FW
Raw silk, which is imported from China, is becoming costlier thus, India’s silk fabric exporters are looking for incentives to remain competitive. They hope to meet commerce ministry officials to discuss the withdrawal of export incentives under the Foreign Trade Policy 2015-20. Members of the Silk Association of India say exporters could get a five per cent incentive on woven silk fabrics, which was applicable on exports to all countries under the previous Exim policy (2009-14). As per the new policy, export of silk fabrics made only on handloom is eligible for a five per cent incentive and it was lowered to two per cent for power looms.
Under the new policy, exports to one of the major silk markets are no longer incentivised, said Vikram Tantia, President of the Silk Association of India. East Asia, Africa, and Australia too are major markets for silk exports. Besides, several exporters using powerlooms are not eligible for incentives from states such as Karnataka, Bengal, UP, and Bihar.
Textile mills in Maharashtra are incurring losses to the tune of Rs 10-40 crores each as almost 50 co-operative textile mills are either sick, closed or under liquidation process. The government's share in their capital ranges from 80 per cent to 45 per cent. Maharashtra government may soon allow the mills to sell off excess land in their possession to save them from further losses. Earlier they were never permitted to do so despite repeated requests. The government is yet to decide whether there should be a cap on saleable land.
The closure of all ailing mills was suggested earlier by the Suresh Halwankar Committee, to cut losses. The Congress and NCP reproached the suggestion as a ‘deliberate attempt’ to devastate the cooperative sector. Chandrakant Dada Patil, Textile Minister said they believed this decision would help ailing mills to revive their business as the government has invested huge amounts in them. He added that if this move does not help, the government would have to step in.
Most ailing mills are in smaller cities and towns and not a single one has that much excess land, which could fetch Rs 30-40 crores. Therefore, experts have termed this plan as ‘useless’ and ‘impractical’.
The consultant for preparation of a Detailed Project Report was appointed by the government said M Ashokan, Corporation Commissioner. He added that the focus in Tirupur would be on underground sewerage scheme, improvement of water supply, e-governance, health and sanitation, increasing green cover and transportation, and some other parameters. Infrastructure needs would be minutely studied by the DPR before floating the final plan, said Corporation officials. Tirupur is going to be included under the Smart City project, as it is envisaged that it would propel the prowess of the knitwear industry, both in the global and the domestic markets. Industrialists in Tirupur knitwear cluster have welcomed this move.
The cluster is looking at Rs one lakh crore in turnover through garments sales, both to foreign and domestic markets by 2020, says M Veluswamy, Chairman of Confederation of Indian Industry (Tirupur district council). He added that infrastructure needs to grow exponentially to attain this, thus the funding for development of Tirupur as a ‘Smart City’ will be helpful.
The main requirements of the knit city include housing facilities for labourers, which could be constructed on a public-private partnership mode, ESI hospital for workers, development of ring roads to improve access to villages from where workers travel to the city and wifi facilities across the city. These were just some among others, cited by the knitwear entrepreneurs of Tirupur.
The Trading Corporation of Pakistan (TCP) has asked the Federal Board of Revenue (FBR) to clarify the rate of withholding tax on purchase of lint cotton under the prevailing laws, as the rate would have future implications for TCP if government intervenes in the market during the current season. The TCP has written to the FBR seeking clarification of withholding tax rate on purchase of ginned or lint cotton.
As per the government's directive TCP has purchased lint cotton from cotton factories located in different parts of the country and deducted income tax on the following rates, i.e. 4.5 per cent of the gross amount in case of non-corporate sellers and four per cent of the gross amount in case of corporate sellers.
TCP’s tax consultant has stated that withholding tax will be applicable on purchase of ginned cotton under section 153(1)(b) of the Income Tax Ordinance, 2001, and not under clause 1(a) of division III of part III of the first schedule of the income Tax Ordinance, 2001. However, Pakistan’s cotton ginners do not agree with this rate. They say ginned or lint cotton is covered under the lower rate and, according to the Income Tax Ordinance, 2001, withholding rate on ginned or lint cotton is one per cent.
If Bangladesh RMG makers wish to establish warehouses in India, they would have to set up manufacturing units in the country, as the Indian government has hinted at a meeting held in Gujarat between the two parties. Shahidullah Azim, BGMEA Vice-President Shahidullah Azim, said that the government, during the meeting mentioned that if Bangladesh wanted to open a warehouse in India, they would have to establish manufacturing units for their interest, creating employment. Bangladesh would have to move forward with this policy proposed by the Indian government.
Azim was on a two-day visit to India and had travelled to Gujarat to inspect the possibility of setting up a warehouse to grab the local market there. A five-member delegation visited three economic zones during the trip, which included Sanand Industrial Estate under Gujarat Industrial Development Corporation, Amitar Green Hi-Tech Textiles Park Private Limited and Viraj Integrated Textile Park to assess if a warehouse could be set up. Azim said that they had selected Sanand Industrial Estate to set up a warehouse, based on the facilities offered by the zones’ management. Besides, Azim said that the state had uninterrupted power connection and other facilities while there is no obligation of allowing trade union there.
Bangladesh can get land at a cost of Rs 3,500 per sq. mt. while per unit electricity price at Rs 6.5, according to the offer. High land prices, according to Azim need to be bargained for at the high level G2G meetings. The domestic market in India is of $32 billion and offers duty-free access. Azim feels that if Bangladesh can establish a warehouse and distribution centre here, it could grab more market.
China to strengthen its position
The report suggests annual apparel sales in China will reach $333,312 million in 2019, an increase of 25 per cent from $267,246 million in 2014. In comparison, apparel sales in the United States are estimated to reach $267,360 million in 2019, which is only 3 per cent higher than $260,050 million in 2014.
The study points out that China seems to be an even more competitive apparel market than the United States because no apparel brand was able to achieve a market share of more than 1 per cent in 2014 in China, whereas in the United States, market shares of several leading brands exceeded 2 per cent. Moreover, domestic brands overall outperform international brands in the Chinese market.
Despite its overall market size, as a developing country, dollar spending on apparel per capita will remain much lower in China than many developed economies around the world. In 2014, each Chinese consumer on average spent $240 on apparel versus $815 in the United States, even though apparel spending accounted for a larger share of household income in China (around 10 per cent) compared with the United States (less than 3 per cent).
Shift to value-added products benefit China
Sheng Lu, of the Department of Fashion & Apparel Studies, University of Delaware points out, it is time US apparel companies and fashion brands start thinking about their sourcing strategy seriously, specifically for the Chinese market. He says for many Chinese apparel companies, serving the domestic market will help them upgrade from low-value added manufacturing to higher-value added functions such as design, branding and distribution to boost exports.
Lu says controlling sourcing cost will be equally important for China as well as the United States. When China’s applied tariff rate is still as high as 9.63 per cent for textiles and 16.05 per cent for apparel, US fashion companies or fashion brands may not have many options but to use ‘Made in China’ to serve the Chinese consumers. But the equation can later change with ‘Made in China’ gradually getting replaced by ‘Made in Asia’, since several free trade agreements (FTAs) involving China such as CEPA are reaching finalisation.
While China may strategically use rules of origin in these FTAs and encourage domestic manufacturers to use China-made textiles for its products, Lu feels managing the apparel supply chain based on either ‘Made in China’ or ‘Made in Asia’ may not give a competitive edge to US companies over their Chinese counterparts.
www.euromonitor.com
The United States Fashion Industry Association (USFIA) and the Better Cotton Initiative (BCI) in partnership have come together to promote the cause of responsible cotton sourcing. USFIA represents the fashion industry that includes textile and apparel brands, retailers, importers and wholesalers, based in the US and is doing business globally. The Better Cotton Initiative, on the other hand, is an NGO that works with a multi-stakeholder group of organisations to support responsible cotton production across the globe.
Julia K Hughes, President of USFIA points out that they are thrilled to collaborate with the BCI. She adds that their members include major global brands and retailers, who are committed to responsible sourcing at all levels in the supply chain. Their members would be able to enhance this commitment from the ground up with this collaboration and would also learn from the BCI.
BCI and USFIA, both stand to mutually benefit with this partnership from each other’s expertise. The BCI would give information about supporting responsibly grown cotton to USFIA members. BCI members, in turn would get support of USFIA to navigate the complex sourcing issues in the US and around the globe. The USFIA will enable the BCI to connect with key stakeholders via publications, educational events and networking opportunities.
Daren Abney, Membership Engagement Manager, BCI says that they are excited about joining an organisation as repute as the USFIA and are looking forward to exploring this partnership and how it can enable the supply chain of the future.
The four-day trade show, Avantex Expo, will be held in Paris from September 14 to 17, 2015. The Avantex-Exhibition for Hightech Fabrics Technologies is hosted in Paris twice a year, within Texworld and Apparelsourcing. The show being organised by Taiwan Textile Federation, Messe Frankfurt France SAS, Messe Frankfurt Exhibition GmbH is held at Paris, Le Bourget.
Dedicated to the exclusive world of apparels, the Apparel Sourcing Paris event marks the presence of children’s wear, women’s wear, menswear, activewear - knits, wovens, denim, collections, suiting, contemporary, intimates/lingerie, loungewear/sleepwear, fashion accessories, finished clothing, packaging materials, clothing accessories and other products.
The tradeshow Apparelsourcing Paris-International Apparel and Fashion Sourcing Show, this year, served as a platform for 164 exhibitors. Apparelsourcing Paris saw 13,639 visitors. Apparelsourcing Paris is held twice a year, with Texworld Paris. An international trade fair, it is an excellent platform for buyers and sellers to cultivate the best relationship. There are strong marketing and networking opportunities for all exhibitors at the event and has a wide variety of collection for the visitors, as well.
Non-compliance with many conventions of European Union (EU) related to human rights and environment may cause, Pakistan to lose its GSP Plus status. Pakistan’s compliance of its conventions and imports are being reviewed by the EU and its officials are visiting Pakistani factories, without notifying the government. The EU Ambassador had a meeting with businessmen at Karachi Chamber of Commerce and Industry KCCI.
A decline of orders from Pakistan is what prompted this move. Muhammad Ibrahim Kasumbi, acting president KCCI recently stated that trade facilitation would discontinue if the EU faces more compliance issues. In January, the EU would be having a review meeting.
In December 2013, Pakistan was granted GSP Plus status, which opened doors for huge opportunities. However, the country failed in getting full duty benefits for free exports. As per the status available until 2017, the country gets free market access to 96 per cent of the items exported to the EU markets. Provided that Pakistan implements 27 conventions of the EU. The government lacked in fulfilling the conventions, though the private sector was fulfilling many of them, said Kasumbi. He added that textile sector exports to the EU are about 80 per cent and comply with around 80 per cent conventions.
Capital punishment is prohibited according to the EU conventions, yet Pakistan has resumed it. However, continuity in exports show that EU may have ignored it, as Pakistan is fighting with terrorists who could emerge again if not punished. Besides, Pakistan has not utilised 10 per cent of its potential of exports to the EU.
Foreign buyers are increasingly sourcing Bangladesh-made terry towel products because of cheap labour, utility cost and duty-free access to the EU, among others. Experts say, this has helped the industry flourish over the last three decades. The industry though, could not flourish well mainly because of the absence of government policy support, they added. The industry has seen a total of Tk 55 billion investments during the period.
If gas supply, lower bank interest rates and incentives are ensured to retain its competitiveness, the country can earn $10 to $12 billion from export of home textile and terry towel products within a couple of years, feel industry experts. More than 100 units established in the last three decades produce both home textile and terry towel products. As per Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA), out of these about 71 are terry towel producing units that have 6,500 looms and production capacity of 135 million kilograms.
The country produces various types of towels like towel, bar mop, hand towel, bath towel, dish, glass, kitchen, shop towel, kitchen gloves, dish clothes, surgical towel and draw sheet. Khandkar Abdul Muktadir, Chairman, BTTLMEA said that these products are a must for household use, tourism and hospitality industries.
He added buyers are looking for an alternative to China where the production cost has increased significantly mainly due to higher labour cost. Thus, the sub-sector of the home textile industry has a huge potential. Besides, global tourism and hospitality industries are growing, and so, the demand for such products is also on the rise, Muktadir stated.
