FW
Cotton linter pulp mills and refined cotton plants in China are largely running with low operating rates, exerting a significant impact on the cotton linter import market. China’s imports of cotton linter in March were up 101.2 per cent month on month but down 70.2 per cent on a yearly basis.
The cotton linter import market has witnessed big volatility since the beginning of this year. In March, China’s imports of cotton linter from Turkey were 37.6 per cent of the total. Imports from the US occupied 22 per cent of the total.
For Q1 of 2018, China’s imports of cotton linter from Turkey and the US took up 40.5 per cent and 22.6 per cent of the total. Imports from India and Turkmenistan respectively occupied 17.44 per cent and 8.75 per cent of the total.
The import price in March was down 5.75 per cent year on year in the first quarter. Year on year it was down 4.18 per cent. Turkey and the US are the largest origins of China’s imported cotton linter while imports from India and Central Asia have decreased evidently. The ban on solid waste (including cotton waste) which took effect in January 2018, as well as the intense pressure of environmental protection, have exerted significant on cotton linter pulp mills and refined cotton plants.
Lisky, a global name in knit technology, will set up a sportswear manufacturing plant with sophisticated technology at Sadapur, Savar near Dhaka. The global sportswear market now stands at $270 billion. Although Bangladesh is the second largest garment exporter worldwide, it earlier had little presence in world sportswear market. However, now many Bangladeshi apparel makers are gearing up to enter the global sportswear markets, as demand for the items is on the rise with changes in taste and fashion.
The garment industry is the biggest sector in Bangladesh. It contributes more than 80 per cent of the total export of the country. The present government is the industry & business-friendly and ready to extend any cooperation to the development of the industry.
Net inflow of foreign direct investment (FDI) from India to Bangladesh rose by 44.76 per cent in the last year. Around one-sixth of the FDI was injected into the banking sector. This was followed by textiles and power. The India-Bangladesh relationship has started improving since 2009-10.
Though investments have more than doubled in the last two years, the flow is still minimal. Prominent Indian investments in the country are from Airtel, Marico, Godrej and VIP Industries.
Bangladesh is bullish about export-oriented investments as a remedy to its lopsided balance of trade with India. Co-operation initiatives are opening up opportunities for infrastructure companies. L&T is building three gas-based power plants for Bangladesh generation companies. The infra major has also got a contract for constructing a new airport.
The Indian denim fabric industry will continue to face margin pressures in 2018-19 due to oversupply. About 15 to 20 per cent of the total capacity will remain underutilized. Additionally, competition will intensify as several players have undertaken capacity additions to add another 150 million meters a year. Denim fabric capacity additions are expected to outpace garmenting capacity additions over the short term, translating into a continued denim fabric surplus in the market. However the long-term demand potential for the segment remains intact due to denim’s versatile fashion appeal among the young populace, a rising disposable income and untapped semi-urban pockets of the country.
India is a leading denim fabric manufacturer in the world. However, the sector’s operating margins are expected to remain in the range of 10 to 11 per cent in the current fiscal. Though the denim fabric industry is cyclical in nature and characterised by periods of excess capacity, the present downturn may be relatively prolonged, partly on account of the regulatory disruptions that the industry underwent in the last two fiscals.
The credit profile of denim fabric manufacturers is likely to moderate over this fiscal amid the continuing contraction of operating margin and debt-funded capacity expansions. <br/
Outdated labor laws in the textile sector, is hampering India’s growth in global textile industry. The country is not perceived as a low cost labor destination. Incentives offered in India are far below those offered in China. So, Indian products lose on price competitiveness in global markets.
Bad roads and poor connectivity around weaver hubs have led to reduced number of visits by buyers, leading to a greater dependence on buying agents. The high import cost of machines deters many small manufacturers from upgrading to latest technology, thereby contributing to compromises on quality.
There is a need for strengthening the eco-system for textile exports, integrating the fragmented textile value chain and investing in skill upgradation to boost India's sourcing potential. Other necessary measures are innovation in new products, business models and collaborations; digitisation of the entire supply chain from product development to delivery and ensuring compliances related to quality and legal issues.
Key to success will be encouraging product as well as market diversification for varied textiles and apparel products and clear positioning of Indian textiles in international markets. The focus should be on promoting niche areas that cover indigenous artisans, weavers and craftsman as they provide a unique identity to the country’s textile output.
As per Zacks Investment Research, Wall Street brokerages have forecasted Gap Inc’s sales will be worth $3.61 billion for the current quarter. Nine analysts have issued estimates for GAP’s earnings, with lowest sales estimate being $3.45 billion while the highest estimate being $3.75 billion. The company reported sales of $3.44 billion in the same quarter last year, suggesting a positive year over year growth rate of 4.9 per cent.
Zacks, analysts expects GAP to report full-year sales of $16.30 billion for the current fiscal year, with estimates ranging from $15.93 billion to $16.77 billion. For the next fiscal year, analysts expect the firm to report sales of $16.67 billion per share, with estimates ranging from $15.93 billion to $17.37 billion.
India needs to rethink its trade agreements. The FTA with the European Union has not taken the country far and exports are not rising. On the other hand, Indian imports from countries like Bangladesh are rising and eating into the share of domestic manufacturers because of South Asian Free Trade Area (SAFTA). This is a trade agreement that came into force in 2006 between India, Pakistan, Bangladesh, Bhutan, Maldives, Nepal and Sri Lanka.
Other major areas that need to be worked upon include a change in traditional mindsets. New practices for sustained growth have to be adopted, creating economies of scale, inviting foreign investment and focusing on research and development. The workforce has to be skilled. Competitive products have to be created. Processing is another segment where huge capacities need to be generated and quality improved.
There is a need to create an end-to-end value chain in the textile sector. Ahmedabad and Surat are major centers for producing cotton and manmade fibers and fabrics, aimed predominantly at the low-value domestic market. Gujarat is the largest producer of cotton and manmade fibers. Low-value products like cotton and fabrics are being exported from the state while high-value products like apparels are being imported.
As per the Ready Made Garments Export Council, Egypt’s exports of readymade garments increased 17 per cent in the first quarter (Q1) of 2018, thus recording a profit of $385 million (LE 6.77 billion), compared to $330 million during the same period of 2017.
Around 48 per cent of Egypt’s ready-made garments exports in Q1 was to the US, recording $185 million, compared to $160 million in the same period of 2017, a 16 per cent increase. The council aims to increase export by 20 per cent by the end of 2018 to touch $1.8 billion. The sector’s exports to African countries do not exceed 2 per cent but activating trade agreements such as the African Continental Free Trade Area, will increase exports of Egyptian products to specific markets such as South Africa.
Pakistan’s budget for 2018-19 focuses on general industry and trade. The zero-rating regime has been continued. But exporters say their refunds should be disbursed and that export development surcharge should be abolished. They also want the one per cent tax on export to be reduced to 0.5 per cent. They argue, their problems will multiply owing to the liquidity crunch and as a result the trade deficit will further widen. The liquidity crunch is a major stumbling block in the way of improving exports.
Exporters want a reduction in electricity and gas tariffs. Energy is an important element regarding the cost of production particularly for the spinning, weaving and processing industries. Exporters say its availability at a regionally competitive price is important. Another of their proposals is that gas prices should be uniform throughout the country.
In value added textiles, particularly garments and knitwear, Pakistan lacks variety both in products and type of fabrics. The country does not produce blended yarn and blended fabrics that the global market demands. Pakistan’s textile exports rose 7.2 per cent during the first eight months of the current fiscal year. Textile exports make up around 60 per cent of the country’s total exports.
Bangladesh’s textile industry accounts for over 70 per cent of export revenue and 13 per cent of the country’s gross domestic product. The country has more investor-friendly policies than many of its neighbors and cheaper skilled labor. The country has tax-free access to 37 countries, including the European Union, Canada and Australia.
After liberation in 1972, Bangladesh opted for a socialistic economic policy by nationalising all big industries, including large textile mills. However, the country took a more capitalistic view of development by not only opting for a market-oriented economic policy but also handing over these mills to the private sector in phases.
This signaled a breakthrough in the industry, which provides five million jobs for the people of the country. The country today is an export-oriented economy, thriving on cotton and readymade garments.
Last year, Bangladesh came up with a textile policy, targeted at expanding the export market. One of the focal points of the policy is to strengthen the primary textile sector to fulfil the local demand of textiles and promote a medium and high value added export oriented garment industry.
Knitting industries in the country are self-sufficient. The spinning, weaving, power loom, knitting, dyeing and finishing industries are strong.
