FW
A World Bank book titled ‘Stitches to Riches’, offers specific policy recommendations for stakeholders to better leverage the apparel manufacturing sector's potential in South Asia. The book is focused on identifying key bottlenecks and areas for improvement in the South Asian countries compared with those of their closest competitors in the South East Asian region (Vietnam, Cambodia, and Indonesia).
The recommendations include:) removing trade restrictions to allow easy access to manmade fibers as inputs; increasing efficiency along the value chain such as integration between textile and apparel; and third improving social and environmental compliance by introducing better human resource practices.
At the country level, policy highlights include suggestions that Bangladesh should improve performance on non-cost factors important to buyers. Stitches to Riches says India must address constraints to firm growth (like integration of textile and apparel, and access to manmade fibers), and Sri Lanka should position itself as regional hub and take advantage of emerging markets.
The book also suggests that Pakistan should increase product diversity and reliability, and take advantage of new markets. Stitches to Riches has been motivated by South Asia's urgent need to create more and better jobs for a growing population.
Garment exporters in India say raising the minimum wages for contract labour to Rs 10,000 could result in a sharp drop in exports and lower employment. They say that with the proposed increase in wages, the industry will not be able to exercise its flexibility of engaging more labor to meet its peak-time requirements and will lose to competitors in Bangladesh and China, who already have a cost advantage.
The industry witnesses peak demand between October and February, while orders decline by around 30 per cent in other seasons.
According to exporters the higher wage burden could lead to a 10 per cent decline in export turnover and a proportionate decline in employment. The higher contract wages would also lead to a violation of wage parity norms (vis-à-vis workers on the rolls of a company) and lead to unrest in the industry.
The proposed wage hike is an effort to check exploitation of labor employed by the industry on a contract basis. If the provision is uniformly implemented across all states, the result will be an over 90 per cent increase in wages for contract labor in states such as Orissa and Rajasthan and over 30 per cent in most other states.
Pakistan’s textile industry faces high cost of doing business. About Rs 200 billion of refunds relating to sales tax, income tax, rebates and previous policy initiatives are yet to be paid. This is proving to be a major stumbling block in the smooth running of the industry.
The textile industry is not able to utilise resources due to sustained losses earlier and a liquidity shortage now. This is hindering the production of an exportable surplus.
The industry now wants refunds to be released on priority, the complete withdrawal of the Gas Infrastructure Development cess from the entire textile chain, payment of drawback of local taxes and levies at five percent to remove incidentals of taxes, cess, levies and duties on all textile exports. It wants a 15 per cent regulatory duty on imports of yarns and fabrics made from synthetics including polyester, viscose and acrylic, which have made serious inroads into domestic commerce.
The industry says the stuck up refund amounts are reflected in the revenue account, which is not a fair practice. It wants the eight-point textile industry package to be implemented in totality and not partially as is being done now. Also Pakistan’s currency is seen to be having an unrealistic value.
Planet Textiles will to be held in Denmark from May 11 will discuss supply chain traceability when it comes to man-made cellulosic fibers such as viscose and lyocell and how brands can avoid using raw material (wood) from endangered forests.
Around 360 delegates from 33 countries will be present at the event. Among those participating are Swiss textile manufacturer Remei and the Canopy Style initiative featuring H&M and Birla. A special discussion by Canopy will look at supply chain traceability of man-made fibers to ensure endangered forests are not used to produce man-made cellulosic fibers. The aim is to ensure that material from endangered forests doesn’t end up in the textile supply chains.
Remei runs a long-established bioRe organic cotton project in Northern Tanzania and India. Remei is a well known user of organic cotton fiber to offer a range of ring-spun, combed or carded organic cotton yarns including mélange – as well as a range of knitted and woven clothing sold under the bioRe label.
The event is being organised by MCL News & Media, The Sustainable Apparel Coalition and Messe Frankfurt and is sponsored by Leadership partner, Oeko-Tex. Event supporters include Covestro, Historic Futures, TIPA Corp., Novozymes, Australian Cotton, Workplace Options.
Pakistan’s textile exports to the European Union rose by 21.3 per cent during fiscal year 2015. Cotton exports increased by 4.43 per cent. Footwear exports increased 12 per cent, carpet and rug exports increased by 17.35 per cent.
During the first three quarters of the current fiscal year (2015-16), overall imports into the country declined by 4.22 per cent compared to the corresponding period of last year. Imports into the country during July to March 2015-16 were recorded at 32.515 billion dollars compared to the imports of 33.948 billion dollars during July to March 2014-15. Exports from the country also witnessed a negative growth of 12.92 per cent by falling from 17.921 billion dollars last year to 15.606 billion dollars during the current year.
Overall trade deficit during the period under review was recorded at 16.909 billion dollars compared to the deficit of 16.027 billion dollars last year, showing an increase of 5.50 per cent. Total textile exports increased from 5,45,698 metric tons in 2013 to 6,62,475 metric tons in 2015. Among textile products, exports of textile garments increased from 1,37,399 metric tons to 1,79,901 metric tons in 2015, showing an increase of 31 per cent while homemade textile exports increased from 1,95,243 metric tons to 2,59,557 metric tons in 2015, showing a growth of 33 per cent.
Gujarat's textile policy, announced in 2012, has so far attracted investment commitments worth Rs 9,208 crores through varied units such as weaving, made-ups, processing, spinning, ginning and technical textiles. The plan is to attract Rs 20,000 crores of investment and 2.5 million new jobs by 2017.
Under the policy, 549 textile units have got approvals. The latest nod is for a textile and apparel park coming up in Surat. This park will come up on 62 acres, house 42 manufacturing units and generate 1,900 jobs. So far, 12 such parks have received an in-principle nod.
Approvals have been granted for 43 units, 42 of these units are weaving, made-ups, knitted fabrics, processing, embroidery, cotton ginning and twisting, and one unit for technical textiles. These units have bagged approvals for interest subsidy and value-added tax concession, apart from a power rate subsidy for weaving units. Nearly Rs 603 crores have been invested for plant and machinery. While made-up units will enjoy an interest subsidy of seven per cent, technical textiles and rest of the units will enjoy six per cent and five per cent respectively.
Maharashtra, too, has rolled out a textile policy aiming to attract Rs 40,000 crores of investment and create 1.1 million job opportunities in five years.
The Indian government believes elimination of export subsidies on cotton by developed nations of WTO would help domestic growers and also prevent dumping of subsidised natural fiber in India. The commerce ministry said in a statement that WTO's Nairobi Ministerial decision on elimination of export subsidies on cotton will be good for Indian exports as it will create a level playing field for domestic farmers, who were not entitled to it but other developed countries were providing the same.
India's push has helped in elimination of cotton export subsidies by developed countries. This will help Indian cotton growers in competing with other growers as well as prevent dumping of subsidised cotton in India, the statement said. The government is committed to the welfare of cotton farmers and has been taking steps to protect them. These include procurement through Cotton Corporation of India (CCI) at minimum support prices, the statement added.
The statement further said that cotton is an important crop and very high level of subsidies in developed countries have been a cause of worry for developing countries as they adversely affect cotton growers in the poorest nations. The WTO's Agreement on Agriculture (AoA) permits export subsidies on agriculture subject to the limits set-out in members' schedules of commitments. Export subsidies can still be used by the World Trade Organization (WTO) members, but only where they used them during the base period (1986-1988).
Last week, the equivalent of 41 million bales of cotton traded in a single day on the Zhengzhou Commodity Exchange, the most in more than five years and enough to make almost 9 billion pairs of jeans, or at least one for every person on the planet. Prices that had slumped to the lowest on record in February surged almost 19 per cent in the four days leading up to the trading spike recently.
Meanwhile, traders have piled into Chinese commodity markets, sending volumes of everything from steel to coking coal soaring and prompting exchanges to boost margins and fees or issue warnings to investors. The surge in trading is reminiscent of last year’s equities rally that boosted the stock market before a rout erased $5 trillion. China is the world’s largest consumer of cotton and second-biggest producer.
More than 3.6 million contracts of 5 tonnes apiece traded in Zhengzhou on a single day. With Chinese exchanges double counting volume to account for the long and short side of a trade, that’s still about 9 million tonnes, or 41 million bales. One bale can make 215 pairs of jeans, according to the National Cotton Council of America.
On the same day, about 1.6 billion pounds traded on ICE Futures in New York. That’s about 3.3 million bales, or more than 700 million pairs of jeans, enough to dress up the US, Brazil and Japan in denim.
The Cambodian textile and apparel industry enjoyed a seven per cent rise in exports in 2015 and a similar increase is expected in the current year. This growth rate is among the highest recorded in the Asian continent. The local textile and apparel industry generates more than seven lakh jobs in 1,200 workshops. It accounts for 80 per cent of Cambodia’s total exports and contributes a third of gross domestic product. The industry uses as raw material cloth imported mainly from other Asian countries. It continues to attract foreign direct investment.
The country’s clothing and footwear exports in 2015 reached a value of $6.3 billion, compared to $5.8 billion a year earlier. It was a 7.6 per cent rise, a welcome acceleration after a slow first half of the year, though still below the 9.6 per cent growth recorded between 2013 and 2014. Footwear by itself posted a 21.8 per cent rise, with $538 million worth of goods exported.
Europe remained Cambodia’s main market. The US is the country’s second biggest market. Duty-free access to the European Union continues supporting the clothing industry, whatever the sharp increase of labor costs in the last few years.
Bangladesh is one of the largest cotton importers in the world. The country produces just one per cent of the total requirement of cotton for making yarns and fabrics for clothes. It is also the second largest readymade garment exporter in the world. Last year, Bangladesh imported 6.1 million bales of cotton, which was double the amount it imported in 2006. India and Uzbekistan are the main sources of those imports.
Bangladesh has a policy of not cultivating cotton on land where some other crop is grown. But now, it’s looking for places where it can promote cotton, like coastal areas, where no other crop can be produced due to saline intrusion. One target is hilly areas as only two percent of that region has been utilized so far. Cotton production will also be promoted in areas where tobacco is being cultivated.
The country has taken up a project for research and expansion of cotton production. Producing cotton can help the country save 10 per cent to 15 per cent on import costs. In fact a world cotton summit is being held in Bangladesh ending today. Global cotton buyers and sellers have convened at the summit in an attempt to understand the market better.
