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Spanish company Inditex has signed a three-year collaboration agreement by which it will fund grants for students of Tsinghua School of Economics and Management, China to conduct academic and business exchanges in Spain. The chairman and CEO of Inditex Pablo Isla, and the Dean of the Tsinghua University School of Economics and Management (SEM), Professor Yingyi Qian, were the signatories. Inditex is a Spanish multinational clothing company headquartered in Arteixo, Galicia. It is the biggest fashion group in the world that operates over 7,000 stores in 91 markets worldwide.
As per the agreement, the two would donate resources for programs like: Grants for Tsinghua’s SEM students to visit Inditex’s headquarters in Arteixo, Spain to gain practical experience in areas such as fashion retail management, logistics, environmental protection and sustainable development; training programmes to support the professional development of academic staff in scientific research and teacher training; promotion of cultural activities for students on the Tsinghua SEM campus in Beijing.
The five day International Cotton Advisory Committee (ICAC) meeting concluded in Islamabad with member-countries pledging to adopt innovative-cutting edge technologies for improving cotton production at lower costs, and strengthening the value-chain that would make competitive. The meet was held from October 30 to November 4.
A statement issued at the end of the 75th plenary meeting on Emerging Dynamics in Cotton: Enhancing Sustainability in the Cotton Value Chain said government policies should focus on allowing prices to fluctuate with market forces, increasing funding for agricultural research, and implementing science-based regulations that allow technology development and adoption. The concluding session was presided over by ICAC executive director JoseSette while the secretary, Ministry of Textile Industry Pakistan Hassan Iqbal was the chief guest. Sette said one of the greatest challenges for the cotton sector in Pakistan was energy shortage, which needed to be addressed on an urgent basis for industrial growth in the textile sector. Pakistan possesses huge potential in cotton production and textile manufacturing to penetrate in the international market, he added. The event, organised by the Ministry of Textile Industry in collaboration with ICAC, was attended by 378 persons, including 14 representatives from members, four international-member organisations and four non-member countries.
Buyers and retailers in Bangladesh have expressed concern over slow progress on structural remediation in factories where readymade garment (RMG) is assessed by Western retailers' groups. They feel, structural remediation is now being done at a slower pace than that of fire and electrical ones.
Apparel makers, however, blame slow move in detailed engineering assessment (DEA) approval by the retailers' platforms, absence of required engineering firms having experience of conducting DEA and high cost for such a slow progress. In its initial inspection, Accord assessed some 1,600 local garment factories that produce apparel products for its more than 200 signatory members and found more than 80,000 safety hazards.
Accord says, around 966 factories submitted their DEA reports to the group for approval till June 2016 while only 297 got clearance. Only 20 per cent or 3,854 structural issues out of 19,790 have been so far remediated till July last. About 70 per cent and 45 per cent electrical and fire safety hazards respectively have been remediated till July. Another platform of North American-based apparel buyers and companies namely Alliance assessed some 759 garment factories. Some 3,334 structural hazards or nearly 49 per cent out of total identified 6,707 have been fixed in its listed factories till September last.
On the other hand, 11,569 electrical issues out of 16,824 flaws and 8,851 fire hazards out of 14,122 have been remediated, according to Alliance. About 68 per cent and 62 per cent of electrical and fire hazards were remediated respectively, according to Alliance.
"‘Make in India’ has been in the forefront of Prime Minister Modi’s vision of putting India in the global manufacturing map. However, experts now point out that a lot still needs to be done to make it a reality as Sanjay K Jain, MD, TT writes in “Make in India – is it happening” Indeed it has been a major programme the PM and rightfully so as India has truly lagged in manufacturing sector. As he says, “All the ingredients are there but still the dish is far from complete as the receipe is yet to be figured out."
‘Make in India’ has been in the forefront of Prime Minister Modi’s vision of putting India in the global manufacturing map. However, experts now point out that a lot still needs to be done to make it a reality as Sanjay K Jain, MD, TT writes in “Make in India – is it happening” Indeed it has been a major programme the PM and rightfully so as India has truly lagged in manufacturing sector. As he says, “All the ingredients are there but still the dish is far from complete as the receipe is yet to be figured out. The negative to flat industrial growth rates in the recent past when the economy is said to be growing at 7 per cent plus is another disturbing and eye brow rising piece of data,” he writes. Jain says we ourselves are a manufacturer who sells domestically and exports across the globe. “The Make in India programme had excited me also personally and had hoped for a lot to happen.”
What works for India is its ample labour at reasonable cost, a huge domestic market, ample opportunity for import subsitution, rich reserves of raw materials, a proactive government, yet the Make in India vision has really not taken off as expected.
Making Make in India a Reality Jain writes in his article, “As I sit down and ponder objectively, prompted by the growing influence of Chinese products in our country – it makes me wonder how Make In India dream will be fulfilled. I am asked by many youngsters as to what sectors and segments hold great potential. My instant reaction is that avoid the manufacturing sector – it makes me guilty of not being in sync with our PM who I admire a lot. I looked around to see whether my advice is wrong, however sadly the more I analyse and look around, the more convinced I am that my advice is correct,” reiterated Jain.
Jain says, many have countered him to say as businessman he should be promoting ‘Make in India’ strongly. But he is able to convince himself and find sufficient logic/reason to share the excitement. “It is pertinent to understand as to why have the educated class of the country, mostly shunned entreprenuership and more so the manufacturing sector,” he opines.
Jain says everyone feels owning a factory means one is rich and everyone tries to extract their pound of flesh. This leads to a factory being harrassed by: local people on various counts. Inspector raj should be managed as they have omni powers to penalise you; multiple laws regulate factories; labour and trade unions must be managed.
Issues that plague the system
Jain asserts, to get consolidated land for a factory is a nightmare, and thereafter no insurance that it’s going to stay with you. Moreover a manufacturer is open to risk of fire, calamities, accidents and so on. “Despite being one of the fastest growing economies, we are far behind even smaller nations when it comes to Ease of doing business. World Bank recently confirmed India’s ranking at 130 out of 190 nations (means no progress made by us despite intentions).”
Another bugbear is power which is extremely expensive in most parts of the country. The Electricity Act was passed in 2003, however still many States don’t allow purchase of power and many make it inviable by imposing cross subsidies, taxes, charges etc. Power on IEX is available as low as Rs 2/unit, however its landed cost to industry multiplies 2 to 3 times, where allowed to be purchased. The moot point is that why should State Electricity Boards be allowed to act as monopolies?
Interest rates are extremely high. Despite RBI having decreased their rates by 175 basis points over last 18 months, the banks have not even decreased by 100 basis points!!! Why should compliant customers pay for NPAs and inefficiencies of banks?
Jain says labour attrition, absenteeism, education levels make manufacturing consistently a challenge. Some reasons for this same are number of religious festivals we have across the country, MNRGEA which makes labour take long leaves for their home town, culturally not a disciplined country, education levels in rural still very low – makes skilling difficult, propensity to migrate has reduced, married women working is still very low.
Economies of scale are difficult to develop due to poor availability of consolidated land, issues of employing large number of labour in one location – one stray incident or displeasure of local leaders can ruin a company. There are hardly any favourable FTAs, which could provide a big market to Indian companies to dare to set up large capacities.
Jain says manufacturing taxes too add to the problem. “Manufacturing is taxed and taxed, ensuring they never can generate sufficient return on capital employed unless they are in some industry where they enjoy monopoly or subsidies,” he says. Apart from direct taxes, companies pay a host of indirect taxes. Cross-subsidies are the order of the day. Even after paying taxes and taxes for meeting government expenditure, they have to pay cross subsidies on a host of expenses to subsidise other sectors like power, interest, freight etc. Even indirect tax collection like VAT is the duty of the purchaser – its duty of company to ensure his supplier pays taxes instead of VAT department who has registered them.
What needs to be done?
Jain feels unless we in spirit don’t understand the importance of manufacturing sector and its role in development of the country by generating employment, revenue, self reliance, earning foreign exchange by exports and import subsitution, reducing cost of products for the common man – we shall never ever see the dream of India becoming a manufacturing hub and factory of the world like other nations have become over the last few decades.
Today the service sector looks attractive and all are zeroing on it. But Jain questions, without a vibrant primary economy how can the supporting segments thrive and grow. Indeed, the government has understood all this and hence, ‘Make in India’ came up, “however, to realise the dreams on ground, we have miles to go. We also recognise that it needs the combined efforts of both Centre and state to make things work, hence important to build a Federal consensus like being done for GST. Federal competitiveness is already visible and the Statewise ranking on Ease of Doing Business is also a welcome step.
Jain hopes ground level problems are understood and appreciated before it’s too late.
Linen and uniform launderers and suppliers from across the world assembled at Bruges, Belgium to attend the World Textile Services Congress (WTSC) from October 5 to 7. The event was organised by the European Textile Services Association (ETSA), FBT (Belgian national association of textile services) and TRSA (international, based in the United States).
Nearly 90 executives from more than 50 laundry companies came from 12 different countries along with 14 sponsoring suppliers making for a total of nearly 200 participants. They reviewed political, economic and social conditions affecting the industry worldwide.
While delegates were prompted to recognize what makes their businesses and homelands unique, many of them related to each other’s experiences noted issues they face at home that extend across borders. This enabled executives to share strategies for fulfilling common business opportunities.
Trends that WTSC presenters discussed were: The industry has yet to thoroughly document the value of its services, indicating the need to reverse perceptions of the business as a commodity; corporate consolidation of textile services operators continues to decrease their numbers and increase larger chains’ market share, but niches remain for independents; immigration creates costly public burdens but remains a fertile source of employees; better analysis of launderers’ databases can improve customer service and drive additional revenue; more plant processes can be automated to increase operating margins.
These themes emerged from the beginning when former European Commission President Herman Von Rompuy delivered his keynote address. Attendees recognized similarities when geographic and product market trends were discussed in panel discussions. Belgian launderers discussed their operations as they opened their doors for participants’ visits on the final day of the Congress.
The Coimbatore-based VXL Group is a one-stop solution provider for waste collection and baling requirements. The company has set up a state-of-the-art facility to manufacture the new-generation high efficiency fans and autobaling systems. Known for its continual R&D initiatives, the company has carved a niche for itself in the field of ring travelers. In its ring traveler unit, VXL has developed new process techniques to produce the new range of travelers, especially designed for compact spinning.
VXL has more than 4,000 installations across India. Design strength, sophisticated engineering, intelligent technology and dedicated customer support have been the key reasons behind the group’s success over the years. The company has a team of experienced application engineers for helping out customers with traveler selection and to achieve better quality and production.
Despite recessionary trends, the company has been able to maintain top line in the first half. The introduction of the new range of high efficiency centrifugal fans and central baling stations has been an important milestone reached by the group this year. Some of the major customers of the group include Ramco and Premier, both of Tamil Nadu, Vasantha Spinners and Ravali Spinnners, both of Andhra Pradesh, ST Cotex and Sel Textiles, both of Ludhiana.
The global socks market was valued at $5.6 billion in 2014, expected to increase at a CAGR of 8.5 per cent from 2015 to 2023. Although an integral part of the apparel industry, the socks market holds a negligible part in the market dynamics of the apparel industry. Although an integral part of the apparel industry, the global socks market plays a small part in the dynamics of the former. However, in recent times, owing to the transformation from being a traditional item into a luxury product, expansion of retail network and promotional activities, the demand for socks has been steadily increasing.
According to estimates of market intelligence firm, Transparency Market Research (TMR), the global socks market would value S$11.6 bn by 2023 rising at a significant CAGR of 8.5 per cent. The study states that almost 70 per cent of men use socks every day. Socks are quickly growing beyond being a useful item to an apparel of fashion due to product developments, diversifications, and commercialization. Application specific customized socks are also opening new opportunities in the market.
Going on the geographical regions that have the most significant demand for socks, developing countries like China, Brazil and India have witnessed rapid expansion of their retail network. Increasing population and disposable income in these regions is fueling the retail sector. Regions like Asia Pacific and Rest of the World are expected to have better growth potential in the socks market due to the rise in population, a steadily increasing GDP and favorable government policies.
Advanced socks are now being developed to address poor blood circulation in the veins, bacteria resistant socks that control foot odour, socks that help protect fragile skin that is at greater risk of tears and ulcers, as well as socks with seamless and cushioned toes to reduce friction, blistering, and pressure. Researchers have also developed socks for diabetic patients, which come with a specially designed top that keeps the sock up without restricting circulation.
The Goods and Services Tax (GST) will have a four-slab tax structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent. The lower rates are for essential items and the highest for luxury goods. Both the Center and the states will have powers to scrutinise and audit all assessees.
The highest tax slab of 28 per cent will be applicable to items which are currently taxed at 30 to 31 per cent (excise duty plus VAT). However, a lot of the items in this category which are mass consumed by middle and lower-middle classes, like soaps and detergents, could be brought under the 18 per cent slab.
Luxury cars, tobacco and aerated drinks would also be levied with an additional cess on top of the highest tax rate. The idea would be to keep the total tax plus cess similar to the levy charged on these items now.
The collection from this cess as well as that of the clean energy cess would create a revenue pool which would be used for compensating states for any loss of revenue during the first five years of implementation of GST. The cess would lapse after five years.
Some global apparel manufacturers are actively moving to transfer manufacturing capacity from Bangladesh to Ethiopia. Ethiopia is a country that has worked very hard to build its capability in this area, and it’s had considerable success.
In fact, in an interesting development Bangladeshi manufacturers are starting to outsource some of their production capacity to Ethiopia and to other East African countries. This development is slightly ahead of the curve because a lot of people are talking about transferring their capacity from China to Bangladesh at the moment.
However, whether this move to Africa will work out remains to be seen because Ethiopia as it happens is under some turmoil. There has been a crackdown on the opposition. There are worries that this will have an impact on the kind of companies that are looking to invest there, because one of the things that they’re very focused on, particularly in the apparel industry, is corporate responsibility.
Companies want to make sure that their supply chain is not riddled with issues like child labor or collapsing factories – the things that have really damaged their image in the past. So this political crisis is exactly the sort of thing that’s going to put off the manufacturers that are just starting to get interested in that country.
Free market policy in Pakistan will continue with the government pulling itself out completely of the cotton business. It would mainly focus on regulation, says Aamer Irshad, chief of Food and Agriculture Planning Commission. While cotton will continue as an important contributor to the national economy, the private sector will be encouraged to lead innovation, bring knowledge and investment in cotton technology (value chain and varietal development), informed Irshad. He was talking at the 75th plenary meeting on the fifth day of the ICAC.
The government will further strengthen its cotton governance while its investment in cotton will focus on improving productivity and efficiency, Irshad added. He further said that cotton production was 14.2 million bales in 2004-05 it fell down to 10 million bales in 2015-16. However, he said that various policy instruments such as textiles Policy, Strategic Trade Policy Framework and Vision 2025 along with the organisations has been taken by the government for brining improvement in the sector.
He cotton would continue to be prime contributor to Pakistan's economy. The government needs to facilitate to improve yield by carrying out necessary legislation such as enactment of Plant Breeders Right Bill and by providing support to reduce the cost of doing business, he observed.
Muhammad Ilyas Sarwar of the Pakistan Central Cotton Committee Central Cotton Research Institute urged for a research on high yielding with better fibre quality cotton varieties. He said cotton trading houses should be established and make them beneficial for all stakeholders.
