Germany Emerges As the Top Destination for Bangladesh’S Apparel Exports Editorial Asst
EAI 01 ISSUE 09
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GLOBAL Impact of BUSINESS Trade War OUTLOOK on global POSITIVE apparel sector FOR 2019
YogaYoga pantspants forfor workwork && playplay APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
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DEAR FRIENDS,
am happy to share that the industry has fi nally seen some growth in the last one month, with October export fi gures showing a pick up. After 12 months Iof stagnation, apparel exports has recorded a positive growth of 36.26% in October 2018, as against Oct 2017 exports. I hope the trend is sustained and the industry fi nally fi nds its place in the sun.
But the fact remains that the industry is grappling with competitiveness issues, one of which is the lack of a conducive environment for invest and expansion. The short term and ad hoc policy initiatives have not been able to attract the kind of long term vision and investment that the sector needs. In this regard the new MSME package of the Prime Minister initiative had participated in International may provide a shot in the arm. Sourcing Expo, Melbourne, Australia and a delegation consisting of senior EC members I would like to extend my gratitude to and representative of Ministry of Textiles also Hon’ble Prime Minister of India, Shri Narendra visited with the objective to explore the market Modi for launching Support and Outreach potential of Australia. The initial report of the Initiatives for the Micro, Small and Medium event was very positive. Enterprises (MSME). Apparel Exporters which largely comprises of MSME’s will defi nitely I would like to thank NITI Ayog for be benefi ted from the initiatives. The key organising the First India Russia Economic initiatives include increase in interest subsidy Forum for Strategic Economic dialogue under Interest Equalisation scheme from 3% to at Russia, led by Shri Rajiv Kumar, Vice 5%, Loan upto Rs. 1 crore within 59 minutes Chairman, NITI Ayog. I am happy to share through online portal, etc. The package will that apparel trade was one of the focus areas ease the credit access for MSME’s. AEPC of discussion. Recognizing the potential of has partnered with the MSME Help Desk in the Russian market for Indian apparel exports, Tirupur to facilitate the exporters in better it was proposed to set up a target for US $ 1 understanding and availing of the package billion of apparel exports from India by 2020. benefi ts. Given the commitment of leaders of both the countries, I look upon these dialogues as a new AEPC under its export promotion window for growth of apparel exports. n
HKL Magu, Chairman, AEPC
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 1
Apparel_December_2018_Pages.indd 3 30/11/2018 3:06:59 PM CONTENTS EAI 01 ISSUE 09
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GLOBAL Impact of BUSINESS Trade War OUTLOOK on global POSITIVE apparel sector FOR 2019
04 | the broADCASt India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-September) 2018-19 Yoga pants for 05 | the broADCASt India’s Ready-Made Garment (RMG) Export Update for FY (April-October) work & play 2018-19 APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 06 | AepC eVeNtS CHAIRMAN AEPC AEPC organises ‘Fabric of Unity’ event Mr. HKL Magu 08 | AepC mSme report CHAIRMAN EP Government launches Support and Outreach Initiative for MSME Mr. Sudhir Sekhri 10| mArketS • India improves its rank in the ‘Ease of Doing Business’ survey ADVISOR AEPC • Global sewing machines market to grow at 4.6% CAGR Mrs. Chandrima Chatterjee • Global apparel consumption to reach $2.6 trillion by 2025 PUBLISHER Apparel Export Promotion Council 12| brAND retAIl • American Apparel to expand sizing chart • Uniqlo to double store network by 2022 • US retailers to expand operations 13| brAND retAIl • Adidas increases its profitability outlook • Versace to consolidate operations • Uniqlo A/W sales for October plummets 14 | CoVer Story US-China trade war could alter the global business map 18 | bUSINeSS Despite tariff wars, global outlook for clothing, fashion market positive in 2019 Editor-in Chief & Publisher & CEO - 20| bUSINeSS Sanjay Chawla • FDI in Malaysian clothing sector reaches MYR112 million Director - Salil Chawla • EU apparel imports rise by over 10 per cent Managing Editor - Sujata Dutta Sachdeva • Bangladesh earns $1.13 billion from trousers VP-Corporate Communications Shraboni Mukherjee 21| bUSINeSS • Higher growth expected for US apparel and footwear brands Assistant General Manager - Saqib Meer • World manmade yarn exports down 36 per cent in Q2 Narayan Subramaniam Editorial - • Germany emerges as the top destination for Bangladesh’s apparel exports Editorial Asst. - Ranjit Kaur Correspondent - Ajay Kumar Goswami, 22| trADe treAtIeS Special Contribution Editorial - Ajanta Ganguly British fashion industry braces up for Brexit and beyond Supported By - Abdul Hussain, Sumit Masand 24 trADe treAtIeS ART DIRECTOR - Sanjeev D. Sonavane | • US accuses India flouting WTO norms for cotton subsidies Production & Admn. - Dhansukh Rathod, • USTR revokes duty-free concessions on 50 Indian imports Dinesh Poojary • India asks China to reduce tariffs
Mumbai Offi ce: 38/314, Unnat Nagar 4, 25| trADe treAtIeS Off M. G. Road, MHADA Colony, Goregaon (W), • TPP-11 to lower tariffs on agricultural and industrial goods Mumbai - 400 062. Ph: 022 2875 5181 • RCEP to not be implemented by year end e-mail: [email protected] / [email protected] • Sri Lanka to lose GSP access with regime change 26 | proDUCt Dehli Offi ce: Salil Chawla, Business & Mktg: New Delhi Asia Pacific to be frontrunners in global knitwear market by 2026: Study - 110017, Mobile: +9193503 18639/ 95601 79633 e-mail: [email protected] 28 | CoNCerN Volatile prices, fabric-sourcing challenges big concern for India’s apparel sector Printing Press: VIBA Press Pvt. Ltd. C-66/3, Okhla Industrial Area, Phase-II New Delhi-110020 30| CottoN • World cotton production to decline this year e-mail: [email protected] • Global organic cotton increases by 10% • ICF estimates cotton production to be over 370 lakh bales in 2018-19
2 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
Apparel_December_2018_Pages.indd 4 30/11/2018 5:11:42 PM 31| Import • Bangladesh apparel exports to India increase • German raw material imports decline by 9% 32 | TIRUPUR Eyeing US, EU markets, Tirupur knitwear makers set up units abroad 34 | SOURCING With rising costs in China, Mexico, Turkey emerge strong sourcing destinations 36 | business China still remains global textile leader 38 | PRODUCT FOCUS China still remains global textile leader 42 | PRODUCT Global denim sales to be driven by sustainability initiatives, new trends 44 | AEPC Seminar Report AEPC Bangalore organises seminar on Strategies for Financial Risk Management for Apparel Sector 45| Compliance • Accord severs ties with 532 garment companies • UK retailers pledge to stop slavery in textile trade • EU restricts use of 33 textile chemicals 46 | retail Future retail spaces to offer high-touch, seamless experience: WSGN study 48 | retail Rising shopping frequency causes dissatisfaction among online consumers 50 | CoMPLIANCE Fashion industry responsible for 10 per cent of global carbon emissions 52| Sustainability • CITI evaluation report ranks Levi’s as the world’s top apparel brand • ZDHC program gets seven new members • Higg Facility Modules to address value chain inefficiencies 53| Sustainability • PHMA urges govt to demand duty free access to Chinese markets • A new approach needed for textile recycling • Brands find selling eco-friendly products difficult 54 | Skiling Focus on skills development must for apparel industry growth 56 | INSIGHT Economists, policy makers divided on the need for import regulation 57 | GEMA Report Vinod Dhawan, President, GEMA shares his plans for the industry 58 | MINISTRY NOTIFICATIONS 59 | GSt Update 60 | AEPC EVENT CALENDAR CALENDAR OF EVENTS - 2019
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 3
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AppArel / THE BROADCAST
India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-September) 2018-19
INDeX oF INDUStrIAl proDUCtIoN manufacture of mom Growth rate manufacture of mom Growth textiles (In %) wearing apparel rate (In %) month 2017-18 2018-19 2018-19/2017-18 2017-18 2018-19 2018-19/2017-18 April 116 114.2 -1.6 155.5 134.6 -13.4 may 116.7 116.1 -0.5 156.8 136.8 -12.8 June 116.4 115.5 -0.8 145.2 151.6 4.4 July 116.4 119.8 2.9 134.2 147.3 9.8 August 116 125.1 7.8 121.4 144.3 18.9 September 115.2 121.4 5.4 118.8 143.6 20.9 total April-September 116.1 119.6 3.0 138.7 143.7 3.6 Source: CSO, 2018 SUmmAry • Manufacturing of Textiles has shown a growth of 5.4% in September, 2018 and growth of 3% for the period of April-September, 2018-19 • Manufacturing of Wearing apparel has shown a growth of 20.9% in September, 2018 and growth of 3.6% for the period of April-September, 2018-19
4 / AppArel eXpOrT prOMOTION COUNCIl MAGAZINe | December 2018
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AppArel / THE BROADCAST
India’s Ready-Made Garment (RMG) Export Update for FY (April-October) 2018-19
India’s RMG Exports
RMG exports were to the tune of USD 1130.95 million in October 2018 with the growth of 36.26 per cent against the corresponding month of October 2017, which was USD 830.02 million.
In rupee term export for the Month of October 2018 was ` 8327.42 cr. as against ` 5401.86 Cr. in October 2017 with the growth of 54.16 per cent.
India’s RMG export to World in the April-October of 2018-19 was to the tune of USD 8847.12 mn. which has decreased by -11.63 per cent compared to the same period of previous fi nancial year. During April-October 2017-18, India’s apparel exports were to the tune of USD 10011.51 mn.
India’s rmG export to World mom Growth of Fy 2017-18 Fy 2018-19 month 2018-19 over 2017-18 (%) In INr Crore In US$ million In INr Crore In US$ million INr US$ April 11272.24 1747.44 8859.67 1349.81 -21.4 -22.76 may 10342.55 1605.37 9040.63 1338.57 -12.59 -16.62 June 9979.57 1548.59 9202.63 1357.46 -7.79 -12.34 July 8262.94 1281.95 8757.23 1274.83 5.98 -0.56 August 8552.24 1336.95 8986.67 1292.18 5.08 -3.35 September 10704.85 1661.19 7967.69 1103.32 -25.57 -33.58 october 5401.86 830.02 8327.42 1130.95 54.16 36.26 April-october 64516.25 10011.51 61141.94 8847.12 -5.23 -11.63 Source: DGCI&S, Kolkata, 2018
AppArel eXpOrT prOMOTION COUNCIl MAGAZINe | December 2018 / 5
Apparel_December_2018_Pages.indd 7 11/29/2018 10:06:10 PM AppArel / AEPC events
AEPC organises ‘Fabric of Unity’ event
o mark the unveiling of the ‘Statue representatives from brands, ETI, ATDC students and NGOs of Unity’ in Gujarat on October 31, working in this sector. T 2018, AEPC organised the ‘Fabric of Unity”, an event to commemorate the Indian Integrating the entire industry textiles industry. Union minister of textiles, Incorporated in 1978, AEPC is the official body of apparel Smriti Zubin Irani graced the event attended exporters in India that provides invaluable assistance to Indian by AEPC’s EC members, officials from the exporters and importers/international buyers who choose Ministry of Textiles and senior representatives India as their preferred sourcing destination for garments. In from textiles councils and associations, recent years, AEPC has worked tirelessly to integrate the entire
6 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
Apparel_December_2018_Pages.indd 8 30/11/2018 5:09:29 PM AppArel / AEPC EVENTS AEPC has organised the Fabric of Unity event in industry - starting at the grassroot level training the workforce which industry, workers, and and supplying a steady stream of manpower to the industry; volunteers took the pledge identifying the best countries to source machinery and other to work for the betterment of infrastructure and brokering several path breaking deals for members, while helping exporters to showcase their best at the nation. In continuation of home fairs as well as be highly visible at international fairs the this spirit of the Unity Pledge world over. - to contribute to the nation Speaking at the event HKL Magu, Chairman, AEPC said building as an unified entity, “Indian textiles have played an important role in the freedom movement and what can be a better example of unity in diversity AEPC can take the concept than the Indian textile heritage. The Fabric of Unity is an event of Fabric of Unity forward by to celebrate this. This year happens to be AEPC’s 40th year showcasing the rich history of service for promoting apparel exports around the world. We feel proud to be working on very important initiatives to of the diverse fabric and promote inclusion and sustainable apparel eco system. ” textiles traditions of India at Smriti Zubin Irani, Minister of Textiles said, “AEPC has AEPC premises organised the Fabric of Unity event in which industry, workers, and volunteers took the pledge to work for the betterment of the nation. In continuation of this spirit of the Unity Pledge - to gifted a package of Rs 6,000 crore to AEPC contribute to the nation building as an unified entity, AEPC can to encourage the skilled workers and people take the concept of Fabric of Unity forward by showcasing the into the organised sector. PM Modi also rich history of the diverse fabric and textiles traditions of India wished the Indian textile Industry to bring at AEPC premises.” about newer heights in the world economy. She hoped AEPC will work hard towards Encouraging skilled workers into achieving this target. She also requested the organised sector extension of the concept of Fabric of Unity Irani highlighted that Prime Minister, Narendra Modi has to every member and office of AEPC.n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 7
Apparel_December_2018_Pages.indd 9 11/29/2018 10:06:15 PM AppArel / AEPC MSME Report
Dr.A.Sakthivel, Vice Chairman, AEPC in the presence of Mr. Kandasamy, GM - District Industries Centre, Mr. Sundaramoorthy, Lead District Manager, Canara Bank, EC Members at MSME Helpdesk at AEPC, Tirupur Government launches Support and Outreach Initiative for MSME arendra Modi, Prime Minister of India, on November • Single consent under air and water pollution 2, 2018, launched 12 support and outreach initiatives laws. Returns will be accepted through self- Nfor the Micro, Small and Medium Enterprises certification and only 10 per cent MSME to (MSME) sector in New Delhi. These initiatives include: be inspected • Loan of upto Rs. 1 crore within 59 minutes through online portal • For minor violations under Companies Act, • Interest subvention of 2 per cent for all GST registered entrepreneurs no longer have to approach MSMEs on fresh or incremental loans court but can correct them through sample • All companies with a turnover of over Rs. 500 crore to be procedures mandatorily on TReDS platform • All PSUs to compulsorily procure 25 per cent instead of 20 MSME Help Desk to per cent of their total purchase from MSMEs strengthen manufacturing • Out of this 25 per cent; 3 per cent should be reserved for base women entrepreneurs AEPC set up the MSME Help Desk in • All CPSUs to compulsorily procure through GeM portal Tirupur on November 16, 2018 to facilitate the • 100 technology centers to be established at the cost of exporters’ to strengthen their manufacturing Rs. 6,000 crore base. This help desk was inaugurated by • Govt. of India to bear 70 per cent of the cost for establishing Dr.A.Sakthivel, Vice Chairman, AEPC in the pharma clusters presence of Kandasamy, General Manager, • Returns under 8 labor laws and 10 Union Regulations to be District Industries Centre; Sundaramoorthy, filled in one year Lead District Manager, Canara Bank, EC • Establishments, to be visited by an inspector, will be decided members along with officials, exporters, press through a random computerised allotment and media. n
8 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
Apparel_December_2018_Pages.indd 10 11/29/2018 10:06:17 PM Apparel_December_2018_Pages.indd 11 11/29/2018 10:06:18 PM AppArel / MarketS India improves its rank in the ‘Ease of Doing Business’ survey ndia’s rank in the Ease of Doing Business 2019 survey’ improved by 23 places to reach 77 among 190 countries surveyed, Imaking it the only country to rank among the top 10 improvers for the second consecutive year. India saw a similar improvement in the “trading across borders” section to 80th position from 146th a year ago. This improvement became possible as the country reduced time and cost to export and import through various initiatives, including the implementation of electronic sealing of containers, upgrading of port infrastructure and allowing electronic submission of supporting documents with digital signatures under its National Trade Facilitation Action Plan 2017-2020. points, and trading across borders, in which it India has registered huge improvement in six out of the 10 rose by 66 points. Areas where the country still indicators and has moved closer to international best practices. needs to improve are starting of business, in The biggest improvements have been in the indicators related which the country ranked 137, paying taxes to construction permits, in which India’s ranking improved by 129 and enforcement of contracts. n Global sewing machines Global apparel market to grow at 4.6% CAGR consumption to reach lobal sewing machine market is expected to grow at a CAGR of 4.6 per cent from 2018 to 2026.The increasing $2.6 trillion by 2025 Gpopularity of the do-it-yourself culture is an important factor he global apparel consumption is forecast contributing to the growth. People, in order to give a personalised to grow at a CAGR of 4 per cent and reach touch to their garments are increasingly practicing home arts T$2.6 trillion by 2025. Market growth rate of such as sewing and knitting. developed countries is expected to slowdown Asia Pacific is the largest market for sewing machines. The whereas large emerging economies will be the presence of a large number of sewing machine manufacturers key drivers of growth. China and India, with headquartered in the region is an important factor propelling a large population base, will be the fastest market growth in the region. growing markets in the segment. In recent years, sewing machines have witnessed significant It is expected that over the next decade, technological advancements. Apparel manufacturers are domestic apparel market of India and China transitioning from manual sewing machines to digital sewing will attain high growth rates of 11 per cent machines. Moreover, sewing machines each, to add a cumulative market size of have been bestowed with a plethora of $393 billion by 2025. new features and functionalities. Apparel consumption in 2017 is estimated For instance, Kinoshita introduced sewing to be $1.8 trillion, which formed around machines that have automatic bobbin 2 per cent of the changers. Similarly the sewing machine world GDP of $79.3 market has witnessed other innovations in trillion. EU-28 was the form of real-time monitoring in sewing the largest apparel machines, modular sewing machines, consumer market convertibility in sewing machines, smart sewing machines and worth $400 billion, digital feed system in sewing machines, among others. which was followed Some of the major players operating in the sewing machine by markets of the market include China Feiyue, Brother, Juki, Jack, Singer, Bernina, USA, China, and Pegasus and Million Special, among others. Research and Japan. These top four markets together development is one of the most common strategies adopted constituted approximately 59 per cent of the by the market players which helps companies stay afloat in the global apparel consumption. n market by addressing the increasing competition. n
10 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
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Apparel_December_2018_Pages.indd 13 11/29/2018 10:06:19 PM AppArel / Brand Retail American Apparel to expand sizing chart merican Apparel, which was relaunched in the US in August 2017 by AGildanActivewear, a Canada-based manufacturer, will standardise and expand its sizing to include extra large pieces, lower its prices by up to 23 per cent and offer its previous hits including disco pants, high- waisted jeans and bodysuits. Founded in 1989, American Apparel came under criticism with its provocative advertising that eatured scantily clad women in suggestive poses. The brand still aims to be sexy, but will be careful about its portrayal of women in future. The brand was operating a test store that it will use to study the brand’s traction and potentially pave the way for a return to physical retail. n
Uniqlo to double store US retailers to network by 2022 expand operations etailers in the US, like Macy’s and Kohl’s, are planning to expand their operations through new partnerships and Rtie-ups. Kohl is planning to downsize its store size to about 60,000 sq ft with the remaining space to be leased to fitness centers or other retailers. Macy’s on other hand will add restaurants and other categories that revolve around the way customers live and shop. The retailer has also acquired a stake in Silicon Valley start-up b8ta, which features different online upstart brands and major labels like Sony at its locations, including an in-store boutique at Macy’s niqlo is planning to double its store New York flagship. b8ta, which drives traffic and sales by regularly network in Southeast Asia and Oceania to featuring new brands and allowing customers to try and interact Uaround 400 by 2022. Fast Retailing, the with products in out-of-box-setting, is also using its technology to parent company of Uniqlo recently acquired expand the Market at Macy’s pop-up shop concept. a 35 per cent stake in Hanoi-based women’s Macy’s this year also bought Story, famous for its New York fashion brand Elise. The store will be operated shop that hosts different brands with unique themes. n by a joint venture between Fast Retailing and Mitsubishi Corporation. Its arrival in Vietnam will intensify competition for foreign brands as Zara and H&M who have already successfully launched there. According to German firm Statistics Portal, Vietnam’s fashion revenue will annually grow 22.5 per cent from 2017 to 2022, and its clothing sales will surge to an estimated $245 million this year. n
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Oct_shortstories.indd 2 11/29/2018 9:57:04 PM AppArel / Brand Retail Adidas increases its profitability outlook ue to the strong financial performance in the first nine months of 2018, Adidas has increased its profitability Doutlook for the year and specified the targeted range for its top-line growth. The company now projects its currency- neutral revenues in 2018 to grow between 8 per cent and 9 per cent at the lower end of the communicated range due to lower-than-initially-expected growth in western Europe. At the same time, Adidas now forecasts its net income from by 19 per cent in the third quarter. Its revenue continuing operations to increase between 16 per cent and increased by 8 per cent on a currency-neutral 20 per cent compared to the prior-year level. The company’s basis and per cent in euro terms. Gross margin gross margin is now projected to increase up to 1.0 percentage increased by 1.4 percentage points to 51.8 per points to a level of up to 51.4 per cent. This, together with the cent. Operating profit was up by 13 per cent projected top-line growth, is expected to drive an increase in in the quarter, resulting in an operating margin operating profit of between 12 per cent and 16 per cent. improvement of 1.3 percentage points to a The net income of Adidas from continuing operations increased level of 15.3 per cent. nw Versace to consolidate Uniqlo A/W sales for operations October plummets ersace will consolidate its operations which will help the company to further develop the Versace Jeans collections Vwhile at the same time preserve the DNA and design codes of Versus. The company will discontinue its long-established seconds line Versus Versace and focus on one contemporary range alone. In recent months, Versace examined several ways of streamlining its business model, to enable it to focus on its brand portfolio and ensure it remained innovative and relevant The like-to-like sales of Fast Retailing’s in everything it did. Uniqlo chain plummeted by 10 per cent as Fashion labels are did its total sales figure in October 2018. increasingly streamlining The higher-than-expected temperatures in their product range. The Japan dented demand for its autumn/winter era of second and third collection. It also depressed customer footfall lines seems to have and the number of items each shopper who come to an end. A similar did buy actually went home with. approach has already October traditionally has been a tough been adopted by Giorgio Armani, who from spring/summer 2018 month for fashion retailers. In 2017, a number redesigned his corporate portfolio around three main labels: of otherwise-buoyant businesses around the Giorgio Armani, Emporio Armani and A/X Armani Exchange. world registered negative results for their Since 2009, accessible luxury label Versace Jeans has been autumn season as summer-like temperatures produced by Swinger, the apparel company which owns the continued while their coats and knits appeared brand Genny and is also a licensee of Cavalli Class. on store shelves and stayed there. Versace was acquired last September by the US group And the extent of the impact of the ‘wrong’ Michael Kors and is active in the luxury segment with ready- temperatures can be seen clearly when chains to-wear, accessories, jewelry, watches, eyewear, fragrance that are otherwise-successful, such as Uniqlo, and home decoration lines. Versace products are distributed suffer as much as those who are struggling via 200 monobrand stores and over 1,500 multibrand retailers generally. n worldwide. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 13
Oct_shortstories.indd 3 11/29/2018 9:57:05 PM AppArel / COVER STORY US-China trade war could alter the global business map The ongoing trade war between the US and other countries mainly China is altering business equations amongst nations. Even though it will have less direct impact on Indian exports as apparel and made-up textiles are not included in the currently effective US 301 tariff lists, however, prices of end products are expected to rise
he unilateral tariff imposition per cent duty on aluminium and steel respectively coming from by the United States on various all countries except Canada and Mexico, businesses worth $100 Tcountries has started a trade war billion out of the total business of $635 billion faced difficulties. that threatens to adversely affect the world’s Although this was not regarded as a trade war, the big threat came major economies. China and the US are later with the announcement of the $200 billion tariff imposition currently locked in an on-going trade war on China’s export in June 2018. This price escalation makes as each country has introduced tariffs on industry experts feel that that the world is now on the brink of a goods traded between each other. Although major trade war, which will affect India too in many ways. economists feel no country, including the US The trade war is altering business equations amongst itself, is likely to benefit from a tariff war, the nations. According to the IMF, in 2017, EU exports to Asia were effects are yet to kick in. bigger than those to the US. While Asia’s exports to the EU are During his 2016 election campaign, US growing fast, making the Union increasingly more important president Donald Trump had assured he will to Asia. China is now the largest market for an expanding list fix what he feels is China’s abuse of the broken of countries, including Australia, Brazil, Russia, South Africa, international system and unfair practices over South Korea and Indonesia, among others. many years. Along with protecting US jobs for Americans, he also plans to wipe out US Impact on India yet to show up trade deficits with countries around the world Most economists had earlier felt that with China being by renegotiating trade arrangement. forced to back off, India’s export penetration in the US and With Trump having imposed 10 and 25 elsewhere will increase substantially. However, an analysis of
14 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018
Apparel_December_2018_Pages.indd 14 30/11/2018 4:19:21 PM AppArel / COVER STORY plunges. NSE Nifty’s performance too was along the same lines as it saw significant drops. India- US duty tariff rates have also changed, since trade data shows while China’s export basket is more advanced after the US has imposed duties on steel and and consists of more finished manufacturing goods, India’s aluminium, India now has to pay approximately consists more of raw materials and semi-finished goods. As the $241 million worth of tax to the US. tariff war continues, it is unlikely that India will gain significantly So India, as a counter-measure has proposed in the international market at the expense of China. imposing duties on 30 different types of goods. A trade war will hurt China mostly and in anticipation of that, This will ensure that the US has to pay about the Central Bank of China has eased monetary policy. A significant $238 million as duties to India. However, trade war will have an effect on many countries that are integrated this affect the end consumers negatively as into China’s supply chain such as Japan, Korea, Taiwan and some everything that falls under the tariff scanner is South East Asian countries. It will have less direct impact on India expected to become more expensive. due to the small share of trade in economic activity. Since India is highly integrated into global services supply chains, it is expected Apparel industry optimistic that the trade wars will not directly affect services. despite odds However, there will be some changing dynamics in our Some interesting expectations were arrived country’s economy. The basic principles of economics -- at the recent edition of Centrestage, a fashion demand and supply -- will once again come into play. The brand-promotion, launch platform and trade shortage of supply of a good, either finished material or raw exhibition organised by the Hong Kong Trade material, will increase the final consumption price for the consumer. Moreover, the burden of increased tax from the According to the IMF, in 2017, duties will also be borne by the final user. EU exports to Asia were bigger The US-China war is affecting India already in many ways. than those to the US. While Recently, the value of the rupee has dropped to an all-time low, Asia’s exports to the EU are when in some occasions it was hovering around the mid Rs growing fast, making the Union 68’s against the US dollar. This coincided with Donald Trump’s increasingly more important to threat of imposing a fresh round of tariffs on exports worth $200 billion. This trend can be linked to the weakening of the Asia. China is now the largest US dollar, which automatically creates a negative impact on the market for an expanding list of trade deficit of India. countries, including Australia, The Indian stock markets have also reflected changes with Brazil, Russia, South Africa, key indices in the Indian share market dropping due to hesitant South Korea and Indonesia, investors. In the last few months, the BSE Sensex saw regular among others
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 15
Apparel_December_2018_Pages.indd 15 11/29/2018 10:06:19 PM AppArel / COVER STORY Development Council (HKTDC). They conducted one-on-one interviews with 234 buyers and 72 exhibitors and came up with interesting results. The study showed many industry players are optimistic about sales over the next one year. Around, 87 per cent buyers and 91 per cent exhibitors expected sales to either remain steady or increase over the next one year. Around 58 per cent buyers expected retail price of their apparels to remain stable in 2019 while 31 per cent expected them to increase and 11 per cent foresaw a decrease. Some of the other projections were that around 38 per cent exhibitors expected retail accounts for 40 per cent of the total sales revenue of fashion price of their FOB products to increase as companies with an e-commerce presence. compared to only 17 per cent last year. On the If current growth rates of imports in the US and China other hand, only 8 per cent of them expected hold in the next few years, by 2021 China will surpass the US them to decrease versus 13 per cent last year. to become the largest market for imports in the world, says the The casual wear segment got the maximum IMF. Against this backdrop, Trump’s trade war is creating new support from both buyers and exhibitors impetus for the EU and Asia to speed up opening their markets followed by fashion accessories, at this event. to forge closer economic ties. The US-China trade war is not expected to affect Indian exports as apparel and made- US consumers most affected up textiles are not included in the currently When the General Agreement on Tariffs and Trade (GATT) effective US 301 tariff lists. However, sourcing was refurbished as the WTO around 23 years ago, almost every and production costs are set to increase with country in the world joined the organization. As per agreed over 45 per cent buyers and 75 per cent norms, trade tariffs amongst member countries are reduced exhibiters expecting an increase. Around 60 through negotiations and the agreed rates applied uniformly to per cent exhibitors, among the traditional all trade partners. However, China which joined the organization markets, Japan and Taiwan have the greatest in 2001 does not adhere to these rules and does many things potential for growth in 2019, followed by such as shaking down foreign investors for chosen technologies Hong Kong, South Korea, Australia and besides giving subsidy to its own industries. While there are Pacific Islands. Chinese Mainland continued enough reasons for punishing China for flouting multilateral to receive the biggest endorsement as the trade rules, through overproduction, dumping overseas and emerging market from exhibitors followed by unnecessary restrictions on market access, the primary loser ASEAN countries and the Middle East. from this trade war is likely to be the US, as the so-called The Centrestage conference indicated benefits of more manufacturing jobs will negated by the higher crossover/joint promotions was expected to prices that the consumer has to pay. be the most effective product development Tariffs on Chinese-made goods are increasing prices on strategy in2019, This was expected to be apparel and footwear imports in the US, and the impact will followed by celebrity endorsed fashion be even more damaging when tariff rates jump from 10 to collections as well as limited edition collections. 25 per cent in 2019. The National Retail Federation (NRF) E-tailing was also expected to add 40 per cent and other industry groups have stated that the tariffs harm sales revenues and is an effective product both US consumers and workers, but it seems retailers and development strategy. On an average, e-tailing manufacturers will need to adjust to these additional costs. A
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Apparel_December_2018_Pages.indd 16 11/29/2018 10:06:19 PM AppArel / COVER STORY Many countries will capitalize off the trade war as various businesses shift some or all of prolonged trade war between the world’s two largest economies their manufacturing operations represents a major challenge for retailers, manufacturers and out of China due to concerns consumers. In the short term, increased sourcing and supply over steep tariffs in the US. chain costs will lead to lower margins, higher prices or both. Indeed many businesses began In the longer term, US companies will need to ramp up with suppliers in countries that are not subject to tariffs. But it’s moving some or all of their not so easy to shift supply chains that have been built up over manufacturing operations out many years. Additionally, apparel and related products make of China over the last several up a significant portion of US imports, and China represents years because of soaring the world’s largest manufacturing base for these items. While costs but the trade war is fast experts suggest alternatives to China such as nearshoring — forwarding the exodus. Various sourcing products from NAFTA countries or other non-Asia companies have begun moving regions — and onshoring, i.e. using US manufacturers, is an their manufacturing operations option but questions remain as to whether they will be enough out of China to other countries to offset the costs that will hit US consumers. across Asia, and Mexico, while others are considering countries Need to accelerate India-EU FTA they should set their sights on. India’s exports and imports of goods and services is around Vietnam is high on this list. 42 per cent of its GDP. Any trade war is thus likely to have implications for the country. Turkey recently imposed a 21 per pricing, Bangladesh will also reportedly benefit cent customs duty on Indian products. Additionally, local value when it comes to sourcing cotton as China has addition of 51 per cent in case Indian companies wish to sell reportedly stopped buying cotton from US their products in Turkey, forces them to create capacity in a sub- already. After China stopped buying cotton optimal manner by investing significantly in the local country. from USA (which was worth a little more than The trade barriers that Indian textile companies face $1 billion), Bangladesh has now reportedly pose obstacles in their access to some of the most important emerged as the largest cotton importer. markets. For over four decades, Indian manufacturers designed Many apparel and electronics their production, investment and sourcing strategies around manufacturers have started diversifying the assumption that the movement of goods across the world’s production to rivals such as Vietnam and borders would continue to grow ever freer. In the process, many India. Vietnam specially has been enjoying of them built complex, intricately linked and cost-efficient an export boom in clothes and cell phones, supply chains that span the globe. The US and EU markets which was earlier dominated by China. As absorb about 60 per cent of the Indian output in apparel. The Vietnam has become a more important player country, therefore, needs to expedite an FTA with the EU. in supply chains, the US trade deficit with the country has swelled to $38 billion last year, Conclusion three times larger than in 2011. India is also The trade war between the United States and China has expected to slowly catch up in some specific emerged as a blessing for the Bangladesh garment industry, which market segments. The US is now banking is reportedly witnessing increased work orders from both the on its offshore apparel and electronics countries, underlined a recent study. Analysts say, many buyers are production factories set up close home, rather returning to Bangladesh and the country’s share in the American than sourcing from low cost but far-away garment market has increased 6.46 per cent in the first nine months countries. The world is waiting with baited of the year. It is an opportune moment for Bangladesh as China breath to see how Chinese exports will get also announced tariff cuts on imports from the country. Moreover hit by the new tariff laws and how it will also other than inflow of work orders for apparel items for competitive affect trade relations with other countries. n
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Despite tariff wars, global outlook for clothing, fashion market positive in 2019
ong Kong Trade Development exhibitors expected sales to remain steady or increase over the Council (HKTDC), during the next 12 months. Around 58 per cent of buyers expected the Hcourse of Centerstage, a fashion retail price of their products to remain unchanged in 2019, brand-promotion, launch platform and trade while 31 per cent expected an increase in the retail price and exhibition conducted face-to-face interviews 11 per cent foresaw a decrease. with 234 buyers and 72 exhibitors to gain an Around 38 per cent of all exhibitors expected the FOB overview of the current market prospects, new selling price of their products to increase compared to 17 per product trends and latest e-tailing developments. cent in the 2017 survey, while a comparatively small number of exhibitors expected it to decrease to 8 per cent as against Optimistic about sales 13 per cent last year. The results reflected optimistic views on Around 45 per cent buyers expected sourcing prices and sales prospects over the next 12 months with production costs to increase, while 51 per cent anticipated it exhibitors being more upbeat than buyers. to remain unchanged. Only 4 per cent, however, predicted a Around 87 per cent of buyers and 91 per cent decrease in costs.
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Japan, Taiwan show highest growth potential In terms of market potential, Japan and Taiwan led with nearly 60 per cent of exhibitors opting for these countries as having the highest growth potential among their traditional as their most favored product development markets, followed by Hong Kong, South Korea, Australia & strategies for 2019. Pacific Islands. Chinese Mainland continued to receive the biggest endorsement from the exhibitors as the major emerging Rising e-com trend across market, followed by ASEAN countries and the Middle East. the globe Around 68 per cent buyers and 71 per cent exhibitors did On an average, e-tailing accounted for not expect any positive impact of the China-US trade spat 40 per cent of the total sales revenue of fashion on the export performance of their products. While around companies with an e-commerce presence. 30 per cent of buyers and exhibitors expected the war to affect Around 29 per cent of the companies not them negatively. The relatively high neutrality perhaps reflects engaged in e-tailing, or are planning to start the fact that apparel and made-up textiles (of HS chapters 61 selling online within the next two years. While through 63) are not included in any of the currently effective 71 per cent companies currently engaged US 301 tariff lists. in e-tailing or are planning to, perceived the Around 47 per cent of respondents backed ‘crossover/ channel to be suitable for selling women’s joint promotions’ as the most prevalent product development wear, followed by fashion jewellery (27 per strategy in the coming year. This was followed by ‘celebrity or cent), bags (24 per cent) and menswear (18 per key opinion leader-endorsed fashion collections’ and ‘limited cent). Of those companies currently engaged edition collections’. Among buyers, brand-licensing products’ in e-tailing, 61 per cent sourced from Mainland and ‘collections made from new materials’ emerged as next China, followed by Hong Kong (32 per cent), most important strategies. Exhibitors, however, considered Japan (19 per cent), South Korea (14 per cent) collections made from new materials and sustainable fashion and the ASEAN countries (14 per cent). n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 19
Apparel_December_2018_Pages.indd 19 11/29/2018 10:06:20 PM AppArel / Business FDI in Malaysian clothing sector reaches MYR112 million s per Malaysian Investment Development Authority (MIDA), FDI in Malaysia’s clothing Aand textile sector is increasing more this year on the back of a robust performance in 2017. From January to June 2018, the total investments in the sector reached MYR244.8 million ($58.73 million) of which FDI accounted for MYR112 million ($26.87million). This compares with MYR428.8 million ($102 milliion) of investments approved across 12 projects for the garment and textile sector last year where MYR322.3 million ($77.35 million) – 75.2 per cent – came from foreign investors.. All these projects put together generated 1,850 jobs comprising skilled positions for continue to rise in 2018 based on the performance in the first engineers, quality controllers, and highly skilled half of the year. The Asian Development Bank (ADB) has also technicians. MIDA expects investments to sounded positive about a rise in FDI in general during 2018. n
EU apparel imports rise Bangladesh earns $1.13 by over 10 per cent billion from trousers he apparel imports of the European atest Otexa figures reveal, export of Bangladeshi-made Union’s apparel imports increased by cotton trousers fetched $1.13 billion in revenue during T10.70 per cent in July this year. Its apparel LJanuary-September 2018, a 9.31 per cent gain compared imports from January to July 2018 increased to the same period last year. Cotton trousers made up for 27 marginally by 0.06 per cent. During the period per cent of Bangladesh’s total apparel exports to the US in 2018. the value of China’s apparel exports to the EU
declined by 6.78 per cent. Unit prices this year too plunged by 1.60 per cent. Bangladesh’s apparel exports to the EU grew by 3.92 per cent year on year. The exports of Bangladesh’s apparel exports to the US, during the period, Turkey however remained stable despite the amounted to $4.16 billion, up 5.84 per cent from last year. The worst ever economic crisis it is facing and major garments exported were cotton trousers, cotton dress, knit managed to tap a 2.90 per cent growth in its blouse, slacks, cotton underwear and sweater. Export of slacks apparel shipments to the EU. India’s value of marked a significant rise, fetching over $59 million. This was apparel exports to the EU decline by 3.02 per an impressive 9.32 per cent gain from the $54 million during cent, while those of Vietnam increased by the period in 2017. On the other hand, export of woven shirts 24.4 per cent till July 2018. n declined. It fetched $41 million during this time, down 1.14 per cent from previous year. n
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Oct_shortstories.indd 4 30/11/2018 3:48:23 PM AppArel / Business Higher growth expected for US apparel and footwear brands he sales of apparel Nearly all rated companies and footwear are expected to show some Tcompanies are form of profit growth next expected to increase year as they realize benefits between 6 per cent from cost-saving initiatives, and 7 per cent this acquisition synergies, new year and between product introductions and 4 per cent and 5 targeted marketing as well as per cent in 2019. improved macroeconomic Their operating profit conditions. growth is expected to Many brands are focusing be in the range of 8 to on direct-to-consumer sales 9 per cent. channels as a driver of The positive outlook growth. This allows companies for the US apparel to more closely control brand and footwear industry messaging and the overall reflects faster-than-anticipated revenue and profit growth. shopping experience. n World manmade yarn exports Germany emerges as the top destination for Bangladesh’s down 36 per cent in Q2 apparel exports
ccording to the latest data released by Bangladesh Export Promotion Bureau Ashows, Germany has emerged the top destination of Bangladesh’s apparel exports to orld manmade yarn exports dropped 36.28 per cent the world in October 2018, followed closely by in the second quarter. Manmade filament yarn exports the United States. Wfell 32.25 per cent over the previous quarter and 24.50 Bangladesh earned $2.06 billion from per cent over the corresponding period of last year. Manmade exports to Germany during July-October staple fiber yarn exports witnessed a drop of 47.41 per cent 2018. This was a 19 per cent gain over the over the previous quarter and a 45.75 per cent drop over the $1.73 billion from the same period last year. corresponding period of the last year. Knitwear fetched $ 1.23 billion during this India’s manmade yarn exports grew 3.02 per cent in the period, a gain of 13 per cent gain. Woven items second quarter. Under total manmade fiber exports, India’s surged over 29 per cent, fetching over $834 synthetic filament yarn exports accounted for a share of 95 per million during this first fiscal quarter. cent. The US market, which once was top apparel Synthetic filament yarn exports from China grew 12.43 per export destination for Bangladesh, saw an cent over the previous quarter and 33.09 per cent over the impressive gain during the first quarter. The corresponding period last year. Turkey’s manmade yarn exports total apparel exports during this period fetched grew 3.91 per cent over the same period last year but from the $2 billion, marking a 31 per cent gain over last previous quarter there was a fall of 7.67 per cent. Mexico is the year’s $1.56 billion. n top export market for USA’s synthetic filament yarn. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 21
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British fashion industry braces up for Brexit and beyond nly seven months remain for the would remain a part of the customs union. Lim believes, whatever UK to formally exit the European happens, the price of a pair of jeans will, in all likeliness, go up OUnion, and the £28 billion fashion post Brexit. Tariffs, and an exodus of (European) shop staff, sector has to get three different looks ready for designers, warehouse staff, delivery drivers would all add up to future-proof business. As Richard Lim, Chief push up clothes prices in the UK. Executive of Retail Economics points out, the potential scenarios would include ‘Hard Brexit’, Focus on easing Brexit transition where designers, retailers and manufacturers Annually, the UK imports around £10 billion worth of have to pay to trade with the EU. This would clothes and shoes from Europe and more than 10,000 European mean clothing and footwear tariffs of about staff work in the British fashion industry. It has become a 11 per cent or just over £1 billion more each microcosm of UK’s struggle to deal with the referendum result. year. A second option includes free trade Katharine Hamnett sold thousands of ‘Cancel Brexit’ agreement and a third option believes the UK T-shirts and then went on to offer a new version: ‘Fashion
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Hates Brexit’ tees. While campaigning for a second referendum Hamnett also has a Plan B. She has set up her own Italian company, near Venice, ‘to handle production and logistics, so it doesn’t get snarled up in complicated Brexit red tape and import and export problems for its manufacturing and shipments’. Francis Card, Fashion Consultant and former Matchesfashion. com COO laments the fact that the industry knows little about the Brexit deal. Her sentiments are echoed by Clare Hornby of ME+EM, whose Breton T-shirts are loved by the Duchess of Cambridge. Photographer Nick Knight believes Britain and its communities will be considerably worse off both economically and culturally if they leave the EU. universities claim talent drain isn’t happening The devaluation of the Brexit-fuelled pound is surging yet. The London College of Fashion says its the number of Chinese, Arab and American fashion tourists proportion of EU applicants hasn’t dropped chucking cash at the West End’s fanciest tills. But to offset over the past year. rising foreign manufacturing costs, an influx of shoppers On the other hand there are people like needs to be balanced by an outflux of international talent from Liam Fox, International Trade Secretary, who the industry. José Neves, Founder of luxury online platform feel Brexit is ‘an unprecedented opportunity Farfetch, believes if Brexit jeopardises the presence of 25 to create a trading environment that delivers different nationalities in its London office, it’ll be a major loss.’ for our country, our businesses and our Many great British designers are European and proud of it’: citizens’. Brexit isn’t a wardrobe disaster Mary Katrantzou is Greek, Simone Rocha is Irish, Peter Pilotto for every London company in the fashion is Austrian-Italian. industry. The vote could help in the return of ‘Made in Britain’. Losing skilled workforce a matter of At the same time there is concern as a concern large number of designers, stitchers etc, are Another concern post Brexit is the talent drain. As Stephanie from mainland Europe. Also, UK apparel Phair, Chair British Fashion Council, points out ‘making sure makers need something to make their clothes young people from all around the world have access to creative from — as three quarters of materials used in education and skills to protect our home-grown talent pipeline’ the UK are imported. If there is no deal, UK is a post-Brexit priority. The BFC helps run the fashion arm manufacturers will be subject to a bewildering of the Home Office’s Tier 1 visa scheme, giving 2,000 top array of tariffs. designers from outside the EU fast-tracked visas. ‘In light of In short, experts worry London may lose Brexit, this is something that is incredibly important.’ However, its reputation as a global fashion capital. Last month, Superdry founder Julian Dunkerton, gave £1 million to the People’s Vote campaign for a second referendum. And as Card points out UK has come back from a major exodus of designers and top models at London Fashion Week around a decade ago — it was hard to do. Brexit’s potential loss cuts through all aspects of the industry: it’s a disaster for stores, businesses and carefully nurtured brands, and the freedom to move everything and everyone easily across borders. n
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Apparel_December_2018_Pages.indd 21 11/29/2018 10:06:20 PM AppArel / Trade Treaties US accuses India of flouting WTO norms for cotton subsidies he United States, in a recent filing to the WTO, has accused India of paying out far more in cotton subsidies than the TWorld Trade Organization allowed, with payments vastly in excess of what it had officially declared. The filing is the latest in a series of analyses of publicly available data that Washington has submitted to the WTO, each one setting out apparent breaches of WTO rules that are hiding in plain sight. Previous submissions have targeted China and Vietnam as well as India. support of $18 million, which was about Rs 1.2 According to the U.S. assessment of India’s market price billion, but the United States estimated that the support (MPS) for cotton, New Delhi was allowed to pay out correct figure to be around Rs 504 billion. up to 10 per cent of the value of production, but the actual In 2016/17, India had not notified any MPS, figure had ranged from 53 percent to 81 per cent since 2010. but the United States calculated the correct For the 2015/16 marketing year, India had notified market price value to be around Rs 557 billion. n
USTR revokes duty-free India asks China to concessions on 50 reduce tariffs Indian imports ndia has sought tariff concessions for its exports to China as the country has granted deep duty cuts to India’s competitors Iincluding Peru, Pakistan, Australia, South Korea and Asean countries in free trade agreements with them, which has displaced some of India’s exports. The products for which concessions have been sought include naphtha, bovine leather, shrimps, cotton yarn, frozen, shelled shrimps, broken he office of the United States Trade rice, fresh grapes, zinc, aluminium oxide and hydrocarbons like Representative (USTR) has revoked duty- paraxylene, polyethylene, polypropylene and benzene. Tfree concessions on import of at least 50 The Asia Pacific Trade Agreement is the only operational trade Indian products, mostly from the handloom pact linking India and China. South Korea, Bangladesh, Lao PDR and agriculture sectors. The federal register and Sri Lanka are also APTA notification mentioned 90 products that were members. so far subject to duty-free provisions under For instance, India’s the Generalised System of Preferences (GSP). exports of naphtha, a major These products may continue to be imported industrial fuel, to China are subject to regular most favored nation duty- subject to a 6 per cent duty rates, a news agency reported. with a 10 per cent margin In 2017, the duty-free export to the United of preference under APTA. States by India, the largest beneficiary of the This is the highest duty GSP, under the scheme was to the tune of for any of China’s FTA more than $5.6 billion.The list conveys that a partners as Asean countries large number of small and medium businesses pay zero, Australia 2.4 per could be impacted, in particular handloom and cent and South Korea 4.8 agricultural sector, the report said. per cent. India’s exports of frozen shrimp and prawns form a Products from Pakistan, Ecuador, Brazil, small share in the Chinese market due to the absence of tariff Thailand, Suriname, Turkey, the Philippines, concessions. Asean members face zero per cent tariff in the Argentina and Indonesia have also been Chinese market and thereby account for a six per cent share in removed from the GSP list. n that country’s imports of these products. n
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Oct_shortstories.indd 6 11/29/2018 9:57:07 PM AppArel / Trade Treaties deal takes effect 60 days after at least six TPP-11 to lower tariffs on countries complete the ratification process. Nicknamed the TPP-11, the agreement was agricultural and industrial goods earlier known as the Trans-Pacific Partnership he 11-nation Trans- but was formally renamed the Comprehensive Pacific Partnership and Progressive Agreement for Trans-Pacific T(TPP-11) free trade Partnership last year. agreement will lower Australia recently notified New Zealand that tariffs on agricultural it has ratified the agreement. Mexico, Japan, and industrial goods, Singapore, New Zealand and Canada had as well as unify rules for business. Tariffs on 99.9 per cent of already completed the procedures. Vietnam’s Japan’s industrial products and 98.5 per cent of its farm, forestry parliament is expected to approve the deal by and seafood products will eventually be abolished. Tariffs on mid-November.Once the trade pact comes agricultural products exported from Australia and New Zealand into force, a TPP committee of ministerial-level to Japan will also go down. officials from member states will meet and TPP-11 will be implemented on December 30, 2018. Six decide on needed steps for countries hoping legislatures of member states have ratified the pact. The trade to join, such as Thailand and the U.K. n RCEP to not be Sri Lanka to lose GSP access with regime change implemented by year end ri Lanka might lose its duty-free access to he Regional Comprehensive Economic Partnership, being the EU as the return of Mahinda Rajapaksa negotiated by 16 mostly Asian countries, is unlikely to be Sas Prime Minister could derail the progress Tsigned by year end. The RCEP negotiating countries include made toward national reconciliation. Under the ten ASEAN countries — Brunei, Cambodia, Indonesia, Laos, Generalised System of Preferences Plus status, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Sri Lanka’s top Vietnam — plus Australia, China, India, Japan, South Korea and exports of garments New Zealand. and fish get lucrative After OVER five years and 24 rounds of negotiations since concessions in May 2013, RCEP countries are still struggling to try and forge the world’s largest an agreement. Concluding the pact by year-end looks unlikely single market. due to differing levels of development among the countries Trade is the key to Sri Lanka’s economy and involved, as well as political factors including general elections the EU is its biggest export market, accounting next year in India and Australia. for nearly a third of exports in 2017. Sri Lanka India has issues in goods and services. It is of the view that there regained the GSP plus preferential treatment in are many issues that are yet to be resolved, including the extent 2017. Its exports to the EU have since jumped of commitments by 18 per cent. Sri Lanka had promised the EU India would take in 2016 that it would work toward reconciliation in opening up with Tamils, who mostly live in the north and its goods market east of the predominantly Buddhist nation. The and what it would country also pledged justice and reparations to get from other victims of human rights violations committed members in during the 26-year civil war. terms of increase The EU warning on trade is the strongest yet in mobility of from western powers. On the other hand, China, professionals. which has invested billions of dollars during Giving substantial concessions to members, especially China, Rajapaksa’s presidency, has called for non- could lead to protests from a large section of the Indian industry. interference and said Sri Lanka could tackle its Once concluded, the RCEP is likely to result in the largest free own problems. Sri Lanka’s garment industry is trade bloc in the world covering about 3.5 billion people and 30 its second biggest hard currency earner. n per cent of the world’s GDP. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | December 2018 / 25
Oct_shortstories.indd 7 11/29/2018 9:57:07 PM AppArel / Product Asia Pacific to be frontrunners in global knitwear market by 2026: Study s per a new study by Transparency Market Research titled ‘Knitwear AMarket – Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2018-26’ the global knitwear market is expected to expand at a CAGR of 5.3 per cent from 2018 to 2026 to be worth $817,402.7 million by 2026. Volume wise, the market is expected to expand at a CAGR of 5.0 per cent from 2018 to 2026 reach 26,208 million units in 2026. The market share of Asia Pacific in the global knitwear market is expected to increase during the forecast period.
L ow-cost Asia Pacific markets to lead Global knitwear brands such as Gap and Abercrombie & Fitch and major activewear brands such as Adidas AG and Nike continue to focus on research and development, design, logistics marketing and branding, and service to improve their position in the market. These brands outsource their manufacturing to low-cost Asia Pacific countries such as China, Bangladesh, and India. Adidas AG manufactured only 2 per cent of its apparels in US and only 1 per cent in Europe in 2017; outsourcing almost 97.0 per cent production China, Bangladesh, India, Pakistan, and other South Asian and to Asia Pacific. East Asian countries are major exporters of knitwear products Similarly, Nike manufactures all its apparels across the globe. through independent contract vendors. The Although, knitwear is still manufactured in Europe, its apparel contract factories in China, Vietnam, quantity has declined. The unit cost to manufacture knitwear is and Thailand manufactured 26.0 per cent, high in the UK due to high wages, yet British designers prefer 18.0 per cent, and 10 per cent, respectively to manufacture locally due to short lead time and flexibility in of the company’s total apparel production. minimum order quantity.
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Branded knitwear to see higher growth North America on the other hand, imports almost all of its knitwear products from Asia Pacific. Although R&D and designing of these is majorly done outside Asia Pacific, manufacturing is mostly done in China, India, Bangladesh, and Vietnam. The knitwear market in India is also rising due to a growth in the number of organised knitwear retailers selling branded knitwear products. Demand for branded knitwear is also rising in the Middle East. With approximately 62.0 per cent of its population being young and middle-aged, the region imports knitwear products worth US$ 3.5 billion annually. Knitwear exporters such as Bangladesh export knitwear to the UAE to increase its knitwear revenue. Cotton knitwear products are in demand in South American countries. There is a growing demand for cotton knitwear products in Brazil and other South American countries. In 2016-17, Brazil imported approximately $11.47 million of T-shirts, singlets and other vests made of cotton. Almost half of the knitwear imports in Brazil are from China. n
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Volatile prices, fabric-sourcing challenges big concern for India’s apparel sector abric sourcing, till a few years ago, Procurement of synthetic fabrics or yarns is more of a was one of the most challenging concern than cotton yarn or fabric. There are some yarns or Ftasks. But increasing options of blends that are not available in India, like Cashmere. Additionally fabric sourcing, advanced technologies and the man-made fiber sector attracts numerous duties which awareness about quality have improved the increases the cost of these fiber manufacturers. Local Indian conditions for fabric sourcing; though some producers then quote high and unexplained prices. Import challenges still prevail and industry continues duties on fabrics, is another cause of concern as it increases the to struggle with those issues. price of fabrics, especially linen and imported silk.
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Price volatility needs to be roped in Garment manufacturers using cotton fabric are almost helpless when it comes to price volatility as prices increase anytime without any strong and valid reason. Though in past 10 years, situation in sourcing of Indian fabric has improved, the main challenge of sourcing cotton and cotton blends yarn still exists like before. When prices of yarn increase, suppliers prefer to deliver it at current rate to gain extra profits though they are supposed to deliver it first to the buyer to whom he has already agreed upon earlier at lower prices. Such issues need to be addressed as they not only delay fabric development but also the overall efficiency of the business.
Fabric quality a bug bear As for quality, apart from good vendors, fair price, strong check, trial runs are being adopted by many apparel manufacturers. However, whenever there is a tilt towards cotton export, yarn manufacturers or suppliers increase prices without any reason. There is no way to control illogical price hiking. Some exporters see it as market dynamics and manage accordingly. Chinese or imported fabric quality is better. Most buyers approve Indian fabric as there is no other viable option and prices of Indian fabrics are a little lower. Therefore, Indian companies need to adopt similar advanced infrastructure like China. n
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Apparel_December_2018_Pages.indd 25 11/29/2018 10:06:22 PM AppArel / Cotton World cotton production to decline this year lobal production of cotton is expected to decrease in 2018-19. Although Brazil and West Africa are expected Gto see an uptick in planted area, these are unlikely to be significant enough to offset losses in Australia, China, India and the United States. The global stocks declined by 22 per cent from 2014-15. The trend is expected to continue next year, with the projected 6 per cent decrease further eroding stocks. Total ending stocks downward to 27.5 million tonne. Demand for in China are expected to drop to 8.2 million tonne, representing Indian cotton is robust from China as a trade the lowest levels since 2011-12. China’s stocks-to-use ratio also war is prompting the world’s top consumer to continues its decline, falling to 93 per cent for the first time since avoid imports from the United States. 2011-12. Outside of China, cotton stocks increased for the third Indian cotton prices are ruling 10 per cent lower season in a row, surpassing 10 million tonne. than international prices. The minimum support Due to uncertainties in the world economy and trading market, price is up 26 to 28 per cent, notwithstanding the global consumption forecast for 2018-19 has been revised favorable monsoon conditions. n Global organic cotton ICF estimates cotton increases by 10% production to be over 370 lobal organic cotton output rose by 10 per cent in FY 2016-17. The largest lakh bales in 2018-19 Gvolumes came from India, China, Turkey and Kyrgyzstan. While organic still he Indian Cotton occupies less than 1 per cent of global cotton Federation (ICF) production, many countries have growth in Thas estimated the double-digits. cotton crop for 2018- A huge area of cotton-growing land is in 19 in the country to transition to organic. About 80 per cent of be 373 lakh bales this transition is taking place in India, with the of 170 kg a bale. remainder stemming primarily from Pakistan, Production in the China, Tanzania, and Turkey. north zone including However, after hitting a production peak in Punjab, Haryana and the 2009-10 season, the sector failed to kick Rajasthan is expected in, and it has been pretty much downhill all to be 61 lakh, the central zone, 200 lakh bales (Gujarat, the way since then, while other certification Maharasthra, and Madhya Pradesh), and the south zone 107 schemes such as BCI cotton have flourished. lakh bales. Production from the entire country is expected to While organic cotton undoubtedly has be 373 lakh bales and imports might be 18 lakh bales. The positive connotations with consumers, it is provisional estimate for consumption is 320 lakh bales. more expensive to grow with more variable Without an official crop estimate, there were uncertainties yields, making it much more difficult to get to about the cotton crop situation. There were also reports of a market at a profitable price point. Organic cotton lower crop. The uncertainties were leading to hardships for is not necessarily economically viable. There cotton trade and the textile mills. According to a study by the is no disputing the fact that the organic cotton Federation, the average crop size in the last 12 years in the market has struggled to maintain any significant country is 377 lakh bales. The average of the worst year is 348 momentum in recent years. Indeed, it often feels lakh bales. For the cotton year 2018-19, around five lakh packets like a case of two steps forward, three steps of cotton seeds are sold. back. Cotton’s share in fiber use has dropped Except for a few pockets in Karnataka, Maharashtra, and from 50 per cent to just over 30 per cent. n Gujarat, all the cotton growing areas have received sufficient rain. So, the cotton production this year should be higher. n
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Oct_shortstories.indd 8 11/29/2018 9:57:08 PM AppArel / Import Bangladesh apparel exports to India increase angladesh’s apparel exports to India increased by 167 per cent in October B2018. For Q1 the country’s apparel exports to India were $187 million. During this period woven garment exports to India increased by 300 per cent from the same period last year. This remarkable surge in exports to India can be attributed to foreign brands’ and retailers’ opening up a number of outlets and stores in India – which, in turn, have been sourcing heavily from Bangladesh. Foreign retailers buy a lot of garment items from Bangladesh for Indian customers, especially for the rising middle class. Last fiscal, apparel exports to the country from Bangladesh witnessed a 100 per grew by 69 per cent compared to the corresponding period of cent gain – a trend which is still continuing. the previous year. Woven apparel imports grew by 51 per cent India’s imports of readymade garments compared to the same period of 2016. from Bangladesh during July-November 2017 GST has led to a flood of textile imports from Bangladesh to increased by 56 per cent compared to the India. The main reason is the exemption of basic customs duty same period last year. Knitted apparel imports on imports of garments from Bangladesh. n German raw material imports decline by 9% he import of raw materials by Germany increased proceeds by 3.1 per cent above 2017. declined by 9.4 per cent in August as its textile Germany has overtaken the United States and become the largest Tproduction sank by 3.3 per cent. Clothing export market for Bangladesh’s readymade garments. Due to strong production in the country fell by 3 per cent. While economic activities in Europe, especially in Germany, and preferential textile production price increased by 0.9 per cent, treatment received by Bangladeshi exporters, Europe’s largest clothing production price increased by 0.7 per cent. economy has become the largest market for Bangladeshi garment Order intake in the country increased steadily in products. Bangladesh’s readymade garment exports to Germany August by 0.1 per cent above July. Clothing had a grew by 8.65 per cent in fiscal 2018 against a growth of 2.84 per cent 13.1 per cent lower order intake. German retail has in the US market. n
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Eyeing US, EU markets, Tirupur knitwear makers set up units abroad ndia’s largest knitwear manufacturing the sector for decades, opened factories in Ethiopia. hub, which faced the brunt of Idemonetisation and GST, is in doldrums Easy market access, cheap labour lure as many manufacturers are shifting their units Tirupur makers from Tirupur to countries like Ethiopia and Sri There are many reasons why so many Tirupur manufacturers Lanka that provide free access to markets like are opening units abroad. Cheap labor, free market access to the the US and EU. These countries offer excellent EU and US, readily available infrastructure and absence of red- infrastructure to young entrepreneurs. They also tape. The Indian industry, which was growing at over 10 per cent offer a geographical advantage over others as the every year, has been reporting a 7 per cent dip since 2011, resulting flying time from Coimbatore to Colombo is just in loss of a whopping Rs 2,000 crore ($0.27billion). Exports, 70 minutes. In the past six months, four well- valued at Rs 26,000 crore ($3.54 billion) in 2016-17, declined to Rs known garment manufacturers, who excelled in 24,000 crore ($3.27 billion) in 2017-18 and domestic sales stood at
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US – thus attracting most of the buyers. The labor cost in Tirupur is $150 to $200 (between Rs 11,000 to Rs 15,000) a week, while it is just $75 (Rs 6,000) in Ethiopia. Secondly, in India, separate labor is hired for stitching, around Rs 18,000 crore($2.45 billion). packing, etc. Foreign countries, however, train India does not offer a free market access to EU and the US, their labor to multi-task, saving much more on which puts manufacturers in Tirupur at a disadvantageous position the cost involved. since entry tax is levied once goods reach the destination countries. Bangladesh and Sri Lanka, on the other hand, offer free access to Ready infrastructure makes the EU; Ethiopia also offers free access to both the EU and the it easy to move The Ethiopian government keeps its infrastructure ready for garment manufacturers – all they have to do is to go with their machines, hire employees, train them and their factory is up and running. This plug and play model attracts manufacturers as they don’t have to go through the hassle of looking for land, constructing a building and get permissions. Everything is done by the government; all they have to do is to start our operations For example, R Rajkumar, Managing Director, Best Corporation, which launched operations in Hawassa, Ethiopia a couple of months ago, operates 500 machines in the country in two shifts. The company plans to increase capacity to 2,000 machines gradually. Similarly, Santex Inc, which was also lured by the free market access that Sri Lanka offers to the EU, has opened a factory near Kandy in the country. n
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With rising costs in China, Mexico, Turkey emerge strong sourcing destinations McKinsey study reveals, western rise has resulted in some nearshore countries becoming cheaper brands are finding it easier to than China. For instance, making a pair of jeans in Mexico and Aproduce in low-cost countries due importing it into the US costs about 12 per cent lesser. And for to rising costs in China. US-based brands a company looking to import its jeans into Germany, Turkey is find it easy to source from Mexico and for 3 per cent cheaper than China. brands selling in Europe, Turkey is a prime Although producing the same pair of jeans cost and around 20 manufacturing destination. per cent less in Bangladesh; Turkey and Mexico are preferred due to their shorter delivery times from those countries. The shorter lead Nearshoring the new trend times yield a number of benefits, creating an added economic bonus. The McKinsey study suggests, labor costs in China in 2005, were about one-tenth of the Innovations speed up deliveries US, but now it’s about one-third. This sharp Fashion companies are embracing new technologies
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Apparel_December_2018_Pages.indd 28 11/29/2018 10:06:23 PM AppArel / SOURCING with automation and import them into the US, the final cost ends up being around $11.40. But to produce them in Mexico with automation and import them into the US, the cost would be about $10, plus the assorted benefits of the shorter lead time, too. However, experts agree that even though these changes are happening they are likely to take a long time. China has built up a manufacturing infrastructure and capacity that other countries just can’t match. Some brands are already moving a share of production to nearby countries, but a large-scale shift might not be possible until those countries are able to build up factories to handle the workload. The vast majority of this to speed up deliveries. McKinsey assumed a hypothetical work currently happens in Asia, particularly in scenario where all major technologies currently in development China, especially in the case of any specialised were implemented, and worked with a university in Aachen, fabrics. Companies may assemble finished Germany, and the Digital Capability Center Aachen to calculate garments in Mexico or Turkey, but they buy the cost savings in time and labor for producing a pair of jeans. and import all their materials from much Based on their calculations, to produce the jeans in China further overseas. With shipping costs and duties rising, many Western brands are likely to keep their production in Asia. Clothing and footwear brands are being pushed to look outside China and nearer to home for manufacturing. In a highly competitive market that’s splitting ever more into winners and losers, a fast, flexible supply chain is increasingly an advantage. It allows brands to respond better to the needs and wants of today’s demanding, internet-enabled shoppers, and that’s why brands including Nike, Adidas, Levi’s are changing the way they make their products—and investing in things like automation and moving production nearshore. Ultimately, it’s not so much a question of whether garment production will move away from China and closer to Western markets, rather it will be how much of the supply chain will be rerouted, and when. n
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China still remains the global textile leader
hough the fast-paced recovery of half of 2018, the US-China relationship posed great challenges. the global economy and increased As latest statistics from General Administration of Customs of Tdomestic demand led to a strong China indicate, Chinese textile and apparel exports in the first growth in Chinese textile industry in the first half of this year amounted to $127.524 billion representing a year-on-year growth of only 3.24 per cent. Exports of textile yarns, fabrics and end products, in particular, amounted to $58.332 billion, a YOY growth of 10.28 per cent, while export of garments and accessories decreased 2.03 per cent YOY.
Domestic market sees good growth China’s domestic textile and apparel market continued to grow at a fast pace with both physical stores and e-commerce channels registering high level of sales. As the country’s National Bureau of Statistics indicate, the sale of clothing, shoes, hats and knitting products from January to May 2018 increased by 9.1 per cent over the same period last year. Meanwhile, e-commerce channels continued to maintain rapid growth. The sales of clothing on these channels from January to May
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increased by 24.9 per cent YOY, representing a higher growth of this year amounted to rate when compared with the same period in the previous year. $127.524 billion representing As per latest statistics from the Office of Textiles and a year-on-year growth of Apparel US, China’s textile and apparel exports to the US totaled $38.74 billion in 2017, of which apparel exports was only 3.24 per cent. Exports $27.03 billion and textiles and finished product exports was of textile yarns, fabrics and $11.71 billion. end products, in particular, From July 2018, the US imposed 25 per cent tariffs on amounted to $58.332 billion, Chinese products worth $36 billion. China took counter measures. Meanwhile, the Office of the United States Trade a YOY growth of 10.28 Representative (USTR) further announced 25 per cent tariffs per cent, while export of on another list of Chinese imported products worth $16 billion garments and accessories on August 7. The Customs Tariff Commission of the State Council of China responded by imposing an extra 25 per cent decreased 2.03 per cent YOY tariff on US imported products also worth $16 billion. An extra 10 per cent tariff on $200 billion worth of Chinese years. At the same time, China’s latest tariff imported products was announced by the USTR recently. This imposition on US imports led to many list of over 5,000 products includes textile related products, such Chinese textile enterprises and traders shifting as textile raw materials, yarns, fabrics, carpets, technical textiles, their sourcing to other countries. leather, etc. As per CNTAC, the value of annual exports to the The foundation for the development US amounts to about $4 billion. of Chinese textile industry in 2018 remains strong. To achieve this growth, the industry Shift in global supply chain needs to upgrade production technologies A recent survey by the US Fashion Industry Association and product quality, grasp the opportunities indicates that nearly 70 per cent of fashion industry executives of the Belt and Road Initiative and transform plan to restructure sourcing from China over the next two into the world’s true textile industry leader. n
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Apparel_December_2018_Pages.indd 31 11/29/2018 10:06:24 PM AppArel / PRODUCT FOCUS Yoga pants attract the attention of biggest athleisure companies; boost innovations ntroduced by Lululemon in 1998, yoga pants have conquered the wardrobes of Ithose who, in their entire lifetime, have never been near a yoga studio. These pants today form a part of daily office wear in the US. The first pair of yoga pants was a mix of nylon and Lycra. Made of synthetic elastic fibers, they provided the stretch and softness needed to manage all those sweat-inducing contortions during a lengthy session on the mat.
New fabrics focus on consumer comfort The popularity of yoga pants predictably led to the evolution of new fabrics. Lululemon Athletica , a brand credited with introducing stretchy pants, is developing new fabrics for Yoga Pants. Its original fabric, Luon, with a high proportion of nylon microfibre was trademarked in the US in 2005. Many of its newer fabrics are branded and geared toward specific uses. Luxtreme is a moisture-wicking, four-way stretch fabric that fits like a second skin. Nulux is a compression fabric meant for sweatier workouts. Silverescent is sold as Lululemon’s ‘stink-conquering technology,’ that uses silver bonded to the surface of fibers to stop bacteria from reproducing. A T-shirt made from the material costs $68. Leggings from market competitors promote versatile pants through branded fabric combinations. For Adidas, pants boast fabrics like its sweat-wicking Climalite material or the thermal-regulating Climacool and Climawarm to accommodate training conditions. Likewise, Nike’s Dri-Fit material
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keeps sweat at bay and trainers dry. Even Target’s C9-branded fitness collection flexes high-functioning fabrics: Freedom Fabric is a soft blend of polyester and spandex for lifestyle or fitness, while its Embrace Fabric hugs tight to the body for a cozy feel. Tucked away in the basement of its Vancouver headquarters is a lab called Whitespace, the retailer’s research and development skunkworks. It made yoga pants with repurposed yarn combinations normally used in lingerie.
Brands invest in women’swear lines The biggest businesses now in the athletic wear space have invested heavily in growing their women’swear lines — especially in developing new fabrics and features for the once-simple yoga pant. That same year, Adidas AG began directing its youth brand, Neo, toward younger women. The German sports giant even brought on former Lululemon Chief Executive Officer Christine Day as a strategic adviser. Adidas quickly became a formidable threat to Lululemon’s dominance. Early steps turned into exclusive designs for women through the PureBoost X line, leading to an even larger emphasis on active tops and bottoms, using technology called Climachill and Techfit, both focused on women’s training. Last year, women’s sales for Adidas grew by 28 percent, making it one of the company’s strongest segments. According to Marshal Cohen, NPD Group Analyst, active bottoms and leggings are now a $1 billion industry. Their appeal to consumers has yielded rapid sales growth that shows no sign of going. While Lululemon found success with women consumers by providing a niche product that could satisfy casual and active uses, major brands such as Adidas and Nike completed the picture, confirming just how strong the athleisure trend could be. n
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Global denim sales to be driven by sustainability initiatives, new trends
lobal denim industry is seeing good launches. They have so far stocked 42 per cent more denim growth as a recent study by P&S products than last year. As a result, both manufacturers and GMarket Research indicates, global designers are betting on denim’s revival. jeans sales reached $40 billion in 2016, and is Levi Strauss & Co in 2017 posted an 8 per cent growth expected to exceed $87 billion by 2023. Data with a significant revamp of its women’s jeans line. This is the from Edited suggests retailers have started to jeans maker’s strongest annual growth since 2011. Similarly, refocus on their denim collections with new street wear brands Off-White and Vetements garnered a lot
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of attention for the washes on their reworked denim and patchwork styles respectively, while mass-market labels like American Eagle Outfitters set a record for volume last Fall, in an effort to lure teens into stores by providing a range of different silhouettes and washes, from ripped high-waisted ‘jeggings’ to indigo mom jeans. and comfort stretch street clothing overtook Acsia-Pa ific fastest growth market the denim industry but post this luxury and Driven by digitisation within the apparel industry, mass markets witnessed a huge upswing. advancement in new denim knitting technologies, growth in To lower the cost of mass market, various investment in clothing and increasing adoption of luxurious denim manufacturers are experimenting and casual garments by all segments of the society, Asia-Pacific with new materials, replacing cotton with is witnessing the fastest growth in denim sales. nylon, polyester, aramid, and other spun Over dominance of comfort clothing over the past decade thermoplastic variations. led to growth stagnancy of classic jeans. The segment did not witness any major innovations during this period. Short-lived New denim styles drive up trends such as cropped and frayed hemlines, flared bottoms demand and ’80s throwbacks did uplift the gloom for a brief period but Driven by new trends and eager shoppers, could not bring back the reign enjoyed by the skinny jean style. the denim market soared through the early Meanwhile, for a brief period from 2015 to 2016, athleisure months of 2018. Skinny jeans represented 58 per cent of women’s jeans with other styles such as wide leg and flare bottom, frayed details, silhouettes such as cropped hems, culottes, mom jeans, and wide styles also gaining momentum In addition to this, silhouettes such as cropped hems, culottes, wide leg and flare bottom styles, frayed details and black and white colors are the most in-demand denim styles today with brands like Madewell and Everlane refocusing their attention on them. Madewell, witnessed record sales both in stores and online last quarter, and continues to report double-digit increase in comparative store sales, thanks to its jeans category. With sustainability being the centre of conversation in fashion and apparel industry, Levi’s launched its F.L.X. technology– a laser- powered process that allows consumers to customise a unique distressed finish on their jeans. By giving consumers the opportunity to personalise their designs, laser distressing could be used as a means to create thousands of finishes currently being achieved through laborious traditional methods like sanding. n
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AEPC Bangalore Seminar on “Strategies for Financial Risk Management for Apparel Sector” AEPC Bangalore organises seminar on Strategies for Financial Risk Management for Apparel Sector EPC Bangalore organised a seminar Edelweiss Finance and National Stock Exchange. on “Strategies for Financial Risk Jagadish N Hinduja, EC Member, AEPC delivered a special AManagement for Apparel Sector” address and appreciated the efforts made by AEPC and suggested on November 30, 2018. The seminar that the council should continue to organise such seminars and was organised in collaboration with M/s. workshops for the benefit of the apparel industry. n
Mr. Jagadish N Hinduja, EC Member, AEPC gave special address in the Seminar
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Apparel_December_2018_Pages.indd 38 11/29/2018 10:06:32 PM AppArel / Compliance Accord severs ties with 532 garment companies ccord has severed business ties with 532 garment factories for their alleged Apoor progress in remediation. Some of these factories are big and compliant, owned by the leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) The Accord on Fire and Building Safety in Bangladesh, the platform of more than 200 mostly European-based retailers formed to design a safe and healthy garment industry in the country, is due to leave Bangladesh resistance from the government and factory owners. on November 30 after five and a half years. By then, if the 532 factories do not complete their remediation Although the platform has been trying to works they would become ineligible to supply to the Accord’s extend its tenure for three more years to see over 200 signatory brands. The owners of these factories have through the remediation works in the factories already spent Tk 5 crore to Tk 30 crore for inspection and it has inspected. But it has been met with remediation of a factory. n
UK retailers pledge to stop EU restricts use of 33 slavery in textile trade textile chemicals ased on recommendations by the European Chemicals Agency and Bfollowing broad consultations with stakeholders, the European Union (EU) has restricted the use of 33 hazardous substances in clothing, footwear and other textile articles. This will protect the health of European citizens by limiting their exposure to CMR chemicals—substances classified as carcinogenic, mutagenic and op retailers in the UK like John Lewis, Marks &Spencer and toxic for reproduction—that Next have agreed to support moves to stop modern slavery may be “particularly harmful” Tin textile trade. The retailers will raise awareness to prevent when in frequent contact with slavery, protect vulnerable workers and help bring more criminals human skin. to justice. Businesses in the UK with a turnover of more than The EC had originally £36 million have to publish annual statements setting out what considered 286 substances, they are doing to stop modern slavery. But fewer than two in three which textile-trade groups have complied. Anti-slavery operations are at an all-time high in such as the European Apparel and Textile the country. More than 920 live investigations were conducted Federation, Independent Retail Europe and the by the police in September, in excess of 2,000 victims. International Wool Textile Organisation balked In October thousands of businesses were warned they could against in 2016, calling the expansive scope of face action if they failed to meet legal obligations. The UK has the proposal “deeply concerning” and “likely pledged £40 million to aid more than 500,000 people around to have a negative economic impact.”The the world who have either survived modern slavery or are at new rules have been incorporated into REACH risk of becoming victims. The support will address slavery and (Registration, Evaluation and Authorisation of trafficking in countries with a high prevalence of these crimes in Chemicals) legislation. n South Asia. n
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Future retail spaces to offer high-touch, seamless experience: WSGN study WGSN study reveals, emerging offer technology-led experience that will also meet the high attitudes around age, gender and expectations around service, personalisation and convenience. Adisability is likely to shape the future of retail space. Designing for sustainability Format stores will be in trend will be the key as consumers are becoming As selling space is shrinks, more retailers will opt for small increasingly aware of the damage they are format stores. These stores allow greater experimentation with causing to the environment. Retailers will flexible merchandising and tightly-curated edits. IKEA for
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Apparel_December_2018_Pages.indd 40 11/29/2018 10:06:32 PM AppArel / Retail space to product care, with stores like Selfridges and Harvey Nichols incorporating bag repair clinics into their London flagship example, is experimenting with compact stores in Southeast Asia, stores, while Saks Fifth Avenue hosts a space opening a 28, 000 sq ft store in Phuket, Thailand. The retailer in its men’s department for footwear repair aims to make smaller investments so it can respond better to service, The Leather Spa. demand and be able to open stores in crowded city centres. Since space on the sales floor is limited, fitting rooms are being Launderettes gaining stocked with behind-the-scenes operating system that pulls items popularity from the stockroom. Similarly, strategies like interstitial fixtures in Branded launderettes are on the rise, corridors, queue areas and corners are gaining importance, along extending brand reach across all aspects of with space-saving ideas such as clever ceiling or wall installations, the product journey. Denim label Denham or displays worked into niches and panels. already offers in-store washing services, while fashion-focused boutique launderettes such Wholesome shopping experience the as Celcious in Brooklyn, offer an energy- new order efficient and sustainable approach to washing Retailers are developing stores around changing consumer clothes. Sportswear retailers and activewear attitudes, with spaces and experiences that encourage a mental brands are incorporating in-store sneaker or physical reset. Lululemon is introducing meditation space at washing services, as Nike has done at its its new store near Rockefeller Centre in New York. The concept Moscow flagship, or partner with bonafide store features cushioned “Zen pods” where visitors can listen to sneaker care companies such as Crep Protect one of 12 self-guided meditation recordings. The US brand has or Jason Markk, which in March 2018 opened just opened a pop-up experiential space in New York called Life a stand-alone store in London. Coach, dedicated to self-improvement. Visitors can book in for A shift towards deliberately simple and free sessions with tarot card readers, astrologists and mystics, or pared back store design has emerged, putting play games and partake in activities that encourage self-expression. the focus purely on the product. Expect this trend to develop with a more extreme move Sustainability to agenda towards completely unbranded spaces, in Gen Z and millennials want to preserve their items for long, which retailers aim to reduce unnecessary noise, and are willing to pay to keep them in good condition. This is stripping stores of branding and marketing driving new aftercare and product preservation strategies, such tools in order to create a soothing, clutter- free as specialist sneaker cleaning, bag and shoe repair services and environment that puts the consumer in charge. in-store laundries. These services help brands to connect more This is changing the relationship that people meaningfully with customers beyond the initial transaction have with product – with choice being driven and encourage repeat store visits, as well as build sustainable by the product’s attributes rather than the credentials. Department store retailers are dedicating floor branding around them. n
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Rising shopping frequency causes dissatisfaction among online consumers s per 2018 Pitney Bowes Global Higher shopping frequency leads to Ecommerce Study, 61 per cent of dissatisfaction Aonline retailers and marketplaces, Though nearly 94 per cent of global consumers shop online; who had prepared for record volumes of the frequency with which these do so accelerates. Globally, orders this holiday season, were disappointed 35 per cent of online shoppers shop at least once a week. by their experience during last holiday season. In India, 68 per cent of online shoppers purchase from a Consumers cited post-purchase experiences, marketplace as opposed to a shopping with an online brand. including items arriving late, expensive Increase in shopping frequency, however, contributes to a shipping, tracking inaccuracies, confusing rise in consumer dissatisfaction. Individual consumers spend returns policies, and lost or incorrect items as more time shopping online and waiting for products, creating reasons for their dissatisfaction. a greater probability for a bad experience. As volumes rise,
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retailers struggle to keep up with demand in terms of physical infrastructure and the technology to manage it effectively.
A toggle between ‘free and fast’ The study states, consumers’ judge their post-purchase experience even before placing orders. At the same time, they demand ‘fast and free’ service with only 47 per cent considering Marketplaces continue to soak up 60 per two-day free shipping as fast. Consumers rank ‘free shipping’ cent of online purchases reveals the study. as more important than ‘fast shipping’. Globally, 76 per cent This also offers an opportunity to retailers to consumers prefer ‘free’ over ‘fast’. In India, 56 per cent of invest in their brand and delight consumers consumers prefer free shipping over faster delivery. throughout the shopping and post-purchase The study also reveals, 90 per cent online shoppers in the US experience. Around 61 per cent of online take some action in response to a bad post-purchase experience. shopping occurs when the consumer knows Their reactions range from sharing their frustrations on social specifically what brand and product they’re media to never purchasing from the offending site again. looking to buy. In these cases, more than half Among millennials, 30 per cent talk about their poor experience prefer to buy from a retailer website over an in an online review or social media post, potentially affecting online marketplace. the buying decisions of their entire social networks. The US, China, and Japan are the only Successful high-growth retailers place a greater emphasis on countries where the number of cross-border the post-purchase consumer experience than their slower growth shippers increased in 2018. Shoppers who competitors. This includes providing services like free returns shop cross-border do so more frequently and day-definite guaranteed delivery. Around 54 per cent of high- leading to the growth in market. Globally, growth retailers offer two-three-day free shipping, while 60 per 12 per cent engage in cross border shopping cent of low-growth retailers offer four-seven-day free shipping. at least weekly, up from 10 per cent in 2017. n
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Apparel_December_2018_Pages.indd 43 11/29/2018 10:06:33 PM AppArel / CoMPLIANCE
Fashion industry responsible for 10 per cent of global carbon emissions he State of Fashion report 2018 if the sector fails to adopt sustainable initiatives, its emissions released by McKinsey & Company are likely to rise by more than 60 per cent by 2030. Treveals, the ecological impact and As far as carbon footprints are concerned, manufacturing carbon footprint of fast fashion industry, hubs China and India are the two major culprits. More than remains a cause of concern even though the 60 per cent of textiles are used in the garment industry and industry has become more environmentally a large proportion of clothes are manufactured in China responsible and sustainable. and India, countries which rely on coal-fuelled power plants, increasing the footprint of each garment. Textile emissions on the rise Production of polyester and cotton, two most commonly The journal Natural Climate Change used fabrics in the industry, has a considerable impact on the highlights the total greenhouse gas emissions environment. The production of polyester results in more from textile production stand at 1.2 billion emissions since the material is produced from fossil fuels ton annually as of now. The fashion industry such as crude oil. As per estimates, 262 per cent more CO2 is responsible for 10 per cent of the global is emitted to produce a single polyester T-shirt than a cotton carbon emissions and, according to UNFCCC, shirt. Therefore, as the Pulse of the Fashion Report 2018
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Apparel_December_2018_Pages.indd 44 11/29/2018 10:06:33 PM AppArel / CoMPLIANCE use, less than 1 per cent of the material used to produce clothing is recycled into new clothing. An estimated $500 billion worth is suggests substituting polyester with its recyclable counterpart lost every year due to this take-make-dispose is advisable. This not only reduces the toxic substances by model. If nothing changes, by 2050, the 90 per cent, but also energy usage by 60 per cent and emissions fashion industry could use more than 26 per by 40 per cent. cent of carbon budget associated with a 2C pathway, warns Ellen MacArthur Foundation. Garment longevity and carbon But, it is possible to reduce the industry’s emissions GHG emissions, says Ellen MacArthur The average number of times a garment is worn before Foundation. The foundation advises doubling being discarded is 36 per cent compared to 15 years ago. After the number of times a garment is worn. This would reduce GHG emissions by 44 per cent. Using low-carbon materials and production processes (including renewable energy and energy-efficiency measures) would further reduce the GHG emissions of a new system.
An alliance to promote sustainability Recently 10 UN nations came together to establish the UN Alliance on Sustainable Fashion which will be launched in March 2019. This alliance will target the private sector, governments of UN member states, NGOs and other relevant stakeholders to make sustainability the next fashion trend. n
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Apparel_December_2018_Pages.indd 45 11/29/2018 10:06:33 PM AppArel / Sustainability CITI evaluation report ranks Levi’s as the world’s top apparel brand ccording to the fifth version of the Green procurement on a greater scale. In all, 306 brands Supply Chain CITI (Corporate Information were ranked, 76 in the textile and apparel sectors. ATransparency Index) evaluation report, The latest report indicates a huge spike in the published by Institute of Public and Environmental number of apparel brands that use the IPE’s Affairs (IPE ), Levi’s has been ranked as the world’s database to screen their Chinese suppliers for top ranked apparel brand. The next best placed environmental compliance and push them to apparel brands include C&A, followed by Nike, disclose information. Primark, H&M, Inditex and Target. The report The report also shows that 10 apparel retailers indicates that the apparel industry is pressing have now joined the IPE Green Supply Chain Map, suppliers in Asia harder to disclose information the only tool in the world to openly link leading on textile pollution. multinational corporations to their suppliers’ The report aims to use environmental big environmental performance. These ten brands data to generate solutions to help leading include Adidas, Esprit, Gap, Inditex, Levi’s, New multinational and local brands develop green Balance, Nike, Puma, Target and Tesco. n ZDHC program gets Higg Facility Modules to address seven new members value chain inefficiencies even new companies have joined the eleased by Sustainable Apparel Coalition (SAC), the 2018 ZDHC Roadmap to Zero Program. UK Higg Facility Modules on Higg.org aims to address value Sonline fashion company, Asos recently Rchain inefficiencies, resolve damaging practices, and joined as a signatory brand. Other new achieve the environmental and social transparency consumers members of the program include Bangladeshi are demanding. denim business, Denim Expert, Chinese Factories can use the updated Higg Facility Environmental viscose business, Sateri, Indian chemicals Module (Higg business, Meghmani Dyes and Intermediates FEM) and the LLP, Indian apparel business Eastman Exports Higg Facility Global Clothing and Sustainable Textile Social & Labor Solutions (STS). Module (Higg These companies FSLM), which will adopt the ZDHC is accessible tools, such as the online for the ZDHC Manufacturing first time, to evaluate value chain sustainability performance. Restricted Substances The Higg FEM assessment measures factories’ environmental List (ZDHC MRSL) and the ZDHC Wastewater management systems, energy use and greenhouse gas Guidelines, and implement them into their value emissions, water use, wastewater, emissions to air, waste chains. With the additional organisations, the management, and chemical use and management. The new total number of ZDHC Contributors is 116. web-based Higg FSLM introduces the industry’s first standardised The program aims to implement sustainable self-assessment for measuring factories’ social and labor chemistry, drive innovations and best practices in performance. textile, apparel and footwear industries to protect Informed by the Social and Labor Convergence Project, the consumers, workers and the environment. The SAC developed the Higg FSLM to evaluate recruitment and ZDHC is an industry collaboration of brands, hiring practices, working hours, wages and benefits, employee value chain partners and associates aimed at health and safety, and community engagement, among other driving the textile and apparel industries towards areas. The SAC is working towards accreditation as a host of the more sustainable chemistry. n converged assessment and will release a scored version of Higg FSLM at the end of 2019. n
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Oct_shortstories.indd 11 11/29/2018 9:57:11 PM AppArel / Sustainability PHMA urges govt to demand duty free access to Chinese markets akistan Hosiery Manufacturers & Exporters Association’s (PHMA) has urged the PGovernment of Pakistan to demand duty free access to Chinese to allow imports of finished fabric under DTRE and stitching machinery and after conversion of this finished fabric into garments, Pakistan will export these value added garments to China with zero per cent duty at par with ASEAN countries. Pakistan can achieve a milestone in value added textile exports in view of China’s import of value added textile Items to the tune of $7,000 million. However, Pakistan exports to China amounted to only $100 million. n A new approach needed Brands find selling for textile recycling eco-friendly products difficult rands that haven’t woven sustainability into the fabric of what they do are finding Bthemselves hard-pressed to get consumers to pay up for a more eco-friendly product. Geetanjali Woollens has been recycling post- consumer clothing for 40 years. The company gathers post-consumer apparel from waste
ecycling of blended fabrics is a major challenge that the industry faces today as the various fabric components need Rto be separated. The process requires extensive investment as recycling technologies enabling recycled materials need to be developed to become as profitable as new ones. A new approach needs to be adopted right from the beginning of the process. Choosing designs wisely can reduce the environmental collectors in the US, Europe, Australia and impact of clothes, and improve their circularity. Each garment Japan, sorts it by fiber composition, then sorts is likely to generate between 20 per cent and 30 per cent of it again by color. Each color gets shredded fabric offcuts. into fiber, spun into yarn and finds its way into For example, only 30 per cent of a pair of jeans can be sweaters, accessories, beanies and socks— recycled, due to the stitching and rivets. Single material fabrics each produced without dyes and chemicals, and would make recycling easier. Using sustainable materials right substantially less water. from the start of the process would also go in the same direction. The brand finds that retailers take in just a Downstream marketing strategies engage end consumers, fraction of the nearly 25,000 kg of clothing that allowing them to co-design products that meet their tastes and it recycles every day. This is not sustainable as expectations and increase their loyalty, and actually extend the the company has to pay its workers and bills. n life cycle of garments. n
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Oct_shortstories.indd 12 11/29/2018 9:57:12 PM AppArel / Skilling
Focus on skills development must for apparel industry growth
rowing consumer needs are the lack of skilled workers. There is high dissatisfaction with pressurising retailers and the content and modes of training provided. Furthermore, the Gmanufacturers to deliver products investment provided for the training is not adequate. faster, cheaper through transparent and sustainable supply chains. Consequently, Scope for career development a must organisations across the value chain are facing A recent survey reveals, one of the biggest complaints from a dire need for skilled workforce and their brands and vendors is they have trouble hiring people with training and development. the right skills. Around 62 per cent said they are struggling to Training, though happening within fill certain positions. Apparel businesses need to ensure that companies, is not enough to keep up with younger people see the apparel industry as an attractive place to
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focus their careers. According to the 2018 LinkedIn Learning Workplace Learning Report, 94 per cent of employees would stay at a company longer if it invested in their career development. Around 91 per cent managers see training as important for the professional development of their employees, while 88 per cent viewed it as important for maintaining job satisfaction. Only 16 per cent managers surveyed revealed their companies have undertaken skill assessments of their whole workforce. These companies have done skill assessments of their whole workforce employees. Around 49 per cent managers, and 50 per cent of others had taken some sort of company sponsored training over the past 12 months, while only one-third work for technical design and product development companies that use a Learning Management System. ranking the highest. This is followed by
Employee training faces budgetary technical apparel making, quality control, issues production and process management, retail Although there is an awareness about the need for training operations and visual merchandising ranked budgets aren’t matching. Less than 30 per cent of those surveyed the lowest. have seen their budgets increase in the last two years, and over Brands are planning to increase on- 70 per cent think that more investment is required. Additionally, shoring as they face new challenges around only 38 per cent see a planned increase in investment in training trade rules, currency fluctuations and speed over the next two years. Many businesses hold back due to the to market. Additionally technology advances lack of a clear method for measuring the effectiveness of training. are lessening the number of workers. There This suggests that there is no consistent way of measuring the is a pressing need to train new talent into success of training, and thus no way to justify further investment. local industry in order to restore what many view as dying skills. This is a particularly Restoring old skills urgent challenge for specialised skills like bra- Some functional areas require more ongoing training, with making, hosiery and pattern making. n
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Apparel_December_2018_Pages.indd 47 11/29/2018 10:06:34 PM AppArel / INSIGHT Economists, policy makers divided on the need for import regulation conomists across the world are at loggerheads with policymakers on Ewhether countries should impose import duty on specific products to regulate imports. While many countries, including India, are actively considering such measures, economists argue governments should refrain from regulating trade flows. Free imports expand production quickly while boosting the purchasing power of consumers by allowing them to buy high-quality goods at low price. If trade flow is unhindered, many developed countries, the US, the EU and most other the law of comparative advantage forces developed countries charge high import duty on products of countries to specialise and trade in products interest to developing countries and grant calibrated access they have some competitive advantage in. This only. The EU and the US charge 10-20 per cent import duty on benefits consumers and producers of both Indian apparel and shoes. Japan charges 300 per cent duty on exporting and importing countries. rice. Many European countries charge seasonal import duties on agriculture products. High import duties hinders growth Need for import substitution China has repeatedly proved that The need is to reduce over-reliance on one country for comparative advantage, in most cases, can be products related to health, food or national security. For developed in a short period by offering several instance, India imports over 90 per cent of its requirement of incentives. In the 1980s, China had no domestic Active Pharmaceutical Ingredients (APIs) from China. Realising electronics and computer industry and imported this, China sharply increased prices in the past two years. India everything for meeting local needs. therefore, needs an urgent strategy for import substitution. Raw materials and low-end components China accounts for more than 95 per cent of Indian for these units were sourced from ASEAN imports for items such as blankets, bed linen, artificial and while the components requiring advance flowers, kitchenware, baby carriages, clock movements, manufacturing came from Japan, Korea and tricycles, festival items, combs, vacuum flasks, candles, etc. Taiwan. This model made China the leading As these are low technology, labour-intensive products, they exporter of electrical machinery, electronic can be manufactured even locally. items and telecom equipment by 2005. In Indeed import substitution cannot be an option to the next phase of growth, the country innovation. For instance, a high-technology product like reduced its dependence on the GVC model a driver-less car can only be produced in a country that has by manufacturing everything needed in- with in-depth institutional knowledge of precision fabrication, house. China applied a similar strategy for electronics, robotics, design, IT and many more streams, it organic chemicals and electrical machinery cannot be manufactured in countries like Brazil, India or China. to emerge a world leader. Quick comparative advantage cannot be developed in a short While average import duties are low for period for such products through import substitution. n
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Apparel_December_2018_Pages.indd 48 11/29/2018 10:06:34 PM AppArel / GEMA Report Vinod Dhawan, President, GEMA shares his plans for the industry by small-scale players, seasonal production and poor R&D. The Indian Industry is largely confined to small scale production which is a result of faulty policies in the past. In addition, poor skill sets and lack of modern technology resulted into low efficiency & poor quality. India is most known for cotton fabrics, which confines it to seasonal production focused on summer collections. Mr. Vinod Dhawan, President GEMA. Unfavourable import duties make it difficult to source special EMA (Apparel Exporters & fabrics, in particular, synthetics to make winter clothing, which Manufacturers Association) and GEA has a much higher volume than summer collections. A(Garment Exporters Association) Besides we also face other challenges such as high logistic costs, recently merged to form the GEMA (Garments wages and duties which have been detrimental to supporting scale. Exporters & Manufacturers Association) .Vinod Dhawan, President, GEMA has been Q. As the President of GEMA, what steps are you planning the Vice Chairman of the Eastern Region of to take to address these challenges? AEPC, Member of the IGFA Committee, Past In order to fuel the export industry, we need adequate President, AEMA, Trustee JNPT and Member, policies where all factors are addressed. Unfortunately, the Advisory board Indian Airline. current relaxations are a one-step measures and more needs to He elucidates on the vision and activities be done to bring the desired reform. of GEMA to Apparel India I would like to mobilise the government into action. We will participate in policy advocacy to ensure that comprehensive Q. What was your objective behind policies that address the issues at a ground level are implemented. forming the Garment Exporters and I plan to draw upon industry insight, expertise and experience Manufacturers Association (GEMA)? to form solutions that fuel the industry into growth mode. Since the last three decades, AEMA and GEA have been operating as two separate bodies Q. What are the names which comprises the Managaing having the common objective of fostering export Committee of GEMA? growth in India. We combined both these bodies The newly Management Committee consist of industry leaders to form GEMA with three common objectives: of the region. Beside myself, Mr. Sudhir Sekhri, Trendsetters - • To support initiatives to raise the awareness Vice President, Mr. Animesh Saxena-Neetee Clothing pvt ltd- of Indian exporters and manufacturers. Honorary General Secretary,Mr. Satish lakhina,Maya Export • To be the bridge between the members, Corporation-Honorary Treasurer,Mr.Ashok Logani-Instyle industry bodies and regulators to ensure Exports Pvt Ltd,Mr. Anil Peshawari-Meenu Creations,Mr. Anil that right governance and regulatory Verma-Monica Garments,Mr. Gautam Nair-Matrix Clothing,Mr. compliances are in place G S Mdan-Madan Trading Co,Mr. Harish Ahuja, Shahi Exports • To improve productivity and make digitisation pvt ltd,Mr. H K L Magu-Jyoti Apparels,Mr. K K Kohli-Orient tools available apart from best practices in Craft Ltd,Mr.Lalit Gulati-Modelama Exports Ltd,Mr. Lalit the industry. GEMA (previously initiated by Thukral-Tewnty Second Miles,Mr. M K Jain-Chelsea Mills,Mr. AEMA) as a registered assessment body with Manoj Lal-Milano International(I) Pvt Ltd,Mr. Rajiv Prem- AMHSSC is in a strong position to provide Vishesh Overseas,Mr. Rakesh Vaid-Usha Fabs Pvt Ltd, Mr. skilled man power. Tony Uppal-Pee Empro Exports Pvt ltd,Mr. Vijay Jindal-SPL Industries,Mr.Vinit Sethi-Orient Fashion,Mr. Virender Uppal- Q. What are the challenges before the Richa Global Exports Pvt Ltd,Mr. Ashish Nath(Co-Opted industry? Member)-General Commerce Ltd,Mr. Deepak Seth(Co-Opted The challenges that the industry faces today Member)- Pearl Global Industries ltd,Mr. Hari Kapoor(Co- are a result of inadequate policy support, digital Opted Member)-Allied Garments Exports Ind,Mr. Prithvi adoption and high costs. They include domination Manaktala(Co-Opted Member)-Cosmique Pvt ltd. n
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Apparel_December_2018_Pages.indd 49 30/11/2018 12:16:24 PM AppArel / MINISTRY NOTIFICATIONS
Ministry Notifi cations
Sub.: Mandatory RFID Tag for movement of goods in Uttar Pradesh w.e.f. 1st November, 2018
e Commissioner of State Tax U.P. vide noti cation No.- E-way Bill- R.F.I.D./sachaldal/2018-19/commercial tax hereby direct that such transporters, who transport such goods for which, information relating to the said goods as speci ed in FORM GST EWB 01 is required to be furnished electronically on the common portal, before transportation of such goods in the territory of Uttar Pradesh, shall obtain a R.F.I.D. Tag and get the said R.F.I.D. Tag embedded on wind screen of the conveyance carrying such goods and get it mapped to the E-way bill system
Sub.: Extension of the validity period of EPCG Authorisation
DGFT in its Public Notice No. 47/2015-20 dated 16th November, 2018 has extended the EPCG Authorisation from 18 months to 24 months.
Full Notifi cation - http://dgft.gov.in/sites/default/fi les/P.%20No.%2047%20english_0.pdf
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Apparel_December_2018_Pages.indd 50 11/29/2018 10:06:43 PM AppArel / GST UPDATE
GST Update 1. Clarifi cation on certain issues related to refund: 5. Taxpayers whose registration has been cancelled on or As per Circular No. 70/44/2018 -GST dated 26.10.2018, before the 30th September, 2018 time to furnish fi nal amount of Input Tax Credit debited under sub-rule (3) return in FORM GSTR-10 till 31st December, 2018: of rule 89 of the Central Goods and Services Tax Rules, The persons, whose registration under the said Act has 2017 (hereinafter referred to as the “CGST Rules”) is been cancelled by the proper offi cer on or before the required to be re-credited to the electronic credit ledger 30th September, 2018, as the class of persons who shall of the applicant by using FORM GST RFD-01B and the furnish the fi nal return in FORM GSTR-10 of the said taxpayer is expected to fi le a fresh application for refund. rules till the 31st December, 2018 vide Notifi cation No. The exporters who have received capital goods under 58/2018-Central Tax Dated 26.10.2018. EPCG to claim refund of IGST paid on exports. 6. Extends the time limit for furnishing the declaration 2. Processing of Applications for Cancellation of in FORM GST ITC-04 for the period from July, 2017 to Registration submitted in FORM GST REG-16: September, 2018 till 31st December, 2018: As per Circular No. 69/43/2018-GST dated 26.10.2018, The Central government hereby extends the time limit on standard operating procedure for Processing of for furnishing the declaration in FORM GST ITC-04 Application for Cancellation of Registration submitted in of the said rules, in respect of goods dispatched to a form GST REG-16. job worker or received from a job worker or sent from one job worker to another, during the period from July, 3 Issues pertaining to registration as a casual taxable 2017 to September, 2018 till the 31st day of December, person & recovery of excess Input Tax Credit 2018 as per Notifi cation No. 59/2018-Central Tax dated distributed by an Input Service distributor: 26.10.2018. The CBIC issued the Circular No. 71/45/2018-GST dated 26.10.2018, Clarifi cation of issues under GST related to 7. Exemption to a casual taxable person making taxable casual taxable person and recovery of excess input tax supply of handicraft goods from the requirement to credit distributed by an input service distributor. obtain registration but e-way bill is required: As per notifi cation No. 32/2017-Central Tax dated 4. Clarify the procedure in respect of return of time 15.09.2017, stated that such person are not liable to expired drugs or medicines: obtain GST registration till the turnover reaches 20 lakh in a The goods which have crossed their date of expiry are fi nancial year (ten lakh rupees in case of Special Category colloquially referred to as time expired goods and are States, other than the State of Jammu and Kashmir). The returned back to the manufacturer, on account of expiry, casual taxable persons mentioned in the notifi cation shall through the supply chain. In this case the person returning obtain a Permanent Account Number and generate an the time expired goods is a registered person (other than e-way bill in accordance with the provision of rule 138 of the a composition taxpayer), he may, at his option, return the Central Goods and Service Tax Rules, 2017. The exemption said goods by treating it is as a fresh supply and thereby shall be available to such persons who are making inter- issuing an invoice for the same (hereinafter referred to as state taxable supplies of handicraft goods. The above said the, “return supply”). The recipient of such goods shall be notifi cation has been superseded by the current Notifi cation eligible for ITC of return supply. As per sub-section (1) of No. 56/2018-Central Tax Dated 23.10.2018 but e-way bill Section 34 of the CGST Act the supplier can issue a credit is required. note where the goods are returned back by the recipient vide Circular No. 72/46/2018-GST dated 26.10.2018.
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Apparel_December_2018_Pages.indd 51 11/29/2018 10:06:49 PM AppArel / aepc event calendar
CALENDAR OF EVENTS - 2019 5February, 2019, France 6March, 2019, China
Premiere Intertextile Vision Shanghai/ Paris Yarn Expo 7July, 2019, HONG KONG 8July, 2019, JAPAN
Hong Kong India Trend Fashion Fair (ITF) at Week at Tokyo, Japan Hong Kong 8August, 2019, USA 8September, 2019, France
Sourcing WHO’s at Magic, Next, Paris Las Vegas, – France USA 8October, 2019, SPAIN 8November, 2019, AUSTRALIa India Apparel & Acces- International sories fair Sourcing Expo at Madrid, Australia Spain
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Apparel_December_2018_Pages.indd 52 30/11/2018 12:56:49 PM Apparel_December_2018_Pages.indd 53 11/29/2018 10:06:52 PM BOOK YOUR SPACE
4-7 Febuary 2019 Las Vegas Convention Centre, 3150 Paradise Road, 89109 Las Vegas, Nevada, USA
This one-of-a Kind Convergence of Fashion’s Global Supply Chain connects Established and Emerging Brands to an unparalleled network of Manufacturers, Materials, Technology, Logistic Solutions & Talent
Contact for further details : Mr. K S Bisht, Jt. Director (Fairs & Exhibition) Apparel Export Promotion Council Apparel House, Institutional Area, Sector - 44, Gurgaon-122003, Haryana, (India) Tel: +91 124 2708156(D), 2708000-003, Fax: +91 1242708004, Mobile: +91 9810527747, Email : [email protected] The Application form may be downloaded from our website www.aepcindia.com (Highlights Section) Limited Stalls available on First Come First Serve Basis
Apparel_December_2018_Pages.indd 54 11/29/2018 10:06:52 PM