FW
‘Yarn forward’ forms a key part of the proposed format of the Trans-Pacific Partnership (TPP), a United States led trade agreement involving twelve countries, which is under negotiation. In essence, ‘yarn forward’ would require that only fabric produced from yarn made by a TPP country would qualify for the trade agreement’s duty-free status. Vietnam, one of the signatory countries, will have significant effect of this rule which is intended to ensure that the trade benefits of the TPP only apply to signatory countries rather than outside players such as China.
Vietnam has much to gain from the implementation of trade agreement, including drastically reduced tariffs in some of the world’s largest markets because the TPP trade area would comprise a region with $28 trillion in economic output upon completion. If the TPP is successfully implemented, tariffs will be removed on almost $2 trillion in goods and services exchanged between the signatory countries.
Vietnam is currently a key global garment manufacturing location, however, its factories often use Chinese-made fabrics in their products, and China is not a part of the TPP. If the country wants to be eligible for TPP benefits such as lower tariffs in the US, it will have to develop its own local fabric industry or constrain itself to only importing fabric from another TPP country. Hence, Vietnam is currently working to have the ‘yarn forward’ rule removed, or its implementation delayed, from TPP. A number of other countries have also pledged their support to Vietnam. However, it seems that Vietnam may be ready to acquiesce to yarn forward, and the country has so far expressed fairly consistent support for the trade agreement, since it will allow many of its other products market access to some of the world’s biggest economies. The US Trade Representative (USTR) has also stated that the US will not pull back from its demand for ‘yarn forward’.
A number of Vietnamese companies are already starting up, or expanding, their own fiber manufacturing operations in order to not be left behind when the TPP is finally implemented. Key companies include the Century Synthetic Fiber Corporation (CSFC), Thanh Cong Joint Stock Co (TCM), and the Vietnam Textile and Garment Corporation (Vinatex). These companies are also getting the support from government to enhance the competitiveness of the country’s fiber manufacturing industry. Vietnam’s Ministry of Industry and Trade has proposed levying a two percent import tax on polyester staple fiber (PSF). Currently PSF imports are not subject to tax.
In case the Pakistan government alters the Reduced Rate Regime, and fails to release stuck up funds and ensures immediate liquidity supply from banks, the textile industry will face 50 per cent closure, fears S M Tanveer, Chairman, All Pakistan Textile Mills Association (APTMA). The textile industry in Pakistan is facing a crisis due to the high cost of doing business, energy constraints, high cost of finance and labour wages as against regional competitors.
According to the APTMA chairman, refund claims worth Rs 100 billion across the textile industry have been stuck up with the Federal Board of Revenue with no clue as when these would be released. It has choked the textile industry and causing colossal losses due to the constraints beyond its control.
Then there are rumors about the government mulling imposition of 5 per cent sales tax on all inputs and utilities across the value chain under the Reduced Rate Regime.
In 2014, Vietnam's textile and garment sector saw a 16 per cent rise in the level of exports. While exporting garments is big business in Vietnam, investors should not ignore the growing opportunities to import products into the country and to take advantage of the growing consumer market there. In order to conduct import, export, and distribution activities in Vietnam, the best investment strategy tends to be to set up a trading company.
Generally, a trading company is inexpensive to establish and can be of great assistance to foreign investors by combining both sourcing and quality control activities with purchasing and export facilities, thus providing more control and quicker reaction times compared to sourcing purely while based overseas.
The strong predicted growth in the garment sector is the result of a number of free trade agreements that Vietnam is currently negotiating. Chief among these is the Trans Pacific Partnership, a US-led agreement involving 12 nations. Upon completion, the TPP trade area would comprise a region with $28 trillion in economic output, making up around 39 per cent of the world’s total output. If the TPP is successfully implemented, tariffs will be removed on almost $2 trillion in goods and services exchanged between the signatory countries.
Vietnam has also signed or is in the final stages of negotiations FTAs with South Korea, the European Union, and the customs union of Belarus, Kazakhstan, and Russia.
One of world's largest fabric makers for the fashion industry, Aditya Birla has decided to abide by the policy to exclude fiber produced at the expense of endangered forests, reports Canopy, an environmental group. Its use of viscose made the company a target for environmental groups pushing to curb deforestation in the pulp and paper sector.
Many other fashion brands, in the recent past, including H&M, Zara, and Levi's have adopted similar policy as a part of their sustainability programs. The agreement however differs significantly from the deforestation-free policies being adopted in the palm oil and soy sectors in that it doesn't specifically bar old-growth timber from Birla's supply chain. Instead it requires wood harvested in "ancient and endangered forests" to be extracted under a "sustainable forest management system" or as part of "a biotope-conservation program". That means the company could still buy fiber from companies operating within rainforests and boreal forests.
Aditya Birla, an Indian conglomerate with operations in 36 countries and 120,000 employees, accounts for about a fifth of global production of man-made cellulosic fibers for fabric, including viscose which is produced from wood pulp.
As e dollar remained strong against other currencies, US apparel imports rebounded in March. Apparel imports surged 19 per cent in March, compared to the same month last year, to $7.9 billion. The increase greatly outpaced that of overall imports, which rose by only 1.8 per cent to $199 billion in the month.
In late February, an agreement was reached between the parties in West Coast ports to slowdown, and the huge backlog of imported goods finally began entering the US, which helped boost March apparel import figures. On a 12-month smoothed basis, which corrects for volatility of data in a particular month, apparel import growth was 3.3 per cent in March, its largest increase in five months and three times February’s growth rate.
China, Vietnam, Bangladesh, Indonesia and India are the top five of US imported apparel so far this year, though Indonesia has seen its apparel exports to the US drop in the first three months of the year compared to 2014. Apparel exports continued to outperform the total export market, however, increasing by 3.2 per cent. Overall exports of goods and services dropped 6.2 per cent in the month, hurt by the strength of the dollar.
Bangladesh's ready-made garment exports to the US increased by 6.25 per cent in the first quarter of 2015 compared to the corresponding period last year. However, apparel exports from Vietnam to the US, one of Bangladesh’s main competitors and India grew by 12.11 per cent and 9.36 per cent during the same period.
Due to the accidents in Bangladesh and political unrest, a large number of orders were shifted to Vietnam and India. Buyers are, however, coming back to Bangladesh after they regained confidence mainly due to ongoing safety measures taken by the garment industry.
Vietnam’s exports to the US increased from $8.12 billion in 2013 to $9.26 billion in 2014. India exported apparels worth $3.40 billion last year, which was $3.21 billion in 2013. Bangladesh is still competitive in terms of price, quality and timely shipment.
China’s exports to the US also increased by 4.93 per cent during the January-March period of 2015. India and Vietnam are grabbing orders shifted from China as they are more competitive than Bangladesh because the Bangladeshi currency is appreciating against the US dollar while those of Vietnam and India are depreciating, making imports from Bangladesh costlier.
Coats, world’s leading industrial thread and consumer textile crafts business, has acquired GSD. Coats is a recognised industry leader, with long standing expertise and deep industry relationships.GSD, a UK based company, supplies expert management solutions that analyse time, cost and production capability in the sewn products sector with a focus on maximising productivity and controlling costs.
GSD will become part of Coats Global Services, which was launched in 2013 in response to customer demands to help them realise productivity and supply chain improvements, develop technical skills and enhance corporate responsibility.
This means GSD’s specialist technical knowledge, data integrity and industry experience will be married to the global reach, customer and brand relationships, industry stature and consulting expertise of Coats.
GSD will enhance Coats Global Services’ end-to-end operational excellence offering, which provides practical, industry-specific technical services, training, technology solutions, quality assurance and compliance, while GSD will have access to Coats’ global reach and resources.
Coats Global Services and GSD will work together to deliver management solutions to maximise productivity and drive down costs in the sewn products manufacturing sector, with GSD providing time-cost benchmarking and Coats offering consulting and technical production expertise, for retailers, brands and their supply chain vendors.
www.coats.com/
Surat's textile markets are getting negatively affected because of defaulters from Madhya Pradesh, Rajasthan, Uttar Pradesh and Bihar. Defaults worth over Rs 700 crores have been reported from these markets in the last five months. Industry insiders point out that almost 20 to 25 cases of defaults are being reported every month.
Their modus operandi involves renting shops at the textile markets under fake names, identity proofs and residential addresses, followed by placing huge orders after making first three payments on time and then disappearing seeking credit of four months. And when the victims lodge police complaints or approach Federation of Surat Textile Traders' Association (FOSTTA), there is not much, they are able to do since the people cannot be traced due fake identities.
According to Chairman of textile committee of Southern Gujarat Chamber of Commerce and Industry (SGCCI), Devkishan Manghani, "There are over 165 textile markets housing more than 65,000 textile shops. Each market has been given the printed forms to be filled by those taking shops on rent. It is the responsibility of the textile markets and the shop owners to verify the details."
www.fostta.com
Though a slowdown in China, political unrest in Bangladesh and labour and other issues in Vietnam gave an opportunity to Indian textile exporters, the segment managed to expand its performance by just 8.2 per cent over the last three years. While the average annual growth rate of Chinese textile and clothing exports slowed to 6.1 percent since 2012 from as high as 20.1 per cent in 2011, India’s average expansion rate is just 8.2 percent against 15.8 per cent growth rate reported by Vietnam since 2012. Even Bangladesh, despite all the challenges it has been facing, has managed a growth rate of 7.8 per cent.
Experts have blamed lack of incentives, excessive emphasis on cotton fibre and handlooms by the government, flip-flop in raw material policy, faulty duty structure in the man-made fibre segment where imports of certain raw materials like PTA are taxed higher than those of finished products and inflexible labour laws as hurdles to the growth of the textile and apparel sector. The withdrawal of certain export incentives in the recently-announced foreign trade policy 2015-20 will further make a negative impact.
However, according to Texpreneurs, a forum formed by Tamil Nadu based textile entrepreneurs, against seeking sops from the government, which is preparing a report based on corporate economic advisor, Ritesh Kumar Singh’s suggestions on boosting textile exports through trade pacts, , a well-conceived trade pact can open up opportunities on the textile export front, but a badly negotiated free trade pact can lead to unintended consequences, like SAFTA (Agreement on South Asia Free Trade Area). Singh points out that with the WTO obligation forcing India to phase out all its export incentives for the textile sector by end of 2015, on the other hand the Indian textile industry and policy makers are too focused on export incentive scheme for export promotion, which does not augur well for the industry. “The key to survive in the long run would be to seek improved trade facilitation and basic infrastructure,” he asserts.
The event is showcasing the 2016 Spring/Summer collections made by textile entrepreneurs of Tirupur knitwear cluster. Among the exhibits are: knitted T-shirts, children’s wear, night wear, trendy dresses for women and trousers.
Though the fair is being held twice a year, for the last two decades, a large section of knitwear exporters feel that the fair needs to undergo changes according to the changing scenario and must become a better platform for B2B interactions between a wide base of foreign buyers and manufacturers.
The three-day fair has been organised by the Apparel Export Promotion Council, India Knit Fair Association and Tirupur Exporters Association. It is India’s biggest fair for knitted garments. The India Knit Fair offers the knitting and yarn industries the best manufactured equipments and raw materials. It features leading knitwear exporting organizations from all over India. It is a platform to build contacts, develop business prospects and work on major tie-ups and partnerships. Among visitors are designers, manufacturers, buyers, agents and celebrities from the fashion world.
Tirupur has 80 per cent share of India’s knitted garment exports. Knitted garments are 45 per cent of India’s total textile exports.
