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Luwa India has completed the first phase of its state-of-the-art manufacturing unit in Bangalore. The company had a good year in 2017. In many countries around the globe it concluded orders not only with large customers but also with smaller ones. It expects business to be the same in 2018 and has an excellent order backlog and many projects under discussion. For India, with GST worries getting sorted, it expects an improvement in the flow of new investments with additional capacities in the weaving and knitting segments.
Luwa is a global leader in air engineering that provides comprehensive tailor-made solutions for various air needs of the textile industry. It has seen increased business in Bangladesh, Vietnam, Uzbekistan, Pakistan and the US, while sales in Turkey have just recovered. It sees more and more customers investing in other countries than their home base.
In India, Luwa has maintained its market leadership in textile humidification and filtration plants and increased its business by being a preferred supplier to corporate groups. Besides it has penetrated into the small and micro sector business too and has provided energy-efficient solutions to its various customers in and around Bhiwandi, Bhilwara, Ichalkaranji and Ahmedabad.
Luwa is developing an add-on to its DigiControl system to manage performance of humidification and filtration plants. It will be available for customers in India this year.
Lower cotton prices and demand recovery are expected to support textile sector’s profitability. This is in view of expected margin expansion due to softening in cotton prices, improved consumer spending outlook in key user countries and the low base effect of FY18, according to India Ratings and Research.
The report noted the slowdown in domestic demand for textiles due to demonetisation and the goods and services tax (GST) implementation, seems to have bottomed out in the second half of the fiscal. Better margins, modest reduction in working capital requirements and subdued capex in FY19 will improve the overall credit profile.
The report noted that the textile sector outlook is constrained by the possible impact of pink bollworm on cotton output and prices, and increasing crude prices on synthetics. Increasing crude price is likely to narrow the spread between cotton and synthetic yarns, thereby moderating the pace of switch to synthetics from cotton textiles. Operating margins of synthetics manufacturers may witness volatile margins due to crude price fluctuations and delays in passing on cost inflation.
A higher-than-expected rise in cotton acreage at 19 per cent and a consequent 11 per cent increase in crop production in FY17-FY18 are likely to moderate cotton prices in FY19, despite increase in prices in the last few months due to the pink bollworm issue. The global stock-to-use ratio for cotton, excluding China, increased to 56 per cent in FY18 from 47 per cent in FY17, although Chinese inventory declined 17 per cent year on year.
The ongoing IIT Expo in Sri Lanka from February 21 to 23 is showcasing textiles of India. More than 40 Indian fabric manufacturers and exporters are displaying varieties of apparel fabrics (woven, knitted and non-woven), made-ups, home textiles, traditional items etc in various blends, textures, colors and designs from various clusters of India like Tamil Nadu, Solapur, Bhiwandi, Mumbai, Ahmedabad, Surat and Rajasthan.
The event is expected to position India as a reliable source of supply of textile items to Sri Lanka. Sri Lanka is one of the biggest garment manufacturing hubs neighbourhng India. These garment units largely depend on imported fabrics and thus India serves as a good source of fabrics and other textile items. This will definitely be a win-win situation for both Indian and Sri Lankan entrepreneurs to directly interact to furthering their respective business interests.
This event is organized by the Powerloom Development and Export Promotion Council (PDEXCIL) for the third time in Sri Lanka, with the previous events being held in 2013 and 2017. PDEXCIL, under the ministry of textiles, Govt. of India, promotes overall growth and export of the power loom sector in India.
The outlook for cotton textiles and synthetics in India looks stable. This is in view of expected margin expansion due to softening in cotton prices and improved consumer spending outlook in key user countries. The slowdown in domestic demand for textiles due to demonetization and GST implementation seems to have bottomed out in the second half of the fiscal.
A higher-than-expected rise in cotton acreage at 19 per cent and a consequent 11 per cent increase in crop production in fiscal year 2017-18 are likely to moderate cotton prices in fiscal year 2019, despite an increase in prices in the last few months due to the pink bollworm issue.
Increasing crude price is likely to narrow the spread between cotton and synthetic yarns, thereby moderating the pace of switch to synthetics from cotton textiles. Operating margins of synthetic manufacturers may witness volatile margins due to crude price fluctuations and delays in passing on cost inflation. However these challenges may be countered by improved demand growth on a year-on-year basis and operating leverage benefits. The global stock-to-use ratio for cotton, excluding China, increased 56 per cent in2018 fiscal from 47 per cent in2017, although Chinese inventory declined 17 per cent year on year.
During the last cotton season, there were reports of pink bollworm (PBW) being uncontrollable in 700 villages of Maharashtra where the infestation of this insect pest created havoc on the cotton crop. A review meeting by the Indian Council of Agricultural Research (ICAR) in October 2017 paints a different picture, the participating scientists conclusions were there was no case for “de-notifying” Bt cotton.
The PBW disaster, it was noted, was confined to certain areas, even while the technology continued to be effective against other bollworm insects. Further, there were prescribed agronomic methods for managing PBW, as was successfully demonstrated in Gujarat during the recent season. Following this, the Union Minister of State for Environment Mahesh Sharma said, in a written reply to a Parliament question, that Bt cotton had helped double India’s production and minimise the damage caused by bollworms since its introduction in 2002-03.
A status paper published in January 2017 by the directorate of cotton development at Nagpur, also noted the benefits from Bt cotton cultivation. Despite this, there were news reports of a few seed companies approaching the Agriculture Minister to demand removal of the Rs 49-per-packet trait fee currently payable to the Bt technology provider.
The Bt cotton trait was approved to control the American bollworm while effectiveness against spotted bollworm, armyworm and PBW were added features of the technology. Further, can seed firms that have incorporated Bt technology into their hybrids shy away from the responsibility for resistance developed by pests?
The ICAR meeting’s minutes reported that around 30 per cent of seed samples used to plant refugia non-Bt cotton around the main Bt crop to be of low quality. That could have been a major cause of vulnerability to PBW. During the last 20 years, Indian farmers took advantage of the shifting of cotton acreages out of the US. With Bt technology also coming at the right time, India was able to emerge as the world’s biggest cotton producer.
With changing international dynamics and acreages slowly moving back to the US India is in danger of losing an advantageous position.
The Central Silk Board (CSB) assistant director, Shankar Kotrannavar says a new initiatives is being planned to promote silk. The Board is in working towards introducing new technology to produce Iktat saris using pure silk spun yarn and unique varieties of luxury apparel by exploring the untapped potential of mulberry silk. The Board is also working towards commercialising the technology of knitting fabric using raw mulberry silk produced through automatic reeling machine.
The technology of producing double Iktat saris using silk spurn yarn would be introduced in Patola textile cluster of Gujarat where manufacturers are using raw silk and cotton to weave the Iktat saris. To produce winter garments using mulberry silk yarn, the board will use a new technology through a collaborative effort with the technocrats of the NIFT-TEA Knitwear Fashion Institute in Tirupur. Till now, major concentration has been on winter wear using eri silk.
The board is actively working towards promoting technologies for making silk textiles by ensuring entrepreneurs realise the importance of cost-effective production. Negating sceptics, Shankar says, people are sceptical about producing silk textiles since it is seen as a high-end consumer product. But drastic cost cutting at production level is possible. A cost effective solution suggested by the Board is to blend silk with other natural fibres such as modal, cotton, bamboo and linen.
A double benefit solution was to use double layer fabrics where the outer layer will be a thin layer of silk and inner layer will be made using cotton thus giving the customer the luxury of silk and comfort of cotton. Shankar further reveals the board is also trying to commercialise silk denim and silk knits developed recently post R&D.
H&M, C&A and 3M, are looking into the reported allegation that inmates of a Chinese prison made packaging used by the companies. An H&M spokeswoman said the company was looking into the allegations, but could not yet ascertain whether they were true. It is completely unacceptable placing manufacturing into prisons and it seriously violates the regulatory framework that our suppliers must follow. A failure to comply would immediately lead to permanent termination of our business contract. C&A's chief sustainability officer Jeffrey Hogue said the company took the allegations seriously and was investigating. They have a zero tolerance policy for any form of modern slavery including forced, bonded or prison labour. If detect a case, they immediately terminate relationship with the supplier.
In an article for the Financial Times last week, Peter Humphrey described work the prisoners did, "Our men made packaging parts. I recognised well-known brands 3M, C&A and H&M."
The annual index compiled by EcoVadis notes companies have been making more robust efforts to ensure their supply chains are clean of trafficking and forced labour, but there is still room for improvement. 3M, which also has policies prohibiting the use of forced labour, said it was investigating the report. A spokesman for the brand said, "3M does not engage or participate in exploitative working conditions and we are not aware of any 3M suppliers in China using prison labour."
Bangladesh’s readymade garment sector faces a series of challenges. Less-than-satisfactory performance with on standard and compliance issues, lack of branding and coordination among authorities are among the issues.
Other challenges include dependence on import of raw materials, inadequate supply of utilities, high costs of transport services, limited facilities in ports, lack of interest in financing small and medium producers, administrative and regulatory constraints, unhealthy competition and pricing.
A harmonised and targeted approach needs to be taken toward branding. There is a need for diversification. Five products account for 74 per cent of total readymade garment exports. Bangladesh’s exports are heavily dependent on markets of the European Union, the US and Canada, which account for some 63 per cent, 18 per cent and three per cent of total readymade garment exports. Among new and potential markets for the country are South Asia, Oceania, CIS and Latin America. The move towards upgradation and high-end products could include suits, blazers, lingerie, jackets, swimwear, sportswear, uniforms, raincoats and fishing wear.
The country lags behind international competitors like India, Vietnam and Sri Lanka in terms of efficient production. However, an industry-friendly environment, marked by availability of sufficient manpower, exists across the country.
Apparel Export Promotion Council (AEPC) celebrated 40 years of its inception at APEC Head office in Gurgaon with Amitabh Kant CEO, NITI Aayog as the chief guest for the event. Kant delivered the foundation day speech highlighting the importance of Indian apparel sector as a pivot for higher value addition and employment generation with very low capital investment.
Incepted in 1978 as a quota monitoring entity, AEPC today is one of the largest councils of the country. It is recognised worldwide as a powerful body for the promotion and facilitation of garment manufacturing and export from India. As a sponsored body under the Ministry of Textiles, it boasts of a strong membership base of 8300+ members.
In his address Kant said, “China has started moving out of the apparel sector and there is a huge opportunity for India. Today the wages in China are 2-3 times that of India and given the aging population of China, the cost of apparel manufacturing will continue to rise there. In such a scenario, the global suppliers will start looking at other avenues for sourcing. Countries like Bangladesh and Vietnam are having preferential access in European Markets and hence it is extremely important that we get the FTA with Europe ratified at the earliest.”
He said, as far as Indian apparel exports are concerned, India is heavily reliant on cotton and we need to see how we can move to man-made fibres which can help us to garner more global share. There has been a reduction in the benefits of the Industry post GST roll out and we are looking at ways through which we could bring it at par with the rates prevalent in the previous regime. For the benefit of the Industry central and state levies should be refunded and Government will work with The Industry to resolve this issue,” he added.
HKL Magu, Chairman, AEPC said, “AEPC’s well-timed initiatives and confidence to take calculated risks, braving all odds, perceptible across all circumstances, is the key fuel for the India's apparel export growth. As India is gearing up to move towards WTO-compatible, production-based subsidies from export-based subsidies, it becomes extremely important that we position India strongly as a responsible sourcing destination.”
With 100 days to go till the current Bangladesh Accord on Fire and Building Safety expires, garment companies were asked to continue to ensure a safe and sustainable garment industry in Bangladesh and sign the next 2018 Transition Accord. The 2018 Transition Accord will continue the work of inspecting factories in Bangladesh, identifying safety hazards and ensuring that they are resolved. Currently, 109 garment companies have signed the 2018 Accord, covering over 2 million workers.
Many garment companies have still to reconfirm their commitment to safety of Bangladeshi workers in their supply chain. Among the companies that are delaying are: Marks and Spencer, Next, Sainsbury’s, Metro Group, Abercrombie & Fitch and Dansk Supermarked.
The global union signatories to the Accord, IndustriALL and UNI, and the four witness signatories, Clean Clothes Campaign, International Labor Rights Forum, Maquila Solidarity Network and Worker Rights Consortium, requested garment companies that have not yet signed the 2018 Accord to do so.
Not signing the 2018 Accord means workers will be left in unmonitored factories and consequently, garment brands will fall short on their due diligence obligations to keep the workers in their supply chain safe. Christy Hoffman, Deputy General Secretary, UNI global union says the need for safety committees and inspection programme is on-going because a factory can be safe one day, and then the fire doors are blocked the next. As long as the Bangladeshi government is not yet ready to assume this responsibility, the Accord will continue to provide the training, engineering expertise, and accountability structures necessary to make garment work safer.
