FW
"A study conducted by Asian Development Bank (ADB) on technology upgradation from a developing country’s point of view observes: technology upgrading depends on the extent of assimilation of foreign technologies, the availability of skilled labour and government policies that encourage investments in skills and technology."
A study conducted by Asian Development Bank (ADB) on technology upgradation from a developing country’s point of view observes: technology upgrading depends on the extent of assimilation of foreign technologies, the availability of skilled labour and government policies that encourage investments in skills and technology. Export promotion strategies of the government tend to overlook this aspect, and a more nuanced approach to global value chain activity may help the industry more, the working paper series of ADB South Asia on ‘Upgrading in the Indian Garment Industry’ added. The textile industry is one of the most important sectors as it accounts for about 14 per cent to the country’s total industrial production, 4 per cent of GDP, and 13 per cent of total export earnings. It is the second most essential sector in terms of employment, after agriculture. It provides direct employment to about 45 million and indirect employment to 60 million people (Technopak 2012). India is amongst the top 15 exporters of textiles and clothing in the world. In 2013, India’s textile and apparel exports amounted to $40.2 billion (57 per cent textiles and 43 per cent apparel).
India, a strong global sourcing point
From the apparel industry, there are many companies catering to global value chains, and also as selling in the domestic market. Firms in the Mumbai cluster have been selling half of their output to the domestic market and half to the global market. As per the ADB study, the global value chain has two types of firms: supplying to the European Union (EU) and the United States (US), and supplying to the Middle East market (or countries in South America). Most medium- and large firms in Delhi-NCR cater to the global value chains that are being sold in the EU and the US, while firms in Tirupur cater to both EU-US and Middle East. Other newer markets that were being explored include Japan, South Korea, Singapore, Latin America, South America, and East, highlights the study.
In the ADB study, various differences in organising global trade chain were given but the differences in domestic value chain were more interesting. The domestic value chain in India is organised in a different manner from the global value chains, and has two segments: first catering to lower and middle income market in the country; the other is pertaining to export market quite similar to the global trade chains, as per the paper. The recent emergence of Regional Value Chain was also highlighted to show increasing integration of economies as a single world market. Some firms were reported to have production linkages with Bangladesh and the products being sold to Bangladesh include traditional clothing (sherwani, jodhpuri etc.) as well as ladies’ T-shirts. Some of the advantages cited in the case of the regional value chain included lower labor costs; lower costs for sourcing inputs; lower energy costs; ease of availability of labour.
ADB Survey observations
A sample of 97 firms (34 from Tirupur, 37 from Mumbai, 1 from Surat, and 25 from the Delhi NCR) was carried out to reach certain conclusion about product, process and functional upgrading. Product upgrading that involves steps taken to upgrade product quality, introduction of new fabrics and raw materials, and reduction in reworking rates was the least commonly reported type, followed by functional and process. Product upgrading was highest within the domestic category, in Delhi NCR, and in large firms. Functional upgrading, involving upgradation through design, marketing, and branding was highest in exporters, firms in Delhi NCR, and the largest firms but still 5 firms out of these 97 firms (approximately 5 per cent) did not undertake any such functional upgrading. Process upgrading taking place through the use of new production machinery, worker training, reduction in delivery time, total quality programs, introduction of new organisational approaches, improvements in the production process, and increased use of computer programs for business purposes was highest among firms that both export and sell domestically, in Tirupur, and among the medium-sized firms.
Lack of skilled labour
The paper also highlighted the differences within the clusters with respect to upgradation. Out of all the firms the highest average score was recorded by the Mumbai cluster, followed by Delhi and Tirupur. The majority reported lack of skilled labour, access to technology, and finance as major obstacle to upgrading. Some observed the duty drawback system needs to be more streamlined to reduce delays in receiving payments. Lack of logistics systems and inadequate infrastructure were cited as major reasons for delays in exporting.
Although little or no upgrading is common in domestic firms, firms in Delhi NCR and large firms but this could be because all the firms in Delhi NCR sample are exporters and the market to which the firm supplies is important, too, since a low level of upgrading was reported in firms with quasi-hierarchical structures.
Five export associations in Multan have demanded the Pakistan government to issue a notification regarding zero-rated regime for export-oriented textile industry. The demand came from Syed Muhammad Aasim Shah Chairman APBUMA, Khawaja Muhammad Ilyas (APTMA) Nawab Shehzad Ali Khan Chairman of PCGA, Ex-Presidents of MCCI Shahid Nasim Khokhar, Khawaja Muhammad Yousaf, Atta Shafi Tanvir Senior Vice President of MCCI, Khaliq Qandeel Ansari of All Pakistan Power Looms Association, Zulfikar Nasuha President DGCCI, Muhammad Iftikhar, Chaudhry Abdul Jabbar and Zulfikar Ali.
They have asked the FM and the FBR chairman to immediately issue the notification for zero-rating of five export sectors so that exporters could make shipments as per announcements in the federal budget. They said that value-added export sectors were waiting for the issuance of the SRO or notification of the decision, as they had to prepare export shipments as per the rule ‘no-payment, no-refund.’
They said that the government had accepted the demands of the textile sector regarding SRO.1125. They demanded that the government would abolish 3 per cent to 5 per cent sales tax on different stages which would be replaced with zero-per cent sales tax in the budget.
The associations further said, this decision would boost Pakistani export, in order to get maximum results (i.e.; 20 to 25 per cent increase), government should immediately release refund payments against Sales Tax, duty drawback and drawback on local taxes and levies (DLTL) as well as bring down tariff of electricity, gas and water to boost exports and give incentives to export as per other competitor countries.
A visiting Nepali delegation in the US for the Joint Nepal-US Trade and Investment Framework (TIFA) Council meeting, requested the US to adopt further flexibility in the duty-free market access facility the country has offered to Nepali readymade garment products. Even though the US has offered the facility to 66 garment items under the Trade Facilitation and Trade Enforcement Act, Nepali garment manufacturers are disappointed that most of the items listed under the facility are not produced in Nepal.
Nepali garment sector suffered the worst disaster because of the lack of competitiveness, after the quota system was removed in 2005. In 2000-01, Nepal’s garment exports reached an all-time high of Rs13.12 billion, with the US accounting for 86.49 per cent of the exports. But it slumped to Rs5.28 billion in fiscal 2014-15.
Representatives of the Garment Association of Nepal also participated in bilateral meeting and they raised their concerns, said Kailash Raj Pokharel, economic consular at the Nepali embassy in the US.
A member of the Nepali team present in the meeting said the US side advised that Nepal utilise the available facility for greater benefit of the garment sector for now. They were of the view that there remains the possibility of resistance in the US if the product list was extended, said the Nepali delegation member.
Tracing the trend in recent years, export proportion of cotton blended yarn in total cotton yarn exports increased in the first half of year but declined in the second half. Exports of cotton blended yarn were rising on the whole in recent years except for some months in 2013. Proportion of cotton blended yarn in total cotton yarn exports reached 25.9 per cent in 2013, around 29.2 per cent in 2014, 36.4 per cent in 2015 and around 34.6 per cent in Jan-Apr, 2016, and market share in Jan-Apr, 2015 was around 31.5 per cent.
Low-count variety was mainly cotton blended yarn exported, and exports of carded descriptions were bigger than combed one, but exports tended to high-count descriptions. Exports of carded cotton blended yarn below 8.2S declined by 5 per cent compared with the same period of last year, and proportion of combed 8.2-25S/1 and 8.2-25S/2 increased by 2 per cent and 3 per cent respectively. As for combed cotton blended yarn, proportion of combed 25-30.4S and 30.4-46.6S both increased by 1 per cent, while that of combed 8.2-25S/2 declined by 1 per cent.
Recently, major German retailer KiK met Kyrgyz apparel companies to discuss opportunities with European buyers. The meeting was part of the Apparel Innovation Club supported by the United States through USAID’s Business Growth Initiative to strengthen the Kyrgyz textile industry, according to the US Embassy in Bishkek.
In the meeting, KiK International Sourcing Director Stefanie Artmann presented the firm’s global sourcing strategy and opportunities for Kyrgyz producers to supply apparel to this €2.2 billion retailer, which has more than 3,300 stores in nine European countries. Kyrgyz producers learned about buyer requirements for KIK’s global suppliers, with a particular emphasis on corporate social responsibility.
According to Artmann, Kyrgyzstan is well-positioned to benefit from apparel making. The European Union’s recent award of duty-free status for Kyrgyz apparel imports (GSP+) will also boost the market. The meeting was part of USAID’s ongoing efforts to connect Kyrgyz textile manufacturers with international markets. These efforts have already generated $1 million in orders for Kyrgyz apparel producers.
For the wrong reasons, textile units in Tamil Nadu have grabbed headlines several times in the past. Non-governmental organisations, including international organisations, have alleged that child workers are employed in many textile mills and that some units that employ young women do not provide adequate facilities for those who stay in hostels within the mill premises.
The problem seems to persist in an industry that employs about 50 lakh workers directly in the state, though employment of children has reduced drastically in the last few years and there are only ‘rare instances’ now. Says A Aloysius, Founder of Social Awareness and Voluntary Education, an NGO in Tirupur, it is due to the mandatory audits and pressure on industry to comply with norms from western buyers, child labour is almost nil in the garment sector. Still, there are instances of children employed in medium-sized textile mills in areas such as Udumalpet, Dharapuram, Vellakoil, etc., he says.
Further, several north Indian workers have moved to Tirupur for work, with their families, and live in specific localities. Their families do handwork, such as stitching buttons, and there are cases where they involve the children at home for this work rather than sending them to school. Though these children do not go to factories for work, they work out of home. This is a development in the last two or three years, he says.
According to Aloysius, the State needs to have proper monitoring mechanisms to identify employment of children in such work. Officials, textile management sources, and voluntary organisations say that one reason for employment of children in some of the textile mills is labour shortage.
Saying that Tirupur does not have proper amenities for medical treatment, exporters want an ESI hospital with the necessary facilities to cater to patients with various major health problems. They want funds to build women’s hostels and labor quarters.
More than five lakh workers, mainly women, are employed in the sector directly and indirectly. About 65 per cent of the 3.5 lakh workers are women from a rural background. About 44 per cent of its 8.78 lakh population is employed in the knitwear and stakeholder units. Exporters also want a Rs 200 crores central grant to set up effluent plants.
The Tirupur knitwear trade contributes a revenue of Rs 33,000 crores a year, both from exports and the domestic market. Now, it wants comparative advantages its counterpart cities have, mainly in infrastructure and other business facilities like the smart city tag. Tirupur has been included in the list of smart cities but nothing further has been done. The city wants further action on this front and some movement in that direction as that would directly help increase exports from that town and upgrade the quality of life.
Among 506 cities and towns of India that provide employment, Tirupur occupies a premier position.
Teijin has developed a new aramid fiber fabric suited for use in high-visibility protective apparel thanks to its extra-vivid coloring and resistance to fading. The new aramid fabric is expected to meet growing demands for safety clothing that offers comfort and maneuverability as well as high visibility.
The new aramid fabric is fully compliant with international standards for high-visibility clothing that enables others to see the wearer in a variety of lighting conditions. Over the decades, Teijin’s durable, heat-resistant, flame-retardant aramid fibers have contributed to the advancement of safety and protective apparel, providing police, firefighters and chemical-plant workers with high-performance clothing favored for their high-visibility, flame-retardant and flame-proof properties.
Teijin is strengthening its leading position in the Japanese market for protective apparel, putting forward new hybrid safety solutions that combine various high-performance materials to meet diverse customer demands.
Teijin is a global group operating in the fields of advanced fibers and composites, electric materials and performance polymer products, nylon, acetate, aramid, and polyvinyl chloride for apparel and industrial materials, healthcare and fiber. Teijin also makes polyester films used in advanced magnetic media and electronics equipment, pharmaceuticals, medical products, and information systems equipment.
The company’s global development initiatives are expected to boost sales in the global market for safety and protection.
A state-of-the-art textile processing and power loom weaving cluster is coming up in Gujarat, near Surat. It’s planned on 50 lakh sq. mt. of coastal land. However, allotment is awaited. The cluster is for those who want to produce fabric in bulk quantities. Barring a few big process houses and weaving units, most factories produce fabric in smaller volumes. But importers prefer suppliers who produce goods in bulk quantity.
The textile processing units will be connected with a common boiler system thereby discouraging the use of chimneys emitting pollution. There will be wind power and solar power generation, common drainage, CETP plant, tertiary treatment plant etc.
The plan is to have only processing and weaving at the cluster, and also garment units. So investors from Trichy, the garmenting hub, who are looking for expansion will be invited to explore prospects and opportunities.
If everything goes well, textile processing and power loom weaving units in Surat would be induced to shift to the planned cluster. The project has been planned by the Southern Gujarat Chamber of Commerce and Industry and the South Gujarat Textile Processors' Association.
Meanwhile, around 50 textile processing houses in China are willing to set up units in Surat. A delegation will soon visit China to explore possibilities.
The textile industry says it’s entitled to dues worth Rs 3,000 crores under the Technology Upgradation Fund Scheme. But it is unlikely these dues will be released. That means, liabilities related to the blackout or left out period cases will be given a silent burial.
The blackout period (June 20, 2010 to April 27, 2011) refers to a time when subsidy payments under the Technology Upgradation Fund Scheme were halted temporarily. The aim was to change the contours of the scheme from an open-ended scheme to a closed-ended one. The revised scheme came in April 2011.
Those who had invested during those 10 months of the blackout period, and were awaiting a decision on the eligibility of TUFS on the blackout period, have now got their answer. They are disappointed the funds are not going to be released. And the reason given is that there is a paucity of funds.
These textile units say they have continuously been under severe stress since April 2014 due to the non disbursal of committed liabilities under the TUFS scheme. Several hundreds of spinning mills are facing closure as they are likely to become non-performing assets.
So the textile industry has made a representation that the committed liabilities under TUFS scheme be disbursed and that cotton yarn be extended export benefits like Merchandise Exports from India Scheme on par with other textile products.
