IBTEX No. 85 of 2016 April 29, 2016
USD 65.24 | EUR 75.47| GBP 94.24| JPY 0.59
Spot Prices of Overseas Ring Spun Yarn in Indicative Prices of Cotton Grey Fabrics in China Chinese Market Date: 7 Apr-2016 FOB Price Date: 7-Apr-2016 Price (Post-Tax) (Pre-Tax) Description Prices Prices (USD/Kg.) (Domestic Production) (Yuan/Meter) Country C32Sx32S 130x70 63” 2/1 fine 20S 30S 7.20 Carded Carded twill India 2.10 2.20 C40Sx40S 133X72 63” 1/1 poplin 6.40 Indonesia 2.78 3.18 C40Sx40S 128X68 67” 2/1 twill 6.20-6.40 Pakistan 2.20 2.60 24Sx24S 72x60 54” 1/1 batik Turkey 2.62 2.75 4.50 Source CCF Group dyeing 20Sx20S 60x60 63” 1/1 plain cloth 6.30
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INTERNATIONAL NEWS No Topics 1 The implications of Sino-US trade tensions 2 Tunisia’s knitters are open for business 3 Taiwan : Textile industry urged to compete through quality 4 Pakistan: Depleting stocks push up cotton prices to seasonal high rates 5 China announces rules for sale of 9 million bales of reserve cotton 6 Pakistan: Government urged to put fabric import from Dubai on negative list 7 Vietnam textiles clearing the decks for FTAs NATIONAL NEWS 1 TUFS, SITP to strengthen country's textile sector: Gangawar 2 Govt sets no target for textile production: Santosh Gangwar 3 India lagging behind in garment exports: World Bank 4 Chinese dumping threat looms large over VSF textile sector 5 '10% rise in China apparel prices to create 1.2 million Indian jobs' 6 South Asia clothing industry can employ millions more women, boost growth - World Bank 7 How to solve India’s exports puzzle 8 ‘Opposing field tests for GM crops is detrimental to farming sector’ 9 Like a cloud of steam 10 RIL ties up with Star Cotspin for sewing thread 11 ‘Reforms a must to boost apparel exports’ 12 Rajeev Kher: A trade policy agenda for India-II
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INTERNATIONAL NEWS
The implications of Sino-US trade tensions
Hostility is building up between the US and China over trade policy, particularly with regards to Chinese steel exports. What are the political forces driving these tensions, and what are the consequences for firms and investors?
The last few months have experienced mounting trade frictions between the US and China. April in particular saw China initiate a number of new trade measures – with mixed consequences for bilateral trade relations. China’s changing trade policy presents potential risks and opportunities for investors and businesses with a stake in Sino-US trade.
Tensions ebb and flow
Bilateral tensions over trade between the US and China began escalating in March when the US, following in the footsteps of the European Union (EU), accused China of dumping subsidized, underpriced Chinese steel on the American market. To counter this dumping, the US set a tariff of 265.79% on Chinese cold-rolled steel.
By mid-April, however, trade relations seemed to be looking up. On April 14th, the US and China resolved a long-standing dispute over Chinese export subsidies. The US had filed a formal complaint (dispute DS489) at the World Trade Organization over China’s subsidization of key small firms in several industries including textiles, agriculture, and aquaculture. The agreement also cut into Chinese government support for firms producing specialized steel exports. China appears to have acquiesced to American demands, backing down in the face of US pressure. US leaders heralded the agreement as a major win and a positive step forward for trade relations.
One week later, however, Beijing announced a host of new export- promotion measures. On April 20th, China released new policies pushing banks to give more credit to exporters and offering tax incentives to firms exporting machinery and appliances.
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The next day, Beijing introduced new measures to encourage banks to back steel exporters. These steps are likely to reverse the positive momentum generated by the April 14th MOU and spark renewed tensions over trade.
Recent trade data is also likely to further strain Sino-American trade relations. The UN Conference on Trade and Employment announced that China’s share of worldwide exports increased from 12.3% in 2014 to 13.8% in 2015. Despite China’s economic difficulties, rising manufacturing costs, and a strengthening currency, Chinese exports seem to be increasingly competitive abroad. This will lead to renewed US and European calls for China to address its steel dumping.
The political roots of the challenge
The ongoing trade dispute is driven by several key forces. First and foremost, China is struggling with excess capacity in its steel and manufacturing industries, and is trying to jettison a burgeoning glut of steel onto the global market.
Additionally, given slowing economic growth and plans to introduce large, potentially socially-destabilizing cuts to its steel, coal, and manufacturing sectors, China will be loath to voluntarily reduce the competitiveness of its exports. Beijing has always been wary of social unrest, and given the growing number of labor protests throughout the mainland, it may be feeling increasingly vulnerable.
At the same time, strategic and political concerns are driving the US to challenge China more aggressively over its trade practices.
The Obama administration hopes to promote the newly-formed Trans- Pacific Partnership – the centerpiece of American economic leadership in Asia – at home and abroad by highlighting that the US will vigorously prosecute states that violate the terms of trade agreements.
The administration also hopes to protect the Democratic Party against accusations from the progressive left and populist right that it has been weak on trade policy – particularly given the difficulties facing steel manufacturers in the US.
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Looking ahead: Risks and opportunities
New Chinese export policies will create immediate challenges for Western steel producers by increasing the competitiveness of Chinese exports and contributing to continued global overcapacity. Meanwhile foreign companies in textiles and seafood industries are likely to enjoy new opportunities generated by China’s reversal of its incentive program.
Beyond these obvious immediate threats lie broader strategic concerns for investors and businesses affected by Sino-US commercial ties. Most significantly, escalating trade frictions pose a longer-term strategic risk to importers, exporters, and investors in both countries.
Beijing’s recalcitrance will only feed into rising protectionist sentiments in the US during the 2016 presidential race. On the right, Trump touts protectionist measures that deviate wildly from conservative, pro-business positions on free-trade.
On the left, the Clinton has been pulled away from her neo-liberal sympathies and toward populist positions on trade over the course of her primary competition with Sanders. Either candidate could take a hardline stance on trade with China early on in their administration. Aggressive tariffs on Chinese goods could spark a broader trade war that would result in significant losses for both economies, creating significant concerns for investors.
Additionally, China’s continued dependence on export-promotion does not bode well for the long-term health of its economy.
China needs to bolster domestic demand and its service sector, not its heavy industry exports. China’s support for exports may simply be a stopgap measure to support social stability as it pursues broader structural reforms, but investors should monitor Beijing’s progress carefully. Stronger reforms are still needed to guarantee robust growth for China’s economy.
Source: globalriskinsights.com– Apr 28, 2016 HOME *****************
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Tunisia’s knitters are open for business
After the terrorist attacks at the Bardo Museum and on Sousse beach last year, Tunisia’s economy suffered a massive body blow at a time of fragility following the 2011 revolution that ousted dictator Ben Ali. According to a report by API (Agence de Promotion de l’industrie et de l’innovation) it has shown a fall in exports from 1,168 Million Tunisian Dinars (511 million Euros) in 2008 down to 1,137 MTDN (498 million Euros) in 2012.
However, Tunisia’s textile industry is coming out fighting looking to conquer new territories and become more visible in the market.
Confidence in Tunisia by knitwear giant Benetton was recently shown by a visit to CETTEX (Centre du Technique et Textile) in Tunis. According to CETTEX’s website Benetton wanted to “explore opportunities for collaboration and partnership including technical support and training for enterprises located in regions Kasserine and Gafsa.”
Tunisia is strong in lingerie, swimwear and knitting including hosiery knitting. This makes it not just a sourcing destination but also a buyer for high end technical knits. Traditionally the country has mainly supplied the French (34% of total production) and Italian markets (taking 28% according to API’s report). Unlike its neighbours Egypt and Morocco, Tunisia is focused on the quality end of the market and is now looking to expand into the UK and German markets.
Zied Zamoussi owner of a Sfax based lingerie manufacturer stated that they supply: “Aubade, Lise Charmel, Calida from Switzerland, and from Spain Selmark & Jianera, these are the main clients.”
They have a flexible production model he said that: “We have one big factory and four small units. We make swimwear, lingerie, corsetry and pyjamas at the main factory, we have one small for swimwear and another for lingerie and another for pyjamas.
For the big brands we have minimum one line of production for example Lise Charmel 1000 per day. We have nine lines for the large factory, but the maximum per customer is one line, no customer takes more than 30% capacity, this is the maximum to reduce our risk.”
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Textiles and clothing
The Tunisian textile and garment industry comprises of 1,852 companies. The industry is across six sectors including yarn spinning, finishing, knitting/hosiery and ready made garments. Production of knitted fabrics as well as ready made garments using knitted fabrics such as jersey and interlock for T-shirts and sweatshirts make up a large segment of the industry with 1597 companies in this segment of which 1381 companies export. (http://www.textileintunisia.net/textile-sector.php).
According to the website there are 236 hosiery knitting companies in Tunisia with 175 exporting. The main bases for activity are the city of Tunis the capital, Sfax in the South East of the country, and the coastal towns of Sousse and Monastir.
Moncef Khemakhem Gerant owner of Cisconfection, a lingerie company in Sfax with four production units, said: “We work for brands such as Decathlon in France, Etam, Eminance, Well, Dim and Tchibo.” Tunisian companies like Cisconfection are looking beyond private labelling: “We are in the process of integration, we are doing product development we are creating a mark called Chanaz for lingerie femme and maillot de bain, we are selling in Tunisia and proposing internationally, we are showing the salon de lingerie, selling in two shops in Tunisia.” In terms of materials he said: “We do European sourcing for the fabric and some from Tunisia.”
Knitwear production
Sweater knitting is a small part of the Tunisian textile industry, and focused mostly on the mid-market. Karim Zouari of industrial knitting company CSM said: “[we are] producing for the French market, like Christine Laure, Pro-mode, Camaieu, mid-market brands.
Zouari said: “We work with 50/50 acrylic cotton, 50/50 acrylic wool, 100% cotton, cotton viscose and with some brands we work with viscose, polyamide, angora.” The majority of their work is cut and sew. Zouari said: “We produce an average of 10,000 pieces per month. Flat knitting, from 7 gauge to 12 gauge for cut and sew.
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Working with patterns, fancy knitting, cables because we have Japanese machines, 12 Shima Seiki machines. We can do fully fashioned but our customers do not ask this of us, we have some who ask for fully fashioned but 70 – 80% of production is not fully fashioned.”
Hosiery production
There are nine companies focused on hosiery based in both Tunis and Monastir. Accessing the contacts for companies is via the Tunisie Industrie portal website (http://www.tunisieindustrie.nat.tn/en/dbi.asp). One of the failings of many companies is not having a website or listing them.
However, Monastir based Sotichauss which provides a full package of design, production and printing for socks, stockings and pantyhose in a variety of yarns from technical fibres from Coolmax to cashmere and bamboo, has its own website http://sotichauss.com/ as does sock manufacturer http://www.kindachaussettes.com/
In knitted fabric and garments production there are some 341 companies listed on the Tunisian Industry portal. The majority have expertise in underwear and swimwear and other ready made garments. In total CEPEX listed 19 companies that are purely focused on lingerie and swimwear. Currently CEPEX, the government’s trade and export office are focused on lingerie and swimwear as key products and services with a strong programme of trade missions and trade shows including the recent Paris Interfiliére.
CONECT, a relatively new professional association partners with EU countries and with fairs such as Messe Frankfurt to support it’s Festival of Fashion on May 19th and is currently developing it’s new trade show with the working name of ‘TexMed’ to bring the market to Tunisia.
To create a force in the market, members of the textile and clothing industry have come together to create an association called CONECT, with regular monthly meetings.
They are coordinating to create a stronger presence in the sourcing market.
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Their next event is The Festival of Young Designers to be held in Tunis on 19th May 2016 in Tunis which CONECT hopes will not only be a platform for the new generation of young talent in Tunisia but will be an opportunity to attract international buyers to see that Tunisia is a centre for design talent and new brands and not just a sourcing destination.
At CONECT’s March meeting in Sfax the steering group were looking beyond the EU discussing the possibility of exploiting the newly opening Iranian market which has a population of nearly 82 million people. In addition, they showed commitment to showing at the next Premierevision Istanbul and forging collaborations to provide production for larger Turkish producers to increase their capacity.
Looking forward Zied Jamoussi, vice-president of CONECT and owner of a Sfax based lingerie company said: “We are looking to develop, to seek for clients is normal, next week we have B2B in Germany. All missions are supported by CEPEX, so this is vital to the development of the industry.”
Source: knittingindustry.com- Apr 28, 2016 HOME *****************
Taiwan : Textile industry urged to compete through quality
The nation’s textile industry should develop into a complete supply chain and compete through quality instead of quantity, Taiwan Man-Made Fiber Industries Association (台灣人纖公會, TMMFA) chairman Hou Po-ming (侯博明) said on Wednesday.
“It is hard to compete with China through quantity,” Hou said, citing latest industry data showing that China controls 73 percent of the global chemical fiber market share while Taiwan only holds 2.9 percent.
“Opportunities lie in high-end functional fabrics and other smart applications,” Hou said, adding that the industry could make use of global trends in sports and leisure activities.
Taiwan’s functional fabrics have a global market share of 70 percent, with more than 50 percent of the world’s fireproof fabrics produced in Taiwan
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News Clippings and eight out of 10 yoga apparel lines sold in the US manufactured by Taiwanese companies.
The association said that proves that the nation’s textile industry has the upper hand in research and design, as well as the capability to supply high-end products to downstream industries, global brands and channel distributors.
Last year, the Taiwanese textile sector generated NT$434.7 billion (US$13.5 billion) in production value, with NT$118.6 billion coming from synthetic fiber production, association data showed.
“The industry as a whole is responsible for the livelihood of 150,000 Taiwanese families,” Hou said.
Hou urged the incoming government, which is to take office on May 20, to work on joining regional economic agreements such as the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership soon to eliminate tariffs.
“Otherwise, Taiwanese firms’ profits will be eroded by high tariffs in the region,” he said.
Hou, who is also vice chairman of Tainan Spinning Co (台南紡織), said that the 61-year-old company has upgraded its plants to utilize automated production processes in a bid to increase its output value.
Tainan Spinning is the nation’s largest polyester staple fiber and yarn manufacturer and also the largest yarn supplier in Vietnam. The company, which mainly processes orders for fabrics and garment suppliers, operates yarn factories in Taiwan and Vietnam.
Hou said that another plant in Vietnam is to become operational by the end of this year, which would enable the company to produce up to 600,000 spindles of yarn per year in Vietnam.
In the first quarter, Tainan Spinning’s revenue dropped 20.42 percent to NT$4.2 billion from a year earlier.
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Hou said the company’s outlook would improve with each quarter after hitting trough in the first quarter and on the back recovery signs in orders this month
Source : taipeitimes.com - Apr 28, 2016 HOME *****************
Pakistan: Depleting stocks push up cotton prices to seasonal high rates
With barely a couple of hundred thousand bales (155 kgs) from the current crop (August 2015 / July 2016) remaining unsold with the ginners, mostly of lower grades, lint prices have risen to seasonal high levels. There are reports in the market that the Trading Corporation of Pakistan (TCP) has sold about 4,000 bales it was holding from the 2014 / 2015 crop at Rs 5,860 per maund (37.32 kgs) ex-warehouse, Karachi. TCP is still said to be holding nearly 80,000 bales of the 2014 / 2015 the quality of which is said to be fairly good.
Sindh seed cotton (kapas / phutti) from the current crop (2015 / 2016) has been sold out but small quantities of remaining seed cotton from Punjab is being offered from Rs 3,000 to Rs 3,400 per 40 kgs, according to the quality. Lint prices from Sindh are said to have ranged from Rs 5,000 to Rs 5,800 per maund (37.32 kgs) on Thursday, according to the quality.
Lint prices from Punjab reportedly ranged from Rs 5,200 to Rs 6,000 per maund, according to the quality.
New crop (August 2016 / July 2017) sowing in Sindh is making steady progress whereas in the Punjab sowing has just started in a few areas.
Yarn and textile business is picking up with a modicum of improvement in prices, but the business is still being conducted on a modest scale. Some observers say that asking prices for yarns by the mills are somewhat on the high side.
Internationally, cotton prices had risen since a few weeks but now they have slowed down due to profit-taking. The prices of Indian cotton are higher due to a shorter crop during the outgoing season.
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China is said to have indicated to sell a portion of its large reserves of cotton (from May to August 2016). Some reports say that China's indicated price to sell some of its pile of cotton is on the higher side. In Pakistan, one report indicated that the sowing of the new cotton crop (August 2016 / July 2017) was delayed due to inclement weather.
Moreover, cotton growers also suffered sizeable losses during the current season (2015 / 2016) due to lower prices. One report indicated that some growers are now thinking of planting sugarcane instead of cotton due to lower returns.
On the global economic and financial front, the first quarter of 2016 has been mostly disappointing for many if not the most of the economies around the world. The largest economy of the world, the United States, posted a comparatively meagre growth of only half a percent during the first quarter of 2016.
According to British Broadcasting Corporation (BBC), the dismal growth performance during the first quarter of 2016 in America registers a sharp fall from the 1.4 rate of growth during the final quarter of 2015. Not only that, the half a percent economic growth rate during the first quarter of 2016 in America is the slowest pace in two years.
Several reasons have been put forward to account for the slowdown in American economic growth since the beginning of the year (2016) including a fall in domestic demand and a strong dollar which impeded exports. Furthermore, consumers were buying less and investors slowed down ordering new stock.
It has been further reported that consumer spending increased only at the rate of 1.9 percent which decreased from 2.4 percent recorded during the previous quarter. Business investment reportedly fell by 5.9 percent which is the highest quarterly decline since the depths of the financial crisis in 2009, reports added.
Fears are being expressed that America could face another dismal year during 2016 as forecasts for economic growth are now being expressed in pessimistic terms by several experts and economists. It has also been observed that the "American economy has ground to a near-standstill".
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The Eurozone is hardly making any substantive progress towards economic growth. For instance, the Eurozone continues to keep its interest rate in the negative territory with its morbid fear of falling into deflation. Negative interest rates in the Eurozone are likely to continue as growth in the private sector is reported to have declined slightly.
At midweek, Chinese shares fell lower on fears that recoveries of loans would be difficult as widespread lending had created doubts about the authenticity of several loans extended to all and sundry. Chinese industrial companies have shown fair profits in March 2016 compared to a year earlier leading to belief that the country's economic slowdown may be bottoming out.
In the United Kingdom, economic growth has slowed in the first quarter of 2016. It has been observed that a heavy drop in construction and manufacturing are responsible for the slowdown.
The much feared "Brexit" or the exit of Great Britain from the European Union is being projected by some observers to lead to the break up of the socioeconomic and political cohesion cobbled together after the Second World War in Europe. Anyhow, all around the world traditional political, economic, commercial and social values continuing since almost the past three quarters of a century are under great threat.
Source: brecorder.com- Apr 29, 2016 HOME *****************
China announces rules for sale of 9 million bales of reserve cotton
Cotton marketing experts have been arguing about the quality of the cotton in China’s reserves for three years. Now they may be about to find out just how good or how bad it is.
A few days ago the China National Development and Reform Commission or NRCD announced they would begin selling a portion of China’s estimated 58 million bales of reserve stocks beginning in early May.
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According to the NRCD, 2 million metric tons (the equivalent of about 9 million 480-pound bales) will be offered for sale in 2016. Only a set amount can be purchased daily, apparently to avoid giving the appearance China is dumping cotton on the market.
Whether China will be any more successful in this year’s auction than last year’s when almost no cotton was sold remains to be seen, according to Jody Campiche, the National Cotton Council’s vice president for economic services. She talked about Chinese cotton developments in a presentation to the American Cotton Producers meeting in Birmingham, Ala.
The difference in this auction compared to last year’s is they’re expected to release a larger amount of their reserves, Dr. Campiche said. And they are supposed to use a price that is driven by the domestic and world markets.
So we’re expecting the price to be more competitive compared to last year when they were able to auction off only a small amount.
Source: cottonyarnmarket.net - Apr 28, 2016 HOME *****************
Pakistan: Government urged to put fabric import from Dubai on negative list
Pakistan Yarn Merchants Association (PYMA) Central Chairman Muhammad Usman has urged the government to put fabric import from Dubai on negative list, as there are no weaving/knitting factories in Dubai, while the Indian fabric is simply being routed thru Dubai, resulting in huge losses to local industries.
To resolve the conflict over imposition of regulatory duty on polyester filament yarn, he suggested that fabric imports from any part of the world should be allowed under legal channel, which included Letter of Credit (LC) or Documents Against Payments (DP), whereas payments via banking channels could save the local downstream industry.
The PYMA Chairman pointed out that the local manufacturers of polyester filament yarn could only meet the needs of the local downstream industry to the extent of about 25 percent, whereas the rest 75 percent requirement
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News Clippings was met through imported yarn. Despite the fact that an investigation was currently underway by National Tariff Commission to review the anti- dumping duty, some manufacturers were lobbying to ensure imposition of regulatory duty, which might result in the collapse of weaving and knitting industry, he said, adding that these attempts by local manufacturers would put the entire weaving and knitting industry in a grave situation by increasing the cost of yarn, thus making the entire downstream industry uncompetitive.
Usman warned that the results of such attempts would be disastrous for exports, which were already suffering on account of high energy costs. He said that few local manufacturers were making attempts to monopolise in order to gain short-term benefits at the expense of large downstream sector, which was the backbone of the country's economy.
He further pointed out that an anti-dumping duty of 18 percent was imposed on imported filament yarn from Thailand, Malaysia, Korea and Indonesia in 2005 and at that point in time, a total of 17 local yarn manufacturers were operating, whereas this raw material was not being imported from China.
Despite improving the situation, the measure proved to be counterproductive as during the last over 8 years since the imposition of anti-dumping duty, the number of local manufacturers had reduced to just four units while the market share had also drastically descended, he added.
He suggested that a long term solution for dealing with these serious issues was to modernise and upgrade plants of the local manufacturers to enhance their production capacity.
Usman stated that National Tariff Commission was the right forum to address such issues.
He said that a textile package was envisioned by the government in 2005, under which all stakeholders agreed that in order to bring fabric trade under legal umbrella, maximum duty on fabric should not exceed 15 percent.
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Hence, the duty on yarn was fixed at 7 percent but over the years, the duty on yarn had escalated to 11 percent, causing distortions and making raw material for the downstream industry more expensive.
"We suggest that the yarn duty should be rolled back to 9 percent to give benefits to weaving and knitting industry," he said.
Source: brecorder.com- Apr 29, 2016 HOME *****************
Vietnam textiles clearing the decks for FTAs
Vietnamese textile companies are getting ready for the introduction of a wide array of Free Trade Agreements (FTAs), hoping they will usher in an age of unparalleled growth and prosperity.
The Vietnam National Textile and Garment Group (Vinatex), the nation’s largest textile company, plans to invest US$91 million to construct a second plant on a 3.7-hectare site in the southern province of Kien Giang.
The plant, scheduled to open by the spring of 2017, will have 32 production lines and the capacity to produce 12 million items of clothing annually. It is expected to bolster revenues from exports by US$37 million.
The company's first plant was erected in the same province in early 2015. With ready access the sea and a close proximity to Ho Chi Minh City, Kien Giang is rapidly transforming into a new thriving hub for the textile industry, thanks to FTAs.
Trade pacts such as the Trans Pacific Partnership (TPP) when they come into force will eliminate tariffs in many areas but, in principle at least, will only benefit clothing manufacturers sourcing materials from within the 12-member TPP community, due to the mechanism called the ‘rules of origin’.
Currently, most imports of sewing materials to Vietnam come from China, which did not take a seat at the TPP negotiating table.
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Anticipation is as a result, growing that the local demand for materials and intermediary goods will increase in Vietnam, hence the upfront investments in the textiles supply chain and related activities.
An Phuoc, another textile company, is set to spend US$28.2 million (VND628 billion) to build a silk plant in Thanh Hoa Province in central Vietnam. Construction will start as early as April 2016 for a scheduled opening in February next year.
Overseas players are also eager to invest early. US-based Kraig Biocraft Laboratories, which produces artificial fibres, said in March it will establish a subsidiary in Vietnam along with a research base and a facility to produce test products.
It will also cooperate with the Vietnam government in studies pertaining to innovative, new material products and silkworm development. In June of 2015, Taiwan's Far Eastern group broke ground on a plant in Binh.
Source: myinforms.com - Apr 29, 2016 HOME *****************
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NATIONAL NEWS
TUFS, SITP to strengthen country's textile sector: Gangawar
Government has launched Technology Upgradation Fund Scheme(TUFS), Schemes for the development of the Powerloom sector, Schemes for Technical textiles, Scheme for Integrated Textile Parks(SITP) and Integrated Skill Development Scheme to generate employment opportunities for textile workers, the Lok Sabha was informed today.
In a reply during Question Hour, Minister of State(Independent Charge) in the Ministry of Textiles Santosh Kumar Gangawar said these schemes were intended to strengthen the country's textile sector.
He said the production of textiles and garments was predominantly in the private sector. Therefore, the government does not prescribe targets for the textile and garment Industry.
The Minister said increasing production of textiles garments through various policy interventions was among the foremost objectives of the government.
He said the government has not received any report of textile workers facing problems due to recession in the sector
Source : webindia123.com– Apr 28, 2016 HOME *****************
Govt sets no target for textile production: Santosh Gangwar
"Production of textiles and garments is predominantly in the private sector. Therefore, the government does not prescribe specific production targets to the textile and garmenting industry," Textiles Minister Santosh Kumar Gangwar said during Question Hour.
Government does not set any target for the textile and garment industry as their production is predominantly in the private sector, Lok Sabha was told today.
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"Production of textiles and garments is predominantly in the private sector. Therefore, the government does not prescribe specific production targets to the textile and garmenting industry," Textiles Minister Santosh Kumar Gangwar said during Question Hour.
He said the data available on production and exports show an increasing trend during the last three years and the current year. Gangwar also said that the government has not received any report of textile workers facing problems due to recession in the sector.
Increasing the production of textiles garments through various policy initiatives was among the foremost objectives of the government, he said.
In order to strengthen the textile industry in the country and to protect the interests of textile workers, government has launched various policy initiatives and schemes such as technology upgradation fund scheme, scheme for the development of powerloom sector.
"These are intended to strengthen the Indian textile sector and generate employment opportunities for textile workers," the Minister said.
Source : moneycontrol.com -Apr 28, 2016 HOME *****************
India lagging behind in garment exports: World Bank
India is losing out to countries such as Cambodia, Indonesia and Vietnam in the race for a greater share in the global apparel market being relinquished by China. It needs to reduce duties on import of manmade fibre and increase productivity by helping firms grow in size with less complex labour policies, a World Bank report has said.
Free trade pacts like the Trans Pacific Partnership (TPP) between the US and 11 other Pacific rim countries would benefit competing countries such as Vietnam, said Onno Ruhl, World Bank Country Director, India, answering a question at a press conference at the launch of the report, entitled ‘Stitches to riches? — apparel employment, trade and economic development in South Asia’ on Thursday.
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The Indian garments industry, too, could gain if the country became part of the TPP, but it is for India to decide, keeping other things in mind, Ruhl added.
“A reduction in tariff and non-tariff barriers (among TPP members) could lead to trade diversion for South Asia, including in the textiles and apparel sector,” the report said.
As wages increase in China, the largest apparel manufacturer for the last 10 years is expected to slowly relinquish its lead position and give an opportunity to India and other South Asian countries to grab some of its share. “Even a 10 per cent increase in Chinese apparel prices could create at least 1.2 million new jobs in the Indian apparel industry,” the report says.
A 1 per cent increase in Chinese apparel prices could increase EU demand for Indian apparel exports by 1.9 per cent and US demand for Indian apparel by 1.46 per cent.
Job creation
“Although the report finds that India has maintained its share in the world market, it needs to do better and grow fast to create more employment,” Ruhl said.
For that to happen, India needs to remove barriers in the import of manmade fibre to encourage production of garments made of fabric other than cotton.
“In India the focus is on cotton, but the world demands garments made of manmade fibre as well. India has to tap into that demand by lowering import duties, pegged at 10 per cent,” said Gladys Lopez-Acevedo, co- author of the report.
Non-cost factors
South-East Asian countries are also outperforming India on non-cost factors that buyers care about, such as quality, lead time and reliability and social compliance sustainability, the report said.
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India needs to attract more FDI into the sector by helping firms grow in size (by tackling complex policies) and also by increasing integration in the fibre-textile-apparel supply chain.
“To increase productivity, the government could help firms enter the formal sector and take advantage of economies of scale with less complex labour policies,” the report said.
Source : thehindubusinessline.com-Apr 28, 2016 HOME *****************
Chinese dumping threat looms large over VSF textile sector
The booming viscose staple fibre (VSF)-based textile industry, which is facing the heat of increased dumping from China and Indonesia, has warned that any tampering with the existing anti-dumping duty structure will affect its growth.
"The viscose-based textile industry has shown a remarkable growth in the last five years, reflecting the spirit of Make in India initiative.
"Before anti-dumping duty was imposed, Chinese and Indonesians had nearly killed our market. Now again both the countries are trying to flood the market with heavy discounts," Ramesh Natarajan, Director of Indian Man-Made Yarn Manufacturers Association, told PTI.
The existing anti-dumping duties, imposed in 2010, are up for review shortly and a section of the textile industry is calling for ending duty protection, citing rising input cost.
Players like the Indian Spinners Association (ISA) has said continuation of the duty on the fibre will have a "deleterious effect" on the textile sector, which is already reeling under high cost of production and sagging export demand.
Before the dumping duty was slapped, Chinese and Indonesians were selling their products at Rs 185-190 a kg while the domestic prices were much higher, Natarajan said, but added that the quality of domestic products is unmatched.
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He warned that if the anti-dumping duties are rolled back, it will kill the domestic industry.
Already, the industry has lost over two lakh direct jobs, with one lakh in the Coimbatore-Erode belt of Tamil Nadu alone. If the government falls prey to international and domestic pressure, it will kill more jobs, he said.
Natarajan said the biggest VSF-based textile hub is the Coimbatore-Erode belt which consumes over 20,000 tonnes of the textile a month, while the intake in the rest of the country is only 5,000 tonnes.
"The government must ensure that there are adequate safeguards in place for all products of the VSF value chain so that this industry attracts more investments and drives local manufacturing, which is the key focus of the present regime," P S Sundaram, managing director of Erode-based Victory Spinning, told PTI.
According to industry statistics, the domestic VSF industry grew at a CAGR of 11 per cent in the past five years, while exports clipped at 14 per cent CAGR.
Exports jumped from 249 tonnes per day (tpd) in 2011-12 to 424 tpd in 2015-16, and domestic sales grew from 590 tpd to 853 tpd.
This growth has been driven by the largest domestic VSF producer Grasim Industries, initiatives like creating robust consumer demand and collaboration with SMEs, among others.
Development of the VSF supply chain has also attracted major global brands.
Top international brands like American Eagle, Kohls, Bershka and GAP, among others, have increased their intake from India by around 20 per cent.
Source : business-standard.com- Apr 28, 2016 HOME ***************
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'10% rise in China apparel prices to create 1.2 million Indian jobs'
Rising wages in China presents a huge opportunity to the apparel sector in India with a possibility of creating up to 1.2 million jobs in the country, a World Bank report said on Thursday. Even a 10 percent rise in Chinese apparel prices could create at least 1.2 million jobs in Indian apparel industry, the report estimates.
"Rising costs of apparel manufacturing in China provides a window of opportunity for India to focus on apparel in productively employing its huge working-age population," said Onno Ruhl, World Bank Country Director, India.
According to the report titled 'Stitches to Riches Apparel Employment, Trade and Economic Development in South Asia', women are expected to benefit the most as their share in the total apparel employment is much higher than their share in other industries.
Even the 1 percent increase in expected wages in the textiles and apparel industry could raise the probability of women entering the labor force by 18.9 percent.
The report suggests various policy measures to help increase apparel exports from India, including rise in product diversity by reducing tariffs and import barriers to ease access to manmade fibers.
It also recommends lower excise taxes or other incentives to develop a domestic manmade fiber industry and improving productivity by helping firms enter the formal sector and take advantage of economies of scale with less complex labour laws.
"Although China remains the world's largest apparel exporter, apparel as a share of its total exports in 2012 accounted for only 7.1 percent, about half of the 15.6 percent in 1990.
The potential decrease in Chinese exports presents a huge opportunity for South Asian countries, which currently account for 12 percent of global apparel exports," said the report.
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However, it cautioned that Trans Pacific Partnership (TPP) accord a trade agreement between 12 Pacific Rim countries including the US will also likely have far-reaching impact for key sectors in South Asia, including apparel, pointing out that a reduction in tariff and non-tariff barriers could lead to trade diversion for South Asia, including in the textiles and apparel sector.
"Though India is gaining market share, Southeast Asian countries (Cambodia, Indonesia, and Vietnam) are outperforming all South Asian countries in overall apparel export performance, product diversity, and other non-cost related factors.
"For it to take advantage, India needs to move quickly to ease barriers to the import of manmade fibers, facilitate market access and encourage foreign investment to reach more end markets, which would also yield dividends for other light manufacturers like footwear and toy, the report suggests.
Source : zeenews.com- Apr 28, 2016 HOME ***************
South Asia clothing industry can employ millions more women, boost growth - World Bank
South Asia's clothing and textiles industry can create millions of jobs for the region's working-age women, boosting economic growth and helping improve children's health and education, a World Bank report said.
The industry is already the most female-intensive in much of the region, women making up 71 percent of its workforce in Sri Lanka, 35 percent in India and 34 percent in Bangladesh. In Pakistan, its share of women workers is second to agriculture.
"South Asia needs to create jobs in labour-intensive industries where it enjoys a comparative advantage — such as apparel — to employ its burgeoning youth and attract more women into the workforce," the report released on Thursday said.
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"South Asian households with women working, especially in the textile and apparel sector in India and Pakistan, tend to have fewer young children on average," it said.
Higher wages in China, the world's largest clothing exporter, are driving global brands to seek cheaper alternatives in countries including Bangladesh, India, Pakistan and Sri Lanka.
South Asia is best placed to lure these businesses with its lower wages and expanding young population, even though recent industrial disasters have raised questions about safety and the conditions of workers in these countries.
The industry employs about 4.7 million workers in the formal sector, and several million more informally, making up about 40 percent of the region's manufacturing employment.
Its ability to lure unskilled and semi-skilled women is particularly important, as South Asia has one of the lowest female labour force participation rates in the world of about 32 percent, compared with East Asia's 62 percent, the report said.
MORE WOMEN WORKERS, FEWER CHILDREN
Countries with greater female labour force participation generally see later marriages, fewer children, better nutrition and school enrolment, and higher gross domestic product, according to the World Bank.
"The apparel sector offers a promising and realistic entry point for women into the formal labour force, thanks to a high wage premium compared to agriculture," the report said.
"As apparel exports increase, the rising demand for female labour pulls women from agriculture and other informal sectors."
Average wages in the industry range from about $0.51 per hour in Bangladesh to about $1.06 in India, compared with $2.60 in China, according to 2012 data compiled by the World Bank.
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As output increases to meet higher demand, a 1 percent increase in the expected wage raises the likelihood of women joining the labour force by between 16 percent in Pakistan and 89 percent in Sri Lanka, the World Bank estimates.
Despite the large number of women the industry employs, however, female workers lack a voice and representation in Bangladesh, the region's largest exporter by value.
Regulatory capacity is also weak in Bangladesh, even though scrutiny has increased in the wake of the Rana Plaza disaster.
Three years after the disaster that killed more than 1,100 factory workers, the rights and safety of workers in the region are in greater focus, but progress in fixing problems in the supply chain is slow, experts and activists say.
In India, compliance is limited in the informal sector, where most workers are employed. Overtime is a serious problem, and child labour is common, with reports also of exploitation and sexual harassment of women.
In addition, the region faces growing competition from Southeast Asian countries including Cambodia, Indonesia and Vietnam.
But with stricter controls, better wages and higher-value products, South Asia's apparel and textile industry can retain its competitive edge, the report said.
"Given that much of apparel production continues to be labour intensive, the potential to create more and better jobs is immense," it added.
Source : in.reuters.com- Apr 28, 2016 HOME ***************
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How to solve India’s exports puzzle
The steady decline in India’s exports over the past one-plus year has been at the centre of a raging debate in India. Granted, global factors such as tepid global demand, erosion of commodity prices and high volatility in currency markets have contributed to this conundrum. However, trade performance of any country is determined by internal as well as external factors.
External factors consist of global economic conditions, market access, possibilities of export diversification, and effective trade agreements. Internal factors include macroeconomic management (price and income elasticity of exports, exchange rates, trade policy, interest rates and inflation), goods and services market reforms, and sound institutional and regulatory policies.
A combination of these factors determines the productivity and overall competitiveness of exports. Therefore, the current decline in India’s exports must be analysed by taking into account the state of play of these external and internal factors.
Growth and currency rates
Many policy thinkers argue that an overvalued rupee is partially responsible for the recent decline in India’s exports. To understand the relationship between exports and exchange rate, we need to look at the growth of India’s exports and real effective exchange rate (REER) between 2002 and 2015.
Till 2013, the relationship between export growth and REER was mixed (See chart). After this period, it exhibits a clear trend that an overvalued rupee has affected the growth of India’s exports.
This corroborates a well-tested hypothesis that “a stronger currency is not good for export outlook”. Many countries in East Asia including China pursued the strategy of relatively undervalued currency to make their exports competitive in global market under their export led industrialisation.
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However, one has to keep in mind that a relatively undervalued currency does not generate additional demand nor is it a permanent solution to all the ills prevailing in the domestic economy.
But in a highly complex and competitive world, where countries are competing for their export interest, the value of currency must be fairly placed vis-à-vis competing currencies to make one’s export competitive.
Overdependence issues
Another factor behind the steep decline in India’s exports could be over- dependence on a few markets such as the US and European Union countries which together account for 40 per cent share in India’s total exports.
It is particularly important in view of falling demand, stagnant growth and resultant aggregate demand in these countries.
The Regional Hirshman Index (RHI), a standard measure of export market diversification, demonstrates that while India’s RHI with the EU and the US declined from 0.067 and 0.061 in 2005 to 0.033 and 0.036 in 2015, there is not much corresponding increase in the RHI with Asia and Africa.
This increased from 0.229 and 0.004 in 2005 to 0.246 and 0.011 in 2015. The overall RHI of India’s exports has witnessed a marginal decrease: from 0.5742 in 2005 to 0.5713 in 2015.
While improved RHI with Asia is because of India’s extensive engagements with Asian countries through regional and bilateral trade agreements, it has made limited progress in terms of diversifying its exports to non-traditional markets such as in South America, Africa and the Eurasian countries.
The diversification of export markets is important in the context of future sources of global aggregate demand and the changing dynamics of the global trading through mega regional trade agreements.
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Price and income elasticity
It is widely believed that competitiveness of exports hinges on the price and income elasticity of exports which largely depend on the nature of exports of the country. In this regard, a study carried out by Mehdi Raissi and Volodymyr Tulin — ‘Price and Income Elasticity of Indian Exports: The Role of Supply-Side Bottlenecks, 2015’ — provides a fair insight about price and income elasticity of India’s exports.
It says India’s exports are sensitive to relative price competitiveness and global demand. It corroborates the popular perception that the current decline in India’s exports is caused by a fall in global demand and loss in price competitiveness.
Therefore, in view of such external shocks, a slight adjustment in exchange rate could serve as an effective instrument to address challenges emanating from relative price competitiveness and can help India’s exports.
The way forward
Exchange rate management alone will not relieve India’s export conundrum. The country should make continuous efforts in alleviating supply-side bottlenecks to boost sectoral productivity and export competitiveness.
Therefore, India should adopt a calibrated approach towards structural reforms to address cyclical as well as structural factors at the external and internal fronts, which are adversely affecting our export performance.
On the external front, India should engage with those trade agreements which would help in securing better market access, can diversify our exports and provide greater space for our producers to participate in global production networks.
On the internal front, India should emphasise on reforming domestic policies and institutions dealing with macroeconomic management (exchange rate, inflation and interest rates), standards, intellectual property rights, trade facilitation, and organisations vis-à-vis operational aspects of trade and investment rules and regulations.
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In all this, the Centre should use its national organisations such as the Council for Trade and Development, the Board of Trade and the export promotion councils more effectively to work out national strategies to take the agenda forward.
Source : thehindubusinessline.com- Apr 29, 2016 HOME ***************
‘Opposing field tests for GM crops is detrimental to farming sector’
Eminent agricultural scientist M. Mahadevappa says if GM crops were encouraged, scientists could have developed drought resistant varieties.
Criticising the moratorium on field tests for genetically modified (GM) crops, eminent agricultural scientist M. Mahadevappa, on Thursday, opined such a move was detrimental for the farming sector.
“If the field trials of GM crops were encouraged, by now, the scientists would have come out with drought-resistant varieties,” he said while delivering the keynote address at the inauguration of a state-level seminar on farmers’ suicides organised by University of Mysore’s Post-Graduation Centre Hema Gangothri here.
There was strong opposition to the release of Bt cotton in India and its introduction to the fields was delayed by nearly six years. “It was finally released in 2002. In eight years, India became the second largest cotton producer in the globe. Before the introduction of Bt cotton, we were in the fifth position… that is the advantage of advanced technology,” he said.
The scientists of University of Agricultural Sciences-Dharwad have cultivated Bt brinjal, but they have not yet got permission for field trials. The scientists are waiting for approvals to conduct field trials for Bt brinjal since February 2012.
“If they were allowed to conduct trials, by now the scientists would have come out with drought resistant varieties of various crops that would have helped the farmers,” he said.
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Dr. Mahadevappa, who is also former Vice Chancellor of UAS Dharwad, took a dig at importance given to organic farming. “Agriculture is nothing but organic farming. However, along with that we have to adopt new technologies to get better yield. Nowadays, some people are getting undue publicity in the name of organic farming,” he said.
Before the green revolution, food production in the country was just 45 lakh tonnes. “If not for green revolution, we would not have been able to provide food for the growing population.” He recommended setting up of Special Agriculture Zones, besides Special Economic Zones with agro- based industries for the betterment of farming sector.
“We lack in accepting advanced technology and that has been one of the reasons for sorry state of farmers,” he charged.
Indumathi, Professor of Economics, T.S. Devaraj, Director of the PG Centre, and others were present.
Source : thehindu.com- Apr 28, 2016 HOME ***************
Like a cloud of steam
As old as 7,000 years, cotton has been woven into the history of Tamil Nadu.
In light of the surge of renewed interest in the sari among a cross-section of women on social media platforms, the seminar on ‘Cotton saris of Tamilnadu’ complemented by a display and exhibition-sale of handloom saris convened by the C.P. Ramaswami Aiyar Foundation was a timely tribute to the creators of the ubiquitous six yards and the creative process. The event was the brainchild of Nanditha Krishna, Director of the institution and Kausalya Santhanam, curator, with the active participation of the Weavers’ Service Centre (WSC) and Co-optex.
Inaugurated by T.N. Venkatesh, Managing Director, Co-optex, the seminar began with his talk on the recent innovations implemented in the handloom sector that have benefited both weavers and buyers.
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To cater to the on-going demand, Chettinad saris with long Ganga- Jamuna borders and Koorainadu cotton saris whose sheen echoes that of pure silk in vibrant hues are among the newly introduced varieties, available at Co-optex showrooms and government boutiques in Chennai (‘Ashtalakshmi’ Lattice Bridge Road, Adyar), Coimbatore, Kochi and New Delhi. Each sari is accompanied by an ID card carrying a photo of the weaver, his/her name, age, years of experience and the time taken to weave each sari.
This highly appreciated gesture pays tribute to the weavers, hitherto anonymous artisans, conferring long overdue recognition on for their work. Attached cards also detail the specialities of each weave.
Genuine handlooms carry the Silk Mark, Handloom Mark or the India Handloom Brand assurance. Sabitha Radhakrishna, textile expert and freelance writer, provided insights into the ‘Prime Weaves of Tamilnadu.’ Dwelling on the importance of Kanchi, the temple town, as a weaving hub where religion and the weaving craft are intertwined, she touched upon the origin of weavers from Saurashtra, the korvai technique, treatment of silk yarn and composition of zari thread, with illustrative sari samples.
Once the exclusive preserve of Serfoji princesses, the cotton-tissue Kodalikaruppur weave is on the verge of extinction today despite revival attempts by the WSC. Other varieties mentioned were Kuthni, Chettinad, Amman Selai and the ‘Bleeding Madras’ fabric which triggered an export boom.
Madurai Sungudi, a languishing, labour-intensive craft with inadequate remuneration, was revived through a handful of artisans. With craft sustainability being dependent on the designer-craftsperson nexus, the instance of ace designer Sabyasachi giving a fillip to the revival, by purchasing and using several bales of Sungudi in his ensembles, was cited.
Presenting a sociological view of ‘The Weaving Communities of Tamilnadu,’ Prof. G.J. Sudhakar, CPR Centre of Indological Research, elaborated on five – Kaikolar, Sale or Senapati, Saliyan, Devanga and Patnulkarar, their distinct customs and traditions.
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Devangas, for instance, engage in ritual worship of goddess Chandeswari. Their women enjoyed rights to property even before legislation was passed in this regard. Settled chiefly in and around Madurai, the Patnulkarars migrated from Gujarat, adopted the practice of wearing the sacred thread and came to be known as Saurashtra Brahmins.
Dr. S. Ananthakrishnan, A.M. Jain College, detailed the history of cotton in his lecture ‘White Gold from Tamilnadu.’ Excavated samples prove that cotton usage existed 7,000 years ago during the Neolithic age and later in civilisations across the Indus Valley, Egypt and Mexico. Ancient records confirm that cotton was an important commodity in Indo-Greek trade, with Argaru (Uraiyur) and Madurai being centres for fine calicos.
Famously likened to a snake’s slough or a cloud of steam, fine-spun cottons were also traded with China, Thailand and Malaysia. The Mahabharata mentions a gift of pure muslins (agartic) from Thanjavur, sent to Yudishtira at his coronation. Tamil literary sources such as the Agananuru, Purananuru and Silappadikaram and accounts of foreign travellers contain references to the separating of cotton, yarn making and spinning.
Under British rule, India was forced to supply raw cotton and buy textiles manufactured in Britain, pushing the handloom industry into a decline. Mahatma Gandhi’s emphasis on khadi spinning and usage sparked a revival.
S. Balaji, weaver, Sivasakthi Society touched upon ‘Experiences in weaving the Dindigul Cotton Sari.’ Hailing from a paramparik weaver family, his craftsmanship spans 15 years. Earlier, producing a cotton sari would net Rs. 700 apiece. Expressing his gratitude to Co-optex and the dynamic initiatives of T.N. Venkatesh, he explained that the Society now weaves azo-free dyed, 80-count organic cottons that generate earnings of Rs.1,200 per piece.
Thanks to design inputs that combine traditional templates with contemporary appeal, there has been a three-fold increase in sales and a regular flow of commissions, resulting in a sustainable livelihood.
Source : thehindu.com- Apr 28, 2016 HOME ***************
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RIL ties up with Star Cotspin for sewing thread
As the next step in the Recron SHT Branding Programme which was launched last month, Reliance Industries Ltd (RIL), one of the largest manufacturers of synthetic fibre in the world, has partnered with the Bhilwara-based Star Cotspin Limited, a leading manufacturer and exporter of sewing thread in India.
Star Cotspin will be the first company in North India to be certified under the Recron SHT Branding Programme, RIL said in a press release.
The partnership agreement was signed in New Delhi by Gunjan Sharma, Business Head, Polyester Staple Fibre Business, Reliance Industries Limited, and S K Chhajer, CEO, Star Cotspin.
Star Cotspin is one of the largest grey sewing thread producers in India, having shown the fastest growth in recent years. As per the agreement, Reliance's Recron SHT, the world's best quality super high tenacity fibre, will be the basic substrate for polyester sewing threads manufactured by Star Cotspin. This yarn will then be sold, cobranded with Recron SHT. Apart from branding the products, RIL will also provide marketing and technical support to Star Cotspin.
Commenting on the agreement, Gunjan Sharma of RIL, said, “This step, in our endeavour towards establishing standardized high quality sewing threads, is a vital one. We are happy that Star Cotspin, the first grey sewing thread producer in India, has chosen to partner us in this initiative that will help both companies to strengthen growth and customer trust. Star Cotspin has shown considerable growth, and have ambitious plans for the future.”
S K Chhajer, CEO, Star Cotspin, said, “We have been associated with Reliance Polyester Fibre for several years, and are pleased to enter into a co-branding partnership with Reliance Recron SHT PSF.
We believe that this will accelerate our future growth through further penetration in our customer base of rewinder manufactured products.”
RIL and Star Cotspin will jointly conduct research and development work to further enhance Recron SHT sewing thread's quality, and will also explore new business opportunities.
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Reliance will also support Star Cotspin in creating awareness about standardized high quality sewing thread products among key stakeholders, especially spoolers and apparel manufacturers.
Star Cotspin is planning to undertake a 12,000 spindles expansion project. Six thousand spindles each is expected to be allocated to optical white and black yarn. The company expects to double the consumption of Recron SHT fibre by the end of 2017, the release said.
Source : fibre2fashion.com- Apr 28, 2016 HOME ***************
‘Reforms a must to boost apparel exports’
India needs to soon carry out reforms including reducing tariffs, easing labour norms and promoting foreign investment, to cash in on the opportunity to be an apparel manufacturing and exporting major as China slowly relinquishes its lead position owing to factors such as wage increases, according to the World Bank.
India should look at ways to help its apparel sector connect to global value chains (where production processes are situated in different countries) and consider joining mega free trade agreements such as the Trans-Pacific Partnership to get preferential access to huge and lucrative markets such as the U.S., according to a World Bank report titled ‘Stitches to Riches? Apparel Employment, Trade, and Economic Development in South Asia,’ released on Thursday.
The apparel sector of China — which holds the largest share of global apparel trade at 41 per cent (as against India’s share of just 3.5 per cent) — is likely to be hit by factors such as higher wages and the production shift to higher value-added industries like electronics. This is encouraging investors to seek out apparel firms in countries like Cambodia and Vietnam, the Bank said. It added that the potential decrease in Chinese apparel exports presents a huge opportunity for South Asian nations. The World Bank estimated that even a 10 per cent increase in Chinese apparel prices could create at least 1.2 million new jobs in the Indian apparel industry.
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Onno Ruhl, World Bank Country Director, India, said: “Rising costs of apparel manufacturing in China provides a window of opportunity for India to focus on apparel in productively employing its huge working-age population.”
Though India is gaining market share, Southeast Asian countries (Cambodia, Indonesia, and Vietnam) are outperforming all South Asian countries in overall apparel export performance, product diversity, and other non-cost related factors, according to the report. India’s annual apparel exports stood at about $12 billion as against China’s $145 billion. For India to take advantage, it needs to move quickly to ease barriers to the import of manmade fibres, facilitate market access and encourage foreign investment to reach more end markets, which would also yield dividends for other light manufacturers like footwear and toy, the Bank suggested.
India should consider reforms including reduce tariffs and import barriers to ease access to manmade fibres -- such as more transparency for duty drawback schemes and bonded warehouses, and removing anti-dumping duties on manmade fibres, India could also lower excise taxes or provide other incentives to develop a domestic manmade fibre industry, it added.
The import duty on manmade fibres is currently at around 10 per cent, while in competing countries such as Sri Lanka the duty is nil. “To improve productivity, they (India) could help firms enter the formal sector and take advantage of economies of scale with less complex labor policies. They (India) could also promote foreign investment for apparel by adopting clear and transparent policies on foreign ownership (already in place for textiles) and within Export Promotion Zones,” according to the report.
It added that India could diversify markets by taking advantage of market access to emerging markets. And it could shorten lead times by using industrial parks to provide better infrastructure in a concentrated way.
Source : thehindu.com- Apr 29, 2016 HOME ***************
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Rajeev Kher: A trade policy agenda for India-II
The Trans-Pacific Partnership (TPP) agreement was signed early this year. No one has asked India to join the TPP nor are we in a position to do so.
Trans-Atlantic Trade and Investment Partnership is the other mega region in the making between the US and EU. While the former focuses on high standards, the latter aims at regulatory coherence. Between the two, they cover more than 60 per cent of world trade.
Major economies such as China, India, Russia, Brazil, Indonesia and South Africa are not part of these agreements. In the long run, no major economy can remain uninfluenced by them because the discriminatory rules regime will have consequences on trade with even non-member economies.
So, India needs to expand its destination markets significantly to offset at least some loss because of trade diversion in favour of TPP members. First, we need to conclude the long overdue India-EU trade agreement. Both sides are waiting for the other to blink first. This does not serve either and betrays a lack of leadership. The possibility of Brexit has added a new twist. EU should not forget that it will get access to the largest and fastest growing market. India has offered a fairly attractive deal.
India's traditional sectors will benefit significantly. However, India must sort out the data security issue for any meaningful market access to its IT sector. Among the TPP members, India must open its negotiations with Peru immediately. This will give India the benefit of accessing Latin America's most promising area, the Pacific Alliance, besides a foothold in the TPP region. The Indian initiative of promoting investment in the CLMV (Cambodia, Laos, Myanmar, and Vietnam) has been languishing.
It's important for our textile sector to integrate with its Vietnamese counterpart to draw advantage of the "yarn forward" regime. The likelihood of other CLMV countries joining the TPP makes it necessary for us to integrate our economy with them. Extremely slow progress on the Asian highway has neutralised a potential advantage to the region.
A seamless South Asia is critical to India's trade policy. While the western front remains unpredictable, integration of the rest of the region is imperative for India to play a larger role in world trade.
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India has taken asymmetric responsibilities in the region to liberalise trade. However, the attitudes of personnel posted at the borders and the lackadaisical state of infrastructure need to improve. The relative lack of motivation of Indian industry to make investments in these countries demands greater attention. Our effort should be to canvass South Asia as a regional production network.
Africa deserves much greater attention. At least 13 African nations are good targets for institutionalising trading arrangements. India must be prepared to take asymmetric responsibilities in this region too. These countries have been growing steadily and offer a promising market and opportunities of integrating along value chains.
Iran offers a very promising market opportunity. Both countries decided to have a preferential trade arrangement but that has not moved much. Iran also offers the central point for connecting Russia and India through the International North-South Corridor (INSTC). A trade agreement with Eurasian economies, including Russia, is overdue. This will not only help in sourcing raw material but will also open up other central Asian economies for India. Russia became a World Trade Organization (WTO) member recently.
Another critical area is development of a modern ecosystem for technical regulations. In the area of food products, significant work has been done in developing standards and setting up a framework. India's loss in the WTO because of a poultry meat ban was entirely attributed to absence of a risk analysis.
A well-developed modern technical regulatory system helps in manufacture of products of higher quality, helping greater value addition and consequent hope for better returns from the market. India has been losing its competitiveness on account of high factor costs and emergence of many cheaper producers of mass goods.
Therefore, increasing the share of higher value-added products in our export basket is essential. This would, in any case, conform to the 'Make in India' philosophy. An evolved standards and technical regulatory regime helps in this direction. It comes handy in filtering out cheap, low-quality imports.
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It helps consumers the most in acquiring good products. Finally, it helps in integrating Indian products and services with global leaders.
Therefore, an essential element of India's trade policy agenda has to be a state-of-the-art technical regulatory system. This will involve adoption of international standards in line with the WTO agreement on technical barriers to trade, a mandatory standards regime in selected product areas, an enabling environment, institutional separation for different functions, and an accreditation system for conformity assessment bodies and testing laboratories.
Unfortunately, the standards agenda is driven by the consumer affairs ministry, which has no external orientation. Therefore, involvement of the commerce and industry ministry in a much larger way is necessary. A complete recast of the Bureau of Indian Standards is overdue.
The implementation of the trade facilitation agreement needs to be monitored closely as it will help India in the long run. There is a good case for concluding these agreements between the Union and states. This would cover substantive reforms of not only trade infrastructure and logistics but also transit and taxation, opening up of pan-India movement of agricultural goods etc.
While infrastructure has received some boost, there is hardly any specific focus on trade-facilitating infrastructure. Too many departments are operating in this area. Some, like the railways, enjoy a monopoly, leading to inefficiencies. We need to constitute a multi-agency trade infrastructure monitoring committee. It's a pity that one of the flagship schemes, ASIDE, which despite low-budgetary allocations helped in bridging some of the crucial trade infrastructure gaps, has been left to starve.
Without the necessary changes discussed here, investments and ease of doing business - critical for reviving manufacturing - will yield limited results.
Source : business-standard.com- Apr 29, 2016 HOME ***************
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