FW
The demand to remove anti-dumping duty on yarn is being raised from various circles including Federation of Surat Textile Traders Association (FOSTTA), Malegaon Industries and Manufacturers Association (MIMA), Bhiwandi Powerloom Federation and other organisations working for the industry. Asaduddin Owaisi, the Hyderabad MP and president of the All India Majlis-e-Ittehadul Muslimeen (AIMIM) has also made a strong appeal to remove anti-dumping duty on synthetic yarn. He said that the government's 'Make in India' policy is proving disastrous for the local textile industry.
The government's ‘Make in India’ policy is helping just a handful of corporate houses while destroying the local textile industry, Owaisi said in the Parliament. Giving a brief overview of the textile industry, Owaisi said that there are about 2.5 million power looms in India providing livelihood to more than 6.3 million people. The textile sector is the largest industry after agriculture, but today it is struggling because of the government’s disastrous policy. As a result of this policy, the cost of grey fabrics produced in the country is going up by about 30 per cent. On the other hand, countries like China, Sri Lanka, Bangladesh and Pakistan are given free run to export their produce to India.
Helpless and distressed people in Malegaon, Bhiwandi, Surat, Sholapur are looking at some kind hope and anticipation. The government should without further delay remove the anti-dumping duty on the synthetic yarn imported from China.
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Aditya Birla Group has decided to merge Aditya Birla Nuvo (ABF) with Grasim under a grand plan stitched by them to beef up shareholder value. The proposal is expected to simplify group cross-holdings and deliver value from a diverse range of businesses to shareholders. The combination of Nuvo and Grasim would create a company with a combined market cap of Rs 62,767 crore and a turnover of around Rs 59,766 crore with operating earnings of Rs 11,961 crore. While AB Nuvo will cease to exist after the merger. All financial services businesses, including insurance and payments bank, will be listed on stock exchanges.
Meanwhile’ Grasim April-June quarter results show net profit jumped 64 per cent. Total consolidated income also rose by nine per cent to Rs 9,088.55 crores quarter from Rs 8,365.70 crores during the same quarter in 2015-16. Expenses were higher at Rs 7,500.41 crores as against Rs 7, 272, 84 crores during the period under review.
The company will continue to focus on expanding the viscose staple fiber market in India by partnering with the textile value chain and better customer connect. Enriching the product mix through a larger share of specialty fiber in the portfolio will be yet another focus area. Grasim is part of the Aditya Birla Group. Its core businesses are viscose staple fiber and cement, contributing over 90 per cent of its revenues and operating profits. It is also present in chemicals.
The Aditya Birla Group is the world’s leading producer of VSF, commanding a 16 per cent global market share. Grasim has a global market share of eight per cent. in July 2004, Grasim acquired a majority stake and management control in UltraTech. One of the largest-of-its-kind in the cement sector, this acquisition catapulted Grasim to the top of the league in India. Subsequently Grasim demerged its cement business into UltraTech in July 2010. The merger has created the largest cement company in India, providing a platform that will help in pursuing aggressive growth going forward.
Last year, the $41-billion Aditya Birla Group consolidated its garments business into a single entity by carving out premium apparel maker Madura Garments Lifestyle Retail Co Ltd from AB Nuvo and merging it with Pantaloons Fashion and Retail India to create India's largest branded clothing company with annual sales of Rs 5,290 crores. With holdings in the group's financial services, telecom, fashion and lifestyle, and divisions of fertilisers, insulators, linen manufacturing and rayon, AB Nuvo so far was positioned as a diversified conglomerate within the group as well as an incubator of new businesses.
To boost apparel exports, the Union government has announced a scheme allowing duty-free import of fabric. The 'Special Advance Authorisation Scheme' will come into effect from September 1. ‘Duty free import of fabric under the Special Advance Authorisation Scheme for export of articles of apparel and clothing accessories shall be allowed" in certain type of products,’ the Directorate General of Foreign Trade said in a notification. Under the scheme, exporters would be entitled for an authorisation for fabrics including inter-lining on pre-import basis and All Industry Rate of Duty Drawback for non-fabric inputs on the exports. The authorisation shall be issued for the import of relevant fabrics including inter lining only as input. Recently, the Union Cabinet had approved a Rs 6,000-crore package for the textiles sector with an aim to create one crore new jobs in three years and attract investments of $11 billion while eyeing additional $30 billion in exports.
The Fair Labor Association (FLA), a non- profit collaborative effort of universities, civil society organizations and businesses, has released its first annual compensation report, highlighting data on the earnings of workers in 124 apparel and footwear factories assessed by it last year. This is the first-of-its kind collection and publication of wage data and analysis that is part of a commitment by the FLA and its affiliates to improve compensation for workers in global supply chains.
From each factory where assessors of FLA collected compensation data, the Association has compiled a chart that depicts how much workers are earning, compared with other local benchmarks such as the legal minimum wage, World Bank poverty levels and cost-of-living figures developed by governments, unions, non - governmental organizations (NGOs) and others.
Wanting to place workers' compensation in a local context, these wage ladder charts provide a snapshot of workers' purchasing power going by their current compensation levels in each of the 21 countries where FLA assessors collected data. In all the four factories assessed in Bangladesh last year, average compensation fell below the World Bank poverty line for a three-adult-equivalent household.
The annual compensation report also enlists the FLA's 2015 findings of legal pay violations with 20 per cent of the factories assessed found to have miscalculated overtime pay and six per cent of factories found to have violations of minimum wages. On the other hand, compensation for workers in assessed facilities in Cambodia, the Dominican Republic, India, the Philippines, and Sri Lanka (and for migrant workers in Jordan) averaged above World Bank poverty lines, though the FLA found that purchasing power of compensation for these workers remained comparitively weak. Average compensation was found to be highest in relation to the World Bank poverty line in the 14 factories assessed of the United States.
The Association will continue to collect compensation data in its 2016 factory assessment cycle and in subsequent years help steadily to increase awareness among companies, unions, NGOs and other interested stakeholders
Bangladesh’s export earnings declined by 3.49 per cent in July 2016 compared to July 2015. Major exports like readymade garments, home textiles, leather and leather products and footwear, agricultural products and frozen and live fish faced negative growth and thus pulled down the overall merchandise shipments.
Earnings from knitwear recorded a 4.45 per cent negative growth compared to the corresponding period of last fiscal. The earnings fell short of the set target by 16.68 per cent. Earnings from the woven sector witnessed 4.36 per cent negative growth. The earnings fell short of the target by 29.65 per cent.
Home textile export earnings declined by 18.22 per cent compared to the corresponding period of the last fiscal.
Earnings from jute and jute goods posted a 25.71 per cent growth. Export earnings from frozen and live fishes declined by 23.48 per cent. Agricultural products, leather and leather products, leather footwear and furniture recorded 5.85 per cent, 2.26 per cent, 4.31 per cent and 27.39 per cent negative growth.
Earnings from plastic products slightly grew by 0.96 per cent though it fell short of the target by 13.60 per cent.
The government has set a total export target for the current 2016-17 fiscal year at 37 billion dollars.
People in China like US cotton. They appreciate its quality and would buy more of it if they could get quota restrictions lifted. Shane Stephens, National Cotton Council chairman, who recently led a delegation of US cotton leaders to China, said that the Chinese textile manufacturers have an insufficient volume of quality cotton and that is why they want more high quality US cotton. Stephens was addressing a joint summer meeting of the American Cotton Producers and Cotton Foundation at Lubbock, Texas.
He pointed out that a spokesman from the US Embassy in China said although relations between the US and Chinese governments have cooled down in recent years, the relationship between US and Chinese cotton industries remains cordial. Chinese cotton industry has tremendous respect for the Cotton Council. He hoped to see cooperation from US cotton to ensure a stable supply of high quality cotton. Better quality cotton will allow Chinese mills to produce more high-end goods.
The 16th edition of Knit Show held at Tirupur once again proved to be a successful event as most stakeholders from the apparel manufacturing supply chain were there with their latest machines, fabrics and accessories. All kind of printing technologies in the field of digital, screen and direct-to-garment dominated the show. Well known names like Grafica Flextronica, Cheran Machines India, Digital Graphics Incorporation, ROQ, MHM, Negi Sign Systems & Suppliers, Dhaval Colour Chem, Lordz, Wenli, Apsom Infotex displayed their printing machines.
Grafica Flextronica and Cheran Machines India, which were earlier mainly into screen printing, displayed their digital printers for the first time. This is indeed a positive development as far as innovation in the printing domain is concerned and almost every company dealing in printing equipment opined that all kind of printing facilities will grow in Tirupur.
The fair also witnessed advance technology in cutting room solutions. Companies like Serkon Textile Machinery; Turkey displayed its solution in India for the first time. The event saw the presence of both local and international players and was marked by a high footfall. Visitor presence was good at most of the booths. However, some visitors were of the opinion that there were very few fabric companies present at the fair, especially in the woven segment.
Apparel Resources met many exhibitors at the show and all of them said that they were pleased with the footfall and visitors response. Overall, the fair managed to impress people with its avant-garde exhibits.
Teams from Next Sourcing, Evesyl Enterprises, Rupa & Company, Anbu Apparels India and Shivam Exports opined that the fair was quite impressive as far as printing technology was concerned, but in the future, it can add value by including more fabric companies. Overall, the fair managed to impress people with its avant-garde exhibits.
"Since 2013, Bangladesh does not have the facility of Generalised System of Preference (GSP) which was suspended by the US after two devastating accidents. With the Export Promotion Bureau (EPB) projecting Bangladesh’s garment exports to hit $28.09 billion in the FY2015-16 with 10.21 per cent growth, it is being hoped that the US would change its stance on GSP for Bangladesh."
Since 2013, Bangladesh does not have the facility of Generalised System of Preference (GSP) which was suspended by the US after two devastating accidents. With the Export Promotion Bureau (EPB) projecting Bangladesh’s garment exports to hit $28.09 billion in the FY2015-16 with 10.21 per cent growth, it is being hoped that the US would change its stance on GSP for Bangladesh.
The United States offers GSP to provide duty-free entry into the US market for nearly 5,000 products from 122 countries. Except Bangladesh, all members of South Asian Association for Regional Cooperation (SAARC) are eligible for GSP. Bangladesh lost out when the readymade garment (RMG) sector hit headlines because of Rana Plaza factory building collapse and the Tazreen Fashions fire that killed more than 1,200 workers. However, the US GSP scheme does not cover Bangladesh’s RMG sector, and that’s why the US action did not directly affect export of RMG to the American markets.
Bangladesh’s exports compete with China
In recent years, Bangladesh’s export percentage to the US has been dropping. In 2015, it earned $5.40 billion as compared to $4.83 billion in the previous year. The same year, the US started importing clothing products worth $85.16 bilion from across the globe. Bangladesh’s share was 6.34 per cent, China’s 35.86 per cent and Vietnam’s 12.40 per cent in terms of value. So, when Vietnam can benefit from the GSP, Bangladesh too can do so.
Working towards bringing Bangladesh back
Even as US buyers cut prices, triggering great concern for Bangladeshi exporters, US Republican presidential candidate Donald Trump has spoken in favour of Bangladesh garments. He has said that the quality of shirts from there is good. Bangladesh offers ease of doing business while import-export is faster. Research and Development (R&D) on new styles is faster as one can import fabrics in three days as compared to India where it takes 10 days. It is being hoped that the US would change its stand on GSP for Bangladesh. Also, Bangladesh should improve political understanding with the US, bring in lobbyists and integrate inter-ministerial coordination efforts. It should also boost bargaining power and improve economic diplomacy.
The US had introduced GSP to promote exports of low income countries to industrialised ones in order to support their economic growth and development. However, Bangladesh did not benefit from it in the last 37 years before it was suspended.
Bangladesh exports tobacco, apparels, sporting equipment, porcelain china, plastic products and a small quantity of textile products. According to the US Trade Representative (USTR), China secured top position in exporting RMG to the US with $30 billion in 2015 while Vietnam earned $10.5 billion. India exported apparel items worth $3.6 billion with 7.78 per cent growth than the previous year’s export earnings. Bangladesh is the third largest exporter of clothing products to the US.
In the view of Indian Credit Ratings Agency (ICRA), a 12% duty recommended by the Arvind Subramanian Committee is likely to have a negative impact on the textile sector especially the cotton value chain that is currently attracting zero central excise duty (under optional route) unlike the man-made fibre sector. Hence, there is an incentive for the downstream players in man-made sector to avail the Input Credit Tax (ITC). ICRA has pointed out that most of the cotton based textile players in the value chain operate through the optional route that results in lower duties. The key reasons for this are exemption on cotton and hence, lower ITC for cotton spinning mills. As a result, cotton yarn manufacturers opt for optional duty route without claiming ITC and pay zero excise duty. As Anil Gupta, VP, Corporate Sector Ratings, ICRA points out “With an optional duty structure at the cotton yarn stage itself, the downstream sectors, i.e. weaving, processing and garments also operate under the optional route. This is reflected in the less than 1 per cent effective excise duty rate applicable to 480 spinning and weaving companies rated by ICRA, which accounted for Rs 57000 crores revenue during FY2015.” He adds, with GST on textile, the textile value chain will become more organised as it will make GST non-compliant suppliers uncompetitive vis a vis GST-compliant suppliers, as buyers won’t be able to take ITC. “Due to the reduced tax advantage of cotton yarn vis a vis man-made yarn, there can be a gradual shift in the domestic textile industry, which currently operates with a fibre mix of cotton: manmade of 60:40; as against a global average of cotton: manmade of 40:60.”
Under GST, textile players who are oriented towards domestic markets will be able to avail ITC on domestic capital goods (but not the import duty) as their sales will be subject to GST. Accordingly, this will reduce the cost of capital investments and hence will be positive for the players operating in domestic markets.
Exports will be zero rated under GST as there will be transparency and availability of full ITC for exporters which is currently being provided by duty drawback schemes. Accordingly, the duty-drawback will lose its relevance under GST. However, sectors where the drawback rates are higher than actual indirect taxes on inputs may face profitability pressures, an ICRA assessment states.
