Centre for Trade Facilitation and Research in Textiles Textile Economic Intelligence (MONTH ENDING 28-02-2018) NEWS HIGHLIGHTS India's December quarter GDP growth likely to be 7% India's growth slowed due to structural reforms: US India snatches back title of the world's fastest growing major economy from China Cotton imports set to rise as textile mills prefer U.S. cotton Cotton exports in Egypt decline by 36.7%: CAPMAS Sri Lanka s textile export to experience highest rate of growth in 2018 Textile Industry seeks steps to control garment import from Bangladesh Ikea to invest Rs 3000 cr in Maharashtra over long term Centre plans to set up yarn depot with UP to boost textile sector Grasim Industries receives green signal for expansion of Kharach unit in Bharuch UP government signs 29 MoUs worth Rs.74.36 billion in textile sector Total fabric output increases 13.3% in December 2017 S. Korea s Hyosung to set up its first spandex unit in India by 2019 Haryana cabinet approves new textile policy
GLOBAL ECONOMIC NEWS a) Euro depreciated against Dollar by 1.74% from 0.803 per dollar on 1st Feb 18 to 0.818 per dollar on 28th Feb 18 and Japanese Yen appreciated against dollar by 2.35% from 109.69 per dollar on1st Feb 18 to 107.11 per dollar on 28 th Feb 18. b) Brent Crude oil price index decreased by 5.56% from 1st Feb 18 to 28 th Feb 18. It decreased from $69.65 per barrel on 1st Feb 18 to $65.78 per barrel on 28 th Feb 18. c) Cot Look A Index increased by 2.98% from 89.35 cents/pound on 2nd Feb 18 to 91.7 cents/pound on 28 th Feb 18. d) The US stock market indicator Dow Jones came down by 4.42% from 26186.71 on 1st Feb 18 to 25029.2 on 28 th Feb 18. In Asian market, NIKKEI (Japanese market) came down by 6.04% from 23486.11 on 1st Feb 18 to 22068.24 on 28 th Feb 18. SSE Composite came down by 5.42% from 3446.24 on 1st Feb 18 to 3259.5 on 28 th Feb 18 and Hang sang came down by 5.51% from 32643.09 on 1st Feb 18 to 30844.72 on 28 th Feb 18.
INDIAN ECONOMIC NEWS EXCHANGE RATE: The Rupee depreciated by 2.34% from Rs 63.61/$ on1st Feb 18 to Rs. 65.1/$ on 28 th Feb 18 weakening by Rs. 1.49 FINANCIAL MARKET TRENDS: The Sensex came down by 1722.62 points or 4.80% from 35906.66 on1st Feb 18 to 34184.04 on 28 th Feb 18. The Nifty came down by 524.05 points or 4.76% from 11016.9 on1st Feb 18 to 10492.85 on 28 th Feb 18. CHANGE IN FOREIGN EXCHANGE RESERVES: India s Foreign exchange reserves decreased by $1.324 bn. to reach $420.590. On 23ed Feb 18 from $421.914 bn. on 9th Feb 18. India's December quarter GDP growth likely to be 7% India's economic recovery is expected to have gathered momentum and GDP growth is likely to grow at its fastest pace at 7 per cent in the December quarter as consumers, businesses and the government stepped up spending. India's GDP grew by 6.3 per cent in July-September quarter of the fiscal, up from 5.7 per cent in the first quarter. Growth in the industry and services sector is expected to have accelerated while growth in the agriculture sector decelerated. The economic recovery to have gathered further momentum with GDP growth accelerating to 7 per cent year-on-year in the December-17 quarter from 6.3 per cent in the September quarter. In GVA terms, growth picked up further to 6.7 per cent year-on-year from 6.1 per cent in the previous quarter. India's growth slowed due to structural reforms: US According the Economic Report of the US President India s growth has slowed due to structural economic reforms like demonetisation and the rising share of nonperforming loans (NPLs) in its banks is worrisome. NPLs have alarmingly increased in recent years, with the current NPL slippage ratio in India almost double that in 2014-15. The introduction goods and services tax has created short-term uncertainty and India s public sector banks, led by the State Bank of India, account for the lion s share of NPLs in the banking sector, which poses further risks. US bilateral trade deficit with four major countries, including India, narrowed in the first three quarters of 2017 compared to the previous year. According to statistics provided to the International Monetary Fund (IMF) by India, NPLs as a share of all loans the NPL slippage ratio stood at 9.7 per cent in the third quarter of 2017, compared with 1.7 per cent in China. Indian banking sector s stress, however, may be ameliorated in the future, as the government recently announced a $32.4-billion package to recapitalise publicly sector banks. Observing India to be the most frequent user of anti-dumping measures, the White House report said delays in the approval of agricultural products derived
from biotechnology in China, the European Union, India and other countries result in increased market uncertainty among technology providers, farmers, and traders of US corn, soy, cotton, and alfalfa, leading to reduced exports of these products. The US Government also blamed India for not implementing the WTO ruling on poultry. India snatches back title of the world's fastest growing major economy from China India has snatched back the title of the world's fastest growing major economy from China, going by the encouraging 3rd quarter growth numbers released by the Central Statistics Office (CSO) yesterday. Showing signs of recovery, the Indian economy recorded a five-quarter high growth of 7.2 percent in the October-December period on good showing by key sectors like agriculture, construction and manufacturing. China, in comparison, reportedly grew by 6.8% in the same period. In addition, the data for eight core infrastructure sectors - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - showed improved growth of 6.7 percent for January, up from 4.2 percent in December and 3.4 percent in January 2017. For instance, petroleum refinery production spurted 11 percent last month against a flat output in the year-ago period and cement output jumped 20.7 percent in the month against 13.3 percent contraction in January 2017. Manufacturing GVA in the quarter under review grew at 8.9 percent, compared to 6.9 percent in the previous quarter. Similarly, the farm sector GVA grew at 4.1 percent, up from 2.7 percent. The construction sector recorded a growth of 6.8 percent vis-a-vis 2.8 percent in Q2 while the services segment, including financial services, grew at 6.7 percent (previously 6.4 percent). Looking ahead, the economy is expected to grow at 6.6 percent in the current fiscal ending March 31, as per the second advanced estimates of the CSO, compared to 7.1 percent in 2016-17. This however is marginally better than the earlier estimate of 6.5 percent. The growth for the second quarter (July-September) has been revised upwards to 6.5 percent from 6.3 percent estimated earlier. The previous high was recorded at 7.5 per cent in the July-September quarter of 2016-17.
GLOBAL TEXTILE NEWS PAKISTAN TEXTILE & APPAREL EXPORT RISES BY 2% IN JANUARY 2017: The Textile & Apparel Exports of Pakistan for the month of January 2018 was US $1086 Mn which increased by 2% from US $1064 Mn when compared to corresponding month last year. The highest exported item was Readymade Garments for the value of $233 Mn which rose by 15% from $202 Mn in January 2017. The year-to-date exports also increased by 7% from $ 7225 Mn in 2016 to $ 7729 this year. TEXTILE EXPORTS OF PAKISTAN (USD Mn) Value (Jan) % YTD (July-Jan) % 201 Change 2017-2016- 2017 Change 8 18 17 Textile Group 108 6 1064 2 7729 7225 7 a) Raw Cotton 2 1 55 55 37 49 b) Cotton Yarn 78 93-16 739 744-1 c) Cotton Cloth 182 186-2 1249 1234 1 d) Cotton Carded or Combed 0 0-0 0 - e) Yarn other than Cotton Yarn 3 1 147 18 14 32 f) Knitwear 221 200 11 1556 1393 12 g) Bed Wear 181 173 5 1305 1226 6 h) Towels 69 64 9 450 439 2 i) Tents, Canvas & Tarpulin 7 15-53 57 86-33 j) Readymade Garments 233 202 15 1482 1302 14 k) Art, Silk & Synthetic Textile 25 22 12 173 143 21 l) Madeup Articles 59 55 7 399 376 6 m) Other Textile materials 26 53-51 245 250-2 Cotton imports set to rise as textile mills prefer U.S. cotton According to trade and industry sources, as textile mills increasingly prefer to buy cotton from the U.S. in larger quantities. Cotton imports this season might surpass the official estimate of 17 lakh bales. The units could get a 4 to 5% cost advantage. Total imports during the last cotton season (2016-2017) were 30.94 lakh bales and the previous year it was 22.79 lakh bales. The total imports this season (October 2017 to September 2018) might cross 20 lakh bales. Mills in Andhra Pradesh, Gujarat, and Tamil Nadu are buying from the U.S. The total import this season is already more than 10 lakh bales and majority stock is from U.S. According to Indian Cotton Federation large quantity of cotton is available at discounted price from the U.S. for the current season the reason why textile mills are booking cotton from the U.S. Though imported cotton is of slightly lower micronaire
(one of the quality parameters of cotton) compared with the widely used domestic cotton (Shankar 6 variety), mills were opting for U.S. cotton as these were free of contamination and realisation would be better. The price of Shankar 6 variety was Rs. 39,800 a candy on Friday. According to Indian Cotton Federation cotton arrivals had picked up in the domestic market by nearly 1.5 lakh bales a day. The prices might not decline or increase much this year. Since there was surplus production globally, cotton export from India this season was also not high. According to president of Coimbatore Cotton Association, the total imports may not increase much. It depends on how Indian cotton prices move in the next two months. Domestic cotton production is estimated to be high this cotton season at 377 lakh bales Cotton exports in Egypt decline by 36.7%: CAPMAS According to Egypt s Central Agency for Public Mobilization and Statistics (CAPMAS) the country s cotton exports declined by 36.7 per cent, falling to 128,300 kantars during the first quarter of the 2017-2018 agricultural season ending November compared to 202,500 kantars during the same period in the previous season. A kantar equals 45.02 kilograms. CAPMAS attributed the decline to decreasing area of cultivation. The quantity of cotton consumed domestically has reached 44,500 kantars during that quarter compared to 107,000 kantars in the same period of the previous season, declining by 58.4 per cent, as some cotton mills stopped production. The quantity of treated cotton, however, witnessed an increase of 95.5 per cent during the period due to the accumulation of the crop from the previous season. Sri Lanka s textile export to experience highest rate of growth in 2018 According to Oxford Business Group (OBG), Sri Lanka's apparel and textile export segment is likely to experience the highest rate of growth in overseas shipment in 2018 as Sri Lanka focus on achieving $20 billion in export earnings by 2020.Textile is considered the backbone of Sri Lanka's trade able sector comprising 47% of total exports in 2016. Export industries received a welcome boost in May 2017, when the EU reinstated Sri Lanka's Generalized Scheme of Preferences Plus (GSP+) status, which had previously been rescinded over human rights concerns in 2010. GSP+ status removes the majority of import duties on Sri Lankan goods entering the European single market, and likely drove the 13.8% year-on-year increase in garment exports to the EU in November 2017. Even though the immediate future looks bright for the garments segment, Sri Lanka would be wise to devise adaptation strategies for technological advancements in manufacturing processes. According to the survey 49% of respondents place rising global oil prices as the top risk factor. One of the chief reasons for Sri Lanka submitting to the $1.5bn IMF bailout package was the profligacy of the previous Mahinda Rajapaksa administration, which had agreed to a number of high interest Chinese loans to fund infrastructure projects.
Many of these developments have operated below capacity since completion, making it difficult for Sri Lanka to honor its payment commitments. As a result, the Sirisena administration has been forced to make hard choices, such as handing over control of 70% of Hambantota Port to Chinese interests on a 99-year lease. China is the country's main source of foreign direct investment across Sri Lanka s economic sectors Textile Industry seeks steps to control garment import from Bangladesh The textile industry here has sought measures to control garment imports from Bangladesh, which is on the increase. Members of Indian texpreneurs federation met the union minister for commerce and industry in New Delhi recently and explained the problems faced by the industry because of higher garment imports. They said the government should weak the rules of origin for import of garments from Bangladesh so that the government makers in that country used Indian yarn and fabric from India and also prevent China from taking advantage of the agreement to indirectly increase its export to India. According to them, allowing duty free import of apparels from countries such as Bangladesh under South Asian Free Trade (SAFTA) and other least developed countries is indirectly benefiting China. These countries do not have adequate domestic production of yarn and fabric and source substantially from China. The quantitative restrictions on duty free import from Bangladesh was lifted in 2010. After that, garment export from there to India grew 67% between2006 to 2010 and 98 % from 2010 to 2014. In the next financial year, it increased 27.8% and then by 17 %. There was a slight drop in 2016-2017. However, data available for the first six months of the current financial year shows a revival in garment imports from Bangladesh.
INDIAN TEXTILE NEWS Ikea to invest Rs 3000 cr in Maharashtra over long term According to company deputy country manager, Swedish furniture retailer Ikea will invest Rs 3,000 crore in India s Maharashtra state over the long-term to set up multiformat stores and experience centres. The company recently committed to invest Rs 750 crore over the next 2-3 years in setting up its first distribution centre in Pune. The company could increase investments in India and Delhi-National Capital Region would be another key market for the company. Initially, the company had earmarked Rs 10,500 crore to open about 25 stores in the country by 2025. He attributed the delay in opening the first Ikea store in Hyderabad, scheduled to open early this year, to the company s focus on safety of workers and construction quality. The company is already working with suppliers in the areas of textiles and plastics. Ikea currently sources from 11 suppliers in India. It is also exploring options to partner with state governments to source sustainable raw materials like bamboo, jute, rubber wood, banana barks and coir. Hornell said. Centre plans to set up yarn depot with UP to boost textile sector Indian textiles minister at the investor s summit that concluded in state capital Lucknow, announced a proposal to jointly set up a yarn depot with the Uttar Pradesh (UP) government to give a further boost to the textile sector in the state, which garnered proposals worth Rs 7,000 crore. The proposal to set up yarn depot in UP is through which weavers can directly purchase yarn at subsidised rates, as subsidies hardly reached weavers.they also urged UP industry minister and textile minister to start discussions with industrialists to restart closed knitwear mills. The new textile policy was announced as many UP industrialists want to return to the state. Grasim Industries receives green signal for expansion of Kharach unit in Bharuch Grasim Industries received green signal for expanding the production of viscose staple fibre (VSF) and captive power at Kharach unit in Bharuch in order to meet the increased demand of man-made fibres in the country. This project will entail an investment of Rs.18 billion. The company plans to raise the production capacity of VSF from 127,750 tonnes per annum to 233,600 tonnes per annum. The captive power generation will increase from 25 megawatts to 45 megawatts. The company has four VSF plants in India, of which two are in Gujarat, one each in Kharach and Vilayat in Bharuch district. In January 2018, the company received the environment clearance for expansion of Vilayat plant.
UP government signs 29 MoUs worth Rs.74.36 billion in textile sector The Uttar Pradesh (UP) government signed 29 MoUs worth Rs.74.36 billion in the textiles segment during the UP Investors Summit, said state textile minister. The implementation of the MoUs is expected to generate more than 500,000 jobs. The minister added that a four-member committee under the textile commissioner has been formed, so as to maintain a constant touch with the investors and ensure that their problems are resolved Total fabric output increases 13.3% in December 2017 Total fabric output increased by 13.3 per cent y-o-y to 5,703.6 million square metres in December 2017. Output of cotton fabrics grew by 10.21 per cent to 3,455.2 million square metres during the month. Production of blended fabrics and man-made fibre fabrics surged by 13.55 and 22.78 per cent to 1,022.7 and 1,225.7 million square metres, respectively. On a cumulative basis, total fabric production was up by 5.07 per cent to 49,767.4 million square metres during April-December 2017. Output of all types of fabrics grew in the range of 2.96-11.26 per cent during the period. Month Total Cotton fabrics Blended fabrics Manmade fibre Fabrics Y-o-Y % change Y-o-Y % Y-o-Y % Y-o-Y % change change change Aug 2017 0.24 2.26-1.33-3.42 Sep 2017 5.27 4.91 9.27 3.35 Oct 2017 7.31 11.97 9.12-4.86 Nov 2017 18.29 15.54 29.80 17.31 Dec 2017 13.30 10.21 13.55 2.78 S. Korea s Hyosung to set up its first spandex unit in India by 2019 The world s leading spandex manufacturer, South Korea s Hyosung Corporation is coming up with its first-ever spandex manufacturing facility in India by 2019. The move will enable the company to entrench well for further penetration into the Indian market. The company has earmarked US $ 200 million as the initial outlay for the next 5 years and its new unit in India, sources informed Apparel Resources. Additionally, Hyosung is reportedly looking to acquire a 40ha site in the AURIC industrial complex near Aurangabad in Maharashtra. Further investments will be made depending on the market demand and growth projections.
Hyosung has already been present in India through a trading firm in New Delhi. Its spandex brand Creora commands roughly 60 per cent of the country s market share. It is also looking to fortify its market supremacy and enhance profitability by growing its market share to 70 per cent. Importantly, setting up its own spandex manufacturing in India is part of Hyosung s worldwide expansion strategy wherein the company will promote Hyosung Vietnam as the global base for making core products (spandex and tire cords) to tap Europe and Asia, whilst Hyosung India will facilitate wider access to the big domestic market. Hyosung s outlook for India is rather positive. The company has chosen to set up manufacturing in India at a time when the country s spandex market is on an uptick. Growing by an annual average of over 12 per cent, the market size is pegged at US $ 200 million by 2020. Also, the company has been quite mindful as regards the selection of the location for its maiden manufacturing plant in India. Notably, the state of Maharashtra accounts for over 50 per cent of country s fibre production and makes an ideal choice, therefore. It s also worth mentioning that Hyosung s upcoming spandex unit will also aid the development of allied industries viz., weaving, knitting, dyeing and sewing. This will not only lead to further employment growth but also help revitalise the country s overall economy. Haryana cabinet approves new textile policy The Haryana government's approval of the Textile Policy, 2018, for the state will now help in positioning the state as the textile manufacturing hub at an international level. Confirming growth and modernisation of the existing textile industry in the state, the new policy will assist in procuring financial aid for increase in the number of textile units. According to the State minister for industries and commerce, the policy is packed with fiscal incentives and contains provisions for infrastructure augmentation, setting up of textile parks, promotion of khadi industry and facilities for skill training. It aims at generating 50,000 new jobs by attracting investment in the textile sector to the tune of Rs 5,000 crore. Under the policy, the state government will set up textile parks and facilities for skill development, said Goel adding that establishment of apparel parks are also in plan, exclusively to increase apparel production. This sector provides employment to about one million people and readymade garments worth $2 billion are exported from the state annually, the state will lend support to execute agreements signed for developing its textile sectors. In an effort to promote the textile industry in the state, the policy talks of collaboration with various research institutions such as IIT Delhi