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NDO – Vietnam’s garment and textile sector posted a total export revenue of approximately US$36.1 billion in 2018, an increase of US$2 billion over the yearly estimate despite increasingly fierce competition and geopolitical fluctuations in the world, particularly rising trade protectionism.
The result demonstrates the ceaseless efforts of enterprises in seeking and expanding markets, applying advanced technology in enhancing quality of their products, and improving their competitiveness.
Stable sources of orders
The number of orders won by Vietnamese garment companies is abundant, creating stable job and income for labourers. According to Chairman of the Board of Directors of Hung Yen Garment Corporation (Hugaco) Nguyen Xuan Duong, Hugaco reported an export revenue of around US$310 million in 2018, up 8% over the yearly estimate in spite of tough competition from Bangladesh, Cambodia, Indonesia and India.
Duong noted that Hugaco’s subsidiaries have also won bulk orders to export products by the end of April and even by the end of June 2019. However, he expressed his worry about the trade war between the US and China which may affect the Vietnam’s garment and textile industry.
As one of the largest garment firms in the southern province of Dong Nai, Dong Nai Garment Corporation (Donagamex) posted a growth rate of over 10% in 2018 and an export revenue of US$70 million. According to Donagamex General Director Bui The Kich, the company carried out a number of solutions to maintain established markets and expand into new ones, including investing in modern technology to increase productivity and ensure the competitiveness.
Kich said that Donagamex received orders to be completed by the end of the second quarter of 2019, noting that, with positive signs from the world market and the Vietnam’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the garment and textile sector will not worry about order shortage in 2019.
Executive Director of the Vietnam National Textile and Garment Group (Vinatex) Cao Huu Hieu affirmed that the export revenue of Vietnam’s garment and textile industry was estimated at US$36.1 billion in 2018, up 16.1% over 2017. A large number of garment companies have received orders for the end of the second quarter of 2019 and the entire 2019, Hieu noted.
Vietnam has been one of the leading garment and textile exporters to the US market for many years and Vietnam is the second choice for US apparel importers, after China. Meanwhile, Vietnam has yet to be able to compete with other rivals in the EU market because other competitors, such as Bangladesh and Cambodia, are offered tariff incentives without meeting any conditions of origin. If Vietnam can take advantage of the EU-Vietnam Free Trade Agreement (EVFTA) in the future, it will be able to gradually penetrate into the EU market.
Chairman of the Binh Duong Textiles Association Le Hong Phoa said that business situation of local garment enterprises in the province in 2018 is very optimistic and most of enterprises have fulfilled their production targets. The total export revenue of the garment and textile sector in the province reached US$2.65 billion, an increase of 16.8% compared to 2017. This is a good sign, showing that enterprises have grasped the opportunities and adapted well to the changes of the market economy. Notably, the number of apparel importers from the US and the Republic of Korea (RoK) placing orders to Vietnam has sharply increased recently.
Utilising opportunities
Vinatex Executive Director Cao Huu Hieu affirmed that when participating in CPTPP, Vietnam’s garment and textile sector will have opportunities to open its market and gain access to non-traditional textile and garment markets such as Canada and Australia.
Canada’s textile and garment import turnover reached US$13.86 billion in 2017, including US$814 million worth of imports from Vietnam, accounting for 5.9% of the total Canadian market share. Vietnam’s garment and textile export revenue to Australia posted at merely US$256 million in 2017, occupying only 2.8% of Australia’s total imports of garments and textiles, Hieu noted.
Enterprises in this field are expect to boost their exports thanks to reduced tariffs and boosted investment in supporting industries.
However, garment and textile companies have to face a lot of challenges to enjoy tariff incentives, such as stricter requirements on the proof of origin, business declaration, and record and document archives, in addition to competitive pressure from foreign direct investment (FDI) enterprises.
To penetrate into textile markets of CPTPP member countries, Vinatex has focused on boosting trade promotion and relations with customers while avoiding unnecessary costs. At the same time, the company focuses on increasing its self-control in raw materials and accessories, Hieu stated.
According to Bui The Kich, to take advantage of CPTPP, businesses should continue to invest in automated equipment to replace labourers and increase productivity and product quality.
The CPTPP, without the US, has also opened up new markets for Vietnamese firms such as Canada, Australia and several South American countries which have great demand for garment and textile products, Kich said. However, to overcome the challenges and make good use of opportunities from CPTPP, state management agencies should continue in administrative reforms, reduce the specialised inspection of import and export goods, and cut transportation costs to support enterprises, Kich added.
Meanwhile, Nguyen Xuan Duong warned that the garment and textile growth rate in the coming years will not be as good as in 2018 due to increasing competition and trade protection trend, particularly from the US.
Hieu said that businesses need to step up their investment and production solutions to continue to gain market shares from their biggest rival China and other rivals in the established markets. Regarding non-traditional markets, companies needs to take advantage of the CPTPP to penetrate into these markets, including the two potential markets of Canada and Australia. In addition, they need to solve the existing problems of exchange rates, inventory, orders, and others.
Enterprises are advised to invest in modern technology, enhance corporate management, improve working conditions, increase labour productivity and product quality while ensuring delivery time and prices of products to boost their competitiveness in the market. In addition, the State should develop mechanisms of support for enterprises in the areas of finance, tax and land and work out specific measures to encourage the development of supporting industries. Authorities also need to develop raw-material areas to serve the garment and textile industry as well as continuing in administrative reforms to facilitate enterprises in this area.
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Vietnam has become increasingly appealing to large foreign investor groups in the textile and garment industry who want to seize opportunities before the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) takes effect in January next year, according to analysts.
German-based Amann Group, one of the world’s top three leading producers of high-quality sewing and embroidery threads, is expanding its network to Vietnam with a new factory being constructed on a 45,000sq.m ground at Tam Thang Industrial Park in the central province of Quang Nam.
The new facility will be added to Amann’s existing network of factories in various countries across Asia, including Bangladesh, China, India, and Indonesia
At the new production site, the group will produce around 2,300 tonnes of sewing threads per year, mainly for the manufacture of apparel and shoes.
The first phase of the project is scheduled to commence in late July of next year.
Kraig Biocraft Laboratories Inc., the US’ leading developer of spider silk-based yarn, is working with agricultural cooperatives in Quang Nam to expand mulberry production and develop high-performance silk in Vietnam.
The firm plans to set up a centre for research and development (R&D) of silk, as well as grow about 2,500ha of mulberry to support spider silk in the country.
According to Kraig Biocraft Laboratories, Vietnam is being chosen to scale up its spider silk commercialisation efforts in one of the firm’s strategic moves to further growth.
The domino effect created by FDI expansion in the textile and garment sector has also led to an increase in the number of foreign suppliers of machinery and equipment for the industry
In June, ILLIES Vietnam – a member of the German C. ILLIES & Co. and also a leading distributor of industrial textiles machinery and equipment – announced it has expanded its portfolio in the spinning sector. It now provides machines and spare parts for short-staple yarn-spinning systems for the Rieter Group and the local textile market.
In the first quarter of 2019, the company will open a repair centre for mechanical and electrical parts of Rieter machines.
So far this year, the Vietnam Textile and Apparel Association (VITAS) has welcomed many foreign textile and garment producers visiting Vietnam to explore investment opportunities, said VITAS Vice President Truong Van Cam. More FDI projects will arrive in the country’s textiles sector in the coming years, Cam added.
Once new-generation free trade agreements (FTA), like the CPTPP and the EU-Vietnam FTA, enter into force, investment in the textile and garment industry will increase, offering a great opportunity for machinery suppliers like Rieter, said a representative of ILLIES Vietnam.
Statistics by the VITAS showed that a total of nearly 15.9 billion USD in FDI had been injected into more than 2,090 textile and garment projects in Vietnam by the end of last year. In the first half of 2018, the industry attracted another 2.8 billion USD in FDI.
The country is now among the leading exporters of textile and garments in Asia. Vietnam’s total textile and garment exports have experienced a 3.6-fold increase over the past decade, from 7.78 billion USD in 2007 to 31 billion USD in 2017. Last year’s figure represented 16 percent of the nation’s total export revenue.
This year, the sector expects to earn 35 billion USD from exports.
Adviser to Prime Minister on Commerce, Textile and Industries Abdul Razak Dawood has announced that the government has finalised a five-year national tariff policy aimed at restricting duties on raw material and machinery imports for export-based industries.
“We are making efforts to rationalise certain taxes and regulatory and customs duties,” he said. “At present, there exists roughly 34 different taxes and the government is planning to reduce them to 12 or eight in the next couple of years.”
It would assist the leadership to remove a key impediment in the way of ease of doing business, the adviser emphasised, adding that he was well aware of the challenges faced by the business community regarding tax slabs and tariff lines.
Addressing the ‘Emerging Pakistan’ ceremony organised by the Rawalpindi Chamber of Commerce and Industry (RCCI) at the Jinnah Convention Centre, Dawood highlighted that the government, in its first 100 days, had initiated reforms in the Federal Board of Revenue (FBR) and transformed its functioning.
Trade deficit narrows to $8.9b in first quarter
“We have decided to withdraw policy functions from the FBR,” he said, adding that from now on, the finance ministry would be formulating the policy in consultation with key stakeholders including the business community.
He assured the RCCI of complete cooperation in fulfilling its demand of converting the old airport building into a modern expo centre and installation of a grid station for the Rawat Industrial Estate.
The adviser voiced hope that people would notice a genuine change on the economic front in the next 30 days as major changes had been made keeping in view the policy matters pertaining to taxation, exports, refunds, regulatory and customs duties and incentives to business community with respect to the ease of doing business.
“Renowned companies of the world including ExxonMobil, Pepsi and Suzuki have pledged additional investment in Pakistan,” he pointed out.
World Bank asks Pakistan, India to trade more via land
Earlier, RCCI President Malik Shahid Saleem, in his address, emphasised that the major aim of the event was to discuss current economic challenges, decline in exports, taxation and promoting a positive image of Pakistan.
He was of the view that Pakistan’s economy was taking a leap and hence, the country needed an environment conducive to investment.
He urged the government to tackle the prevailing uncertainty surrounding the business corridors and provide maximum assistance and incentives for broadening the tax net.
He termed private sector the backbone of exports, pressing the government to address its grievances at the earliest. Major issues highlighted were sales tax refunds, rupee depreciation, rising interest rate and high regulatory duties on raw material.
Despite being a promising export item, shipment of garment scrap, locally known as jhoot, fell last fiscal year mainly due to the government’s anti-export policy amid rising local consumption and a Chinese ban on import, industry people said.
Exports fetched $50 million in fiscal 2017-18, down 16 percent year-on-year, according to Syed Nazrul Islam Faruque, president of Bangladesh Textile and Garments Waste Processors and Exporters Association. “This is an indirect reflection of the government’s anti-export tariff policy,” he told The Daily Star.
He said export slightly came down as China stopped importing the textile waste from Bangladesh at the end of 2017. In the previous years, Bangladesh used to earn $60 million to $70 million per year by exporting garment scrap.
Depending on quality, the export price of the apparel waste is $120 to $500 per tonne. However, Bangladesh Tariff Commission has fixed the minimum export price at $320 a tonne whereas the price hovers between $120 and $500 in the international market.
“We can’t export jhoot at a low price because of the tariff policy although there is a huge demand of the low-end textile waste in the international market,” Faruque added.
About three lakh tonnes of garment leftovers are produced in Bangladesh every year. Of them, 95 percent is being exported, mainly to India and European countries. Cotton, yarn or even clothes are manufactured from the discarded fabrics and yarn through recycling.
Industry people said the export volume would increase if the government does not fix the tariff.
There are two categories of garment scrap: one is from woven fabric and another from knit. Woven scrap is cheaper than knit, as it is easy to recycle the knit waste to yarn or fibre after reprocessing, Faruque said.
According to the chief of the association, they collect woven waste at Tk 25 to Tk 26 per kg and knit scrap at Tk 40 to Tk 45 a kg and then process them.
About 10 lakh workers are involved in the waste processing industry and there are more than 1,000 waste processing factories in the garment industrial areas. More than 100 businesses are directly involved in exports.
According to the exporters’ platform, a record 192,975 tonnes of scrap were shipped in 2017-2018, 203,130 tonnes in 2016-17, 213,265 tonnes in 2015-16, and 228,902 tonnes in 2014-15.
Separate data on garment scrap export is hard to come by as the National Board of Revenue considers the shipment as part of the overall garment export. There is no separate harmonised system (HS) code although the Tariff Commission has fixed the minimum export price, said Faruque.
He said there is no capable spinning mill in Bangladesh that can recycle garment leftovers to manufacture yarn and fabric. So, most of the processed waste has to be exported.
There are a maximum 20 millers which manufacture terry towel using garment waste as raw material, but the quantity is very low.
About 40 percent of the garment leftover is exported to India, 40 percent to Europe, 15 percent to other countries, and the rest 5 percent is used locally to manufacture terry towel, according to Vhim Khetan, managing director of RL Trading, an exporter of apparel scrap.
Bangladesh has huge potential to export the garment leftovers as most of them are not locally used and a huge amount is generated by garment factories.
“If garment scrap is not exported, it will emerge as an environmental hazard.
Indonesia on Sunday signed an economic agreement with the European Free Trade Association (EFTA) aimed at increasing trade and investment, concluding almost eight years of negotiations.
Under the deal, tariffs and non-tariff barriers would be eliminated for thousands of products traded between Indonesia and the EFTA countries – Switzerland, Liechtenstein, Norway and Iceland, according to government statements.
Among those products, Indonesian palm oil would get full market access in Iceland and Norway, with an exception of palm products for animal feed other than for fish, according to Jakarta’s statement.
Switzerland would also grant easier access for palm oil, but under certain quotas, its embassy in Jakarta said in a statement.
Enggartiasto Lukita, Indonesian Trade Minister, said discussion on market access for palm oil was the sticking point that dragged negotiations on for years. The first round of talks were held in early 2011.
“They held back our palm,” Lukita told reporters after the signing of the agreement.
“I said, we’ve gone a long way. You will benefit from this and I too. So if you don’t open up for our palm, let’s just forget about this,” adding that he had threatened to leave Norwegian salmon out of the deal.
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Swiss Federal Councillor Johann N. Schneider-Ammann said the agreement was based on sustainable palm oil production.
“As far as palm oil is concerned, believe me, we had intensive discussions in Switzerland as well and we found a solution with our partners here in Indonesia, a solution to balance the interests and to stay at the same time very respectful as far as the palm oil concern,” he said at a news conference.
The world’s top palm oil producer and exporter Indonesia has often tried to reassure buyers that its palm oil is produced sustainably.
Lukita on Sunday repeated the government’s argument that palm oil production requires less land than other vegetable oils, making it unfair to blame deforestation on palm plantations.
Greenpeace said more than 74 million hectares of Indonesian rainforest – representing an area twice the size of Germany – have been logged, burned or degraded in the last half century, which the group blamed on palm oil and pulp and paper industries.
Other main Indonesian export products such as fish, coffee and textiles would also get preferential treatment under the deal, in exchange for greater access for the main products of the EFTA countries, such as gold, medicines and dairy products.
In 2017, Indonesia-EFTA trade was worth $2.4 billion (1.9 billion pounds) with Indonesia having a trade surplus of $212 million. EFTA countries put $621 million of foreign direct investment into Indonesia in 2017, according to Indonesian records.
Green process 75% faster, 40% more energy-efficient than existing technology’
Three researchers from the North-Eastern Hill University (NEHU) based in Meghalaya capital Shillong have patented a fast, energy-efficient and low-cost process for treatment and bio-detoxification of industrial effluents contaminated with harmful azo-dye.
Non-toxic discharge
The ‘green process’ developed by Mihir K. Sahoo, Bhauk Sinha and Rajesh N. Sharan for treating waste-water from industries such as textile, leather and paint is 75% faster, 40% more energy-efficient and more sustainable than the existing technology.
Their process has also been found to leave the discharge environmentally benign and thus likely to be equally non-toxic to other bio-flora and fauna.
“We received the patent for biologically detoxifying industrial waste-water apart from chemical detoxification, which we feel is quite revolutionary. My expertise in molecular biology and my colleagues’ expertise in chemistry combined to develop the technology,” Prof. Sharan of NEHU’s Department of Biochemistry told The Hindu on Sunday.
He worked with Dr. Sahoo and Mr. Sinha of NEHU’s Department of Chemistry for four years. The trio perfected the technology and applied for a patent in July 2013. The patent was received in October this year.
According to the trio, the traditional treatment of environmentally damaging waste-water effluents with appropriate chemicals processes such as chemical precipitation, coagulation and electrocoagulation only transfers the contaminating chemical entities and chemical groups of the waste-water to other media, thereby producing secondary wastes.
Secondary wastes
“In some cases, these secondary wastes, intermediates and by-products formed by the second process of chemical remediation or detoxification may produce equally or more toxic chemical entities than the original toxicants and pollutants,” Prof. Sharan said.
It was thus important to ascertain if the treated effluent was also benign to the biosphere (flora and fauna). Although theoretically, modern chemical remediation processes completely eliminate the pollutants from waste-water, the trio’s bio-toxicity evaluation of such effluents using Escherichia coli, or E. coli based bio-toxicity assay showed that it still continued to be highly bio-toxic.
Most strains of E. coli, a common kind of bacteria that lives in the intestines of animals and people, are harmless. Their survival is crucial for bio-flora and fauna, the researchers said.
Therefore, the release of such effluents into the environment could adversely affect the survival of aquatic micro-organisms, flora and fauna, thereby disturbing the entire ecosystem and ecological balance.
“The so-called waste-water is not really suitable for release directly into streams, rivers and other water bodies. We recognised this serious shortcoming of the existing technologies in the domain, and came up with the innovative technology,” Prof. Sharan said.
The textile industry needs to focus on training its young managers and technicians, T. Kannan, Managing Director of Thiagarajar Mills, said here on Saturday.
Mr. Kannan was speaking at the inaugural of the 74th All India Textile Conference of The Textile Association (India), organised by its South India Unit. The theme for the two-day conference is “Global Textiles – The Way Forward”.
“We need to do much more to train the managers and young technicians,” he said. There are many ingredients for the success of a textile unit. The most important is the manager or the chief executive officer. The industry faces challenges in this area as most of the textile units are small and medium-scale enterprises that are family-owned and family-run. Explaining the requirements of the an efficient manager, he said the candidate should have the right information about developments in the industry. In the changing market, most of the companies go through the cycle of ups and downs. Managers should understand the risks and manage these, he said.
T. Rajkumar, deputy chairman of Confederation of Indian Textile Industry, said the industry was giving thrust to innovation. It was going through changes in all its segments. The stakeholders should work towards sustaining export and domestic growth of textiles and clothing.
Raja M. Shanmugam, president of Tirupur Exporters’ Association, said the total annual turnover of the knitwear units in Tirupur is about ?45,000 crore. The aim was to achieve ?1 lakh crore by 2020. However, macro economic changes slowed down growth for the last two years. The knitwear town is hopeful of achieving the target by 2022.
T.K. Sengupta, president of The Textile Association (India), said the vision of the Association is to promote technological knowledge. The next world textile conference would be held in Dhaka next year.
T.R. Dinakaran, Chairman of Shri Ramalinga Group of Mills, presented “Life Time Achievement Award” to R. Jagadish Chandran, Chairman of Premier Mills, and Mr. Kannan presented “Industrial Excellence Award” to Sanjay Jayavarthanavelu, Chairman and Managing Director of Lakshmi Machine Works.
Delegates from nearly 200 states finalised a common rule book designed to deliver the Paris goals of limiting global temperature rises to well below two degrees Celsius
Nations on Sunday struck a deal to implement the landmark 2015 Paris climate treaty after marathon UN talks that failed to match the ambition the world’s most vulnerable countries need to avert dangerous global warming. Delegates from nearly 200 states finalised a common rule book designed to deliver the Paris goals of limiting global temperature rises to well below two degrees Celsius (3.6 Fahrenheit). “Putting together the Paris agreement work programme is a big responsibility,” said COP24 president Michal Kurtyka as he gavelled through the manual following the talks in Poland that ran deep into overtime.
“It has been a long road. We did our best to leave no-one behind.” But environmental groups said the package agreed in the Polish mining city of Katowice lacked the bold ambition needed to protect states already dealing with devastating floods, droughts and extreme weather made worse by climate change.
“We continue to witness an irresponsible divide between the vulnerable island states and impoverished countries pitted against those who would block climate action or who are immorally failing to act fast enough,” executive director of Greenpeace Jennifer Morgan said.
The final decision text was repeatedly delayed as negotiators sought guidelines that are effective in warding off the worst threats posed by our heating planet while protecting the economies of rich and poor nations alike.
“Without a clear rulebook, we won’t see how countries are tracking, whether they are actually doing what they say they are doing,” Canada’s Environment Minister Catherine McKenna told AFP.
At their heart, negotiations were about how each nation funds action to mitigate and adapt to climate change, as well as how those actions are reported.
Developing nations wanted more clarity from richer ones over how the future climate fight will be funded and pushed for so-called “loss and damage” measures.
This would see richer countries giving money now to help deal with the effects of climate change many vulnerable states are already experiencing.
Another contentious issue was the integrity of carbon markets, looking ahead to the day when the patchwork of distinct exchanges — in China, the Europe Union, parts of the United States — may be joined up in a global system.
“To tap that potential, you have to get the rules right,” said Alex Hanafi, lead counsel for the Environmental Defense Fund in the United States.
“One of those key rules — which is the bedrock of carbon markets — is no double counting of emissions reductions.” The Paris Agreement calls for setting up a mechanism to guard against practices that could undermine such a market, but finding a solution has proved so problematic that the debate has been kicked down the road to next year.
One veteran observer told AFP Poland’s presidency at COP24 had left many countries out of the process and presented at-risk nations with a “take it or leave it” deal.
Progress had “been held up by Brazil, when it should have been held up by the small islands. It’s tragic.” One of the largest disappointments for countries of all wealths and sizes was the lack of ambition to reduce emissions shown in the final COP24 text.
Most nations wanted the findings of the Intergovernmental Panel on Climate Change (IPCC) to form a key part of future planning.
It highlighted the need for carbon pollution to be slashed to nearly half by 2030 in order to hit the 1.5C target.
But the US, Saudi Arabia, Russia and Kuwait objected, leading to watered-down wording.
The final statement from the Polish COP24 presidency welcomed “the timely conclusion” of the report and invited “parties to make use of it” — hardly the ringing endorsement many nations had called for.
“There’s been a shocking lack of response to the 1.5 report,” Morgan told AFP. “You can’t come together and say you can’t do more!” With UN talks well into their third decade sputtering on as emissions rise remorselessly, activists have stepped up grassroots campaigns of civil disobedience to speed up action on climate.
“We are not a one-off protest, we are a rebellion,” a spokesman for the Extinction Rebellion movement, which disrupted at least one ministerial event at the COP, told AFP.
“We are organising for repeated disruption, and we are targeting our governments, calling for the system change needed to deal with the crisis that we are facing.”
The government’s decision to raise the duty drawback rates will boost textile and apparel exports, experts said.
Despite several incentives offered by the government to boost textile and apparel exports, their shipment from India stagnated between $32 billion and $37 billion for over seven years.
For the financial year 2017-18, India witnessed textile and apparel exports to the tune of $36.05 billion as against the target of $45 billion. Now, the government has set yet another challenging target of $82 billion by 2021.
To achieve this, the government hiked the Merchandise Export from India Scheme (MEIS) rate from 2 per cent to 4 per cent on various products and also offered several incentives, including interest subvention. But, these efforts did not yield desired result primarily because of preferential treatment given to small economies like Bangladesh and Thailand in the western countries, the largest market of India’s textile and apparel exports.
“The revised drawback rates will lead to increase exports of cotton textiles and other products in the value chain. There is a significant increase in the drawback rates for cotton made-ups which will encourage export of value-added products like home textiles. Further, the removal of drawback cap in the case of export products where the drawback rates are less than 2 per cent will benefit the cotton textiles exporters,” said K V Srinivasan, Chairman, The Cotton Textiles Export Promotion Council (Texprocil).
The Union Ministry of Commerce raised the duty drawback rates across all varieties of textile and apparel by up to 70 per cent recently.
Global markets have turned favourable for Indian exporters because of the Chinese government’s decision to reduce activities in the labour and energy-intensive industries, including textile and apparel. Industry sources said China has reduced its global market share in the textile and apparel segment to 38 per cent from over 40 per cent nearly two years ago.
India, however, has failed to grab the opportunity to increase its global market share which remained consistently at 1 per cent for several years.
China’s vacated market share has not been fully explored because of the high cost of production and the liquidity crises in India. In fact, small economies like Bangladesh, Thailand, Indonesia and Vietnam have increased their global market share in the textile and apparel segment.
Meanwhile, India’s overall textile and apparel exports recorded a marginal growth of 2 per cent to $20.8 billion for the April-October 2018 period over $20.4 billion in the corresponding last year. The share of textile and apparel in overall merchandised exports from India stood at 11 per cent for the period this year.
“The increased drawback rates will provide relief to the exporters. In view of the significant duties/taxes embedded in the man-made fibre (MMF) textile segment, the drawback rates declared now need to be enhanced at least up to 6 to 7 per cent from the existing 1 to 3 per cent,” said Sri Narain Aggarwal, Chairman, The Synthetic & Rayon Textiles Export Promotion Council (SRTEPC).
The increase in the duty drawback rates would help the exporters face the competition in the overseas market. The maximum increase of drawback rates on MMF textiles is by about 1.5 per cent.
Also, the product of nylon filament yarn (dyed) has been added under the drawback scheme.
Texprocil, meanwhile, urged the government to increase the MEIS rate for fabrics from 2 to 4 per cent and also to cover cotton yarn under the MIES apart from a 3 per cent increase in Interest Equalization rate so that exports of cotton textiles can achieve its true potential.
Apparel exporters in Tirupur have sought increase in duty drawback rates and Rebate of State Levies (ROSL) rates as the Government recently reduced the drawback rates for ready-made garments. In a memorandum to the Prime Minister, president of Tirupur Exporters’ Association Raja M. Shanmugham said the reduction in duty drawback rates came as a shocker to the apparel industry. The rates were increased for cotton, yarn, and fabric but reduced for garments.
Traditionally, the government has been following a policy of encouraging apparel exports compared to other products in the value chain. Apparel sector is one of the largest job creators and more than 90 % of the apparel manufacturing units are in the MSME sector. “It is well known that for every crore of investment in apparel making, 70 jobs are created,” he said. The reduction in duty drawback now for garments and increasing it for other products is a deviation from the existing policy.
Effectively, there is 0.1 % to 0.2 % reduction in the rates. Though this might not affect exports directly, by increasing the drawback rates for other products in the value chain, the government is encouraging export of raw materials (yarn and fabric) to the competing countries. Apparel industry was seeing negative growth for continuous months since last July.
“We have sought restoration of the pre-GST level of rates,” Mr. Shanmugham told The Hindu . “We gave enough material to support our demand and to sustain competitiveness of the garment sector,” he added.
“We want the government to revisit its decision and restore the pre-GST rates,” he said.
