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The much anticipated GSP+ concession, which Sri Lanka regained from the European Union, comes into force from today, May 19. The Generalised System of Preferences (GSP) is a preferential tariff system awarded to developing nations such as Sri Lanka, to export goods to European markets at lower tariff rates. Under this tariff system, Sri Lanka has the opportunity to export 6,200 items to the European Union, tax free.
Following the devastating 2004 Boxing Day Tsunami, Sri Lanka was awarded the GSP+ concession for a period of three years, however, the lack of progress by the earlier government in twenty-seven international agreements, including the fields of human rights, labour laws, environment conservation and good governance led to Sri Lanka losing the GSP+ concession on the 15th of August 2010. The GSP+ consession which comes into effect, will be implemented until 2021.The 9.6% duty charged when exporting garments to the EU, will now be removed. Around 33% of Sri Lanka’s exports are directed to the European Union.
A number of exporters held discussion with Prime Minister Ranil Wickremesinghe with regard to the decision made by the EU.
M&S cheered its first rise in clothing and home sales for nearly two years in January but this is maybe a a temporary reprieve as the timing of Easter is set to have impacted its fourth quarter trading.
Analysts predict clothing and home sales fell by 3.3 per cent in the three months to the end of March, against a 2.3 per cent hike the previous quarter. Food sales are likely to have fallen by close to 1 per cent in the final quarter. This will see the group's year end on a sour note, with underlying pre-tax profits also set to dive 13 per cent to £593 million from £684 million the previous year.
Chief executive Steve Rowe has already warned that profits would take time to recover as its clothing turnaround beds in, but the third quarter trading gave hope that it is beginning to turn the corner. Analysts at Numis Securities say stripping out the effects of this year's Easter, clothing sales are likely to have been close to flat, while Peel Hunt believe underlying sales rose by 0.5 per cent.
Jonathan Pritchard at Peel Hunt points out sales will have regained their poise" since Easter-affected fourth quarter and they think the immediate changes that management made to the offer, merchandising and service are starting to resonate with customers. M&S has recently poached the chief executive of Halfords Jill McDonald to lead the turnaround in its clothing business.
With the Goods and Services Tax (GST) Council unable to arrive at a consensus on Friday on the textiles sector, the rate announcement has been deferred to June 3. The deferment is understandably due to complexities within the entire textiles value chain, in addition to the industry's anticipation of a fibre neutral taxation across the chain.
According to textile industry representatives, differed rates for different parts of the textile value chain with some being taxed and some being exempt has led to tax evasion and flourishing of the unorganised sector. In addition, India has been a cotton heavy region in terms of fibre as compared to the global trend of a skewed in favour of man-made fibre (MMF).
Tax variation in textiles has been such that, while fabrics do not attract excise duty or sales in most states, branded apparels are subject to both excise duty and sales tax. On the fibre front, natural fibre like cotton is exempt from taxes though man-made fibre draws a 10 per cent excise duty.
Sakthivel, Former Chairman of Apparel Export Promotion Council (AEPC), says they are awaiting clarity on what kind of input credit would be given in case the branded garments vertical attracts a higher rate of 18 per cent. This gains significance amidst unorganised sector forming a large part of the textile industry, creating a gap in flow of input tax credit since the credit is not availed of, in case registered taxpayers procure inputs from unorganised sources.
The textile industry's other concern is compliance issue which may get aggravated in case of a higher rate fixed, especially at the end of the value chain. According to the apprel sector, the definition of 'branded garment' has also been a contentious issue. While, currently a large part of the unorganised sector also goes along in the name of branded garments by placing private labels, it is to be seen how the same would be defined under GST for better compliance across the industry.
Sutlej Textiles and Industries (STIL) has received approval to raise funds up to Rs 500 crores by way of borrowing for long term working capital requirements and growth plan. The board of directors at its meeting held on May 18, 2017 had approved for the same.
STIL, an ISO 9001:2008 certified company is one of the largest integrated textile manufacturing companies and is having strong position in the Indian Textile sector in the manufacturing of value added synthetic, natural and blended yarns, all types of spun yarns, processing of fabrics and home textile furnishing.
Sutlej Textiles and Industries' net profit fell 34.6 per cent to Rs 33.27 crore on 8.9 per cent increase in net sales to Rs 597.67 crore in Q4 March 2017 over Q4 March 2016. Sutlej Textiles and Industries is currently trading at Rs 886.1, up by Rs 4.75 or 0.54per cent from its previous closing of Rs 881.35 on the BSE. Sutlej Textiles and Industries is an integrated textile manufacturing company.
International Apparel Federation (IAF)’ Portuguese association member ATP held a conference on “The rebirth of Portuguese Textiles” at the European Parliament. Hosted by José Manuel Fernandes, Member of European Parliament it highlighted the growing importance of Portugese apparel and textiles industry. The Portuguese fashion and textile industry has undergone significant recovery which is all the more remarkable because it has taken place during the 2011 Portuguese crisis and subsequent bail-out. ATP President Paulo Melo and ATP Director General Paulo Vaz said the success was based on a well-defined and implemented strategy as well as support from EU funding programs.
IAF’s secretary General Matthijs Crietee and Euratex’s director general Francesco Marchi placed the Portuguese in a broader European and global context. They could see the combination of quality and reactivity as the industry’s strongest USP. Crietee said the strategic guidance of ATP, leading to investments in the entire system, including schooling, innovation, productivity, sustainability and international promotion has been an important factor of the Portuguese apparel industry’s success. IAF helps member associations develop their strategic industry plans and the Portuguese example is an important one for all to take a good closer look at.
A recent survey states overconsumption of fashion has become an international phenomenon. More than half consumers in Europe and Asia are buying more clothes than they need and use. Despite having sufficient clothing, the younger generation is shopping for fulfilment and encouragement by social media and the ease of online shopping.
Compulsive fashion shoppers regularly overspend on new clothes in spite of not being able to use them, with post-shopping excitement often turning into guilt after less than a day, says a study commissioned by Greenpeace in China, Hong Kong, Taiwan, Italy and Germany from December 2016 to March 2017. The survey was carried out amongst 1,000 people 20 to 45 year old in China, Hong Kong, Taiwan, Italy and Germany.
A large number of respondents agreed to overconsumption of clothes with 60 per cent in China, 60 per cent in Germany, 51 per cent in Italy, 68 per cent in Hong Kong and 54 per cent in Taiwan. The survey indicated young shoppers are lured to purchase while browsing social media with 72 per cent in China, 23 per cent in Germany, 63 per cent in Hong Kong, 36 per cent in Italy and 55 per cent in Taiwan agreeing to it.
Kirsten Brodde, Project Lead, Greenpeace Detox my Fashion campaign says the surveys reveals binge shopping is followed by an emotional hangover - made of emptiness, guilt and shame. People start realising they are trapped in an unsatisfying cycle of cheap, disposable fashion trends and that their overconsumption does not lead to lasting happiness. This should serve as a warning to companies and advertisers that promote the current fast fashion model. Fast fashion clothing brands should radically change their business model by shifting focus away from high volume production towards quality and durability. Brodde further added that broken fashion system, companies spend billions of ad dollars to sell us false dreams of happiness, beauty and connection tied to shopping products.
Nigerian exporters have come together to form a fashion training facility. The center has over 150 sewing machines, pattern making and cutting tables. It has the primary objective of promoting garment making skills, creating job opportunities and upgrading technical skills to improve quality, productivity and efficiency levels in the garment industry.
The purpose of the center is to build capacity of Nigerian garment producers in apparel production for the local and export market. Nigeria is awash with creative talents in the fashion industry, whose designs can compete anywhere globally. However, there is a wide gap in production and finishing, which affects the marketability of garments made in Nigeria.
Capacity utilisation in Nigeria’s textile and apparel sector has increased from 29.10 per cent in 2010 to 49.7 per cent in 2011 and is currently 50.2 per cent. The industry is dominated by foreigners, though it harbors various classes of players, individual investors, partnerships and government involvement in the industry. Mills are of all sizes. They have been set up by players from Hong Kong, India, UK, China, Japan and even Colombia.
Nigeria’s textile and apparel industry covers the entire clothing value chain, and has a strong potential for growth due to availability of cotton and the country’s large market-size represented by over 170 million inhabitants, who provide a natural market for textiles and apparels.
Industrialists and investors attending the groundbreaking-cum-inauguration ceremony of 24 industrial units in the state on Thursday by Chief Minister Raghubar Das have posed complete faith in government’s changed pro-investor approach for renewed industrial development in last two years. Textile major Orient Craft Chairman Sudhir Dhingra appeared moving a step further to claim that the State was having all the potential to leave Bangladesh behind and become top textile exporter in the world.
This is a historical day for garment industry in the State. The CM had expressed worries during a meeting with him in July last year over migration of unemployed young men, women and even teens to different parts of country in search of jobs and used to get ill-employed there. This is why the industry is coming up with huge garment production unit with employment capacity of over 15,000 in next six months.
He further added that the garment sector was among the quickest employment generating industries as it required only a maximum of 90 days to provide basic training to someone and make him worth employable in this industry. All the garment sector companies coming to the State carry a history and reputation of their own, and I strongly believe that we can change the fate of sector and people of State with support of the government, says Dhingra.
Ranjan Medicant Super Specialty Hospital Managing Director also confirmed changed industrial scenario in the State and said that the government had done wonderful job in attracting the investment whose trust is setting up a 500-bed super specialty hospital in Bokaro.
Footwear company SKF manufacturer promoter Aftab Alam, Kaveri Agri Warehousing (India) Managing Director G Suman Rao and other investors also posed faith in the way Government machinery had been functioning relentlessly to take MoUs done during Global Investors Summit (GIS) on February this year forward.
The textile industry has been urging the central government to decide a uniform Goods and Services Tax (GST) rate of 5 per cent for items across the textile value chain. The council is expected to reach a consensus regarding the tax structure during the two-day meeting chaired by Union finance minister Arun Jaitley, which is currently underway in Srinagar.
Over 20 textile associations led by the Southern India Mills' Association (SIMA) had recently issued a joint memorandum to the Union textiles minister Smriti Irani. A uniform levy of 5 per cent GST on all textiles and clothing products would ensure smooth migration of entire textile value chain from the present tax structure to GST tax structure with full compliance, creating win-win strategy for all the stakeholders and would bring substantial revenue to the exchequer when compared to the existing revenue.
Sriramulu Balakrishnan, MD, KG Denim pointed out saying that currently, fabrics do not attract excise duty or sales tax. Post-GST, the textiles industry expects that it should be nil rate of tax or be minimum. Representations have been made to the ministry of textiles by TEXPROCIL. Branded apparel is subject to both excise duty and sales tax.
Vikram Mahaldar, VP and global sales head of OCM believes that after the GST is imposed, mills and buyers will have to pay extra money for fabrics made from natural fibre, as they are exempt from any taxes in most part of the country. This may lead to short term decline in demand till channel stocks last, and until customers accept the change.
As for the e-commerce sector, it is likely to bring in greater convenience as GST promises standardisation for online marketplaces. "The 'one tax, one market' concept on which GST is based is expected to be a big welcome step and promising standardisation for online marketplaces to make e-commerce convenient. Jimmy Kaul, MD and co-founder of Shopotox commented on this saying that he believes that once GST comes into full effect, e-commerce sector would be structured well and the way forward will be easier.
India’s exports for April 2017 jumped nearly 20 per cent in dollar terms over exports during April 2016. This is particularly heartening when export figures were showing a decline over the last 24 months.
Medium and small scale exporters have a near 40 per cent share in total merchandise exports. These exporters have a leading role in exports of readymade garments, leather and footwear and gems and jewelry, which are important contributors in India’s export basket.
Exports from India have gone down in secular terms from 2013 to 2016 and between 2014 and 2016 the drop in exports was more than 17 per cent in dollar terms. Exports of readymade garments have nearly stagnated between 2015 and 2016.
For leather and leather products, another sector dominated by small and medium enterprises, there was a drop in exports during the last two calendar years. The story is identical for labor intensive small and medium sector of gems and jewelry which has a 15 per cent share in India’s export basket.
An increase in credit offtake is a natural corollary to the growth in any economic activities as enterprises, particularly small and medium enterprises, cannot maintain a cash chest ready for use for increasing manufacturing as per market demand.
