TEXPROCIL E-NEWSLETTER, AUGUST 05, 2015 PAGE 1.

Volume II. Issue No. 21. August 05, 2015 INSIDE THIS ISSUE Cotton Scenario 2024 : USDA Projections Page 1 & 2 : CHAIRMAN’S MESSAGE COVER STORY Page 3 - 4 : Cotton Scenario 2024: Projections by the US Dept. of Agriculture SPECIAL FEATURE Page 5 - 6 : The Quiet Rise of South Asia (An Article in TOI, By Ruchir Sharma) TRADE NOTIFICATION

Page 7 : Member Satisfaction Survey With an average annual increase of 11.2 percent to 2020/25, China’s reforms are expected to raise the share of world cotton consumption once Page 8 : Membership Subscription Renewal again.(Source: www.USDA.org) CHAIRMAN’S MESSAGE Dear Friends, to 3.3% in 2015 and eventually to of finished goods like clothing than As we pass by the 4% in 2016. Trade expansion is in intermediates and commodities. thus estimated to remain well below first six months Rising costs, greater self-sufficiency of the year 2015, the annual average of 5.1% posted since 1991. in emerging markets (read China) export growth and changing production techniques remains sluggish Data for the first quarter of this are impacting world trade in an even though year released by the WTO seems increasing manner and in a way reports do indicate to corroborate the above mentioned slowing it down. that markets are likely to improve forecast as world exports increased in the coming months as Europe by 0.4% down from the 2.1% The world is also being carved up shows signs of recovery and USA growth registered in the previous into exclusive zones with a growing has shown positive growth in quarter. Imports, on the other hand trend towards major trading imports. grew by 0.9% in the same period countries like USA/ European Union negotiating mega trade pacts Countries in South Asia like down from 1.5% in the previous like the Trans - Pacific Partnership Bangladesh, Pakistan, Sri- Lanka, quarter. Agreement (TPP), Trans-Atlantic Vietnam, Korea, UAE, Egypt are Another interesting development other markets which are likely to see Trade & Investment Partnership that we have pointed out in our (TPIP). positive growth even as commodity Annual Report (2014-2015), just prices collapse, China slows down sent to all our members is that the Regional Comprehensive Economic and global trade stagnates. data on global trade in textiles and Partnership (RCEP) consisting of In fact, a WTO report forecasts that clothing shows that trade in clothing ASEAN plus China and five others world merchandise trade is expected grew in 2014 by 6.03%, while trade including India is also under active to pick up only slightly over the next in textiles grew by only 2%, thereby negotiation with plans to conclude two years, rising from 2.8% in 2014 indicating a greater trend in trading it by the end of 2015.

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CHAIRMAN’S CONTINUED FROM PAGE 1 MESSAGE

Apart from the above, existing Mumbai mainly for Dyed Fabrics, Friends, while we make our efforts to agreements like CAFTA, NAFTA, Made-ups and Fabrics used in the get some incentives here & there we AGOA, ASEAN are also re- defining manufacture of Technical Textiles, need to be clear that the future levels trade patterns in many subtle ways. which was well appreciated. of trade will depend on our abilities Friends, we need to be alert to these We propose to make the presentation to improve our quality, productivity, changes and re- orient our thinking on Cotton Yarn, Grey Fabrics and develop new product lines and and formulate appropriate strategies. Knitted Fabrics on August 25 at keenly follow the technological The trends point to greater need for Bangalore. In case members have changes re- defining the way we value addition in our products for us data to submit on these items or any are living. While the greater use of to benefit from trade with overseas other allied item please feel free to technology is shrinking markets, markets where opportunities may contact the Texprocil Officials. product cycles, lead times, it is also not actually be growing but may be simultaneously providing newer shrinking! As regards some of our pending issues we are being assured that platforms for reaching to customers. In such circumstances we need to the interest rate subvention will As we write this column, we read identify new product lines for trade be announced shortly. The issue reports that Online fashion site and newer platforms for reaching relating to issuance of additional like “Myntra” is planning to turn out to customers. scrips under the erstwhile MLFP itself into a fashion network where As regards new product lines we Scheme is also expected to be users can invite friends, form were happy to learn about the new resolved as the Department is just a groups, upload photos and seek out step away from agreeing to issue the investments being made by some opinion before buying clothes and scrips manually. However, we await of our entrepreneurs in high valued accessories. The idea is to become the relevant notifications. “Technical Textiles”, comprising the Facebook of Fashion.! of items like “Flame Retardant We have also taken up the inclusion Fabrics,” “Glass Fibre Fabrics”, of dyed/ printed fabrics exported to Coupled with this the millennial “Fibre Glass Reinforced Pultrusion”. some of the Sub- Saharan African generation’s anxieties to appear These items now being produced in countries under the MIE scheme differently dressed in their Instagram commercial quantities are the way to as also some of the HS lines in posts on the Internet, seems to be a the future. Knitted Fabrics, which seem to have blessing in disguise for retailers as it These facts came to light when the been inadvertently left out from the guarantees higher sales! list of items granted 2% incentive Council made a presentation to the All these trends augur well to boost Drawback Committee set up by when exported to Bangladesh and consumption of textiles even as the the Government to decide on the Sri- Lanka. Apart from these, we need of the hour for all of us is to drawback rates for the textile sector have also requested for inclusion of for the fiscal year 2015-2016. The fabrics exported to China, Korea, understand these fast paced changes, Committee is headed by Dr Saumitra Vietnam under the MEI Scheme. move away from a mindset built Chaudhary former member of the on seeking incentives and develop We are hopeful that the suggestions erstwhile Planning Commission. innovative products. made by us are considered by the The Council made presentation Government in the larger interests of R K Dalmia before the Committee on 24 July at increasing our exports. Chairman

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Cotton Scenario 2024: COVER STORY Projections by the US Department of Agriculture

Bremen Cotton Report has published in its latest issue the major facts of the Cotton Scenario 2024 by USDA, the US Department of Agriculture, and we are happy to present this feature with the regarding tables to you Macroeconomic assumptions defined in ‘USDA Agricultural Projections to 2024’ report are underlying USDA’s long- term scenario promising stable world growth over the next decade. Developing countries continue to become a larger part of the world economy. Their share of real global GDP is projected to rise to 44 percent in 2024 from 38 percent in 2015. World cotton trade is projected to trend upward at a rapid 4.6-percent annual growth rate between 2015/16 and 2024/25.

Cotton Imports on the Move textile industry continues growing increase in output is expected to rapidly; followed by Vietnam, enable India to continue its role as After a sharp decline in recent years, Turkey, Indonesia and Pakistan the world’s second-largest cotton China’s cotton imports are expected throughout the projection period. exporter, adding 3.9 million bales to resume growth in 2015/16, with by 2024/25. Brazil’s cotton exports an average annual increase of Cotton Exports Rising are projected to increase by the 11.2 percent to 2024/25. China’s The U.S. share of world cotton greatest amount, adding 4.3 million reforms are expected to raise the production has fallen sharply and bales by 2024/25. By 2019/20, share of world cotton consumption is expected to continue falling Brazil overtakes Central Asia as once again. Bangladesh became from 40.6 % in 2010/11 to 21.3 % the world’s third-largest source the world’s second-largest cotton by 2024/25. Even with production of cotton exports. Exports from importer in 2014/15 and is projected lower than historical levels, the the 15 countries of the Economic to maintain this position as its United States remain the world’s Community of West African leading cotton exporter with States are projected to experience a growth rate by 1.1 percent sustained growth during the coming E-NEWSLETTER annually to 11.6 million decade, at an average annual rate Edited & Published by: bales by 2024/25. The of about 5 percent. Exports from Siddhartha Rajagopal Editorial Team N. Ravindranathan, Rajesh Satam, A. Ravindrakumar, Shailesh Martis, Sanjay Rane Ideas & contributions are welcome at: [email protected]; [email protected] Editorial & Publishing Office at :

The Cotton Textiles Export Promotion Council Engineering Centre, 5th floor, 9, Mathew Road, Mumbai – 400 004. India. Tel: +91 22 23632910 to 12 E-mail: [email protected] Disclaimer TEXPROCIL E-Newsletter, fortnightly edition, is the sole property of Texprocil – [owners] The Cotton Textiles Export Promotion Council. The views and opinions expressed or implied by contributions - compiled by the editorial team are those of the authors and do not necessarily reflect those of Texprocil, Editorial Team or the Publisher. Unsolicited articles and transparencies are sent in at the contributor’s risk and the owners accept no liability for loss or damage. Subscription to this e-newsletter shall be available on the condition that no content be reproduced whether in part or full or distributed without prior written consent of the owners. (For private circulation only)

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COVER STORY Cotton Scenario 2024: (CONTD FROM PAGE 3) Projections by the US Department of Agriculture

the other countries in Sub-Saharan Africa are also to more exports of textile products rather than exports projected to increase. In total, Sub-Saharan Africa of raw cotton. Nevertheless exports grow by 4 percent is expected to account for about 15 to 16 percent of annually to 5.7 million bales by 2024/25, but still world trade, compared with 10 percent during 2009- below the peak exports in 2005/06 of 7.3 million bales. 13. Government policies in the major cotton producing (Source: www.USDA.org) Central Asian countries of the Former Soviet Union are promoting investment in textile industries contributing :: TEXPROCIL ::

EServe No. 79 of 2015 Dated: July 30, 2015 To: The Members of TEXPROCIL Sub: Extension of date for receipt of Award Application from 31st July, 2015 to 14th August, 2015 Dear Member, Executive Director, This is to inform you that the last date for receipt of The Cotton Textiles Export Promotion Council, Application for Export Awards for the year 2014-2015 has ‘Engineering Centre’, 5th Floor, 9, Mathew Road, been extended from 31st July, 2015 to 14th August, 2015. Mumbai - 400 004 A copy of the detailed circular in this regard (circulated Kindly note that there shall be no further extension of time earlier vide E-Serve No. 66 of 2015 dated 02.07.2015) in this regard. can be downloaded from the home-page at the Council’s Regards, official website: www.texprocil.org Siddhartha Rajagopal Application may be sent on or before 14th August, 2015 to Executive Director the below address: :: TEXPROCIL ::

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SPECIAL The Quiet Rise Of South Asia FEATURE

South Asia has long been seen as an economic laggard, but that could start changing. At a time when growth is falling sharply in most other emerging nations, as commodity prices collapse and global trade slows, South Asia has proved relatively resilient. Together, India, Bangladesh, Sri Lanka and Pakistan are now growing at an average annual pace of close to 6%, compared to 2% for the emerging world outside China.

Due to their lower per capita income, share of global exports decline, but beat out China for rights to build it should hardly be surprising not Pakistan and Bangladesh.Their Bangladesh’s first deep-water port, that South Asian economies are wages are still competitive, and they at Matarbari. The inflow of foreign growing faster than other emerging are increasing their share of global direct investment is helping to keep markets. But that spread of nearly exports, even as growth in global South Asia in what can be identified four percentage points is the largest trade is stagnating for the first time as the investment sweet spot: strong in the region’s post-independence since the 1980s. economies tend to invest between history.While hopes for a revival in They are benefitting along with Sri 25 and 35% of GDP. Sri Lanka and India exploded when Prime Minister Lanka as manufacturers look for Bangladesh are now right in the Narendra Modi took power in 2014, cheaper wages outside of China, sweet spot, at or near 30% of GDP. promising major economic reform, with wages in the manufacturing its smaller neighbours remained Investment also tends to have the sector having increased by 370% in under the radar. Now, however, greatest impact on jobs and growth the world’s second largest economy Bangladesh, Sri Lanka and Pakistan when it is going into manufacturing. over the past decade. Bangladesh are leading the quiet rise of South Both Sri Lanka and Bangladesh is now the second leading exporter, Asia. Since the global financial have strong manufacturing sectors, after China, of ready-made clothes to crisis, a number of emerging representing 18% of GDP. Pakistan the US and Germany. markets have been ramping up debt is much weaker, with investment at and government spending. But the And as China and Japan compete 14% and manufacturing at 12% of smaller South Asian economies have with India for influence in the Indian GDP. But Pakistan’s manufacturing largely avoided these excesses, so Ocean, they are pouring billions into sector is now growing, due to both they still have room to boost growth. new ports in Bangladesh, Pakistan increasing electric output and the While falling prices for oil and and Sri Lanka. The upshot of these fact that, like Bangladesh, its young other raw materials are hurting most positive trends is that South Asia population and labour force is emerging regions, they are a boon could sustain a growth rate of over expected to continue expanding for to the nations of South Asia, all of 5% for the next few years, which at least the next five years. which are commodity importers. would make it one of the fastest- At a time when much of the growing regions in the emerging The impact of low commodity prices workforce is entering retirement age world. is helping to keep inflation low in larger emerging nations including even as growth accelerates, while The competition between Japan and China, Korea, Taiwan and Russia, countries like Brazil, Russia and China is a huge boost: after Beijing the positive demographic trends South Africa face stagflation. Many recently announced plans to build in South Asia are potentially a big emerging economies have been hurt a $46 billion “economic corridor” competitive advantage.With exports by rising wages and have seen their connecting Pakistan to China, Japan and investment strong, Bangladesh

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SPECIAL The Quiet Rise Of South Asia FEATURE is running a current account surplus, Though Pakistan is a Sunni- trade, lows matched only in parts Sri Lanka is reducing a deficit now dominated country it has long had of Latin America and Africa. There equal to 3% of GDP, and Pakistan pragmatic relations with the Shiite are however signs of improvement has cut its current account deficit government in Iran, and could be as the Indian gov ernment begins from 8% of GDP in 2008 to just 1%. a beneficiary of the nuclear deal to reach out to neighbours, and lifting internation al sanctions on Just as important, these South Asian relations are improving particularly Tehran.The biggest risk to South nations have managed to keep growth with Bangladesh and Sri Lanka. alive without sinking deep into debt. Asia is the one that has dogged all its members since independence in The final risk is that, after decades All three don’t have credit troubles, of regional stagnation and tension, with relatively modest growth in the 1940s: political instability and regional hostilities. so many people have migrated private credit as a share of GDP abroad that their remittances now over the last five years, and loan to In essence, the Sharif government account for 7% of GDP or more deposit ratios of less than 80%, well in Pakistan and the Awami League in the three smaller South Asian below the 100% level which signals government in Bangladesh are states. Without those remittances, that banks are overextended. trying to revive civilian control the current account balances would This marks South Asia as an island of in nations long dominated by the be in much worse shape. In Pakistan opportunity in a world where many military, a campaign that could and Ban gladesh most of that income big emerging countries, led by China trigger a backlash in these coup is sent home by expats working in but including Turkey, Thailand and prone countries. the Gulf region, and is thus subject Brazil, have seen dangerously sharp The uncertainty is so high, many to the vagaries of both oil prices and expansion of credit in the last five Pakistani officials prefer to keep Middle East politics. years. India, where around 15% of offices in Dubai, and Bangladesh’s the loans in the banking system are The long history of conflict and trade ruling party is working to non-performing, faces similar credit fragmentation in South Asia makes it permanently sideline all opposition. risks. Governments in South Asia a very hard region to hype. However, Arundyuti Das Basu In Sri Lanka, have been working to reduce state India is growing at 5 to 6%, less than meddling in the economy, paring President Mahinda Rajapaksa government claims but still well back public debts and deficits. The recently called early elections in a above the current emerging market governments of Bangladesh and bid to hang on to power for a third average, and its small neighbours Sri Lanka are still running deficits term, but was rejected by voters wary are picking up momentum. of at least 5% of GDP, but they of his in creasingly authoritarian are coming down. Despite being ways. Relieved executives at one They are all posting relatively strong hobbled by allegations of corruption, local company, who were scared growth, with their stock markets up the government of Nawaz Sharif has to be openly critical of Rajapaksa between 30 to 50% over the last pushed a reform agenda including when he was in power, said his three years, and doing it without privatisation since his election in loss had lifted the “Mugabe risk”, attracting much attention as a group. May 2013. at least for now.Rajapaksa is trying Since hype normally signals the end to stage a comeback, running for of a good run, it is a big plus that no The government deficit has fallen prime minister in the parliamentary one is talking up the “South Asian to less than 5% from 8.5% in 2012, elections next month. Tigers”, at least not yet. and growth has accelerated to more than 5% from 3% before Sharif took The old hostilities in South Asia also (Source: Article appeared in Times office. The consumer is out in force, continue to weigh on trade among its of India by Ruchir Sharma, Head with television channels reporting neighbouring states. Trade among of Emerging Markets Equity and record-breaking sales in the run up neighbours has been vital to the rise Global Macro at Morgan Stanley to Eid and one million square feet of East Asia and Eastern Europe, Investment Management.) of retail space under construction in but in South Asia in traregional Lahore alone. trade represents just 6% of all :: TEXPROCIL ::

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TRADE MEMBERSHIP SATISFACTION SURVEY NOTIFICATION MEMBER’S FEEDBACK FORM

Dear Member, The Council has recently obtained ISO-9001:2008 Certification. As part of the ISO documentation concerning ‘Customer Satisfaction’ we are seeking feedback from our Members on the services offered by the Council. Accordingly kindly fill in your complete information below and respond to the questions below by tick () marking appropriate response in the space provided or with suggestions in brief wherever necessary. We value your association with us and prompt feedback. COMPANY INFORMATION Name of the Company :

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1) Kindly rate the following services offered by Texprocil on rating of 5 to 1. in order to serve you still better.* 5= Excellent, 4=Good, 3 = Satisfactory, 2 = Needs Improvement., 1 = Not Availed (N.A.) Membership Rate Trade Rate Trade Rate Trade Services Rate Trade Rate Here Development Here Promotion Here Here Intelligence Here

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TRADE TEXPROCIL MEMBERSHIP NOTIFICATION ANNUAL RENEWAL SUBSCRIPTION

The annual renewal subscription amount for the financial year 2015-2016 (due from 1stApril, 2015) is as follows: - 1) MEMBER EXPORTER - RS. 11,400/- ( MEM FEES 10,000 + S. TAX 1,400 ) 2) REGISTERED TEXTILE EXPORTERS (RTE) - RS. 5,700/- ( MEM FEES 5,000 + S. TAX 700 ) Special Discount: Texprocil is announcing a special discount scheme for those who wish to renew their membership for a period of 3 or 5 years as follows: Membership Fees Discount Discounted Fees Benefit to Exporters Period RTE Member Slab RTE Member RTE Member For 3 years 15,000 30,000 10% 13,500 27,000 1,500 3,000 For 5 years 25,000 50,000 15% 21,250 42,500 3,750 7,500 [RTEs and Members have to pay service tax on the discounted amount at the rate of 14%.] Note for Members: Members are also requested to submit the CA Certificate as per the format given below certifying the Export Turnover for the financial years 2013-2014 & 2014-2015 i.e. the amount of actual FOB value of exports of Cotton Textiles excluding Readymade Garments and Handloom Textiles. Members may note that the eligibility criterion of annual export turnover is minimum Rs. 2 Crore. Those not fulfilling the criteria will automatically be renewed as RTE i.e. Registered Textile Exporter. RTEs are not required to submit the CA certificate.

Format of Chartered Accountant Certificate to be submitted by Members only: CHARTERED ACCOUNTANT CERTIFICATE (on C.A.’s Letter Head) TO WHOMSOEVER IT MAY CONCERN This is to certify that M/s. ______(Name and full address of the Member) having IE code No. ______have exported Cotton / Cotton Yarn / Cotton Fabrics / Cotton Madeups (Excluding Handloom Items / Readymade Garments and Silks, etc.) during the financial year 2013-2014 & 2014- 2015 as follows: 2014-2015 2013-2014 Sr. No. Description (Rs. FOB Value) (Rs. FOB Value) 1 Cotton 2 Cotton Yarn 3 Cotton Fabrics 4 Cotton Made-ups TOTAL (Stamp & Signature of Chartered Accountant) (Membership No. of Chartered Accountant) (Firm Registration No. of Chartered Accountant) PLACE: DATE:

Note to Members & RTEs whose RCMC is expiring on 31.03.2015: Please apply immediately for renewal of RCMC with the following documents: [1] Copy of your Import-Exporter Code (IEC) [2] In case of Manufacturer Exporter, a copy of Manufacturing Licence [3] In case of changes in Partners, a copy of revised deed of partnership [4] In case of changes in Directors, a copy of Form 32/DIR-2 or Board Resolution for those who have resigned or newly appointed. (For any further queries please write to Mrs. Smita Dalvi on email : [email protected]) www.texprocil.org