order of 1,000 pieces. In many cases, it went up even higher.
zLabels started in 2010 with around 11 brands in apparel and footwear category to cater to its niche customers. “These 11 private label brands – Anna Field, Even & Odd, Friboo, Fullstop, Kiomi, Mint & Berry, Pier One, Twintip, Your Turn, Zalando Essentials and Zign – will be kept for the time being and reviewed in line with this new assortment strategy at a later point.
Karl Mayer’s products have a very good price-performance ratio and they minimise the making-up effort.
This includes especially plain Raschel fabrics with seamlessly incorporated, lace-like decoration tapes, which do not require hem on leg cut outs and waistband. For manufacturers of shoe fabrics, the double-bar Raschel machine with piezo-jacquard technology offers wide-ranging patterning possibilities. Contours and functional details such as stabilisation structures are created directly during the warp knitting process. The weft-insertion warp knitting machine produces a fine, transparent product with an irregularly puffed-up fancy yarn. The finished curtain article resembles a woven fabric in its look, but is produced much more efficiently and without the elaborate sizing process. The new terry tricot machine has up to 250 per cent higher output than air-jet weaving machines, consumes 87 per cent less energy and production without a sizing process. The ISO Elastic 42/21 is an efficient DS machine for the midrange segment for elastane warping on sectional beams. This is geared towards the standard business in terms of speed, application width and price, and offers a high-quality fabric appearance.
Karl Mayer’s software start-up KM.On presents digital solutions for customers‘ support. This young company offers developments in eight product categories, and it has already been successful on the market with digital innovations on the topics of service, patterning and management.
US fashion brands are adding active wear. Own-brand labels Zella (Nordstrom) and Ideology (Macy’s) have grown their assortments of the number of products landing each month and in the frequency of drops. These increases indicate a high demand for private label active wear within department stores.
Targeting the value market, Old Navy frequently features discounted active wear in its e-mail communications and promotes the category at attainable price points. May is the favored month for active wear messaging at Old Navy, while 50 per cent off is the most popular discount offered. American Eagle Outfitters focuses on featuring active wear pieces that have lifestyle appeal to the mass market. In its newly launched Tackma Tech performance collection, neons are prominent alongside stretch and moisture-wicking components. Tommy Hilfiger is also getting in on the active wear action. Tommy Hilfiger also infuses its existing brand DNA into the collection by featuring pieces in its signature American colors.
Bright colors are gaining traction when it comes to men’s active wear. Shades like orange and yellow have increased in product counts by 67 per cent and 143 per cent. Patterns are popular this season in women’s wear accounting for 20 per cent of arrivals compared to 15 per cent last year.
