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A yarn production plant in Nam ??nh Province. Vi?t Nam and India are seeking to increase exports to each other in the textile and garment sector
HCM CITY — Trade between India and Vi?t Nam in textiles has grown significantly, but there is still huge untapped potential, the Indian consul general in the city has said.
In his opening remarks at a business interaction event titled “Textiles: India-Vi?t Nam Co-operation”, K Srikar Reddy said Vi?t Nam was among the top five textile and clothing exporting countries along with India.
Its exports exceeded US$31 billion last year, a year-on-year growth of 10.23 per cent.
According to Indian government figures, during the 2017-18 fiscal year, India’s textile and clothing exports were worth around $36.7 billion. Its exports to Vi?t Nam grew by 42 per cent to $555 million.
“Bilateral trade in textiles has registered impressive growth during the last two years. However, there is still a lot of potential for trade in the area of textiles between our countries,” Reddy said.
Vi?t Nam had to import a lot of raw materials and was looking to diversify its sourcing of raw materials for garments such as cotton, yarn, made-ups and fabric, he said.
India is one of the suppliers of high-quality materials, fabric and machinery at competitive prices globally, he said.
Also, under the India-ASEAN FTA, most types of cotton yarns, woven cotton fabrics and cotton knit fabric could be imported duty free from India from January 1 next year, he said.
“Therefore, India can become a reliable partner for Vi?t Nam in supplying cotton, yarn and fabrics.”
Nguy?n H?ng Giang of the Vi?t Nam Cotton and Spinning Association (VCOSA) said there was plenty of opportunity for co-operation in yarn, cotton and fabrics between businesses in the two countries.
“Indian companies are strong in making cotton fabrics and textiles. From the perspective of the Vi?t Nam Cotton and Spinning Association, we welcome investment from India in fabric making.”
When investing in Vi?t Nam, Indian firms would get tax breaks from FTAs that Vi?t Nam has signed or would be signing, he said.
“You buy more yarn from Vi?t Nam and we will buy more cotton fabric from you. That is a win-win situation.”
Reddy said: “Many Indian companies have already invested in Vi?t Nam in the textile and garment sector. I would also like Vietnamese companies to explore the gigantic market of 1.3 billion people in India by investing in production of yarn, fabric, readymade garments, and others in India.”
The Indian Government allows 100 per cent foreign direct investment under the automatic route in many sectors, including textiles, he said.
Shailesh Martis of the Cotton Textiles Export Promotion Council gave a detailed presentation on the Indian textiles sector and invited Vietnamese companies to attend IND-TEXPO 2019, a textile exhibition showcasing the entire range of textile products, to be held from January 27 to 29 next year at Coimbatore, India.
Importers and buyers from Vi?t Nam who are interested in sourcing from India can benefit from a subsidised scheme for hotel stay and travel by visiting the show in India, he said.
Organised by the Indian consulate in HCM City in co-ordination with VCOSA, the event attracted nine Indian companies who also participated in the 18th Vi?t Nam International Textile and Garment Industry Exhibition in HCM City from November 21 to 24 besides local firms.
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During a meeting with Chief Minister Vijay Rupani on Saturday, industry bodies sought an increase in various subsidies, and also pressed for parity in benefits with other states.
The Gujarat Chamber of Commerce & Industry (GCCI) proposed that benefits given by the state under the new Textile Policy should be at par with Maharashtra, Madhya Pradesh, Jharkhand, and other states, and by neighbouring countries.
“This will ensure that capital does not flow out of our state to other states,” the apex industry outfit said. It pressed for a higher capital subsidy, interest subsidy, and power subsidy for spinning, weaving, processing, and garments units under the new policy.
The Southern Gujarat Chamber of Commerce & Industry (SGCCI) also pressed for parity in benefits with other states.
“If we want to ensure that Gujarat remains the textile hub, we must provide adequate support to the industry. The government should try to ensure that there is no inter-state competition. For instance, Maharashtra is offering power tariff of Rs 3.50 per unit for weaving units, while in Gujarat it is over Rs7. Even otherwise, there is a difference of Rs 2 per unit. This needs to be addressed,” Mehta said.
He pointed out that there is a cap of Rs 25 lakh on capital subsidy in Gujarat, but not in other states. Similarly, he demanded that interest subsidy be hiked to 7% from existing 5%.
“Equally importantly, the subsidy should be paid in time,” he said.
Among other demands, GCCI sought subsidy for setting up common effluent treatment plants near Ahmedabad and Rajkot, and various relaxations in subsidy norms for expansion of textile units, and support for backward/forward integration.
“Level playing field should be given to existing units. The policy should give equal opportunity to investments in new and existing units. Since growth is a continuous process, the policy should allow all new investments made from time-to-time by existing units, without having restricting provisions such as percentage growth,” GCCI said in a representation.
The industry body pointed out that garments segment was feeling lack of support from the government, and sought various benefits for it. It also said that the government should encourage and provide support to companies like Walmart and Marks & Spencer, and major textile brands to set up their buying houses in Gujarat.
The pilot project of the scheme was introduced last year in two places in Ralegan Siddhi in Ahmednagar and Kolambi in Yawatmal.
After the success of a pilot project, the Maharashtra government plans to extend the chief minister’s agricultural solar feeder scheme in the rest of the state.
The pilot project of the scheme was introduced last year in two places in Ralegan Siddhi in Ahmednagar and Kolambi in Yawatmal.
The scheme is a total success and will be extended to the entire state. This is a game changer and solar units will be set up in the government land where there is evacuation facility,” Maharashtra State Electricity Transmission Company (Mahatransco) director Vishwas Pathak said.
Under this programme, the farmers are supplied power during the day with the help of solar generation.
When asked about the privatisation process of power distribution for Malegaon and Kalwa-Mumbra sections, he said the project is on fast track and the tendering process is underway now.
“The entire process is likely to be completed soon,” he added.
Pathak further said the privatisation of Bhiwandi is successful and hence we have decided to go in for privatisation of power supply in the two areas, where the bill collection is very low.
“Already a number of companies have participated in the tendering process, including Torrent Power, which manages the powerloom town of Bhiwandi and the best suited one would be picked up,” he added.
Pathak also said there has been a growth of power consumers from 2.15 crore to 2.45 crore and to meet this growth, the company is taking every effort.
“There was an acute shortage of meters recently due to the fact that 16 lakh meters supplied by two companies, one from Hyderabad and the other from UP, were found to be faulty and had to be replaced on priority. These two companies have been blacklisted, he said and added that the legal process was underway for “recovery of losses,” he said. When asked about the transmission and distribution losses incurred by state discom Mahavitaran, he said the company could reduce it from the past 17.50 per cent to 14.50 per cent. “We do not claim that we have achieved and met every target but to a large extent we have performed and brought the power scene to a good position as regards supply, distribution and reducing the problems which were faced earlier,” he said.
South Gujarat Productivity Council (SGPC) has suggested to the state government a number of security provisions for women in the new textile policy, which is scheduled to be announced by it soon. SGPC wants a government portal through which work could be assigned to women, a special policy for units run by women or those having more than 60 per cent female workforce. Sexual harassment cells and hostel facilities for them in the industrial areas.
SGPC president Asha Dave sai, An estimated 14 lakh people work in textile sector of surat and 15 per cent of them are women, However, only 9.5 lakh are registered with the labour department. Menials jobs in the textile sector are done by women and they need maximum care and protection. The government should reserve lace and embroidery work etc., for women and assign such jobs to them through its portal only. The Women will get right remuneration for the work done by them and not be cheated.
She said many women come to Surat city for work from nearby towns and villages. Therefore, these working women should have hostel facilities in the city. Safety and security of women should be of a paramount importance to the authorities. Thus, SGPC has asked for sexual harassment cells in industrial areas and a special policy for units run by women or those having more than 60 per cent female work force. Dace in a letter to the chief minister has also demanded from the state government identity cards for all the labourers working in the textile industry. If a labourer’s antecedents have been verified, he would hesitate to commit any crime or harass a female co-worker in a unit.
Entering Nov, under the pessimistic atmosphere, cotton yarn market continues the slackness, and seems slacker than in Oct. Almost no variety survives.
With poor downstream demand and soft cotton price, cotton yarn market has started the downtrend since Sep. From the perspective of price index, cotton yarn carded 32S moved down by 735yuan/mt from Sep’s high, while cotton price slid more, by 1175yuan/mt from Sep. The decrease of cotton yarn price is thought owing to sluggish downstream demand which resulted in hiking inventory in cotton yarn mills. With pessimistic attitude to market demand outlook, cotton yarn mills prefer to sell at lower price and purchase cotton cautiously, which also depresses cotton demand. With intensive cotton supply on the market, cotton price accelerates to decline.
Stocks of imported cotton yarn in ports are at a large amount, but the sales are stagnant. Under increasing capital pressure, traders undersell continuously. At present, price of Indian carded 32S for air-jet moved down to 22,600yuan/mt, and the price spread with domestic one reached 900yuan/mt. Amid sluggish sales, imported cotton yarn price may tick down further without cost support, and the price gap with domestic one will widen further. Low-priced imported cotton yarn brings high pressure to domestic market.
Overall profit of cotton yarn mills is tolerable in 2018. During state reserved cotton auction, spinners enjoyed high profits. Since Oct, calculated on spot cotton price, the profit narrowed compared with that during cotton auction, but still tolerable, fluctuating within 200-800yuan/mt. Despite weak trading sentiment, most spinners can profit.
In short run, cotton yarn market will remain weak and now is waiting for the result of China-US talks on the trade war. If China and US reach comprise, the pessimistic atmosphere on the market will be eased and spinners may restock before Spring Festival. But if the trade war escalates further, the market may keep dull or even weaker. In addition, China-US trade war also has impacts on macro economy like commodities, and further affects the ups and downs of cotton and cotton yarn futures and trading sentiment of spot cotton and cotton yarn.
In a major relief, the textile ministry may soon announce simplified norms under the Amended Technology Funds Scheme (ATUFS) for players in textile and intermediaries across the value chain.
Following severe difficulties faced by textile players to avail benefits under ATUFS due to its complicated structure, a steering committee under the aegis of senior textile ministry officials held its meeting on Thursday to discuss modalities for its simplifications. The industry hopes that the ministry would soon convene a meeting of senior industry officials including their representative bodies to make the scheme industry-friendly.
The complications can be gauged from the fact that the textile ministry has received 8160 applications seeking benefits under ATUFS since its launch in January 2016 of which the government has issued unique identity numbers (UIDs) for 6400 projects. Out of the annual budgetary allocations of Rs 23 billion and claim sought for around Rs 18 billion, the government has released a meagre amount of Rs 3.5 billion.
“Because of this massive fund blockage with the government, many units are facing financial strain for the purchase of raw material to feed their plants. Since the fund meant for speedy release, companies had borrowed from financial institutions. Consequently, they are paying interest on the fund blocked with the government. So, it is a double blow for the entire textile sector and its value chain,” said K Selvaraju, Southern India Mills’ Association (SIMA).
The Finance Minister in the Union Budget 2017-18 and 2018-19 had allocated an annual sum of Rs 23 billion for technology upgradation in the textile sector. But, the complicated structure of ATUFS has made it one of India’s least preferred subsidy schemes.
Textile units are facing a number of hardships to avail this benefit. For example, the overseas machinery suppliers should be enlisted in the suppliers’ list for which the government is asking for documents like ISO (International Organization for Standardization) certification which machinery suppliers find reluctance. Secondly, the government has introduced joint inspection by textile experts in financial institutions or industry associations.
Apart from the allocation of 16-digit MIC (machine identification code) number engraved on imported machinery, the government has included approval for all individual machinery mandatory required for the plant.
“The total fund allocation under ATUFS has been very low since its launch in January 2016,” said Sanjay Jain, Chairman, Confederation of Indian Textile Industry (CITI).
While announcing ATUFS, the government allocated Rs 178 billion of which Rs 51.5 billion was meant for ATUFS alone. The balance was scheduled for old TUFS including blackout period, revised TUFS (RTUFS), revised and restructured TUFS (RRTUFS) etc.
The textile industry has blamed manpower shortage at the Textile Commissioner’s office for joint inspection. The industry has recommended the textile ministry to set up a special task force to study the difficulties faced under ATUFS.
“We believe, the government would soon announce relaxations in ATUFS for ease of doing business in this sector for the benefit of textile sector,” said a senior industry official involved in dialogue with the government.
Meanwhile, India’s textiles and apparel exports jumped by a staggering 38 per cent in October due to growing demand from overseas. Led by the US, the largest importer of India’s clothing, the boom has been triggered by recovery in the global economy. Depreciating rupee helped boost realisations of textile, apparel exporters.
According to data compiled by the Ministry of Commerce, the country’s textile and apparel exports stood at Rs 203.53 billion for October 2018 as against Rs 147.79 billion in the corresponding month last year. While overall textiles exports posted a jump of 28 per cent, shipment of apparel from the country shot up by 54 per cent in the month under consideration.
Being closely linked with the country’s economy and employment generation, the increase in exports indicates a recovery in the global economy.
Countries belonging to the G20 group of the world’s biggest economies applied 40 new trade restrictive measures between mid-May and mid-October, covering around $481 billion of trade, the World Trade Organization said on Thursday.
The new restrictions covered six times more trade than in the previous period and were the largest since the WTO started monitoring G20 trade in 2012, it said in a statement.
“The report’s findings should be of serious concern for G20 governments and the whole international community,” WTO Director-General Roberto Azevedo said in the statement.
“Further escalation remains a real threat. If we continue along the current course, the economic risks will increase, with potential effects for growth, jobs and consumer prices around the world.”
The WTO was doing all it could to help de-escalate the situation, he added, but solutions would need political will and leadership from the G20, whose leaders will meet in Argentina next week.
The monthly number of trade restrictions averaged eight during the period covered by the report, up from six per month in the previous report, which covered mid-October 2017 to mid-May 2018, the WTO statement said.
“The proliferation of trade-restrictive actions and the uncertainty created by such actions could place economic recovery in jeopardy. Further escalation would carry potentially large risks for global trade, with knock-on effects for economic growth, jobs and consumer prices around the world,” it said.
TARIFF HIKES
Three-quarters of the latest trade restrictions were tariff hikes, many of them retaliation to steel and aluminium tariffs imposed by US President Donald Trump in March.
But the WTO did not count measures that had been announced and not yet implemented, and one G20 country had asked for its tariff retaliation to be omitted from the monitoring report, which was done for “transparency” purposes, the WTO said.
G20 countries had also implemented a monthly average of almost seven trade-liberalising measures, such as reducing import tariffs and export duties, in line with the trend since 2012.
The trade covered by the liberalising measures was worth $216 billion, about two and a half times more than in the previous report. Two-thirds of that value was attributable to China reducing more than 1,400 tariffs on vehicles, components and other products.
A further $541 billion of trade, 4 percent of G20 countries’ imports, was covered by expansion of the WTO’s Information Technology Agreement, a liberalising measure that was excluded from the report’s headline numbers.
About half the number of workers employed at units in Somanur are from other districts
Cyclone Gaja, which destroyed properties and crops in several of the southern districts, has had an impact on weaving units in Tirupur and districts too.
These districts employ a large number of workers to operate the conventional powerlooms that do job work.
Most of the workers from the southern districts have either not returned to work after the cyclone or have gone back home.
The job working powerloom units in Coimbatore and Tirupur districts are functioning only to 30 % of the capacity, according to the unit owners.
About half the number of workers employed at the job working units in Somanur are from other districts. Usually they go home for Deepavali and return after a week. This year, with cyclone Gaja, workers from these districts have not returned to work yet.
“The units are facing labour shortage as just 50 % of the workers from other districts have returned,” says P. Kumarasamy, secretary of the Somanur Job Working Powerloom Unit Owners’ Association.
Just 30 % of the installed capacity of job working powerloom units are functioning, he said.
It might take another two weeks for normal production to resume.
Contract workers
According to Velusamy, president of the Palladam Powerloom Job Workers’ Association, workers from the northern States are usually employed to operate the larger powerlooms and those from other districts of Tamil Nadu are mostly employed as contract workers at the conventional powerloom units.
Some workers from the southern States who returned to work after Deepavali have also gone back now to assess damage to their houses and to see their families. This has affected production to a large extent, he said.
The job working powerloom units in Palladam will soon have common facilities that will help them manufacture value-added fabrics.
According to Velusamy, president of the Palladam Powerloom Job Workers’ Association, the plan is to set up common sizing, bleaching, printing, stitching, and cutting units with modern machinery. “We have formed a private company called Palladam Powerloom Cluster. It currently has 45 members. The Central Government approved our project and recently sanctioned Rs. 12.5 crore and the State Government has given Rs. 1 crore. We will also invest Rs. 5 crore, part of which will be bank loan,” he said.
The members of the company, who now produce grey fabric, will be able to add value. They can print, stitch, and make different products. They can scale up to become “own manufacturers” from job working, he said. They work will be done at a minimal cost for the members. The newly-formed company is looking for land. “We are trying to identify four to five acres.” The Central Government has provided back-ended subsidy. So the works have to commence for the Government funds to come in. The private company has to become sustainable, Mr. Velusamy added.
This is a project sanctioned through the MSME Ministry to help clusters set up common facilities.
The State government on Thursday introduced a Bill to bring amendments to the Maharashtra Goods and Services Tax Act, 2017, to ease out inconveniences caused to medium and small enterprises.
The government has proposed the amendments as per which a tax payer can now have the option to obtain multiple registrations for multiple places of business located within the same State. It also offers separate registration for the special economic zone unit or the developer.
The amendment Bill offers enhancement in the exemption limit for registration in the special category States from Rs. 10 lakh to Rs. 20 lakh, empower the State to notify the classes of registered persons for paying the tax on reverse charge basis, in respect of receipt of supplies of certain specified categories of goods or service or both, from unregistered suppliers, enhancement in the limit of composition levy from Rs. 1 crore to Rs. 1.5 crore, a provision for temporary suspension of registration while cancellation of registration is under process, and an increase in the period relating to detention or seizure of goods and conveyance in transit from seven days to 14 days.
Deepak Kesarkar, Minister of State for Finance, introduced the Bill in the Assembly, which will be discussed next week. The State cabinet had already announced these decisions last month. However, those will now be the part of the State GST Act after the Assembly passes the amendments.
