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Apparel exports from the country dwindled for the eighth month in a row giving tough time to exporters based in Punjab, Haryana and UP. The three states contribute 40 per cent of the total apparel exports from the country.
The sector has been witnessing a downward trend since October last. In dollar terms, the exports declined by over 16 per cent in May 2018. There are around 800 exporters in these states.
According to a data, total readymade garment exports in May this year was around $1.34 billion while it was $1.6 billion in the same month last year. In rupee terms, exports in the month was Rs 9,040.63 crore, a decline of 12.6 per cent over Rs 10,343 crore during the corresponding period last year.
Exporters say apparel exports, particularly from Punjab, Haryana and Uttar Pradesh, have seen a steep decline due to high input costs, delay in GST refund and stiff competition from Bangladesh, Vietnam, Pakistan and China.
The input costs in Punjab, Haryana and UP is higher compared to other regions, thus affecting the industry, said Harish Dua, MD of Ludhiana-based KG Exports. In such a scenario, exporters in Punjab are pining hope on the Drawback Committee constituted by the Finance Ministry to provide incentives in a time-bound manner. The continued backlog in the GST and the remission on state levies are affecting the business sentiments. “The exports are dwindling because of weak economic sentiments globally. However, with dollar strengthening, we expect that things will improve by September,” said Apparel Export Promotion Council Chairman HKL Magu.
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Ludhiana-based apparel manufacturers have agreed to set up around 25 units at Dehri-on-Sone in a move that could create around 25,000 jobs for textile workers in Bihar.
The deal was clinched at a roundtable meeting between a delegation of the industries department led by principal secretary S. Siddharth and the Apparels and Textile Manufacturers of Ludhiana.
“Various apparel manufacturers of repute have agreed to establish 25 manufacturing units in Bihar. They will provide direct employment to 25,000 people. We have asked them to apply for stage-I clearance from the State Investment Promotion Board (SIPB) within a month,” Siddharth told The Telegraph.
The apparel units will be located at Dehri-on-Sone in Rohtas, around 140km southeast from Patna. The place is equidistant from Varanasi in Uttar Pradesh, and lies close to National Highway 2, also known as the Grand Trunk Road
The dedicated freight corridor being constructed by the central government will also pass along the same alignment, providing wide-ranging transportation facilities to the manufacturers, who export apparels to countries globally.
“We have 79 acres available for industries at Dehri-on-Sone. We will give common industrial infrastructure to facilitate the entrepreneurs. They are happy over the provisions and benefits of the new Bihar Industrial Investment Promotion Policy (BIIPP) 2016,” Siddharth added.
Apparel manufacturers of Ludhiana are mainly into knitwear and cater to large brands and retail chains like Spencer’s, Walmart, GAP and sellers as well as designers in France, Germany, US etc.
The industries department had been wooing them since last year by showcasing Bihar’s long tradition of textile, handloom, silk, khadi, weaving and dyeing.
The rupee recovered from record lows set on Thursday morning aided by dollar selling intervention by the Reserve Bank of India but weak macro-economic fundamentals and broad dollar strength are likely to keep up the downward pressure on it.
Most other Asian currencies also edged down as a trade dispute between the United States and China kept investors on edge.
The RBI is suspected to have sold dollars through state-run banks at around the 69.09 rupee level, traders said. They were hopeful of larger dollar sales to prevent sharper falls in coming days.
The partially convertible rupee, however, was propped up by dollar selling intervention, closing at 68.79/80 versus the previous close of 68.65/66. The rupee hit a life low of 69.0950 earlier in the session.
The rupee’s last record low was 68.8650, on Nov. 24, 2016.
“The fall in the rupee was led by higher oil prices and rising trade war tensions between US and China,” HDFC Bank analysts wrote in a note.
“In the near term, the rupee is likely to be under pressure as oil prices continue to remain high, capital outflows from emerging economies continue and trade war tensions keep markets jittery,” they said.
Things have gone from bad to worse for the rupee, Indonesian rupiah and Philippine peso after the benchmark 10-year U.S. Treasury yield posted its first weekly close above the 3 percent threshold in nearly seven years, a Reuters forex analyst wrote.
A senior Indian finance ministry official, who declined to be identified as he is not authorised to speak to media, said the government and the central bank were closely monitoring and there was no need to panic.
“The situation is quite different compared to 2013 rupee crisis. This time, we have enough forex reserves to deal with any sharp fall,” he said adding the RBI could spend up to $25 billion to support the rupee whenever needed.
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The rupee has shed 7.7 percent this year, making it the worst performing currency in Asia, followed closely by the Philippine peso.
“Weakening at this pace shatters confidence. Markets expect RBI to manage the currency more effectively. The pressure on INR is high, thus in the absence of major action from regulators, 70 levels can be seen,” the head of currency and debt trading at a foreign bank, said.
India’s foreign exchange reserves stood at $410.07 billion as of June 15, the latest central bank data showed.
The widening current account deficit, due to higher global crude oil prices and steady capital outflows, has weighed on the rupee.
Oil prices have rallied for much of 2018 on tightening market conditions due to record demand and supply cuts led by the Middle East-dominated producer cartel of the Organization of the Petroleum Exporting Countries.
The January-March current account deficit widened to $13.0 billion, or 1.9 per cent of GDP, from $2.6 billion, or 0.4 per cent of GDP, a year earlier.
The rupee’s fall, however, is expected to help exporters, though currency moves in other trading partners will also have an impact, especially with the Chinese yuan in retreat.
Shares of software service exporters such as Infosys rose 1.5 percent but investors are cautious amid volatile market conditions.
Investors are now awaiting the fiscal deficit data from the government due to be released on Friday.
Despite the rise in the current account deficit, it remains modest relative to GDP and is largely financed by equity inflows, including foreign direct investment, Moody’s said in a note on Thursday, adding that the large foreign exchange reserves provided a good buffer.
“India’s low dependence on foreign-currency borrowing to fund its debt burden limits the risk of currency depreciation transmitting into materially weaker debt affordability,” Moody’s added.
Lower fibre production in the current season (October-September) owing to crop infestation and acreage drop in the coming season (2018-2019) as well as adverse weather conditions in other key cotton growing nations could pose supply constraints, India Ratings and Research (Ind-Ra) said in a report.
India Ratings and Research (Ind-Ra) today said cotton prices are likely to stay firm during the next financial year following the tight demand-supply scenario, according to a report.
Lower fibre production in the current season (October-September) owing to crop infestation and acreage drop in the coming season (2018-2019) as well as adverse weather conditions in other key cotton growing nations could pose supply constraints, India Ratings and Research (Ind-Ra) said in a report.
However, the expectation of firming prices might encourage farmers to sow and arrest the acreage contraction. On the other hand, a robust domestic demand and rise in exports on account of the anticipated stock rebuilding by China are likely to keep the global consumption strong, the report said.
Minimum support prices (MSPs) for cotton are likely to be higher for the 2018-2019 season than for the previous season, it said.
However, given the tight demand-supply scenario, cotton prices might trade higher than MSP, limiting the government intervention, it added.
Despite the firm cotton prices, Ind-Ra expects margins across the cotton value chain to remain more or less stable.
This is primarily because a sustained demand from the end-user segments will allow manufacturers to pass on the price rise, it said.
Meanwhile, synthetic textile players are likely to witness a material margin contraction during FY19, due to their inability to pass on the price rise of crude oil-based raw materials, owing to the prevailing overcapacity domestically.
This might become worse because of rupee depreciation as raw material is procured at the import parity price.
Within the synthetic segment, it said, exporters and integrated players will be better placed to absorb a higher input cost, while standalone spinning units might be the most impacted.
Moreover, textile dyes and chemical prices are likely to remain high, exerting margin pressure, it added.
MCX already has accredited warehouses in Yavatmal and Jalna. To further facilitate delivery of cotton in the region, the exchange plans to provide delivery facilities in three or more new locations in Vidarbha under the mission.
Aimed at enabling a ‘Cotton Mission’ to empower cotton farmers in Maharashtra’s Vidarbha, Multi Commodity Exchange of India Limited(MCX) signed a Memorandum of Understanding with the Maharashtra state government at MMRDA Auditorium in Mumbai on Thursday.
Mrugank Paranjape, MD & CEO, MCX, Bijay Kumar, Additional Chief Secretary – Agriculture & Marketing, and Maharashtra Chief Minister Devendra Fadnavis were present at the signing of the MoU. This joint initiative aims to create a value chain with final market linkages to support thousands of cotton farmers in Akola, Amravati, and Wardha. Under the beneficial ambit of this MoU, MCX will partner with the Department of Agriculture, Government of Maharashtra, and other government agencies, to work closely with Farmer Producer Organizations (FPOs) and help them connect to the exchange’s organized market network, thus enabling them to build their capacities.
MCX has already accredited warehouses in Yavatmal and Jalna. To further facilitate delivery of cotton in the region, the exchange plans to provide delivery facilities at three or more new locations in Vidarbha under the Cotton Mission. The cotton futures market provides an efficient platform for farmers to move up the value chain and increase their realizations. The underlying of MCX cotton futures being ginned cotton, cotton farmers are incentivized to process their produce and sell in the physical market or use the exchange mechanism to deliver and/or hedge to get remunerative prices. This would support Vidarbha’s cotton farmers in their upliftment and is expected to contribute to doubling their incomes by 2022-23, as envisaged by the Government of India.
Devendra Fadnavis said, “Commodity exchanges greatly influence a large section of the society due to the trading of various agro commodities, base metals, and bullion. They can play a key role for inclusive growth and development of commodity markets and market infrastructure. In this regard, MCX’s special focus on the cotton-growing Vidarbha region and its vision of enabling a ‘Cotton Mission’ in Akola, Amravati, and Wardha is highly appreciable and will greatly improve the lives of the farmers in the region. Its assistance in creating a value chain with a final market linkage will further help farmers plan their crop as well as demand the right value for their produce. I wholeheartedly appreciate MCX’s endeavour in leading this mission and assure the government’s full support for this project.”
Mrugank Paranjape said, “The ‘Cotton Mission’ aims to empower cotton farmers in Vidarbha — one of the largest cotton-growing regions in the country. It plans to do so by enhancing market linkages that will provide the right support to farmers in the region. Under this program, the exchange will work with the government to identify and create farmer groups, and work towards equipping these groups to access regulated markets that will enable them to participate in a transparent price discovery mechanism and sell their produce in the national market for better price realization.” “Special emphasis will be given on farmers’ training, education, and awareness so that they can plan and produce quality crop that is marketable as well as benefit from our existing infrastructure. We stand committed to using the organized exchange mechanism to improve the economic power of the farmers and continue to act as a catalyst for the development of a robust commodity market eco-system. We are honored to be associated with the Government of Maharashtra in spearheading this initiative,” Paranjape added. Multi Commodity Exchange of India ended the day at Rs725.25, down Rs15.45, or 2.09%, from its previous close of Rs740.70 on the BSE.
The segment’s potential is largely untapped: Kavita Gupta
The technical textiles industry is projected to grow at 20 per cent year-on-year and the segment’s potential is largely untapped, a senior government official said here.
“We see huge growth potential for the technical textile industry in India. With 12 segments of technical textiles and a market size of ?1,16,000 crore, it is projected to grow 20 per cent per annum,” Textile Commissioner Kavita Gupta said here.
India accounts for just 3 per cent of global technical textile production. As compared to countries like Germany where technical textile contributes 50-60 per cent, in India, the contribution is only 12 per cent, she said. Inaugurating TECHNOTEX 2018 — an International Exhibition and Conference on Technical Textiles jointly organised by FICCI — Gupta said technical textiles are being promoted at the highest level by the government in order to realise the full potential of the critical segment.
She said the Ministry needs the support of industry to promote usage of technical textiles.
Shishir Jaipuria, Chairman, FICCI Textile Committee and Chairman and Managing Director of Ginni Filaments, in his welcome address said, “The Government has special focus on technical textiles and has announced various flagship schemes and future looks promising. We want to pass on the benefits to the consumers.”
Nearly 168 exhibitors from 39 countries, including China, Taiwan, South Korea, Vietnam and USA, are participating in Technotex. A total of 225 international buyers will be taking part in the reverse buyer-seller meet and 7,000 visitors are expected at the two-day event.
The textile and apparel industry was defined as a field with one of the highest growth rates over the next 12 years.
It’s expected the business will grow by 14 per cent over the next two years and a further 10 per cent up to 2030.
Speaking at the 4th Vietnam Textile Summit 2018 held in Hà N?i on Wednesday, Dr. Tr?n Du L?ch said he believed the future would be bright.
“Garment and textile is a key economic sector in terms of employment creation and contribution to exports. It creates 20 per cent of jobs in Vietnamese industry,” said L?ch.
This sector has the second highest export turnover and occupies the fifth position in the world. Last year saw goods worth more than US$31 billion, exported, representing 10.23 per cent year-on-year increase.
The rapid growth rate was expected to continue this year with an estimated turnover of $33 billion.
In addition to maintaining traditional markets such as the US, Europe, Japan and South Korea, Vietnamese garment and textile firms have been expanding to new areas such as China, Russia and Cambodia.
It also promotes the development of the cotton fiber industry; petrochemical industry and other textile supporting industries as well as trading, services, and fashion industry.
“The textile industry contributes to the success of FDI attraction policy. FDI accounts for about 60 per cent of apparel and textile export turnover,” he said adding that in the economy industrialisation strategy, the industry played an important role in the economic structure of Vi?t Nam.
However, he said the Government policies played an important role to help businesses develop. Vi?t Nam’s vocational training policies in the industry had not been effective and would need further support.
In addition, the Government should encourage enterprises to mobilise capital on the stock market. The application of the Decree No 111/N?-CP on supporting industries should be promoted and be included in research budgets, application of new technologies and reduction of corporate income tax.
The Government should also encourage the linking of value chains by supporting small and medium enterprises under the Law on the promotion of small-and-medium sized enterprises (SMEs).
Tr?n Thanh H?i, deputy head of the Department of Export and Import under the Ministry of Industry and Trade said new Free Trade Agreements (FTAs) which Viet Nam signed or negotiated would benefit the country’s garment and textile sector.
“In the 2018-22 period, the export tax of some products would be reduced to zero, creating new opportunities for the country to increase export added value and promoting the economic growth,” H?i said.
On the other hand, the competitive labour costs and preferential policies would continue to help Vi?t Nam become one of ideal destinations for investors in the sector.
However, Vi?t Nam should continue to compete to maintain competitiveness with countries such as Bangladesh, Sri Lanka, Myanmar and Cambodia.
Sharing the ideas, Ven Tran, director of Vi?t Nam Office of Weave Services Limited said Vi?t Nam had experienced strong growth in textile manufacturing thanks to three key advantages as trade barriers are gradually removed.
In addition, Vi?t Nam ranked second lowest in the regions, after Bangladesh. Its global position made it an ideal choice for investors who want to leave China.
However, there were still three main challenges to sustain this strong growth including low productivity, environmental regulation and long lead time, he said.
Long lead time means retailers and manufacturers fail to meet customers’ expectation and managing raw materials is key to speeding up productivity. Material accounts for a half of total lead time and it can even be 70 per cent when it comes to overseas supply.
He suggested the solutions were to set up a common language with supply methods while factoring in risk.
The event co-organised by ECV International and Vi?t Nam Cotton and Spinning Association (VCOSA) aimed to better understand the market, as well as mitigate risks and identify new opportunities. Meanwhile, the summit can also act as a platform for exchanges, communication and mutual assistance.
1. GNPA of SCBs rose to 11.6% in FY18 compared to previous 10.2% in September 2017. This would be be 140 basis points increase in GNPA in just seven months of FY18.
2. The Reserve Bank of India has released the 17th series of Financial Stability Report (FSR), and looking at the trend mapped by the central bank it is clear that the problem of Scheduled Commercial Banks (SCBs) is not over yet and that revival is not nigh. The FSR reflects the overall assessment of the stability of India’s financial system and its resilience to risks emanating from global and domestic factors. The Report also discusses issues relating to developments in and regulation of the financial sector. The major issue of SCBs especially public sector banks (PSBs) have been the gross non-performing assets (GNPA) which clearly is not ready to come down as shown in the report.
3. GNPA of SCBs rose to 11.6% in FY18 compared to previous 10.2% in September 2017. This would be be 140 basis points increase in GNPA in just seven months of FY18. Interestingly, net NPA registered only a smaller increase during the period due to increase in provisioning.
4. According to RBI, credit risk arising from exposure to the infrastructure sector (specifically power, transport and telecommunication) as well as textiles and engineering was examined through a sectoral credit stress test where the GNPA ratio of the specific sector was assumed to increase by a fixed percentage point.
5. RBI said, “The resulting impact on the GNPA ratio of the entire banking system was examined.”
7. PSBs had the maximum exposure to these sectors and also account for the highest GNPAs, particularly in the power and the telecom sector. The results of the stress tests show that among the considered sectors, the most severe shock to the power sector will cause the banking system GNPAs to rise by about 68 bps.
8. The textile and the engineering sectors, though small in terms of total advances to that sector as compared to the infrastructure sector, also exhibited considerable transmission of stress to the banking sector.
9. The central bank believes e GNPA ratio of all SCBs may increase from 11.6% in March 2018 to 12.2% by March 2019.
In a meeting of Ministry of Commerce & Industry and Civil Aviationn, Suresh Prabhu said that trade events are being organised in African, Central and South American countries to find new markets for exports and to introduce new products. Because of these measures, exports are continuously registering growth.
Prabhu took stock of the latest export trends and expressed confidence over robust growth of total exports by 12.9% in 2017-18.
The minister also reviewed the development of USD 100 Billion Additional Export Strategy focussing on Champion & Promising products and market retention. This is envisaged as a multipronged sector wise strategy focussing on traditional and new products & markets.
“Commodity Specific Strategy includes products like Gems &Jewellery, Leather, Textile& Apparel, Pharmaceuticals, Electronics, Engineering Sector, Chemical & Petrochemicals, Marine Products and Agriculture & Allied Products,” the ministry said.
The ministry also stated that the Territory Specific Strategy include regions like NAFTA, Europe, North East Asia, ASEAN, South Asia, Latin America, Africa& WANA, CIS, Australia and New Zealand.
A statement released by the ministry stated that that commodity-specific strategy includes products like gems and jewellery, leather, textile, pharmaceuticals, electronics, engineering, chemical, marine products and agriculture goods. India’s exports grew by 9.78 per cent to USD 302.84 billion in 2017-18.
The war against Pink Bollworm is getting stronger in Maharashtra. The year 2017 had seen pink bollworm (PBW) attacks on cotton, especially in Maharashtra, Telangana, Andhra Pradesh and Karnataka. The war against Pink Bollworm is getting stronger in Maharashtra. The year 2017 had seen pink bollworm (PBW) attacks on cotton, especially in Maharashtra, Telangana, Andhra Pradesh and Karnataka. The infestation of this insect pest — whose larvae bore into cotton bolls through the lint fibre to feed on the seeds — happened during October, just when the crop was maturing and almost ready for its first-flush pickings, and further aggravated by unseasonal rains.
To overcome this problem, the union government has recommended a unique RIB (Refugia In Bag) concept, wherein 25 grams of non-Bt Cotton seed is mixed with 450 grams of Bt Cotton seeds.
‘Refuge’ plots are non-transgenic plants. However, these packs were separate and usually ignored by farmers who put them aside during sowing operations. As a result, the Pink Bollworm attacks became stronger. To combat and weaken the proliferation of Pink Bollworm, the government of Maharashtra may decide to stop the process of separate non-BT packs and instead provide these along with BT Cotton so that the farmers end up sowing these seeds along with BT cotton seeds. CB Mayee, president, South Asian Biotechnology Centre, had earlier pointed out that one way to reduce pest susceptibility is to plant non-Bt cotton as “refugia” in the vicinity of the main Bt crop. But farmers, especially with small holdings, don’t want to lose land in growing non-Bt plants that can act as hosts for the bollworm insects. It is important to note here that PBW exclusively feed on cotton, unlike other bollworm insect species that also attack other crops such as pigeon-pea, sorghum and sunflower.
Without cultivating non-Bt cotton as refugia, PBW is bound to develop resistance to Bt toxins over time, as has happened in Maharashtra. Over the years, Bt Cotton’s resistance to PBW has reduced and during the last season alone the pest has caused 20-25% loss to the crop across the state. The strategy of growing ‘refuge’ plants around the GM plants is to prevent or delay the development of Bt-resistant insects. This enables planting non-BT cotton which can host PBW wild insects and prevent resistance build-up in PBW, industry experts pointed out.
Last season onwards, the National Seeds Association of India (NSAI) has taken up the issue on a war footing and revived the RIB concept. Several seed and pesticide companies have also begun to distribute pheromone traps as part of their CSR projects.
Recommending the RIB concept, MG Shembekar, vice president, NSAI, said that this would help weaken the proliferation of PBW on BT Cotton.
He pointed out that since PBW exclusively feed on cotton, unlike other bollworm insect species that also attack other crops such as pigeon-pea, sorghum and sunflower.
Due to RIB, the PBW will not get adequate nutrition and weaken over time, he said. Without cultivating non-Bt cotton as refugia, PBW is bound to develop resistance to Bt toxins over time, as has happened in Maharashtra, he pointed out. The Centre has granted permission for 5-10% of non-BT Cotton along with the BT Cotton seeds and should the farmers follow these methods for sowing along with other preventive measures, PBW will weaken over the season, he said. According to him, the cotton sowing is in full swing. More than 20-30% sowing operations have been completed in Yavatmal, Wardha, Amravati and Nagpur regions. However, the dry spell in between may see the need for resowing operations in some regions, he pointed out.
This year, the Met department has been careful in its warning and had also issued an advisory that farmers should start Kharif sowing only by June end after regular spell of rains. Most farmers in the region seem to have heeded the advice. But in the last one week, districts like Yavatmal in the cotton belt, which received scattered rainfall, saw sowing operations picking up.
Nationally, annual seed market for the legally approved varieties is estimated at around 4.5-4.8 crore packets (of 450 gram each) and the area under the fibre crop hovers around 120 lakh hectares. This season, Maharashtra is preparing 40 lakh hectares for cotton sowing and normally some 1.6 crore packets of seeds are required for a season. A major portion of the crop is in Vidarbha, Marathwada and Khandesh pockets of the state.
