The bullish movement in the textile sector, combined with the broader economic recovery trendsetter stage for continued optimism.
India's stock market closed in green in an unpredictable week (ending on December 13) that saw intense action between the bulls and bears, but the Nifty50 index ended the week on a positive note with a modest gain of 0.37%, closing at 24,768 points. While the market experienced a divergence between the performance of midcap and smallcap stocks, the overall outlook remains promising, driven by select sectors demonstrating strong growth potential. Despite the volatility, specic sectors have managed to shine brightly. There was a breakout of the Denedge EQW Textile Index, which tracks 52 textile-related stocks.
The Power of Equal-Weighted Indexes
The Equal Weighted Index (EQW) provides a better understanding of sector performance. Unlike traditional market-capitalisation weighted indices, where larger companies can disproportionately inuence overall performance, the EQW treats all constituent stocks equally. This approach provides a clearer picture of how a sector as a whole is performing rather than being swayed by a few dominant The Definedge EQW Textile Index, which tracks 52 companies in the textile industry, is particularly insightful. This sectoral index offers a more comprehensive view of the textiles market, one that acknowledges the industry's cyclical nature—demand often fluctuates due to both domestic and international factors. The Heikin Ashi chart, which is often used to identify trends and momentum, shows that the bulls are gaining strength. A larger body candle indicates the bullish trend is getting stronger, a sign that the sector is entering a bullish phase. This breakout marks the end of a two-year consolidation period and could signal a new era of growth for textile stocks.
Multi-Timeframe Relative Strength in Textile Stocks
To further refine our understanding of sector performance, we employ a range of technical tools, including the Multi-Timeframe Relative Strength (RS) Matrix. This scanner tracks relative strength patterns across multiple timeframes—daily, weekly, monthly, and quarterly—allowing for a more dynamic and flexible stock performance analysis.
The RS Matrix assigns a score to each stock based on its performance across these various timeframes. A score of 1 indicates that the stock is performing bullishly, while a score of 0 reflects a bearish trend. Stocks that score four across all timeframes are considered to be outperforming and qualify as potential candidates for further investment.
This method offers an efficient way to identify stocks showing consistent bullish behaviour across different timeframes.
The above stocks are outperforming the Definedge EQW Textile Index in multiple timeframes and are potentially positioned to outperform the broader textile sector. For readers looking for high-potential candidates within the textile space, these names could serve as a starting point for further research and analysis.
The Road Ahead: Optimism and Growth Potential
Looking ahead, the outlook for the Indian stock market remains optimistic as Nifty50 is on the verge of breaking the previous high of 24,857, especially with the strengthening performance of key sectors.
The bullish movement in the textile sector, combined with the broader economic recovery trend, sets the stage for continued optimism.
With a focus on emerging sectors, strong technical analysis, and an eye on key performance indicators, readers can continue to find opportunities in textile stocks that potentially promise rewarding returns.
Source: Business Standard
₹10 crore has been provided to implement subvention scheme for textile mills that want to invest and upgrade technology
Tamil Nadu Department of Handlooms, Handicrafts, Textiles and Khadi has issued guidelines enabling spinners in the State to avail 6 per cent interest subvention to modernise spinning machines that are over 15 years old for a period of five years. In its order on December 9, the department said that ₹10 crore has been allotted for the current fiscal to implement the scheme for textile mills that want to invest and upgrade technology.
State Finance Minister Thangam Thenarasum in the budget for 2024-25 said investment in modern technologies in the spinning sector is imperative to make Tamil Nadu the leading State in the field. In pursuit of this goal, the government will introduce a special scheme for technological upgradation by providing interest subvention of 6 per cent at an estimated cost of ₹500 crore over the next 10 years.
The government order says that 60 per cent of the funds will be for ring frame spinning mills; 15 per cent towards air jet/electro spinning and the remaining 25 per cent to modernise open-end spinning rotor kits. Only the machineries and spares in the spindles and the rotors having age of 15 years or more shall be eligible for benefit under the scheme, the order said.
SK Sundararaman, Chairman, Southern India Mills’ Association (SIMA), thanked the State government for announcing the unique policy, a much needed one to revive the spinning segment in the State. This has come at a time when there is a dire need to modernise the spinning units in Tamil Nadu to have a level playing field and compete with other States and globally. He has added that the modernised spinning machines would increase productivity, enhance the quality and produce yarn for high value-added fabrics, made-ups and garments.
Out of 46 million working spindles in the country, 19 million spindles are in Tamil Nadu, in which over 12 million spindles are over 15 years old, he said.
The textile industry in the country, particularly in the State, is going through a crisis due to huge incentives offered by other competing States. Market has slowed down due to poor demand and inadequate labour availability.
Fund allocation for open-end spinning and air jet/electro spinning would help these segments, which account around 70 per cent of of the viscose staple fibre yarn manufacturing and over 60 per cent of recycled yarn production and thereby the downstream sectors in Erode and Karur regions, he said.
The Textiles and Clothing (T&C) industry is the backbone for the Tamil Nadu economy as the State accounts one-third of the country’s textile business and fetches over ₹75,000 crore export earnings.
Source: Business Line
Madhya Pradesh Chief Minister Dr. Mohan Yadav held significant discussions with Shri Rajinder Gupta, Chairman of Trident Group, regarding investment opportunities and industrial expansion in the textile sector. The meeting took place during the “Invest Madhya Pradesh”: Regional Industry Conclave, Narmadapuram, underscoring the state’s growing stature as a preferred destination for industrial development.
While addressing the gathering at the event, Shri Rajinder Gupta expressed his gratitude to the Madhya Pradesh government, he highlighted Trident’s remarkable journey in the state. “We ventured into Madhya Pradesh a few years ago and invested Rs. 5,000 crores. Today, our finished products from Madhya Pradesh are exported to 122 countries, with demand continually rising,” he shared.
Looking ahead, Shri Gupta announced Trident Group’s plans to invest an additional Rs. 3,000 crores in the state’s textile sector which will expand employment opportunities here at Trident Group from current 12,000 to over 15,000.
“We are committed to ensuring that the benefits of our operations stay within Madhya Pradesh, from sourcing cotton to producing finished goods. The state is an ideal confluence of sustainability, inclusive growth, and green energy, with immense potential for solar and wind energy development,” Shri Gupta said. He also emphasized Trident’s focus on skill development and women empowerment, with 50% of new employment opportunities reserved for women.
Praising the Chief Minister’s visionary leadership, Shri Gupta noted that fostering collaboration between intellectuals and industrialists has energized innovation and regional development. This initiative reinforces Madhya Pradesh’s reputation as a hub for sustainable industrial growth and inclusive progress, further cementing its appeal to investors worldwide.
Source: Business News
India's import of Russian crude oil dropped in November to its lowest level since June 2022 but the Kremlin continues to be the biggest source of oil for India, according to a monthly tracker report of a European think tank. India became the second biggest buyer of Russian crude oil since Moscow invaded Ukraine in February 2022, with purchases rising from less than one per cent of the total oil imported to almost 40 per cent of the country's total oil purchases. The rise was primarily because the Russian crude oil was available at a discount to other internationally traded oil due to the price cap and the European nations shunning purchases from Moscow. "India's imports of Russian crude oil dropped by a massive 55 per cent in November - the lowest figure since June 2022," the Centre for Research on Energy and Clean Air (CREA) said its latest report.
Russia remained India's top oil supplier, followed by Iraq and Saudi Arabia.
"China has bought 47 per cent of Russia's crude exports, followed by India (37 per cent), the EU (6 per cent), and Turkey (6 per cent)," CREA said without giving absolute numbers. In November, there was a 17 per cent month-on-month increase in the discount on Russia's Urals grade crude oil to an average of $6.01 per barrel compared to Brent crude oil. The discount on the ESPO grade narrowed by a massive 15 per cent and was traded at an average discount of $3.88 per barrel while that on the Sokol blend narrowed by 2 per cent to $6.65 per barrel, it said.
Russia predominantly sells ESPO and Sokol grades of crude oil to India.
Besides crude oil, India bought smaller quantities of coal from Russia.
"From December 5, 2022, until the end of November 2024, China purchased 46 per cent of all Russia's coal exports - India (17 per cent), Turkey (11 per cent), South Korea (10 per cent), and Taiwan (5 per cent) round off the top five buyers list," according to CREA. All fossil fuels taken together, "India dropped to third in the list of largest buyers of Russian fossil fuels in November, contributing 17 per cent (EUR 2.1 billion) to Russia's monthly export earnings from its top five importers. There was a significant 22 per cent drop in Russian revenues from crude oil exports to India in November," it said. While there was an 11 per cent month-on-month decline in the total volume of India's imports of crude oil in November, Russian volumes suffered the most, dropping by a massive 55 per cent. India imports more than 85 per cent of its crude oil, which is refined into fuels like petrol and diesel refineries. In an attempt to restrict funds for Russia's war machine, The Group of Seven (G7) rich nations, the European Union and Australia put an embargo on Russian crude and introduced a $60 per barrel price cap in December 2022. Over the next 12 months, the price cap and embargo had a significant impact on revenues and forced Russia to find new markets and ways to transport its oil.
Russia did this by offering deep discounts on its Urals grade crude.
"It has been two years since the imposition of the price cap. CREA estimates that in this period, the sanctions have forced Russia to drop the price of Urals by an estimated 15 per cent. Since the sanctions, Russia has lost an estimated EUR 14.6 billion in revenues from Urals grade crude exports," the report said. In the second year of the sanctions, CREA estimates that sanctions impacted Russian Urals crude revenues by 10 per cent resulting in losses of EUR 4 billion. This impact was felt heavily for the first half of 2024 when Russian revenues were hit by EUR 2.5 billion. "The price cap has had an impact but has failed to live up to its potential. A lack of enforcement and desire to lower the price cap has meant Russia has found a way to circumvent the cap and find new markets as time has gone by, especially in the second year of the sanctions," it said. In the first year of the sanctions Russia was losing on an average, 23 per cent of its Urals crude export revenues every month due to the price cap and embargo. This figure has fallen sharply to a mere monthly average of 9 per cent in the second year of the cap. The impact has reduced steadily through 2024 - the effect on revenues in October was 63 per cent lower than that in January. "As Russia has built a network of 'shadow' tankers, it can trade its oil above the cap to new markets in non-sanctioning countries," CREA added.
Source: Business Standard
Synopsis India's inflexible model bilateral investment treaty (BIT) is hindering trade negotiations with several nations, including Saudi Arabia, the UK, and the EU. These countries seek stronger investor protections, posing a challenge as India prioritizes safeguarding itself from liability. While internal discussions on potential carve-outs are underway, the BIT's rigidity may impact India's ability to attract crucial foreign investment. India's model bilateral investment treaty (BIT) and the nance ministry's rm stance against amending it are becoming significant roadblocks for trade negotiators, according to a ToI report. This rigid position is also creating challenges for several nations —including Saudi Arabia, the UK, the European Union, and Sri Lanka— seeking investment arrangements with India.
Saudi Arabia's Concerns
The issue gains prominence ahead of Prime Minister Narendra Modi's upcoming visit to Saudi Arabia, where investment topics are expected to dominate the agenda. Specially, Saudi Aramco’s plans to establish two refineries in India—one in Gujarat in partnership with ONGC and another in Andhra Pradesh with BPCL—could be a key focus. Saudi Arabia has previously raised concerns about India's model BIT, which
has also hindered progress in negotiating a bilateral trade deal with the Gulf Cooperation Council (GCC).
UK Trade Negotiations to Revisit
BIT Debate the UK trade negotiators are also expected to revisit the issue next month, as the British government under Prime Minister Keir Starmer works to finalize a free trade agreement (FTA) with India. Negotiations have dragged on for over a decade and a half, often stalling due to differences over investment protections. In 2016, India introduced the current model BIT following its loss in the White Industries arbitration case in 2010. Subsequently, two UK-based companies, Cairn Energy and Vodafone, invoked arbitration under previous BITs after facing retrospective tax claims in India. Even the India-UK Infrastructure Financing Bridge, which aims to encourage British investment in projects like roads and green energy, has been bogged down by concerns over the current BIT framework.
UAE's Precedent and EU Resistance
India made certain concessions while signing its FTA with the UAE, providing a potential precedent for future negotiations. However, trade partners like the UK and the EU remain steadfast in their demand for modifications to the investment chapter, expressing concerns about the lack of flexibility in India's model BIT.
Sri Lanka and Other Nations Raise Issues
Sri Lanka has also flagged concerns about the model BIT in its engagement with India to expand the scope of their existing trade agreement. Meanwhile, countries like Singapore and South Korea still operate under earlier BITs. Indian officials have, however, indicated potential changes in their agreements with South Korea, though the details remain unclear. India’s model BIT was introduced to provide a stronger defense for the government in arbitration cases after significant losses in previous disputes. The treaty’s stringent provisions focus on protecting India from liability, but they often deter foreign investors who seek robust legal protections.
Source: Economic Times
India’s factory output, based on the Index of Industrial Production (IIP), grew at a three-month high of 3.5% in October, due to a broad-based pick up in output of all the three sectors–manufacturing, mining, and electricity–amidst the festive season, official data released on Thursday showed.
The output of manufacturing and electricity grew by 4.1% and 2%, respectively, on a year-on-year basis in October. And that of mining grew marginally by 0.9%. The growth rates of all the three sectors were the highest in three months, the data showed. Analysts say that manufacturing growth was supported by festive demand, as output of electricals and electronics, apparels, food products, and other transport equipment improved. “At the same time, automobiles and machinery production contracted, possibly impacted by extremely high base, inventory build-up and muted demand conditions,” said HDFC Bank in a report. Overall, Overall, 18 of 23 manufacturing sub-segments recorded year-on-year growth, same as last month.
On a sequential basis, the IIP grew 2.2% in October, the fastest pace in five months. Mining’s output rose 15% one month; while manufacturing’s output inched up by 0.6%, and electricity’s by 0.6%. At a use-base level, two of the seven categories–capital goods and consumer durables–recorded a slower growth, year-on-year, in October as against September. This was mainly due to the statistical effect of a high base. Consumer durables output growth slowed to 5.9% in October from 6.5% in September, and capital goods output growth eased to 3.1% from 3.6%. Consumer non-durables growth, however, rose to 2.7% from 2.2%, and primary goods’ output growth increased to 2.6% from 1.8%.
“While the performance in the consumer durables segment has remained healthy in the year so far, the encouraging aspect is the improvement in output of consumer non-durables seen in the last two months. This reiterates the fact that there have been signs of continued improvement in rural demand,” said Rajani Sinha, chief economist, Care Edge Ratings. Analysts say that healthy agricultural production is expected to be supportive for the consumption scenario going forward. However, there is a need to remain watchful of the trends in urban demand, especially considering some signs of slowdown, they say. Additionally, in the coming months, the industrial sector activity is expected to improve further on the back of an expected pickup in government capex, say economists. A sustained increase in various high frequency indicators also points to the improvement in industrial output, said India Ratings and Research (Ind-Ra) in a report. Ind-Ra expects IIP growth to rise to 4.5% in November.
Source: Financial Express
Synopsis India-UK business relations have flourished this year, driven by expectations of a free trade agreement. HSBC data reveals a 36% surge in UK-bound Indian business client referrals and a significant increase in cross-border payments, indicating growing investment and trade between the two nations. Business between the UK and India has boomed this year as rms in both countries anticipate their governments will be able to seal a free trade agreement, HSBC Holdings Plc data showed. In the nine months to October, HSBC’s UK unit received 36% more business client referrals from its arm in India than a year earlier, data from the bank showed on Monday. That includes Indian clients who want to set up a company in the UK, establish a subsidiary or make an acquisition. Payments received from India by UK clients climbed by 121%, with a 32% rise in flows in the opposite direction. The positive snapshot from the only UK bank to have a significant presence in both markets comes as the two nations prepare to relaunch negotiations on a free trade agreement in January. Talks which then-Prime Minister Boris Johnson hoped would conclude by Diwali in October 2022 are still dragging on more than two years and three British premiers later and have been on hold since the UK’s July 4 general election. While a deal is still far from nailed on, Prime Minister Keir Starmer — who ousted Rishi Sunak’s Conservatives in July — will welcome the rise in Indian interest in the UK indicated by HSBC’s figures. The premier has sought to market the UK as an attractive place for overseas capital, holding a high-profile international investment summit in October as he pledges to re up growth. The bank’s growth in business between India and the UK has been driven in part by the “massive” potential for a trade deal between the two nations, according to Cora McLaren, HSBC UK’s head of international subsidiary banking. She said that even absent a deal, the ongoing commitment of the two countries to securing one after 14 rounds of talks boosts confidence in bilateral trade. “The free trade agreement is being talked about, when I speak to clients — their interest is in how it relates to them,” McLaren said in an interview. “Anything that gives certainty to businesses around the future outlook is helpful because in making decisions, one of the enemies is uncertainty or volatility.” Trade between the UK and India totalled £42 billion ($53 billion) in the 12 months through June, with UK exports to India worth £16.6 billion, according to official figures. When the last round of FTA talks closed in August, people familiar with the matter said there were still hurdles to be overcome in goods, services and investment areas. India has more protectionist policies than Britain, imposing an import tari on Scotch whisky of 150%, for example. During his previous presidential term, Donald Trump called India the “king” of taris, but with the US president elect now threatening his own levies of up to 20% on all goods imported to the US — Britain’s biggest individual trading partner — it’s becoming increasingly important for the UK to broaden trade with other nations. McLaren said that concluding a trade deal would encourage British companies to search out opportunities in India that could ultimately help the UK reach its growth targets: Starmer is aiming for the UK to have the highest sustained rate of growth in the G7. In terms of British rms, broadening customer bases abroad could bring more activity to production facilities in the UK, while building new premises in India could help create jobs as many rms will initially take UK workers to lend their expertise, McLaren said. She also said that Indian clients appreciate the UK’s pool of talent and political stability and that even after Brexit, some see Britain as a pathway into the larger market of the European Union. India has also been holding separate trade negotiations with the bloc, but progress has been sluggish. Promises by Starmer to form closer ties with the EU post-Brexit have piqued the interest of clients in India. “We still see strong trading between the UK and EU and indeed it’s been a priority for the government to open up those conversations more at pace,” McLaren said. That “sells the UK as being open for business, which is really positive.” She nevertheless warned against complacency in attracting Indian investment, saying: “If we think we’re not in competition, we are kidding ourselves. Of course, it’s a competition because large corporates overseas have a real choice in where they want to invest.”
Source: Economic Times
Synopsis The growth in exports to the US was higher than aggregate exports until FY00. However, the global nancial crisis in 2008 slowed down growth until FY10. Since then, the growth in exports to the US has consistently outpaced the overall export growth, underscoring the growing importance of the American market for Indian exports. New Delhi: India's exports to the United States have shown a consistent upward trend, valued at USD 77.5 billion in FY24, marking a growth rate of 10.3 per cent compounded annually (CAGR) over the last 30 years, according to a report by Bank of Baroda. Notably, the growth in exports to the US was higher than aggregate exports until FY00. However, the global nancial crisis in 2008 slowed down growth until FY10. Since then, the growth in exports to the US has consistently outpaced the overall export growth, underscoring the growing importance of the American market for Indian exports. The report highlights that India's exports to the United States have followed a similar trajectory to the country's overall export growth since 1991, when India began economic reforms. As of FY24, the US accounts for 18 per cent of India's total exports, a rise from 16.4 per cent in FY92 but still below the peak of 22.8 per cent in FY00 (financial year 2000). The share of US in India's exports fell to a low of 10.1 per cent in FY11 post the nancial crisis, but it has rebounded over the years. Despite this, the report advises diversifying India's export markets to reduce dependency on any single destination, particularly in light of shifting global political dynamics. The US remains a crucial market for several key Indian industries. In FY24, the top ve export commodities to the US included drugs and pharmaceuticals, pearls and precious stones, petro products, telecom instruments, and readymade garments, together accounting for 40 per cent of total exports to the country. Other notable exports include yarn, marine products, and electronic goods, with the latter facing competition from other Asian countries. Industries like drugs and pharmaceuticals, pearls and precious stones, telecom instruments, and ready-made garments have the highest exposure to the US, with over 30 per cent of their turnover tied to the American market. On the other hand, sectors like carpets, electronic products, yarn products, and marine products have a high percentage of exports to the US despite their smaller overall export value.
Source: Economic Times
Synopsis Portuguese Foreign Minister Paulo Rangel urged India and the EU to prioritize a "good" free trade agreement (FTA) over a "best" deal, emphasizing pragmatism and speed. He highlighted Portugal's strong support for the FTA, citing its geo-economic and geopolitical signicance, and drawing parallels with the EU-MERCOSUR agreement. Rangel's visit included a meeting with India's Commerce Minister to advance negotiations. Portugal has been a big champion of the proposed India-EU FTA since the launch of negotiations and the two entities should focus on getting a 'good deal' instead of focusing their energy on achieving the 'best deal', visiting Portuguese foreign minister Paulo Rangel told ET. "There is a saying in Portugal that 'best' is the enemy of good. The goal should be working towards a good deal as a good deal can be lost while chasing the best. We should focus on a faster, simpler and pragmatic deal," the minister noted. Rangel mentioned that Portugal has been the frontrunner in supporting India-EU FTA which has geo-economic and geo-political implications. The minister in this context referred to the EU-MERCOSUR FTA which has opened up huge opportunities between the EU and Latin America. In this backdrop of India-EU FTA negotiations, Rangel met commerce and industry minister Piyush Goyal. Earlier this week, the EU envoy, along with a dozen of envoys from various EU states, met Goyal for a discussion on IndiaEU FTA ahead of a hectic set of meetings between the two sides in 2025. Rangel mentioned that geo-political and geo-economics developments globally will be balanced through India-EU FTA.
Source: Economic Times
Synopsis India benefited less than other nations from the US-China trade war, according to a GTRI report. While India's exports to the US grew, nations like Mexico and Canada saw larger gains. The report suggests India strengthen domestic supply chains and reduce reliance on China to enhance its competitiveness and capitalize on evolving trade dynamics. New Delhi: Canada, and 10-nation Southeast Asian bloc ASEAN benefited more from the US-China trade war than India, economic think tank GTRI said in a report. It said that India has to strengthen its local supply chains and produce critical intermediates to reduce reliance on China, while improving cost efficiency and ease of doing business to enhance competitiveness of domestic industries and increase exports to the US. With Donald Trump again becoming the US President, the evolving trade landscape offers huge opportunities for the Indian industry as he is now planning new taris targeting Mexico, Canada, China, and others. The US-China trade war, initiated in 2018 under President Trump with taris targeting key sectors, has significantly reshaped global trade flows but failed to achieve its primary goals. "Key beneficiaries of the trade war included Mexico, Canada, and ASEAN nations, which collectively accounted for 57 per cent of the growth in US imports. India also emerged as a significant gainer, with exports to the US rising by USD 36.8 billion, driven by sectors like electronics, pharmaceuticals, and engineering goods," GTRI Founder Ajay Srivastava said Mexico emerged as the biggest winner, with an increase in exports by USD 164.3 billion to the US between 2017 and 2023. It was followed by Canada (USD 124 billion), Vietnam (USD 70.5 billion), South Korea (USD 46.3 billion) and Germany (USD 43 billion). The report said that India ranked sixth, with a USD 36.8 billion increase in exports, driven by growth in electronics, pharmaceuticals, and engineering goods. Key contributors to India's export growth included smartphones and telecom equipment, which saw a USD 6.2 billion increase, accounting for 17.2 per cent of the total rise. Medicines contributed USD 4.5 billion (12.4 per cent), petroleum oils added USD 2.5 billion (6.8 per cent), and solar cells accounted for USD 1.9 billion (5.3 per cent). "India needs to increase local value addition in exports, as many rely heavily on imported inputs. For instance, most smartphone parts are imported, solar cells for panels come largely from China, and up to 70 per cent of APIs (pharma raw material) for medicines are also imported from China," it added. The think tank suggested the US to limit the use of Chinese inputs in all products exported to the US by recasting non-preferential rules of origin and this will be a more effective mechanism than imposing higher taris. The US, India's largest trading partner with over USD 190 billion in bilateral trade, plays a pivotal role in India's economic landscape and to navigate a potential Trump-led trade era, India can lower import taris by modest adjustments and could bring average tariffs down to around 10 per cent without significantly affecting revenue.
Source: Economic Times
The textile industry in Pakistan is a testament to the country’s resilience and adaptability in the face of global economic slowdown triggered by the increased production costs. In 2021, the sector achieved a landmark, with textile exports reaching a record $19.9 billion, accounting for more than half of Pakistan’s total exports. This milestone highlighted the industry’s critical role in the national economy and showcased its potential as a global player in the textile market. However, the journey has been far from smooth. Amidst the global economic slowdown triggered by the increase in energy expenses, Pakistan’s industrial manufacturing sector has been adversely affected, mirroring the situation in other parts of the world. The textile industry, which has been a crucial sector of Pakistan’s economy since its inception, contributing significantly to the country’s GDP, employment, and exports, faces additional challenges due to the country’s struggling economy and prolonged periods of political instability. In 2024, Pakistan’s textile industry, once a cornerstone of the national economy, stands at a critical crossroads. Once globally competitive, it now faces unprecedented challenges threatening its global standing. Meanwhile, Bangladesh, a major competitor in the textile sector, is grappling with a severe crisis, prompting international buyers to seek alternative suppliers. This presents a potential opportunity for Pakistan. Textile industry is well-positioned to absorb Bangladesh’s displaced orders provided the government eases stifling policies. Bangladesh’s textile industry, known for its low-cost garment production, has been hit by political instability, energy shortages, rising labour costs, and environmental challenges. Global brands that once depended on Bangladesh are now searching for alternative suppliers. Unfortunately, Pakistan is unable to fill this gap due to its own set of challenges. High energy costs, heavy taxation, lack of technological investment, and supply chain disruptions have restricted the growth pace. Global conditions are generally favourable for exports, with American and European brands shifting away from China and Myanmar. This is the time to re-design export strategies to grab these huge export opportunities that will lead to economic prosperity for the country. Resolving Pakistan’s energy crisis is crucial. Stable and affordable energy could be a game-changer for the industry as high energy costs are a significant burden, directly affecting the competitiveness of Pakistani textiles in the global market. Power tariff has exceeded a critical threshold of over 14 cents/KWh, which is almost twice the average faced by competing economies like Vietnams, India, and Bangladesh. Similarly, gas/RLNG tariff for industries has reached to $13.5 per mmbtu, which makes the industry unviable within the region.
Gas is the basic fuel for the export-oriented textile value chain.
However, gas supply to highly efficient captive co-generation power plants will be discontinued from January 1, 2025. This move will hamper the industrial manufacturing leading to a large-scale industrial closure and massive unemployment. Huge investments of billions of rupees will become sunk cost as additional investments will be required for grid connectivity. DISCOs inability (outages/fluctuations) to maintain stable and consistent power will enormously damage the highly automated machines leading to heavy losses. Large-scale manufacturing (LSM) units with power demands exceeding 10 MW per hour, will be required to install own grids, which is a time-consuming process that requires billions of rupees in investment. Unwarranted delay in payment of outstanding refunds is inflicting a severe strain on the highest growth-oriented and employment providing textile industry. This poses a substantial financial burden on exporters as a significant portion of exporters’ working capital (more than Rs300 billion) remains trapped in the refund regime on account of Sales Tax, Income Tax, Duty Drawback etc, resulting in the burden of paying interest on outstanding refunds. The advance income tax on exporters has doubled in the last federal budget, including 1pc minimum tax (advance under Section 154) and an additional 1pc advance tax under Section 147.
This has severely affected exporters’ cash flow.
Manufacturers involved in domestic textile trade pay only 1.25pc advance tax, while exporters bear a heavier burden. Since exporters already pay 29pc income tax on earnings, we recommend that individual exporters’ Q1FY25 reviewed accounts by the chartered accountants be analysed by FBR. Exporters with low profitability whose tax liability is covered by Section 154, advance tax should be exempt from Section 147 advance tax.The Sales Tax Act 1990 holds exporters responsible for the GST input across the entire supply chain.
This is both illogical and unfair, as exporters can only be accountable for their direct business partners and have no access to FBR systems to track the supply chain origin. Exporters are one of the most compliant sectors, providing detailed monthly disclosures under the sales tax regime. The 12pc sales cap and Form H already provide a complete accounting of materials and finished products. We request this anomaly be corrected, and that a regulatory framework be established to prevent harassment. In terms of subsection 7 of Section 3, a registered person can be made liable to withhold sales tax charged by his supplier on his supplies to the extent and manner prescribed in 11th schedule of the Sales Tax Act 1990. The exporters maybe declared as withholding agent in terms of subsection 7 of Section 3 and extent of withholding against all of their purchases may be notified in the 11th schedule of the Act. The EFS scheme was launched after thorough deliberation to document the export value chain and support export-oriented businesses. However, the recent budget removed the scheme for domestic trade, despite being revenue-neutral (due to zero-rating of GST on exports). This withdrawal has negatively impacted the textile value chain’s cash flow and is a major obstacle to achieving double-digit growth. Rationalising the scheme will help address these concerns. Expanding export markets beyond traditional regions will reduce reliance on a few large buyers and tap into emerging markets in Africa and Latin America. Pakistan’s textile industry is at a pivotal moment. While Bangladesh’s crisis has created an opening, Pakistan’s internal struggles have hindered the sector’s ability to capitalise on it. However, with the right mix of investment, government support, and a focus on sustainability, Pakistan still has the potential to re-emerge as a global leader in textiles.
Source: PK News
HANOI (Vietnam News/ANN): Vietnam’s garment-textile export value is expected to reach US$44 billion in 2024, marking an 11.26% increase from 2023, according to the Vietnam Textile and Apparel Association (VITAS). Meanwhile, garment-textile import turnover is estimated at US$25 billion, up 14.79%, resulting in a trade surplus of US$19 billion, up 6.93% compared to the previous year. VITAS President Vu Duc Giang noted that many companies in the sector are experiencing growth in orders for both 2024 and 2025. Despite ongoing global complexities, fluctuating shipping costs, slow trade recovery, and reduced global investment, Vietnam's garment-textile industry has managed to maintain strong growth. For 2025, the entire industry aims for an export turnover of around 48 billion USD, said Giang said, emphasising that this figure is based on thorough calculation and research on order trends, predicting an abundant order volume for the sector compared to 2024. However, he warned that despite optimistic forecasts, the industry will encounter significant challenges in 2025, including limited opportunities for large orders, stagnant prices, and slow consumer demand recovery. Companies will also face new challenges such as persistently low order prices alongside rising input costs, significant changes in purchasing practices by brands, and stricter regulations on payments and production volumes. Moreover, the pressure of lower order prices combined with new regulations demanding stricter standards related to sustainability in production and self-sufficiency in raw materials will pose ongoing challenges for textile enterprises in the coming year. Additionally, under intense competitive pressure from supply markets, Vietnamese garment-textile companies have to meet stringent labour standards, traceability requirements, and low carbon emissions targets from major export markets like the EU. Nguyen Xuan Duong, Chairman of the Board of Directors of the Hung Yen Garment Corporation, pointed out that while the sector is projected to reach 44 billion USD in exports in 2024, exports to the EU remain modest. A significant challenge for the industry is the issue of sourcing, as raw materials are largely imported from China and other non-FTA countries. To better leverage this large market and effectively utilise the tariff benefits provided by the EVFTA, Duong proposed competent agencies to address the industry's limitations. Meeting origin rules must be tied to developing local raw material resources, while it is necessary to make planning for large industrial zones to attract investors. Additionally, garment and textile companies need to continue investing in technology, automation, and robotics to improve production process. Furthermore, adopting drastic energy-saving measures and utilising renewable energy in production will be essential to obtain green certifications, which are increasingly mandatory for large market orders. - Vietnam News/ANN
Source: The Star
