After two years of subdued performance, India's polyester yarn manufacturers are set to witness a recovery in operating profitability by 100-150 basis points (bps), reaching 7-8 per cent this fiscal (FY24), according to a CRISIL Ratings analysis of 20 polyester yarn makers, which account for approximately 40 per cent of the sector's revenue. This improvement is attributed to government countermeasures aimed at curbing the import of cheaper competing products. In October 2023, the Indian government issued a Quality Control Order (QCO) mandating BIS certification for imported yarn, addressing the influx of cheaper polyester yarn from China. Despite India importing around 12 per cent of its total polyester yarn requirement in fiscal 2024, up from 7-8 per cent prior to fiscal 2023, Indian manufacturers faced pressure to match the prices of imported yarn to remain competitive. In response to the QCO, China began exporting cheaper polyester fabric to India. To combat this, the Indian government imposed a minimum import price (MIP) of $3.5 per kilogram on synthetic knitted fabric in March 2024 to restrict uncompetitive imports. This measure has led to a decline in the volume of cheaper polyester yarn and fabric imports from China, as per CRISIL. As a result, the revenue of domestic polyester yarn makers is expected to grow by 3-5 per cent this fiscal, following a flat performance last fiscal year. The recovery in operating margins is projected to boost cash accruals by 20-25 per cent this fiscal, after a period of moderation over the past two years. Debt protection metrics, which were impacted by lower margins and moderate revenue growth in the last two fiscals, are anticipated to recover due to improved cash accruals and moderate capital expenditure (capex). Interest coverage is expected to improve to 5.5-5.7 times this fiscal, up from 4.0-4.2 times last fiscal. Gearing is projected to remain comfortable at 0.4-0.45 times, compared to 0.5 times as of March 31, 2024. However, potential challenges such as a slowdown in demand from downstream segments, adverse movements in crude prices affecting raw material costs, or regulatory changes impacting the polyester yarn industry will need to be monitored closely in the future. “The twin effect of the government measures will give domestic polyester yarn players a leg up. This is reflected in the fall in polyester yarn imports by 61 per cent in the seven months ending May 2024, after rising 92 per cent on-year in the seven months prior. The imports of synthetic knitted fabric, too, fell significantly in April-May on-year. Therefore, operating profitability of polyester yarn manufacturers will recover this fiscal and reach closer to the pre-pandemic level,” said Gautam Shahi, director, CRISIL Ratings.
Source: Fibre2fashion
The 5th ASEAN-India Trade in Goods Agreement (AITIGA) Joint Committee and related meetings for the review of the AITIGA were held at the ASEAN Secretariat in Jakarta, Indonesia, from July 29 to August 1, 2024. This event marked a significant milestone in enhancing economic cooperation between ASEAN and India. During the 3rd round of negotiations in Jakarta, all eight sub-committees dealing with various aspects of the agreement—‘national treatment and market access’, ‘rules of origin’, ‘standards, technical regulations and conformity assessment procedures’, ‘sanitary and phytosanitary’, ‘legal and institutional issues’, ‘customs procedures and trade facilitation’, ‘trade remedies’ and ‘economic and technical cooperation’—met alongside the 5th AITIGA JC and held substantive discussions. Significant progress was made during this round, with all sub-committees reporting their discussion outcomes to the 5th AITIGA JC, which provided further guidance to steer their future work. The meeting was co-chaired by Rajesh Agrawal, additional secretary, Department of Commerce, India, and Mastura Ahmad Mustafa, deputy secretary general (Trade), Ministry of Investment, Trade & Industry, Malaysia. Delegates from all 10 ASEAN countries and India participated in the meeting, the Ministry of Commerce and Industry said in a press release. On the sidelines of the 5th AITIGA JC meeting, the Indian delegation, led by Rajesh Agrawal, held bilateral meetings with counterparts from Malaysia, Singapore, Indonesia, and Vietnam to develop a common understanding of the issues being discussed in the AITIGA review. Separate meetings were also held with ASEAN Secretary General Dr Kao Kim Hourn and ASEAN deputy secretary general Satvinder Singh to explore possibilities for enhancing economic cooperation between India and ASEAN through the review of AITIGA. The Indian delegation also interacted with Indian businesses in Jakarta on July 31, 2024, at a dinner arranged by the Embassy of India in Jakarta, where they listened to the experiences of the industry and their expectations from the AITIGA review ASEAN is an important trade partner for India, with about 11 per cent share in India’s global trade. The review of AITIGA, which was originally signed in 2009, aims to create further opportunities for businesses on both sides to enhance the level of India-ASEAN trade. The next meeting of the AITIGA Joint Committee will be held in India from November 19-22, 2024.
Source: aspirantiasacadem
Indian textile makers’ shares surged on bets they stand to gain from a political turmoil in Bangladesh that threatens to disrupt supply chains. Bangladesh’s textile exporters face the risk of losing business amid political instability that saw violent protests forcing Prime Minister Sheikh Hasina to flee the country on Monday. Stocks of Indian manufacturers including KPR Mill, Arvind, Gokaldas Exports, Vardhman Textiles, and Welspun Living all jumped more than 10% in Mumbai, on expectations of a higher market share. Bangladesh has enjoyed rapid growth in its exports of ready-made garments and other textile products, making it the second-largest exporter of such products in the world behind China. The country’s textile exports were worth $45 billion in 2022, more than double that of India.
Source: Times of India
Ahmedabad: The ongoing crisis in Bangladesh has cast a shadow over Gujarat’s textile and chemical industries, which have significant stakes in the South Asian market. As the situation unfolds, these sectors are closely monitoring the developments and bracing for potential disruptions. Initial estimates indicate that Gujarat’s textile industry has seen at least Rs 1,000 crore in transactions affected Both industries are in a revival phase, and the Bangladesh crisis could severely impact them. The textile industry, heavily reliant on exports to Bangladesh, has already taken a hit. Around 60% of Gujarat’s cotton yarn exports go to Bangladesh, and new shipments have been halted as a precaution. About 100 containers, each weighing 20 tonnes, are stranded at Gujarat’s ports, awaiting clarity on when exports can resume. “Bangladesh is the biggest export market for Gujarat-based spinning industry with around 60% share. There will be a significant impact on the industry. Currently, export is halted. We are closely observing the situation,” said Rahul Shah, cochairman of the GCCI Textile Taskforce. Yarn prices declined by Rs 8 per kg in the past week, settling at Rs 242 per kg, reflecting the uncertainty surrounding the industry’s ability to maintain its export momentum to Bangladesh. Some believe that prolonged uncertainty in Bangladesh could boost garment manufacturing in India, but industry leaders caution that the immediate impact on yarn exports is severe. The chemical industry is also facing challenges. “Gujarat’s dyestuff manufacturers supply around 3,500 to 4,000 tonnes of dyes, mainly reactive dyes, to Bangladesh every month, accounting for approximately 15% of the state’s dye exports. We are going to hold an urgent meeting of exporters to assess the situation and devise strategies to mitigate potential losses,” said Nilesh Damani, vice-president of the Gujarat Dyestuffs Manufacturers’ Association (GDMA). Around 150 companies have significant exports of reactive dyes to Bangladesh from Ahmedabad. Both industries are hoping for a swift resolution to the crisis and a return to normal trade relations. Industry leaders are expected to explore contingency plans to minimize the impact on their businesses, including diversifying export markets and alternative supply chains.
Source: Times of India
The government on Tuesday said it is developing a trade connect e-platform to connect exporters, MSMEs and entrepreneurs with various stakeholders including Indian missions abroad, export promotion councils, and other partner government agencies. Minister of State for Commerce and Industry Jitin Prasada said in a written reply to the Lok Sabha that the platform will provide information on trade events taking place in different parts of the world, benefits available due to India's free trade agreements (FTAs) and other international trade-related information and data. "The government has initiated the creation of a trade connect e-platform to connect Indian exporters, MSMEs and entrepreneurs with various stakeholders including Indian Missions Abroad, Export Promotion Councils, and other partner government agencies," he said. Replying to a separate question, Prasada said that the major districts which are recording healthy export growth include Jamnagar, Kanchipuram, Mumbai, Pune, Surat, and Kachchh. During the April-May of this fiscal, the highest exports were recorded from Jamnagar at $ 10 bn. It was followed by Kanchipuram ($ 3.27 bn), Mumbai ($ 2.24 bn), Pune ($ 2.14 bn), Kachchh ($ 2 bn), and Surat ($ 1.98 bn). On a separate question whether the government has implemented an 80 per cent concession for Women Entrepreneurs and a 50 per cent concession for MSMEs in licensing fees for licences granted by the Petroleum and Explosives Safety Organisation (PESO), the minister said the proposal is under active consideration of the Department for Promotion of Industry and Internal Trade (DPIIT).
Source: Business Standard
Surat: The ongoing turmoil in Bangladesh has posed new obstacles for Surat's textile industry. The city exports approximately Rs 100 crore worth of textile and yarn products to Bangladesh monthly. However, due to the current situation there, Surat’s textile and yarn businesses are not receiving new orders, and there are uncertainties regarding payments for the materials already delivered. Bangladesh is a significant garment manufacturing hub, producing clothing for leading brands in the United States, United Kingdom, and other countries. Surat and parts of south Gujarat provide textile products to Bangladesh for garment production. Additionally, Bangladesh is a major buyer of sarees, and Surat is a prominent saree manufacturing centre. “Bangladesh is an important market for Surat’s textile industry. But in the current scenario, there will be no business for the time being,” said Sanjay Sarawagi, MD, Laxmipati Group. Some garment manufacturers anticipate a shift in garment production to India. Exporters suggest that Indian manufacturers have an opportunity to establish themselves in the global market. “Post-Covid, Indian exporters could attract orders that used to go to China. Now there is a chance for Indian manufacturers to attract business from Bangladesh,” said an exporter. A textile exporter said that Bangladeshi importers typically follow a six-month payment timeline. With textile exports from Surat to Bangladesh amounting to around Rs 100 crore, payments for goods supplied in the last four to five months are currently blocked due to the ongoing situation.
Source: Times of India
Indian textile stocks surged in Tuesday's trade, even as the main indices struggled to recover from a significant drop in the previous session. The rally in textile stocks was driven by investor optimism that the ongoing crisis in Bangladesh may prompt international buyers to shift their focus to alternative markets like India, which has a significant presence in the textile and apparel space. Bangladesh has increased its market share in the apparel industry by leveraging the China-plus-one strategy. However, with political unrest escalating in Bangladesh, reports suggest that international buyers may adopt a Bangladesh-plus-one strategy, potentially benefiting India from this trend. Against this backdrop, shares of Gokaldas Exports surged by 19% in intraday trading today, reaching ₹1,095 each and breaking a five-day streak of declines. Other textile stocks, including KPR Mills, Vardhman Textiles, Welspun Living, S.P. Apparels, Nitin Spinners, Arvind, and Himatsingka Seide, also experienced rally ranging from 5% to 17%. In recent years, apparel buyers have increasingly diversified their procurement sources, favoring India. This trend is supported by Government of India's (GoI) initiatives aimed at enhancing bilateral trade through agreements and treaties. Additionally, apparel buyers are consolidating their vendor lists, which benefits larger apparel manufacturers in India. Despite these favorable conditions, Bangladesh has been outperforming India in apparel exports. The country has gained a larger share of global exports by leveraging the China-plus-one strategy and geopolitical tensions between the United States and China. In 2019, Bangladesh's share of apparel exports to the USA was 7%, while China's was 30%. By 2023, China's share had dropped to 22%, and Bangladesh's share had risen to 09%. Meanwhile, India has also benefited slightly, increasing its share from 5% in 2018 to 6% in 2023. Similarly, Bangladesh's share of apparel imports into the EU rose to 21% in 2023, while India’s share remained at 5%. Indian players face lower market penetration in the UK due to tariff disadvantages compared to Pakistan, Turkey, and Bangladesh. However, a Free Trade Agreement (FTA) with the UK could enhance India’s competitiveness by allowing duty-free exports. Bangladesh’s significant boost in apparel exports has contributed to a record high of $55.56 billion in total exports for the country in 2022–23. Apparel exports alone surged to nearly $47 billion, exceeding the previous record set in 2022 by approximately 10.27%, according to the Export Promotion Bureau (EPB). The textile industry has become a major sector of Bangladesh’s economy, representing 80% of its exports and 15% of its GDP. The primary markets for Bangladeshi textiles are the European Union, United States, Canada, Australia, and Japan.
Source: Live Mint
S&P Global Ratings, Director, Sovereign and International Public Finance Ratings (AsiaPacific), Andrew Wood said that S&P expects domestic demand conditions in Bangladesh in this period of time to be weak and probably going to entail less support for exports from other countries, including India, into Bangladesh. India is a well diversified exporter and a blip in its exports to Bangladesh is unlikely to have any meaningful impact on India's overall trade position for the full year, S&P Global Ratings said on Tuesday. Bangladesh is facing its worst political crisis since independence in 1971, with Prime Minister Sheikh Hasina resigning amid massive antigovernment protests. Bangladesh Army Chief General Waqar-uz-Zaman on Monday announced that an interim government would be taking over the responsibilities. S&P Global Ratings, Director, Sovereign and International Public Finance Ratings (Asia-Pacific), Andrew Wood said that S&P expects domestic demand conditions in Bangladesh in this period of time to be weak and probably going to entail less support for exports from other countries, including India, into Bangladesh "India is a well diversified exporter to the entire world and its trade profile is significantly larger than bilateral trade relationships with economies like Bangladesh. "Whatever the impact is going to be on directly is really quite unlikely to have a meaningful impact on its overall trade position for the fiscal year... its external position is quite strong in the country and is a net creditor to the world by our calculation," Wood said in a webinar. Bangladesh is India's biggest trade partner in South Asia, while India is the second biggest trade partner of the neighbouring country in Asia. India's exports to Bangladesh dipped to USD 11 billion in 2023-24 from USD 12.21 billion in 2022-23. Imports too declined to USD 1.84 billion in the last fiscal, from USD 2 billion in 2022-23. India's main exports include vegetables, coffee, tea, spices, sugar, confectionery, refined petroleum oil, chemicals, cotton, iron and steel, and vehicles. The main import items are fish, plastic, leather, and apparel, among others.
Source: Economic Times
Pakistani businesspeople who have invested in Bangladesh’s textile sector are concerned since the country’s recent upheaval and unrest has created the same level of uncertainty as in Pakistan.
Previously, several Pakistani textile entrepreneurs shifted their companies to Bangladesh. Lower production costs, preferential trade agreements, and improved infrastructure in Bangladesh all contributed to this trend. Bangladesh is the second largest exporter of apparel in the world after China and is regularly encroaching on the Chinese share, which has been slapped with sanctions by Western nations. Most of them have established their operations in recent years in special export processing zones of Bangladesh. Entrepreneurs from more than a dozen Pakistani textile industries, particularly in the home textiles and readymade garment sectors, have moved their units to Bangladesh to reduce production costs by nearly 50 per cent. Soorty Enterprises has invested US $ 35 million to set up a garment factory in Bangladesh, employing around 6,000 Bangladeshis. Other notable names include, Interloop Limited, Pak Denim Limited, Crescent TextileMills, Gul Ahmed Textile Mills, Kohinoor Textile Mills, Al-Karam Textile Mills, Nishat Mills Limited (Part of the Nishat Group), Artistic Milliners and Masood Textile Mills. These individuals and businesses have relocated or extended their operations to Bangladesh due to lower manufacturing costs, improved market access, and advantageous economic policies. Bangladesh’s strategic advantages, including as low labour costs and good trade agreements with the European Union and the United States, impacted the relocation, as they provide Bangladesh better market access and lower tariffs than Pakistan. (The European Union granted Pakistan GSP+ status in 2013). These incentives have made Bangladesh an appealing destination for Pakistani textile companies seeking to increase earnings and market reach.
Source: Apparel Resource
The Federal Government has met with the International Cotton Advisory Committee (ICAC) to kickstart the resuscitation of the moribund cotton/textile industry in the country. The meeting convened at the Presidential Villa in Abuja, by Vice President Kashim Shettima, to discuss the ambitious “African Cotton Sustainability Programme 2030”, set a target is to create over 1.4 million jobs annually in the cotton/textile sector, while the focus is to develop key components of the cotton value chain comprising farming, weaving, ginning and linking of cotton, all in line with the industrialization drive of the President Bola Tinubu administration. The meeting which had ICAC’s Executive Director, Eric Trachtenberg, Shettima urged stakeholders to come up with a roadmap for the revitalization of the cotton/textile sector in Nigeria, noting that “it is time to work more and talk less”. He assured that the Tinubu administration will make conscious efforts to ensure the country harnesses opportunities in the cotton value chain, including ensuring that Nigeria regains its ICAC membership. He acknowledged ICAC’s commitment to the development of the sector in Africa, noting that “your diverse backgrounds in ICAC gives a nuanced understanding of the complexities and opportunities in the cotton value chain.” Earlier in his remarks, Governor of Lagos, Babajide Sanwo-Olu, said his state was well positioned to harness opportunities in the cotton value chain, given that it hosts the factories, the market and is a critical component of the business ecosystem for the cotton sub-sector. He said Lagos, as an integral part of the cotton value chain in Nigeria, will support every effort by stakeholders to revamp the sector to enable the state sustain its status as the largest fashion hub in the continent. He expressed excitement at the possibility and opportunity for the resuscitation of the cotton and textile sector with a particular focus on job creation and economic transformation. Sanwo-Olu pledged the state’s readiness to off take cotton produced in other parts of the country for companies based within the area. On concerns about local patronage of Nigerian textiles versus imported fabrics, the governor advocated for a focus on the entire value chain to stimulate local production. He explained that many Nigerian garment manufacturers use polyester instead of cotton, due to its lower cost, he however highlighted the potential for Nigeria to produce high-grade cotton and reduce reliance on imports. He stressed on the importance of examining the entire value chain and promoting local production and consumption, citing statistics that showed that the cotton industry once employed 15-18 million Nigerians, and expressed hope that reviving the industry could create millions of jobs in the next few years. He also welcomed the support of the ICAC, which he described as the “United Nations equivalent of the cotton industry” and praised Vice President Kashim Shettima for his commitment to the industry’s revival. Governor of Imo State, Hope Uzodimma said the meeting with the delegation from the ICAC is the beginning of Nigeria’s quest to revamp the textile industry as part of the broad objective for industrializing the economy. He said Imo State and the South-eastern region will key into the renewed effort to revamp the cotton/textile sector with the bid to create jobs for the people and for the overall industrialization drive of the country. “the opportunity created by the meeting is a new beginning in our quest for industrial recovery and creation of jobs for our teeming youths as well as an opportunity for a new partnership.” He expressed excitement while speaking to journalists about the potential of the cotton industry to revamp Nigeria’s economy and highlighted the opportunity for Nigeria to leverage international partnerships, expertise, and innovations to revamp its moribund cotton and textile industries. Uzodimma emphasized the potential for job creation, employment, and engagement of young people, saying “this is a new opportunity that will create jobs, employment, and engage our young men and women roaming the streets”. He recalled the past glory of Nigeria’s textile industry, citing the numerous textile industries in Lagos’ Isolo area and Kaduna’s reputation as a center for cotton production and textile mills. Uzodimma hammered on the need to stimulate the economy, create jobs, redefine Nigeria, and align with the new digital age for production and economic stimulation. In his remarks, Trechtenberg said he was pleased with the level of interest and commitment shown by the leadership of the country and other stakeholders in reviving the industry in Nigeria. Citing examples in China, India, Pakistan and other parts of the world, the ICAC Executive Director said the potentials in the cotton value chain was huge and has proven to be transformative. He noted that cotton and textile offer competitive advantage, economic transformation and is a very competitive product that can be sold, both domestically and internationally, with probability to generate high quality jobs for now and in the future. He said the ICAC would support Nigeria’s cotton value chain revamp by offering expert advice in improving productivity and boosting the value chain and investment facilitation. Trachtenberg, expressed optimism while speaking to newsmen about Nigeria’s unique advantages, including low-cost labour, market access to the African Growth and Opportunity Act (AGOA) and Economic Partnership Agreements with the EU, and a talented workforce, urging collaboration to reimagine the cotton economy.
He emphasized that ICAC is committed to supporting Nigeria in achieving its goals, creating quality jobs, generating foreign exchange, and re-imagining the global cotton economy. The ICAC boss highlighted the potential for Nigeria to become a major player in the global cotton industry, given its favorable conditions and forward-leaning government officials. The Comptroller-General of the Nigerian Customs Service, Adewale Adeniyi, on his part pledged to tackle smuggling and support the revival of the textile industry in Nigeria. He acknowledged that smuggling has hindered the industry’s development, but noted that other challenges like yield, power, and investments also need to be addressed. He stated that the Customs Service has been given a “marching order” to play its role in reviving the industry, focusing on policy formulation and implementation. Adeniyi identified policy as a major factor that “killed” the textile industry, but expressed commitment to revisiting and reforming policies to support the industry’s recovery.
He assured that the Customs Service will do everything possible to protect the industry, affirming its commitment to supporting Nigeria’s economic recovery through the textile sector. Also speaking, the Director-General of the Nigerian Textile Manufacturers Association, Hamma Kwajaffa, expressed optimism about the revival of the textile industry, predicting a surge in employment and a reduction in security problems.
He said the association is happy to see the revival of the textile industry, which will lead to increased employment opportunities and a decrease in protests.
He noted that the focus is not on funding, but on ensuring a conducive environment for cotton production, citing the need for scientific expertise to achieve high yields.
Kwajaffa noted that many textile mills have closed due to lack of raw materials and smuggling, but expressed confidence that the industry will bounce back, with about 70 textile mills expected to reopen, up from the current 24. He predicted a return to the “booming days” of the textile industry, which once had 200 mills operating in the country. Also present at the meeting were the Minister of Innovation, Science and Technology, Uche Nnaji; the Director General, Budget Office, Dr Tanimu Yakubu; Director General, Raw Material Research and Development Council (RMRDC), Prof Nnanyelugo Ike-Muonso, and Director General, Federal Institute of Industrial Research, Oshodi, Dr Jummai Tutuwa. Other members of the ICAC delegation included the Director of Textiles, Mr. Usman Kanwar; Chief Scientist, Dr Keshav Kranthi; President of the National Cotton Association of Nigeria, Anibe Achimugu; Vice President, Cotton Ginners Association, Abdulkarim Lawal Kaita and representatives of major textile and cotton producers in the country, among others.
Source: The Sun
Indonesia reimposed additional tariffs on imports of fabrics to protect its local industry from a flood of cheaper goods coming mostly from China. The ‘safeguard duties’ take effect on Aug. 9 and are valid for three years, according to a Finance Ministry ruling issued on Tuesday. They apply to five types of fabrics imported from 124 countries, it said. Imports from the Chinese mainland, Hong Kong and South Korea are charged on their entire range of fabrics.
Source: Caixinglobal
