FW
As Britons voted to leave the European Union, Bangladesh runs the risk of losing duty benefits on its annual exports of more than $3 billion to the UK.
Apart from exports to the UK, remittance income from the European country may come under strain as an impact of its departure from the EU. In the long run, Bangladesh's economy might take a hit if the current uncertainty in the global economy persists further.
According to Zahid, lead economist of the World Bank in Dhaka, the devaluation of the pound may have an immediate impact on Bangladesh's exports and remittance. However, the devaluation resulted from an overreaction which would cool down soon.
The UK is Bangladesh's third largest export destination after the US and Germany, and the second largest in Europe.
Bangladesh exported goods worth $3.23 billion to the UK in 2014-15, registering a 21.28 percent growth from the previous year, according to the Export Promotion Bureau (EPB). Garments make up nearly 90 per cent of the export figure.
As Britain chose to leave the EU, economists and exporters said it would be a major challenge for Bangladesh to retain duty-free trade privilege of its goods to the UK.
Because of Brexit, the whole EU as well as the UK would face an economic crisis. As a result, people would buy less and the exporting countries would feel the pinch, said Faruque Hassan, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
"But the textile industry hopes Brexit could mean India emerging as a stronger political and trade partner for the UK, thereby expediting work on FTA. Garment exporters in Tirupur are worried as UK decided to exit from EU. For India’s readymade garments (RMG) exports, EU is a major destination. In 2015-16, total RMG exports from India was Rs 1,11,236 crore, of which EU's share was 36.97 per cent."
But the textile industry hopes Brexit could mean India emerging as a stronger political and trade partner for the UK, thereby expediting work on FTA. Garment exporters in Tirupur are worried as UK decided to exit from EU. For India’s readymade garments (RMG) exports, EU is a major destination. In 2015-16, total RMG exports from India was Rs 1,11,236 crore, of which EU's share was 36.97 per cent.
Estee Exports’ managing director, T. Thirukumaran was sounding worried after he heard the news that UK has decided to exit from the European Union which in turn impacted the currency. He is one of the exporters from the tiny town of Tirupur, and 50 per cent of the business comes from Euro and he has already lost 5 per cent of the value. Five per cent may sound small, but for an exporter like us, it’s big especially given the current circumstances, according to Thirukumaran.
While similar view is echoed by many of the exporters from this tiny town, which exports around Rs 26,000 crore worth of knitwear, A. Sakthivel, president, Tirupur Exporters Association, tries to cheer them up by giving the positive side of the story.
Sakthivel said that it will have an impact but it will be temporary but in the long run this will help them since UK will support more which it could not when it was part of the EU.
Positive side
The apparel and made-ups industries are hoping the Indian textile industry will only stand to benefit from Brexit given the rupee devaluation against pound and euro.
According to Rahul Mehta, president of Clothing Manufacturers' Association of India (CMAI), in the immediate, Indian apparel exporters should only benefit from this and exports to UK and Europe will be more remunerative for us due to rupee devaluation. Of the roughly $16-17 billion of Indian apparel exports, Europe forms 45 per cent, within which UK forms roughly 40 per cent. However, for made-ups, share of Europe in exports come to roughly around 20-25 per cent, of which UK forms around 15-20 per cent.
A senior official at Welspun Group on condition of anonymity said that, though a small share, UK's exit from EU should benefit the Indian made-ups industry due to rupee devaluation. Welspun is a leading home textiles or made-ups exporter from India. Similarly, the textile industry also hopes Brexit could mean India emerging as a stronger political and trade partner for the UK, thereby expediting work on free trade agreement (FTA).
Mehta added that even EU could now look at India favourably with regard to FTAs and review the same soon. This should also benefit the Indian textiles industry.
Out of the total, knitwear exports is around Rs 50,150 crore of which Tiurupur’s share is around Rs 23,050 crore or 45.96 per cent. Total knitwear export to the UK is around Rs 5,519 crore and from Tirupur it is around 30 per cent.
Worried about EU’s future
Indian exporters are also worried about the existence of EU itself. An exporter said that now that UK has exited many may follow. In such a scenario, it will take a long time for India to enter into FTA with each country and negotiation is going to be a major challenge.
On this note, Somi Hazari, MD, Shosova Properties, said that the situation is positive for India since FTA with UK can happen fast and doesn’t have to depend on the EU.
Moreover, UK’s exit can open doors for some more business on the long run, feels many exporters. For example, UK has been buying high-end products from Italy. Before EU, it used to be from countries like India, which has been enjoying EU member status in tax concessions and others. Now that UK has exited, it would attract customs duty and other things, which will make Italian products costlier and that would open doors for countries like India.
There is a mix reaction or one can call it confusion among garment exporters from India on what the future is going to be.
Techtextil, the international trade fair for technical textiles and nonwovens for the first time will make a presentation at Fashiontech, the Conference on the Future of Fashion. To be held on June 29, as part of the summer edition of the Berlin Fashion Week 2016. Together with two of its exhibitors, Techtextil will illustrate the future of intelligent textiles under the banner, ‘Textile innovations powered by Techtextil’.
In addition to Thimo Schwenzfeier, Head of Marketing Communication, Textiles & Textile Technologies at Messe Frankfurt, Dr Jan Zimmermann of Switzerland’s Forster & Rohner will speak about the development of functional textile products, such as a jacket decorated with LEDs for Bogner, a jacket with integrated heating elements for Zegna and decorative fabrics with integrated lighting elements. Philipp G. Schwarz of Nuremburg-based Wearable Life Sciences will show how his Antelope label is conquering the market with performance-enhancing sportswear that combines functional textiles with electric muscle stimulation. These products will also be on show at the associated Techtextil exhibition stand.
Twice a year during the Berlin Fashion Week, Fashiontech is the platform for the latest trends and business models in the fields of fashion design, production and marketing, especially with respect to the links between fashion and technology. Fashiontech is organised by Premium Exhibitions, which present selected collections by international newcomers and exclusive trend products, and Seek, Berlin’s leading trade fair for contemporary fashion.
India will import 20,000 cotton bales from Pakistan.This is because of high Indian prices following limited supply. India is the world's biggest cotton producer. Landed cost of imported cotton is lower than local prices.
The move is a role reversal from earlier this year, when Pakistan was buying cotton from India after its output had been hit by bad weather. Indian cotton prices have risen by 28 per cent since the start of the 2015-16 season as two years of drought have affected output. Pakistani supplies are available at about 70 cents per lb on a free-on-board basis.
India has so far imported about 1.2 million bales in 2015-16 and needs another 4,00,000 bales before the new crop starts arriving from the end of September.
In fact supplies are dwindling in both countries. Global cotton prices could rally sharply in the coming months as stocks become further depleted in key producing countries.
The sharp rally in Indian prices is making imports viable from Pakistan. But Indian buying has been pushing up prices in Pakistan. Mills in Pakistan say cotton exports to India should be restricted and the raw material should instead be provided for domestic textile production.
More than 1,200 exhibitors from 18 countries and regions will take part in the 23rd HKTDC Hong Kong Fashion Week for Spring/Summer, which runs 4-7 July at the Hong Kong Convention and Exhibition Centre.
The Fashion Week, under the theme ‘Garden Breeze’ will include a variety of themed zones, including: Men in Style, Footwear, Leggings & Socks, Knitwear, Womenswear, Fashion Gallery, International Fashion Designers’ Showcase and Fashion Tech.
Epson Hong Kong will showcase a series of cutting-edge printers in the inaugural Fashion Tech zone. Another Fashion Tech exhibitor, The Hong Kong Research Institute of Textiles and Apparel (HKRITA), will showcase their textile innovations in activity-based Carbon Footprint Modelling (ACFM) and display award-winning items from the International Exhibition of Inventions of Geneva.
International trend forecast groups such as WGSN and Fashion Snoops will hold seminars to share their 2017/18 fashion forecasts. Other seminar topics include ‘Fashion Sustainability – From Product Development to Manufacturing’ and ‘Tips to Stand Out Your Brand in E-tailing Era.’ At the event, students from the School of Continuing and Professional Studies, Chinese University of Hong Kong, Hong Kong Polytechnic University and the Technological and Higher Education Institute of Hong Kong will showcase their latest collections.
According to ICRA, Government of India’s latest package for the textile sector is likely to improve the competitiveness of the country's exports but achieving the target of USD 43 billion of apparel exports by 2018 remains a challenge.
The Government approved a Rs 6,000 crore special package for textiles ICRA apparel sector to create one crore new jobs in 3 years, attract investments of USD 11 billion and generate USD 30 billion in exports. These steps will lead to increased competitiveness of India's apparel exports and improve employment generation in the garment sector given its labour intensiveness.
However, achieving the target of USD 43 billion of apparel exports by CY 2018 appear to be a challenge, while the fiscal incentives under the package will improve capacity additions and increase the competitiveness of India's exports.
In ICRA’s view, the increased benefit of 25 per cent of capital subsidy under amended Technology Upgradation Fund Scheme (TUFS) for new garment units will further reduce the investments requirements for new units by 7.5 per cent.
In addition, the proposal would also benefit new garment units by way of savings of up to 3.7 per cent on labour costs and 1 per cent on total manufacturing cost of apparel due to government's contribution towards employer's share of EPF contribution, according to the report.
Meanwhile, India's garment exports grew at 4 per cent in 2015, whereby they increased to USD 17.1 billion from USD 16.5 billion in the previous year.
According to ICRA, Government of India’s latest package for the textile sector is likely to improve the competitiveness of the country's exports but achieving the target of USD 43 billion of apparel exports by 2018 remains a challenge.
The Government approved a Rs 6,000 crore special package for textiles ICRA apparel sector to create one crore new jobs in 3 years, attract investments of USD 11 billion and generate USD 30 billion in exports. These steps will lead to increased competitiveness of India's apparel exports and improve employment generation in the garment sector given its labour intensiveness.
However, achieving the target of USD 43 billion of apparel exports by CY 2018 appear to be a challenge, while the fiscal incentives under the package will improve capacity additions and increase the competitiveness of India's exports.
In ICRA’s view, the increased benefit of 25 per cent of capital subsidy under amended Technology Upgradation Fund Scheme (TUFS) for new garment units will further reduce the investments requirements for new units by 7.5 per cent.
In addition, the proposal would also benefit new garment units by way of savings of up to 3.7 per cent on labour costs and 1 per cent on total manufacturing cost of apparel due to government's contribution towards employer's share of EPF contribution, according to the report.
Meanwhile, India's garment exports grew at 4 per cent in 2015, whereby they increased to USD 17.1 billion from USD 16.5 billion in the previous year.
With eco fashion as one of the focal points, Berlin Fashion Week has a specific theme that clearly sets it apart from the fashion weeks in Paris, London, Milan and New York. The central hotspot for all things eco-fashion will be Greenshowroom and Ethical Fashion Show Berlin from June 28-30, 2016. This summer, the trade fair duo at the Postbahnhof will celebrate an anniversary and exhibitor record: 'A total of 168 international labels will give the event a scope that is greater than ever before, not just in terms of the surface area, but also the number of labels. The internationality of the event has also grown. Greenshowroom and Ethical Fashion Show Berlin is taking place for the tenth time.
The upcoming edition of the trade fair duo puts the topic of social responsibility firmly on the agenda and presents a variety of pioneering labels that place value on socially fair production conditions. During a three-day programme with talks and panel discussions, representatives from the worlds of industry, trade and design will highlight the important challenges and discuss solutions. The CSR day hosted by the Dialogs Textil-Bekleidung (DTB), which will take place in cooperation with Messe Frankfurt for the first time, tackles this topic. On the second day of the trade fair, June 29, 2016, at the club in the Postbahnhof, there will be a whole-day programme entitled ‘Responsible Management of Supply Chains – Social Compliance and Chemical Input.
The Cotton Association of India with over 400 members representing all walks of cotton trade such as merchants, brokers, spinning mills is opposed to all measures that negatively affect free trade in cotton.
Reacting to the recent reports from Pakistan about the opposition from All Pakistan Textile Mills’ Association (APTMA) to export cotton from Pakistan to India, Dhiren Sheth, President of CAI urged the Government of Pakistan not to support the call for export ban by APTMA.
Dhiren Sheth expressed that if issue for APTMA was the elimination of import duty on cotton, it has to be addressed directly as a separate issue. CIA has expressed strongly that it is opposed to measures hurting free trade such as import duty and has warned about the serious repercussions on the cotton trade and textile industry in Pakistan and India if APTMA’s push becomes a reality.
According to industry sources, although India is a leader in cotton production and is expected to export about 6 to 6.5 million bales (170 Kgs) this season, India needs to import little quantities of short staple from Pakistan and long staple from United States, Australia and Egypt to cater to the needs of its diverse spinning sector. In commenting on the end-uses of short staple cotton imported from Pakistan, the source said those cottons are spun into yarns that go to developing industrial application products such as coverall and wrapping bags.
"The outcome may see Britain embark on at least two years of complicated divorce proceedings with the EU, raising questions over London’s role as a global financial capital and putting huge pressure on its Prime Minister David Cameron to resign. Friday morning, Europe woke up to the news that more than half of British voters in the country's EU referendum decided they no longer wanted to be a part of the 28-nation bloc."
The outcome may see Britain embark on at least two years of complicated divorce proceedings with the EU, raising questions over London’s role as a global financial capital and putting huge pressure on its Prime Minister David Cameron to resign. Friday morning, Europe woke up to the news that more than half of British voters in the country's EU referendum decided they no longer wanted to be a part of the 28-nation bloc.
With 52 per cent of voters supporting a decision to leave, against 48 per cent for remain, Britain’s highly divisive referendum has been closely watched by financial markets and politicians around the world.
The pound plummeted to its lowest level against the dollar since 1985. The euro also fell 3.3 per cent against the dollar, its biggest one-day fall since the currency's inception. And Asian stocks dropped sharply as the markets began to digest the results.
In the run-up to the vote, major banks, corporations and governments around the world had warned against an exit from EU, including the IMF, who opined Brexit could cause ‘severe regional and global damage.’
The break up
England voted strongly for Brexit, by 53.4 per cent to 46.6 per cent, as did Wales, with Leave getting 52.5 per cent of the vote and Remain 47.5 per cent. Scotland and Northern Ireland both backed staying in the EU. Scotland backed Remain by 62 per cent to 38 per cent, while 55.8 per cent in Northern Ireland voted Remain and 44.2 per cent Leave.
Prime Minister David Cameron promised to hold one if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum.
The EU has changed a lot since then, gaining more control over Briton’s daily lives, they argued. According to Cameron, It is time for the British people to have their say. It is time to settle this European question in British politics.
How long will it take to leave the EU? The minimum period after a vote to leave will be two years. During that time Britain will continue to abide by EU treaties and laws, but not take part in any decision-making, as it negotiated a withdrawal agreement and the terms of its relationship with the now 27 nation bloc. In practice it may take longer than two years, depending on how the negotiations go.
No nation has ever left the EU. But Greenland, one of Denmark's overseas territories, held a referendum in 1982, after gaining a greater degree of self government, and voted by 52 per cent to 48 per cent to leave, which it duly did after a period of negotiation.
What happens next?
David Cameron said he would be stepping down as prime minister by October. He said he would leave it to his successor to invoke Article 50 of the Lisbon Treaty, which kicks off the two-year process of negotiating a new trade relationship with the UK's former partners.
Britain leaving the EU will send shockwaves across the world, not least for its fashion industry, which contributed an estimated £26 billion ($38 billion) to the UK economy in 2014.
Luca Solca, head of luxury goods at Exane BNP Paribas said that the industry has to brace for more demand retrenchment. The most important consequence of 'Brexit', is a dent to global GDP prospects and damage to confidence. This is likely to develop on the back of downward asset markets adjustments. Hence, more than ever, the industry will have to work on moderating costs and capital expenditure.
