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Bangladesh has asked Accord to draw up a time-bound responsibility handover arrangement. The observations include Accord’s transition mechanism to be focused on a smooth transition of management of factories from the platform to the Remediation Coordination Cell (RCC). In September last year, the European Union-based platform submitted an exit plan to end its ongoing workplace safety activities in the country’s readymade garment sector in six phases. Accord’s proposed transition plan mainly put attention on remediation of the factories, RCC’s capacity building, including setting up a liaison office of Accord within it, handover of Accord’s safety committee, safety training program and its safety complaints mechanism.
Accord, a platform of more than 200 global apparel brands, retailers and rights groups based mostly in Europe, was formed immediately after the Rana Plaza building collapse to improve workplace safety in the country’s apparel industry for five years that ended in May last. Bangladesh allowed a six-month extension until November 30 while the platform wants to stay for more time. Accord has so far handed over responsibilities of its inspected 100 garment factories, which fully completed all the required remediation work.
In phases three and four, Accord has proposed gradual handover of its safety committee, training program and complaints mechanism.
"With Brexit on a knife edge, many designers and small-time manufacturers doubt whether the bi-annual catwalk event London Fashion Week holds anything for them. A slowdown in customer spending has triggered cautiousness in the rag trade. Luxury retailer Harrods is increasing its spring/summer stock to protect the exposed areas of its business ahead of the March 29 deadline. As the Business of Fashion website points out, the UK fashion sector may face disruptions in key imports besides losing access to international talent if the UK fails to reach a deal to soften the country's exit from the European Union."
With Brexit on a knife edge, many designers and small-time manufacturers doubt whether the bi-annual catwalk event London Fashion Week holds anything for them. A slowdown in customer spending has triggered cautiousness in the rag trade. Luxury retailer Harrods is increasing its spring/summer stock to protect the exposed areas of its business ahead of the March 29 deadline. As the Business of Fashion website points out, the UK fashion sector may face disruptions in key imports besides losing access to international talent if the UK fails to reach a deal to soften the country's exit from the European Union.
Custom clearances, increased prices cause concern
Meanwhile, Irish designers, manufacturers and retailers are dealing with new worries, such as customs clearance and the challenges around pricing, tariffs, sourcing production and fabrics that would come with a No Deal Brexit. There's the prospect of international customs and temporary export-import documents being reintroduced.
For the fashion-loving consumer, there's the annoying prospect of increased costs, potential shipping and customs delays
hitting delivery times. For online shoppers, there's the added disappointment of an end to free delivery from some sites. Eddie Shanahan, retail consultant and founder of the Council of Irish Fashion Designers (CIFD), last season led a group of Irish designers to a show in London. Although initially their enthusiasm was high, it dampened after a hugely successful show in aid of the London Irish Centre in Camden. Their optimism about how they can now tap into in that market was tinged with concerns.
A direct blow to sales
Brexit could directly hit brand sales. For designer Heidi Higgins, sales through its online store would be the major challenge, while Designer Niamh O'Neill fears that tariffs could push up prices. The prospect of increased costs on favorite British labels is enough to dampen the dreams of those harboring dreams of entering the industry. The graduate collection of for student could be hit too, a reason why many students are buying fabrics through wholesalers in Britain.
Exploring new avenues
The FeeG label has successfully diversified its business outside UK. It has established a foothold in Italy and Jewish markets in Israel and New York. Dublin designer Jennifer Rothwell is focusing on exporting to the Middle East, Dubai in particular. She says, Brexit would not massively affect the brand’s UK sales as it is a high-end luxury brand and plans to set up some US pop-ups later in the year to continue brand expansion in the US.
After 21 years of working with Fruit of the Loom in Co Donegal, Bernie Murphy’s skills as a garment technologist and product development were made redundant. Two years ago she launched her own fashion label starting with a distinctive smocked scarf followed by striking tweed pieces for which she sources her fabrics and yarns in her own native county. Her fashion tale is a positive one in an industry where so many designers have had their creative impulses cut to the quick by fear.
The global footwear market is expanding at a CAGR of 3.1 per cent between 2018 and 2026. Shoe knitting technology is becoming widespread. This contributes to less waste and reduced labor costs, and also lends itself to customization and speed to market.
The ongoing digitization of the creation process, such as the use of advanced CAD programs, will also gain momentum in 2019. Digitization allows for access to better materials and is also a way to create sample shoes without actually having to go to a factory and build them. Digital resolutions are now extremely high, making it easy to see complex design details, and the use of 3-D printing means that a brand can print a single shoe in multiple color ways, thus saving time and money in the selection process.
The use of sustainable and recycled materials and eco-friendly manufacturing processes is a top priority. Brands are reducing waste in supply chains and at the factory and using materials that are sustainable. Part of this involves things like transforming the operations process. The other part requires companies to consider making adjustments in production and considering how they could reuse or sell waste instead of discarding it.
Credits ratings firm Fitch Ratings has upgraded Levi Strauss & Co.‘s long term issuer default rating. The upgrade has the rating now at “BB+” from “BB.” The upgrade recognises Levi’s stable performance, with accelerating growth in revenue and EBITDA (earnings before interest, taxes, depreciation and amortisation) in 2018, as well a meaningful cash flow generation.
As David Silverman, the primary analyst wrote the upgrade report, Levi’s top-line has accelerated, with 8 per cent revenue growth in fiscal 2017, ended November 2017, and 11 percent growth expected in fiscal 2018. The company’s merchandising and branding efforts are bearing fruit, with strong growth across categories and geographies. Levi’s offering are trendsetting and the company is successfully exploiting opportunities to capitalize on this momentum through new product assortments, brand and celebrity collaborations, and square-footage expansion.
H&M’s fourth quarter net sales rose y 12 per cent to SEK 56.4 billion. Its online sales rose by 24 per cent in SEK. Gross profit in the quarter reached SEK 30.6 billion, with a gross margin of 54.2 per cent, as the cost of markdowns declined by 0.6 percentage points. Quarterly profit after financial items declined 11 per cent to SEK 4.35 billion.
For the full year, net sales increased 5 per cent to SEK 210.4 billion, with sales and market share rising in most markets during the second half, the company also said. Its online sales increased by 22 per cent to about SEK 30 billion, reaching 14.5 percent of total sales. Gross profit for 2018 was SEK 110.9 billion as gross margin reached 52.7 per cent. Profit after financial items was SEK 15.6 billion and profit after tax was SEK 12.65 billion.
The company plans 175 new stores in 2019, with about 335 new stores opening, of which 240 will be H&M stores, with a focus on growth markets.
The interim budget garnered mixed response from textile Surat industry. While the one-time tax rebate for those with a taxable income of up to Rs 5 lakh annually and the businesses with annual turnover less than Rs 5 crore being allowed to file quarterly GST returns has been welcomed by the industry, the absence of any announcements regarding Input Tax Credit has left them waiting for the next GST council meeting. Manoj Agrawal, President of the Federation of Surat Textile Traders Association (FOSSTA), expressed his disappointment over the lack of subsidy or schemes for garment package.
The Pakistan Tehreek-e-Insaf (PTI) government has given another bailout package worth Rs29 billion to the textile tycoons by waiving taxes and duties on the import of cotton. The government is offering support to industrial barons, who have got billions of rupees worth of incentive packages. They are now receiving gas and electricity at discounted tariffs. The government also recently approved a Rs25-billion gas subsidy for five zero-rated export-focused industries where textile giants are the major beneficiaries.
Another support package for textile manufacturers has been announced by waiving 50 per cent of the outstanding Gas Infrastructure Development Cess (GIDC), which amounts to Rs 40 billion. The textile industry will pay a total of Rs80 billion in GIDC arrears. With the scrapping of taxes and duties on cotton import, the government would lose Rs 14.6 billion in customs duty, Rs 6.9 billion in additional customs duty and Rs7.7 billion in sales tax.
Despite getting such incentive packages, textile exports from Pakistan to the global market have not increased significantly as Bangladesh exporters are eating into the share of their Pakistani counterparts.
Cotton stocks across the world are projected to drop to 17.6 million ton by 2018-19 end, reflecting a decrease of 5 per cent from the prior year and registering the fourth straight year of decline. Consumption is expected to remain steady but production will decline by 3 per cent. Cotton production in China is expected to increase by 1 per cent to 5.94 million ton, and when combined with a 7 per cent decline in India’s production due to insufficient rainfall, China will regain the ‘top producer’ title it lost to India in the 2015/16 season.
Although cotton prices have come under pressure, current projections for global consumption are unchanged at 26.8 million ton with production projected to be slightly lower at 25.9 million tons. Cotton prices are feeling the effects of uncertainty related to the global economic environment, as opposed to the impact of trade barriers. Price fundamentals still look solid, as reflected in the price forecast.
Response in the western region of Coimbatore to the Interim budget 2019 was a mix of elation and disappointment. While knitwear and garment industry broadly hailed the interim budgetary, small scale manufacturers expressed disappointment over few measures to boost industrial activity.
Raja M Shanmugham, President, Tirupur Exporters Association (TEA), welcomed the the announcement of Rs 6,000 per annum to the Small and Marginal farmers and increasing the income tax exemption limit from Rs 2.5 lakh to Rs 5 lakh to individuals, and a monthly pension for unorganised sector workers are considered as better measures. He, however, urged the centre to allocate adequate funds for textile and knitwear sectors.
K V Srinivasan, Chairman, The Cotton Textiles Export Promotion Council (Texprocil) termed the budget growth oriented. He feels, hike in the taxable income threshold, increase in standard deduction to Rs 50,000 are measures that would leave more disposable income with the salaried class, leading to higher consumption including textiles. He urged the inclusion of cotton yarn and fabrics under ROSL scheme.
V Lakshminarayanasamy, President, Indian Chamber of Commerce and Industry, Coimbatore hailed the budget's focus on two major points: farmers and general tax payers.
"Textile industry welcomed the Interim Budget 2019-20 announced by the Finance Minister, Piyush Goyal. Sanjay Jain, Chairman, CITI feels the budget will give a major impetus to the textile and apparel consumption in India by increasing the purchasing power of middle class and farmers. He feels, the announcements highlight the commitments of the present government to improve overall socio-economic condition of the country by touching upon the healthcare sector, infrastructure, ease of doing business, more beneficial schemes for low income strata of the society by enhancing their purchasing power, protecting them through pension scheme, minimum income through MGNREGA, etc."
Textile industry welcomed the Interim Budget 2019-20 announced by the Finance Minister, Piyush Goyal. Sanjay Jain, Chairman, CITI feels the budget will give a major impetus to the textile and apparel consumption in India by increasing the purchasing power of middle class and farmers. He feels, the announcements highlight the commitments of the present government to improve overall socio-economic condition of the country by touching upon the healthcare sector, infrastructure, ease of doing business, more beneficial schemes for low income strata of the society by enhancing their purchasing power, protecting them through pension scheme, minimum income through MGNREGA, etc.
Goyal said the 2 per cent interest subvention for Micro, Small and Medium Enterprises (MSMEs) loans with a ticket size of Rs 1 crore will give a thrust to MSMEs to boost employment and economic growth. A few banks exiting PCA, relaxation for MSMEs on funding and interest rates will benefit 80 per cent of the textile and clothing industry which falls under MSMEs.
Textile sector outlay reduced
The outlay for textile sector has been reduced from Rs 6943.26 crores to 5,831.48 crore. The Budget allocation for A-TUFS has
been decreased from Rs. 2, 300 crore to Rs. 700 crores. The Budget for ROSL has also been reduced significantly which is a cause for great worry to the industry as this could lead to working capital blockages and delay in ROSL receipts. Further the industry has been expecting upward revision in ROSL rates which would need more funds.
Procurement of Cotton by CCI under Price Support Scheme has increased from Rs 924 crore to Rs. 2018 crore. Allocation for Central Silk Board has also been increased, which is a welcome step by the Government.
Rahul Mehta, President, CMAI, welcomed the proposals of increasing tax exemptions limit and income support scheme. He believes, this will increase consumption and spending among the middle class and rural India.
Budget to benefit handloom weavers, MSME workers
P Nataraj, Chairman, The Southern India Mills’ Association (SIMA) hailed the announcement of Rs 6,000per year for farmers having below two hectares of land under Prathan Mandri Kisan Samman Nidhi Programme. He also welcomed the pension scheme for the workers in the unorganised sector enabling them to receive Rs 3,000 per month as pension after attaining 60 years as the textile industry is predominantly in the unorganised sector. According to him, the scheme would largely benefit handloom weavers and powerlooms and also the workers of several other small, micro units from other segments of the industry.
The decision of doubling the income tax exemption limit from Rs 2.5 lakh per annum to Rs 5 lakh per annum apart from enhancing the standard deduction limit from Rs 40,000 to Rs 50,000 was also approved by Nataraj as it would benefit several lakh middle class employees in the textile industry.
A boon for retailers
Krish Iyer, President and CEO of Walmart India feels the Budget gives huge resources in the hands of people. As it focuses on fiscal consolidation, it will bridge the divide between India and Bharat. Kunal Bahl, CEO & Co-founder of Snapdeal welcomed tax exemption upto Rs 5 lakh income as it will increase consumption, both through online and offline retail.
