Textile Industry Updates (From 1st January to 31st January 2019)
1) Maharashtra Government will provide subsidised power at Rs three per unit to the spinning mills in the State. The Government has asked textile industries to tap non-conventional energy sources in next three years. Else, subsidy to them will be stopped.
2) The area under cotton sowing in Pakistan has reduced by 26 per cent due to the absence of appropriate crop zoning in the country, posing a serious threat to the production of the cash crop, cotton commissioner Khalid Abdullah recently informed the country’s Senate Standing Committee on National Food Security and Research during a briefing.
Cotton arrival in the domestic markets reduced by 700,000 bales this fiscal compared to the last, Pakistani media reports quoted Abdullah as saying.
3) Industry officials said textile raw material from China is coming into India via Bangladesh, which has a free-trade agreement with India giving it access to the country’s US$100 billion textile market.
Duty free fabric from China is coming to Bangladesh, getting converted and landing into India at zero duty. Industry bodies argue that India’s latest action is not enough to protect domestic garment manufacturers which are facing fierce competition from China and Bangladesh.
4) Even though China has for long remained favorite destination for global investors, India has pipped its neighbour in 2018 for the first time in the last 20 years in terms of attracting foreign direct investment (FDI).
With 253 inbound deals amounting to US$ 39.515 billion, India’s annual FDI was higher than that of China’s so far this calendar year, according to data from Dealogic, a global financial markets platform. China attracted FDI to the tune of US$ 33.02 billion in 397 inbound deals in the same period, the data showed.
5) Indian textile companies face higher trade barriers, compared to other competing countries like Bangladesh, Vietnam and Pakistan, in the US and European Union.
The average tariff on textile products faced by India in the EU and US is 5.9% and 6.2%, respectively. In comparison, Pakistan face zero% and 5.3% average tariff in the EU and US, respectively for Bangladesh it is zero% and 3.9% whereas Vietnam attracted 6.1% and 5.5% tariff.
6) The US is the top export destination for textiles made in India with a share of 17%, followed by the EU, Bangladesh, China, Pakistan, UAE, Vietnam, Sri Lanka, Brazil and South Korea, respectively.
7) Thursday evening, the American Petroleum Institute (API) reported that crude inventories decreased by about 4.5 million barrels in the week ending December 28. For the same period, analysts expected crude inventories to fall by about 2.3 million barrels.
Reports yesterday morning that China and the United States plan to restart discussions to end their trade differences have put some air under crude oil prices. An end to the trade dispute would theoretically bring the global economy out of its current stupor, particularly in demand from China for U.S. crude oil.
Coupled with rising hopes on trade, Saudi Arabia reportedly cut crude oil production by half a million barrels a day last month. The cut is on top of the 1.4 million barrels a day that OPEC and its partners already had agreed to cut beginning this month.
8) The Comprehensive & Progressive Agreement for Trans-Pacific Partnership (CPTPP) went into effect for six of its 11 members on Dec. 30.
Six of the signatories–Australia, Canada, Japan, Mexico, New Zealand and Singapore–have enacted the multilateral trade deal, with Vietnam set to officially join in on Jan. 14. The other four countries—Brunei, Chile, Malaysia, and Peru—still need their governments to ratify the deal.
The 11 nations have a combined gross domestic product (GDP) is an estimated $10 trillion, accounting for 13.5% of the world’s economic output.
9) As per latest data released by Bangladesh Export Promotion Bureau, Bangladesh’s apparel exports increased by over 15% in December, plagued by a spate of labor unrest and factory shutdowns.
The apparel export receipt stood at over US$ 17.8 billion during the July-December period, gaining over 15.6% on a year-to-year basis. For December alone, export receipt was US$ 2.9 billion.
10) The Nigerian Textile Manufacturers Association (NTMA) has set a production target of 1.7-billion metre finished fabric for 2019 and increase its contribution to the country’s gross domestic product, according to Hamma Kwajaffa, director general of the association, which wants to capture a market share of up to 70% in finished fabrics.
11) The Sri Lanka Ports Authority (SLPA) has substantially raised its port charges and other related tariffs effective from January 1, 2019, a move that has taken importers, exporters and other key stakeholders by surprise, as it will drive up costs for manufacturers and consumers alike.
12) Kenya’s exports to the US hit a fresh record in the three months ended September 2018 after Washington and Nairobi signed trade deals late June, largely textile and apparels, data collected by the statistics office shows.
13) India is projected to be the fastest-growing major economy in the current and next fiscal, the finance ministry said recently citing statistics from the International Monetary Fund (IMF).
14) Decline in crude oil prices and sluggish demand have hit the entire cotton value chain, leaving stakeholders complaining about cash crunch as money has been locked up in inventories and prompting yarn manufacturers to cut prices. The monthly yarn price declared at Tirupur has been cut by INR 10 per kg.
15) The prices of crude have been showing continuous increase due to the talks in Beijing between U.S. and Chinese officials that might defuse a trade dispute and OPEC supply cut.
The tanker-tracking data showed that big drop has been observed in Saudi Arabia’s crude oil exports from the December end. Also, China’s factory activity fall has added concern about economic slowdown and fuel demand.
16) Retail cargo imports at major U.S. container ports have slowed after a fall rush to beat increased tariffs on goods from China, according to the monthly Global Port Tracker report released Tuesday by the National Retail Federation and Hackett Associates.
17) As per the Confederation of Indian Textile Industry (CITI), free trade agreements with the European Union, Australia, Canada and Britain will help Indian exports of garments and made ups, at par with its competitors such as Vietnam and Bangladesh.
18) India is hopeful to fully operationalise the strategic Chabahar port in the Sistan-Balochistan province of Iran soon, and the government has allowed an Iranian bank to open a branch in Mumbai for related transactions.
19) To enhance exports, the Federal Government of Pakistan has announced a decrease in power tariffs by PKR 3 per kilowatt hour (kWh) for exporters, which will help in lessening pressure on international payments, according to a notification issued by the Ministry of Energy (Power Division).
20) Bangladesh raised wages for garment workers on Sunday following a week of demonstrations calling for higher salaries.
All parties involved agreed to raise wages across 6 of the 7 pay grades, leaving the minimum wages unchanged at 8,000 taka ($95).
21) The GST e-way bill system is likely to be integrated with NHAI’s (National Highways Authority of India) FASTag mechanism from April to help track movement of goods and check GST evasion.
22) A R200-million programme by South Africa has successfully revived the country’s cotton industry by unlocking private sector investments and buying power worth hundreds of millions.
The programme, known as Sustainable Cotton Cluster and funded by the department of trade and industry (DTI), will end in March, when a decision will be taken on its extension.
23) Special zones have been approved to move textile units outside Surat, India.
Scientists have devised an innovative technique that could be used to incorporate batteries, wireless devices and sensors into fabrics like paper and cotton textiles.
The researchers from Imperial College London in the UK used the technique to print metals such as silver, gold and platinum onto fabrics.
24) Volatility in crude oil prices has hit synthetic textile manufacturers hard, with a frequent change in buying behavior observed for both the raw material and finished products segments.
25) Full-fledged Indian exports to Iran are expected to resume with the UCO Bank activating the rupee payment mechanism to circumvent US-imposed sanctions against the Islamic nation. But the two sides are still struggling to sort out glitches in shipping, insurance and exchange of documents.
The Centre and banks have now clarified on the list of goods that can be classified as non-sanctioned and exported to Iran including textiles.
26) The Goods and Services Tax Network (GSTN) is developing such IT system that businesses who have not filed returns for two straight return filing cycle, which is six months, would be barred from generating e-way bills.
As per the Director General of Textile and Clothing Office of the Ministry of Industry, Mine and Trade, Iran, exports of apparel and clothing increased 60 percent in the nine months of the current year (March. 21 – Dec. 21).
27) The Clothing Manufacturers Association of India hopes that the Government’s decision to conduct a study to come up with a standard size for apparels sold in India will reduce production cost of textile companies.
28) All India Manufacturers Organisation (AIMO), which claims to have over 50 million MSME players in its fold, demanded a one-India-one-price mechanism across sectors.
29) Uzbekistan to hold talks in US concerning lift of boycott of its textile products.
The Uzbek government officials will attend the annual meeting of the Cotton Campaign coalition, which consists of labor and human rights NGOs, investment companies standing for eradication of child and forced labor in cotton production.
30) Cheap labour cost made Indian textile mills turn to Ethiopia.
31) Maharashtra Government will develop a Textile Park on 169-hectare land in Koradi.
Maharashtra State Power Generation Company (Mahagenco) will provide its additional 169-hectare land for the Textile park. Traders and industrialists of the city will get space in the park.
32) Microsoft India recently launched a new e-commerce platform, re-weave.in, for handloom weavers under Project ReWeave under its Philanthropies initiative.
It helps artisans directly connect with buyers, helping them reach new markets, and hosts signature collections by weavers, showcasing traditional designs and products created from natural dyes.
33) Cotton Association of India (CAI) is soon going to launch a ‘CAI trader mobile app’ for the benefit of all its members who deal in cotton trade.
The app would help cotton traders with fresh market data about prices and arrival.
34) China dominated US imports of cotton and manmade fiber nightwear and pajamas.
China holds a 55.8% share of the US market with a 9% share increase for the year through October. The next six major suppliers are all from volume-oriented and low-cost production Asian countries.
35) The US Trade Representative’s (USTR) office recently changed the scheduled date of a tariff rate rise to 25% from 10% on US$ 200 billion worth of Chinese goods to 0501 GMT on March 2, 2019, from March 1 as both nations pursue trade talks.
The notice does not affect the 25% tariff rate in place on US$ 50 billion worth of Chinese technology items. The notice attributed the change to new US-Chinese engagement “with the goal of obtaining the elimination of the acts, policies, and practices covered in the investigation” following a December 1 meeting between the Presidents of the countries in Buenos Aires.
36) India exempted the Rupee payments for Iran oil from hefty taxes.
Iran will be able to use the rupee funds for a range of expenses – including imports from India, the cost of its missions in the country, direct investment in Indian projects, and its financing of Iranian students in India. It can also invest the funds in Indian government debt securities.
37) The Cabinet Committee on Economic Affairs has given its approval to the proposal of the Department of Commerce for including merchant exporters under the Interest Equalisation Scheme (IES) for Pre and Post Shipment Rupee Export Credit by allowing them interest equalisation rate of 3% on such credit for export of products covered under 416 tariff lines identified under the scheme.
These products are largely in MSME/ labour intensive sectors including Textiles. The proposal will entail benefits of around Rs 600 crore to exporters on interest equalisation, for the remaining period of the scheme.
38) To promote Government participation in production and exports of textile and apparel products, India government has announced Special Package for garments and made-ups sectors. The package offers labour law reforms, additional incentives under ATUFS, enhanced duty drawback coverage and relaxation of Section 80JJAA of Income Tax Act.
39) The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), effective since December 30, may push Vietnam to reform its economic institutions and improve the business climate to optimise opportunities.
CPTPP will offer Vietnam better access to the nine large Asia-Pacific markets, thus helping diversification of markets.
As more than 90% of import tariffs in CPTPP member markets have been lifted immediately after the deal took effect.
When tariffs are cut, Vietnam can increase the export of its key products such as textile-garment and footwear without competition from other countries.
40) The Government of Turkey has initiated a safeguard investigation on yarn of nylon or other polyamides. A safeguard investigation seeks to determine whether increased imports of a product are causing, or is threatening to cause, serious injury to a domestic industry.
As per a notification issued by the WTO, Turkey had initiated the safeguard investigation on December 30, 2018. The product under investigation ‘yarn of nylon’ are currently classified in the Turkish Customs Tariff Schedule under the customs tariff codes 5402.31, 5402.32, 5402.45, 5402.51 and 5402.61.
41) The Ghana local textile industry has received a boost following the government’s decision to zero-rate Value-Added Tax on the supply of locally manufactured textiles for a period of three years.
The move is to help reduce their cost build up, make the local textile industry price-competitive and help them compete with the influx of cheap textile products from other parts of the world.
42) The Goods and Services Tax (GST) council in its 32nd meeting held on Thursday doubled the exemption threshold limit of textile players from the existing Rs 2 million to Rs 4 million effective April 1, 2019.
43) Under the Gujarat’s new textile policy 2019 announced on Thursday, the government has removed incentives for two crucial activities such as ginning and spinning that occupy an important role in the textile value chain.
Ginning and spinning have been struck off from a list of over eight manufacturing activities that will be eligible for incentives under various schemes, including credit linked interest subsidy of 6% for MSMEs and 4-6% for large enterprises.
44) In a consumer-friendly measure, the revenue department is planning to make it mandatory for composition dealers and service providers to declare their GST registration status in invoices to ensure that they do not charge any tax from buyers.
45) The Reserve Bank of India (RBI) on Friday notified that the Government has decided to include merchant exporters under the ongoing Interest Equalisation Scheme for Pre and Post Shipment Rupee Export Credit with effect from January 2.
46) The government has issued a notification to withdraw a condition that restricts claiming of an export incentive under goods and services tax (GST), after various petitions were filed in courts against the curbs.
Earlier, the DGFT and the customs department had imposed a condition that the advance authorisation scheme would be available to exporters only if imports have been undertaken by them.
47) The Pakistan government on Tuesday ordered immediate clearance of about PKR 36 billion refund claims of exporters and allowed tax and duty-free import of cotton.
In response to demands of the textile industry, the Economic Coordination Committee (ECC) approved withdrawal of customs duty, additional customs duty and sales tax on import of cotton effective Feb 1-June 30, 2019.
48) The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has officially come into force in Vietnam on January 14. From this date, Vietnamese goods exported to countries that have ratified the deal will enjoy new preferential tariffs.
49) Rising labor costs in East Asia and tax-free access to the US market is encouraging Asian textile and garment manufacturers and Western buyers to turn to Egypt.
China is planning to move 20% of its production to Egypt either by setting up shop, through mergers or full acquisitions of local companies. The US-China trade war is also pushing Chinese manufacturers to look for new hubs to avoid potential tariffs of 25% into the US.
50) Ghana government has suspended plans to begin the implementation of the tax stamp policy for the textile industry which is slated for this month.
The move is to ensure additional security features are added to the stamp. Government revealed last year of its plans to extend the tax stamp policy to textiles in order to curb smuggling of the product in the country and to increase jobs in the sector.
51) India and Mauritius discussed initiatives to strengthen bilateral ties including the early finalisation of the Comprehensive Economic Cooperation Partnership Agreement (CEPCA).
52) The regulatory duty on polyester and cotton yarn must be withdrawn in the upcoming mini-budget to strengthen the domestic manufacturing units, urged Faisalabad Chamber of Commerce and Industry (FCCI) President Syed Zia Alumdar Hussain.
53) Exporters are likely to get incentives based on parameters like research and development, product-specific clusters and production pattern under a five-year foreign trade policy to be released later this year.
The commerce ministry is working on recasting the existing export incentive schemes in line with the global trade norms of the World Trade Organisation. The new incentives, the official said, could focus on R&D activities, production parameters, product-specific clusters and rebates on state levies.
54) Under pressure to cut duties on at least 80% of its imports from China under a mega trade agreement spanning 16 countries, India has begun bilateral talks on the modalities of tariff concessions with the country.
The two-day meeting in China beginning Monday comes ahead of a meeting of negotiators of the 16 participating countries in Jakarta, Indonesia, later this week when all the member countries of the Regional Comprehensive Economic Partnership (RCEP) will chalk out timelines aimed at concluding the agreement this year.