EAI 01 ISSUE 13
100
GSP withdrawal by US to have minimal Impact
Slow
recovery for Indian exporters
McKinsey Report:
Indian Ascent in global industry APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRiL 2019
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AppArel / Chairman’s Message Dear Friends,
I
t’s election time again - time to hope for new visions and resolutions. The last five years of government were a mixed bag with many ups and downs but we have seen consistent consolidation of the industry in the last few months. We are seeing growth, in spite of recession and instabilities in some of the important markets. The special apparel package, GST, major facilitation measures for MEIS, packages for SMEs, and now ROSCTL were some of the highlights of the govt. The industry looks forward to continuation and strengthening of these facilitation measures, specially the online and simplification measures for disbursement of several schemes. I hope the incumbent government encourages skill development and other institutional infrastructure for strengthening manufacturing excellence. I welcome Shri Balram Kumar, IDAS, who took charge as Secretary General, AEPC, from March 2019. I also thank our outgoing SG, Smt Jaya Dubey, for her support and guidance to the Council during her tenure. I am happy to share with you that AEPC in association with WGSN has organized a fashion forecast seminar pan India for forecasting the trends spring/summer 2020. I hope that the seminar is beneficial for the designers for forecasting the upcoming trends. AEPC and Marks & Spencer’s, India, had launched the Gender Equality Programme at Apparel House, Gurgaon. AEPC & M&S had signed a Memorandum of Understanding to explore avenues for working together on a program on gender equality through work place training. I invite the industry to come forward for developing better workplaces for our workers under this programme. I am happy to share that AEPC had raised the Technical Barriers to Trade (TBT) issue for Argentina i.e. “Concerns on the Export documents Attestation fee requirement by
the Argentinean authorities for export of textile products from India to Argentina”. The Government of India has taken up this issue at the WTO TBT committee meeting held during 5-7 March, 2019, and requested the concerned authorities of the Government of Argentina to consider removing the attestation charges, thereby facilitating the removal of such barriers to trade. I urge members of the council to keep raising such issues they face with any country. I assure you that we will take these issues to the highest level of the government. I extend my gratitude to DGFT for extending the Exemption from IGST under Advance Authorisation, EPCG and EOU scheme from March 2018 to March 2020. We also hope that our pending suggestion like removal of port of registration for applying MEIS and streamlining of issuance of ROSCTL scrips will be considered at the earliest.
HKL Magu, Chairman, AEPC APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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EAI 01 ISSUE 13
100
GSP withdrawal by US to have minimal Impact
Slow
recovery for Indian exporters
McKinsey Report:
Indian Ascent in global industry APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2019
CHAIRMAN AEPC Mr. HKL Magu CHAIRMAN EP Mr. Sudhir Sekhri ADVISOR AEPC Mrs. Chandrima Chatterjee PUBLISHER Apparel Export Promotion Council Apparel House, Sector-44, Institutional Area, Gurugram, HARYANA – 122003. Phone: 0124-2708000 www.aepcindia.com
Content & Design DFU Publications New Delhi Email: dfudelhi@yahoo.co.in Printing Press: VIBA Press Pvt. Ltd. C-66/3, Okhla Industrial Area, Phase-II New Delhi-110020 e-mail: info.vibappl@gmail.com
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C o n t e n t s
EAI 01 |ISSUE 13 | APRIL 2019 | Pages 64
04 | The BrOADcAST
• RMG exports in India increase by 7.17% • India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-January) 2018-19
34| ecONOMY
• Strategies to combat another recession
36| FUTUreScOpe
• ILRF’s roadmap for transforming global apparel industry
06| Aepc eVeNTS
• AEPC & Marks & Spencers launch Gender Equality Program
10| GlOBAl AFFAIrS
• GSP withdrawal by US to have minimal impact on Indian exports
12| MArKeTS
• Global luxe industry gets a boost from rising disposable income • Market News
15| eMerGING INDIA
• Year 2019 will be India’s ascent in global fashion industry: McKinsey study
18| FAST FASHION
• Fast fashion feels the heat from online brands globally
38| TecH TreNDS
• Fusion clothing, custom fit, online retail driving Indian fashion industry
40| SUSTAINABIlITY
• Growing synergies between sustainability and development agenda • Sustainability News
43| BUSINeSS TreNDS
• Indian consumers opening up to eco-friendly, durable fashion products
45| TreNDS
• Trends News • AEPC organises Fashion Forecasting Seminar
48| Aepc AcTIVITIeS
20| reTAIl
• Fashion’s two biggest companies, Amazon, Zara compete for market share • Retail News
• PBIP highlights agenda for the Punjab apparel sector
49| MOVeMeNT
• AEPC welcomes Shri Balram Kumar as new Secretary General
24| INSIGHTS
• Demand for men’s dress shirt remains constant as customisation gains ground
26| DeNIM
• Denim jeans continue to dominate from Mexico to the US
50| eVeNTS
• Texprocess to focus on micro-factories for quicker, flexible and sustainable processing
53| GST UpDATe
28| BUSINeSS
• Slow recovery for Indian apparel exports amidst challenging environment • Business News
32| GUeST cOlUMN
• Indian Apparel Exports: The Way Forward
• Applicability of GST on gifts and free sample products
55| NOTIFIcATIONS • Ministry Notification • AEPC Notification
59| SUBScrIpTION 60| eVeNTS cAleNDAr
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRiL 2019
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AppArel / the broadCast
RMG exports in India increase by 7.17% RMG exports within India increased by 7.17 per cent to US$ 1544.26 million in February 2019 against the corresponding month of February 2018, which was US$1440.94 million. In rupee terms RMG exports in February 2019 were Rs. 10,998.53 crore as against Rs. 9,275.87 crore in February 2018 with a growth of 18.57 per cent. India’s RMG exports to the world in the April-February of 2018-19 declined by 5.26 per cent to US$ 14,421.65 million. Apparels exports during April-February 2017-18 were registered to be of US$ 15,222.29 million. India’s rMG export to World Month
FY 2017-18
MoM Growth of 2018-19 over 2017-18 (%)
FY 2018-19
In INr crore In US$ Million In INr crore In US$ Million
INr
US$
April
11272.24
1747.44
8859.67
1349.81
-21.40
-22.76
May
10342.55
1605.37
9040.63
1338.57
-12.59
-16.62
June
9979.57
1548.59
9202.63
1357.46
-7.79
-12.34
July
8262.94
1281.95
8757.23
1274.83
5.98
-0.56
August
8552.24
1336.95
8986.67
1292.18
5.08
-3.35
September
10704.85
1661.19
7967.69
1103.32
-25.57
-33.58
October
5401.86
830.02
8327.42
1130.95
54.16
36.26
November
6719.85
1036.01
8112.46
1129.02
20.72
8.98
December
8590.47
1337.20
9720.59
1374.30
13.16
2.77
January
8887.71
1396.63
10800.54
1526.95
21.52
9.33
February
9275.87
1440.94
10998.53
1544.26
18.57
7.17
97990.15
15222.29
100774.06
14421.65
2.84
-5.26
Total
Source: DGCI&S, Kolkata, 2019
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AppArel / the broadCast
India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-January) 2018-19 INDeX OF INDUSTrIAl prODUcTION Manufacture of textiles Month
MoM Growth rate (In %)
Manufacture of wearing apparel
MoM Growth rate (In %)
2017-18 2018-19 2018-19/2017-18 2017-18 2018-19 2018-19/2017-18
April
116
114.2
-1.6
155.5
134.6
-13.4
May
116.7
116.1
-0.5
156.8
136.8
-12.8
June
116.4
115.5
-0.8
145.2
151.6
4.4
July
116.4
119.8
2.9
134.2
147.3
9.8
August
116
125.1
7.8
121.4
144.3
18.9
September
115.2
121.4
5.4
118.8
143.6
20.9
October
113.5
120.5
6.2
106.3
1369.1
28.0
November
117.7
112.0
-4.8
118.1
144.2
22.1
December
122.4
118.8
-2.9
140.9
164.1
16.5
January
120.4
117.7
-2.2
141.1
164.2
16.4
Total
117.1
118.8
1.5
133.8
148.6
11.1
Source: CSO, 2019 SUMMArY • Manufacturing of Textiles has shown a decline of -2.2% in January 2019 and growth of 1.5% for the period of April-January, 2018-19 • Manufacturing of wearing apparel has shown a growth of 16.4% in January, 2019 and growth of 11.1% for the period of April-January, 2018-19 APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRiL 2019
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AppArel / AEPC events
AEPC & Marks & Spencers launch Gender Equality Program
T
he Apparel Export Promotion Council of India and Marks & Spencers, India, signed a Memorandum of Understanding on January 3 2019 to explore avenues for working together on a program on Gender Equality through work place training.
Support for the larger objective
Both the organisations, through this collaboration, asserted their support for the larger objective of creating just and equal workplaces, and in turn, equal societies and perception. They launched the Gender Equality Programme on March 13, 2019 in Gurgaon. Under this Project POWER (Providing Opportunities to Women with Equal Rights), as it is rightly called, a very well structured program, led by Marks & Spencers, India, will be implemented by Change Alliance and Swasti Health Catalyst. The objective of the project is to have safe and enabling work space, happy workforce, which is aware, assertive, responsible and productive, leading to reduced attrition and absenteeism and benefit to factory as firms join and commitment to better work.
Project benefits
Chairman, AEPC speaking at the launch
The benefits of POWER project includes increased productivity, decreased rate of attrition resulting in reduced HR hiring cost and legal cost, decrease in absenteeism resulting in better capacity utilisation, safety of workers at workplace, alignment with brands’ contribution to SDGs and BHR resulting in strong vendor relationship, brand-building and reputations.
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AppArel / AEPC events Phase I
The Phase-I of the program achieved the following objectives:
• It was conceptualised and supported by Marks and Spencers and British High Commission (BHC) • The programme was piloted in two garment factories in Bengaluru (2016- 2017) • Trained 140 workers on gender equality, fairness and tackling violence at work place. • The project has equipped 40 workers as champions within their work space.
Phase II
In the Phase-II of the program, British High Commission, Marks and Spencers along with other three leading brands Superdry, Mothercare and Levi Strauss supported the programme implemented by Change Alliance and Treble Partners (2017 – 2018).
• 13,500 workers trained in a cascade model (Training of the Trainers- ToTs), made aware and informed of the provisions under the POSH Act, 2013. • 268 Peer Trainers trained across 11 factories on the rights of the aggrieved woman under the POSH Act, 2013 • 30 welfare officers and HR managers have understood their roles and responsibilities of facilitating a functioning internal committee. • 128 senior managers made aware of their roles and responsibilities and the duties of the employer as per the POSH Act, 2013.
Employees of M/s Richa Global Exports Pvt. Ltd. sharing their experience at the program
• 296 Supervisors were trained on Gender equality, POSH and how to work responsibly. • Internal committees of the participating factories reviewed and reconstituted for transparent functioning. • Factory policies of all 11 participating factories reviewed and necessary recommendations for the safe and decent workplace provided.
Road map of Phase-III
The 3rd phase of the POWER Project has three components designed by Marks and Spencer and BHC implemented by Change Alliance and Swasti Health Catalyst. These include
• Component 1: Promoting Gender Equality and safe workplace in 6 factories based in Bengaluru- M&S and Superdry suppliers (reaching to 9000 work force)
(L to R) Ms. Chandrima Chatterjee, Advisor, AEPC; Dr. Archana Shukla Mukherjee, Manager, Change Alliance; Ms. Nidhi Dua, Country Manager, M&S (On podium); Mr. HKL Magu, Chairman, AEPC; Mr. Richard Barlow, Head of Political & Bilateral Affairs; British High Commission; Ms. Shaonli Chakraborty, Associate Director, Swasti Garment; Mr. Vijay Mathur, Senior Advisor, AEPC APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / AEPC events
Participants at the launch
Ms. Nidhi Dua, Country Manager, M&S speaking at the seminar
• Component 2: Career Progression for Women Workforce (50 women- pilot) • Component 3: Community Intervention (11000
community members) Key outcomes & outputs envisaged • Women as well as Men factory workers have improved knowledge on issues of gender equality, sexual harassment, violence against women and grievance redressal. • Institutional mechanisms are conducive and gender sensitive in target factories to address the grievances of women factory workers • Review and reconstitution of the Internal Committee (IC) as per the requirements of the PoSH Act 2013 (as amended in 2016). • Access to communication collaterals; like posters, handbook and IC Compliance manual for the factories to print and display at the conspicuous locations of their premises. • Access to Prevention of Sexual Harassment Policy, gender equality policy and No-Retaliation policy templates for immediate implementation of the requirements of the Act. n
Launch of the program brochure
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AppArel / Global affairs
GSP withdrawal by US to have minimal impact on Indian exports • US plans to scrap GSP benefits on apparels exported by India within the next two months • India is likely to impose higher duties on 29 goods imported from the US from April 1 • Last year, India exported goods worth $5.6 billion under GSP, but its total GSP benefits were to the tune of only $190 million
T
he US decision to scrap the generalised system of preferences (GSP) benefits for India within the next two months will not have any significant impacts on India’s apparel shipment to the US as the 15 products to which India gets a duty free access with 100 per cent margin of preference contribute to only 0.46 per cent of India’s apparel exports. Most of this impact would be on women’s or girls’
dresses, not knitted or crocheted, containing 70 per cent or more by weight of silk or silk waste. Moderate impact will be seen on shawls, scarves, mufflers, maintillas, veils etc.
India to impose retaliatory tariffs
The US decision to withdraw GSP preferences to India is a result of the change in the FDI rules in India. The new norms place several restrictions on
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AppArel / Global affairs e-commerce companies, including Walmart and Amazon. The increased levies, proposed in June 2018 have been already deferred six times in view of the bilateral trade dialogue. These tariffs are likely to derail the substantive package that India and the US were working on to resolve trade issues. With the US terminating preferential treatment to Indian exports under GSP, India is likely to impose retaliatory tariffs on 29 goods imported from the US from April 1.
India to seek deadline extension for GSP withdrawal
GSP benefits are non-reciprocal and non-discriminatory which are extended by developed countries to developing economies. Last year, India exported goods worth $5.6 billion under GSP, but its total GSP benefits were to the tune of only $190 million. US President Donald Trump intends to end the preferential trade status granted to India and Turkey, asserting that New Delhi has failed to assure America of “equitable and reasonable” access to its markets. To mitigate the effects of this withdrawal, India plans to seek an extension to its deadline. The withdrawal of GSP benefits is also likely to increase the import duty on Indian products. As these products would be levied the Most Favored Nation (MFN) or effective applied tariff rates, it will slightly affect their price competitiveness in the US markets. India’s competitors in the US markets, Bangladesh, Indonesia, Brazil, Egypt, Cambodia and South Africa will continue to get duty free market access, while India will be subject to standard tar-
iff rates. Unless Indian commodities have a genuine comparative advantage, they will lose their competitiveness.
Resolving issue through a dialogue
India might appeal to the WTO to resolve this issue. However, it needs to take a realistic stance and initiate a dialogue with the US. It can also initiate talks with EU and UAE and set up special cells with additional emphasis on the intermediate goods sector. The Indian government can also provide incentives to exporters such as GST relief or exemption for small and medium enterprises in order to retain their competitiveness in the global market. Only a strong domestic economy with world-class infrastructure will help India tide over turbulences like these. n
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AppArel / Markets
Global luxe industry gets a boost from rising disposable income
A
recent report by Transparency Market Research (TMR) predicts vendors of global luxury apparels market may witness remarkable growth due to the presence of a number of companies in the market. The competitive market landscape is fragmented, as various companies are offering numerous growth opportunities either in product or R&D strategies. The report estimates the global luxury apparel market will touch $60.7 billion by the end of 2024. It is expected to grow at a CAGR of 13.2 per cent between 2016 to 2024. The market is dominated by cotton, which accounts for 35.87 per cent of the
total share. In terms of geographical segmentation, Asia Pacific will contribute the most with a CAGR of 14.75 per cent by the end of forecast period.
Rising incomes increases purchasing power
The global market for luxury apparels is growing due to an increase in disposable income leading to a rise in purchasing capacity of consumers. Moreover, the trend of luxury apparels amongst the younger generation is propelling the market. Online shopping is also boosting growth as it is easier to shop from home instead of going to a store and trying out outfits. The facility of easy returns has attracted many consumers.
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AppArel / Markets
Asia Pacific to see rapid growth
The report estimates the global luxury apparel market will touch $60.7 billion by the end of 2024. It is expected to grow at a CAGR of 13.2 per cent between 2016 to 2024. The market is dominated by cotton, which accounts for 35.87 per cent of the total share
The Asia Pacific market is expected to see rapid growth due to a rise in disposable incomes, along with changing lifestyles especially in China and India. Europe, on the other hand, has already attained maturity because of the presence of many luxury brands doing business for decades. However, establishing and running a luxury apparels business requires huge investments. This hinders overall market growth. Moreover, major vendors are investing in innovation and research to outstand other players. Thus, new entrants are finding it tough to enter the market and compete with the high levels set by successful players. This is also projected to hamper the growth of luxury apparels market in the years to come. n
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APPAREL / MARKETS
Fuelled by latest innovations Digital Bureau generates huge potential
F
uelled by three enablers; digital textile printing, web to print software and vibrant ecommerce platforms, the Digital Bureau has generated huge potential from start-ups all the way through to mass manufacture. The bureau creates unique fabrics on the roll that can then be
used in a myriad of applications from fashion to homewares, craft to interior design. It employs only two or three people and yet is capable of beating larger enterprises in terms of service, delivery and price. In this entry-level Bureau, all the skills are present through multi-task training from design to pre-press and on to printing, inspection and dispatch. Typically they cater for a broad base of demand. Many of these Bureau’s offer over 50 standard fabrics and a full range of printing ink-set options from latex to dyesub and from reactive to pigment. In many cases Bureau’s work with simple workflow software based around Adobe Photoshop for design, and RIPs (Raster Image Processing Software) supplied by the manufacturer. Yet, the system gives the entry level printer the ability to manoeuvre images and print quickly and accurately to satisfy the requirements of their clients who need customisation and personalisation in a hurry. n
Chinese sewing machines capture the Indian market
C
hinese sewing machine brands have captured the Indian market. Providing low cost, high quality and strong technical support, Chinese sewing machine brands have been able to shift the Indian market’s focus from Japanese or European brands towards them. Jack has opened service centers in all major garment manufacturing hubs of India. More than a 100 Indian technicians have been trained by the sewing juggernaut. Not just garment units and main dealers, the brand provides training to sub dealers and small level distributors too. Jack has divided its business strategy into three segments: basic business with mid-low level customers; developing business with mid-high level customers; and future business with mid-high level customers. In the first category, it aims to sell basic lockstitch, overlock and interlock machines while in the second category Jack is currently focusing on mid-high level customers and wants to provide them intelligent and automatic
solutions according to their needs. Lincoln Sewing Machine has a range of technologies like the LK-1790A machine which is part of an intelligent computer direct drive, flat head buttonhole machine series. This machine performs buttonhole operation using a basting stitch mechanism and is effective on elastic materials such as knits, saving the cost of five laborers. n
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AppArel / emerging india
Year 2019 will be India’s ascent in global fashion industry: McKinsey study
T
hough economic expansion is happening across Asia, 2019 will be the year when India will take center stage. As highlighted in McKinsey’s latest ‘State of Fashion report written in partnership with the Business of Fashion, India’s ascent is one of 10 trends the fashion industry needs to watch out for in 2019.
Retailers leverage technology
As per data from McKinsey’s FashionScope, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth largest in the world, comparable to the United Kingdom’s ($65 billion) and Germany’s ($63.1 billion). The aggregate income of the addressable population is expected to triple between now and 2025. According to Sanjay Kapoor, Founder of Genesis Luxury, a luxury retail conglomerate, higher incomes are likely to create a whole new class of consumer: Retailers are moving on toward the ‘gold collar’ worker, term that defines the highly paid professionals. Over 300 international fashion brands are expected to open stores in India in the next two years. To build momentum around conventional stores, Indian players are innovating: retailers are leveraging technology to enhance the in-store experience with digital marketing displays and improved checkout. For instance, Madura Fashion & APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRiL 2019
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AppArel / emerging india
figures have since increased to 355 million and 460 million, respectively, in 2018, and they are expected to double by 2021, when more than 900 million Indian consumers will be online. E-commerce leaders are moving to solutions based on artificial intelligence.
Consumption patterns, preferences in focus
Lifestyle launched the Van Heusen Style Studio, which uses augmented reality to display outfits on customers. Malls have also increased their share of space devoted to food service and entertainment. Growth in the apparel sector is also being driven by increasing tech savviness among consumers. Ten years ago, technology was for the few, with just five million smartphones in a country of 1.2 billion people and only 45 million Internet users. These
Successful brands have studied the consumption patterns of their consumers, their preferred colors, designs and touchpoints. Indian women have beautifully amalagated the Indian and Western sensibilities across the spectrum. Traditional clothing made up almost 70 per cent of women’s apparel sales in 2017. It is expected to account for a 65 per cent market share by 2023. With nearly 40 per cent of the Indian network unpaved till 2016, India’s infrastructure too continues to lag behind that of many other Asian countries. In addition, retail stock is often below expectations. However, there are signs of improvement. Reliance Brands, which operates over 500 stores for International brands is developing two fantastic luxury malls in Mumbai along with the convention center.
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AppArel / emerging india
Offering a great promise
Many brands are determined to take advantage of India’s blossoming growth. The majority are likely to choose one of the three routes. First, players can partner with existing e-commerce platforms. This is most suitable for players with low brand awareness and relatively little capital to invest; it also offers a good way to test demand and customer preferences. Second, brands that have little local knowledge and are looking to enter the market quickly can do so with a franchise model, developing brick-and-mortar retail spaces. Finally, players that have significant local knowledge and capital resources can create fully owned and operated stores. In short, the Indian market offers great promise. Despite structural challenges that include inequality, infrastructure, and market fragmentation, strong economic growth, scale and rising tech savviness will combine to make India the next destination for global fashion and apparel business.n
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AppArel / Fast Fashion
Fast fashion feels the heat from online brands globally
T
he rise of fast fashion brands like H&M and Zara, whose ability to significantly reduce time to market and undercut pricing of many iconic brands, have added to the woes of specialty retailers. Now, unexpectedly, H&M the world’s second largest clothing manufacturer, decided to close down 160 stores. The fashion giant, in mid-2018, accumulated over $4 billion in unsold inventory, forcing significant discounting to clear out goods. This resulted in reductions in profits for 6th straight quarter. Martino Pessina, President of H&M’s of North American operations, revealed the brand has already begun scaling back heavy discounting in its North American locations. It’s unclear how a company that has hooked customers on fast and cheap can simply flip the switch, without repercussions. H&M isn’t the only fast fashion player that is
feeling the pain. More recently, fast-fashion retailer Charlotte Russe filed for chapter 11 bankruptcy. It initially planning on only closing about 20 per cent stores but could end up liquidating if it is not able to find an investor to keep the business going.
Strong online players push up competition
Another cause of concern for the two fast giants is the emergence of a whole new breed of onlinecentric players. These upstarts include brands like ASOS, Boohoo and Misguided in the UK, who are building followings by cutting down supply chains to bring out offerings in as little as a week. Another major disruptor, Fashion Nova is supercharging its digital-first brand utilising a social strategy, powered by Instagram. They have managed to build more than 14 million social media followers; and in 2017 Fashion Nova became one of the most
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AppArel / Fast Fashion Googled brands in the world. The company has been able to introduce anywhere between 600 and 900 new pieces per week.
Growing carbon footprint, forced labour issues a bug bear
Indeed fast fashion has been responsible for a catastrophic environmental pollution. The trifecta of overt use of raw materials, water pollution and greenhouse gas emotions are only a part of the story. Not only is this circular buy, wear and toss behavior impacting landfills, and becoming a major
H&M the world’s second largest clothing manufacturer, decided to close down 160 stores. The fashion giant, in mid-2018, accumulated over $4 billion in unsold inventory, forcing significant discounting to clear out goods
carbon contributor, that may not be the worst of it. Fast fashion has played a dark role in contributing to black-market trafficking of forced labor, as evidenced in the New York Times documentary, Invisible Hands, by journalist Shraysi Tandon. Additionally, hundreds of lobbying groups are raising awareness and influencing demand for drastic industry change. This has led to growing evidence that both millennial and gen Z’s are pushing for a new level of transparency around the ecological footprint and entire life cycle all products. And according to a recent Nielsen survey, 73 per cent millennials have demonstrated a willingness to pay more for products that are sustainable.
Trending appears to be evolving from a top-down fashion evolution, to a bottom-up percolation, driven by social media and personal fashion expression. The effect has given permission and encouragement to throngs of consumers to cultivate their own, unique personal styles. Contrary to the forces behind fast fashion, consumers of all ages and demographics are investing in fewer, but higher quality basics that can be mixed, matched and re-worn; even with the addition of some great vintage accessories. n APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / Retail
Fashion’s two biggest companies, Amazon, Zara compete for market share
Z
ara, which became the biggest clothing retailer in the world by perfecting, cheap ’n’ chic fast fashion, is being challenged by Amazon which plans to offer aspirational clothes, shoe brands, watches and jewelry at the lowest rates on his newly redesigned Amazon Fashion site. And it’s going to be quite a fight between two of the biggest fashion companies of the world.
Amazon ready to take on competition
Amazon began these hostilities in an unconventional way, by building bricks-and-mortar stores. A pop-up on London’s Baker Street last year sold a mixture of traditional high street brands including Calvin Klein, Tommy Hilfiger, Puma and Levi’s, as well as Amazon’s recently created own-label collections: Truth & Fable (occasion wear), Find (street style fast fashion), Iris & Lilly
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AppArel / Retail (lingerie and swimwear), Meraki (high-end basics) and Aurique (athleisure). Shoppers could buy goods in the store and take them away or scan the codes on product tags for home delivery. The e-com also plans to set up more shops, pop-up and permanent stores. It has also opened its own studio in Hoxton where it shoots 500,000 images a year to display on its Fashion websites here and in France, Italy, Germany and Spain. Online, the e-tailer has signed deals with brands such as Calvin Klein, Hugo Boss, Theory, Kate Spade, French Connection, 7 For All Mankind, Diane von Furstenberg, Levi’s, Ted Baker, LK Bennett and Nike. Many of these labels had previously avoided Amazon, fearing that its platform was not premium enough. They have signed up now as many third party retailers were already selling their clothes on Amazon.
Attractive offers lure buyers
Amazon also spends more on research and development than any other e-tailer in the world. Last year it spend $23bn, more than four times the entire BBC budget — which enables it to pioneer new services, both digital and analogue.
The company is developing an apps that will enable Amazon Fashion to scour ‘selfies’ and online calendars and predict the clothes for a particular event such as a business meeting or wedding. This app will use selfies to create augmented reality images of what the consumers would look like in the clothes. The company’s Prime Wardrobe allows consumers to order a box of clothes, shoes and accessories, try them on at home, send back what they don’t like within seven days. Only then they are billed. Way to go! n
Zara, which became the biggest clothing retailer in the world by perfecting, cheap ’n’ chic fast fashion, is being challenged by Amazon which plans to offer aspirational clothes, shoe brands, watches and jewelry at the lowest rates on his newly redesigned Amazon Fashion site. And it’s going to be quite a fight between two of the biggest fashion companies of the world
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APPAREL / RETAIL
H&M launches new print collection for kids
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&M recently launched a new print collection in the kidswear segment in collaboration with a French artist Nathalie Lété. The collection comprises an assortment of colorful and poetic prints by Lété, over children’s clothing and accessories. The pieces in the recent collection include vibrant T-shirts, jackets, jeans, dresses, jumpsuits, shorts and swimsuits for toddlers and children. The motifs comprise animals and floral patterns starting from Lété’s acrylic paintings, where the designs are artfully arranged together to create an imaginative and fun story. This enfolds to a tropical jungle with chameleons and tigers, along with the artist’s signature depiction of flowers with cats, birds and rabbits. Known for her illustrations, textiles, ceramics and paintings, Lété creates a fantasy land through flowers, animals, birds, naivety and colors. The relationships between these elements
Gap demerges into two companies
of her collection tell stories that create a nice atmosphere. The Swedish multinational fast fashion brand collaborated with British heritage interiors brand GP&J Baker for a women’s line last summer, endorsing archive prints.n
Retail sales in UK decline by 0.1%
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ap is splitting into two companies; Old Navy and another unnamed company comprising Gap, Banana Republic and the company’s other brands. Post this demerger, Old Navy will become a standalone company as its business model and customers have increasingly diverged from Gap’s other brands over time. Originally launched by Gap in 1994, Old Navy offers apparel that generally comes in at a lower price point than at Gap or Banana Republic. Gap reported fullyear comparable sales of positive 3 per cent at Old Navy versus a decline of 5 per cent at Gap and a gain of 1 per cent at Banana Republic. The company plans to close over 230 Gap stores globally over the next two years as it plans to revitalise the Gap brand by re-engaging with customers and expanding its loyal customer base, leveraging the multigenerational, democratic appeal of the brand. n
U
K retail sales in February 2019 declined by around 0.1 per cent on a ike-for-like basis from February 2018, when it had increased 0.6 per cent from the preceding year. On a total basis, sales increased by 0.5 per cent in February 2019 compared to 1.6 per cent in February 2018. This is below both the three-month and 12-month averages of 0.9 per cent and 1.2 per cent respectively. Over the three months to February, in-store sales of nonfood items declined 2.8 per cent on a total basis and 3.1 per cent on a like-for-like basis. This is below the 12-month total average decline of 2.4 per cent. Over the three months to February, non-food retail sales in the UK decreased 0.6 per cent on a like-for-like basis and 0.4 per cent on a total basis. This is below the 12-month total average decrease of 0.2 per cent. Online sales of non-food products grew 5.4 per cent in February, against a growth of 6.4 per cent in February 2018. This is below the three-month average of 5.6 per cent and pulls down the 12-month average to 6.9 per cent. n
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APPAREL / RETAIL
Net sales of Urban Outfitters increases by 3 per cent
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he net sales of Urban Outfitters for the fourth quarter Urban Outfitters’ increased by 3.7 per cent. Its sales in the comparable retail segment increased by 3 per cent, reflecting double-digit growth in the retailer’s digital channel, partially offset by negative store sales. The wholesale revenues rose by 3 per cent. Both the company’s Urban Outfitters and Free People brands posted an increase of 4 per cent in comparable retail segment sales while sales for the Anthropologie brand increased by 2 per cent. The company’s sales, for the full fiscal year 2019, increased by 9.3 per cent. Its sales in the comparable retail segment increased by 8 per cent, reflecting a double-digit growth in the digital channel and positive retail store sales. Net sales in the wholesale segment rose by 10 per cent. Over the course of the fiscal year, the group opened 18 company-operated stores and
Retailers in the US downsize, some by big brands
added the company’s first five franchiseeowned locations to its retail network. Anthropologie plans to accelerate its European expansion in the coming year, with store openings planned in Germany, France, Holland and Spain. n
Sports retailers differentiate with different looks
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etailers in USA plan to close around 4,810 stores in 2019. Gap plans to shut 230 of its namesake brand stores over the next two years. The brand, this fiscal year, expects to close about 50 company-owned stores. Victoria’s Secret plans to shut 53 stores this year, as the lingerie retailer struggles to appeal to women with its outdated bra and underwear merchandise. On an average, the company closes roughly 15 stores every year. Teen apparel retailer Abercrombie plans to close up to 40 stores during fiscal 2019, after closing 29 locations last year. The company has, meanwhile, been reducing the size of its stores and remodeling existing locations. Abercrombie also plans to open additional stores this year, to make up for the closures, after opening 22 stores in 2018. Tesla will shift its sales online and close most of its stores as a result. A small number of Tesla stores will remain open as galleries, showcases and Tesla information centers, where customers can learn about the company’s products and buy Tesla merchandise. Tesla had been opening up shop in malls across the US to operate more than 100 stores and showrooms. n
ports retailers are differentiating themselves in order to offer their customers a unique shopping experience. Tentree is planning to plant one billion trees by 2030. The company plants ten trees for each of its product sold. What started with one T-shirt has become an impressive collection and 58,230 trees have been planted in the European business alone and 25 million worldwide. Templa, based in Australia, offers a young, very contemporary ski collection in the luxury segment. The collection comprising calf-length down coats, sack-like parkas, wide cargo pants, is made from highly functional materials. Serving around 350 fashion locations in Germany, Blutsgeschwister is known for parkas, hoodies and hooded jackets. Jackets and parkas are equipped with a water column and are therefore ideal for urban environments. In addition, the brand attaches great importance to sustainable production. n
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AppArel / Insights
Demand for men’s dress shirt remains constant as customisation gains ground
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ven though ‘casual Fridays’ have loosened up men’s formal dressing styles, the classic shirt, paired with a suit, remains a staple for corporate men. The trend is being customised across many
apparel categories ranging from jeans and T-shirts to shoes and suits. Suits are becoming more casual with unstructured tailoring, oversized fits and unconventional designs. However, the classic dress shirt still remains a staple pairing. As per
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AppArel / Insights Drury, mass marketers in the US are following suit, recording a 5 per cent increase in dress shirt arrivals in 2018 compared to 2017. In 2018, there was a 12 per cent sellout of styles, more than double the year before. Of those that sold out, majority was split between two brackets: the $40 to $60 range and the $60 to $80 range. J.C. Penney, Express and Kohl’s have had the most sellouts in the last three months.
Customisation the new trend
The trend of customisation is boosting the sector as consumers are increasingly seeking a more personalised look. Tailored Brands aims to custom suit accessible for anyone who plans to buy a suit. The company has a sustainable competitive advantage in meeting its customers’ needs with custom, given its expansive store footprint, highly trained wardrobe consultants and our at scale supply chain. For the third quarter of 2018, its custom sales averaged over $5 million per week, an increase of a 150 percent compared to $2 million per week for the same period a year ago. In September, Tailored Brands reduced the delivery of Joe and 1905 custom suits to three to four weeks from the earlier four to six weeks. It also accelerated the rollout of Custom Express to just
seven days to all Jos. A. Bank, Men’s Wearhouse and Moores stores. Each of these three brands offers more than 250 custom suit fabrics, over 100 linings and roughly 200 shirt fabrics from which to choose in making a custom garment.
New Age fabrics in demand
In the third quarter, customised shirts in performance fabrics were introduced in Kenneth Cole at Men’s Wearhouse. Moores also introduced stretch fabrics and construction that allow for greater range of motion and comfort. At Jos. A. Bank, traveler custom in both suiting and shirts was launched, as was travel tech custom, featuring moisture-wicking technology. Although athleisure is booming and casual clothing dominates, a formal suit still remains the uniform for a high proportion of men in the US. But now, there is an opportunity for brands to focus on the fit and variety of these shirts. They should be made more high-tech just as the sportswear. In fact, brands like Brooks Brother’s, J.Crew, Banana Republic and Express are incorporating new features like moisture wicking technology, water repellent properties and, most importantly, stretch fabrics in these shirts. Way to go! n
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AppArel / denim
Denim jeans continue to dominate from Mexico to the US
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he classic appeal of jeans continues to attract consumers despite joggers and leggings coming up as top fashion trend. One major reason for this is the addition of stretch to both men’s and women’s jeans. In fact, Marshal Cohen, Chief Industry Advisor, NPD Group credits stretch with boosting sales of women’s denim by 5 per cent to $16.4 billion in year ending July 2018. Between 2011 and 2017, the percentage of denim jeans that contained stretch in the US increased from 44 to 75 per cent, revealed Cotton Incorporated’s retail and Lifestyle Monitor™ surveys. In China, the percentage increased from 26 to 56 per cent.
Denim market to clock in robust growth
A global market review published by Just-Style indicates, world market for denim jeans grew at 8.9 per cent between 2013 and 2018. It is expected to reach nearly $60 billion by 2023. United States ($20.1 billion) and Europe ($19.75 billion) account for 69 per cent of the world’s total value share in jeanswear, even though the population of these two continents represents less than 15 per cent of the world’s total. While North America and Europe dominate global denim market, fastest growth is expected to come from Asia, South
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AppArel / Denim America, and Africa. As per Monitor™ research, and CCI and Cotton Incorporated’s Global Lifestyle Monitor™ Survey, almost 77 per cent of Latin Americans prefer wearing jeans. The figure decreases slightly to 65 per cent in China and further to 55 per cent in the US.
Mexican, US consumers wear denim at all times
Monitor™ research indicates the US citizens prefer wearing jeans for running errands, at school, while going out to dinner, doing yard work, hanging out at home, on a date and also to work. While Chinese consumers prefer them when going to dinner and running errands followed by work. In Mexico, denim is the preferred bottomwear for work, running errands, going out to dine, looking stylish or fashionable and hanging out at home (22 per cent). The Mexican consumer owns more pairs of jeans than US and Chinese. Mexican consumers also wear their denim more often than those in the US and China.
Performance features a new attraction
CCI and Cotton Incorporated’s Chinese Consumer Survey indicates the Chinese prefer jeans that are made from 100 per cent cotton, having performance features , are moisture wicking, have extra stretch, are able to be wash less, and are created more sustainably. On the other hand, US consumers would be willing to pay more for jeans that fit them perfectly, are higher quality/last longer (79 per cent), are custom made to their fit and style (70 per cent) and kept their shape all day long (69 per cent), according to Monitor™ research. As denim makers have started adding stretch, there are other athleisure-inspired features that can give denim even more appeal. For instance, 64 per cent consumers are interested in moisture management in their clothing. Yet, moisture management is only available in 9 per cent clothing, according to Cotton Incorporated’s Retail and Lifestyle Monitor™ studies. Additionally, 61 per cent are interested in thermal regulation, yet it has just 2 per cent retail availability. Indeed denim can evolve to meet desires and expectations, now it’s time for brands to rise to the challenge. n APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / BUSINESS
Slow recovery for Indian apparel exports amidst challenging environment • India’s apparel exports in Q3 FY2019 remained lower than the average quarterly exports during the past five years. • Incremental developments on CTPPP could considerably strengthen Vietnam’s competitiveness. • EU-Vietnam FTA could weaken India’s positioning in the Vietnam market
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ollowing a decline of 4 per cent in FY 2018, India’s apparel exports are further estimated to decline by 4-5 per cent in FY2019. India’s apparel exports in Q3 FY2019 remained lower than the average quarterly exports during the past five years. ICRA expects this trend to bottom out and recovery to set in with internal challenges and abrupt pressures subsiding, though the pace of recovery is
likely to remain muted considering the challenging environment. India continues to experience intense competitive pressures from nations that offer a cost advantage over India as this constrains the overall momentum of the apparel export sector of India.
FTAs to alter global trade dynamics
India continues to experience intense competitive pressures from nations that offer a cost advantage over India as this constrains the overall momentum of the apparel export sector of India. The concerns are heightened by the progress on certain large free trade agreements (FTA) which can materially alter the global trade dynamics. The most prominent amongst these is the Comprehensive and Progressive Trans Pacific Partnership (CP TPP), which is the third largest free trade area in the world by GDP. By mid-January 2019, the agreement had entered into force between seven of
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AppArel / BUSINESS the eleven nations. Even though there is some respite for India considering that the leading apparel importing regions are not yet a part of the CP TPP, any incremental developments on this front could prove to be a potential threat as it could considerably strengthen Vietnam’s competitiveness. Another FTA being closely watched is the EU-Vietnam FTA. Conclusion of the FTA can weaken India’s competitive positioning in one of the key apparel markets, accounting for ~37 per cent of India’s apparel exports in CY2018. This can be corroborated from the fact that Bangladesh, which enjoys a duty-free access to the EU market since 2001 under the Generalised Scheme of Preferences, has been able to expand its market share in EU from less than 7 per cent in 2001 to ~20 per cent at present, while India has been able to barely maintain its share at ~6-7 per cent.
Presence in the niche and valueadded product segments alongwith with access to an established client base has helped export-based companies to maintain revenue growth, in contrast to the broad industry trend
Value added markets and established client base help growth
ICRA research also notes that a sample of large, listed, domestic as well as export-focused garment-manufacturing companies has continued to perform well, reporting a 13per cent (YoY) growth in Q3 FY2019, following the similar average growth rate during the previous four quarters. ICRA believes that presence in the niche and value-added product segments, together with access to an established client base has helped export-based companies to maintain revenue growth, in contrast to the broad industry trend. This, together with a revival in domestic demand, particularly in metros and tier-I markets where the larger listed players are predominantly present, translated into a healthy growth for ICRA’s sample during the current financial year. Besides, favourable currency movement and healthy growth in revenues facilitated. Going forward, steps taken by the Government of India to address the challenges, will remain crucial for a broad-based recovery across the sector. This also remains critical for the domestic apparel exporters to capitalise on the revived global apparel trade as well as the continuing loss of market share by China, which opens up a lucrative opportunity for key players such as India, Vietnam and Bangladesh. n
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APPAREL / BUSINESS
Indian economy to grow at 7.3 % in 2019-2020
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ccording to Moody’s Investor Service, India’s economy is likely to grow at 7.3 per cent in 2019 and 2020. The announcement in the interim budget 2019-20 on direct cash transfers for farmers and the middleclass tax relief measures are expected to contribute a financial year stimulus of about 0.45 per cent of the gross domestic product. The Reserve Bank of India is likely to be able to maintain its current monetary policy stance after some tightening last year. Though the overall strength of the banking system is improving, it remains a constraint on the economy. However, a complete turnaround of the banking system requires more time amid slower-than-expected resolution of legacy problem loans. With range-bound oil prices, export growth has outpaced import
growth for the last two years. Fiscal spending on infrastructure and the rural economy should continue to support domestic activity, recommends Moody’s. Government spending announced this year is expected to support near-term growth. n
UK requests Tirupur exporters to ship orders before Brexit
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K-based buyers have requested garment exporters based in Tirupur to ship orders before Britain leaves the EU as they want to avoid losses in the face of possible changes in tariffs. The Brexit deal is likely to be sealed on March 29. However, it is not certain how exporters can respond to the request since garments cannot be manufactured overnight. Britain is one of the major importers of apparel goods from India. For the Tirupur knitwear industry, such exports account for about 12 per cent of their business. Goods worth Rs 3,000 crore are exported from the cluster every year. Trade bodies like the Apparel Export Promotion Council have urged the government to enter a free trade agreement with the UK once the Brexit deal is completed. Brexit is only impacting a limited number of Indian
businesses operating and investing in the UK. These include manufacturing companies that rely on just-in-time supply chains and who trade between the UK and the EU. n
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APPAREL / BUSINESS
Indian kidswear exports to the US increase
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ndia’s kidswear exports to the US increased by 6.52 per cent from January to October ’18. India is the only country which increased its valuewise share, while all other countries declined their share on a year on year basis. All the top Asian exporting nations saw a fall in their respective value-wise exports in the children’s wear segment to the US. The share of China, Bangladesh and Vietnam dwindled by 3.23 per cent, 2.50 per cent and 2.52 per cent respectively and the declining trend of these countries helped India capture the shift especially from China which caters to 47 per cent of the children’s wear demand in the US. Some Indian manufacturers who had previously been focusing solely on the export market have started reorienting themselves to meet the growing demand within the country. By 2023, the Indian kidswear retail is projected to constitute almost 22 per cent of the total apparel business in India. The 0 to 14 years group amounts to around 29 per cent
of the total population. This market in India is mostly dominated by private labels -- big retailers, international brands and just a handful of home-grown mono brands. Organised brands comprise only a miniscule of the overall children’s wear market. n
Indian apparel exports fall below average
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ndia’s apparel exports in the third quarter of fiscal 2019 remained lower than the average quarterly exports during the past five years. India continues to experience headwinds in the form of intense competitive pressures from nations having a cost advantage. While China, the world’s largest apparel manufacturer and exporter, continues to shed market share in global trade, India has not been able to capitalise on the opportunity. Instead, a large chunk has been garnered by Bangladesh and Vietnam, the second and the third largest apparel exporting nations globally. The EU-Vietnam FTA can weaken India’s competitive positioning in one of the key apparel markets, accounting for 37 per cent of India’s apparel exports in 2018. Bangladesh, which enjoys a duty-free access to the EU market since 2001 under the Generalised Scheme of Preferences, has been able to expand its market share in EU from less than seven per cent in 2001 to 20 per cent at present. But India
has been barely able to maintain its share at six per cent or seven per cent. Indian exports are set to recover with internal challenges and abrupt pressures subsiding, though the pace of recovery is likely to remain muted considering the challenging environment. n
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AppArel / GUEST COLUMN
Indian Apparel Exports: The Way Forward Pushkar Mukewar, Co-Founder and Co-CEO, Drip Capital, highlights strategies to revive the declining apparel exports in India.
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ccording to the data released by the Ministry of Commerce, India exported over $15 billion worth of apparel goods in FY 2018-19, with the highest value of goods shipped in May 2019. However, post this period, apparel exports declined for the rest of the year, before recovering slightly in December 2018 (more on seasonality later). To dwell into the state of these exports, Drip Capital, as part of a series on reports on Commodity Insightst, recently released a ‘Commodity Insights -- Apparel’ report. The report analyses proprietary as well as publicly available export data besides gathering on-theground information by talking to apparel exporters across India.
The key insights of the report include: Top exporting & importing markets
While the five Indian states of Tamil Nadu, Maharashtra, Delhi, Karnataka, Punjab account for over 92 per cent of India’s apparel exports; US, the EU (mostly Germany, France, Belgium, Spain, and the Netherlands), the UK, and the UAE are leading importers of Indian apparels. These markets import roughly 75 per cent of the apparels
Effect of Indian seasons on exports
India’s apparel exports report highest volumes at the begining of a given calendar year after which these exports trend downwards for most of the remaining calendar year, with demand picking up again in late October and early November in time for a fresh cycle.
Decline in demand from key markets
According to the data gathered by Drip Capital alongwith that available in the public domain from the Ministry of Commerce, apparel exports in 2018 registered a y-o-y decline from 2017. The demand from key import markets, particularly Middle East, declined significantly in the last few months. Many local manufacturing units have sprung up in the Middle East, especially the UAE who prefer to source raw material from India and elsewhere, then process it into readymade garments for resale in consumer markets.
Rising competition from neighboring countries
Neighboring nations like Cambodia and Bangladesh are increasingly becoming large competitive threats to Indian apparel exports. Drip’s analysis reveals that lower labor costs in these markets enable them to price their exports more competitively. Exporters recommend a focus on technology upgrade as a means of countering this fresh competition.
The report makes several recommendations to deal with the declining exports including: Incentivise exporters to focus on technology: India should focus on introducing policies that incentivise apparel exporters to upgrade their technology, including procuring better machinery, improving assembly-line efficiency, etc. Expansion into new markets: Drip Capital’s research reveals four new markets that have seen an extraordinary y-o-y increase in demand for Indian apparel exports in the last two years -- the United Kingdom (a resurgent traditional importer), Chile, Israel, and Japan. Exporters tap into these new markets to fuel their growth and boost sales. Identifying products with high growth potential: According to reports released by the AEPC, by identifying products with high growth potential, and leveraging individual strengths like tech innovation, exporters can start to push their profits and efficiency margins. n
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AppArel / Economy
Strategies to combat another recession
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onsumers and retailers are still reeling from the side effects of 2008 recession which continues to reverberate throughout the consumer economy. To ensure that companies aren’t caught unwares the next time recession hits the world, Deloitte, which provides audit, tax, consulting, enterprise risk and financial advisory services, surveyed
the trends defining winners and losers in past recessions for future-proofing strategies that retailers can leverage.
Dominance of ecommerce
As per the survey, most businesses impacted by the Great Recession underestimated the “degree to which the structural change of the industry
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AppArel / Economy
Consumers and retailers are still reeling from the side effects of 2008 recession which continues to reverberate throughout the consumer economy. To ensure that companies aren’t caught unwares the next time recession hits the world, Deloitte, which provides audit, tax, consulting, enterprise risk and financial advisory services, surveyed the trends defining winners and losers in past recessions for future-proofing strategies that retailers can leverage accelerated during this period.” Structural change include digital and e-commerce initiatives. Online sales drove most retail growth throughout the economic collapse. Also, the web outperformed expectations besides laying the foundation for new vertically integrated and digitally native brands to crop up, stealing market share from entrenched incumbents. Retailers, during the period, also had to contend with the emergence of discount and off-price
players newly resonating with value-conscious consumers. Retailers who reinvested at high rates during the Great Recession witnessed a four-year combined annual growth rate of 7.9 percent.
Create defence mechanisms
To ensure that the next recession doesn’t sink them altogether, Deloitte recommends retail companies to double down on a value proposition that serves either the high or low segments of the consumer market. They should also stockpile a “war chest” for recession-time investing. Getting rid of underperforming assets, reviewing existing debt levels and focusing on only the most strategic capex projects can free up funds for reinvestments. This can be achieved through tweaking fulfillment operations and store formats to implementing innovative digital technologies, diversifying capabilities and acquiring a new customer base. Deloitte highlights, retail companies cannot defer investing in robotic process automation much longer, especially as labor costs continue to climb and technology is getting comparably cheaper. They should instead align human capital with advancing digital capabilities as co-investing in talent and technology can be a powerful partnership. Retailers should also consider brandbuilding partnerships and planning jointly with suppliers and other stakeholders. n
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AppArel / Futurescope
ILRF’s roadmap for transforming global apparel industry
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he International Labor Rights Forum’s paper: ‘Future of Fashion: Worker-Led Strategies for Corporate Accountability in the Global Apparel Industry,’ reveals corporate social responsibility (CSR) and multistakeholder initiatives have failed to address persistent exploitation of millions of apparel industry workers. The eight-storey Bangladeshi Rana Plaza collapsed on the April 24, 2013, killing at least 1,134 apparel workers and leaving 2,500 others injured. Unfortunately, this is not an anomaly in the global apparel industry. In previous year also, two factory fires – one in Pakistan’s Ali Enterprises factory and another in Bangladesh’s Tazreen Fashions factory, had killed more than 350 workers and left many others permanently disabled. Surprisingly, all
three buildings had passed safety inspections by corporate-funded auditors.
Complex supply chains queer the pitch
The global apparel industry is characterised by complex global supply chains operated by large multinational brands/retailers, like Gap and Walmart. These brands/retailers outsource production to factories in developing nations. This model of outsourced, globalised production enables MNC brands and retailers to increase profits besides insulating themselves from legal liability for working conditions in the factories making their products. Responding to NGO campaigns, trade union pressure, and media exposés of sweatshop abuses
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AppArel / Futurescope
in the 1990s, MNCs adopted private, voluntary codes of conduct those require their suppliers to comply with minimum labor standards. Monitoring of compliance with these codes is largely left to third-party social auditing firms that conduct short, annual visits to the factories to assess working conditions. Critics have pointed out the shortcomings of this model, including extreme time pressures on auditors leading to superficial “check-thebox” assessments, the absence of meaningful consultations with workers or trade unions during the audit process, a lack of transparency with regard to the audit results, and a failure to correct violations, even when serious problems are detected. Notably, most CSR models fail to address a fundamental root cause of labor violations and poor working conditions: the sourcing and purchasing practices of brands’ and retailers’ own business model, and in particular the price squeeze that they impose on their suppliers.
CSR initiatives don’t meet expectations
Most CSR initiatives have been ineffective in improving the condition of workers and have particularly failed to address most pervasive problems in the industry viz: low wages and the violation of freedom of association and collective bargaining rights. Indeed, corporate-led models based on social auditing have primarily protected corporate interests and image, rather than providing a counterbalance to the unequal power
Six companies have grouped together under the ‘World of Digital Fashion’ umbrella. Together, these companies will showcase ways of integrating and combining their products in a variety of workflows within the value creation chain. Their focus will be on the customisation of apparel and fashion items relations that are at the root of poor working conditions and labor violations in garment factories across the world. he International Labor Rights Forum’s study explores the successes and challenges of three examples, one each in Indonesia, Honduras, and Bangladesh – of enforceable brand agreements in the global apparel industry, examining the context in which each was developed and how they address the deficiencies in traditional CSR approaches. It then outlines a four-part analytic framework, or essential elements, for identifying what a workercentered, worker-driven model for advancing workers’ rights in the apparel supply chain should include. Finally, it lays out a road map for transforming the global apparel industry through greater uptake of worker-led initiatives and other actions necessary to strengthen worker rights in the global apparel industry. n APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / Tech Trends
Fusion clothing, custom fit, online retail driving Indian fashion industry
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ndian fashion industry is shifting from western brands to indigenous brands. This transformation is happening largely due to the income shift and penetration of big brands. Gen Y or millennials are purchasing new, trendy, and fusion clothing rather than normal mundane clothes that look more like a uniform and are found in almost everybody’s wardrobes.
Online fashion retail boosts industry
Online fashion retail accounts for 18 per cent of the entire fashion sales in India. Flipkart alone crossed $1 billion sales in 2018, and its fashiondedicated groups, Jabong and Myntra together clocked in $1.2 billion in sales last year. As per
CNBC, Amazon will soon become a leading apparel retailer leaving behind competitors like Walmart. The e-tailer is expected to sell fashion products worth $52 billion till the year 2020. With the emergence of new fashion brands, the popularity of content-based marketing is growing. Online marketing and delivering fashion industry related news is attracting more customers. Designers are using influencers to reach out to prospective consumers and build a reliable relationship with them. Moreover, many fashion business brands are starting their own blogs to deliver fashion advice, tips, and tricks to users. This is gaining immense popularity among people as everyone reads updates on industry behavior and fashion trends and tips.
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Comfort over style the mantra
The Indian fashion industry is accepting not only the changing demands and global styles but also differently designed clothes. Today, people prefer comfortable rather than stylish but awkward clothes. This shift is changing conventional
stitched through e-commerce websites in a few days. This trend is more dominant in customised gift products such as T-shirts, wherein users can get funky designs printed on the fabric to give it a personalised and unique look. Retail giants are offering clothing advice through their e-commerce apps. Once the user purchases a product or adds it to the bag, the app suggests possible options to pair it. Therefore, if a customer wants to purchase denim, the app will suggest options in T-shirts, shirts, bag, shoes, and accessories to team the denim with to get a complete curated look.
Brick and mortar stores continue to draw shoppers
designing patterns with brands using comfortable fabrics, giving it a fashionable, trendy look. E-commerce fashion giants such as Myntra are offering try and buy solutions to users. Using these solutions, customers can try clothes at home and return immediately if they don’t like the fit. Online stores are opting for custom-fit clothing. Customers can give measurements and get clothes
Many online fashion brands are setting up physical stores where their users can select the product on the store or buy it online. If the product bought online doesn’t fit, it can be easily exchanged in a day at the store. This adds to the convenience of online shopping. Collaborating with physical stores gives retailers the feasibility of delivering the product as early as possible. The fashion industry has great potential with its emerging demands and technology-driven solutions. All that a brand requires is the right knowledge and guidance to help set up its business in the industry. n
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AppArel / sUstainability
Growing synergies between sustainability and development agenda
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inding synergies between the fashion industry and international development arena has been toughs so far. While one is focused on trendsetting and design the other emphasises on poverty alleviation, peace and security. However, things seem to be changing as there is visible collaboration on the sustainability agenda. Textile dyeing is the second-largest polluter of clean water globally. Polyester microfibres add to the ever-growing volumes of plastic in the environment. As most garments are nonbiodegradable, they present serious threats to our oceans and wastelands. Growing cotton increases the impact of toxic chemicals in agriculture. In the past 20 years, consumer purchases have increased by 60 per cent. And almost 80 per cent of these discarded textiles end up at landfills. Only 20 per cent of clothing globally is reused or recycled, and less than 1 per cent collected clothing is recycled. The fashion industry needs to be more mindful of diminishing natural resources, environmental pollution and the exploitation of nature, people and animals. It needs to tackle unequal distribution of commodities.
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Brands take to ethical fashion
Ethical fashion encompasses a broader and more rigorous set of criteria for meeting sustainable standards. Ethical fashion brands adhere to human rights and embrace International Labour Organization (ILO) standards, fair compensation to workers, and healthy, safe working environments, and reject sweatshops, child labour and slavery. In addition, ethical fashion takes fair treatment of animals into consideration. After much criticism from environmental groups, big fashion houses like LVMH, Furla and Michael Kors have substituted fur and leather with alternative animal-friendly materials. Stella McCartney, an industry leader, has shown commitment to disruptive fashion innovation. Her brand has shifted to ‘vegan fashion’, using fungi instead of leather, and replacing silk with yeast proteins. Consumers are demanding transparency in policies, supply chains, business models, and labor and environmental practices from brands. This will not only lead to more accountability but ultimately
change the way the fashion business is conducted.
C2C initiatives gaining ground
To make fashion sustainable, brands should move away from the linear system of production, to a circular approach focused on restorative, reformative and transformative design. Fashion houses have been opting for cradle-to-cradle (C2C) initiatives to close the product lifecycle loop for sustainability. Recently, Adidas partnered with Parley to create shoes using ocean waste from beaches. Due to the products’ overwhelming success, companies have decided to ramp up their eco-friendly collaboration with a long-term sustainability framework. While the fashion industry has been talking about transparency, ethical standards and reducing environmental degradation, it is yet to take concrete action on it. To remain avant-garde, fashion houses need to think beyond the next season and participate in the sustainable fashion revolution. n
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APPAREL / SUSTAINABILITY
Primark launches sustainable women’s denim
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igh street fashion retailer Primark has launched a range of women’s skinny jeans made using cotton sourced from the company’s Sustainable Cotton Program. The new collection is made of three denim washes and from cotton produced using natural farming methods, which have minimised the use of chemical pesticides and fertilisers, reduced water consumption, alongside delivering increased incomes to cotton farmers. Primark plans to use only sustainably sourced cotton in its products, to help reduce the impact of cotton production on the environment, to equip farmers with the skills they need to improve their livelihoods and to offer customers sustainable products
Bestseller launches new strategy
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at a great price. n
Levi Strauss launches new denim collection made with hemp
estseller has launched a new strategy called Fashion FWD that emphasises on the immediate need for inclusive and holistic action on sustainability across the value chain. This strategy is based on sustainability across four focus areas covering Bestseller’s value chain. These areas include using sustainable materials and working with innovative new fibers, improving its environmental footprint to have a positive impact on the environment, embedding
human rights in the industry and focusing on a circular business model. Bestseller has also committed to a new investment platform as a part of Fashion FWD. Dubbed Invest FWD, this new initiative will see Bestseller strategically invest in sustainable innovation and solutions throughout the whole life cycle of fashion. Each of these focus areas includes specific, measurable goals for the period 2019 to 2025. Bestseller commits to being fashion forward until the company is climate positive, fair for all and circular by design. n
L
evis Strauss recently launched its spring/summer collection that includes a new denim blend which is made with hemp that has been altered to feel just like cotton. Hemp requires far less water and land in the growing phase and has roughly half the carbon footprint of conventionally grown cotton. The garments in the collection comprise jeans and a trucker jacket made with a 70/30 cotton to cottonise the hemp blend. The hemp was sourced from a rain-fed hemp crop thus reducing the water used in fiber cultivation by roughly 30 per cent. In addition to this, the collection features single-fiber board shorts that are made with fully recyclable nylon with materials such as fabric, eyelets, core and stitching also made from nylon which can be further recycled and re-made into other nylon garments. n
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AppArel / Business trends
Indian consumers opening up to eco-friendly, durable fashion products
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study conducted by Nielsen almost eight years ago had revealed that Indian consumers are increasingly becoming conscious about eco-friendly fashion practices. Groups like the Worker Diaries, that advocates welfare of workers in and Fashion Revolution India, which promotes sustainable and ethical practices in fashion, are highlighting issues, making them more visible. Meanwhile India doubled its commitment to reduce carbon emissions. The country is committed to absorb 2.5 to 3 billion tons of CO2 by planting trees, achieving 40 per cent renewable energy by 2030, besides reducing the intensity of greenhouse gas emissions based on its GDP by a third below its 2005 levels. A recent United Nations report shows, India is on track to meet the first two of these goals ahead of this deadline, reflecting the government’s dedication to averting a climate disaster. On per capita basis, India is still 128th in terms
of emissions. As its economy grows, more people will have access to goods that contribute to the world’s pollution, including fashion. As the number of consumers grows, it’s arguably a critical time to introduce eco-friendly products. As top European and American brands enter India, sustainable selling makes good business sense. This is one reason why global giants are pitching themselves to Indians as eco-friendly brands. It’s become clear that to truly tackle the looming threat of climate change brands need to rethink not only what they are selling but also how much they are selling.
New ways of limiting environmental impact
Levi’s has been trying to lower its environmental footprint by reducing carbon emissions and using lasers to finish jeans instead of chemicals. Levi’s broadcasts messages about its sustainability goals, its plans to reduce carbon emissions across
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AppArel / Business trends
its offices, retail stores, and distribution network by using 100 per cent renewable sources in its own facilities by 2025, or its new technique for finishing jeans that aims to save 50 billion liters of water by 2020. H&M, plans to use recycled or sustainably sourced materials by 2030, and totally offset its carbon footprint by 2040. A part of this approach is to respond to customer demand and sell more products to eco-conscious Indians. The brand aims to source all its cotton sustainably which will help farmers reduce environmental stress by 2020. The science of fabric recycling is still in its infancy. Organisations including the H&M Foundation are developing technologies that separate fibers used in fabric blends. But H&M is already collecting
clothes from customers to be recycled. In 2017, the company collected 17,771 tons of textiles. It has recycling bins set up at all 40 Indian stores.
Growing importance of durability
As per Ellen MacArthur Foundation, the number of times a clothing is worn before it gets chucked has dropped 36 per cent since 2000, with many consumers discarding garments after just seven to ten wears. And in that same period, the number of units of clothes sold annually has doubled from 50 billion units to 100 billion units. Rather than selling more sustainable clothes, a truly earth-changing solution would be to encourage consumers to buy fewer, more durable products. Brands like Patagonia mend customer’s wellworn garments to extend their life. Eileen Fisher eschews fashion trends to encourage customers to wear the same outfits season after season. While these brands haven’t grown as fast as their more popular fast fashion counterparts, they are both successful, profitable businesses. Global giants thus have a chance to rewrite the book on fast fashion. Instead of idealising newness they could adopt a more effective approach by focusing on quality, durability, and classic looks. n
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APPAREL / TRENDS
ATSM to forecast fashion color trends for Autumn/Winter 2020-21
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pparel Textile Sourcing Miami (ATSM) will unveil the fashion color trend forecast for Autumn/ Winter 2020-21 by Pantone Color Institute, the global authority on the movement of color across current and future seasons that enables color-critical decisions through every stage of workflow for brands and manufacturers. The show will be held from May 28-30 at the Mana Wynwood Conference Center, coinciding with Miami Fashion Week to present a jam-packed event that features the latest developments shaping the booming apparel and textile market. More than 10 million designers and producers around the world rely on Pantone products and services to help define, communicate and control color. ATSM will provide an unprecedented opportunity for networking and education as more than 300 exhibitors from over 15 countries converge at the show — including fabric mills, ready-made garment
factories, service providers, wholesalers, trade offices and home textile suppliers. Visitors to the show will also get an the opportunity to see the upcoming trends first hand and talk with color specialists at the Pantone booth. n
Levi’s allows US consumers to design their jeans
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enim brand LevI’s allows its US consumers to design their own pair of jeans through the brand’s FLX technology. Consumers can start with seven of Levi’s most popular fits, including the 501. From those seven fits, using a variety of design combinations, they’ll be able to design over a thousand combinations of their own personalized jeans.
Consumers can handpick their desired wash, the type of wear pattern, whether or not they want deconstruction and if so, where and what size. They can opt to over-dye their jeans in a myriad of colors like pink, black and green, and can choose from a select set of images and words to have etched on their jeans for further personalization. The jeans will be produced and shipped and delivered to consumers’ homes in a matter of days. FLX technology is the company’s digitized finishing solution to streamline the process through eco-friendly lasers. With this, the company shifts its focus of providing a finished good to the consumer to providing a blank canvas. This eliminates the risk that comes with designing for long lead times and consumers’ ever-changing tastes and needs. This phase of customization is aimed at deepening consumers’ connection with the brand. n
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AppArel / Trends
Seminar Speaker Ms. Kim Mannino; Ms. Sneh Lata Sharma, Additional Director AEPC; Ms. Priya Sachdeva & Ms. Urvashi Gupta from WGSN India Team
AEPC organises Fashion Forecasting Seminar
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Mr. Sanjiv Malhotra, ASG (O) AEPC, greeting Ms. Kim Mannino, Head of WGSN LIVE from WGSN
pparel Export Promotion Council (AEPC), under the awareness initiatives program organised the first Fashion Forecasting Seminar on March 25, 2019 at the Apparel House in Gurgaon. The seminar focused on the Spring & Summer 2020 & Autumn-Winter 2020-21 collections. The seminars were organised in association with WGSN, the leading trend forecasting agency of the world. The speaker at the event was Mannino Head of WGSN LIVE from WGSN London office. She provided insights on key commercial items, colors and trends for spring – summer 2020 and Textile Trends for AW 20/21.
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AppArel / Trends
Participants at Gurgaon Seminar
Mood Boards for Spring Summer 2020
She also covered the methods on which these trends are forecasted at WGSN along with how they are dissected into macro trends. The Spring/ summer 2020 season was divided into three broad themes namely Code Create, Empower Up, and Designing Emotion.
The Code Create theme fused science, nature and technology to showcase a womenswear range that embraces futuristic aesthetics grounded by a sense of practicality and reality. The collection featured colors rooted in nature such as clear waters, mint foam and rosewater alongwith rich, earthy reds that highlighted the continuing importance of transseasonal tones. The Empower Up! theme featured a palette of upbeat mid-tones. Having a nostalgic and sun-faded quality, these tones recalled the 1980s surf culture and cities by the sea, such as Miami, Sydney, Los Angeles and Cape Town. The Designing Emotion theme explored the interplay between people and technology. This trend combined the industrial with the artisanal with its designs offering a sense of emotional and human connection. The color palette included lean and comforting mid-tones like Yellow and orange that work easily with each other. These themes were presented on 3D mood boards developed by WGSN. n APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / AEPC Activities
PBIP highlights agenda for the Punjab apparel sector
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he Punjab Bureau of Investment Promotion (PBIP) recently held a meeting to discuss the agenda of the apparel sector in Punjab, quality of textile products and overview of Japanese market, testing through Nissenken, and the joint quality seminar to be held by AEPC, JIIPA and Nissenken in Ludhiana in April. The meeting was chaired by CA Rajat Agarwal, IAS, CEO, PBIP, in presence of HKL Magu, Chairman, AEPC, Chandrima Chatterjee, Advisor, AEPC, Amit Maheshwary, Managing Director, Nissenken Quality Evaluation India., Gaurav Khanna, DGM (Investment Facilitation), Punjab Bureau of Investment Promotion, Prashant, JIIPA, along with KPMG officials Punjab Bureau of Investment Promotion also shared the Industrial & Business Development Policy 2017.
The highlights of incentives are given below:
For anchor units (units having minimum turnover of Rs. 50 cr.)
• 100 per cent reimbursement of Net GST* Incentive for 15 years up to 200% of FCI • 100 per cent exemption from CLU /EDC charges • Employment generation subsidy @ Rs 36,000 /employee/ year and Rs. 48,000/employee/year for women and SC/ BC/OBC upto 5 years. • 100 per cent exemption from Electricity Duty for 15 Years • Exemption from payment of extra 2 per cent over MSP to food processing units for setting up private marketing yards
For apparel MSME units • 5 per cent pa Interest subsidy in border districts and Kandi area and SC/ women entrepreneurs upto 10 lakh/ year for 3 years • 100 per cent exemption from electricity duty for 10 years • 100 per cent of Net GST* Incentive for 10 years upto 125 per cent of FCI • 100 per cent exemption/ reimbursement from Stamp Duty • 100 per cent exemption from CLU/EDC and Property Tax for 10 years. n
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AppArel / Movement
AEPC welcomes Shri Balram Kumar as new Secretary General Balram Kumar, IDAS has taken over additional charge as the Secretary General of AEPC from March 12, 2019. He currently serves as the Director of the Ministry of Textiles.
Mr HKL Magu, Chairman, AEPC, welcomes Shri Balram Kumar, IDAS with a bouquet of flowers.
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AppArel / Events
Texprocess to focus on micro-factories for quicker, flexible and sustainable processing
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AppArel / Events
M
icro-factories, based on networked and integrated procedures, represent the progressive way of making textile processing quicker, more flexible and more sustainable; whilst, at the same time, producing personalised products. These micro-factories will be the main theme of Texprocess to be held in Frankfurt am Main from May 14 to 17, 2019.
Combining 3D simulations with direct data transfer
All four micro-factories at the upcoming Texprocess will demonstrate how integrated textile processing works and where micro-factories are already being used. The event, in collaboration with the German Institutes of Textile and Fibre Research in Denkendorf and partners from the industry will display a ‘Digital Textile MicroFactory. This ‘Digital Textile Micro-Factory’ will showcase three production lines for apparel manufacture, 3D-knitted shoes and processing technical textiles, largely for the motor-vehicle and furniture industries. These production lines will demonstrate various stages involved, including CAD/Design, printing, cutting out, assembly, finishing and labelling. They will also combine 3D simulations of clothing with direct data transfer in virtual reality (VR) and
Six companies have grouped together under the ‘World of Digital Fashion’ umbrella. Together, these companies will showcase ways of integrating and combining their products in a variety of workflows within the value creation chain. Their focus will be on the customisation of apparel and fashion items augmented reality (AR). The ‘3D-knitting Line’ demonstrates the entire process from the 3D model to the creation of a geometrically accurate knitting pattern by the software, based on the 3D data set, and the development of a specification of the final knitting data, through to the manufacture of a 3D-knitted prototype. Knitting is the additive manufacturing process for textiles. This line’ is partnered by Stoll. The focus of the third production line of the ‘Digital Textile Micro-Factory’ 2019 is on the automated processing of technical textiles, personalised for the individual customer, taking us right through to the finished product. Trade visitors will see an on-demand inkjet printing APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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and networked machines with integrated sensors, which are linked through a bus system – a futureoriented topic for integrated manufacturing. In addition, the display will also show how creative ideas from the Cloud can be incorporated in the manufacture of technical products.
Smart Textiles Micro-Factory to provide new interaction techniques
In the ‘Smart Textiles Micro-Factory’, the Institute for Textile Technology (ITA) at the RWTH Aachen University, together with partners from industry and research, will produce a ‘smart’ pillow which, with the help of integrated LEDs, provides new ways of interaction. The partners in the project will present an exemplary, industrial-style manufacturing process for a smart textile from design to finished product. The following companies are involved in the ‘Smart Textiles Micro-Factory’: the Institute for Textile Technology (ITA) of the RWTH Aachen University (project coordination), Gerber Technology GmbH, the Korea Institute for Industrial Technology, VETRON TYPICAL Europe
GmbH, Wear it GmbH and ZSK Stickmaschinen GmbH .
World of Digital Fashion to focus on customisation of apparel
Six companies have grouped together under the ‘World of Digital Fashion’ umbrella. Together, these companies will showcase ways of integrating and combining their products in a variety of workflows within the value creation chain. Their focus will be on the customisation of apparel and fashion items.
Efka and Gemini to showcase individually designed knitted garments
Manufacturers of drive mechanisms for industrial sewing machines Efka will, in collaboration with CAD suppliers Gemini, showcase the production of a knitted garment that can be individually designed. The core element of this micro-factory, which closely reflects industrial practice, is the link to the sewing stage of production, something which is already available today as an economic, partially automated solution. n
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AppArel / GST Update
Applicability of GST on gifts and free sample products
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he Section 7 of GST act states that all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business is taxable under GST. Although the act does not take into account free or sample products, there are limitations to it.
Input Tax Credit for gifts and free sample products
The provision related to availability of ITC on gifts has been dealt with at two specific places under the GST Law. Under Section 17 (5) (h) of CGST Act, 2017 the relevant provision of the said provision specifies that notwithstanding anything contained in sub-section (1) of Section 16 and subsection (1) of Section 18, input credit shall not be available to ‘goods lost, stolen, destroyed, written off or disposed off by way of gift or free samples.�
As per sub-section (1) of section 16
Every registered person shall, subject to such conditions and restrictions, as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.
Prohibition on certain supplies
According to the section 17(5) of the CGST Act, there are certain supplies on which input tax credit under GST is not available. These supplies can also be called as blocked credit. Section 17 (5) specifically states in point (h) that goods lost, stolen, destroyed, written off or disposed of by way of gift or free sample are not eligible for input tax credit.Due to Section 17(5), it is so stipulated that no ITC on any goods can be availed, if they are given as gifts, whether or not in course of furtherance of business. We can put it like this also:-
Diwali gifts to business clients
Gift provided on an occasion to the client does not lead to business promotion. Due to no involvement of consideration & contractual obligation, it may fall under the definition of gift and ITC on the same needs to be reversed as per Section 17(5) of CGST Act. APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / gst UPdate
Diwali Gift to employees
Diwali gifts to employees exceeding rs. 50,000 are specifically covered under Schedule I CGST Act, 2017. Hence, they will be considered as gifts and the ITC on the same needs to be reversed as per Section 17(5).
Gift vouchers
Under this scheme, the vendor provides the vouchers as an instrument to be used for making payment of the consideration on the next purchase. For example, if free voucher of rs.500 is provided on purchase of rs.2,000; GST will be liable to be paid on full value of supply.
Free samples and gifts as per Circular No. 92/11/2019-GST
It is a common practice among certain sections of trade and industry, such as, pharmaceutical companies to provide drug samples to their stockiest, dealers, medical practitioners, etc. without charging any consideration. As per sub-clause (a) of sub-section (1) of section 7 of the Act, the expression “supply” includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. Therefore, the goods or services or both which are supplied free of cost shall not be treated as “supply” under GST (except in case of activities mentioned in Schedule I of the Act). Accordingly, it is clarified that samples which are supplied free of cost, without any consideration, do not qualify as “supply” under GST, except where the activity falls within the ambit of Schedule I of the Act. Further, clause (h) of sub-section (5) of section 17 of the Act provides that ITC shall not be available in respect of goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples. Thus, it is clarified that input tax credit shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to the gifts or free samples distributed without any consideration. However, where the activity of distribution of gifts or free samples falls within the scope of “supply” on account of the provisions contained in Schedule I of the said Act, the supplier would be eligible to avail of the ITC. n
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AppArel /notifiCations
Ministry Notification Sub.: Scheme & Rate for Rebate State and Central Embedded Taxes to Support the Textile Sector
The new scheme shall be called Scheme for rebate of State and Central Taxes and Levies (http://egazette.nic.in/WritereadData/2019/199440.pdf) on Export of Garments and Madeups (hereinafter referred to as RoSCTL) will be implemented The New Scheme will come into effect from the date of this Notification i.e. 7th March, 2019 and shall remain in force up to 31.03.2020. rate – The rates of roSCTL Scheme are hereby notified as Schedules 1, 2, 3 and 4 of enclosed notification (http://egazette.nic.in/WritereadData/2019/199526.pdf). The rates under this scheme will come into effect from 07.03.2019 i.e. the date of the Notification of scheme guidelines published vide notification No.14/26/2016- IT (Vol.II) dated 07.03.2019 and shall remain in force up to 31.03.2020.
Sub: 24 x 7 custom clearance facility at IGI Airport
Customs has started Full Fledged 24 X 7 Import operations at Delhi International Airport limited with immediate effect. Customs department will work 24 hours a day in 3 Shifts as per the attached public notice (PN-05/2019) to facilitate the trade. This facility at IGI airport is expected to give significant boost to the business, as the shipments can be cleared at all times. All members are requested to avail of this facility and give us their feedback on the same.
Sub.: AEO Facilitation Portal
In this context, strengthening the commitment to trade facilitation and ease of doing business Delhi Customs Zone has launched an AEO facilitation portalhttps://www.aeodelhicustoms.in/#/home. The AEO entities using the ports of Delhi Air Cargo, Patparganj, Tughlakabad, Ludhiana and Jaipur can use the portal for lodging requests for priority in assessment/examination. The portal will seamlessly connect all the AEO clients with the Customs Officers posted in Delhi Customs as well as ports of Ludhiana and Jaipur under Delhi Customs (Preventive) Zone who are handling the work of assessment, amendment in Bill of Entry or Shipping Bill, Examination, Drawback, IGST refund( error rectification) The AEO clients will have to register on the portal by clicking on the link “AEO registration Form” and fill the details mentioned herein. They will get a verificationmail on their e-mail and the registration process will be completed after the verification of the email. Post registration AEO clients will get a user id and password which they can utilize for logging on to the portal. The registration process is user friendly and self-explanatory, completely online process. For Further information, read the full notification - http://delhicustoms.gov.in/files/ air-cargo-export/public-notices/pn-2019-01-17.pdf
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Sub: Extension of Integrated Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation, EPCG and EOU scheme upto 31.03.2020.
DGFT in its vide notification no. 57/2015-20 dated 20.03.2019 has extended the Exemption from Integrated and Compensation Taxes under Advance Authorisation, EPCG scheme and EOU scheme that were applicable upto 31.03.2018 has been now been extended upto 31.03.2020. For Full Notification - https://dgft.gov.in/sites/default/files/Notification%20No%20 57%20English.pdf
Sub: Clarification Regarding Issue of Scrips under ROSCTL Scheme
As per the letter from Ministry of Textiles dated 22nd March 2019, in order to overcome the transitional difficulties faced by the exporters in rOSCTL, the following is clarified:i) For the exports made from 2019-20 onwards under the new rOSCTL scheme (i.e. 1.4.2019 onwards), DGFT will issue the scrips. ii) For the exports made during 2018-19 under the new rOSCTL scheme (i.e. 7.3.2019 to 31.3.2019), D/o revenue will approve and disburse the rebate at new rates as per the existing mechanism of old rOSL scheme from the funds available for the old rOSL scheme. If due to shortage of funds, D/o Revenue is unable to disburse, D/o Revenue will inform DGFT after 31.3.2019 and DGFT will issue the scrips for such exports. iii) For the exports made under the old rOSL scheme (prior to 7.3.2019), D/o revenue will continue to disburse as per the existing mechanism of old rOSL scheme. In case of shortage of funds, D/o revenue will inform DGFT after 31.3.2019 and DGFT will issue the scrips for such exports made under the old rOSL scheme. iv) D/o Revenue will provide suitable allocation for issue of all such scrips from 2019-20 onwards in respect of (i), (ii) and (iii) above.
Subject: Onetime condonation under the EPCG Scheme –Extension till 30.09.2019
DGFT in it Public Notice No. 30/2015-20 dated 14.02.2018 http://dgft.gov.in/sites/default/ files/PUBLIC%20NOTICE%2030%20english.pdf has stated that in exercise of powers conferred under Paragraph 2.04 of FTP (2015-20) read with Paragraph 2.58 of FTP (201520), the Director General of Foreign Trade in public interest hereby makes the one time relaxation in procedure in respect of acceptance of installation certificate under the EPCG Scheme. To facilitate the ease of doing business for the purpose, it has been decided to permit the rAs to accept the installation certificate without insisting for penalty in respect of authorization issued upto 31.03.2015 as long as the installation has happened within 18 months from the date of import, provided the EPCG authorization is not under any investigation / adjudicated by rA/ customs authority/ any other investigative agency. This relaxation was available upto 31.03.2019. Now, the DGFT in its Public Notice No. 78/2015-20 dated 11 March, 2019 hereby further extends the time of receipt of requests till 30.09.2019 in respect of above mentioned public notices. For Full Notification - http://dgft.gov.in/sites/default/files/Public%20Notice%20%28English%29.pdf
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AppArel /Notifications AEPC/HO/S&M/AS-2019-20 March 8, 2019 All Members and Registered Exporters
Subject: Payment of Annual Subscription for the Financial year 2019-20 Dear Sir/Madam, At the outset on behalf of the Council we convey our Greetings to you. 1. We would like to take this opportunity to thank you for being member of the Apparel Export Promotion Council and allowing us to serve you. Further as per the communication received from DGFT for grant of benefits under Exim Policy Schemes, RCMC issued by the Council is one of the Mandatory Documents. All Councils would now issue RCMC online and RCMC issuance details would be incorporated to the DGFT server through the digitally signed message exchange. The Apparel Export Promotion Council provides various financial benefits and works closely with the Government of India on issues related to Policy Matters in Apparel Sector. The Members of the Council received various financial benefits including following during the Financial Year 2017 -18 and 2018-19
• Export Performance Certificate for duty free Import worth Rs. 1044.60 crores. • Market Access Initiative of Rs. 6.02 crores received from Government of India to subsidize the cost of industry participation in Foreign Fairs. The membership benefits also extend to the recognition by way of Export Awards. Secondly AEPC is providing e- magazine containing information on policies and initiatives by the Government of India with regard to the Apparel Industry. The magazine gives valuable information regarding the Fashion trend, Trade statistics, Specified market reports and other topical study reports for the benefit of the Apparel industry. The following are Annual Subscription charges w.e.f. financial year 2019-20.
Particular
Annual Subscription (w.e.f. financial year 2019-20)
Member Exporter having registration no 1 to 10000 and above 100000 and below 200000
8500+ GST 18%*
Registered Exporter registration no. Other then member exporter
8000+ GST 18%*
• Present applicable GST is 18% It may further be noted that Executive Committee in its meeting held on 16/03/2017 at Jaipur decided the following incentives for payment of Annual Subscription in advance for 3/5 years: I. Incentive of Rs. 500/- each year, in case annual subscription is paid in advance for 3 years, on or before 31st May. II. Incentive of Rs. 600/- each year, in case annual subscription is paid in advance for 5 years, on or before 31st May. III. There will be no incentive, in case the annual subscription is made after 31st May of financial year and/ or is made for less than 3/ 5 years.
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AppArel / Notifications IV. The above incentive (indicated at I & II above) would also be applicable for annual subscription deposited with AEPC office after 31st May (of current financial year), provided it pertains to the financial years (3 years/ 5 years respectively) succeeding to current financial year and current year subscription is paid. V. In case the above referred payment instrument(s) is dishonoured by the bank, on account of exporter, the above incentive will not be applicable. Further, it may be noted that last date for making payment for annual subscription for the year 201920 is 31st May, 2019. It may also be noted that Annual Subscription 2019-20 can be paid through online payment (link for online payment for renewal of membership is available on council’s website (www.aepcindia.com) or through NEFT/RTGS or DD/Cheque/Pay Order. The council’s bank detail for NEFT/RTGS transaction is given below: Name
:
Apparel Export Promotion Council
Saving Bank Account No.
:
180401000007203
Bank Name
:
Indian Overseas Bank
Branch :
Sector-44, Gurgaon Branch (1804) Institutional Area, Apparel House, Sector-44, Gurgaon, Haryana
IFC Code
IOBA0001804
:
In case payment of annual subscription is made through NEFT/RTGS, the following information must be sent through email to ibanerjee@aepcindia.com or sgulati@aepcindia.com. Name of the Exporter and RCMC No. : Date of payment at bank : Amount (Rupees) : UTR No. provide by the exporter bank : Please note that the credit may be provided on receipt of above referred information. In view of above, it is requested that payment towards annual subscription for the financial year 201920 may be made on or before 31st May, 2019 to avail the above incentive and to avoid extra financial burden. Therefore we are enclosing self addressed communication for sending your Annual Subscription for the Financial Year 2019-20. For any further information/assistance kindly feel free to contact us. We look forward for your continued support in our future endeavors. With warm regards and assurances of our best services. Yours sincerely
(Arun Kumar Sharma) Encl: As above.
Joint Director E-mail: aksharma@aepcindia.com
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AppArel /SUBSCRIPTION The Joint Director Apparel Export Promotion Council, ‘Apparel House’ Institutional Area, Sector-44, Gurgaon-122003 Haryana
Sub: Annual Subscription Dear Sir, Please find enclosed herewith Cheque/PO/DD No. drawn on
Dt.
of Rs.
as membership subscription as detailed below:-
Particular
Annual Subscription (Amount payable from 1st April 2019 to 31/05/2019)
Member Exporter having registration no 1 to 10000 and above 100000 and below 200000
8500+ GST 18% *
Registered Exporter registration no. Other then member exporter
8000+ GST 18% *
Signature : Name & address of Company :
AEPC Registration no.
:
GSTIN No.
:
Land Line No.
:
Date:
Mobile No.
:
Place:
Email ID
:
Encl: Cheque/PO/DD Note: 1. The amount may please be sent by A/c payee Cheque/PO/Demand Draft in favour of “Apparel Export Promotion Council” along with valid factory license/SSI certificate/MSME certificate in case of Manufacturer Exporter. 2. The Annual Subscription for 2019-20 as detailed above can be paid upto 31st May 2019. 3. Please quote your correct Registration Number, Mobile No. & email Id on your covering letter. 4. Please ignore this letter if payment has already been made, kindly provide the details. APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | April 2019
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AppArel / aepc event calendar
CALENDAR OF EVENTS -
1
8-11 July, 2019, HONG KONG
2
24-26 July, 2019, JAPAN
Hong Kong Fashion Week at Hong Kong
3
11-14 August, 2019, USA
India Trend Fair (ITF) at Tokyo, Japan
4
6-9 September, 2019, France
Sourcing at Magic, Las Vegas, USA
5
9-10 October, 2019, SPAIN
India Apparel & Accessories fair at Madrid, Spain
2019
WHO’s Next, Paris – France
6
12-14 November, 2019, AUSTRALIa
International Sourcing Expo Australia
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