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The Centre has tinkered with an export incentive scheme that has left the cotton apparel exporters of northern India high and dry, but brought cheers to the woollen garment exporters.
The Central Board of Indirect Taxes and Customs (CBIC) has slashed duty drawback rates from 2% to 1.8% in case of cotton garments. For polyester, the new duty drawback rates will be 2.3% from 2.5% earlier, official sources said. The new drawback rates are effective December 19.
The move came as a bolt from the blue for the cotton apparel industry, which was expecting an increase in duty drawback rates, Punjab and Haryana-based exporters said.
Apparel industry has tremendous potential for employment generation. The industry is passing through an adverse situation due to intense international competition, particularly from neighboring countries. Surprisingly, instead of raising the incentive, it has been reduced,” said Ludhiana-based KG Exports Managing Director Harish Dua.
Exporters said, there has been a marginal increase in business for the past couple of months mainly due to dollar appreciation, but the industry is far behind the 2016-17 level. “The government must also stop raw cotton export to boost exports,” he said. There are around 200 cotton garment exporters in Punjab and Haryana.
Apparel exporters are required to use various inputs for making garments. About 70% of the material consumed is cotton, which is agri-product coming from farming sector and out of GST ambit. It comes loaded with all embedded taxes, which the farmer has to pay for production and transportation of cotton. During the production process of fabric and garments, electricity gets consumed which is also embedded in the cost of garment. Expenses are incurred on fuel and transportation, exporters said, giving reasons for losing market share in the international market. “All these add to the input cost and leads to losing competence over China,” one of the exporters said.
They added that margins are very thin. “Our neighbouring competitors like Bangladesh, Pakistan, Sri Lanka and Vietnam have duty advantage of 9.60% in importing countries whereas India does not have the same advantage in the absence of signing of FTA with EU. Our products, therefore, get outpriced and we lose the market,” they said.
On the other hand, woollen manufacturers said increase in duty drawback rates from 3 to 4.8% will help the exporters. “Any kind of support from the government is helpful for the industry. The increase in duty drawback rates will definitely boost the exports from the country and also give some kind of cushion to the domestic exporters which are facing stiff completion from China and other neighbouring countries,” said Monte Carlo Fashions Executive Director Sandeep Jain.
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Our Bureau The powerloom sector in India can double its earnings in five years if it focuses on value addition, modernisation and by enhancing productivity, said SSM Mathivanan, President, Tamilnadu Powerloom Federation Ltd (TNPLF).
Addressing a session on the challenges and opportunities of the weaving sector at Weaves, a premier trade fair under way at Texvalley, Erode, he observed that India continued to export grey fabrics to countries such as China and Bangladesh, which in turn added value to these fabrics for better realisation in international markets. Grey fabrics fetch just about ?30 a metre for weavers, but with value-addition like fabric printing, weavers can get double the amount.
“The sector needs to embrace modernisation and go for wider fabrics which are in high demand. The sector currently produces fabrics with a width of 48 inches but with automated looms, it will be able to produce fabrics of 63 inches width.”
Low productivity
He said India stood sixth in loom productivity despite having more machinery than China, which is ranked on top in productivity. “There are about 50 lakh handlooms, half as many powerlooms and close to 2 lakh automatic looms. While one powerloom can produce 50 metres of fabric a day, we are able to achieve only half of it,” Mathivanan said.
“Lack of quality power and fluctuation in the price of raw materials also impacts the sector. Also, more than 90 per cent of powerlooms are in the unorganised sector and these units do not have the wherewithal to impart training to workmen. If these issues are addressed, and the units venture into value addition, there should be no turning back, as the demand for fabrics is set to grow,” he said.
“The per capita consumption of fabrics is registering continuous growth, from about 10 metres a day two decades back to 25 metres at present. While it is a pittance when compared to the US, where the per capita consumption is close to 500 metres, with increasing purchasing power and lifestyle aspirations, it is set to grow in India too,” Mathivanan added.
Puneet Dudeja, Sales Director (South Asia), WGSN, a fashion forecast services company, urged weavers to exploit business opportunities that arise out of trends such as fads, fashion and classics. “Big data and artificial intelligence can play a key role in fashion forecasting,” he said.
Genetically engineered Bt cotton has failed to provide livelihood security for farmers, says article.
A research paper co-authored by leading agriculture scientist M.S. Swaminathan, which describes Bt cotton as a ‘failure,’ was criticised by India’s Principal Scientific Adviser (PSA), K. VijayRaghavan as ‘deeply flawed’.
The paper, ‘Modern Technologies for Sustainable Food and Nutrition Security’, appears in the latest issue of the peer-reviewed journal Current Science. It is authored by P.C. Kesavan and Prof. Swaminathan, senior functionaries of the M.S. Swaminathan Research Foundation (MSSRF). The article is a review of crop development in India and transgenic crops — particularly Bt cotton, the stalled Bt brinjal as well as DMH-11, a transgenic mustard hybrid. The latter two have been cleared by scientific regulators but not by the Centre.
“There is no doubt that GE (genetically engineered) Bt cotton has failed in India. It has failed as a sustainable agriculture technology and has, therefore, also failed to provide livelihood security for cotton farmers who are mainly resource-poor, small and marginal farmers,” according to the paper, “…The precautionary principle (PP) has been done away with and no science-based and rigorous biosafety protocols and evaluation of GM crops are in place.”
‘Flawed and full of errors’
The piece also raises questions on the genetic engineering technology itself on the grounds that it raises the cost of sowing. Also, the insertion of foreign genes (in the plant) could lead to “molecular and cellular events not precisely understood.”
The Kesavan and Swaminathan ‘Review’ (sic) is deeply flawed and full of errors. Needs scientific rebuttal,” Mr. VijayRaghavan tweeted from his personal account. Before being appointed the PSA, Mr. VijayRaghavan, a biologist, was Secretary, Department of Biotechnology, which funds a variety of molecular biology projects. Mr. Kesavan, who is the lead author of the piece, told The Hindu that he was unaware of Mr. VijayRaghavan’s comment but was expecting a “scientific, point-by-point response (of any flaws).”
“I’m not on Twitter but I believe a senior scientist shouldn’t be making such irresponsible comments,” he said.
The Hindu reached out to Prof. Swaminathan’s office and was told that the paper had raked up “a lot of controversy.” “We’ll likely soon be holding a press conference or a discussion on some of the points raised since the paper was published,” a spokesperson for the MSSRF said. Mr. VijayRaghavan said in a text message that he wouldn’t be immediately elaborating on his criticism but would in a “few days.”
‘Last resort’
Prof. Swaminathan, credited with leading India’s Green Revolution, has in recent years advocated ‘sustainable agriculture’ and said the government should only use genetic engineering as a last resort. “…Swaminathan emphasised that genetic engineering technology is supplementary and must be needbased. Only in very rare circumstance (less than 1%) may there arise a need for the use of this technology,” according to the paper.
However, the MSSRF is also involved in GE research. It has a programme on developing drought-resistant GM rice by using genes from mangroves to potentially protect rice varieties grown along the coasts from being affected by higher saline content — a consequence of warming seas from climate change. “The programme is ongoing but isn’t aimed for the present. Genes from salt-tolerant plants too aren’t ideal…however, GE may be deployed to manage against abiotic stresses,” said Mr. Kesavan. Abiotic stresses refer to environmental factors that could meddle with plant yield, as opposed to ‘biotic’ stressors such as insects. Conventional GE technology uses genes from soil bacterium to either protect them from specific pests, or — as in the case of GE mustard — facilitate hybridisation. This means making the plant more amenable to developing higher-yielding varieties.
The US trade deficit hit a 10-year high in October as Americans used a stronger dollar to snap up record imports, the government reported Thursday.
The result showed the trade gap has continued to swell despite the punitive tariffs imposed this year on allies and adversaries alike by US President Donald Trump, who has focused intently on the subject with the goal of reducing the deficit.
Amid Trump’s high-stakes trade war with Beijing, the total trade gap rose 1.7 percent to $55.5 billion, driven by all-time high imports, according to the Commerce Department.
The gap in goods trade with China likewise continued to expand, rising two percent to $38 billion, seasonally adjusted, as key exports like soybeans fell.
The October figure handily overshot analyst expectations, and could confirm weaker economic growth in the final quarter of 2018.
Americans bought more medications and imported autos while also taking more vacations, benefiting from the stronger US currency.
Travel by Americans also rose by $200 million, driving up US services imports to a record $46.9 billion.
The deficit in goods also was the highest on record at more than $78 billion, as US imports of goods and services hit a high as well, rising 1.5 percent to $266.5 billion.
Auto imports — another subject on which Trump is battling European leaders — likewise hit their highest level ever, at $31.8 billion.
From January to October, the total trade deficit rose more than 11 percent compared to the same period last year, and the gap in September was $555 million bigger than initially reported.
Long-suffering soy exports, victim of China’s retaliatory tariffs since July, fell by another $800 million in October while exports of aircraft and parts, also sensitive to trade relations, fell $600 million.
Meanwhile, there were declines in imports of computers and telecommunications equipment but not enough to offset the strong gains in pharmaceutical and auto imports for the month.
Buyer-seller meet expected to generate over Rs. 800 crore revenue
To facilitate the partnership between Indian and foreign buyers with manufacturers and traders, a four-day premier textile fair ‘Weaves’, with the theme “Global Connect for Weaving” was inaugurated at Texvalley here on Wednesday.
Organised jointly by the Confederation of India Industry (CII) and Texvalley, an integrated textile market, over 250 exhibitors representing the textile industry ranging from fabrics to weaving machines are taking part in the fair. Apart from this, buyer-seller meet is expected to attract about 1,000 business people to generate revenue of over Rs. 800 crore.
Speaking at the inauguration, A. Sakthivel, Vice-Chairman, Apparel Export Promotion Council and Regional Chairman, Federation of Indian Export Organisations, said that the State accounts for 60% of yarn and fabric exports while it accounts for 85% of knitwear exports.
He said that after 35 years, export from Tirupur has shown minus 15% and the industry is doing everything to come back. The textile industry in the State provides 40 lakh jobs of which 60% of the work force are women. “Reports were submitted to the Ministry of Textiles. If they don’t do it, knitwear exports may go out of India,” he cautioned. He wanted the Central and State governments to absorb the project cost that were implemented by the private parties.
C. Devarajan, Past Chairman, CII Erode Zone and Vice Chairman, Erode Textile Mall Private Limited said that that the situation in fabric manufacturing is not so encouraging as weaving units are large in numbers, but small in size as they were not able to promote and succeed. Hence, the fair will bring holistic improvement to the textile industry as a whole and to the fabric segment.
He said that the value of fabric sector is Rs. 35,000 crore per annum which can very well touch Rs. 1 lakh crore by 2025 with careful value-addition and technology upgradation. He called upon the traders and others to accommodate the change in the industry by aligning with growth partners, learning and attaining right knowledge and improving their visibility.
Sanjay Jayavarthanavelu, Deputy Chairman, CII Southern Region and Chairman and Managing Director, Lakshmi Machine Works Limited said that fashion keeps changing every two weeks and called upon the textile industry to respond quickly to the changes.
B. Krishnaraj Vanavarayar, Chairman of Bharatiya Vidya Bhavan and past Chairman, CII, said that successful entrepreneurs never gave excuses as they relied on their strength and succeeded. He said that the textile industry contributes to the country’s economy immensely and wanted political will to take decisions, which are essential.
M. Duraisamy, Immediate Past Chairman, Powerloom Development and Export Promotion Council, Nahid Rashid, Counsellor (Commercial), Bangladesh High Commission, V. Krishnamoorthy, Deputy High Commissioner, Sri Lanka, and D.P. Kumar, Executive Director, Erode Textile Mall Private Limited also spoke. P. Periyasamy, Chairman, Texvalley, buyers and sellers were present. A coffee table book titled “Titans of Textiles” featuring 28 successful entrepreneurs in the textile sector was also released on the occasion.
After subdued gross domestic product (GDP) growth in the second quarter (Q2) of the current financial year (2018-19), widely tracked Nikkei purchasing managers’ index (PMI) provided a ray of hope for the economy.
The country’s services and manufacturing activities grew at the highest rate since demonetisation (November 8, 2016), showed the data released by the PMI survey. This prompted the finance ministry and the Reserve Bank of India (RBI) to emphasise that the economic growth is on track.
Manufacturing and services (both private and public sectors) account for almost 74 per cent of the country’s GDP.
At 54.5 points, Nikkei India Composite PMI Output Index pointed to the fastest expansion in private sector activity since October 2016, which was a month before demonetisation was announced by Prime Minister Narendra Modi. The index stood at 53 points in October.
The RBI in its policy statement pointed out that the Composite PMI Output Index touched a two-year high of 54.5 in November. That, along with other factors, has prompted it to retain its GDP growth projection at 7.4 per cent for 2018-19, despite a muted 7.1 per cent GDP growth in Q2.
The Composite Index rose as services PMI rose to a four-month high of 53.7 in November, from 52.2 in October due to new orders.
The PMI data released on Monday had shown that the index for manufacturing was up at 54 points in November, the highest so far in this calendar year.
The survey noted that exports rose to a four-year high in November, even as there was decline in new orders for services from overseas.
Economic Affairs Secretary Subhash Garg said the Composite PMI augurs well for third quarter (Q3) GDP growth.
“Fastest expansion in Composite PMI Output Index in November since October 2016… PMI notes quickest pace of growth in exports in November in the last four years. Overall strong increase in business activity and in demand. Should augur well for 3rd quarter GDP growth,” Garg tweeted.
Pollyanna De Lima, principal economist at IHS Markit, and author of the report, also said that the data shows the private sector will provide impetus to GDP numbers in Q3.
“The welcoming news… so far suggests that the private sector economy will provide impetus to Q3 2018-19 GDP results,” the economist said.
On employment, the survey said additions to the workforce were maintained for the 16th month running. “So far, 2018 proved to be the strongest year for employment growth for a decade,” Lima added.
The data showed that the picture for prices was mixed, as input cost inflation moderated to a seven-month low, but firmer demand enabled firms to hike their charges to a greater extent.
Tirupur: Textile knitting units on Wednesday went on a two-day strike, demanding wage hike. They said many knitwear units were not ready to increase the wage, forcing them to go on strike, which is expected to affect Rs 100 crore business.There are about 700 knitting and 350 collar making units in the dollar city. Pointing out that building rent, labour charges and other overheads have been doubled, he said they had been asking knitwear units to increase the knitting job work charges, but in vain.“So, the two associations decided to increase the job work charges by 20%-25% per kg. However, many of them are not ready to provide the revised charges, citing GST implementation and inflation as reasons,” Rathinasamy said. We also conveyed this to knitwear unit associations eight months ago.
The country has exported close to 10 lakh bales of cotton so far to Bangladesh, Vietnam and Indonesia this kharif season, according to industry experts.
The total exports are likely to touch 65 lakh bales even as cotton purchases made by the Cotton Corporation of India remain tepid on weak arrivals. The cotton prices are hovering around minimum support prices (MSP) of Rs 5,150 per quintal for medium staple variety and `5,450 per quintal for long staple variety. The MSP for this season is Rs 1,130 per quintal higher as compared to last year.
In the international cotton market, cotton prices have dropped from 84 to 79 cents on New York futures in last 15 days. The candy rates (356 kg) for the commodity have come down to `44,000 from `47,500. However, the prices of the commodity in Maharashtra, Telangana, Madhya Pradesh are stable on poor arrivals.
According to the ginning community, the sentiment has been weak from October this year from the start of the season and the situation is likely to continue till mid-January.
So far this season, the total arrival in India has been to the tune of 65 lakh bales against 70 lakh bales during the corresponding period last year. Though the Cotton Advisory Board has pegged this year’s crop at 361 lakh bales, down 2.4% on year, most stakeholders believe the number could be much lower, and prices would start rising once arrivals from the first picking are completed by the end of December. Mills also have been stocking up on cotton, anticipating a fall in supply in the not too distant future.
Because of the low arrivals, more than 70% of the ginning units in Khandesh in Maharashtra are yet to commence operations.
According to Pradeep Jain, founder president, Khandesh Gin/Press Owners Association, the ginning industry continues to face shortage on weak arrivals. The daily requirement is around 4 lakh bales and barely 2 lakh bales are available on a daily basis. First pickings in Maharashtra, Madhya Pradesh, Gujarat and Telangana are in the final stages. Jain added that ginners are facing problems because there is no parity and there are payments issues in addition to fears about quality of cotton from next month. Khandesh has some 150 ginning units. Jain expects prices to pick up after December when arrivals peak.
Jain felt that the quality parameters set by CCI could also bring down prices once arrivals peak. As per CCI FAQ parameters, cotton with more than 12% moisture is not eligible for purchase. In the north, there have been reports of farmers selling to commission agents because they do not wish to spoil their relationship with them. Farmers started to sell cotton as they had no expectation of a further rise.
Cotton Association of India has pegged the country’s production in 2018-19 at 348 lakh bales (one bale= 170 kg), down nearly 5% from a year ago. The US agriculture department has also lowered its estimate for India’s ending stock of cotton for the current season to 89.8 lakh bales ( One bale= 218 kg) from 118.8 lakh bales projected in September.
India’s cotton exports, which had slowed in November due to adverse currency movements and volatile prices, are showing signs of a revival this month due to a rise in global prices post a truce in the trade rift between the US and China, traders said.
“In the last couple of days there have been some enquiries as domestic prices have now become viable,” said Vinay Kotak, director of Kotak Commodities.
Since October, deals for the export of over 2.5 mln bales (1 bale = 170 kg) of cotton have been signed, trade officials said. Of the total quantity, around 1.5 mln bales have already been shipped, while the rest will be exported in Dec-Jan. The deals, struck at 84-86 cents per pound, are for exports to Bangladesh, Vietnam, Indonesia, Pakistan, and China. The current season started October began with a bang, as traders sealed export deals for 500,000 bales in the very first week. However, changing dynamics due to crop uncertainties and US-China trade tensions changed the equation and slowed the momentum.
Through most of November, cotton exports were negligible as elevated prices in domestic markets negated the positive impact of the rupee’s fall to a record low against the US dollar in the past few weeks.
“We did not have a single enquiry in most of November,” said Nayan Mirani, partner of Mumbai-based KhimjiVisram & Sons.
Ahmedabad-based exporter Dharmendra Jain agreed, saying export enquiries in November were negligible, at 100,000-200,000 bales.
In Mid-October, the rupee had hit a record against the dollar, a major positive for exporters. However, domestic prices continued to trade much higher than benchmark cotton prices on Intercontinental Exchange.
Though the rupee strengthened in late November, domestic cotton prices fell. A simultaneous rise in global prices of the fibre made exports viable. Recently, prices of cotton on Multi Commodity Exchange of India hit a six-month low of 21,200 rupees a bale, while the benchmark contract on Intercontinental Exchange hit a three-month high of 81.85 cents a pound. In 2018-19, cotton exports from India are likely to be at 5.1 mln bales, lower than 6.9 mln bales last year, according to Cotton Association of India.
Agrawal said that investors need to view skill development from the standpoint of productivity gains from skilling instead of focusing on the perceived benefits of employing low-cost labour.
Jharkhand Skill Development Mission Society and FICCI jointly organised a day long Industry Engagement Programme in New Delhi today. Titled the ‘Employers Network for Generating Aspirational and Gainful Employment’, ENGAGE, the programme aims to build a sustainable linkage between Jharkhand government and Industry players. Rajesh Agrawal, Joint Secretary & CVO, Ministry of Skill Development and Entrepreneurship invited industry to capitalise on the ‘demographic bulge’ that is more pronounced in Jharkhand by investing in skilling and training the required workforce. Jharkhand has 70% of the population under 35 years with the average age being 27 years. Agrawal said that investors need to view skill development from the standpoint of productivity gains from skilling instead of focusing on the perceived benefits of employing low-cost labour.
Industry, he said, had a leading role to play in skill development as the experience of the last 10 years had shown that sustainable skill development growth models are being built by initiatives that as industry-led. Agrawal said that there was a need to evangelise apprenticeships of six months to a year for building a short-term skilling ecosystem. In this context, he commended the Vocational Education & Training (VET) systems adopted by Korea for reaping the benefits of productivity increases.
Rajesh Kumar Sharma, Secretary, Higher Technical Education & Skill Development Department, Government of Jharkhand, enumerated the steps taken by the state government for creating a skills ecosystem. The state aims to train and skill 20 lakh people by 2022, thus touching the lives of 20% of its youth. He said that the state government had framed industry-oriented policies for industrial development and investment promotion. The Jharkhand Industrial and Investment Promotion Policy of 2016 aims at converting the state into a favoured destination for investors. Likewise, the Jharkhand Textile, Apparel and Footwear Policy and the Film Policy have created the right kind of environment for sustainable growth of industries.
Devendra Kumar Tiwari, Development Commissioner, Government of Jharkhand, said that skilling the workforce for Industry 4.0 was imperative not just for growth but for making Indian industry competitive. This was important as export growth in the future will be led by export of manpower, he added. He said that Jharkhand today boasts of an industrial culture that is evidenced by the absence of industrial strikes and loss of man-days. This climate was being improved by a decisive government through its policies.
Ravi Ranjan, Mission Director, Jharkhand Skill Development Mission Society, Government of Jharkhand, said that the state government had fashioned its skilling policy to give primacy to placements. It had devised a package with a sharp focus on developing soft skills for making the workforce future-ready.
