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Reduction of logistics cost by 10 per cent will help boost the country’s exports by about 5-8 per cent, exporters body FIEO said on Thursday.
Federation of Indian Export Organisations (FIEO) President Ganesh Kumar Gupta said that implementation of the Goods and Services Tax (GST) has helped growth of the logistics sector, which is very critical in increasing international trade. High logistics cost impacts competitiveness of domestic goods in the international markets. The cost of logistics for India is about 14 per cent of its GDP and it is far high as compared to other countries.
“It is estimated that a 10 per cent decrease in indirect logistics cost can increase 5-8 per cent of exports,” Gupta told reporters here. He said this while addressing media over LOGIX-India 2019 programme. The commerce ministry is working on a national logistics policy, which is aimed at promoting seamless movement of goods across the country and reducing high transaction cost of traders.
He also said that to develop this sector in an integrated way, it is important to focus on new technology, improved investment, skilling, removing bottlenecks, improving inter modal transportation, automation, single window system for giving clearances, and simplifying processes. Talking about the programme, Gupta said logistics companies from about 27 countries are participating in the three-day show in the national capital.
“LOGIX India 2019 is an initiative to improve India’s trade with regions like Africa, ASEAN, Afghanistan, Iran, and Iraq,” he said. Over 130 International delegates representing logistics and freight forwarders professionals are attending the event.
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He also said that the flagship programme ‘Sagarmala’ along the coastal areas of the country will develop ports for faster handling of import and export cargo
Customs authorities are introducing comprehensive digitalisation of export and import transactions, and leveraging electronic tagging technology to improve export logistics, Finance Minister Piyush Goyal said on February 1.
He also said that the flagship programme ‘Sagarmala’ along the coastal areas of the country will develop ports for faster handling of import and export cargo.
The government, under the Sagarmala project, has set ambitious targets of port modernisation, port connectivity enhancement, port-linked industrialisation and coastal community development for phase-wise implementation until 2035.
“Indian customs is introducing full and comprehensive digitalisation of export/import transactions and leveraging RFID (radio-frequency identification) technology to improve export logistics,” Goyal said while presenting the Budget for 2019-20.
Improvement in logistics helps seamless movement of goods and reduce transactions cost for traders, leading to enhanced competitiveness of domestic products in the global markets.
During April-December this fiscal, exports grew by 10.18 percent to $245.44 billion.
Since 2011-12, India’s exports have been hovering at around $300 billion. During 2017-18, the shipments grew by about 10 percent to $303 billion.
Promoting exports helps a country to create jobs, boost manufacturing and earn more foreign exchange.
Further the minister said that to promote ‘Make in India’ initiative, the government has rationalised customs duties and procedures. “Our government has abolished duties on 36 capital goods. A revised system of importing duty free capital goods and inputs for manufacture and export has been introduced, along with introduction of single point of approval under section 65 of the Customs Act,” he said.
The Odisha state cabinet recently approved the Odisha Handicrafts Policy 2019, aimed to boost the growth of the handicrafts sector. The policy also aims to empower handicraft artisans and make them lead partners in development, focus on their welfare and maximise their income-generating opportunities and enhance the state’s share in export of handicrafts.
It also aims to create necessary physical and human capital, revive languishing crafts, preserve craft heritage and develop a centre of excellence at the State Institute for Development of Arts Crafts (SIDAC), an official statement from the state government.
The rise of the fast fashion industry in the past few years has brought in its wake a booming trade of second-hand clothing. Today, millions of people around the world donate clothes with the understanding that they will support the needy or will be resold in secondhand stores.
But are increased imports into Africa of second-hand clothing from developed countries consistent with the contemporary agenda of African economies, which is to industrialize and add value, rather than to consume? This is at the heart of the recent trade dispute between African economies, particularly those in the east, and major international exporters of second-hand clothing, such as the United States.
Today, about 62% of the continent’s total exports are in primary form. With exports being largely commodity-driven, Africa is in a risky position because of price volatility and because it is dependent. Building a competitive textile value chain is an import step for the African continent to revive its import substitution industries. So the agenda to industrialize is a priority, but can the continent turn its production of textiles and clothing into a manufacturing industry when second hand exports dominate the consumer market?
What is it about second-hand clothing in Africa?
Used clothing has diverse names in the various African countries. In Rwanda, it’s chagua, in Kenya, mitumba, and salaula in Zambia.
The global trade of second-hand clothing has a long and rugged history. It became prominent due to its affordability and to the surge in liberalization policies in the early 1990s. Second-hand clothing provides work for millions of resellers, distributors and market stall holders in developing markets, particularly in East Africa. But the decision by some countries to cut its imports of second-hand clothing in order to encourage local textile manufacturing has brought forth charges of protectionism from developed country exporters.
In an attempt to reconstruct the domestic garment industry, countries such as Rwanda are putting in place an industrial strategy to develop local textiles, apparel and leather sectors, taking a determined stance on imported second-hand clothing, which resulted in the US suspension of AGOA duty-free access to US markets. The exclusion from AGOA would affect about 3% of Rwanda’s total exports to the US, that amounted to $1.5 million in 2017. Rwanda’s total exports that year amounted to $43.7 million .
However, the effects of the AGOA suspension on local economies may be mixed. It may stimulate local production of new clothing and footwear for the domestic market, but it could also negatively affect consumers through higher prices and reduced availability of clothing.
The garment and clothing industry globally are expected to double in the next 10 years, generating up to $5 trillion annually. In the USA alone, $284 billion are spent every year on fashion retail through the purchase of 19 billion garments.
This presents a tremendous opportunity for Africa at various levels of the value chain. From design to production to marketing, the fashion industry is a big and profitable business. The combined apparel and footwear market in sub-Saharan Africa is estimated to be worth $31 billion.
Creating a competitive value chain
The textile and garment industry presents a unique opportunity for countries seeking to pursue industrialization. The sector helps to diversify the economy, and if geared towards exports, it can be a source of foreign exchange.
Let’s look at the case of Ethiopia. The country has a target to generate $30 billion in exports from the textile and apparel sector by 2030 and the government has been building industrial parks to enhance the textile investment and productivity of the country. It’s no wonder that Ethiopia has attracted textile manufacturing giants like H&M and Primark.
But African countries face a host of challenges and opportunities alike. These include a weak business environment; a scarcity of skilled and unskilled workers, high cost of production, and low-level infrastructure among other challenges.
There is an urgent need for Africa to rapidly industrialize and add value to everything that it produces, and the textile and clothing industry is dominated by small and medium size enterprises, which have the potential to create decent jobs – skilled and unskilled – for millions of Africans, especially women and youth.
African countries need to build adequate infrastructure. Information and Communications Technologies (ICTs) such as e-commerce will be key to support this growth and tap into global and regional value chains.
Opportunities for African countries to take advantage of the potential of the textile and garment industry and participate in global or regional value chains depend on the comparative advantage of each economy, the level of its regional/global integration, infrastructure, human capital, access to finance and policies.
The African Development Bank has launched the Fashionomics Africa Flagship initiative to support the development of small and medium-scale enterprises operating in the textile and clothing industry in Africa, with a focus on women and youth empowerment, by increasing access to finance and access to markets through e-commerce for entrepreneurs whilst incubating and accelerating start-ups.
Success will come in ensuring that local content and artisanry are used and properly credited in the value chain which includes industrialization. This creates the foundation for a more sustainable and faster structural transformation of African economies.
The International Monetary Fund on Monday cut its world economic growth forecasts for 2019 and 2020, due to weakness in Europe and some emerging markets, and said failure to resolve trade tensions could further destabilise a slowing global economy.
In its second downgrade in three months, the global lender also cited a bigger-than-expected slowdown in China’s economy and a possible “No Deal” Brexit as risks to its outlook, saying these could worsen market turbulence in financial markets.
The IMF predicted the global economy to grow at 3.5% in 2019 and 3.6% in 2020, down 0.2 and 0.1 percentage point respectively from last October’s forecasts.
The new forecasts, released ahead of this week’s gathering of world leaders and business executives in the Swiss ski resort of Davos, show that policymakers may need to come up with plans to deal with an end to years of solid global growth.
“Risks to global growth tilt to the downside. An escalation of trade tensions beyond those already incorporated in the forecast remains a key source of risk to the outlook,” the IMF said in an update to its World Economic Outlook report.
“Higher trade policy uncertainty and concerns over escalation and retaliation would lower business investment, disrupt supply chains and slow productivity growth. The resulting depressed outlook for corporate profitability could dent financial market sentiment and further dampen growth.”
The downgrades reflected signs of weakness in Europe, with its export powerhouse Germany hurt by new fuel emission standards for cars and with Italy under market pressure due to Rome’s recent budget standoff with the European Union.
Growth in the euro zone is set to moderate from 1.8 percent in 2018 to 1.6 percent in 2019, 0.3 percentage point lower than projected three months ago, the IMF said.
The IMF also cut its 2019 growth forecast for developing countries to 4.5%, down 0.2 percentage point from the previous projection and a slowdown from 4.7 percent in 2018.
“Emerging market and developing economies have been tested by difficult external conditions over the past few months amid trade tensions, rising U.S. interest rates, dollar appreciation, capital outflows, and volatile oil prices,” the IMF said.
The IMF maintained its US growth projections of 2.5% this year and 1.8% in 2020, pointing to continued strength in domestic demand.
It also kept its China growth forecast at 6.2 percent in both 2019 and 2020, but said economic activity could miss expectations if trade tensions persist, even with state efforts to spur growth by boosting fiscal spending and bank lending.
“As seen in 2015–16, concerns about the health of China’s economy can trigger abrupt, wide-reaching sell-offs in financial and commodity markets that place its trading partners, commodity exporters, and other emerging markets under pressure,” it said.
Britain is expected to achieve 1.5 percent growth this year though there is uncertainty over the projection, which is based on the assumption of an orderly exit from the EU, the IMF said.
The rare bright spot was Japan, with the IMF revising up its forecast by 0.2 percentage point to 1.1% this year due to an expected boost from the government’s spending measures, which aim to offset a scheduled sales-tax hike in October.
The IMF has been urging policymakers to carry out structural reforms while the global economy enjoys solid growth, with its managing director, Christine Lagarde, telling them to “fix the roof while the sun is shining”. The IMF has stressed the need to address income inequality and reform the financial sector.
However, as growth momentum peaks and risks to the outlook rise, policymakers must now focus on policies to prevent further slowdowns, the IMF said.
“The main shared policy priority is for countries to resolve cooperatively and quickly their trade disagreements and the resulting policy uncertainty, rather than raising harmful barriers further and destabilizing an already slowing global economy,” it added.
China’s economy grew 6.6 per cent in 2018, the weakest annual performance since 1990, confirming a slowdown in the world’s second-largest economy that could threaten global growth, according to official data on Monday.
China’s growth in 2018 was down from 6.8 per cent growth in 2017.
The country’s economy grew 6.4 per cent in the fourth quarter from a year earlier, levels last seen in early 2009 at the height of the global financial crisis.
“We see that there are changes in stability, concern about these changes. The external environment is complicated and severe,” Efe news quoted Ning Jizhe, director of China’s National Statistic Bureau, as saying in a media conference on Monday.
“The economy is facing downward pressure,” Ning added.
Adding to the gloom was the ongoing trade conflict with Washington, according to the data.
The uncertain outlook for Chinese exporters caused companies to delay investing and hiring and in some cases even to resort to layoffs – a practice that is often discouraged by China’s stability-obsessed Communist Party rulers.
The official jobless rate ticked up to 4.9 per cent last month from 4.8 per cent in November.
In the southern technology and export-manufacturing centre of Shenzhen, for instance, many private makers of electronics, textiles and auto parts furloughed workers more than two months before the Lunar New Year holiday, which begins in February, according to business owners and local officials.
The neighbouring city of Guangzhou saw growth slump to 6.5 per cent last year – well short of the 7.5 per cent annual target set by the city government – as trade tensions hit the city’s manufacturing sector hard.
Some economists and investors have said China’s economy is far more anaemic than the government’s 6.6 per cent rate of expansion for 2018.
They said the government’s move on Friday, just ahead of Monday’s data release, to cut the 2017 growth rate to 6.8 per cent from 6.9 per cent, which they said provides a slightly lower base, giving a slight boost to the fresh 2018 data.
Monday’s economic data also included some indications that this year’s downturn may not be as severe as initially thought, reports the Guardian.
The country’s industrial output rose 5.7 per cent, while retail sales increased 8.2 per cent in December, compared to a year earlier.
Chinese Vice Premier Liu He will visit the US on January 30-31 for the next round of trade talks with Washington.
US President Donald Trump said on Saturday there has been progress toward a trade deal with China, but denied that he was considering lifting tariffs.
Forty representatives of Cambodia’s business community and workers on Monday called on the European Union (EU) not to withdraw trade preferences for Cambodia, saying that such a withdrawal would adversely affect millions of people.
The call came after the EU said in October last year that Cambodia could lose its special trade access to European markets under the Everything But Arms (EBA) preferential trade scheme, citing concerns over human rights and labor rights in the country.
EU would take at least 18 months to decide whether to withdraw the EBA preferences for Cambodia or not.
EU is a major trading partner for Cambodia, especially for textiles and footwear sector. As a Least Developed Country, Cambodia has enjoyed exports of all products, except arms and ammunition, to European markets with duty-free for decades.
“The consequences of such a decision will impose serious economic damage on Cambodia,” said a joint letter addressed to EU Trade Commissioner Cecilia Malmstrom.
The letter was jointly signed by Kith Meng, president of Cambodia Chamber of Commerce, Van Sou Ieng, president of Garment Manufacturers Association in Cambodia, and Arnaud Darc, chairman of European Chamber of Commerce in Cambodia, among other business and union leaders.
It said over the past decades, Cambodia has managed to leverage itself out of humanitarian and economic turmoil to become a world leader of GDP growth, by servicing global markets with the support of multilateral partners and favorable trade preferences.
“However, the withdrawal of this arrangement will jeopardize this progress, by directly harming the livelihood of millions of workers and their families that rely on employment within the garment sector, placing them once again at risk of returning to poverty,” the letter said.
The letter added that the cumulative effect of this decision will threaten the income of another 3 million people, including dependents and service providers from the hospitality, transportation and accommodation sectors.
“We appeal to the European Commission and European member states to continue in its unwavering support of Cambodia’s development by refraining from taking any action that will harm the interests and livelihoods of the country’s people,” the letter said.
Cotton USA shared US cotton’s sustainability story at the recently held Hong Kong Denim Festival (HKDF), sponsored by CreateTHK and organised by Vocational Training Council (VTC) and Hong Kong Design Institute (HKDI) in PMQ, Central and Sham Shui Po fabric wholesale district. Cotton Council International (CCI) is the marketing arm of the US cotton sector.
The festival is a three-week cultural and design event that aims to promote denim culture and generate impactful cultural movement for the creative development of denim art and design. To impart US cotton’s importance in denim, CCI director of China & Northeast Asia, Karin Malmstrom delivered a presentation about sustainable sourcing and global denim trends at the denim seminar.
The festival features a dynamic series of activities including a denim bazaar, exhibition, design workshop and seminar to embrace the culture and experience of denim from the past, present and future. These activities were designed to stimulate people’s emotional attachment with denim chronologically, by revisiting old denim stories and new experiences of denim design, attracting participants from all walks of life, including the general public, artists, designers and industrialists.
Cotton USA licensees, including Advance Denim, H.W. Textiles, Cone Denim, Panther Textiles, Mou Fung and Teelocker, along with global denim brands such as Levi’s, 45R, Bauhaus, Scotch & Soda, Chevignon, G-Star and Koyo, also sponsored and supported the denim festival.
Organisers expect the HKDF to become an iconic art and design event that unites the local denim industry, derive new directions by drawing design experts regionally and internationally, and become a nurturing ground for denim design visionaries.
The growth of Indian economy will be driven by strong domestic demand and increased focus on export markets in future, according to a survey conducted by FICCI and PwC jointly. The survey sought views of India’s c-level executives on Indian economy, the business environment for next 12 months and factors that determine trade competitiveness.
Currently, over 65 per cent of the companies whose CXOs participated in the survey ‘Manufacturing Barometer’ have the Indian market as their major source of business. However, 85 per cent of them believe that their future growth will be driven by export demand, says the report. To promote export growth in terms of operations, the country expects the Government’s support in capacity augmentation at export gateways to reduce waiting time, enhancement of key trade infrastructure at the gateways, improvement of soft infrastructure through simplification of processes to reduce procedural delays at export gateways and creation of digital platforms.
Respondents from the focus sectors believe their sectors on an average will witness over 5 per cent incremental growth over the current year’s performance. Key factors driving this confidence include strong public sector driven infrastructure development, easing out of business and regulatory processes, and opening up of FDI in several sectors, including simplification of FDI rules for large investments and introduction of a fast-tracking mechanism for FDI cases. The positive sentiment around Indian business conditions is also on account of EoDB reforms that helped the country jump 53 places on the World Bank’s ‘Doing Business’ index in 2 years. Between 2017-18, states and union territories introduced 7,758 reforms. The Government is expected to maintain the momentum on the on-ground implementation of these state-level EoDB reforms.
Implementation of Goods and Services Tax has also brought in supply chain efficiency and respondents expect the benefits to be more visible over the long term, as the current period is too short to give a clear opinion on the quantum of impact. Investment decisions are now being made based on the supply chain planning and intent to be closer to markets instead of attempting to maximise state tax incentives. Respondents believe that GST will play an important role in increasing the FDI in the manufacturing sector, and 90 per cent are confident that GST will boost their sectoral growth.
“The Indian manufacturing sector has witnessed a steady recovery in the last 2 years, with the growth rate increasing from 2.8 per cent in 2015–16 to 4.4 per cent and 4.6 per cent in 2016–17 and 2017–18 respectively. Needless to say, a number of proactive Government initiatives like Make in India, a forward-looking and simple FDI Policy, and Skill India, along with the country’s higher rank on the Ease of Doing Business Index, have been instrumental in reviving growth,” said Dilip Chenoy, secretary general, FICCI.
There is an immense opportunity in technical textiles sector. It is estimated that the domestic market is likely to reach at Rs. 2,00,823 crore by 2020-21 with CAGR of 20%, said Sanjay Jain, Chairman of Confederation of Indian Textile Industry (CITI)
The demand for this sector is rising due to many factors including rapid urbanization, advances in medical technology, expansion in construction sectors, awareness on safety and environmentalism and increased spending on healthcare.
However, he said that India still has a long way to go as it currently lacks the ability to domestically fulfil the rising demand and to be globally competitive in this sector.
There is untapped potential both in exports and domestic market of technical textiles.
Jain said that to make Indian technical textiles Industry globally competitive, dual policy needs to be adopted for exports as well as domestic markets.
A proactive approach from Government as well as industry stakeholders will be the key for Indian technical textiles to realize its full potential.
One of the key steps that may be taken by the Government is to establish regulatory norms for mandatory usage of technical textile items in specific industries to increase consumption.
Apart from that, focus on bringing foreign direct investment in order to get the requisite technical know-how and expertise would be crucial.
He also thanked the Government of India for notifying 207 HSN Codes as Technical Textiles.
It was a long standing demand by the industry and this step will give a major boost to the Technical Textiles Sector which is considered as the Sunrise Sector.
Jain pointed out that technical textiles provides new opportunities to the Indian Textile industry to have long term sustainable future.
They are not limited to Chapters 50 to 63 of HSN Codes pertaining to conventional textiles, but are covered under the HSN Codes spread over Chapter 1 to 99.
In order to compile the data on export and import and also provide fiscal support, it was necessary to identify the HSN Codes of all the technical textile items.
He further stated that the absence of clear classification of Technical textiles was creating confusion and many genuine manufacturers were not getting various incentives and subsidies being allowed to Technical Textiles. T
his was impacting investment in the fast growing and sunrise segment of Textiles. Mr Jain is confident that this policy intervention will help the industry to invest increasingly in this sector and enable the growth of the Indian Textile Industry.
CITI Chairman also elaborated that Technical Textiles are very significant for the growth of the Textile Industry as they are value added textile products that are manufactured primarily for technical performance and multi-functional properties with less intent on aesthetics & design.
The diverse range of technical textiles in India can be broadly grouped into 12 categories, such as Agrotech, Meditech, Packtech, Clothtech, Indutech, Hometech, Geotech, Oekotech, Protech, Sportstech, Buildtech and Mobitech. All these sectors are expected to see a double digit growth.
