Apparel India by InsideFashion

Chairman’s Message Though the government is raising the issue of India’s export subsidies at various relevant fora, AEPC is also on its task of meeting policy makers and apprising them about the drastic situation of the apparel industry. The 40th year of the council was celebrated with fanfare and we had the honor of having Mr. Amitabh Kant CEO, NITI Aayog as the Chief guest for the event. It is indeed a momentous journey for a body which was started with mandate of monitoring export quota. Today we are not only one of the largest Councils of the country but also have a strong membership base that exceeds 8600 members.During his address, Mr. Kant reminded us of the huge opportunities which lie ahead as China has started moving out of the apparel sector. At a time when the exports are on a declining curve it is important that Industry starts innovating in design, structuring, promotions and supply chain efficiencies. With this very aim, the second series of the Fashion Forecasting Seminars were conducted in Mumbai, Bangalore, Ludhiana and Noida respectively. In Bangalore Dr. Kavita Gupta, Textile Commissioner, Govt. Of India obliged us by becoming the Chief guest at the seminar. Ms. Kim Mannino - Head of WGSN LIVE from WGSN London office was present during all the four seminars. I am sure the seminars will help the industry in developing capabilities to offer better value propositions to our buyers in terms of designs and products that align with their market needs.

Dear Friends

The ATDC-KTM Center of Excellence for knitwear Industry has been re-launched in Tirupur. Knitwear Technology Mission (KTM) is a unique initiative by the AEPC which is now being transformed and re positioned as “ATDC – KTM Centre of Excellence” to serve the Knitwear Industry in Tirupur. I am hopeful that the center will promote value added knitwear innovations and development of human resources and up gradation of technical capabilities.

I am happy to share with you the first edition of our EMagazine - Apparel India. As part of our responsibility towards the environment, we decided to convert the Apparel India magazine into an E-Magazine, so that our voice and vision reaches far and wide, without adverse environmental footprints. I look forward to the support of everyone in widening the reach of E-version of Apparel India magazine.

The recently concluded ‘Sourcing at MAGIC’, Las Vegas was a huge success with Business worth USD 4.79 Million (approx.) generated during the fair and approximately 12000 visitors attending the event. The show not only attracted buyers from United States but also from various countries of Latin America, Europe, Asia and rest of the world and helped advancing another step forward for enhanced Indo-US Apparel trade.

As we get ready for the onset of summer season, there is not much for the Industry to cheer about.The latest figures of apparel exports has shown a decline of 10.25% which is quite drastic and the fact that US has filed a complaint at the WTO about India’s export subsidy programmes like Merchandise Exports from India Scheme, Export Oriented Units Scheme, Export Promotion Capital Goods Scheme etc., are not very encouraging signs for the Industry, either.

Before I sign off, just want to remind our esteemed members that April is the time for membership renewal. So please get your membership renewed.

HKL Magu, Chairman, AEPC

India’s Ready Made Garment (RMG) Export Update for FY (April-February) 2017-18

India’s RMG Exports

RMG exports were to the tune of USD 1440.82 million in February 2018 with the decline of 10.25% per cent against the corresponding month of February 2017, which was USD 1605.32 million. In rupee term export for the Month of February 2018 was Rs. 9275.08 Cr. as against Rs. 10767.74 Cr. in February 2017 with the decline of 13.86 per cent.

India’s RMG export to World in the April-February of 2017-18 was to the tune of USD 15224.2 mn. which has decreased by 2.19 per cent compared to the same period of previous financial year. During AprilFebruary 2016-17, India’s apparel exports were to the tune of USD 15565.5 mn.

India’s RMG Exports India’s RMG Exports India's RMG Export to World Month FY 2016-17 FY 2017-18

April May June July August September October November December January

February AprilFebruary

In INR Crore 8833.8 9960.2 10585.1 9788.9 8909.02 8570.76 9127.85 7782.82 9873.85 10372.82 10767.74 104572.9

In US$ Million 1329.0 1488.6 1572.9 1456.5 1330.89 1286.14 1367.50 1150.87 1454.17 1523.61 1605.32 15565.5

Source: DGCI&S, Kolkata, 2018

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In INR Crore 11287.7 10355.5 9988.5 8222.9 8563.21 10707.86 5400.35 6719.21 8586.85 8883.26 9275.08 97990.4

In US$ Million 1749.8 1607.4 1550.0 1275.7 1338.65 1663.63 829.77 1035.91 1336.63 1395.93 1440.82 15224.2

MoM Growth of 2017-18 over 2016-17 (%) INR 27.8 4.0 -5.6 -16.0 -3.88 24.93 -40.84 -13.67 -13.03 -14.36 -13.86 -6.29

US$ 31.7 8.0 -1.5 -12.4 0.58 29.35 -39.32 -9.99 -8.08 -8.38 -10.25 -2.19

India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-Jan) 2017-18 • While overall production increased by 7.5% in January 2018, production of apparel decreased by 10.7%. For the period Apr- Jan 2017-18, apparel production declined by 10.4%, due to the consistent decline since May 2017. • It may be noted that production of textiles have slowly picked up since Nov 2017. In January 2018, production of textiles grew by 2.7%.

INDEX OF INDUSTRIAL PRODUCTION Manufacture of textiles

MoM Growth Rate (In %)

Month

2016-17

2017-18

2017-18/ 2016-17

April May June July August September October November December January Total AprilJanuary

114.3 120.6 120 119.4 119.5 119.3 116.3 114 114 118.1 117.6

116.1 116.8 117 115.9 116 113.6 114 115.6 120.2 121.3 117.2

1.6 -3.2 -2.5 -2.9 -2.9 -4.8 -2.0 1.4 5.4 2.7 -0.3

Manufacture of wearing apparel

201617 150.7 166.8 153.3 144.5 147.5 142.3 140.4 127 159.6 161.8 149.4

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MoM Growth Rate (In %)

2017-18

201718/ 2016-17

152.7 158.5 148.4 137.1 138 132 125 110.4 138.1 144.5 133.8

1.3 -5.0 -3.2 -5.1 -6.4 -7.2 -11.0 -13.1 -13.5 -10.7 -10.4

AEPC EVENTS

AEPC celebrates 40 year milestone

It is recognized worldwide as a powerful body for the promotion and facilitation of garment manufacturing and export from India. Started as a sponsored body under the Ministry of Textiles, it boasts of a strong membership base that exceeds 8,600 members. have preferential access in European markets hence, it is extremely important that we get the FTA with Europe ratified at the earliest. As far as Indian apparel exports are concerned, India is heavily reliant on cotton and we need to see how we can move to man-made fibres which can help us garner more global share. There has been a reduction in the benefits of the industry post GST and we are looking at ways through which we could bring it at par with the rates prevalent in previous regime. For the benefit of the industry central and state levies should be refunded and the government will work with the industry to resolve this issue.” Speaking on the occasion Mr. HKL Magu, Chairman, AEPC said, “AEPC’s well-timed initiatives and confidence to take calculated risks, braving all odds, perceptible across all circumstances, is the key fuel for the India’s apparel export growth.

Mr. HKL Magu welcomes Mr. Amitabh Kant, CEO, NITI Aayog The Apparel Export Promotion Council (AEPC) has completed 40 years and to commemorate this, a celebration was held at APEC’s head ofﬁce in Gurgugram. Mr. Amitabh Kant, CEO, NITI Aayog was the chief guest at the event. Incepted in 1978 as a quota monitoring entity, AEPC today is one of the largest councils of the country. It is recognized worldwide as a powerful body for the promotion and facilitation of garment manufacturing and export from India. Started as a sponsored body under the Ministry of Textiles, it boasts of

a strong membership base that exceeds 8,600 members. In his address, Mr. Amitabh Kant, CEO, NITI Aayog said, “China has started moving out of the apparel sector and there is a huge opportunity for India. Today, the wages in China are 2-3 times that of India and given the aging population of China, the cost of apparel manufacturing will continue to rise there. In such a scenario, global suppliers will start looking at other avenues for sourcing. Countries like Bangladesh, Sri Lanka, Cambodia and Pakistan

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As India is gearing up to move towards WTO-compatible, production-based subsidies from export-based subsidies, it becomes extremely important that we position India strongly as a responsible sourcing destination. At the UP Investor’s summit, we signed a MoU with UP government to construct an apparel city in 200 acres on the Yamuna Expressway. With AEPC’s capability and initiatives, and continued understanding and support of the government, India’s apparel exports are sure to grow from strength to strength while providing international buyers with most superior solutions in fashion and apparel.” Closing remarks and vote of thanks was given by Mr. Sudhir Sekhri, Chairman, Export Promotion, AEPC

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AEPC EVENTS

Meeting of AEPC delegation with Shri Suresh Prabhu AEPC has informed the Ministry of Commerce that on account of new taxes there is a shortfall of around 5% under GST and therefore several blocked and embedded taxes may be refunded through higher drawback and RoSL rates, along with refund of GST input tax credit(ITC)

Meeting of AEPC delegation with Hon. Minister of Commerce and Industries, Shri Suresh Prabhu An AEPC delegation led by its Chairman, Mr. HKL Magu met Hon. Minister of Commerce and Industries, Mr. Suresh Prabhu apprised him of various GST and RoSL related issues. AEPC made a request to the Ministry of Commerce and Industry to urgently release the total ITC Credit and IGST of Rs. 4097 Crores which is blocked till date. AEPC has also informed the Ministry of Commerce that on account of new taxes there is a shortfall of around 5% under GST and therefore several blocked and embedded taxes may be refunded through higher drawback and RoSL rates, along with refund of GST input tax credit(ITC) AEPC informed Mr. Prabhu that Post-GST the tax incidence on inputs such as textile fabric, job work, services, inter-state transfers and blocked credits has increased significantly. The GST Rate on man-made fibers(MMF) and MMF yarn is 12% with denial of credit beyond 5% at teh fabric manufacturing stage. This goes against the principle of fibre neutrality in the textile and apparel sector, resulting in em,bedded GST taxes and adversely impacting competitiveness of apparel exports from India.AEPC has requested for a resolution of the issues of the Industry, so that it can regain the lost opportunities in becoming a world leader in apparel exports.

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AEPC EVENTS

AEPC participates in the UP Investor’s Summit During the summit, Mr. Magu highlighted that garment industry in India has not been able to compete with the rapid growth in Bangladesh, Cambodia and Vietnam, while China is experiencing a slow-down in the apparel manufacturing business, India has not been able to capitalize on the market.

Union Minister of Textiles addressing the summit

Smt.

Government of Uttar Pradesh organised UP Investor’s Summit in February, 2018 at Indira Gandhi Pratishthan, Lucknow. AEPC Chairman Mr. HKL Magu along with an AEPC delegation attended the summit. In his address Mr. Magu thanked the Government of Uttar Pradesh for the progressive and comprehensive UP Textile and Garment Policy. He said that the policy will foster investment and generation of

Smriti

Irani

Mr. HKL Magu, Chairman AEPC addressing the UP Investor’s Summit

employment in the textile industry, provide employment to as many people as possible in the textile sector, attract investment in the textile sector, develop the textile industry in backward areas, organize training and skill development programmes.

business, India has not been able to capitalize on the market.

During the summit, Mr. Magu highlighted that garment industry in India has not been able to compete with the rapid growth in Bangladesh, Cambodia and Vietnam, while China is experiencing a slow-down in the apparel manufacturing

Mr. Magu requested Ministry of Commerce to reassess the existing Free Trade Agreement (FTA) to boost the apparel export from our country.

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Mr. Magu also highlighted that Logistics related infrastructure needs to be developed at a rapid pace to boost the growth in the apparel sector in the state.

TECH TRENDS NEWS Smart Manufacturing

Automations

Artiﬁcial Intelligence

Digital

Operational Excellence

TECH TRENDS chain and either stop producing something unsuccessful or ramp up production if successful. Data and data analytics is not sufﬁcient, to succeed this also requires a high degree of trust and integration between retailers and suppliers.” Robert Diamond Founder and CEO, Fernbrook Partners said, “It’s about using technology to deliver continuous improvement in everyday business. People are not good at making a large volume of repeatable decisions with many different data inputs. If business decisions, or the outcome of the resolution tomorrow, is pretty much the same as what happened yesterday, then there is a chance for machine learning to help improve the situation.”

Gap urges suppliers to go digital Gap is encouraging its Tier I suppliers – approximately 800 factories in about 30 countries – to make the transition from a cash-based system to digital payments by 2020. More than 60 per cent of Gap’s supplier factories already provide digital payments methods, such as online transfers to bank accounts or mobile wallets. By having suppliers pay garment workers digitally, Gap aims to accelerate the transition toward a more transparent workplace for women and men. Gap’s approach includes developing and delivering training around topics like communication in the workplace, problem solving, grievance handling and effective negotiations for workers and managers; measuring and improving workers’ sense of value and sense of engagement at work by helping factories make well-being investments in their workforce; consolidating and publishing its Tier I supplier base to focus on partners that share the company’s values and sustainability goals. Women make up 80 per cent of the world’s garment industry workforce. Electronic wage payment methods have the benefit of drawing previously unbanked workers into the formal financial system, allowing women greater control over their finances and a safer way to save, send money, and invest. At the factory level, suppliers benefit from cost savings, due to increased efficiency and speed.

Lectra brings new opportunities for the fashion industry Lectra, the technological partner for companies using fabrics and leather, the French business school ESCP Europe and their joint ‘Fashion & Technology’ Chair explored the impact of Industry 4.0 on fashion’s value chain at a recent round table discussion at ESCP Europe’s London campus. From brands to manufacturers panelists from across the value chain stressed on the need for the industry to embrace alliance between man and machines to leverage enormous beneﬁts from quicker decision-making to cost-reduction. Exploring the advantages of Industry 4.0 technology, Evelthon Vassilou, CEO, Alison Hayes UK, disclosed, “Interpreting the data of what is and isn’t, selling should help to speed up decisions. You can react very quickly across the entire supply

Pierre Mercier, Senior Partner and MD, Boston Consulting Group noted that technology propelled by Industry 4.0 is disrupting former sources of competitive advantage, “forcing companies to rethink how they want to compete in their respective industries and how to use data to compete differently. The common denominator in the fashion ecosystem is that everyone is facing the opportunity for a step change and need to ﬁgure out where to double down and accelerate their transformation.” UK fashion brand’s AllSaints, Dan Hartley, Global Head of Digital Commerce, shared his trade secret, “We take customer feedback very seriously and use it as a framework for our internal road map - from a tech and development point of view, through to design and ﬁt, the customer is at the heart of everything we do.”

Gerber meets Industry 4.0 trends The need for speed continues to intensify with ever changing consumer trends that evolve as technology makes it possible for ideas to spread quickly – creating demand for the see now, buy now mindset. To succeed, fashion companies need to adopt technology and embrace digitalization to streamline workﬂows, which enable greater agility and speed without sacriﬁcing quality and design Guus Backelandt, CEO, Grosso Moda, Amsterdam says market evidence and conversations with the customers have helped the need for digitalization. Often in the fashion development cycle, processes are fragmented and complex. As a longtime user of Gerber’s industryleading AccuMark pattern design, grading, marker making and production planning software, Grosso Moda realized the strength of automating processes. Adding YuniquePLM Cloud to improve the collaboration and organization of overall design process will help their customer better leverage data so they can focus on the needs of their consumers, ensuring they get the right products to market, at the right time. YuniquePLM Cloud product lifecycle management software serves as a central repository of critical data and eliminates problems companies often face when using multiple Excel spreadsheets, email or tracking documents to communicate throughout the stages of product development and management. YuniquePLM Cloud creates a single version of the truth, connecting a company’s creative process with their supply chain and production processes.

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EXPORT IMPORT NEWS Economy

Trade

Business

Exports Import

Statistics

Currency

EX/IMPORT India faces risk of inflation Growth in India’s factory activity slowed to a four-month low in February as new orders eased and weighed on output after manufacturers raised prices at the fastest pace in a year. This suggests retail inflation could continue to pick up over coming months, pressuring the Reserve Bank of India to raise interest rates despite concerns that tighter policy could weigh on economic growth. Cost inflation accelerated the sharpest since February 2017, adding to expectations that inflationary risks will continue over the coming months. While retail inflation eased in January from a 17-month high in the prior month, price rise are still above the RBI’s medium-term target of four per cent on rising energy costs and expectations for an increase in rural spending by the government. The new orders sub-index, an indicator of domestic and export demand, fell to 52.3, lowest since October. That is well below the long-run mean average of 57.1 for orders and marked the

six to 20 per cent year-on-year growth in apparel exports to key nations such as the US, UK, Germany, France and Spain in November-December period of 2017. India’s competitiveness in apparel exports will also remain contingent on the movement in foreign exchange rates. This remained a key challenge last year, with the Indian rupee appreciating by three per cent vis-àvis the dollar in calendar year 2017 compared to a one to three per cent depreciation in the currencies of other key apparel exporting nations, that is, China, Bangladesh and Vietnam. Supported by duty-free access to the EU market, Bangladesh retains its status as the second-largest apparel exporter after China. Vietnam remains the fastest growing among large apparel exporting nations.

India’s apparel production falls

second consecutive month it has fallen. Export order growth, while pulling back slightly, was still solid. While ﬁrms remain optimistic about future output, the world’s seventh-largest economy has not completely overcome the disruptions to demand from demonetization in November 2016 and the implementation of GST.

Apparel exporters face challenges The pace of India’s apparel exports is likely to remain contingent upon the industry’s ability to overcome the internal as well as external headwinds that it is currently facing. While transition to the new taxation and export incentive regime has posed liquidity challenges for the industry, intense competitive pressures in the global market, particularly in the light of the impending trade agreements and foreign currency movements, pose additional challenges. Following an upward revision in export incentives, India saw a

There has been a drastic 10.4 per cent decline in apparel production in India from April 2017 to January 2018. However, a 1.3 per cent growth was reported in apparel production in April 2017 which again saw a ﬁve per cent decline in the following month. June too witnessed a 3.2 per cent decline while July, August, September, October, November and December recorded a 5.1 per cent, 6.4 per cent, 7.2 per cent, 11 per cent, 13.1 per cent and 13.5 per cent decline respectively.

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EXPORT IMPORT NEWS

The decline surfaced at a time when exports are already registering a weakening trend. Exports have seen a 14 per cent decline since January. The industry is already struggling due to blocked funds which have resulted in payments delays to suppliers. Suppliers too do not prefer advance as they cannot carry them for an indeﬁnite period which ultimately resulted in a decline in apparel production. Delays in RoSL disbursements and IGST refunds have added to the woes of industry players. This situation would lead to difﬁculties in meeting export target of $20 billion.

India aims to double textile revenue By 2025, India aims to double the annual revenue of textile industry. The country’s textile industry currently generates about $150 billion in annual revenues — $110 billion from domestic market and $40 billion through exports. To achieve the target, production of synthetic clothes will have increase manifold. While annual production of cotton textiles

were up 4.8 per cent year-to-year. Smart textiles are revolutionizing the industry, opening doors for applications beyond fashion, insulation or covering material. In addition, the US textile industry is embracing greater efforts in sustainability. Many companies have set the goal of waste-free or near waste-free manufacturing, and more and more textile products are being designed with a circular lifecycle in mind. The US now has trade in the crosshairs, with tariffs being imposed and trade deals being renegotiated. The timing coincides with what has been a Made in America resurgence of sorts, driven largely by rising costs in China. Reshoring of manufacturing is being given priority. Growing e-commerce is reconﬁguring the retail sector, a trend that encourages a buy it, make it, ship it production model. Combined with low US energy costs and advances in automating garment and sewn product assembly, possibilities for shifting some textile-related supply chains back to the United States and the Western Hemisphere from Asia are becoming increasingly promising.

is pegged at 6.5 billion kg, about 2.5 billion kg of synthetic textiles produced. About 2.5 lakh new jobs were created in the garments and made-ups sector since June 2016. Garment makers were able to beneﬁt to the tune of Rs 55 lakh for every crore in new investments committed under the package. The capital subsidy under the amended TUF scheme was increased to 25 per cent from 15 per cent. A new scheme was introduced to refund state levies which were not refunded earlier. The move cost the exchequer Rs 5,500 crores but it helped in boosting the competitiveness of Indian textile exports in foreign markets. Overtime hours were increased from three to eight hours a week. EPF was made optional for workers earning less than Rs 15,000 a month. The readymade garment industry is the largest contributor to the country’s textile exports and employs about 12 million persons now.

US export value rises 16 per cent The value of shipments for US textiles and apparel has increased 16 per cent since 2009.Exports of fabric and yarn, increased 6.7 per cent in January compared to December and

‘Textiles in the News’ is a new website to promote the US textile industry.

German clothing and textile exports up 11 per cent German clothing exports grew by 17.7 per cent for the full year. Textile exports grew by 2.6 per cent. Overall, exports of German textile and clothing industry increased by 11.3 per cent. Exports to Russia have recovered while to the US and UK remained positive. However, it’s the EU domestic markets that remained the most important export channel. In both textile and clothing foreign turnover was higher than domestic sources. This underlines the importance of foreign markets for the two sectors. The EU and other foreign countries are responsible for the turnover plus. Textiles production increased in 2017 by three per cent whereas clothing production contracted 2.2 per cent. Clothing manufacturing prices went up 0.1 per cent and manufacturing prices of textile products increased by 0.6 per cent. The clothing segment showed growth in all sectors except lingerie. Hosiery and knitting were also in focus along with workand professional clothing. These added greatly to the turnover.

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EXPORT IMPORT NEWS

to China from 2018 following significant growth in Chinese, Russian and Cambodian markets. As per Vu Duc Giang, President, VITAS the reasons for increase is Vietnam’s fibre exports to China benefit due to a zero per cent tariff under the ASEAN-China FTA, while products from other markets have to pay 3-5 per cent duty. Further, the Regional Comprehensive Economic Partnership (RCEP) between ASEAN and six countries of China, the ROK, Japan, India, Australia and New Zealand is expected to boost Vietnam’s exports to China. By the end of 2017, China was among the top five consumers of Vietnam’s textile and garment products valued at over $3 billion. Le Tien Truong, General Director, Vietnam National Textile and Garment Group (Vinatex), says their country has so far been the world’s leading textile and garment exporter but Chinese products are dominating the domestic market. However, remarkable improvements have been seen in Employment in the two sectors increased 0.9 per cent. Employment in clothing sector was up 0.8 per cent and in the textile sector by 0.9 per cent.

Vietnam’s exports to China.

Vietnam’s garment exports to China rise Vietnam’s textiles and garments exports to China have grown exponentially in recent years, from $2.7 billion in 2016 to $3.2 billion in 2017. The average annual growth in exports remained more than 20 per cent for the past three years. Data from the General Department of Vietnam Customs show import value of textile and garment from China touched around $9 billion

Bangladesh garment exports to grow Bangladesh expects the export volume of readymade garments to reach $60 billion within the next four to ﬁve years. There have been improvements in factory environment and product quality. In addition, Bangladesh has seven of the world’s top 10 green garment factories.

last year, accounting for over 42.7 per cent of the country’s total imports and rose over 12 per cent last year. Value trade was nearly four times higher than that of Republic of Korea and nearly ﬁve times higher than Taiwan - the two major import markets for Vietnam in recent years. China and Vietnam are known rivals in many garment export markets. China’s textile and garment exports touched $260 billion annually, while Vietnam’s apparel products were initially exported to the Chinese market, surging to over $31 billion last year. The Vietnam Textile and Apparel Association (VITAS) estimates it will be easier for them to export higher number

A wage board to fix salaries of workers have already been formed. Salary will be decided on the basis of industry’s capacity and requirement of workers. Bangladesh has 32 LEED certified green buildings in which the world’s top environmentfriendly garment and textile factories are located. LEED is the most widely used third-party verification for green buildings, with around 1.85 million square feet being certified daily. A LEED certificate requires factories to meet its nine requirements, where each chunk has separate points like integrative process, location and transportation, sustainable sites, water efficiency, energy and atmosphere, materials and resources, indoor environment quality, innovation in design and priority. The US Green Building Council has developed this certification process to evaluate the environmental performance of a building and to encourage market transformation towards sustainable designs. Bangladesh, the second largest readymade garment exporter

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EXPORT IMPORT NEWS

in the world, has taken a leading position in sustainable green industrialization.

the US, the UK, India, Germany and Italy, accounting for about 50 per cent of total exports. Due to the combined effect of higher volumes and prices of bunker and aviation fuel, export earnings of petroleum products increased signiﬁcantly in December 2017. Earnings from rubber products increased during the month mainly due to the export of tires. Earnings from exports surpassed a billion dollars in December 2017 for the ﬁfth time during the year

Bangladesh exports to markets up three per cent

emerging

Bangladesh’s garment exports to non-traditional markets rose 3.77 per cent year-on-year in the July-January period of current fiscal. Non-traditional markets are other than key destinations like the European Union, the US, and Canada. They include: India, China, Russia, Japan, South Africa, Turkey, Brazil, Chile, Mexico, South Korea, Malaysia, Australia, and New Zealand. Shipments to these markets are rising on the back of zeroduty benefit granted to Bangladesh, opening of retail stores by global brands, market diversification by local exporters, and fiscal incentives. Bangladesh receives zero-duty benefit to markets such as Japan, India, and China. As a result, shipments to these markets are rising at a faster rate. Riding on relaxed rules of origin, garment exports to Japan grew 1.94 per cent in July-January. In 2011, China granted a duty-free export facility to Bangladesh for nearly 5,000 items, mostly garments. China has also established its own brands and retailers to cater to local customers and these brands buy apparel items from Bangladesh in bulk amid Chinese manufacturers’ growing reluctance to produce basic garments. Bangladesh’s garment exporters also enjoy duty-free export benefits to India, although they are facing a 12.5 per cent countervailing duty at present.

Sri Lanka’s export earnings up 27 per cent Sri Lanka’s earnings from garment exports to the EU increased 27.2 per cent year-on-year in December 2017. Garment exports to the US and other non-traditional markets increased by 18 per cent and 14.1 per cent, respectively, during December 2017. The increased exports to the European Union followed restoration of GSP Plus facility in May 2017.

and recorded a double-digit growth year-on-year for the sixth consecutive month.

Nepal garment exports up 11 per cent Nepal’s readymade garments exports in the first half of the current fiscal increased 11 per cent compared to the corresponding period previous fiscal. However, the expiry of the multi fiber agreement in 2005 has hit the industry hard. The agreement provided dutyfree access for Nepali garments to the US. Since then, over 85 per cent of garment factories have pulled their shutters. Nepali readymade garment producers feel if they are given facilities they can be more competitive globally. As of now the high cost involved in importing raw materials and exporting finished products is the major reason for Nepali garments being less competitive in the international market. Incentives to the sector can have a significant impact on growth of small and medium enterprises, ancillary industries and also generate jobs. A garment processing zone is being developed to promote the export of readymade garments. The aim is to revitalize the garment sector by providing low-cost financing for investment in the latest machines and kick start the economy. The industry has asked for tax incentives and export incentives. Major export destinations are: the European Union, India and the US, among others.

The leading markets for exports from Sri Lanka in 2017 were: APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 15

Indiaâ&#x20AC;&#x2122;s Dipping Exports, Dull domestic demand and not an encouraging exports scenario, Indian apparel industry seems to be stuck between a rock and a hard place. Indeed these are trying times for apparel manufacturers and stakeholders. Positive policy measures backed by infusion of technology could go a long way in reversing the picture to a more positive one

Apparel exports declined 10.25 per cent in Feb â&#x20AC;&#x2DC;18 against last year Decline primarily driven by a sharp dip in exports to the UAE market Excluding UAE, exports stood 3-4 per cent higher in 10 months of FY18 Globally apparel trade has remained passive for the third consecutive year Economic Survey found ROSL had a positive impact on apparel exports

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COVER STORY

A Wake Up Call For Industry Value In US $ Million

Export Scenario during FY 2016-17 vs FY 2017-18

Indian apparel industry has witnessed some of the toughest of times in recent months. As per Apparel Export Promotion Council (AEPC) statistics, India’s apparel exports declined 10.25 per cent in February 2018 against the corresponding periods last year. Taking a year in review, India’s RMG exports in the April-January 2017-18 period was $13,783.4 million, down by 1.27 per cent compared to the same period in previous ﬁscal. During April-January 2016-17, India’s apparel exports were around $13,960.2 million. Rating agency ICRA points out the decline has been primarily driven by a sharp dip in exports to the UAE market. This has been augmented by dismal global apparel trade, which remained subdued at a mere one per cent growth in calendar year 2017, following a decline of two per cent and ﬁve per cent in 2016 and 2015, respectively. Particularly for the 10-month period ending June 2017, India’s apparel exports to UAE had grown at a sharp pace of 56 per cent year on year (YoY). Thereafter, apparel exports to the UAE fell at an equally fast pace, by as much as 45 per cent since June 2017. Excluding

the trade with the UAE, India’s apparel exports are estimated to have stood 3-4 per cent higher in 10 months of FY2018, ICRA report indicated. And as AEPC, chairman HKL Magu points out, “For the period Apr-Feb 2017-18, there has been a drastic decline of 10.25 per cent, in apparel exports. On the other hand, for the period July-Feb 2017-18, apparel exports from Bangladesh registered an 8.68 per cent improvement over the last year.” The implementation of GST since July resulted in blockage of funds for the export community due to lack of input credit refunds. Hailing GST as a great initiative, he says implementation has been the biggest challenge in its success. Owing to this, exporters suffered since their funds were blocked and they were unable to pay suppliers on time. Suppliers don’t give advance, since they can’t carry them forward for an indeﬁnite period. Exports in September 2017 rose almost 40 per cent because of the special package. “GST Council assured us refunds within seven days. Exporters were told they would get 90 per cent of the refund within seven days. However, for July, August, and September, there were no refunds.

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HKL Magu, Chairman, AEPC

“GST Council assured us refunds within seven days. Exporters were told they would get 90 per cent of the refund within seven days. However, for July, August, and September, there were no refunds. Given this scenario, buyers had no choice but to look for other options like Bangladesh, Vietnam and Cambodia,” Given this scenario, buyers had no choice but to look for other options like Bangladesh, Vietnam and Cambodia,” he observes. Since competitors like Bangladesh and Cambodia already have an FTA with the EU, buyers chose them over India. “When China vacated the space due to higher cost of production

COVER STORY

orders were diverted from China to India. But we could not seize the opportunity,” he highlights.

Dipping exports, a bug bear A recent ICRA report reveals while transition to the new taxation and export incentive regime has posed liquidity challenges for the industry, intense competitive pressures in the global market, particularly in the light of impending trade agreements and foreign currency movements pose additional challenges. In addition, uncertainty on apparel exports to the UAE looms, in light of inexplicable trends witnessed in the recent months. Jayanta Roy, Senior VP and Group Head, ICRA says the accommodative stance taken by the government by way of upward revision in export incentives in November 2017, has addressed one of the issues that the

segment is facing. However, sustainability of growth remains contingent on how the scenario on the other fronts pans out. In similar vein Magu explains, “Exports started falling in October by 41 per cent. In November, the decline was 14 per cent while December recorded 13 per cent decline and January saw a 14 per cent dip. There has been a month to month decline in apparel productivity.” From a plus 1.3 per cent in April, 2017, May saw a fall of ﬁve per cent; June the decline was 3.2 per cent while in July, it was 5.1 per cent. August, September, October, November and December recorded 6.4 per cent, 7.2 per cent, 11 per cent, 13.1 per cent, 13.5 per cent dip respectively. Overall the dip in production from May to December has been 10.4 per cent. Owing to this, we can’t meet our export target of $20 billion. “We will be lucky to do what we did last year. Last year, we clocked in almost $17 billion. However, once refunds start

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ﬂowing, things will improve. Moreover, free trade agreements will help boost our exports,” he feels.

Regions witnessing upsurge & decline According to ICRA, following an upward revision in export incentives, India has reported a 6-20 per cent year-on-year (Y-o-Y) growth in apparel exports to key nations such as the US, UK, Germany, France and Spain during the NovemberDecember period in 2017. However, despite this, overall apparel exports are down 1 per cent Y-o-Y in 10 months in FY18. The decline has been primarily driven by a sharp decline in exports to the UAE. It may be noted, UAE had emerged as one of the prominent apparel export destinations for India, with its share increasing to 23 per cent in FY17 from 12 per cent in FY14. Particularly for

COVER STORY

Rating agency ICRA points out the decline has been primarily driven by a sharp decline in exports to the UAE market. This has been augmented by dismal global apparel trade, which remained subdued at a mere one per cent growth in calendar year 2017, following a decline of two per cent and ﬁve per cent in 2016 and 2015, respectively the 10-month period ending June 2017, India’s apparel exports to UAE had grown at a sharp pace (56 per cent Y-o-Y). Thereafter, apparel exports to the UAE have fallen at an equally fast pace, by as much as 45 per cent since June 2017. Excluding the trade with the UAE, India’s apparel exports are estimated to have stood 3-4 per cent higher in 10 months FY18.

The global scenario Globally apparel trade has remained passive for the third consecutive year, expanding by just 1 per cent in the calendar year (CY) 2017 on a low base, following a 2 per cent and 5 per cent decline witnessed in CY2016 and CY2015 respectively. In addition, the world’s largest apparel manufacturer and exporter – China has been able to restrict the sharp declining trend in its apparel exports to a mere 1 per cent in CY2017 as compared to the de-growth of 10 per cent and 6 per cent in CY2016 and CY2015 respectively. Accordingly, China is estimated to have vacated just $1 billion worth of space in global apparel trade compared to

$10-15 billion vacated in each of the previous two years. China’s declining market share was earlier expected to offer opportunities to other major apparel exporting nations, to garner a larger pie of the global apparel trade. Besides China and India, Bangladesh and Vietnam remain the other key apparel exporting nations. Supported by its duty-free access to the EU market, Bangladesh retains its status as the second-largest apparel exporter after China. Vietnam remains the fastest growing amongst large apparel exporting nations, maintaining its growth in the US market despite the latter backing out of a proposed trade agreement. Impending developments, including modiﬁed Trans Paciﬁc Partnership or CPTPP (excluding US but including other prominent buyers such as Japan and Australia) and the EU-Vietnam Free Trade Agreement, which are likely to take shape in the current calendar year, have the potential to further strengthen Vietnam’s presence in global apparel market. Roy says, “In competitiveness of

addition, the Indian apparel

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exporters will also remain contingent upon the movement in foreign exchange rates. This remained a key challenge last year, with the Indian rupee appreciating by 3 per cent (vis-à-vis USD) in the CY2017 compared to 1-3 per cent depreciation in currencies of other key apparel exporting nations, that is, China, Bangladesh and Vietnam.”

A challenging scenario Magu points out clothing will always be in demand much like food and housing. But there are times when main buyers reduce their inventories because once the season ends they have to sell the stock at discounted prices. “Indeed, business is there but buyers want fast track suppliers. Fast fashion dictates trends. Indian exporters don’t have a great infrastructure and most can’t supply in a short span of time. But China has great production abilities and huge capacities. They can cater to any order, however big, within a speciﬁed time while we depend on fabric availability.” He emphasizes while India is good in value addition, embroidery,

COVER STORY

lace work we are not very competitive in basic items. That’s why India’s exports to the world are not growing. Speaking about the challenges the industry is facing today, he says, no Indian company is showing a profit of more than five per cent as interest costs are high. “Interest subvention they get are not good enough. There is a need for cut in interest rates.” Moreover, ports in India are not very efficient. For example, in Bangladesh and Sri Lanka, the cargo is taken a day before the ship leaves while in India the cargo is taken seven days earlier. A cargo from Delhi to Mumbai takes three days to move. In Germany, one can do 1,200 km in 15 hours. “We have to wait 40 days for fabrics to come from China. So, we can’t meet the 45 days delivery window. That’s the reason factories lie idle from May to September. For five months, there is no business. Indeed, there are markets like South America and South Africa but their imports are not so high. AEPC sends delegations to these markets and business is gradually improving,” he adds. If the capital blockage continues and the industry’s cost competitiveness is not restored, slippage in exports

will continue, with long term adverse impact on India’s positioning, fears the Council. Ujwal Lahoti, Chairman, Cotton Textile Export Promotion Council and chairman of Lahoti Overseas, argues the government needs to address core issues ﬁrst, with immediate release of IGST which remained blocked since July 1, 2017. This is choking working capital. Explaining the issue, Sanjay Jain, Chairman, Confederation of Indian Textile Industry (CITI) says the industry needs immediate relief in the form of a minimum 2 per cent on the Merchandise Exporters from India Scheme on cotton yarn and a ROSL package for fabrics and cotton yarn, to retain global competitiveness. Also, the government should immediately levy customs duty across the value chain to restrict import.

A plethora of untapped potential The Economic Survey found the Rebates on State Levies Scheme (ROSL) had a positive impact on apparel exports compared to other goods which did not receive the benefits of the scheme. Further, it increased exports of manmade fibre apparels more than that of natural fibre apparels.

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It maybe noted, that in June 2016, the government had announced Rs 6,000 crore package for the apparel sector, of which the largest component was ROSL to offset indirect taxes levied by the states that were embedded in exports. Prior to the package, duty-drawbacks were between 7.5-9.8 per cent for apparels. After the package, the ROSL increased export incentives by 2.8-3.9 per cent. As per Economic Survey ﬁndings, the package increased exports of readymade garments made of manmade ﬁbres, though it did not have a statistically positive impact on garments made of silk, cotton, etc. By September 2017, the cumulative impact on man-made garment exports was about 16 per cent over the other groups. The growth was also higher than other labour-intensive goods, which did not receive ROSL. The positive impact on garments made of MMF after the package emerges starkly. The Economic Survey also stated the apparel sector has immense potential to drive economic growth, increase employment, and empower women in India.

COVER STORY

This is especially true as China’s share of global apparel exports has come down in recent years. However, India has not capitalised on this opening. Instead, countries like Vietnam and Bangladesh are quickly ﬁlling the space left by China.

Concerns looming large Meanwhile, the US has challenged India’s export subsidy programs like Merchandise Exports from India Scheme, Export Oriented Units Scheme, Export Promotion Capital Goods Scheme etc., at the WTO, which will further accentuate export pressure on the industry, feels AEPC. If the withdrawal takes place, countries like Bangladesh will directly beneﬁt, which is already showing consistent growth in their RMG exports. AEPC requested the government to intervene immediately to redress the situation and allow the release of refunds as until refunds start ﬂowing, things will not improve both on the production as well as export front.

Policy interventions The Union textile commissioner Kavita Gupta had said at a conference the relief package announced in 2016 had boost the garment and made-ups sectors to create around 2.5 lakh new jobs in the country. The provision of 240 days’ employment per year for workers under Section 80JJAA of the Income Tax Act to 150 days annually for the garment industry was also relieved. Apart from this, the government had announced various beneﬁts such as giving employer’s contribution to the employee provident fund (EPF) for new workers for those earning less than Rs 15,000 per month during the ﬁrst three years of employment. Government also made EPF for workers earning less than Rs 15,000 monthly. A new scheme was also introduced to refund the state levies, which were not refunded earlier. The capital subsidy under amended TUFS (technology upgradation fund scheme) from 15 per cent increased to 25 per cent. The feeling is, the textile policies announced over the years will boost the industry’s revenues. The government aims to double the annual revenue of the textile industry in the country to $300 billion by 2025. And as minister of state for textiles

Ajay Tamta says, the Centre has taken several steps to improve textile and apparel exports. In a written reply to the Rajya Sabha Tamta said the government has enhanced rates of Merchandise Exports from India Scheme (MEIS) from 2 per cent to 4 per cent for apparel and made-ups with effect from November 1, 2017. He added that the government has also revised post-GST rates of Rebate of State Levies (RoSL) Scheme implemented from October 1, 2017 and exempted IGST on import under Advance Authorization and Export Promotion Capital Goods Scheme. The minister further said the ﬁnance ministry has been requested for allocation of appropriate funds under RoSL for one time settlement of exporters’ claim and faster and complete refund of Input Tax Credit.In reply to another question, Tamta said major issues raised by apparel industry include: delay in Input Tax Credit (ITC) refunds, reduction in rates of Rebate for State Levies (RoSL) Scheme, appreciation of Indian Rupee, high Interest Rate and lack of Preferential Market Access as compared to competing nations. The government has constituted a Committee on Exports under the Revenue Secretary of ministry of ﬁnance for evolving a suitable strategy for promoting exports post GST.

Wellness programme for a cause At the same time, to introduce best global practices and technological upgradations in the embroidery sector, the textiles ministry launched a unique wellness program aimed at holistic development of workers in the sector. The move is slated to beneﬁt almost 45 million people associated with the industry. Embroidery Intelligence Quotient (EMBiQ) commissioned an expert panel to conduct an in-depth study of the varied working conditions and associated health risks of all departments of the apparel industry. The EMBiQ wellness program is a comprehensive programme covering lifestyle changes, nutrition, yoga and exercises, which can be followed easily to overcome the health issues faced by the workers in the sector, speciﬁcally, while performing their job-role. It incorporates well researched diet plan

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which is both effective and affordable and safety guidelines aimed at avoiding accidents in each function. Keeping in mind the immediate need of a wellness module, it has also been decided to make it available to all workers for free. It is a token of gratitude for their immense contribution towards developing the embroidery sector, the ministry said in a press release.

Textile 4.0 to boost production In order for the textile industry to achieve its goal of becoming a $300 billion market by 2025, there is a need for supportive policy, and public-private partnership, especially in areas like research and development (R&D). A white paper released during the 9th Asian Textile Conference (ATEXCON), highlighted through policy measures by the government in partnership with the industry, India could achieve $80 billion textile and apparel exports at an annual growth of 9 per cent. The overall market is expected to grow at 11 per cent annually to reach $220 billion by 2025. As per textile commissioner Kavita Gupta, the government is planning to integrate the textiles industry through textiles parks to tie in all the value chains together. As for futuristic proposition, Magu says there is still some time for Textile 4.0 to spread out in India but when it does happen, the industry will adapt. “We can take up the challenge. Productivity will increase. We can grow only if we have the technology with us. 4.0 will enhance quality standards and we can do fast deliveries and small orders,” he sums up.

The US has challenged India’s export subsidy programs like Merchandise Exports from India Scheme, Export Oriented Units Scheme, Export Promotion Capital Goods Scheme etc., at the WTO, which will further accentuate export pressure on the industry, feels AEPC. If the withdrawal takes place, countries like Bangladesh will directly beneﬁt, which is already showing consistent growth in their RMG exports.

EXPERT VIEW

GST is a great initiative, however industry looks forward to faster refunds - HKL Magu

“GST Council assured us refunds within seven days. Exporters were told they would get 90 per cent of the refund within seven days. However, for July, August, and September, there were no refunds. Given this scenario, buyers had no choice but to look for other options like Bangladesh, Vietnam and Cambodia,” says HKL Magu, Chairman, AEPC “GST is a great initiative. A single tax has subsumed other taxes,” says H K L Magu, Chairman, AEPC, praising the government’s efforts and adds “But there were problems in implementation. Exporters suffered since their funds were

blocked and they were unable to pay suppliers on time. Suppliers don’t give advance, since they can’t carry them forward for an indeﬁnite period.” Exports in September 2017 rose almost

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 22

“Overall the dip in production from May to December has been 10.4 per cent. Owing to this, we can’t meet our export target of $20 billion. We will be lucky to do what we did last year. Last year, we clocked in almost $17 billion. However, once refunds start ﬂowing, things will improve. Moreover, free trade agreements will help boost our exports.”

EXPERT VIEW

40 per cent because of the special package. “GST Council assured us refunds within seven days. Exporters were told they would get 90 per cent of the refund within seven days. However, for July, August, and September, there were no refunds. Given this scenario, buyers had no choice but to look for

“We have to wait 40 days for fabrics to come from China. So, we can’t meet the 45 days delivery window. That’s the reason factories lie idle from May to September. For ﬁve months, there is no business.” other options like Bangladesh, Vietnam and Cambodia,” he explains. Since competitors like Bangladesh and Cambodia already have an FTA with the EU, buyers chose them over India. He points out, “When China vacated the space due to higher cost of production, orders were diverted from China to India. But we could not seize the opportunity.”

Sustained fall in exports Talking about India’s dipping apparel exports, Magu observes, “Exports started falling in October by 41 per cent. In November, the decline was 14 per cent while December recorded 13 per cent decline and January saw a 14 per cent dip. There has been a month to month decline in apparel productivity.” From a plus 1.3 per cent in April, 2017, May saw a fall of ﬁve per cent; June the decline was 3.2 per cent while in July, it was 5.1 per cent. August, September,

October, November and December recorded 6.4 per cent, 7.2 per cent, 11 per cent, 13.1 per cent, 13.5 per cent dip respectively. “Overall the dip in production from May to December has been 10.4 per cent. Owing to this, we can’t meet our export target of $20 billion. We will be lucky to do what we did last year. Last year, we clocked in almost $17 billion. However, once refunds start ﬂowing, things will improve. Moreover, free trade agreements will help boost our exports,” he feels.

Buyers want fast track suppliers Magu points out clothing will always be in demand much like food and housing. But there are times when main buyers reduce their inventories because once the season ends they have to sell the stock at discounted prices. “Indeed, business is there but buyers want fast track suppliers. Fast fashion dictates trends. Indian exporters don’t have a great infrastructure and most can’t supply in a short span of time. But China has great production abilities and huge capacities. They can cater to any order, however big, within a specified time while we depend on fabric availability.” He emphasizes while India is good in value addition, embroidery, lace work we are not very competitive in basic items. That’s why India’s exports to the world are not growing. Speaking about the challenges the industry is facing today, Magu says, no company in the country is showing a profit of more than five per cent as interest costs are high. “The interest subventions that we get, are not good enough. There is a need for cut in interest rates.” Moreover, ports in India are not very efficient. In Bangladesh and Sri Lanka, the cargo is taken a day before the ship leaves while in India the cargo is taken seven days earlier. A cargo from Delhi to Mumbai takes three days to move. In Germany, one can do 1,200 km in 15 hours. “We have to wait 40 days for fabrics to come from China. So, we can’t meet the 45 days delivery window. That’s the reason factories lie idle from May to September. For five months, there is no business. Indeed, there are markets like South America and South Africa but their

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imports are not so high. AEPC sends delegations to these markets and business is gradually improving,” he adds.

Textile 4.0 to enable small orders He feels, there is still some time for Textile 4.0 to spread out in India but when it does happen the industry will adapt. “We can take up the challenge. Productivity will increase. We can grow only if we have the technology with us. 4.0 will enhance quality standards and we can do fast deliveries and small orders,” he sums up.

“When China vacated the space due to higher cost of production, orders were diverted from China to India. But we could not seize the opportunity.”

HOT TOPIC

The US Trade War: Global impact, US not exempted either

With the US President Donald Trump ﬁnding means and ways to curb exports and strengthen the ‘Make in USA’ tag, the latest series is the reduction of US trade deﬁcit and achieving a more balanced trade with its trading partners. There’s going to be deep-dive effect on global trade dynamics, how individual countries are planning to curb losses and mend ways with the US is what the future would decide and decode, a report APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 24

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from December and grew 21.5 per cent compared to a year earlier.

The ignition of the trade war President Trump’s recent tariffs plan has got the whole world concerned about the uncertainties looming around the possibilities and prospects of trade ties with the US. They have also announced 25 per cent tariff on steel imports and 10 per cent on aluminum for countries other than Canada and Mexico. Additionally, there are plans to impose tariffs as high as 45 per cent on goods imported from China with an aim to suppress the country’s intellectual property issues.

The recent US Commerce Department’s Ofﬁce of Textiles and Apparel ﬁgures show an uptick in textile and apparel imports to the US with an increase of 2.6 per cent to 5.61 billion sq. mt. equivalents (SME) in January over last year. Textile imports rose 4.5 per cent to 3.19 billion SME, while apparel shipments increased 0.2 per cent to 2.42 billion SME.

Among those listed in declining imports, South Korea was ﬁrst with imports falling 9.4 per cent to 115.8 million SME. Imports from Pakistan to the US fell 0.3 per cent to 222.6 million SME, and Indonesia by 5.4 per cent to 148.1 million SME.

United States Fashion Industry Association (USFIA) stated while they support efforts to protect the intellectual property of brands and retailers, they will never support punitive tariffs based on the ﬁction that imports harm domestic jobs and growth. These new tariffs will not create more jobs in the United States, instead, will harm the companies that already create thousands upon thousands of highquality jobs in design, in marketing, in retail, in logistics, in compliance, right here in the United States. And these tariffs will absolutely harm American consumers, who will face higher prices on the clothes, shoes, home products, and other essentials.

Meanwhile, Bureau of Economic Analysis (BEA) reported the overall US trade deﬁcit in goods and services increased 5 per cent to $56.6 billion in January from $53.9 billion in December. January exports decreased 1.3 per cent

to $200.9 billion compared to December and were essentially ﬂat at $257.5 billion from a year earlier. Exports of apparel and clothing accessories increased 11.2 per cent to $277 million in January

China retains the prime position with its imports showing an uptick of 0.9 per cent in January to 2.76 billion SME year-on-year. India, claiming the second spot, notched 11.4 per cent gain to 455 million SME, and Vietnam, the third largest supplier, posted a 0.6 per cent rise to 425.6 million SME. Among other countries, Cambodia registered the highest jump of 27 per cent to 112.2 million SME. With Canada, it was 25 per cent, and Mexico saw its shipments rise 2.4 per cent to 191 million SME.

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Companies will pay taxes at the border for tariffed goods they are bringing in, which will make the products a little more expensive, with consumers picking up the tab. Apparel industry, which is already operating on razor thin margins for most goods cannot afford such high tariffs. Nicole Bivens Collinson, President – international trade and government relations, Sandler, Travis & Rosenberg feels the imposition of a potential additional 35 per cent to 45 per cent tariff on goods Made in China will certainly impact prices. The apparel and footwear industry is the latest to join the agitation over President Trump’s tariff plans on goods imported from China. They argue, the move would result in higher consumer prices. As per sources, the US government is planning to impose tariffs on Chinese information technology, telecommunications and consumer goods with a view to force changes in China’s intellectual property and investment prices. Apart from a number of US retail giants, the American Apparel and Footwear Association (AAFA) and as many as 82 footwear companies wrote a letter to the White House opposing the tariff. As per recent update, Washington could impose more than $60 billion in tariffs on goods ranging from apparels to footwear, electronics and toys. Analysts feel any additional broad-based tariff means burdening American working

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families as they will have to pay higher prices for household basics like clothing, shoes and electronics. There is a sense of caution among the entire US fashion industry. The recent imposition of 25 per cent and 10 per cent tariffs on imported steel and aluminum too will hit the apparel and footwear industry. Steve Lamar, Executive- VP, AAFA believes imposing tariffs on imported items ultimately passes on the tax on to consumers. There is a direct cost that rolls into the industry. It is not like the can industry or the auto industry but it is there. Manufacturers, retailers and importers purchase trucks to haul merchandise and manufacturers package their goods in aluminum cans, he said.

Impact on China The US Trade Representative Robert Lighthizer informed the trade tariffs would target China’s high-technology sector and could also include restrictions on Chinese investments in the US. Other sectors like apparel could also be targeted. Lighthizer told the House of Representatives Ways and Means Committee, a top economic panel, the aim would be to minimise the impact of any tariffs on US consumers. As a countermeasure, China plans to hit US agricultural exports if tariffs on Chinese imports worth up to $60 billion are announced by Washington. A recent study reveals, the US has a huge goods trade deﬁcit with China of up to $375 billion. Estimates of the cost

of counterfeit goods, pirated software and theft of trade secrets could be as high as $600 billion. On this ongoing tiff, Lighthizer accepted that ‘nobody wins from a trade war’, despite Trump’s opposing views that trade wars are ‘good and easy to win’. China’s Foreign Ministry spokeswoman Hua Chunying, said China does not want to fight a trade war with anyone. But if anyone forces them to fight one, they will neither be scared nor hide. A Morgan Stanley too confirms a global trade war would have much harsher economic consequences, possibly hitting the dollar, US stock markets and currencies as varied as the Mexican peso and the Australian dollar.

How’s India placed? Meanwhile, the United States has challenged India’s export subsidy programmes at the World Trade Organization. Under WTO rules, countries with a per capita income of less than $1,000 can provide export subsidies for particular sectors only until their share of exports is below 3.25 per cent of global trade. Once a country’s exports crossed this threshold and remained above it for two consecutive years, subsidies for that particular sector would have to be phased out over eight years, even if the per capita GNI of the country is below the $1,000 threshold. India’s textile exports crossed this 3.25 per cent threshold in 2010 and as per

President Trump’s recent tariffs plan has got the whole world concerned about the uncertainties looming around the possibilities and prospects of trade ties with the US. They have also announced 25 per cent tariff on steel imports and 10 per cent on aluminum for countries other than Canada and Mexico. Additionally, there are plans to impose tariffs as high as 45 per cent on goods imported from China with an aim to suppress the country’s intellectual property issues. the logic, the export subsidies will have to end this year. But the textile sector doesn’t seem to be ready for such a drastic shift. It has already lost the wage arbitrage advantage to countries like Bangladesh, Vietnam, Myanmar and Laos. Withdrawing export subsidies will further impose challenges on the industry. In correspondence to the US government’s challenge, India has clariﬁed that programmes such as the Export Promotion Capital Goods Scheme offered to exporters are not subsidies. These are given mainly to equalise the costs incurred by the industry with international costs and to induce adoption of better technology. Indian ofﬁcials argue, industries face high logistics costs and state levies and these are not reimbursed. Schemes such as the Merchandise Exports From India (MEIs) are to offset these costs. During a recent a two-day World Trade Organization (WTO) informal ministerial meeting, India pursued guidance on the future of the multilateral trading system amid attempts by the US to undermine WTO rules, raising fears of trade wars. India has termed the move discriminatory and demanded exclusion as granted to key allies of the US such as Canada and Mexico, while the European Union has threatened to retaliate by hiking tariffs on a set of goods it imports from the US. As per trade experts, the US

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 26

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wants to go back to the pre-WTO system where abiding by a verdict of the dispute settlement mechanism was not binding and the winning country had to sit down and negotiate with the losing party, which could end up giving more powers to large developed countries to arm-twist their small economic partners.

Bangladesh too in line In this trade war, no one seems to be left out. As per reports, Bangladesh too will come under its radar. The impact of possible tariff on apparel products from Bangladesh would depend on how the US imposes it. Bangladesh’s exports will be affected if the tariff is imposed on all countries. If tariff is imposed only on China and other big countries, Bangladesh may beneﬁt. The imposition of a tariff by the US would be a matter of concern for Bangladeshi apparel exporters as they are currently paying around 16 per cent duty in the market. The US has already imposed additional tariffs on different products from Canada, the European Union and Japan. These countries have warned the US of retaliation through imposing tariffs on US products.

The UK counteracts One more superpower is gearing up to ﬁght out with the US. The European Union has cautioned targeting some of America’s most reputed and well known brands amid the imposition of swinging tariffs on imports of steel and aluminum. According to the Trump if the EU wants to further increase their already massive tariffs and barriers on US companies doing business in the continent, there would be tax on their cars, which freely pour into the US. Amid this chaos, the International Monetary Fund (IMF) warned the restrictions would likely damage the US and global economy. Meanwhile, Peter Navarro, DirectorNational Trade Council at the White House, stated certain exemptions could be made to the tariffs on foreign steel and aluminum, but exclusions for entire countries aren’t expected.

Associations’ views In a letter to President Trump, US apparel and retail organizations have

said because duty rates in these product categories are so high and because China is such a dominant supplier, US imports from China already account for most of duties collected by the US government. In fact, duties on US imports of these consumer products from China already represent more than 22 per cent of all tariffs the US collects from all countries on all products. And to be clear, such duties are paid by US workers, US consumers, and US companies—not China. United States Fashion Industry Association (USFIA) stated while they support efforts to protect the intellectual property of brands and retailers, they will never support punitive tariffs based on the ﬁction that imports harm domestic jobs and growth. These new tariffs will not create more jobs in the United States, instead, will harm the companies that already create thousands upon thousands of highquality jobs in design, in marketing, in retail, in logistics, in compliance, right here in the United States. And these tariffs will absolutely harm American consumers, who will face higher prices on the clothes, shoes, home products, and other essentials.

World Economic Forum’s perspective A recent World Economic Forum (WEC) paper brings forth the necessity and economic rationale of the government’s intent. The paper states, it is more accurate to think of imports as the benefits of trade, and exports as the cost that needs to be paid to obtain these benefits. Secondly, it is a misconception that trade deficits cause a reduction in employment and production and trade surplus increase them. Rather, imports could increase because of an increase in domestic income, thereby increasing the aggregate demand. Experimental studies have found that rapid economic growth and larger trade deficit are associated with faster employment growth in the US in history. As the supply chain goes global, a tax on imported inputs can reduce rather than promote a country’s exports, particularly manufacturing goods (for example high tariffs on imported fabrics will reduce

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the price competitiveness of clothing exports). Likewise, trade barriers could disrupt production and reduce domestic employment in both the ‘protected’ industries and those downstream sectors that use their outputs. Primarily trade balance is a function of a country’s national saving and investments, not of trade policies. In other words, trade policies, such as higher tariffs and quantitative restrictions, will have no impact on a country’s trade balance. Interestingly case study reveals that countries like Singapore, which maintain fairly low trade barriers, run a trade surplus equal to as high as 20 per cent of its GDP. In comparison, India was one of the most highly protected economies in the early 1990s when it experienced unsustainable large trade deﬁcits. Further, there is a dynamic balance between a country’s trade balance and exchange rate: in an open economy, reducing a country’s imports could lead to an appreciation of its currency and eventually hurt its exports as well. It’s still a bit early to comprehend the future scenario. Bivens Collinson added there is no way the manufacturer nor brands can absorb that high of a tariff. While the entire 35 per cent may not be added on to the cost of an item, it can be anticipated that at least some may be added to the cost of apparel and footwear. For now, it’s a wait & watch scenario for the world at large as to how things pan out in the future and how individual countries ﬁght for their right in front of the juggernaut called the US.

As per trade experts, the US wants to go back to the pre-WTO system where abiding by a verdict of the dispute settlement mechanism was not binding and the winning country had to sit down and negotiate with the losing party, which could end up giving more powers to large developed countries to arm-twist their small economic partners.

POLICY NEWS Regulatory Policies

Duty Structures

Trade Treaties

FTAs

Bilateral discussions

POLICY INDIA

India for tighter SAFTA rules of origin to restrict entry of Chinese textiles

Bangladesh imports Chinese fabric, converts them into garments using cheap labor and then exports them to India without paying any duties. And this unilateral duty free market access given to Bangladesh is actually facilitating backdoor entry of Chinese textiles into India.

The commerce ministry is looking to ﬁne tune South Asia Free Trade Area (SAFTA) rules of origin to make it mandatory for Bangladesh to use yarn and fabrics produced in India in its garments for claiming duty and quota-free exports. This at a time, when Bangladesh apparels made from fabric sourced out of China is ﬂooding the Indian market. Even as textile exports from India continue to drop, there has been a surge in imports of textile products, post GST. From July to December 2017, India’s garment imports from Bangladesh went up 66 per cent year-on-year (y-o-y) to reach $111.3 million, while knitted apparel imports from Bangladesh increased by 77 per cent y-o-y to $36.5 million in the same

Sri Lanka wants India to scrap apparel quotas

period, woven apparel imports grew 62 per cent y-o-y to $74.8 million. Tweaking SAFTA rules of origin to make the use of yarn and fabrics of Indian origin mandatory for allowing duty-free, quota-free market access will prevent China from taking undue advantage of a facility that is meant for poor, least developed countries (LDCs). At the same time, it will boost India’s yarn and fabric exports to Bangladesh and other LDCs, which at present are being supplied by China. India will be the ﬁrst country to impose such sourcing restrictions for allowing dutyfree import of apparel. The US imposed sourcing restriction under North American Free Trade Agreement (NAFTA) for accepting duty-free import of garments from Mexico and other NAFTA members. India permitted duty free import of readymade garments from Bangladesh under SAFTA in 2006. Earlier, this facility was limited to 8 million pieces per annum. This restriction was removed in 2010 which resulted in imports from Bangladesh going up consistently.

The Sri Lanka Apparel Exporters Association Chairman Felix Fernando has asked the Indian government to enhance apparel quota system significantly or remove it completely. This will give Sri Lankan apparel exporters more confidence in doing business with India, he feels. Since quota restrictions have been imposed, Sri Lanka can export only a certain quantity. The existing apparel quota is not sufficient for large scale Sri Lankan apparel manufacturers to export to India and it is pertinent to remove these existing impediments to create win opportunities for both countries. Sri Lankan apparel exports have grown substantially recording a 6 per cent growth over the last six months. Fernando feels the current trend would continue in the coming months. Sri Lanka currently exports fabrics and other materials from several ASEAN countries including China which are not eligible to receive the GSP Plus benefit. There is a need for a methodology to help the country’s manufactures to obtain required fabrics and materials from India rather than importing from several ASEAN countries. As per Sri Lanka’s special assignments minister Sarath Amunugama, apparel quota was given not with the idea of restricting but to stimulate trade. Today, that objective is not necessarily uppermost. Sri Lanka is now ready to compete. Apparel is a sensitive product for India given its own apparel industry, the minister noted and removing or improving existing quota wouldn’t affect the extensiveness of Indian market but it would certainly be a positive gesture for a country like Sri Lanka.

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POLICY NEWS

GLOBAL Malaysia’s FTA with US may be delayed

The prospect of a US-Malaysia bilateral trade agreement continues to be bleak until the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP) is completely adopted. The CPTPP came into force when the US pulled out of the Trans Pacific Partnership. The remaining 11 members of the pact agreed to proceed with the treaty, without the US. So, it is unlikely that a US-Malaysia free trade agreement (FTA) will transpire anytime soon. TPP which included the US would have provided Malaysia access to nearly 300 million consumers in America, as well as lower tariffs for Malaysian exports, among other benefits. Lower tariffs and access to US government procurements to increase Malaysian electrical and electronic exports would have also led to tariff savings along with business opportunities. Malaysia had earlier expressed a disinterest to pursue the TPPA without the US. Now, however, it has become more receptive in proceeding with the multilateral trade agreement, while engaging with the US in a separate dialogue. Malaysia feels, a FTA would be vital to elevate trade and investment ties between the two countries and the TPPA framework, which has been delayed since 2008, could be used as a template to complete the FTA negotiations. The US is Malaysia’s third largest trade partner, behind China and the European Union.

to launch an investigation if there are signiﬁcant shortcomings with respect to the implementation of international conventions relevant under the scheme.” A statement issued by the commerce ministry said the EU Parliament expressed satisfaction on the progress achieved by Pakistan in enacting new laws and hoped Islamabad would continue to engage with the EU and ensure to bridge implementation gaps during the next two years of reporting on GSP+. The CIT also agreed to consider the possibility of up-scaling the relationship with Pakistan from a beneﬁciary of GSP+ scheme to a FTA partner in the future. A similar offer of an FTA has been made to India.

Vietnam’s FTA with Europe may happen soon Vietnam is expected to sign a free trade agreement with the EU this year. When implemented, it would become one of the most ambitious and comprehensive investment agreements to be signed between the European Union and a developing country. Vietnamese enterprises can get access to a market with a population of more than 500 million people and a GDP which accounts for 22 per cent of global GDP. In return, EU investors can explore a market that has the most rapid economic growth in the region with a population of more than 90 million people. The FTA will contribute about 2.5 per cent to Vietnam’s GDP in 2020 and 4.6 per cent in 2025.

EU extends GSP + beneﬁts to Pakistan The Generalised System of Preferences Plus (GSP+) scheme has been approved by the European Parliament’s Committee on International Trade (CIT) thus ensuring Pakistani exporters enjoy preferential duties on exports for the next two years. The continuation of the scheme is a gift for the country’s enactment of new laws and developing new institutions for implantation of 27 core conventions of GSP+ — mainly the National Action Plan for human rights. EU’s ambassador Jean-François Cautain conﬁrmed this. “The steps being taken are part of the ongoing GSP+ monitoring process during which the European Commission can decide APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 29

POLICY NEWS

Vietnam is now a benchmark for other Asean countries that are willing to engage in FTA negotiations with the EU. Vietnam’s textile and garments exports rose 10 per cent this year compared to last year. In 2017, its exports of garment products to the US were 9.4 per cent higher than in 2016. Meanwhile a denim and sportswear supply chain show will be held in Vietnam, on June 27 and 28, 2018. This is the third edition of the show.

China to tweak FTA with Pakistan

China has agreed to accommodate the demands of Pakistani exporters in the amended Free Trade Agreement (FTA), which is expected to be signed in March. The Pakistani delegation was led by secretary commerce Mohammad Younus Dagha while the Chinese side was headed by vice minister for commerce Wang Shouwen. The demands included provision for tariff concessions equivalent to Asean countries. The Free Trade Agreement (FTA) between Pakistan and China is expected to be signed by mid March to increase trade between the two countries. The Chinese side also agreed on Electronic Data Exchange which would help in rescuing the chances of under invoicing, another major concern of Pakistan industry. The major focus of STPF would be to boost exports in technology and services sector, competitiveness and investment linkages, particularly attraction of Foreign Direct Investment (FDI) in export related industry and integration of local industry into global value chain.

Bangladesh banks on FTA with Sri Lanka Bangladesh’s high commissioner Riaz Hamid-ullah is conﬁdent about signing a FTA with Sri Lanka this year. Hamid-ullah says, the Bangladeshi ministry is now in discussion with the Ministry of Development Strategies and International Trade. They are engaged in a joint study to determine the scope, modalities and sectors of the agreement. Once this is done, they will develop joint recommendations for the formulation of an agreement. The proposed FTA is largely focused on service sector not goods and targeted at logging into the international supply chain. This should go beyond bilateral trade between the two countries. Hamid-ullah also invited proposals and recommendations for

the FTA from the business council. Speaking of development of his country’s economy and infrastructure, Hamidullah noted trade with Bangladesh was not limited to its market but connected to global and regional trade. “Bangladesh is becoming more connected in its economic landscape and its physical landscape is also becoming a lot smoother, connecting the country to the regional market,” he added. The good relations the two countries shared and facilitation extended to Sri Lankan investors by different governing authorities has made the country an excellent option for investment-related partnerships. The investment of $100 million by LAUGFS Gas (Bangladesh) in the Mongla Port was testimony to the good investment opportunities present in Bangladesh for Sri Lankan investors, he pointed out.

China’s Belt and Road attracts Nepal China’s Belt and Road Initiative may help Nepal realize its dream of development and economic prosperity. Nepal, a landlocked and least developed country, needs the cooperation of neighbours, especially China, to upgrade its status to a developing country. Introduced by China in 2013, the Belt and Road Initiative aims to build a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes the Silk Road. The Belt and Road Initiative is expected to bring opportunities in multiple ﬁelds including trade, connectivity, physical infrastructure development, tourism and investment. China and Nepal are interested in enhancing cooperation, namely, strengthening policy coordination and consolidating mutual trust, expanding connectivity and sharing experience for economic development, promoting unimpeded trade, deepening the ﬁnancial integration and constructing the road for innovation, strengthening the people-to-people bond for mutual learning. Nepal seeks investment under the Belt and Road Initiative in various possible sectors like hydropower, agriculture, trade related infrastructure, tourism, herbs and herbal products, natural resources and service sectors. But for that to happen, Nepal needs to pay attention to basic pre-requisites like connectivity, infrastructure development, reforms in laws, and policy amendments, among others. In addition, there is a need for sincerity and political commitment for the implementation of initiatives from Nepal’s side.

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GUEST COLUMN

How worried should EMs be as DM yields head high? Mr. Abhishek Goenka, CEO, IFA Global, throws light on rising yields in developed economies and its aftereffects on emerging markets and how it would trigger a ﬂight of capital from the latter. move higher in developed market yields. We are in a phase where all three major central banks i.e. the US Federal Reserve, the ECB (European Central Bank) and the BoJ (Bank of Japan) are looking to wind down the ultra-accommodative monetary policy measures. The question therefore is: whether a coherent sharp move higher in US, German and Japanese bond yields would spook the rupee and domestic capital markets again? This time around however, the fundamentals are a little different.

Abhishek Goenka, CEO, IFA Global The yields in developed economies have started heading higher. This raises the question whether the hardening global yields would be disruptive for emerging markets and whether it would trigger a ﬂight of capital from EM assets as a result of carry trade unwinding. Since 2008, there have been three instances when the US, Japanese and German bond yields have moved higher sharply, in unison. When it happened, rupee moved from 39.50 to 43. The second instance was in early 2009, when the rupee weakened from 47 to 52 and the third time it happened in 2013, when the rupee depreciated from 53 to 68. Of course, on each of these occasions there were domestic factors too that were responsible for exacerbating the rupee moves but the trigger was a concerted

The US Federal Reserve has gone up four times and has also initiated balance sheet reduction without causing a major disruption in the global financial markets (quite unlike the time when it had announced tapering of its QE program). Persistent undershoot of its inflation target despite a strengthening economy has given it the leeway to withdraw stimulus gradually. Similarly on the domestic front, the BoP situation is more comfortable, inflation is under control, a sizeable war chest has been built in the form of foreign currency reserves and the government seems committed to fiscal prudence.

We are in a phase where all three major central banks i.e. the US Federal Reserve, the ECB (European Central Bank) and the BoJ (Bank of Japan) are looking to wind down the ultraaccommodative monetary policy measures.

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Rupee weakness in turn starts diminishing the dollar denominated returns of existing investors as a lot of investments are unhedged. This triggers panic and exacerbates sell-off in domestic stocks and bonds. The cushion of higher FX Reserves makes the rupee less vulnerable to outside shocks this time around. Usually a bit of risk aversion initiates FPI selling in stocks and bonds and as they withdraw money from domestic stocks and bonds, the rupee weakens. Rupee weakness in turn starts diminishing the dollar denominated returns of existing investors as a lot of investments are unhedged. This triggers panic and exacerbates sell-off in domestic stocks and bonds. The central bank has been intervening on both sides to keep the rupee stable and the stability of the rupee would comfort FPIs. Unless there is a concerted move higher in DM yields that causes all EM currencies to weaken in tandem, thereby allowing the central bank to let the rupee move in tandem with them, it is unlikely we would see that sort of panic in domestic assets. To get early warning signs though, of a capital ﬂight, we need to closely monitor the next few inﬂation prints in the US, Eurozone and Japan.

TRADE TREATIES

Shifting trade dynamics in global apparel and textile market

With the signing of CPTPP, global trade dynamics is expected to change. While some countries will surely reap good beneďŹ ts, how it will impact India is still being speculated. But for now, Indian apparel and textile exporters can feel easy as the US is not part of the deal.

CPTPP is one of the largest free trade agreements between 11 countries The US is not part of the deal India too is not a part of CPTPP The CPTPP takes a broad approach to cross-border trade and investment in services Signing the agreement will attract some textile investments in Vietnam CPTPP will not impact India much

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TRADE TREATIES

In textiles the CPTPP includes “yarn forward” rules of origin for textile and apparel products. The speciﬁc rules require that production of speciﬁed yarns and fabrics used in textile and apparel production, as well as associated cutting and sewing, must occur in a CPTPP country in order for a product to be eligible for preferential treatment under the Agreement

The much talked about Comprehensive and Progressive Agreement for TransPaciﬁc Partnership (CPTPP) is a reality now. The agreement signed in March 2018 is one of the largest free trade agreements between 11 countries reinforcing their commitment towards free and fair trade. The signatory countries are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. The 11 countries that are party to the CPTPP, form one of the largest trading blocks in the world, accounting for nearly 13.5 per cent of global GDP. Going forward, it will include countries like include Indonesia, the Philippines, South Korea, Taiwan, Thailand, and United Kingdom. In spite of the absence of United States in the deal, countries like Japan, Canada and Australia have come forward to support the new TPP or CPTPP and are expected to gain signiﬁcantly from it. Japan has termed the agreement as an “Engine to overcome protectionism” emerging in parts of the world while it has been well timed for Canada, as it is trying to diversify exports. Further, both Canada which wanted protection of its cultural industries, and Vietnam, which has worried about labour protection rules, will exchange separate side letters with other members on these lines.

Understanding CPTPP The CPTPP is a trade agreement that

covers digital trade, intellectual property rights, state-owned enterprises, nontariff barriers, regulatory coherence, labour and environment as well as traditional areas such as goods, services, investment and government procurement between the signatory countries. According to Global Trade Analysis Project (GTAP) model developed by Purdue University, the economic impact of the CPTPP can be measured by comparing the economic performance of all CPTPP countries between a baseline scenario (prior to implementation of CPTPP) and a post-liberalization scenario (following full implementation of the CPTPP). The baseline scenario simulates the evolution of the global economy to 2040 in the absence of the CPTPP, based on the projected macroeconomic benchmarks and demographic changes provided by the International Monetary Fund and other international organizations. The baseline scenario incorporates the existing tariff schedules under mostfavoured nation (MFN) treatment along with all bilateral FTAs among CPTPP countries, as well as any unilateral tariff liberalization made by countries.The net effect of the CPTPP can be quantiﬁed as the difference between the baseline and post-liberalization scenario expressed in terms of changes in GDP, exports and imports. This approach ensures that all other macroeconomic forces affecting

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the economy, such as macroeconomic fluctuations, employment changes, exchange rate shifts and technological developments, stay the same for both the baseline and post-liberalization scenarios, thus isolating the effects of the CPTPP. The CPTPP takes a broad approach to cross-border trade and investment in services, with services covered unless specifically excluded or listed in a country’s schedule of non-conforming measures (i.e. a negative list approach). Moreover, the agreement ensures that commitments by members are lockedin based on their current domestic regime and therefore cannot become more restrictive.In textiles the CPTPP includes “yarn forward” rules of origin for textile and apparel products. The specific rules require that production of specified yarns and fabrics used in textile and apparel production, as well as associated cutting and sewing, must occur in a CPTPP country in order for a product to be eligible for preferential treatment under the Agreement.

Realigning sourcing hubs

global

The CPTPP agreement is expected to provide a major boost for the growth of textile and apparel trade in signatory countries. Canada, one of the signatory countries, is expected to witness increased market access and greater regional economic integration with AsiaPaciﬁc countries. Apart from Canada,

TRADE TREATIES

CPTPP comes as a major relief to India, primarily due to the absence of United States in the agreement. Without the United States, the signatory countries constitute only 13 per cent of the global economy. Further, CPTPP is not expected to impact India much as six of the 11 CPTPP countries are already part of the group negotiating the 16-nation Regional Comprehensive Economic Partnership (RCEP) agreement where India is also a participant. Vietnam will be a major beneﬁciary of the agreement. Vietnam textile and apparel sector sees CPTPP as an opportunity to expand their export turnover and contribute to the growth target of over 10 per cent of the sector. Signing the agreement will also attract some textile investments in Vietnam. Australia, Canada, Japan, New Zealand and Singapore depend largely on imported apparel, mainly from China. Vietnam’s textile and apparel industry would get a major boost from the deal as the country’s duty free access will add an

edge over its competitors. Subsequently, the country is expected to witness major investments in the textile sector. As textile and apparel marketers are exploring emerging markets, Vietnam can tap the opportunity, giving competition to countries like Bangladesh and India.Going forward, the deal’s impact will be more significant if UK joins it. In fact, the total world textile and garment demand in the last five years has remained unchanged, with countries importing only over $700 billion worth of textiles and clothing while most of the textile and garment exporters have seen a decline.In 2017, with large export turnover of textile and garment China fell over $3 billion, Bangladesh also witnessed a decline, only Vietnam increased over $3 billion and India increased $1 billion. Indeed competition in textile export is always fierce, so the growth of Vietnam textile and garment depends on the dynamics of competitors. It is clear that it would be difficult to maintain export growth rate of over $3 billion in coming years.

CPTPP and textile and industry

India’s apparel

Apparel manufacturers and marketers in India are also speculating about the

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impact of the agreement on the country’s textile and apparel industry. With the earlier TPP undoubtedly, India’s apparel exporters expected to witness fierce competition from Vietnam however, India’s domestic apparel market is growing at a fast pace, giving enough opportunity to marketers. Though GST resulted in apparel imports growing significantly from Bangladesh experts say if India were to conform to TPP rules on market access in goods, the domestic industry may not be able to face import competition in a duty-free regime and would require significant changes in its regulatory regime. However, CPTPP comes as a major relief to India, primarily due to the absence of United States in the agreement. Without the United States, the signatory countries constitute only 13 per cent of the global economy. Further, CPTPP is not expected to impact India much as six of the 11 CPTPP countries are already part of the group negotiating the 16-nation Regional Comprehensive Economic Partnership (RCEP) agreement where India is also a participant. Hence, for the time being the labourintensive garment industry should not feel any threat, as fears of key competitor Vietnam gaining duty-free access to the US, India’s single-largest market for such products subside for now.

BRAND & RETAIL NEWS Business

Marketplace

M&A

Store Opening/Closing

Bankruptcy

E-commerce

RETAIL

Asia dominates apparel retail The era of North American and European dominance of apparel retail sales is ending. Asia has taken the lead in retail. In 2018, the retail industry will continue to be unpredictable, which is now the new normal. The good news is, the industry can look forward to solid sustained growth in 2018. Top 20 per cent retailers globally provide nearly 150 per cent of economic profit in the retail industry. The largest retailers are forecasted to control an even larger stake in global economic profits in 2018 through their scale and dominance. In 2018, greater personalisation both in online and brick and mortar retail will take place. Consumer values will be understood by artificial intelligence; AI will be used to tailor recommendations, engage purchasers, influence and personalise purchasing decisions. More data on each of us will be used to create a purchasing experience custom-tailored to our expectations, likely without our knowledge.

and further extend its leading role. One can hardly think of an ‘American LVMH’. Even Coach and Michael Kors are fighting to become America’s luxury conglomerate and neither really fit the bill as a pillar of strength around which to build a luxury giant. They lack the strong cash profile necessary to finance such a strategic move, also the combined market capital of the four largest American soft luxury champions would be no match for a European challenger. LVMH emerges a clear leader to spearhead industry consolidation. Kering, the international luxury group based in Paris, which owns luxury goods brands, including high-fashion labels such as Gucci, Saint Laurent and Alexander McQueen appears the natural challenger. Not only does it have multicategory ambitions, it could certainly move towards a high-

Online platforms will become the consumer’s obsession before stepping out of their home to make any purchase. The decisions we make as consumers will be made and will take place on our mobile technology. In 2018, mobile technology will become even more important to consumers for both online and brick-and-mortar retail businesses.

profile merger. A tie-up with Richemont SA the Swiss-based luxury goods holding company would be a master stroke. The Swiss luxury group announced recently that it was doubling its investments in high-end internet retail, making an offer of €2.8, or about $3.4 billion, for the online fashion retailer Yoox Net-a-Porter. Richemont’s strategy is an acknowledgment that wealthy consumers are increasingly comfortable buying an expensive watch with a click rather than a trip to an upscale store. Richemont may have ‘the filthy lucre’, but it also has a controlling family whose voting rights would be diluted by a high-profile merger. The group could also be on the receiving end of a bid/ merger by one of the two French giants, LVMH or Kering

Luxury goods industry set for merger The luxury goods industry is ripe for further M&A. Francebased luxury goods company Moet Hennessy Louis Vuitton SA (LVMH), is in a key position to lead consolidation through M&A

It would be amazing to see LVMH tie-up with Chanel. Given its footprint in cosmetics, Chanel would be even more desirable than Hermès and not as big as L’Oréal. On the practical side of M&A the choices are limited. However, what’s certain is that any major move is likely to be as dramatic as the French Moulin Rouge.

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 35

BRAND & RETAIL NEWS

Chinese companies buy global brands

Chinese firms are buying well known brands in the hope of upgrading their own image. Buying famous foreign brands is expected to help them build their own brand, and proper management and deployment of sales channels may help them gain popularity among domestic consumers. Chinese textile giant Shandong Ruyi has announced plans to buy Bally. Shandong is also a joint owner of Scotland’s The Carloway Mill, one of the few remaining makers of Harris Tweed. Fosun is said to have already clinched a deal to buy Lanvin, after having nabbed majority stake in the Italian tailor Caruso in November. It’s doing due diligence on the lingerie label La Perla. Chinese e-commerce players are also moving quickly into western markets. Secoo, China’s largest luxury e-commerce platform is looking for opportunities to expand in Europe, while VIP has become an official London Fashion Week sponsor and plans to work with London-based brands throughout the year to help them enter the Chinese market. But there are concerns about whether a brand like Bally might be devalued after being acquired by a Chinese firm. The management model and deployment of sales channels will matter if Bally wants to win further recognition in the domestic market in the future.

October. Earnings per share on an adjusted basis, was $1.01, a penny below forecasts. For the full year, revenues went up by 7 per cent to $11.8 billion. Earnings per share on a reported basis dropped 30 per cent to $1.79, including a negative impact from recent U.S. tax legislation. Adjusted earnings per share increased 4 per cent to $2.98.

G-Star Raw to take-over Swedish franchise Dutch designer clothing company G-Star Raw is taking over its Swedish franchise partner, Global Retail Sweden. The company, has begun the takeover process from Global Retail Sweden — the company that operates 17 stores in the country. Once the deal is signed and sealed, existing G-Star stores in Sweden will be headed by a local G-Star team based in Stockholm. G-Star announced it has built a healthy relationship with Swedish shoppers since it launched its ﬁrst store in 2008. The takeover will enable the company to strengthen its foothold in Sweden, part of an elaborate strategy to focus on controlled space and transform into a direct retail organisation. Mary Doumtsi, GM for U K and Scandinavia says the Swedish market is important for them and they want to increase focus on loyal customers and deliver best in class experience. G-Star Raw was founded in 1989 in Amsterdam by Jos Tilburg. The company currently has 6,500 point of sales in 63 countries globally, 350 of these being mono-brand stores. To ensure sustainable production and become a more environmentally

VF Corp to sell Nautica VF Corp. the parent company of Timberland, The North Face, Wrangler etc, is in discussions to sell its apparel brand Nautica as it continues to focus on best-performing brand. The sell out is due to the company’s sale of its Licensed Sports Group business to Fanatics in April 2017 and the divestiture of contemporary brands businesses which include 7 For All Mankind and Splendid, to Delta Galil Industries in August 2016. This was announced by the company in its Q4 earnings statement. Steve Rendle, Chairman and CEO, VF Corp, told investors, “While we do not yet have a deﬁnitive agreement, we are actively engaged with several parties, and we’ll update you as conditions warrant.” VF’s revenues went up by 20 per cent to $3.62 billion in Q4, its below the forecasts of $3.7 billion. It reported $247 million in revenue from Williamson-Dickie subsidiary which it acquired in APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 36

BRAND & RETAIL NEWS

friendly, responsible denim production, G-Star has teamed with Artistic Milliners, DyStar and denim manufacturer Saitex to launch G-Star Elwood RFTPi jeans, which is its “most sustainable jeans ever.”

Hanesbrands to buy intimate apparel retailer

Australian

Hanesbrands is looking to acquire Australian intimate apparel retailer Bras N Things. Reporting Q4 and full-year 2017 results, including an 8 per cent fall in operating proﬁts for the quarter, the apparel brand will pay $400 million for the specialty retailer

and online seller of intimate apparels in Australia, New Zealand and South Africa. In 2017, Bras N Things recorded net sales of around A$180 million (US$144 million). The Sydney-based company sells proprietary bras, panties and lingerie sets through a retail network of around 170 stores and e-commerce platform. Its three-year CAGR is 11 per cent and online sales year rose by 71 per cent last year. The company manages 154 stores in Australia, 10 stores in New Zealand and 7 stores in South Africa. Post acquisition, Hanesbrands says its combined commercial businesses would make it the market leader in bras, panties, underwear, socks and baby wear in Australia.

Amazon ranks among top six apparel retailers Six apparel companies have entered the ‘Fast Company’s’ The World’s 50 Most Innovative Companies list this year. What’s more, four of the six —Amazon, Patagonia, Stitch Fix and Walmart—ranked among the top 20. Amazon, grabbed 5th spot. Jeff Bezos, Founder of Amazon says the reason for their victory is the company’s focus on long-term customer loyalty and exponential expansion into new businesses.

newbie, born in 2011, Stitch Fix’s 13th position is in recognition of the impact the e-commerce subscription and personal shopping service has had on the apparel industry since its launch. The reason behind its success is personalised services and keen eye for detail of its over two million users. Walmart, at No. 15, has not only maintained its retail dominance in the face of adversity as a brick-and-mortar store — 4,700 locations in the US and over 600 outlets of its members’-- only warehouse chain Sam’s Club — but it has also made several strong moves in digital retail, investing in e-commerce services, fulﬁlment centres and technology initiatives.

Shoppers love Nordstrom Nordstrom has been emerged a favorite premium fashion retailer among shoppers. Nike takes top spot for footwear. Macy’s topped for e-commerce purchases. These are the results of an annual fashion retail study conducted by Market Force. Kohl’s ranked ﬁrst for its loyalty card program as well as for delivering high value for its prices. Lane Bryant, Nordstrom and Dillard’s were at the bottom of the list for high value for the price. Best merchandise selection, atmosphere and checkout speeds went to Nordstrom. But Lane Bryant was the leader for the ability to create and look and for ease of ﬁnding items. Customers are often assisted at Lane Bryant and Nordstrom and assisted the least at Kohl’s and Old Navy. Nearly 75 per cent of shoppers interact with their favorite fashion retailer online, a 103 per cent increase over the previous year. Despite online growth, consumers are still hitting physical stores for fashion. The survey says, 76 per cent shopped at one of their favorite retailers’ physical stores at least once in the past 90 days, and 48 per cent shopped there at least three times.

Amazon is a leading apparel retailer, expanding its already extensive apparel empire last year with the launch of try-beforeyou-buy service Prime Wardrobe and private label activewear lines Rebel Canyon and Peak Velocity. The e-commerce behemoth is forecast to lead the US apparel market by 2020. Patagonia was in 6th place due to its retail successes by serving as a champion of social causes. Founded in 1973, it has grown into one of the most successful and well respected outdoor brands. The company, which is privately-owned, has used its brand image to enhance awareness on social and environmental issues, investing in grassroots organisation that enables its supply chain to be more sustainable. Comparative APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 37

MARKET FOCUS

THE USA MARKET

Changing over from outsourcing to reshoring and near shoring The US has been one of the biggest markets for textile & clothing suppliers across the globe. But the recent policy upheavals under the Trump administration are charting another story for the entire US textile industry. The government’s popular slogan ‘Make US manufacturing great again’ has had serious implications on the sourcing business and resulted in several companies reshoring their bases to home ground again. This has not only boosted employment but also resulted in faster time to market for retailers. A report.

The US textile industry supply chain, from textile ﬁbres to apparel and other sewn products, employed 550,500 workers in 2017. The US Government estimates one textile manufacturing job in this country supports three other jobs. US textile and apparel shipments totalled $78 billion in 2017. It is the fourth largest exporter of textile-related products in the world. Fibre, textile, and apparel exports combined were $28.6 billion in 2017. Excluding cotton, two-thirds of US textile supply chain exports went to its Western Hemisphere free trade partners in 2017. The entire US textile supply chain exported to more than 200 countries, with 34 countries importing $100 million or more. In 2017, hourly and nonsupervisory textile mill workers on average earned 136 per cent more than clothing store workers ($646 per week vs. $274) and received health care and pension beneﬁts.

The US is no longer the textile manufacturing hotspot rather it is one of the biggest apparel importers in the world. In 2017, apparel products accounted for 75.7 per cent of total US textile and apparel imports in 2017, followed by made-up textiles (17.4 per cent), fabrics (5.7 per cent) and yarns (1.2 per cent). As far as apparel imports are concerned, it was $80,287 million in 2017, slightly down 0.5 per cent from a year earlier and up 40.3 per cent from 2000. The country imported apparel from as many as 150 countries in 2017. This ﬁgure reﬂects that the US fashion brands and retailers have been gradually diversifying their sourcing bases. Top suppliers to

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the US in 2017 (by value) were China (33.7 per cent), Vietnam (14.4 per cent), Bangladesh (6.3 per cent), Indonesia (5.7 per cent), India (4.6 per cent) and Mexico (4.5 per cent). Meanwhile near-shoring has been gaining impetus even after uncertainties over renegotiation of the NAFTA treaty the US apparel imports from Mexico and Canada witnessed a growth of 5.3 per cent and 7.7 per cent respectively in 2017 from a year earlier. These days companies are increasingly focussing on speed to market and the ﬁgures complete the whole story. The US apparel imports have been witnessing a structural change with the market tilting towards non-traditional

MARKET FOCUS

nations. Textile and apparel imports to the US jumped 4 per cent to 4.99 billion sq. mt. equivalents in December compared to a year earlier. China took the lead for the month posting a 4.8 per cent increase, according to data released by the Commerce Department’s Ofﬁce of Textiles & Apparel. India continued to show strength at No. 2, with a 2.7 per cent increase and a 7 per cent hike for the full year to 5.15 billion SME on top of a 5.7 per cent hike in 2016. Vietnam’s imports ﬁnished strong with a 9.5 per cent yearto-year gain for the month and a 7.7 per cent jump to 4.83 billion SME for the year, topping 2016’s 2.5 per cent gain.

Diversifying sourcing base

their

In 2017, US apparel imports came from as many as 150 countries. In fact, the Herﬁndahl Index, a commonly adopted measure of market concentration, declined from 0.17 in 2010 to 0.15 in 2017, implying the overall US apparel import market is becoming less concentrated. Another 2017 Benchmarking companies are too many eggs of increasing

US Fashion Industry Study found US cautious about ‘putting in one basket’ because uncertainty associated

with apparel sourcing, from the threats of trade protectionism, various social and environmental compliance risks, to potential labour disputes. With shifting comparative advantage in garment manufacturing among countries in the world, some apparel exporters, although still small in scale, are gradually emerging sourcing bases for US companies.

Vietnam’s expanse

growing

As per US Commerce Department ﬁgures, Vietnam has seen the highest increase in textiles and apparel imports to the US in September compared to a year earlier, as it continued to take business away from other Asian countries such as Indonesia. Bangladesh showed signs of a slowdown in production. Talking about the statistics, Nate Herman, VP-international trade, the American Apparel & Footwear Association, stated that the overall apparel import growth used to come from China and Bangladesh, but today Vietnam is the main driver. The trend doesn’t seem to get over sooner. Julia Hughes, President of the US Fashion Industry Association, points out the country is undergoing consolidation amid a lot of

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Julia Hughes, President of the US Fashion Industry Association

“The country is undergoing consolidation amid a lot of uncertainty. China retains the position of a dominant apparel supplier and Vietnam has taken the No. 2 slot and together they contribute 55 per cent of all apparel imports by volume.”

MARKET FOCUS

The US apparel imports have been witnessing a structural change with the market tilting towards nontraditional nations. Textile and apparel imports to the US jumped 4 per cent to 4.99 billion sq. mt. equivalents in December compared to a year earlier. China took the lead for the month posting a 4.8 per cent increase. uncertainty. China retains the position of a dominant apparel supplier and Vietnam has taken the No. 2 slot and together they contribute 55 per cent of all apparel imports by volume. The fact remains that they are essential to the industry, which really matters when it comes to the trade policy agenda and concerns over how aggressively the Trump administration will go after China, and the potential for trade skirmishes.

as other Asian countries are concerned, Pakistan, the No. 4 supplier to the US for apparel and textiles, registered a dip in imports of about 5.6 per cent in December. Bangladesh, the No. 7 supplier, witnessed 10.8 per cent drop for the month and rose only 2.1 per cent for the year to 2.24 billion SME. Indonesia’s imports fell 7.7 per cent, while South Korea, the eighth largest supplier, saw imports grow 12.5 per cent in the month.

Adding to that, Nate Herman, Senior-VP supply chain for the American Apparel & Footwear Association, explains despite rising costs, China is still the best place to do business. It has access to raw materials and is reliable. Despite Trump removing the US from the Trans-Paciﬁc Partnership trade talks, which was expected to fuel great growth for Vietnam, the Asian nation is still the fastest growing supplier.

Mexico, the number 5 supplier to the US for textiles and apparel registered 4.5 per cent gain in the month and 3.8 per cent increase for the year whereas Canada’s imports rose 14.4 per cent in December. According to Hughes, there is a strong demand in Mexico and companies rely on

The country is charging full duty on everything from China and Vietnam, but they are stil strong suppliers because they clearly are meeting the needs of the retailers for product, price and on-time delivery, according to Hughes. He said that China has likely also picked up market share from places like Cambodia and Bangladesh as they remain problematic and somewhat risky. Some companies stated that China remains the safe haven. It might be a little bit more expensive, but they have the infrastructure and logistics to ensure prompt delivery. Talking about India, Hughes termed it as a ‘kind of a sleeper’, yet the country is still expanding as an apparel supplier and growth will likely be ongoing. As far APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 40

the supply chain there, especially for the denim market.

Africa’s growing expanse Ethiopia is the rising star in Africa. Gail Strickler, President of Global Trade for Brookﬁeld Associate, feels Ethiopia is everybody’s go-to-spot right now. The combination of VF Corp and PVH making that determination, plus the fact that the government has liberalised things has made it a shining star. Electricity in Ethiopia comes mostly from renewable resources like hydroelectric power, and the costs are quite low. Both the Ethiopian Government and outside industry are investing in factories and industrial parks, as well as adding resources and training

MARKET FOCUS

In comparison, Vietnam was the top supplier for only ﬁve categories (mostly manmade ﬁbre suits and trousers) and two categories for Bangladesh (cotton trousers and brassieres).

that can lead to growth in production for the country. Ethiopia’s imports to the US rose a robust 45.53 per cent year-onyear to 24.4 million SME in 2017. Kenya has been steadily growing, and Lesotho has shown potential. While business in Mauritius seems to have taken a back seat owing to increased costs. The best part about doing business with West Africa is the transit time, which is just about nine days to the East Coast of the United States. Another sunrise regions are Ethiopia, Myanmar and other African countries as well as Jordan and Egypt, which are also showing growth uptick amid political uncertainty, according to Hughes. Myanmar’s imports to the US grew 90.2 per cent to 43.55 million SME in 2017.

No near competitors for ‘Made in China’ In 2017, the value of US apparel imports from China dropped 3.2 per cent from a year ago, which also resulted in the shrinkage of China’s US market share to 33.7 per cent from 34.6 per cent in 2016. Nevertheless, of the total 106 categories of apparel in the OTEXA trade database, China remained the top supplier for as many as 87 categories (or 82 per cent) in 2017.

Moreover, China was not only the top supplier of a full range of apparel products, but also held the lion’s share of the market for them. Speciﬁcally, for the 87 categories of apparel where China was the top supplier, China’s average market shares reached 40.5 per cent, which is 22.1 percentage points higher than the second-largest suppliers for these categories. Another research that justiﬁes the country’s very position is the 2017 US Fashion Industry Benchmarking Study released by the US Fashion Industry Association (USFIA), which suggests that the unparalleled manufacturing capacity is one unique advantage of China as an attractive and competitive apparel sourcing destination for US companies.

Job creation – major emphasis US President Trump’s ‘Make US great again’ have boosted the employment index of the country with recent ﬁgures showing a growth uptick of 2.9 per cent from the same period last year. This has resulted into unemployment rate falling to an 18-year low at about 4.1 per cent. Mark Zandi, Chief Economist, Moody’s Analytics, stated that the job market has been very tight and the situation seems to further accentuate. The biggest driver of this change is the immigration restriction imposed by the government, which is forcing manufacturers to pay their remaining workers a higher wage. Analysts feel that this is just the beginning.

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In order to raise Americans’ wages even further, Cotton, along with Sen. David Perdue (R-GA), introduced legislation in 2017. The Act would shift the current legal immigration system from one that prioritises high-skilled, English-proﬁcient immigrants over those with low-education rates and minor skills.

Consumption demand drives apparel imports US apparel imports overall mirror the pattern of apparel retail sales in the US market. Between 2010 and 2017, the value of US apparel retail sales has been stagnant to three times as much as the value of US apparel imports, with both growing at around 3.1 per cent annually. The value of US apparel retail totalled $260.5bn in 2017, an increase of 1.4 per cent from a year earlier and much improved on the 0.4 per cent growth between 2015 and 2016. Correspondingly, the value of US apparel imports reached $80.29bn in 2017, slipping 0.5 per cent from a year earlier and also recovering from a 5.6 per cent decline between 2015 and 2016. Because of an improving US economy and consumers’ growing spending on clothing, it is estimated that the value of US apparel imports could enjoy even faster growth in 2018.

Made in US – no more a slogan According to a recent study by Consumer Reports, almost 8 in 10 American consumers say they would rather buy an American-made product than an imported one, and more than 60 per cent say they are even willing to pay 10 per cent more for it. Americans believe that US-made products are more reliable (84 per cent), The US apparel and footwear industry has joined the growing list of opponents in corporate America to the sweeping tariffs that President Donald Trump is expected to impose on goods imported from China. As per the recent developments, Washington could impose more than $60 billion in tariffs on goods ranging from electronics to apparel, footwear and toys. A so-called Section 301 action would allow Trump to impose unilateral tariffs on China in response to a conclusion by the US Government that the Chinese had violated intellectual property rules.

MARKET FOCUS

they want to keep manufacturing jobs at home (88 per cent), to help the economy (87 per cent) and to keep America strong in the global economy (84 per cent). The growing need for faster delivery as well as customization is fueling reshoring opportunities for the US companies. Recent Reshoring Initiative data reflects that it ranks number six in industries that have reshored with 17,166 jobs by 287 companies since 2010. Local sourcing seems to have worked better for today’s ‘on-demand’ apparel consumers. For clothing startups, local for local i.e. reshoring offers efficiency enhancement with smaller batches, as well as greater flexibility for customisation, style changes and speeds delivery to customers. Yogasmoga, a three-year-old startup, was initially motivated to manufacture in the US to develop their technical performance fabrics and protect intellectual property. Rishi Bali, founder & CEO, found that local manufacturing is the only way to monitor quality, overcome communication issues and have the flexibility to quickly scale up his business. Because of this, he is able to meet demand much quicker. Buck Mason, Sasha Koehn’s and Erik Schnakenberg’s apparel startup, set up their manufacturing unit for t-shirts, jeans and button-downs in LA. They were able to manufacture their first batch of t-shirts for just $5,000 locally. They estimated that overseas travel to simply research an offshore factory would cost about that amount. Close proximity made production easier to manage and ensured against risky, unethical workforce practices that could potentially damage their brand. Brooks Brothers, a clothing manufacturer in the US since 1818, reshored 70 per cent of suits from offshore locations due to rising wages, quality issues and leadtime. Reshoring enhanced employment from about 300 to 530 workers at their Haverhill, Mass. plant. They produce about 6,000 buttondown shirts weekly at their Garland, NC factory, which employs about 200 people. John Martynec, senior vice president – manufacturing, elaborated that design and production teams work closely to be more responsive to changing trends with increased flexibility and much shorter lead times.If there’s a need in the marketplace, the company can respond quickly. They are looking into converting their factories into duty free sub-zones.

Kevin Plank, CEO, Under Armour, converted a former South Baltimore bus garage into an innovation center called ‘City Garage’ with an aim to bring manufacturing back home. Located inside City Garage is Under Armour’s UA Lighthouse, a 35,000sqft design and manufacturing center. With this move, the company aims to create a maker space for entrepreneurs and startups and also bring design and manufacturing under the same roof to drive innovation and collaboration, attract talent and shrink the supply chain to deliver products to consumers faster and more efﬁciently. As a result, the design, prototyping and production were reduced from 18 months to just 4 months. A recovering economy, on the back of increase in consumer conﬁdence and rising disposable income, has boosted the expanse for reshoring.Looking at the promising avenues, Walmart has also committed to source an additional $250 billion in products made, assembled or grown in the US over 10 years ending 2023. The Reshoring Initiative estimates that amount of purchases will create about 250,000 US manufacturing jobs. According to Walmart research, manufacturing goods closest to the point of sale allows for quicker turnaround time from factory to shelf. No nonsense brand made by Kayser-Roth launched a ‘Sock Initiative’ in cooperation with Walmart. With an investment of up to $28 million in its existing facilities in Burlington and Asheboro, N.C, the collaboration increased domestic production and created about 100 US jobs. The initiative enabled No nonsense and Walmart to offer more America-made products to consumers.

What’s the latest? Meanwhile the US apparel and footwear industry has joined the growing list of opponents in corporate America to the sweeping tariffs that President Donald Trump is expected to impose on goods imported from China. As per the recent developments, Washington could impose more than $60 billion in tariffs on goods ranging from electronics to apparel, footwear and toys. A so-called Section 301 action would allow Trump to impose unilateral tariffs on China in response to a conclusion by the US Government that the Chinese had violated intellectual property rules. The tariffs would not need

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 42

Mark Zandi, Chief Economist, Moody’s Analytics

“The job market has been very tight and the situation seems to further accentuate. The biggest driver of this change is the immigration restriction imposed by the government, which is forcing manufacturers to pay their remaining workers a higher wage.” congressional approval. Steve Lamar, executive vice president, the American Apparel and Footwear Association, said that because tariffs are already high on products like shoes, companies could be forced to either raise prices or reduce their American workforce if faced with increased taxes. Such changing dynamics are further pushing the domestic as well as foreign companies to look for newer avenues and opportunities to drive growth. Only time will tell as to how the entire textile & apparel industry shapes up in Trump administration. Till then, it’s just wait & watch… Vietnam was the top supplier for only five categories (mostly man-made fibre suits and trousers) and two categories for Bangladesh (cotton trousers and brassieres). Moreover, China was not only the top supplier of a full range of apparel products, but also held the lion’s share of the market for them. Specifically, for the 87 categories of apparel where China was the top supplier, China’s average market shares reached 40.5 per cent, which is 22.1 percentage points higher than the second-largest suppliers for these categories

COMPLIANCE NEWS Do’s & Don’ts

Social Compliances

Best Practices

Notiﬁcations

COMPLIANCE H&M makes supply chain transparent H&M is the first fashion company to make its supplier network fully public. The company works with between 2,200 and 2,500 suppliers, including primary and secondary. It has mapped all Tier I suppliers and has gotten through roughly 60 per cent of Tier II H&M is working on the traceability factor so consumers can follow each product as it evolves from, say, a boll of cotton to thread to fabric and finally into a finished garment. The need for fashion is to wake up to the reality of its environmental and social impact. By 2030, H&M plans to source only sustainably produced materials, and it’s on track to meet its 2020 goal of using all sustainably sourced cotton. Garment and textile recycling has been a big push for H&M. Not only has the company partnered with Worn Again to tackle the challenge of separating polyester and cotton fiber from fabric blends, it has spearheaded a similar project with the Hong Kong Research Institute of Textiles and Apparel to develop a similar poly-cotton separation technique. One year later, HKRITA has a viable solution and is looking to scale as it sets up a factory and plans to make its approach open source by 2020.

Bangladesh becomes environmentfriendly Bangladesh has 67 eco-friendly green buildings, the highest number in the world. The country’s apparel sector has a 13 LEED platinum and a total 67 certiﬁed green factories in platinum, gold and silver categories, the highest in the world. Bangladesh, the second largest readymade garment exporter in the world, has taken leading position in sustainable green industrialization with the world’s several top ranked green factories. Indonesia is the second largest, with 40 green factories, followed by India with 30 and Sri Lanka 10. After its independence in 1971, Bangladesh was held as an example of a failed state. People were used to thinking of Bangladesh readymade garment industry as a place for forced labor, child labor and small factories.

taken the lead in green initiatives. The world’s highest rated LEED platinum denim factory, knit factory, washing plant and textile mill all are situated in Bangladesh. It’s expected about 10 per cent of the total readymade garment sector in the next decade will use green technology. Bangladesh’s readymade garment sector is a $28 billion industry.

SAC, Partnership for Sustainable Textiles team up for sustainability Sustainable Apparel Coalition (SAC) and the Partnership for Sustainable Textiles will cooperate to create better working conditions and increased environmental protection across global textile supply chains. Both parties will align requirements, tools, and verification systems. In addition, joint member companies can make use of joint activities and shared information in future. Over the next four years, SAC and the Partnership for Sustainable Textiles will collaborate based on due diligence approach as defined by the United Nations Guiding Principles on Business and Human Rights and specified by the Organization for Economic Co-operation and Development for the garment sector. Members of the SAC and the Partnership for Sustainable Textiles will develop and test joint verification and reporting systems and explore opportunities for a joint methodology to measure impact. This strategic collaboration is seen as a step towards a leaner industry with more efficient practices and, ultimately, creating greater impact throughout the supply chains. It will provide companies in Europe with tools and coherent guidance to successfully implement environmental and social sustainability practices along their supply chains. It will create synergies for member companies in implementing supply chain due diligence. Members of both initiatives will benefit from reduced administrative reporting efforts.

In recent years, a silent revolution has taken place in Bangladesh garment industry. In South Asia, Bangladesh has APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 43

AEPC EVENTS

AEPC, WGSN organise Fashion Forecast Seminars The second series of seminars began in Mumbai on March 9, followed by Bangalore on March 11, Ludhiana on March 12, and Noida on March 13.

Chairman, AEPC Mr HKL Magu, addressing the Noida seminar The Apparel Export Promotion Council (AEPC) under its awareness initiatives program organised the second series of Fashion Forecast Seminars for Spring/ Summer 2019 season. The seminar was organized in association with leading global trend forecasting agency WGSN. The series began in Mumbai on March 9; followed by Bangalore on March 11; Ludhiana on March 12; and Noida on March 13. At the Bangalore seminar, textile commissioner Dr Kavita Gupta was the

chief guest. The speaker at the event was Ms Kim Mannino, Head, WGSN Live from WGSN’s London ofﬁce. Mannino is a seasoned and experienced professional with 30 years in the industry. She has worked with Promostyle for over 20 years and is currently leading the live presentations division of WGSN. Speaking at the Noida seminar, Mr HKL Magu, Chairman, AEPC said, “The industry today is stagnating. Besides grappling with routine concerns like refunds and procedural issues, we are facing strong competition from existing

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competitors like Bangladesh and Vietnam and emerging economies like Cambodia, Myanmar and Africa. And these are also the times of innovation in design, structuring, promotions and supply chain efﬁciencies. Global garment export scenario is changing and to remain competitive, the Indian garment industry will have to develop capabilities to tackle both large volume orders and manage rapid turnarounds with short lead times for diverse fashion garments. The industry will have to develop capabilities to offer better value propositions to buyers in terms

AEPC EVENTS

Participants attending the seminar in Bangalore of design and products that align with market needs.” In her presentation, Mannino gave insights on key commercial items, colors and trends for Spring/Summer ’19 and Textile Trends for A/W 2019-20. She discussed the methodology on how trends are forecasted at WGSN and how trends are dissected into macro trends. Spring/Summer ’19 season has been divided into three broad themes: Common Ground, In Touch and Creative Manifesto. The context for Common Ground is ‘deglobalization’ in a connected world. For better or for worse, the current political landscape will have lasting effects on globalization, well beyond 2019—as evidenced in the recent NATO meeting in Brussels. At a time of de-globalization,

many consumers and countries will turn away from the world economy and focus on domestic growth. At the same time, many people long to connect both locally in real life and globally through social media. It’s time to ﬁnd a Common Ground. In Touch, puts the spotlight on how in the time of constant change, consumers swing between tracking their personal data, social media and news to wanting to opt out entirely. One thing is for sure, people will want to get back in touch with the things that touch them, both emotionally and physically, including sexuality, moods, microbes and food. The context for Creative Manifesto is the inequalities and pressures of conformity. In a world where people are clamoring for truth and transparency, manifesting a desire to be different, to be heard and make an impact, creativity and self-

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 45

Spring/Summer ’19 season has been divided into three broad themes: Common Ground, In Touch and Creative Manifesto. expression will ﬂourish, both above and underground. In such times of upheaval, creativity should be encouraged both in business and design as a weapon for change. A top skill for the future, it will deﬁne directions beyond 2019 and into the next decade, and make the experience a playful along the way. All these trends were brought to life by 3D mood boards developed by WGSN and key commercial items of the season which were developed in-house by WGSN clients in India.

AEPC EVENTS

AEPC participates at Las Vegas show ‘Sourcing at MAGIC’

Sourcing at Magic is a one-of- a-kind convergence of fashion’s global supply chain, which connects established and emerging brands to an unparalleled network of manufactures, materials, technology, logistic solutions and talent.

India Pavilion was jointly inaugurated by Shri. Puneet Agarwal, IAS, Joint Secretary, Ministry of Textiles, Govt of India, Shri. H.K.L. Magu, Chairman AEPC and Shri. Ashok G Rajani, EC Member AEPC in the presence of Mr. Bob Berg, Director of Magic fair authority and the participants. In February, the Apparel Export Promotion Council along with a delegation of top readymade garment manufacturers and exporters from the country participated in ‘Sourcing at

MAGIC’, Las Vegas, USA. Sourcing at Magic is a one-of-a-kind convergence of fashion’s global supply chain, which connects established and emerging brands to an unparalleled network of

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | APRIL 2018 - 46

manufactures, materials, technology, logistic solutions and talent. Total 31 countries participated in this year’s fair. Chairman AEPC, Mr. HKL Magu led the AEPC delegation. The Council

AEPC EVENTS

booked 34 stalls and created a thematic presentation of the stalls in ‘India Pavilion’. The show attracted buyers from the United States and various countries of Latin America, Europe, Asia and rest of the world. The show helped in enhancing Indo-US Apparel trade.

The Indian Pavilion was jointly inaugurated by Mr. Puneet Agarwal, Joint Secretary, Ministry of Textiles, Govt of India, Mr. HKL Magu, Chairman

The buyers included importers, agents, buying ofﬁces, distributors/ wholesalers, fabric and trim buyers, product development and design teams and large volume retailers including department/chain stores, catalog/ mail order companies, e-commerce companies and mass merchandisers. Around 27 companies with 31 booths participated in the fair with business worth $4.79 million (approx.) being generated. The fair was attended by around 12,000 visitors. On display were items like children’s garments, T-shirts, scarves, fashion jewelry, ladies dresses, nightwear, beaded garments in knits and woven fabric etc.

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AEPC and Mr. Ashok G Rajani, Former Chairman and EC Member AEPC in the presence of Mr. Bob Berg, Director, Magic Fair Authority and participants. The delegates’ interest in the exhibits and their companies gave a boost to the exhibitors.

AEPC EVENTS

ATDC- KTM Centre of Excellence opens in Tirupur Knitwear Technology Mission (KTM), a unique initiative by AEPC, is now being transformed and repositioned as ‘ATDC-KTM Centre of Excellence’ to serve the knitwear industry of Tirupur.

AEPC Chairman Mr. HKL Magu addressing the gathering during the relaunch of ATDC - KTM Centre of Excellence Mr. HKL Magu, Chairman, AEPC inaugurated the ATDC-KTM Center of Excellence in Tirupur. Mr. KS Palanisami, District Collector Tirupur presided over the inaugural ceremony. Padmashri Dr. A Sakthivel, Vice Chairman, AEPC spoke on the occasion about the ATDC-KTM initiatives while Mr Rakesh Vaid, Senior Vice Chairman ATDC spoke about the projects and programs of the Centre of Excellence. Dr. Darlie O. Koshy Director General, IAM & ATDC was also present on the occasion.

Knitwear Technology Mission (KTM), a unique initiative by AEPC, is now being transformed and repositioned as ‘ATDCKTM Centre of Excellence’ to serve the knitwear industry of Tirupur by promoting value added knitwear innovations and development of human resources and up gradation of technical capabilities. In his welcome adders Dr. Koshy spoke about the fourth industrial revolution commonly known as ‘Industry 4.0’ the current trend of automation and data exchange in manufacturing technologies, which includes cyber-physical systems,

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In his welcome adders Dr. Koshy spoke about the fourth industrial revolution commonly known as ‘Industry 4.0’, the current trend of automation and data exchange in manufacturing technologies, which includes cyber-physical systems, the Internet of things, cloud computing, cognitive computing and robotics in production.

AEPC EVENTS

(From left) Mr V Elangovan member, EC, AEPC, Padma Shri Dr. A Sakthivel, Vice Chairman, AEPC, Mr. HKL Magu, Chairman AEPC, Mr. K.S. Palanisami, IAS, District Collector Tirupur, Mr. Rakesh Vaid, Senior Vice Chairman ATDC, Dr. Darlie O. Koshy Director General, IAM & ATDC along with Raja M Shanmugam, President,TEA the Internet of things, cloud computing, cognitive computing and robotics in production. He said, now, the industry needs to upgrade and progress on a day to day basis. He further highlighted the role of ATDC as a channelizing partner between the industry and innovation, which strives in ﬁnding new teaching pedagogies to educate students for industrial needs. Dr. Koshy explained the facilities available at KTM and continuing education programs for people working in industry without formal education. He requested all exporting communities to join ATDC-KTM membership under Gold, Silver and Bronze categories. Inaugurating the Centre of Excellence Mr. Magu stressed on the avenues available in synthetic category and the importance of KTM. He spoke about the problems being faced by the apparel industry and growing competition from countries like Vietnam, Cambodia and Bangladesh. He said, India can compete only if it comes out of its over dependency on cotton. KTM can play a role as it will make garment exporters

“India can compete only if it comes out of its over dependency on cotton. KTM can play a role as it will make garment exporters analyze the variety of synthetic fabrics and value additions that can be done on them which will boost exports.” Mr. HKL Magu, Chairman , AEPC analyze the variety of synthetic fabrics and value additions that can be done on them which will boost exports. The district collector of Tirupur, Dr. K. S. Palanisamy, launched the AVI & B. Voc program in ATDC-KTM Centre of Excellence. Palanisamy emphasized on the need for having trained and qualiﬁed people to work in apparel manufacturing sector. He said offering degree programs in this trade

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and selecting the core area to work on will definitely give carrier progression to learners. AEPC’s vice-chairman, Padmashri Dr. A. Sakthivel launched the ATDC-KTM Knitwear Industry Initiatives. He spoke about the tough phase the industry is facing today with apparel exports declining by 14 per cent in rupee terms and 8 per cent in dollar terms. Moreover demonetization and GST have pushed exporters into a financial crisis. Over dependence on cotton and less value addition on products will not improve the export turnover graph. Hence, more creativity and research based developments have to be encouraged, he emphasized. Mr. Rakesh Vaid, Sr. Vice Chairman, ATDC launched the ATDC-IAM Industry Projects and CE Programs. He expressed happiness that the KTM mission will start with renewed energy after its repositioning and relaunching. The chief technical officer Dr. K.P. Vetrivel thanked the guests for sparing time and gracing the occasion.

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SUSTAINABILITY NEWS Conserving Natural Resources

Eco Freindly

Recycling

Circular Economy

Organic

SUSTAINABILITY GLOBAL Bangladesh tops GOTS facilities Bangladesh recorded the highest increase in GOTS-certified facilities in 2017, which was 40 per cent. North America and Portugal together saw a 39 per cent rise each, while Europe saw an average 29 per cent increase. This is a significant increase from the year ago, which saw a rise from 3,814 facilities in 2015 to 4,642 facilities in 2016. The top 10 countries in terms of hosting the highest number of GOTS-certified production units were India, Bangladesh, Germany, Turkey, Italy, China, Pakistan, Portugal, USA and South Korea. India has 1,658 GOTS-approved manufacturing facilities and has been the highest ranked GOTS country since 2008. The Global Organic Textile Standard saw the annual number of certified facilities increase to 5,024 in 2017, an 8.2 per cent increase on the same period in 2016. There has been a 14 per cent increase in the number of chemicals on the GOTS Positive List, translating to more than 17,900 chemicals from 720 manufacturers. Over 1.74 million workers were employed in 19 GOTS-accredited independent certification bodies in 2017. As the world’s second-largest apparel exporter Bangladesh has increased its focus on sustainability and many companies are becoming eligible to for GOTS certification.

Globalization has seen manufacturing moving to countries without strong environmental controls, population growth, rapid increase in GDP (and hence purchasing power), and, most notably, fast fashion trends (that rapidly multiplied the amount of clothing people buy per capita)—and the sum of these trends has increased this sector’s climate impact by 25 per cent in just over a decade. And the sector is projected to sharply increase its climate impact by nearly half as much again by 2030. The ClimateWorks/Quantis report also provides some uniquely helpful information to craft a path forward for the serious reductions we need. By diving deeper into each phase of apparel manufacturing, this study identifies the specific hot spots in manufacturing process which need most attention. In a nutshell, it directs the industry’s focus to areas that matter the most, so that companies don’t waste time on the small stuff. The biggest concern for in the global fashion industry is fabric dyeing and finishing, weighing in at 36 per cent of the sector’s total carbon footprint. And NRDC’s Clean by Design program has focused on this for more than five years. There are many opportunities to reduce climate, water and chemical use in this phase of apparel manufacturing with fixes that save money. And despite the stellar and well-documented results of Clean by Design at more than 100 fabric mills around the world, participation in the program is nowhere near what it should be.

Better Cotton standards Report highlights apparel’s environmental impact A recent path-breaking report by ClimateWorks Foundation and Quantis reﬂects on reducing apparel’s environmental impact. The fashion industry is estimated to contribute 8 per cent of the world’s greenhouse gas emissions. Just short of the contribution of the entire global transportation sector! (14 per cent, as per IPCC.)

Initiative

revises

Better Cotton Initiative (BCI) will launch a revised cotton standard this month with updated principles and criteria. There is increased emphasis on environmental principles concentrating on pesticide use and restrictions. This includes the phasing out of highly hazardous pesticides. It stresses on the need for personal protective equipment when applying pesticides. There is a change in approach regarding biodiversity. The standard focuses on identiﬁcation, mapping and restoration or protection of natural resources. A water stewardship approach has been integrated to the standard,

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SUSTAINABILITY NEWS

opportunities for a joint methodology to improve the European garment sector. This strategic collaboration is seen as a step toward a leaner industry with more efﬁcient practices and, ultimately, creating greater impact throughout the supply chains. SAC’s strategic cooperation with Partnership for Sustainable Textiles comes on the heels of a recent supply chain transparency effort. In November, SAC updated its Higg FEM tool to boost visibility and further reduce audit fatigue in apparel, footwear and textile supply chains.

aimed at addressing and facilitating collective action toward local sustainable water use. This comes after last year’s pilot project to test the new approach to water on small, medium and large farms across India, Pakistan, China, Tajikistan and Mozambique. The revised standard now has a clearer position on gender equality. Topics such as child labor, sanitation and equal pay – which had previously been absent – are now included. Cotton farmers who are part of BCI will be trained on the revised standard to help the successful adoption of newly outlined speciﬁcations. Better Cotton Initiative enables cotton producers, local cotton organizations and international bodies to work together on minimizing the cotton sector’s carbon footprint.

The Higg facility environmental module was developed to standardize sustainability measurement for global factories. The tool enables factories to evaluate their sustainability performance and seamlessly disclose results with their supply chain partners. The tool could help industry members reduce their carbon footprint, increase transparency and engage in more fair labor practices.

Xeros washing machines cut down water use

Joint venture works for sustainability The Sustainable Apparel Coalition (SAC) and German Partnership for Sustainable Textiles are working together to heighten sustainability across the European garment sector, improve working conditions and environmental protection in textile supply chains. As a part of the strategic cooperation, European companies that are members of both initiatives can receive coherent guidance about implementing environmental and social sustainability practices in their supply chains. Members of the Partnership for Sustainable Textiles and the SAC will potentially align reporting systems and foster

Xeros has a near-waterless laundry system. Polymer technology allows washing machines to use a fraction of the water normally used during washing, while still being able to remove stains and protect linen for hundreds of machine washes. Xeros has developed washing machine components capable of reducing water use by 50 per cent and preventing microfiber shedding from synthetic clothing. It is estimated that each laundry cycle creates hundreds of thousands of microfibers from textiles. The XOrb polymer technology and XDrum technology work together inside the washing machines to prevent water loss and promote lower use. X Filtra also uses a filtration process to reduce the number of microfibers released from textiles when washed. Xeros’ core purpose is to give washing machine manufacturers and home laundry customers a washing solution that delivers unparalleled cleaning results and garment care, at the lowest cost, and with the greatest sustainability for the planet. The laundry system is expected to be great benefit to Cape Town, South Africa, which has had a severe lack of water in

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SUSTAINABILITY NEWS

recent months and where municipal water supply may be shut off in July. If this happens, Cape Town will be the ﬁrst major city in the world to run out of water.

GLOBAL BRANDS’ INITIATIVES Big names opt for best practices in fashion Only three apparel players in ethical list Only three players in the apparel industry were among the 135 designees on Ethisphere’s 12th annual list of the World’s Most Ethical Companies. VF Corporation, Marks & Spencer (M&S) and Hong Kong sourcing ﬁrm William E. Connor & Associates made it to the list among enterprises across 23 countries and 57 industries. William E. Connor has made it to the list consistently since 2012, and it’s the only sourcing company recognised.

Groups such as Fashion Positive, part of the Cradle to Cradle Products Innovation Institute and H&M Foundation through its Global Change Award that honours apparel innovation in the areas of waste, digitisation and climate positive advancements — have shown a keen interest in apparel and textile industry’s environmental impact and sourcing to create clothing from alternative materials. The aim is to ensure sustainable best practices in fashion. Eileen Fisher, Gap, Guess, Levi Strauss, Nike and VF Corporation all jumped onto the Science Based Targets bandwagon in a way announcing their commitment to establish emission reduction targets consistent with international methodologies to limit global warming to well below 2 degrees Celsius. Late 2017, the Sustainable Apparel Coalition — which attracted numerous big brand apparel retailers — started the Apparel Impact Institute, in partnership with the Natural Resources Defense Council’s Clean by Design program, whose aim was to improve the impact of textile mills.

Ethisphere’s CEO Timothy Erblich says, “Over the last 12 years, we have repeatedly seen that those companies who focus on transparency and authenticity are rewarded with the trust of their employees, their customers and their investors. While negative headlines might grab attention, the companies who support the rule of law and operate with decency and fair play around the globe will always succeed in the long term.” Ethisphere is of the view that top businesses are adopting “values-based leadership” as global society increasingly expects corporations to set an example for others to follow. “Diversity and inclusion, investment and long-term commitment and constructive use of a company’s voice are now the hallmarks of what stakeholders are expecting and investors are rewarding.” Companies on the Most Ethical list are assessed as per ﬁve weighted categories: ethics and compliance program (35 per cent); corporate citizenship and responsibility (20 per cent); a culture of ethics (20 per cent); governance, including oversight and risk management (15 per cent); and leadership, innovation and reputation (10 per cent).

VF Corp’s, denim producer Orta Anadolu and Danish mattress and bedding company Auping, partnered Circle Economy to develop a tool over the next year that’s expected to help fashion companies reduce their environmental footprint and build more sustainable business models. In a recent press statement Orta Anadolu has said, collaborations and partnerships generate transformational outcomes and we believe that the Circle Fashion Tool will create a platform for the type of circular solutions that the industry is searching for. The US alone generates 15 million tons of textile waste, an amount that has doubled annually over the past 20 years.

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GST NOTIFICATIONS

Sub.: Amending the CGST Rules, 2017 (Third Amendment Rules, 2018)

Notification No. 14/2018 – Central Tax dated 23rd March, 2018 has intralia amended rule 45 of the CGST Rules providing for a specific provision for issuing of the delivery challan or endorsement of the same by the job worker when goods are sent by one job worker to another and so on or back to the principal. This is a facilitation measure and shall ease the movement of goods sent for job work and also reduce the paper work to some extent for the principal Full Notifications is available on:http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification-142018-central_tax-English.pdf

Notifies the date from which E-Way Bill Rules shall come into force Notification No. 15/2018 – Central Tax dated 23rd March, 2018 has notified 1st April 2018 as the date for implementation of the E-Way Bill provisions for INTER STATE MOVEMENT OF GOODS. However, the provision relating to issuing of a consolidated E-Way Bill by the transporter in case of multiple consignments of each value less than Rs.50000/- but aggregate value more than Rs.50000/- being transported in the same vehicle by road has not yet been notified. Full Notifications is available on:http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification-152018-central_tax-English.pdf

Sub.: Seeks to prescribe the due dates for filing FORM GSTR-3B for the months of April to June, 2018 Notification No. 16 /2018 – Central dated 23rd March, 2018 has prescribed the date of furnishing of the FORM GSTR -3B for the months of April, May and June 2018 as the 20th of the following month as was the case earlier. It extends the facility of furnishing 3B up to June, 2018 Full Notifications is available on:http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification-162018-central_tax-English.pdf

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Sub.: Seeks to exempt payment of tax under section 9(4) of the CGST Act, 2017 till 30.06.2018

Notiﬁcations 10-Central Tax and 11-IGST dated 23rd March, 2018 have been issued in compliance with the GST Council decision to extend the period of exemption from RCM on supplies received from unregistered persons up to 30.06.2018 Full Notiﬁcations is available on:http://www.cbec.gov.in/resources//htdocs-cbec/gst/notfctn-102018-cgst-rate-english.pdf

Sub.: Refund of IGST on Export-Extension of date in SB005 alternate mechanism cases & clarifications in other cases-reg Circular no. 08/2018 – Customs dated 23rd March, 2018 has extended the facility of alternative mechanism for processing of IGST refunds on exports i.e, manual processing by Customs officer for rectification of error SB005 for shipping Bills filed up to 28.02 2018. Full Notifications is available on:http://www.cbec.gov.in/resources//htdocs-cbec/customs/cscirculars/cs-circulars-2018/circ08-2018cs.pdf

Sub.: Extended the exemption to EOUs from IGST and Cess up to 01.10.2018 Notiﬁcation No. 33/2018-Customs dated 23rd March, 2018 had extended the exemption to EOUs from IGST and Cess up to 01.10.2018

Full Notiﬁcations is available on:http://www.cbec.gov.in/resources//htdocs-cbec/customs/cs-act/ notiﬁcations/notfns-2018/cs-tarr2018/cs33-2018.pdf

NOTIFICATIONS

Sub.: Amendments to Foreign Trade Policy 2015-2020 Extension of Integrated and Goods and Service Tax (IGST) and Compensation Cess exemption under Advance Authorisation and EPCG Scheme till 01.10.2018. Notiﬁcation No. 54/2015-2020 dated 22 March, 2018 has Exemption from Integrated Tax and Compensation Cess under Advance Authorization Full Notiﬁcations is available on:http://dgft.gov.in/Exim/2000/ NOT/NOT17/NOTIFICATION%2054%20english.pdf

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