Centre for Trade Facilitation and Research in Textiles

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1 Centre for Trade Facilitation and Research in Textiles Textile Economic Intelligence (MONTH ENDING ) NEWS HIGHLIGHTS India's GDP growth estimated to be 6.6% in Economy to double to $5 tn by 2025; no risk to inflation target India's growth to hit 7.3% in FY19, 7.5% in Egyptian cotton gains mass recognition and awareness 44 nations sign African Continental Free Trade Area pact Plastic waste spinned into yarn and fiber in Turkey Welspun proposes projects Denim brand Pepe Jeans opens 219th store in India Power loom weavers in Surat demand scheme for MMF sector Textile ministry to allocate Rs.10 billion towards R&D in sector Official says make use of yarn and fabrics of Indian origin mandatory for exporting apparel to India Power loom unit opened in Manipur (India) Denim industry s operating margins to fall to 10% in Nepal-India relations moving ahead in new grounds for mutual benefits Dubai textiles firm to create 10,000 jobs at Olkaria plant

2 GLOBAL ECONOMIC NEWS a) Euro appreciated against Dollar by 1.22% from per dollar on 1st March 18 to per dollar on 30th March 18 and Japanese Yen appreciated against dollar by 0.46% from per dollar on1st March 18 to per dollar on 30th March 18. b) Brent Crude oil price index increased by 8.79% from 1st March 18 to 29th March 18. It increased from $63.83 per barrel on 1st March 18 to $69.44 per barrel on 29th March 18. c) Cot Look A Index decreased by 1.37% from 91.2 cents/pound on 2nd March 18 to cents/pound on 29th March 18. d) The US stock market indicator Dow Jones came down by 2.06% from on 1st March 18 to on 29th March 18. In Asian market, NIKKEI (Japanese market) came down by 1.24% from on 1st March 18 to on 30th March 18. SSE Composite came down by 3.20% from on 1st March 18 to on 30th March 18 and Hang sang came down by 3.06% from on 1st March 18 to on 29th March 18.

3 INDIAN ECONOMIC NEWS EXCHANGE RATE: The Rupee appreciated by 0.09% from Rs 65.23/$ on1st March 18 to Rs /$ on 30th March 18 strong by by Rs FINANCIAL MARKET TRENDS: The Sensex came down by points or 3.17% from on1st March 18 to on 29th March 18. The Nifty came down by points or 3.30% from on1st March 18 to on 29th March 18. CHANGE IN FOREIGN EXCHANGE RESERVES: India s Foreign exchange reserves increased by $1.198 bn. to reach $ On 30th March 18 from $ bn. on 23th March 18. EXPORT IMPORT DATA FOR THE MONTH OF FEBURARY 2018: According to the Official trade data, Exports increased by 5.47% to $25.83 bn in Feb 18 as compared to the corresponding month last year when it stood at $24.49 bn. Imports stood at $37.81 bn. up by 13.27% in Feb 18 as compared to the corresponding month last year when it was $33.38 bn. India s Export-Import in February 18 (USD Bn) Period feb'18 (Apr-Feb)'18 (Apr-Feb)'17 Total Export Total Import Trade Deficit India's GDP growth estimated to be 6.6% in India s gross domestic product (GDP) growth rate at constant ( ) prices is estimated to be 6.6 per cent in fiscal compared to a growth of 7.1 per cent in , 8.2 per cent in , 7.4 per cent in and 6.4 per cent in , according to the second advance estimates released by the Central Statistics Office (CSO) in February end this year. The decline in growth in the current fiscal is on account of lower growth in agriculture and allied sectors, mining and quarrying, and manufacturing sectors, minister of state for finance told the parliament upper house. The growth of the services sector, however, is likely to accelerate from 7.5 per cent in to 8.3 per cent in Economy to double to $5 tn by 2025; no risk to inflation target India is on track to doubling the size of its economy to $5 trillion by 2025, the finance ministry said while asserting that the inflation target set by the Reserve Bank will not be breached. The country is well poised to click a growth rate of 7-8 per cent and with focus on

4 start-ups, MSMEs and infrastructure investment it can step on to higher growth pedestal, according to Economic Affairs Secretary. According to EAS at the CII Global Industry Associations Summit, he think it is very reasonable to expect, if the economy remains focused on producing goods and services and generate demands for next 7-8 years...they can achieve the level of $5 trillion of economy by That's the reasonably set goal India s GDP in value terms currently stands at $2.5 trillion -- making it the sixth largest economy in the world. With regard to inflation, EAS said its trajectory is well within the RBI's target of 4 per cent, plus/minus 2 per cent. EAS said, they have been extremely successful in adhering to that (inflation target) and going forward also he don't see any major risk in not adhering to that. The wholesale price index based inflation fell to a 7 month low of 2.48 per cent. The consumer price based retail inflation was also at 4 month low of 4.44 per cent in February. The RBI takes into account retail inflation while formulating its monetary policy. In its last policy in February it kept interest rates unchanged citing inflationary concerns. The macro economic factors, including inflation, He don't see any risk to our $5 trillion economy target. They have very stable inflation. India's growth to hit 7.3% in FY19, 7.5% in India s economy is expected to grow by 7.3 per cent in next fiscal and by 7.5 per cent in due to increased investment in infrastructure and waning of the disruptions caused by the rollout of goods and services tax (GST), said by US rating agency in its Global Economic Outlook. The economy will witness a growth rate of 6.5 per cent this fiscal. India s economy grew by 7.1 per cent in Global economic growth will remain above 3 per cent for three consecutive years until 2019, a performance achieved for the first time since the mid-2000s, a news agency report said citing the Fitch document. The Indian economy hit a five-quarter high of 7.2 per cent in the October-December period on good show in key sectors like agriculture, construction and manufacturing. According to them India s budget for fiscal contains measures, such as a minimum price support and free health insurance, to benefit low-income earners and support rural demand. The government also plans to ramp up infrastructure outlays, in particular by state-owned enterprises. Accelerating food prices were the main cause of the pick-up in headline inflation. By contrast, fuel price increases have been contained by the government's decision to roll back excise duties to keep prices stable in the face of rising oil prices. Fitch expects the Reserve Bank of India to start raising interest rates next year as growth gains further traction

5 GLOBAL TEXTILE NEWS PAKISTAN TEXTILE & APPAREL EXPORT RISES BY 7% IN FEBRUARY 2017: The Textile & Apparel Exports of Pakistan for the month of February 2018 was US $1066 Mn which increased by 7% from US $995 Mn when compared to corresponding month last year. The highest exported item was Readymade Garments for the value of $213 Mn which rose by 8% from $198 Mn in February The year-to-date exports also increased by 7% from $ 8220 Mn in 2016 to $ 8795 this year. TEXTILE EXPORTS OF PAKISTAN (USD Mn) Value (Feb) % YTD (July-Feb) % 201 Change Change Textile Group a) Raw Cotton b) Cotton Yarn c) Cotton Cloth d) Cotton Carded or Combed e) Yarn other than Cotton Yarn f) Knitwear g) Bed Wear h) Towels i) Tents, Canvas & Tarpulin j) Readymade Garments k) Art, Silk & Synthetic Textile l) Madeup Articles m) Other Textile materials Egyptian cotton gains mass recognition and awareness In survey, commissioned by the Cotton Egypt Association, When asked which brand they would pay a premium for, 61% said Egyptian Cotton, which respondents also named as their preferred option for towels and bedding. When consumers were asked to arrange a list of cotton brands in order of perceived quality 89% placed Egyptian Cotton as one of their top two choices. Pima made the top two in 45% of selections, followed by Turkish Cotton (35%), Supima (19%) and Sea Island Cotton (12%). Home category technical manager at U.K. retailer, has endorsed the program. They said that they support the measures being taken by the CEA to root out dishonest manufacturers and counterfeit goods from the supply chain and have welcomed the opportunity to work in collaboration with the CEA in setting out requirements to assure the provenance of Egyptian Cotton products. Executive director of the Cotton Egypt Association said they are extremely proud of the thorough accreditation program we have created in association with Bureau Veritas. The Cotton Egypt Association recently unveiled a new brand identity and digital platform to reenforce Egyptian Cotton's stature. According to new consumer research, Egyptian cotton is

6 the most recognized cotton brand in the United States. Egyptian Cotton was also the name most people associated with quality and the cotton fiber they said they were prepared to pay a premium for. It found that while 86% of those questioned couldn t name a brand of cotton, among those who could, 95% cited Egyptian Cotton, with the remaining 5% naming Pima. 52% of consumers said texture was the most important consideration when buying a cotton product and only 2% considered products being manufactured in the USA as an important factor, when asked to rate the importance of listed qualitie 44 nations sign African Continental Free Trade Area pact Forty-four African nations recently signed the African Continental Free Trade Area (AfCFTA) agreement, which aims at creating a liberalized market for goods and services across the continent. The agreement, on the lines of the European Union, was signed during the 10th ordinary session of the African Union (AU) Heads of State summit held in Rwanda s capital Kigali. The AfCFTA saw the origin of the world s largest free trade area since the World Trade Organization was formed in If all 55 AU member states ratify it, the agreement will bring together an estimated 1.2 billion people with a combined gross domestic product of more than $2 trillion. Nigeria did not sign agreement, because Their President may reportedly have succumbed to pressure from local labour unions and big corporations who oppose the treaty, saying it would harm the local economy. Plastic waste spinned into yarn and fiber in Turkey Istanbul, which is home to nearly 15 million people, produces an average of 17,000 tons of domestic waste every day, out of which 6,000 tons are processed in IBB's garbage collection and recycling centers. A recent effort by Istanbul Metropolitan Municipality (IBB) aims to increase the volume of renewable waste collected from Istanbulites through a new system that will refund the value of each recycling deposit to the resident's megacity transport card. Turkey has pioneered recycling efforts in recent years, both through awareness initiatives to empower individual consumers and also recycling infrastructure to take advantage of the resources discarded in the trash. The plastic bottles used by the company are collected from several locations, such as schools, hospitals, hotels and various institutions, and then processed in fiber. Having started up as a family firm in 2009, the company now exports its products to 20 countries. General Director told, As a result of our long-standing research and development project, they have become the first plant in Turkey that produces yarn completely out of recycled plastic bottles. They also said that useful in numerous sectors, such as industrial weaving and knitting as well as furnishing and curtain production, increasing yarn production contributes to the Turkish economy. Their production capacity is 5 tons of yarn, and they want to raise it to 20 tons by 2019 and 40 tons by 2020 adding that they processed around 200 tons of plastic bottles monthly and aimed at increasing this figure to 1,000 tons by Every day, thousands of plastic bottles are saved from landfills and spun into 5 tons of yarn that are exported around the world from a textile firm in western Turkey's prominent industrial center Bursa.

7 Nepal-India relations moving ahead in new grounds for mutual benefits Prime Minister of Nepal laying a foundation stone of the Garment Processing Centre in Special Economic Zone (SEZ) at Sauraha of Jeetpursimara Sub Metropolitan City-4 in Bara district. Prime Minister of Nepal, who is set to embark on an official visit to southern neighbor said that the Nepal-India relations are moving ahead in new grounds for mutual benefits. The PM and UML Chairman has asserted that the country has entered into the new era. He said so while laying a foundation stone of Garment Processing Centre in the Special Economic Zone (SEZ) at Sauraha in Jeetpur Simara Sub Metropolitan-4 in Bara district. The processing centre would be built in 140 bighas of land out of 843 bighas separated for SEZ, one of the national pride projects in Bara district. According to Prime Minister of Neal, It s a first step for import oriented economy like Nepal towards entering into the new phase of economic prosperity. No one can halt the path Nepal has set for prosperity. Poverty, diseases, hunger and backwardness would be eliminated from Nepal. Constitution can be amended at any times as per the requirement of people and country but geography. People s mandate is supreme. It cannot be changed. If necessary other things can be amended. Prime Minister of Nepal, neighbouring countries India, China and other nations are supporting Nepal s path towards development and economic prosperity. Dubai textiles firm to create 10,000 jobs at Olkaria plant A Dubai-based textiles company, United Aryan (EPZ), plans to build a factory that could employ up to 10,000 workers at Olkaria geothermal fields in Naivasha to take advantage of lower electricity costs. The factory, expected to be constructed in the next two years, will manufacture apparel such as trousers, knit tops, fleeces, shirts, robes and pajamas. United Aryan currently operates at Baba Dogo s Balaji Export Processing Zone in Ruaraka, where it manufactures apparels for export. The company s founder and Chairman said the factory will produce products for sale not only in Kenya, but across other markets in the world such as US and Europe. According to Chairman, They have identified an ideal place at Olkaria geothermal fields in Naivasha where we intend to establish a Sh11.5 billion factory for the production of quality garments. They expect to start construction in the next two years and thereafter start operations as soon as the factory will be complete. The factory, which will sit on a 20-acre land will provide employment opportunities to an estimated 10,000 locals directly and 40,000 other Kenyans indirectly. It will have six units made up of 84 lines with the capacity to produce and wash more than 100,000 pieces of attire on a daily basis. The firm s expansion is in line with Kenya s goal of expanding its manufacturing base, which contributes about 10 per cent of the gross domestic product (GDP). The sector s share to GDP fell to 9.2 per cent in 2016, the lowest growth compared to other sectors of the economy. The best performance of the overall economy was in 2010 when GDP expanded 8.4 per cent. Since then, it has grown below six per cent dashing hopes of an upper middle-income economy in the next 12 years. This has pushed Kenyan goods off the shelves in favour of cheap imports from international and regional markets, denying local industries revenues

8 INDIAN TEXTILE NEWS Spun Yarn Production (SSI & Non-SSI) (in Mn. Kgs. ) Cotton Blended 100% N.C. Total Sep' Oct' Nov' Dec' Jan' (Apr-Jan) (Apr-Jan) % Growth FY 17-18/ The Spun yarn production of India has increased by 3.89% to million Kgs in (Apr17-Jan18) from (Apr16-Jan17) when it was million kgs. Welspun proposes projects The Welspun companies that proposed the projects, all three to come up in Shabad mandal, Ranga Reddy district are expected to firm up their plans with the State government approving a set of customised benefits for them recently. Welspun is the latest to join the growing list of well-known names preferring Telangana, something both senior officials and Ministers attribute to the TS-iPASS policy, industry-friendly climate and a support eco-system in the State. Technical woven fabric is the other proposal pertaining to technical textile is by Welspun India Ltd. Interest subsidy, power tariff subsidy and SGST reimbursements will be some of the other incentives. The incentives approved range from one-time capital subsidy of 40 crore, interest subsidy, power tariff subsidy, SGST reimbursement and benefits under T- TAP. Likewise, the line pipe manufacturing facility planned by Welspun Corp Ltd would get 150 acres and one-time capital subsidy of 10% of eligible fixed capital investment under T-IDEA (Telangana Industrial Development and Entrepreneur Advancement programme). With an investment of 409 crore, the project, on 150 acres, is for manufacturing technical woven fabric, stitch bonded fabrics and non-wovens. The approved incentives project is expected to provide direct employment to 1,000 people and indirect job opportunities to 2,000 people. A one-time capital subsidy of 80 crore, interest subsidy at the rate of 8% per annum on eligible capital investment; power tariff subsidy, 100% gross SGST reimbursement for a stipulated period, besides benefits applicable under the Telangana Textile and Apparel Policy (T-TAP) are to be made available. For the 1,261-crore technical textile project of Welspun Flooring, for manufacturing floor covering carpets and LVT, the incentives approved by the government include allotment of 500 acre of encumbrance-free undeveloped industrial land with external infrastructure such as roads, power and water The $2.3 billion, diversified Welspun Group proposes to set up three manufacturing facilities in Telangana entailing an investment of over 1,900 crore. The employment opportunities, both direct and indirect, estimated to be generated would be more than

9 5,000. Two of them would be dedicated to the high growth technical textiles, while the other would be for making line pipes. The Welspun Group, with companies that are fully integrated players in home textiles as well as pipes, plates and coils, has presence in steel, infrastructure and energy space too. Denim brand Pepe Jeans opens 219th store in India British denim brand Pepe Jeans, which has been at the forefront of international denim-led fashion for the past 44 years, has opened one more store in India. The Indian city of Hyderabad has become the latest to host the 219 th store of the brand in the country. The opening of the store has come soon after it inaugurated its store in Pune earlier this month. Spread over 1,350 square feet of area, the retail store is located in Habsiguda area of the city. The store has been decorated with fun props like lamps, trunks, spools, etc. to make it visually appealing. The denim brand is also planning to strengthen its retail footprint by opening exclusive stores in India by the end of this year. The brand s team based in India will look after the establishment process of stores, visual merchandising and overall store operations. The fashion retailer, which has a presence in 61 countries across the globe, is also reportedly gearing up to open its first three stores in Indonesia by next month while the fourth store will go operational by August this year. Power loom weavers in Surat demand scheme for MMF sector Power loom weavers in India s largest man-made fabric (MMF) hub Surat have urged the Gujarat state government to launch a textile promotion scheme following Maharashtra and provide an impetus package, slash electricity tariff and modernize weaving units to raise quality of fabrics. They have written letters to the chief minister and other elected representatives. As the Maharashtra state government is providing a 25 per cent capital subsidy with no cap on investment made in the textile sector, that will encourage textile entrepreneurs in setting up power loom weaving units in that state, thereby offering stiff competition to the MMF industry in Surat. According to the power loom industry leader textile units in Maharashtra have been given an impetus package to the tune of Rs 4,600 crore and the electricity tariff reduced by Rs 2 per unit. This will encourage even entrepreneurs from Surat to set up units in Maharashtra as the fabric manufactured there will be 40 per cent cheaper, the power loom weavers believe. The goods and service tax and demonetisation has broken the back of the power loom sector, with many weavers shutting down their units and more than a lakh conventional power loom machines sold in scrap in the last few months, Textile ministry to allocate Rs.10 billion towards R&D in sector The textile ministry is planning to set up an inter-ministerial committee and set aside Rs.10 billion towards research & development (R&D), technology transfer and training in the sector. This is a part of the Integrated Scheme for Development of Silk Industry approved by the Cabinet for three years till As per the plan, projects related to disease.

10 Official says make use of yarn and fabrics of Indian origin mandatory for exporting apparel to India According to the official, India allowed duty free import of readymade garments from Bangladesh under SAFTA in 2006 and this facility was limited to eight million pieces. However, in 2010, this quantitative restriction was lifted. Bangladesh imports Chinese fabrics and converts them into garments using its cheap labour. Without the need for paying any import duties, it exports these garments to India. He also said the According to CITI India, India's garment imports from Bangladesh increased from $ million during April- December period of 2016 to $ million in the corresponding period of Confederation of Indian Textile Industry (CITI India) Chairman Sanjay K. Jain said that that duty-free facility given to Bangladesh on grounds of it being a Least Developed Countries (LDC) was actually benefiting China's textile exports. Since import of made-in-china fabrics is meant for export, Bangladesh imposes no import duties on them. This is actually facilitating backdoor entry of Chinese textiles into India. He also quoted that Indian domestic garment manufacturers have to pay a 20 per cent import duty if they use the same Chinese fabric. "India has now extended this duty-free quota-free facility to all 49 LDCs on a non-reciprocal basis and again without any sourcing restrictions. So, it is expected that in the coming future, we may have more Bangladesh-type situation. Citing the international practices of imposing sourcing restrictions, he said the US imposed sourcing restriction under NAFTA for accepting duty free import of garments from Mexico and other NAFTA members. Jain added further they have demanded tweaking of SAFTA rules of origin to make the use of yarn and fabrics of Indian origin mandatory for allowing duty-free quota-free market. This is expected to prevent China from taking undue advantage of a facility that is meant for LDCs. He said that this measure is also expected to give a fillip to India's export of yarn and fabrics to Bangladesh and other LDCs which at present are being supplied by China. An official said that the Indian textiles industry is seeking tweaking of South Asian Free Trade Area (SAFTA) rules of origin to make use of yarn and fabrics of Indian origin mandatory for exporting apparel to India, amid a fast increasing import of garments made of Chinese fabrics from Bangladesh. Power loom unit opened in Manipur (India) A power loom unit, with 11 looms was inaugurated by Manipur Textile, Commerce and Industries Minister. The setting up of the power loom unit in the Indian state will boost production and subsequently increase the income of the weavers in the region which has the highest number of weavers in the country. The improved production in the sector will augment income for artisans and create more employment opportunities for the locals in the state. The Minister said that apparel and garment centers will be set up in other industrial estates as well in all the districts of the state. He also called for the promotion of weavers in the state while addressing the gathering at the inauguration of the power loom unit. However, Minister expressed concerns over the survival of traditional handloom as power loom sector has started superseding it. Minister suggested that certain items must be reserved for production through traditional handloom in order to protect the traditional handloom weavers. The State Government would come up with a list of such items, by next month, to be exclusively produced by the handloom weavers only. The move is expected to protect handloom weavers in the state. The Minister advised handloom weavers not to agonies over the growth of power loom which is also an integral part

11 of the textile industry. The State Government is intending for the development of the handloom and textiles so that they can contribute significantly to the growth of the economy of Manipur. Denim industry s operating margins to fall to 10% in The denim industry is likely to witness a fall in its operating margins in The industry s margin stood at 13 per cent in It is expected to decline to 10 per cent in the current financial year due to overcapacity in fabric and mismatch between denim fabric and garment capacity additions. India Ratings is expecting the sector to face margin pressures during as well. Regulatory disruptions in the industry are likely to further contribute to this, the agency stated.