Centre for Trade Facilitation and Research in Textiles

Centre for Trade Facilitation and Research in Textiles Textile Economic Intelligence (WEEK ENDING 16-03-2018) NEWS HIGHLIGHTS VN garment-textile sector aiming for 10 pc growth this year Picanol Group posts turnover of 688.93 million in 2017 Outlook for manufacturing improves for Q4 FY18: FICCI Arvind to set up apparel and textile facility at Chittoor Garment university to be set up in Bengaluru: minister Textile industry needs supportive policy to become USD 300 billion market by 2030: ATEXCON US challenges Indian export subsidy programmes in WTO Apparel exports to continue to decline: AEPC Parliamentary panel suggests change in GST structure to boost textiles sector Karnataka state assured of a textile park

GLOBAL ECONOMIC NEWS a) Euro appreciated against Dollar by 0.25% from 0.813 per dollar on 12th March 18 to 0.811 per dollar on 16th March 18 and Japanese Yen appreciated against dollar by 0.93% from 106.61 per dollar on12th March 18 to 105.62 per dollar on 16th March 18. b) Brent Crude oil price index increased by 1.82% from 12th March 18 to 16th March 18. It increased from $64.95 per barrel on 12th March 18 to $66.13 per barrel on 16th March 18. c) Cot Look A Index decreased by 1.12% from 93.9 cents/pound on 12th March 18 to 92.85 cents/pound on 16th March 18. d) The US stock market indicator Dow Jones came down by 0.92% from 25178.61 on 12th March 18 to 24946.51 on 16th March 18. In Asian market, NIKKEI (Japanese market) came down by 0.68% from 21824.03 on 12th March 18 to 21676.51 on 16th March 18. SSE Composite Came down by 1.68% from 3326.33 on 12th March 18 to 3270.39 on 16th March 18 and Hang sang came down by 0.17% from 31594.33 on 12th March 18 to 31541.1 on 16th March 18.

INDIAN ECONOMIC NEWS EXCHANGE RATE: The Rupee appreciated by 0.14% from Rs 65.02/$ on12th March 18 to Rs. 64.93/$ on 16th March 18 strong by Rs. 0.09 FINANCIAL MARKET TRENDS: The Sensex came down by 741.94 points or 2.19% from 33917.94 on12th March 18 to 33176 on 16th March 18. The Nifty came down by 226.25 points or 2.17% from 10421.4 on12th March 18 to 10195.15 on 16th March 18. CHANGE IN FOREIGN EXCHANGE RESERVES: India s Foreign exchange reserves increased by $0.729 bn. to reach $421.487. On 16th March 18 from $420.758 bn. on 9 th March 18. Sectoral Index of Industrial Production: The Indices of Industrial Production for the Mining, Manufacturing and General sectors for the month of January 2018 stand at 114.5, 133.8 and 132.3 respectively, with the corresponding growth rates of 0.1 per cent, 8.7 per cent and 7.5 per cent as compared to January 2017 when it was 8.6 per cent, 2.5 per cent and 3.5 per cent respectively. The cumulative growth in these three sectors during April-Jan 2017-18 over the corresponding period of 2016-17 has been 2.5 per cent, 4.3 per cent and 4.1 per cent respectively. The growth rate for Textiles and Clothing for the month of January 2018 is 2.7 per cent and - 10.7 per cent respectively. The cumulative growth during April-Jan 2017-18 over the corresponding period of 2016-17 was -0.3 per cent and -10.4 per cent.

GLOBAL TEXTILE NEWS US IMPORTS OF TEXTILE AND APPAREL AUGMENT BY 4.3% FOR THE MONTH OF JAN 2018: The total Textile and Apparel Imports of U.S. for Jan 2018 went up by 4.3% to $9293 Mn as compared to corresponding month last year when it stood at $8911 Mn. Country-wise, China stood as top exporter of Textiles and Apparels to U.S. with export value of $3409 Mn. India stood at 3rd position with exports worth $650Mn to U.S. US IMPORTS OF APPAREL AND NON-APPAREL FROM WORLD (USD Mn) Jan-18 Jan-17 % Change Apparel Import 7050 6983 0.9 Non-Apparel Import 2243 1928 16.4 Total Imports 9293 8911 4.3 VIETNAM EXPORTS OF YARNS, TEXTILE AND GARMENTS FOR THE MONTH OF FEBRUARY 2018 AUGMENT BY 12%: The Yarns Export by Vietnam for February 2018 came down by 17% to $224 Mn as compared to corresponding month last year when it stood at $269 Mn. The Textile and Garment Export by Vietnam went up by 18% to $1630 Mn as compared to corresponding month last year when it stood at $1387 Mn. Top 10 Textile & Apparel Exporters to U.S. (USD Mn) S.No. Country Value (Jan 18) Value (Jan 17) % Change 1 China 3409 3386 1 2 Vietnam 1164 1117 4 3 India 650 633 3 4 Bangladesh 510 500 2 5 Indonesia 428 436-2 6 Mexico 375 328 14 7 Pakistan 251 238 6 8 Cambodia 227 185 23 9 Sri Lanka 174 180-3 10 Honduras 157 138 14 Year-to-Date Yarns Exports by Vietnam for the period of January-February 2018 went up to $558 Mn as against $473 Mn in January- February 2017 registering a positive growth rate of

18%. Also, Year-to-Date Textiles and Garments Exports by Vietnam for the period of January- February 2017 went up to $4121 Mn as against $3544 Mn in January- February 2017 registering a positive growth rate of 16% S.NO. VN garment-textile sector aiming for 10 pc growth this year Vietnamese garment-textile sector inspite of huge challenges in the global market are eyeing for a growth of 10 percent in 2018. The sector earned 4.3 billion USD from exports in the first two months this year, up 22.3 percent year on year. According to Director General of the Vietnam National Textile Garment Group to realize the target, the sector plans to improve product quality and ensure on-schedule deliveries at reasonable prices to enhance its competitiveness. The use of technology will also be enhanced to increase automatic production, as well as IT-based management and workers skills. Chairman of the Director Board of Hung Yen Garment Corporate underlined the challenges faced by the sector said that export prices may fall, while production costs increase. Enterprises need to devise measures to become more productive and reform their management. Export of Yarns and Textiles by Vietnam (In USD Mn) COMMODITY VALUE (Feb) % Change YTD (JAN-Feb) % Change 2018 2017 18/17 2018 2017 18/17 1 Yarns 224 269-17 558 473 18 2 Textiles & Garments 1630 1387 18 4121 3544 16 TOTAL EXPORTS 1854 1656 12 4679 4017 16 However, Vietnamese garment-textile sector is forecast to face huge challenges and fierce competitions particularly this year from China, Myanmar and Cambodia. Picanol Group posts turnover of 688.93 million in 2017 The Picanol Group, which specialises in the development, production and sale of weaving machines, engineered casting solutions and custom-made controller, has recorded consolidated turnover of 688.93 million during the financial year 2017, a turnover increase of 8 per cent compared to the 639.78 million recorded in the financial year 2016.The gross profit of the Picanol Group for 2017 amounted to 159.39 million, compared to 158.4 million in 2016. The gross profit percentage decreased slightly from 25 to 23 per cent. The operating result is stable at 120.77 million in 2017 compared to 120.98 million in 2016. In 2017, the weaving machines division experienced a record breaking year. The rising demand for quality and technology resulted in strong sales mainly in Asia and this led to further market share growth in many countries and weaving market segments. This resulted in

Picanol putting a record number of weaving machines on the market in 2017. The sales of spare parts and accessories followed the positive trend of the weaving machines. The activities of the Picanol Group in 2017 resulted in a net profit of 91.64 million compared to 88.38 million in 2016. The group closed 2017 with a net profit of 101.71 million, compared to 119.72 million in 2016.For the first six months of 2018, the order book is wellfilled. For the first half of 2018 the Picanol Group expects to realise a turnover in line with that of the first half of 2017, but is taking into account a further negative impact of rising commodity prices

INDIAN TEXTILE NEWS Outlook for manufacturing improves for Q4 FY18: FICCI There are visible signs of revival in capital goods and improvement in export outlook for the fourth quarter, i.e. January-March 2017-18, according to FICCI s latest quarterly survey on manufacturing. The positive outlook for the manufacturing sector is based on 55 per cent respondents reporting higher production during the quarter compared to third quarter. According to FICCI survey the proportion of respondents reporting higher output growth during the Q4 2017-18 has increased significantly to 55 per cent from 47 per cent in Q3. The percentage of respondents reporting low production has also come down to 11 per cent in fourth quarter from 15 per cent in Q3 of 2017-18. FICCI s latest quarterly survey assessed the expectations of manufacturers for Q4 (January- March 2017-18) for twelve major sectors, including the textiles and textiles machinery sectors. Responses were drawn from over 300 manufacturing units from both large and SME segments with a combined annual turnover of over Rs 3 lakh crore. In terms of order books, 51 per cent of the respondents in Q4 are expecting higher number of orders as against 42 per cent of Q3 2017-18 which again is a sign of revival, observed FICCI Survey. Overall capacity utilisation in manufacturing remains low. The average capacity utilisation for the manufacturing sector is about 77 per cent for Q3 2017-18 as reported in the survey which is similar to that of Q2 2017-18. In some sectors like textiles and textiles machinery, and leather & footwear, average capacity utilisation has either increased or remained almost same in Q3 of 2017-18. In terms of exports, the outlook seems marginally positive as 47 per cent of the participants are expecting a rise in the exports for Q4 and 34 per cent are expecting the exports to continue on same path as that of same quarter last year. Rupee appreciation has also affected exports during Q3 2017-18 as 80 per cent of the respondents reported that the exports were affected by upto 5 per cent due to rupee appreciation. Meanwhile, the cost of production as a percentage of sales for manufacturers in the survey has risen significantly for 62 per cent respondents in Q3 2017-18. This is primarily due to increase in cost of raw materials, increased wages, power cost and higher GST rates on certain products. Arvind to set up apparel and textile facility at Chittoor Textile major Arvind signed a memorandum of understanding (MoU) with the Andhra Pradesh Economic Development Board for establishing a state-of-the-art integrated apparel and textile facility at Chittoor with an initial investment of Rs.2.5 billion. The integrated facility will be established in multiple phases across 100-125 acres with a capacity to produce 24 million pieces of shirts per annum Garment university to be set up in Bengaluru: minister A garment university will be set up in Bengaluru, India s minister for fertilizers and parliamentary affairs announced recently. They said the university will be set up in Bommanahalli, which has many garment factories. Union textiles minister has already approved the proposal. Union textiles minister said the central government has allocated Rs 6,000 crore for the welfare of garment workers and made it mandatory for all garment factory owners to set up an internal complaints committee to look into instances of harassment of women employees.

Textile industry needs supportive policy to become USD 300 billion market by 2030: ATEXCON In order for the Indian textile industry to achieve its goal of becoming a USD 300 billion market by 2025, there is a need for supportive policy and public-private partnership, especially in areas like research & development, according to a representation released at the 9th Asian Textile Conference (ATEXCON). The release added that through policy measures, India could achieve USD 80 billion textile and apparel exports at an annual growth of nine per cent. Currently, the overall market is expected to grow at 11 per cent annually to reach USD 220 billion by 2025. US challenges Indian export subsidy programmes in WTO The United States has requested dispute settlement consultations with the Government of India at the World Trade Organization (WTO) challenging Indian export subsidy programmes, including the Merchandise Exports from India Scheme (MEIS) and sector specific schemes like Special Economic Zones (SEZs); and Export Promotion Capital Goods (EPCG) Scheme. According to US Trade Representative (USTR) export subsidy programs harm American workers by creating an uneven playing field on which they must compete and our trading partners accountable by vigorously enforcing US rights under our trade agreements and by promoting fair and reciprocal trade through all available tools. These apparent export subsidies provide financial benefits to Indian exporters that allow them to sell their goods more cheaply to the detriment of American workers and manufacturers. According to them, through subsidy programs, the Government of India provides exemptions from certain duties, taxes, and fees; reduces import duty liability; and benefits numerous Indian exporters, including producers of textiles, apparel, steel products, pharmaceuticals, chemicals, and information technology products, USTR statement said. According to Indian government documents, thousands of Indian companies are receiving benefits totaling over $7 billion annually from these programs. Consultations are the first step in the WTO dispute settlement process. If the United States and India are not able to reach a mutually agreed solution through consultations, the United States may request the establishment of a WTO dispute settlement panel to review the matter. Apparel exports to continue to decline: AEPC The Apparel Export Promotion Council (AEPC) has cautioned on the continued decline in apparel production in India and said India won t be able to meet the garment export target of USD 20 billion this year. The council said that if the capital blockage continues and the cost competitiveness of the industry is not restored, the slippage in exports will continue, with long term adverse impact on India s positioning in the sector. AEPC informed the Ministry of Commerce that on account of new taxes there is a shortfall of around five per cent under GST and therefore several blocked and embedded taxes may be refunded through higher drawback and ROSL (Rebate of State Levies), along with refund of GST input tax credit. AEPC said if the tax issues are sorted out, India can again become a world leader in apparel exports.

Parliamentary panel suggests change in GST structure to boost textiles sector The Standing Committee on Labour said it desires the textiles ministry to impress upon the finance ministry to reconsider the overall GST structure for textiles sector and impose higher anti-dumping duty to protect the domestic industry. The panel noted that the textiles ministry has also taken up the issues on inverted duties structure on man-made fibre, imposition of GST on job work, credit transfer documents issues, non-refund of input tax credit, GST for weaving industry, lowering of GST rates for machinery used by MSME textile units, etc. It also observed that the budgeted expenditure for the textiles ministry for 2018-19 is actually less than the budgeted expenditure for 2017-18 after considering Cotton Corporation of India s loss of Rs.9.21 billion. It noted that the reduction of the outlay would adversely impact implementation of ongoing schemes particularly those aimed at benefitting the unorganized sectors of power loom, handloom, handicrafts, wool and sericulture. Karnataka state assured of a textile park Union Textiles Minister at the inauguration of Textile Sector Buyer-Seller meet and launch of Power Tax portal and mobile app in Bengaluru. It will help provide information about various schemes and incentives of the textile ministry. On this occasion, the textile ministry has assured a Rs. 100 crore Textile Park for Karnataka and asked the State Government to provide land for the textile park. The announcement of Textile Park by the textile minister was welcomed by the textile industry in Bengaluru on Sunday. As an assistance to silk weavers, she informed that her ministry is prepared to sanction five crore rupees for setting up of Yarn bank in the state. Those finding it hard to buy silk yarns will benefit from the proposal to set up yarn bank. The minister has said her ministry will support any number of yarn banks proposed by the Industry. Power loom owners, she pointed out can upgrade their plain power looms to semi-automatic looms by availing 20,000 rupees per loom incentive from the ministry. For those adopting solar power, the ministry will provide 50 to 90 percent subsidy and for the future of Man-made fibre a road map is ready in collaboration with the textile industry. The ministry has announced a package of Rs. 1300 crore for the skill development in the apparel industry. Union Chemicals and Fertilisers Minister assured the silk growing farmers that their request to increase import duty on silk from 20 to 35 percent will be looked into under consultations with the Prime Minister but silk fabric manufacturers are seeking its reduction. Hence Union Minister asked both to come to a consensus and approach the Government