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India’s economic growth will accelerate to 7.3 per cent in the current fiscal and 7.5 per cent in the next as money supply has recovered to its pre-demonetisation level and disruptions related to the rollout of GST have diminished.
Fitch, which last month kept India’s sovereign rating unchanged for the 12th year in a row, said the country’s ratings “balance a strong medium-term growth outlook and favourable external balances against a weak fiscal position and difficult business environment”.
But the business environment is likely to improve gradually with the implementation and continued broadening of the government’s structural-reform agenda.
“Fitch expects growth to accelerate to 7.3 per cent in the fiscal year ending March 2019 (FY19), and 7.5 per cent in FY20, from 6.5 per cent in FY18,” it said in second quarter Sovereign Credit Overview for Asia Pacific region
The Indian economy continued to bounce back in the final quarter of 2017, growing 7.2 per cent
“The influence of one-off, policy-related factors, which had been a drag on growth, has now waned. The money supply recovered to its pre-demonetisation level in mid-2017 and is now increasing steadily, similar to the previous trend. Meanwhile, disruptions related to the rollout of the goods and services tax in July 2017 have gradually diminished,” it said.
The BJP-led government’s last full budget before general elections has left much of the task of addressing the country’s relatively weak public finances to the next government.
The budget deficit target for FY19 is set at 3.3 per cent of GDP, down from an expected 3.5 per cent in FY18, implying fiscal slippage of 0.3 per cent of GDP in both FY18 and FY19 relative to last year’s budget targets.
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Mumbai: The work of setting up India’s first textile museum in the city will start this month, confirmed a senior official from the Mumbai Heritage Conservation Committee (MHCC). Work on the first phase of the project, which includes a light show and depiction of a mill worker’s life, will start in a few days. The first textile museum in the country will come up at United Mills’ compound, Kalachowkie. The second phase will be executed after four to five months.
A senior MHCC official said, “The contractors had communicated that they would start work on phase one of the textile museum this month itself. Work on components of the first phase i.e. the light show and musical fountain, and murals depicting the lives of mill workers, will begin.”
In January this year, the BMC finalised the contractor who would execute phase one of the project. Sawani Constructions, which emerged as the lowest bidder, bagged the contract. The first phase will come up on a 10,000 square metre area in the mill premises. It will include beautification and landscaping around a lake inside the compound; setting up of an exhibition centre; a multipurpose plaza with art stalls and murals depicting a bygone era; and a cafeteria.
The main aim behind developing such a museum is to highlight history and the contribution of mill workers in the city. The project will be implemented on an area of 44,000 square metre at the defunct United Mills.
Bangladeshi denim products are dominating the global markets by beating its competitors in the European markets as well as in the United States by occupying a lion’s share of the proverbial denim pie.
As of now, Bangladesh is the largest exporter of denim products to Europe with a 27% market share topping China, the largest exporters of clothing products to both Europe and the US. With a 14.20% market share, Bangladesh now is also the third largest exporter of denim products in the US after Mexico and China.
According to Eurostat, statistics directorate of the European Commission, Bangladesh in 2017 exported denim products worth €1.30 billion – a 0.54% hike from 2016’s €1.29 billion. However, Bangladesh’s closest competitor Turkey has posted a 4.36% growth to $1.12 billion in the same period.
Bangladesh earned $507.92 million – a 9.55% growth – exporting denim products to the US markets in 2017, which was $463.61 million in 2016, according to data from the Office of Textiles and Apparel or Otexa in the US.
China earned $921.90 million with 1.41% negative growth, while second largest exporter Mexico registered 7.9% negative growth by earning $793.42 million. Meanwhile, Pakistan and Vietnam, the two closest competitors of Bangladesh, posted positive growths by over 13% earning $213.78 million and nearly 20% earning $207.28 million, respectively.
Bangladesh currently exports Blue Denim Trousers WG, Blue Denim Trousers MB, Blue Denim Skirts, Blue Denim Jackets, Blue Denim Suit Type Coats MB, Playsuits, and Sunsuits, among other products, to the international markets. The major global retailers to which Bangladeshi entrepreneurs also supply denim products include H&M, Uniqlo, Tesco, Walmart, Levi’s, Diesel, Wrangler, G-Star, s.Oliver, Hugo Boss, and Gap.
Rapid growth
New investments both in fabrics and garments manufacturing and increased capacity are playing major roles in establishing Bangladesh’s dominance in the US and EU markets. But manufacturers are also investing in research and development of high end products, helping them get a better price.
Meanwhile, improvement of the safety standard in the apparel industry has also drawn the attention of more global buyers. “Investment in denim fabrics and denim manufacturing has increased sharply. As a result, production capacity has increased too, pushing the export earnings up and taking the lead in the global markets,” Sayeed Ahmad Chowdhury, general manager of Square Denim, told the Dhaka Tribune.
He said manufacturers now are also taking less time to produce the products as they are sourcing the fabrics from local mills instead of importing. “As a result, buyers are placing more orders here.”
In the last two years, Square Denim has increased its production capacity from 1.5 million meters to three million. Considering the increasing demand, Sayeed said, they will be launching another unit soon.
Envoy Textiles Managing Director Abdus Salam Murshedy told the Dhaka Tribune: “Buyers always want quality fabrics when it comes to denim products. To manufacture quality fabrics, latest technology is must for any company. And we have already established that.”
Producing five million metres of denim fabric every month, Envoy Textiles is currently the Number 1 LEED Platinum certified Green Factory in the world.
Two years back, Bangladesh was highly dependent on imported denim fabrics. “Now, we can meet about 50% of the demand locally and are also exporting to some of the globally renowned buyers,” Murshedy said.
According to Bangladesh Textile Mill Association, Bangladesh currently has 31 denim fabrics manufacturing mills, which produce over 400.40 million metre fabrics every year.
Growth opportunity
According to market research and advisory firm Technavio, the global denim and jeans market is worth about $60 billion. However, the denim industry is expected to grow at a compound annual growth rate of over 6.5% by 2020.
Asia Pacific Countries is expected to be the fastest growing market for denim jeans, said Technavio data, and China is the fastest growing country in the region.
Since Bangladesh is now the largest exporter to the EU and holds a large share in US markets, there is an enormous opportunity to grow – especially in premium denim jeans market, which is expected to grow at a a compound annual growth rate of 12.23% by 2020 in the region.
“There is hardly any adult in the world whose wardrobe does not contain at least one pair of jeans. Moreover, jeans are now worn and loved by women and children across the world. So the prospect of Bangladesh’s denim export growing in the coming years is undoubtedly bright,” Denim Expert Limited Managing Director Mostafiz Uddin told the Dhaka Tribune.
“If Bangladesh can make its footing stronger in developing design and innovation, then the sky is the limit for our denim industry,” he said.
According to a study by Cotton Inc, 71% of people in Europe and Latin America enjoy wearing denim, followed by 70% in the US, 58% in China, and 57% in Japan.
Since customers are more cautious about environmental and health hazards issues, the denim products manufactured by a sustainable process are becoming more popular.
In a recent development, Bangladesh is also turning the apparel manufacturing process into an eco-friendly one by establishing green factories – a major advantage – which consume less water and other natural resources, said Abdus Salam Murshedy.
Besides, more apparel businesses are apparently shifting from China to Bangladesh as the workers’ wages in China have increased, and the country is also moving towards producing high value products instead of basic and mid-range ones.
Challenges and ways forward
Despite being a global market leader in denim products, there are also some challenges ahead for the Bangladeshi manufacturers.
According to people from the growing industry, price of fabrics and getting utility services – including gas and electricity – hindering new investment are some of them. Moving towards value added products is another issue that needs more attention.
“Production cost has gone up, but the manufacturers are forced to offer lower prices due to price cuts in the finished products by global retailers,” said Sayeed Ahmad Chowdhury.
Since most of the denim products are limited in basic items, the key to success in the global market is innovation in designs and washing, he said.
Mostafiz Uddin, also the founder and CEO of Bangladesh Denim Expo, added that the challenge for Bangladesh is too also adding further value to denim products through design development and innovation.
What the sector currently needs, all of them agreed, is more investment in research and innovation to meet the increasing global demand in latest and trending denim products.
To tap the growth opportunity and help with product diversification and value addition, Bangladesh government should prioritize denim products and provide all out support to the entrepreneurs, added former Bangladesh Garment Manufacturers and Exporters Association President Murshedy.
One of the world’s leading producers of polyester fibres, filaments, polyester-based polymers, intermediates and specialty products, Turkish company SASA Polyester Industry Inc. has announced that it will invest $ 8.5 billion in two new projects and change the balance in the global polyester business.
Mehmet Seker, General Manager of SASA Polyester Inc. said: “We have decided to invest to two projects. The first of these will be a polyester investment. The other will be in the field of petrochemicals.”
“With new polyester investment, in the production of polyester chips, fibres and filaments, we will increase our production capacity from 340,000 tons/ year to 3.1 million tons/ year, making us one of the largest producers in the world.”
Once the investment has been completed, Turkey will move from a net importer to a net exporter position, in terms of polyester.
“With the investment in the petrochemical field, we will cut down on imports. First of all, we will produce PTA (Pure Teraphthalic Acid) and MEG (Ethylene Glycol) which are our raw materials to meet our own needs and sell the rest,” Seker said.
Seker also said that the company is in talks with the Ministry of Economy regarding SASA producing its own raw materials and continued: “We will firstly produce raw material of polyester with this investment. After one step we aim to establish a petrochemical plant to produce that raw material. China and South Korea grew this way. Turkey also had to grow up like that. We have imported these products until now, after this investment we will produce ourselves now.”
The projects will reduce the current account deficit to about $ 3.8 billion. With these investments, seven thousand additional jobs will be provided. When the investments are over, total production of SASA will increase to about 10 million tons.”
In 2000, SASA strengthened its leading position in the sector by establishing a joint venture with DuPont. Following the acquisition of DuPont’s shares by Sabanc? Holding in 2004, it became a wholly-owned subsidiary of Hac? Omer Sabanc? Holding A.?. and was renamed ADVANSA. In 2005, the name of the group in Turkey was changed to ADVANSA SASA Polyester Sanayi A.?.
Then in May 2011, H.O. Sabanc? Holding A.?. acquired SASA‘s majority shares from ADVANSA B.V and the business was renamed SASA Polyester Sanayi A.S.
In May 2015, Erdemo?lu Holding acquired all of the SASA shares of Sabanc? Holding, and Erdemo?lu became the main shareholder of SASA with 84.8% of its shares. 15.2% of shares are sold publicly.
Move will also ensure supply of goods is done properly, says GSTN CEO
To curb tax evasion, authorities will start matching details given in the Goods and Services Tax Return (GSTR) Form Number 1 with those given in the e-way bill.
The matching will begin with returns to be filed for April as it is the first month when the tax authorities will have both GSTR1 and e-way bill data.
In the meantime, tax authorities have issued notices to over 8,000 assessees for differences in sales figures of more than ?50 lakh in their GSTR1 and GSTR3B forms. Notices have been served on the basis of returns filed during August and December, 2017. Based on their response, a decision will be taken on how much tax and penalty they need to pay.
“Matching process will ensure supply of goods have been done properly,” Prakash Kumar, CEO of GSTN, the IT backbone of unified indirect tax system, told BusinessLine.
The logic behind matching is to plug any possible loophole in filing of returns. All the GST assessees are required to file GSTR 1 either on monthly or on quarterly basis while e-way bill is required for movement of goods of value exceeding ?50,000.
Commenting on the development, Rakesh Nangia, Managing Partner, Nangia & Co LLP, said the matching of details mentioned in GSTR-1 with the e-way bills will help in curbing tax evading practices as the invoice matching mechanism will be a significant tool in ascertaining the transaction details while matching it with the details furnished by the taxpayer.
“However, the said mechanism will be partly effective/beneficial since only supply of goods can be traced by the matching concept. Further, e-way bill is required on movement of goods where consignment value exceeds ?50,000,” he explained while adding that in cases where value of goods does not exceed ?50,000, matching would not be possible.
Action for mismatch
Option has been given on the e-way bill portal to take reports for particular tax period from e-way bill portal and match with tax invoices for outward supply and inward supply/delivery challan. Information about e-way bills, along with the transactions captured in GSTR1, will make it easy to spot mismatches in certain cases where invoice has not been reported in GST return by the taxpayer or where taxpayer fails to file his returns or furnishes wrong details.
“In such cases, notice may be served by the authorities demanding clarifications for difference in tax amounts along with penalties. The said measures were adopted by the VAT authorities in the erstwhile regime also. Further in extreme cases, confiscation of goods, along with penalties may be imposed by the authorities,” Nangia said.
e-way bill was introduced from April 1. It is applicable for both inter-State and intra-States movement of goods, though the latter is being introduced on phases. So far, 18 States have adopted e-way system. Maharashtra and 7 Union Territories will start the new system for the intra state/UT movement of goods from May 25 while the others will do so by June 3.
e-way bill capacity
GSTN claims that there is capacity to generate e-way bill up to 70 lakh every day. At present, on an average 11-13 lakh e-way bills are being generated everyday. Nearly three-fourth of the e-way bills are related to inter-State trade while the remaining are for intra-State. However, once all the States start using e-way bill for internal movement, the ratio is expected to change to 50:50.
The U.S. cotton projections for 2018/19 include smaller production, unchanged exports and slightly higher ending stocks compared with 2017/18. Production is forecast at 19.5 million bales, based on 13.5 million planted acres as indicated in the March Prospective Plantings report. While planted area is expected higher in 2018/19, reduced precipitation to date in the Southwest suggests abandonment will likely rise from 2017/18’s below-average level. With higher abandonment and the U.S. yield falling from the previous year’s record-high, production is projected 7% lower than in 2017/18. Domestic mill use in 2018/19 is projected slightly higher at 3.4 million bales, while exports are expected to remain unchanged at 15.5 million. At 5.2 million bales, 2018/19 ending stocks are projected 500,000 bales higher than the year before, and equivalent to 28% of total use. The range for the marketing year average price received by producers is 55.0 to 75.0 cents per pound.
For 2017/18, U.S. cotton production is reduced marginally from last month. The export forecast is increased 500,000 bales to 15.5 million bales as the expected U.S. share of world trade rises, with ending stocks lowered accordingly.
The world 2018/19 cotton projections show a decline in stocks of 4.5 million bales, as consumption once again exceeds production. Global production is expected to fall marginally, as area declines 1%. Expected production in India – the world’s largest producer – is unchanged from 2017/18. Lower production in the United States, Australia and China is nearly offset by higher expected crops in Pakistan, Turkey and Brazil. Global consumption is projected to rise 3.9% to a new record high, as a growing world economy drives mill use higher around the world. Projected world trade is raised from 2017/18, as import-oriented consumers such as Vietnam and Bangladesh are accounting for a larger share of world consumption, and China’s imports rise. Ending stocks are projected down 4.5 million bales year to year, at 83.8 million bales, 67% of world consumption. An even larger decline is expected in China’s stocks, and stocks outside of China are expected to rise for the third consecutive year.
For 2017/18, both world production and consumption is increased about 300,000 bales from last month, leaving ending stocks virtually unchanged. Production is higher in Uzbekistan and Australia, and consumption is higher in Turkey and Uzbekistan. Australia’s expected exports are 300,000 bales lower, while higher exports are now expected for the United States, Chad, Benin and Uzbekistan.
Slow growth in India’s exports has prompted the government to promote merchant exporters, who contribute almost a third of India’s exports in value terms but can’t avail of some incentives meant for manufacturer exporters.
Merchant exporters do not own manufacturing facilities but buy goods from manufacturers here and sell to overseas customers. They have the flexibility to procure goods from many sellers and sell them after negotiating the best prices to foreign buyers.
They are usually able to negotiate prices with buyers, sellers and shipping lines which are better than regular exporters. The department of commerce is mulling ways to reduce the cost of credit for them.
“It is crucial to promote merchant exporters and make use of their marketing and negotiatingskills with global partners,” said an official in the know of the development.
Merchant exporters indirectly help upgrade the production quality of manufacturers by making them export ready,” said a Delhi-based expert on export-import matters.
Though India’s exports crossed the $300-billion mark after a gap of two years in 2017-18, exports contracted in March after four months with labour-intensive sectors such as gems & jewellery, readymade garments of all textiles, jute manufacturing including floor covering, carpets and agri products showing a dip in outward shipments.
According to Ajay Sahai, director general of Federation of Indian Export Organisations, manufacturer exporters are constrained by their capacity but merchant exporters are extremely competitive, which helps them bring in higher per unit realisation. “Japan and Korea too have adopted the approach of promoting merchant exporters as they follow the aggregator model and it has been successful there,” Sahai said.
The plan to encourage merchant exporters has come at a time when the government is relooking at its export promotion schemes and making them compliant with global trade norms.
NEW DELHI: The agriculture ministry has decided not to change cotton seed price after the Delhi High Court ruled that Monsanto Technologies’ patents on a manmade gene used in Bt cotton seed variety Bollgard II were not valid. Officials said the government would wait for the judgement of the Supreme Court, where the matter is now being heard. The National Seed Association of India (NSAI) has urged the government to scrap the trait fee on Bollgard II cotton to benefit farmers.
“There will be no change in cotton seed price for this season. Planting has already started in some parts of Punjab and will pick up in the coming days. The matter is now being heard in the Supreme Court and we will go by the final judgment,” said an agriculture ministry official.
The Supreme Court on Monday did not grant a stay on the HC judgement, but justices Rohinton Nariman and Abhay Manohar Sapre sought the response of Monsanto Technology, Nuziveedu Seeds and other seed companies. The matter has been posted for hearing on July 18.
NSAI director general Kalyan Goswami had discussions with the Department of Agriculture to scrap the trait fee on Bt II cotton seeds. “We have conveyed to the government and it is up to them to take it forward,” said Goswami .
The government had in March revised Bt cotton seed prices, including trait value or tech fees, to support distressed farmers hit by frequent pink bollworm pest attacks. The price of Bollgard II was kept at Rs 740 per packet of 450 gm each, including trait value of Rs 39, which seed companies pay to the technology provider, Monsanto Mahyco Biotech (India).
India is the world’s biggest cotton producer with eight million farmers who buy 50 million such seed packets annually to plant on 12.26 million hectares. A Delhi High Court bench had said in an April 11 ruling that Monsanto’s patent was not valid under Section 3(j) of the Patent Act, splitting opinion between those who said it would keep Indian farmers from getting the much-needed benefits of agricultural innovation and others who dismissed this concern as overblown.
Traders’ body CAIT on Thursday said Walmart’s $16-billion acquisition of home-grown retailer Flipkart will affect India’s retail sector “very badly” and demanded scanning and scrutinising the deal from “different angles” by the government.
US retailer Walmart Inc on Wednesday announced the acquisition of 77% stake in Flipkart. The deal values the 11-year old Indian e-commerce firm at $20.8 billion.
“A regulatory authority should be constituted by the government which should scan the details of Walmart-Flipkart deal and it should be scrutinised from different angles like competition and cyber security, predatory pricing, deep discounting and loss funding,” CAIT secretary general Praveen Khandelwal said.
“After assessing the deal, we will either represent to government or to the Competition Commission, or we will go to court,” he added.
US giant to open 50 new cash-and-carry stores
Walmart Inc on Thursday said it will continue to grow its wholesale cash-and-carry business, adding 50 new stores in the next 4-5 years.
“We currently have 21 stores and plan to open 50 stores in 4 to 5 years. Plans are on track,” Walmart India president and CEO Krish Iyer said at a select media roundtable called to explain the Flipkart deal.
Walmart chief executive Doug McMillon said Flipkart, in which the US retailer is acquiring 77% stake, would continue to operate as a separate board-managed company with co-founder Binny Bansal as the CEO. — PTI
e-comm firms violating FDI norms: Retailers
New Delhi: The Retailers Association of India (RAI) has taken exception to “some e-commerce companies” not following the FDI policy and indulging in discounting. The criticism from the retail industry follows a similar stand taken by traders after the mega deal was announced. The RAI said as representatives of the entire retail industry, it is RAI’s policy not to comment on any deals between individual companies. “Having said that, we would like to affirm our support to both online and offline channels of retail as well as Indian and international retail”, it said. The industry body of retailers, which includes leading Indian retail chains, said, “We believe some e-commerce companies in India have not been adhering to the guidelines issued under the Press Note 3 of the FDI Policy for marketplaces”.
The increasing preference for using offshore production could push the New Zealand textile industry to die off within two years, the founder of an outdoor apparel brand says.
Over 40 years to 2016, the number of jobs in textile, clothing and footwear plunged from 47,000 to just 9500.
Davey Hughes, who started Swazi in 1993, said New Zealand factories were being priced out of the market by cheaper overseas suppliers.
“It’s chiselling away at the foundation of the apparel industry in New Zealand,” he said.
“Each year we see more and more government departments taking all of their uniforms, their clothing, their safety equipment offshore to be manufactured simply because New Zealand manufacturers aren’t as competitive as those in the Far East.”
Mr Hughes said the textile industry had been in a steep decline for some time and would probably die by 2020.
“I think it’ll be incredibly sad … People who sew garments, you know, they’re craftspeople and it’s a craft that once you lose it, you lose it forever,” he said.
“I think we’re so close to that actually happening.”
“In Auckland, there is a woman and she is a genius at button-holing.
“Now, everyone who has ever judged iD has had a buttonhole made by her, and she is looking to retire and sell her business,” he said.
“No-one is buying her business and when she retires I will stop making jackets with buttons and just put zips on them, because there won’t be anyone to put buttons on my garments.”
World owner Dame Denise L’Estrange-Corbet said this week her company had been selling T-shirts made in Bangladesh for “approximately seven years”, after the factories with the machinery they needed to make their T-shirts all closed down.
Before the World controversy, designer Annah Stretton said she had to move production to China, because there were no machines left in New Zealand that could create the intricate detailing for which she is known.
“From our point of view, there’s a lot of femininity, a lot of froufrou … there’s a lot of trimming, there’s a lot of colour, there’s a lot of print,” she said.
“That is a lot harder to get here.”
Statistics from the Ministry of Business, Innovation and Employment showed that in 2009, the export value of tapestries, trimmings and embroidery was $5million, while its value in 2017 was just $2million.
In addition to the struggles faced with production moving offshore, Mr Hughes said new costs such as the rise in the minimum wage meant keeping production local was only going to get harder.
“Everything that gets pushed against us is just making it so unsustainable,” he said.
Mr Hughes said there should be more factories like his in regional towns to improve the economic sustainability of local and national economies.
