Textile Economic Intelligence (WEEK ENDING ) NEWS HIGHLIGHTS

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1 Centre for Trade Facilitation and Research in Textiles Textile Economic Intelligence (WEEK ENDING ) NEWS HIGHLIGHTS India to be fastest-growing economy in 2018, 2019: IMF Revised TPP deal known as CPTPP finally makes it across the finish line Building of Ethiopian textile unit by Chinese firm starts Demand for end to duties on cotton yarn import in Pakistan PM reviews progress of EU GSP+ status for Pakistan M&S posts clothing & home revenue at 1,192 million Garment Factories in Bangladesh Get USD 2 million bonanza To Improve Work Environment Egyptian textile, spinning exports increased by 6pc in 2017 India's ICRA seeks more budget fund to raise textile export India's yarn, fabrics, made-ups imports rise 20% in Dec

2 GLOBAL ECONOMIC NEWS a) Euro appreciated against Dollar by 1.47% from per dollar on 22nd Jan 18 to per dollar on 26th Jan 18 and Japanese Yen appreciated against dollar by 1.89% from per dollar on 22nd Jan 18 to per dollar on 26th Jan 18. b) Brent Crude oil price index increased by 1.87% from 22nd Jan 18 to 26th Jan 18. It increased from $69.23 per barrel on 22nd Jan 18 to $70.46 per barrel on 26th Jan 18. c) Cot Look A Index decreased by 1.81% from 94.1 cents/pound on 22nd Jan 18 to 92.4 cents/pound on 26th Jan 18. d) The US stock market indicator Dow Jones went up by 1.53% from on 22nd Jan 18 to on 26th Jan 18. In Asian market, NIKKEI (Japanese market) came down by 0.77% from on 22nd Jan 18 to on 26th Jan 18. SSE Composite went up by 1.65% from on 22nd Jan 18 to on 26th Jan 18 and Hang sang went up by 2.35% from on 22nd Jan 18 to on 26th Jan 18.

3 INDIAN ECONOMIC NEWS EXCHANGE RATE: The Rupee appreciated by 0.45% from Rs 63.8/$ on 22nd Jan 18 to Rs /$ on 26th Jan 18 weakening by Rs FINANCIAL MARKET TRENDS: The Sensex went up by points or 0.71% from on 22nd Jan 18 to on 25th Jan 18. The Nifty went up by points or 0.94% from on 22nd Jan 18 to on 25th Jan 18. CHANGE IN FOREIGN EXCHANGE RESERVES: India s Foreign exchange reserves increased by $0.96 bn. to reach $ bn. on 19 th Jan 18 from $ bn. on 26th Jan 18. EXPORT IMPORT DATA FOR THE MONTH OF DECEMBER 2017: According to the Official trade data, Exports increased by 12.36% to $27.03 bn in Dec 17 as compared to the corresponding month last year when it stood at $24.06 bn. Imports stood at $41.91 billion, up by 21.12% in Dec 17 as compared to the corresponding month last year when it was $34.60 bn. India s Export-Import in December 17 (USD Bn) Period Dec'17 (Apr-Dec)'17 (Apr-Dec)'16 Total Export Total Import Trade Deficit Sectoral Index of Industrial Production: The Indices of Industrial Production for the Mining, Manufacturing and General sectors for the month of Oct 2017 stand at 101.2, and respectively, with the corresponding growth rates of 0.2 per cent, 2.5 per cent and 2.2 per cent as compared to Oct 2016 when it was 1 per cent, 4.8 per cent and 4.2 per cent respectively. The cumulative growth in these three sectors during April-Oct over the corresponding period of has been 3.4 per cent, 2.1 per cent and 2.5 per cent respectively. The growth rate for Textiles and Clothing for the month of Oct 2017 is -2.0 per cent and -11 per cent respectively. The cumulative growth during April-Oct over the corresponding period of was -2.3 per cent and -6.3 per cent.

4 India to be fastest-growing economy in 2018, 2019: IMF Staying bullish on India s growth potential in its World Economic Outlook Update, the International Monetary Fund (IMF) has retained its gross domestic product (GDP) forecast for the country at 6.7 per cent in 2017 and 7.4 per cent in The growth will be 7.8 per cent in 2019, which would make it the world s fastest-growing economy in the next two years. India lost its top ranking briefly in 2017 to China. IMF had lowered India s growth forecast in October last year reflecting lingering disruptions due to demonetisation and the implementation of the goods and services tax (GST). In April, the organisation had pegged India s GDP growth at 7.2 per cent for 2017 and at 7.7 per cent in In contrast, China s growth is expected to slow down from 6.8 per cent in 2017 to 6.6 per cent in 2018 and further to 6.4 per cent in 2019, the report says The forecast for world output has been scaled up to 3.9 per cent each in 2018 and 2019, which is 0.2 percentage points higher than its estimate in October. For 2017, it has raised its estimate for global growth by 0.1 percentage points to 3.7 per cent.

5 GLOBAL TEXTILE NEWS CHINA EXPORTS OF TEXTILE AND GARMENTS RISE BY 7% FOR THE MONTH OF NOV 2017: The Textile Exports by China increased by 11% to $9989 Mn in Nov 2017 as compared to corresponding month last year when it stood at $9004 Mn. The Garment Export by China also increased by 5% to $13126 Mn in Nov 2017 as compared to corresponding month last year when it stood at $12526 Mn. Hence, the overall Export of Textiles and Garments by China rose by 7% The year-to-date Exports of Textiles & Garments increased by 0.3% from $ bn in 2017to $ bn in China Export of Garment and Textiles, Nov 2017 (USD Mn) S.NO. COMMODITY VALUE (Nov) % Change YTD (Jan-Nov) % Change / / Textile yarn, fabrics and made-up articles Garments and clothing accessories Total of which: Cotton yarn Cotton woven fabrics Woven fabrics of synthetic staple fibres Garments, not knitted nor 2 2 crocheted Garments, knitted or crocheted VIETNAM EXPORTS OF YARNS, TEXTILE AND GARMENTS FOR THE MONTH OF DECEMBER 2017 AUGMENT BY 9%: The Yarns Export by Vietnam for November 2017 increased by 22% to $327 Mn as compared to corresponding month last year when it stood at $272 Mn. The Textile and Garment Export by Vietnam also went up by 8% to $2478 Mn as compared to corresponding month last year when it stood at $2297 Mn. Year-to-Date Yarns Exports by Vietnam for the period of January-December 2017 went up to $3595 Mn as against $2931 Mn in January-December 2016 registering a positive growth rate

6 S.NO. of 23%. Also, Year-to-Date Textiles and Garments Exports by Vietnam for the period of January- December 2017 went up to $26215 Mn as against $23946 Mn in January- December 2016 registering a positive growth rate of 9% Export of Yarns and Textiles by Vietnam (In USD Mn) COMMODITY VALUE (Dec) % Change YTD (JAN-Dec) / % Change 17/16 1 Yarns Textiles & Garments TOTAL EXPORTS Revised TPP deal known as CPTPP finally makes it across the finish line The revised Trans-Pacific Partnership trade agreement now known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) has finally made it across the finish line. The 11 remaining countries from the initial Trans-Pacific Partnership agreement finally agreed to go ahead with a new deal without the US. It introduces stronger safeguards to protect governments right to regulate in the public interest and prevent unwarranted claims. The new agreement is considerable win for Australian farmers and service providers, in a trading area worth about a $90 billion (US$72 billion). The agreement will deliver 18 new freetrade agreements between the CPTPP parties. For Australia that means new trade agreements with Canada and Mexico and greater market access to Japan, Chile, Singapore, Malaysia, Vietnam and Brunei. It means a speedier process for reducing import barriers on key Australian products which includes absorbent cotton. It also promises less competition for Australian services exports, encouraging other governments to look to use Australian services and reducing the regulations of state-owned enterprises. The new CPTPP rose from the ashes of the old agreement because of the inclusion of a list of 20 suspended provisions on matters that were of interest for the US. These suspended provisions involved substantial changes in such areas as investment, public procurement, intellectual-property rights and transparency. With the freezing of further copyright restrictions and the provisions on investorstate dispute settlements, these suspensions appear to rebalance the agreement in favor of Australian governments and consumers. In fact, the scope of investor-state dispute settlements are narrower in the CPTPP, because foreign private companies who enter an investment contract with the Australian government will not be able to use it if there is a dispute about that contract. The broader safeguards in the agreement make sure that the Australian government cannot be sued for measures related to public education, health and other social services. Building of Ethiopian textile unit by Chinese firm starts Chinese firm Wuxi No. 1 Cotton Mill will build a textile plant in Dire Dawa Industrial Park (DDIP) in eastern Ethiopia, investing $220 million. A cornerstone-laying ceremony was held recently for the plant, which will take 30 months to build and is expected to employ 3,000. The park is now being constructed by China Civil Engineering Construction Corporation. The company, part of the Guolian Development Group and one of the largest textile manufacturers in China, had last year signed an investment agreement with the Ethiopian

7 Government to establish an integrated textile plant in the country. Wuxi will invest in a spinning plant and a large scale integrated fabric mill, with production targeted at export markets. DDIP, currently being built at a cost of $159 million on 159 hectares of land, is expected to attract industries specialising in textile, apparel and agro-processing. The Ethiopian Government is financing the construction of the industrial park. Demand for end to duties on cotton yarn import in Pakistan Pakistan s value-added textile export sector has urged Prime Minister to abolish all duties and taxes on cotton yarn import to help earn foreign exchange and reduce trade gap that touched $18 billion during the July-December period of fiscal Cotton yarn is not easily available in the domestic market owing to low cotton yield. The sector has the largest share in the total textile exports of Pakistan and cotton. A 30 per cent rise in cotton yarn prices has made the value-added textile export sector uncompetitive in the international market. There is a fear that exporters may fail to meet export orders booked six months back if immediate attention is not paid by the government to the issue. Globally import of raw material is allowed duty free while export of the same is restricted to benefit value addition to earn foreign exchange. PM reviews progress of EU GSP+ status for Pakistan Pakistani commerce and textile minister recently conveyed Prime Minister about a possible positive outcome of the review and rollover of Generalised System of Preferences Plus (GSP+) scheme for three more years. Prime Minister was chairing a meeting to review the efforts for continuation of GSP+ status for Pakistan beyond 2018.The periodic review report by Pakistan had already been submitted and examined by the European Union (EU) that quoted an official statement. The GSP+ scheme was operational since January 2014 and will continue for the next 10 years. Over the past five years, exports to the EU have registered a 45 per cent rise, while those of value-added textile products jumped by 88 per cent. M&S posts clothing & home revenue at 1,192 million The clothing and home category of M&S has recorded revenue of 1,192 million for 13 weeks till December International revenue of the segment went down, reflecting the completion of the planned closure of owned stores in loss-making markets. However, in retained, owned and franchise markets, constant currency revenue increased by 6.5 per cent. In clothing & home, M&S continued with their strategy of restoring price integrity and improving everyday value. Their revenue grew both in-store and online over the weeks leading up to Christmas, and M&S held their full price stance in a very promotional market and did not participate in Black Friday. However, the impact of an unseasonal October resulted in an overall revenue decline. As a result, M&S carried more stock into the December sale. Garment Factories in Bangladesh Get USD 2 million bonanza To Improve Work Environment The proverbial extra mile to be walked for ensuring that garment workers safety is not compromised and factory working conditions are improved is now within range of sight for Bangladesh with the garment industry taking more steps towards the direction. The initiative has been set into motion by two major global unions, namely IndustriAll and UNI Global who have entered into an agreement with a multinational clothing brand to allocate USD 2.3 million to set right the unsafe workplace environment in Bangladesh. The settlement was effectuated by a law firm, namely Covington & Burling LLP that represented the two global unions. The terms of the settlement offered anonymity to the

8 multinational clothing brand which has agreed to pay up USD 2 million for the improvement of working conditions in the garment factories of Bangladesh. The funds will trickle through to more than 150 of the factories that are set up in Bangladesh. In addition to the USD 2 million, the clothing brand will also contribute USD 300,000 the two unions. This money is intended to accrue to IndustriAll and UNI Global s Joint Supply Chain Worker Support Fund. The Fund has been created to strengthen the global unions endeavor to enhance working conditions and wages for garment workers globally. Egyptian textile, spinning exports increased by 6pc in 2017 The textile industry is one of the most important and oldest Egyptian industries and plays a vital role in the Egyptian economy. Egyptian textile and spinning exports increased by 6% in 2017, to record $832m compared to $783m in 2016, according to the Egyptian Textile Export Council. This keeps pace with the announcement of Minister of Trade and Industry in January 2018 that Egypt will establish the largest textile and garment city in Egypt on an area of 3.1m sqm in that city. The city will include 568 factories with a total paid-up capital of $2bn, which will be pumped over a period of seven years, 87% of which comes from foreign investments and 13% from local investments. Furthermore, the textile and garment city will provide up to 160,000 direct job opportunities, with a total production value of $9bn per year. This new city will include schools for training with the latest technology in the spinning and textile industry. According to The General Authority for Investment and Free Zones, Egypt is home to the fully integrated textiles industry in the Middle East, where the entire production process is carried out in Egypt, right from the cultivation of cotton to production of yarns, fabrics, and readymade garments is carried out domestically.

9 INDIAN TEXTILE NEWS Rise in Spun Yarn Production of India by 0.57% in July-Nov : Spun Yarn Production (SSI & Non-SSI) (in Mn. Kgs. ) Cotton Blended 100% N.C. Total July Aug Sept Oct Nov July-Nov ( ) July-Nov ( ) % Change( to ) The Spun yarn production of India increased by 0.57% to million Kgs in July-Nov 2017 as compared to corresponding months last year when it stood at million Kgs. Percentage increase in the production of Blended Yarn was highest at 4.75% which increased from million kg in July-Nov 2016 to this year. India's ICRA seeks more budget fund to raise textile export Indian rating agency ICRA recently sought adequate allocation for schemes like refund of state levies and interest subvention benefits in the next budget to improve textile exporters competitiveness. The textile sector, one of the major contributors to the country's export earnings with a 13 per cent share, is under pressure. Intense competitive pressures have led to apparel exports growing at a slower pace and decline in demand from China led to pressure on yarn exports. The budgetary allocation for the Technology Upgrade Fund Scheme (TUFS) was lowered by 23 per cent from Rs. 2,610 crore in to Rs. 2,013 crore in , a level even lower than in As India continues to be highly dependent on textile intermediaries for export earnings, indicating a potential for further value-addition, investment is needed in the downstream segments, like apparel and home textiles. A higher allocation towards TUFS subsidy for would attract investments in the downstream segments, facilitating higher value addition and an even higher contribution by the sector to the country's gross domestic product and foreign exchange earnings. ICRA estimates apparel exports may go up by times, if raw materials and intermediaries currently being exported, get processed further into apparel. This

10 has the potential to double the cotton-based apparel exports and increase total textile exports from the country by 50 per cent in value terms. India's yarn, fabrics, made-ups imports rise 20% in Dec India s imports of yarn, fabrics and made-up articles during December last year increased by 20 per cent over the figure in the same month in 2016, according to the ministry of commerce and industry. Apparel exports, however, dropped 0.3 per cent in April-December 2017 and 8 per cent in December, which is being attributed by some to duty drawback rates revision. However, total export of textile and apparel rose by 2 per cent between April and December 2017 over the first nine months of , a leading south Indian English-language daily reported. The Confederation of Indian Textile Industry (CITI) sees this as a matter of concern as export data of Bangladesh showed India imported garments worth $111.3 million during July-December 2017 from Bangladesh, which was 66 per cent higher as against the same period of the previous year. Imports of knitted apparel from Bangladesh were worth $20.6 million in July-December 2016 and rose to $36.5 million between July-December last year. Cotton prices and yarn prices are going up in the domestic market and the government has reduced the duty drawback rates. After the implementation of the goods and services tax, exporters do not know yet what refund will they get on duties paid on exports. CITI feels there was a need to impose safeguards such as rules of origin, yarn forward and fabric forward rules on nations like Bangladesh and Sri Lanka that had free trade agreements with India and China. Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty-free, convert it into garments, and sell to India duty-free.