EAI 01 ISSUE 12
100
Demand for eco-friendly, sustainable material on the rise High level deligation to Japan identifies CEPA Britain to focus on India - UK trade APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019
AppArel / Chairman’s Message
Dear Friends,
T
he union budget 2019 has taken several positive steps towards overall economic growth with announcements like allowing businesses with less than Rs. 5 crore annual turnover to file quarterly returns, fully digitised EXIM transactions and leveraging RFID for logistic, all returns to be processed in 24 hrs, etc. There is an increased accent on Artificial Intelligence with focus on development of National Artificial Intelligence Portal as a part of the National Programme on ‘Artificial Intelligence’. Developing hard and soft infrastructure that reduces the cost of business will be beneficial for the apparel industry too. Also, we need to take cue from the increased use of Artificial Intelligence and digitisation as a global trend towards improving supply chain efficiencies. The council was looking forward to some clarity on the refund of embedded taxes which we have been requesting for some time. I am hopeful that there is an active thinking in this direction and the sector will get some relief soon. Global RMG trade moved northward with major importers like USA, Germany, Japan, France, Switzerland, Russia, Australia, Chile, Brazil etc. recording positive growth in global imports. Indian apparel exports have also started showing consistent growth and can leverage this positive trend with a target of double digit growth in the coming financial year, if the financial blockages are further smoothened, especially with regard to refunds AEPC was a part of high level delegation to Japan, led by Secretary (T) for identifying areas for optimising the CEPA and enhancing textile trade with Japan. The delegation met major apparel brands of Japan, testing agencies, machinery manufacturers like Uniqlo, METI, Marubeni Corporation, Japan Textile Machinery Association, Japan Sewing Machinery Manufacturers Association and Nipon Knit Industry Association, Teijin, JETRO & JTIA. An important way forward that emerged was a focused approach towards understanding and improving sourcing, given the specific requirements of the Japanese markets, with aim to double our exports to Japan.
In the Board of Trade meeting, AEPC ubmitted Council’s Presentation on “Strategy for Accelerating Exports in Apparel Sector” to the Union Minister of Commerce & Industry. AEPC raised some constraints faced by the industry like foreign apparel brands facing challenges due to emerging competition due to e-commerce, gap of 6.93 per cent in benefits in pre & post GST period, reduction in financial support for Export Promotion activities etc. The major recommendations were refund of embedded taxes, FTA with EU and CEPA with Australia & Canada, wage support of 10 per cent, enhance the ambit of interest equalization scheme, etc. The council and its members joined the nation in expressing solidarity for the Phulwama martyrs. The council is thankful for the contributions received towards the Bharat ke Veer Fund. It stands by the nation in strengthening and emerging as a strong nation in all aspects – Jai Hind! Happy 2019! n
HKL Magu, Chairman, AEPC
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019
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C O N T E N T S
04 | the broadcast
India’s Ready-Made Garment (RMG) Export Update for FY (April-January) 2018-19
05 | the broadcast
India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (April-December) 2018-19
CHAIRMAN AEPC Mr. HKL Magu CHAIRMAN EP Mr. Sudhir Sekhri ADVISOR AEPC Mrs. Chandrima Chatterjee PUBLISHER Apparel Export Promotion Council Apparel House, Sector-44, Institutional Area, Gurugram, HARYANA – 122003. Phone: 0124-2708000 www.aepcindia.com
06 | aePc events
High level delegation to Japan identifies areas for optimizing the CEPA and enhancing textile trade
12 | aePc events
AEPC sends high level delegation to Czech Republic, Slovenia and Croatia
15| aWards
Recognition to AEPC members
16| budGet
Interim Budget 2019-20 to drive textile and apparel consumption in India
18| trade
AEPC advocates strategies for accelerating exports in the apparel sector
Content & Design DFU Publications New Delhi Email: dfudelhi@yahoo.co.in Printing Press: VIBA Press Pvt. Ltd. C-66/3, Okhla Industrial Area, Phase-II New Delhi-110020 e-mail: info.vibappl@gmail.com
19 | initiative
• Textile Ministry to boost small weavers • Yarn bank set up in Ludhiana • Indian cotton yarn exports decline by 25 per cent
20| trade treaties
Post Brexit, Britain to focus on India-UK trade relationship
22| economy
Developing, emerging economies to lead world economic growth
24| marKet
• Global garments market grows at CAGR of 4 per cent • Global lingerie markets witnesses’ moderate growth • Direct to consumer denim brands catching up especially among men
25| marKet
• US to continue being the largest jeans market • Global athletic footwear expanding at a CAGR of 5.3%
• Knitwear and heritage brands increase their range of woolen wear
26| marKets
Brands, designers to impact menswear fashion in 2019
28 | marKets
Mothers-to-be being wooed by designers, brand and retailers
30 | marKets
Indian fashion comes of age as global designers/brands eye lucrative market
32 | Fast Fashion
Growing awareness about fast fashion’s impact on economy, environment, society
34| business
• India Ratings maintains a stable outlook for Indian textile sector • Indian inverted duty structure boosts synthetic fiber imports • US imports of Chinese apparels increases by 0.91%
35| eXPort
• US imports of apparels from China dwindles • India registers uptick in apparel imports from Bangladesh
36| suPPly chain
Latest technologies, nearshoring speed up deliveries for apparel companies
39 | brand retail
• India Ratings maintains a US retail sales registers worst nine year drop • Adidas to double shoes production in 2019 • Sales of US online luxury fashion grow
40 | brand retail
• Ralph Lauren to increases sales by 2023 • Zara redesigns its logo • Q4 gross margin of Under Armour touches 45 per cent
41| brand retail
• Levi Strauss’ net revenues increase by 14 per cent • Puma’s Q4 sales increase by 20.1 per cent
42| sustainability
Demand for eco-friendly, sustainable materials for high quality garments on the rise
45 | sustainability
• Hanes Brands takes leadership position in CDP 2018 Climate Change Report
2 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019 Apparel_March_2019_FINAL.indd 4
2/3/2019 11:45:15 AM
• Digital textile offers solution for rotary screen printing • Asics collaborates with Charity I:Collect to recycle used sports apparels and footwear
46 | sustainability
Ignoring aesthetic appeal, brands now focus on eco-friendly products
48 | retail
New tools, customisation to drive retail growth this year
50| tech trend
• Levi Strauss to pilot use of block chain technology • Manchester University develops new method of graphene use in wearable textiles
51| trends
• World fiber production rises in 2018 • Indian textiles to do trend analysis
52 | human resources
Most fashion industry professionals satisfied with their job: Study
54 | events
Interfiliere Hong Kong to focus on innovations, sustainability
56 | AEPC events
AEPC interacts with Minister of Commerce and Industry through video conference
57 | GSt Update 58 | NOTIFICATIONS 60 | AEPC EVENT CALENDAR CALENDAR OF EVENTS 2019
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | January 2019
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2/3/2019 11:45:15 AM
AppArel / the broadcast
India’s Ready-Made Garment (RMG) Export Update for FY (April-January) 2018-19 India’s RMG Exports RMG exports were to the tune of USD 1526.95 million in January 2018 with the growth of 9.33 per cent against the corresponding month of January 2017, which was USD 1396.63 million. In rupee term export for the Month of January 2018 was Rs. 10800.54 cr. as against Rs. 8887.71 Cr. in January 2017 with the growth of 21.52 per cent. India’s RMG export to World in the April-January of 2018-19 was to the tune of USD 12877.39 mn. which has decreased by -6.56 per cent compared to the same period of previous financial year. During April-January 2017-18, India’s apparel exports were to the tune of USD 13781.35 mn.
India’s RMG Export to World FY 2017-18 FY 2018-19
Month
MoM Growth of 2018-19 over 2017-18 (%)
In INR Crore In US$ Million In INR Crore In US$ Million INR US$ April
11272.24 1747.44 8859.67 1349.81 -21.4 -22.76
May
10342.55 1605.37 9040.63 1338.57 -12.59 -16.62
June
9979.57 1548.59 9202.63 1357.46 -7.79 -12.34
July
8262.94 1281.95 8757.23 1274.83 5.98 -0.56
August
8552.24 1336.95 8986.67 1292.18 5.08 -3.35
September 10704.85 1661.19 7967.69 1103.32 -25.57 -33.58 October
5401.86
830.02 8327.42 1130.95
54.16
36.26
November 6719.85 1036.01 8112.46 1129.02 20.72 8.98 December 71236.10 11047.52 69254.40 9976.14
-2.78 -9.70
January
21.52
8887.71 1396.63 10800.54 1526.95
April-January 88714.28 13781.35 89775.53 12877.39
9.33
1.20 -6.56
Source: DGCI&S, Kolkata, 2019
4 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
AppArel / the broadcast
India’s Textile & Ready Made Garment (RMG) Update for Index for Industrial Production (IIP) for FY (AprilDecember) 2018-19 INDEX OF INDUSTRIAL PRODUCTION Manufacture of MoM Growth Rate Manufacture of MoM Growth textiles (In %) wearing apparel Rate (In %)
Month
2017-18 2018-19 2018-19/2017-18 2017-18 2018-19 2018-19/2017-18
April 116 114.2 -1.6 155.5 134.6 -13.4
May
116.7 116.1
-0.5
156.8 136.8
-12.8
June
116.4 115.5
-0.8
145.2 151.6
4.4
July
116.4 119.8
2.9
134.2 147.3
9.8
August 116 125.1 7.8 121.4 144.3 18.9
September 115.2 121.4
5.4
118.8 143.6
20.9
October 113.5 120.5
6.2
106.3 136.1
28.0
November 117.7 112.0
-4.8
118.1 144.2
22.1
December 122.4 118.8
-2.9
140.9 164.1
16.5
Total
115.7
119.9
3.6
134
142.1
6.0
Source: CSO, 2019 Summary • Manufacturing of Textiles has shown a decline of -2.9% in December, 2018 and growth of 1.8% for the period of April-December, 2018-19 • Manufacturing of Wearing apparel has shown a growth of 16.5% in December, 2018 and growth of 9.4% for the period of April-December, 2018-19
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
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AppArel / Cover Story
High level delegation to Japan identifies areas for optimizing the CEPA and enhancing textile trade
Indian delegates, along with Dr Satyapaul, First Secretary, Embassy of India in Japan and members of Japan Textile Machinery Association
6 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
A
AppArel / cover story
high level delegation led by Sh. Raghavendra Singh, Sec (T) and comprising of senior Govt officials and industry leaders visited Japan from 14th to 18th Feb 2019. Besides Sh. Raghavendra Singh, Sec (T), the delegation comprised Smt Aditi Das, Trade Advisor, MoT, Sh. B. Praveen, JS, DoC, Smt. Sukriti Likhi, JS, DHI, Shri Ajit B Chavan, Secretary (Textile Committee), Shri H K L Magu, Chairman, AEPC, Shri Ravi Poddar, EC Member, AEPC, Ms. Chandrima Chatterjee, Advisor, AEPC, Shri Manoj Kumar Patodia, Vice Chairman, TEXPROCIL, Dr. Siddhartha Rajagopal, ED, Texprocil, Shri Sri Narain Aggarwal, Chairman, SRTEPC, Shri Mahavir Pratap Sharma, Chairman, CEPC, Shri Amit Aggarwal, Vice Chairman, ITTA, Shri Naveen Sodhi, Sr. VP, Shiva Texyarn Ltd (ITTA), Shri Mohan Sadhwani, CMAI and representatives from TMMA. .
Secretary (T) addressing the audience during the seminar organized by EOI, Japan in Tokyo on “Textile Industry in India- Collaborative Opportunities”
Japan – an important trade partner for India Japan is the third largest importer of textiles and Apparel in the world. Recognizing the cultural alignment and its global share in the global textile and apparel market, India had signed a Comprehensive Economic partnership Agreement (CEPA) with Japan in 2011. This is one of the most important trade agreements for the apparel sector, as virtually all apparel lines today have duty free access to Japan. However the utilization of the CEPA for increasing textile trade by both the countries have been sub -optimal so far. India aspires to be an important player in the CHINA PLUS ONE POLICY. However, though share of China in Japan has reduced from 68% in 2015 to 63.5% in 2017, India has not been the beneficiary. China has vacated USD 1500 mn. in Japan between 2015 to 2017. The major vacated market has been captured by Vietnam and Bangladesh. India would like to supply at least get 20% of this demand – that itself would double our exports to Japan
H.E. Mr. Sanjay Kumar Verma Ambassador of India to Japan speaking during the seminar
Smt Aditi Das, Trade Advisor, MoT giving presentation during the seminar
Delegation Objectives : To understand the bottlenecks and explore possibilities of trade expansion, a high level delegation led by Secretary (Textiles) visited Japan from 14th February to 18th February, 2019. The delegation had senior representatives from dept of Heavy Industries and Commerce, industry leaders from machinery, technical textiles, synthetic and cotton fabrics and made ups. The objectives of the delegation were : I. Enhancing sourcing from India for apparel, handicrafts and handloom products. II. Enhance investment opportunities in India and
having collaboration in joint venture for strengthening textile value chain. III. Collaborative units for accreditation centres to reduce time and cost for procuring Japanese accreditation. IV. Collaborations for strengthening the technical textile value chain in India.
The major cooperation
areas of for Trade
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 7
AppArel / cover story
The delegation met Senior Officers of Marubeni Corporation Japan
Enhancement between Japan and India highlighted by AEPC were: • Collaborate for creation of Facilitation Desks at Indian clusters • Collaborate with Quality and Standard setting Agencies with Japan • Facilitating better visibility and perception of Brand “India” • Collaborations for better access of Japanese market to SME suppliers • Leveraging Synergies in technical textile
value chain • Signing of AEO mutual recognition agreement with Japan will benefit both the buyers and suppliers as it will improve supply chain management in the region. • India’s exports are presently limited to summer collections only. Collaboration on fabrics for developing autumn winter collections can greatly enhance our capabilities to export wider range! Besides apparel the other two areas of opportunity identified and discussed were fabric sourcing and investment by Japanese machinery manufacturers in India. Secretary Textiles shared India’s keenness in enabling more investment by Japanese
Meeting with Tejin
8 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
Shri HKL Magu, Chairman, AEPC during the meeting with Mr. Tadashi Yanai, Chairman, President and CEO of UNIQLO
At Adventure Group office, Osaka
Meeting at Uniqlo, Headquarters
Shri HKL Magu, Chairman, AEPC speaking at the seminar during the delegation to Japan.
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 9
machinery manufacturers n India –as a step towards increasing India Japan textile trade. Presently majority of our machine requirements are being imported. But India can be a good base for manufacturing machines- given the increasing domestic demand. It can also be a base for supplying machines to the neighboring countries. India provides India provides Conducive policy environment for working and provide befits like Incentive to support Up gradation of technology, Social Security Benefits to workers, Employer friendly labor laws, Women Empowerment, Skill India, benefits under State Apparel Policies, Swachh Bharat, Digital India etc..
The details of meeting and agenda of high level delegation: The delegation met Senior Officer of METI , Marubeni Corporation Japan Textile Machinery Association, Japan Sewing Machinery Manufacturers Association and Nipon Knit Industry Association Federation,
Teijin corporation – an important supplier of technical textile inputs, CEO of UNIQLO with its team, Mr. Kazuhiko Obama, Senior Director for Global Strategy, South West Asia, Planning Department, JETRO and team, Nissenken Quality Evaluation Centre, , Chairman, JTIA. Through a seminar and a B2B meeting with Indian businessmen in Japan, the delegation also had intensive discussions on the concerns of the business and areas of collaboration and joint ventures. The major take ways of the delegation were a stock taking of the major issues with regard to investment and sourcing from India. An important way forward that emerged was a focused approach towards understanding and improving sourcing, given the specific requirements of the Japanese markets. Important collaboration partners were identified towards meeting the technology needs, quality issues and participation in Japanese fairs. Japan was identified as a Focus country, both for domestic fairs, like IIGF and Japanese Fairs like India Trend Fair. Up scaling India’s participation in terms of organizations and products on display, better preparedness for displaying products and more due diligences on quality aspects need to be planned for export enhancement. n
10 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
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AppArel / AEPC EVENTS
Meeting with Mr. Jiri Cesal, Executive Director, Association of Textile, Clothing and Leather Industry (ATOK), Czech Republic
AEPC sends high level delegation to Czech Republic, Slovenia and Croatia
T
o leverage the potential of RMG exports tp Czech Republic, Slovenia and Croatia, AEPC mounted a high level trade delegation to Czech Republic, Slovenia and Croatia from December 03-11, 2018. The delegation was led by Chairman, AEPC along with Sudhir Sekhri, Chairman-EP, Anil Peshawari, EC Member, AEPC and R K
Sharma, Sr. Director, AEPC. The objectives of the visit of the delegation included: • Meetings with the Indian ambassadors to Czech Republic, Slovenia and Croatia to discuss about the promotion of RMG export to these countries from India. • To meet important apparel buyers/ chain stores/ departmental stores and to pursue them to source from India. • Meeting with the Chamber of Commerce in Czech Republic, Slovenia and Croatia.
12 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
AppArel / AEPC EVENTS
Meeting with Mr. Dott. Filippo Recami, MD, Max Praga, Prague
Meeting with Mr. Ravi Kumar Jain, Cd’A, Embassy of India, Ljubljana and B2B meetings with the Slovenian companies
Meeting with Mr. Matej Skocir, Head of Internationalization sector, Ministry of Economic Development and Technology, Ljubljana, Slovenia
Meeting with officials of Ministry of Foreign Affairs, Republic of Slovenia, Ljubljana
Meeting with Ms. Ana Falak, Director of Croatian Employer’s Association, Department of Textile and her associates
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 13
Meeting with M/s Siscia, Sisak, Croatia
Meeting with M/s Kotka at Krapina, Croatia
Meeting at M/s Apollo HR facility with Ms Ivana Kos, Wholesale Manager and Ms. Sanja Varjacic Posilovic, Brand Manager Apollo HR
• To explore the possibility of joint ventures/ Foreign Direct Investment (FDI) in apparel manufacturing sector in India from these countries. • To set up an institutional mechanism for facilitating Czech Republic, Slovenian and Croatian apparel buyers to visit India to attend IIGF • To explore the possibilities of firming up some arrangements with chambers/ importers association for promotion of
apparel exports from India to Czech Republic, Slovenia and Croatia. • To meet important garment buyers, and other industry leaders and pursue them to buy from India. • To meet with Garment Importer’s association at Czech Republic, Slovenia and Croatia for persuading them to source RMG from India through their members. The delegation attended various meetings at Prague, Ljubljana and Zagreb organised by the respective embassies of India at these places. n
14 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
AppArel / Awards
M/s. Vishwaa Apparels, Bangalore
Recognition to AEPC members
Outstanding Young Entrepreneur Award in Textile Sector
Ms. A. Mythili, Proprietress of M/s. Vishwaa Apparels, Bangalore has been awarded as “Outstanding Young Entrepreneur in the Textile Sector”, by Sh.Venkaiah Naidu, Hon’ble Vice President, Govt of India, in the presence of Ms.Smriti Irani, Ho’ble Union Textile Minister at Hotel Taj Mahal, New Delhi on 6th January 2019. Ms. Mythili after passing 10th standard in Tamil medium, she moved out from Peranampet a small town near Vellore in Tamil Nadu to Bangalore looking out for a suitable job. With very little English communication, she started her career as a Data entry operator during December 1995. Later during 2008 she started her own apparel industry in the name of “Vishwaa Apparels” and also a buying house in the name of “Agency6”. Subsequently, due to her continuous
Ms. CTA Apperals, Nodia
dedication and perseverance she is setting up a 2nd industry in Andhra Pradesh near Chitoor. Her story is motivation for budding entrepreneur as well as women.
CTA Apparels recognized Uttar Pradesh Chief Minister, Sh. Yogi Adityanath conferred First Prize in State Export Promotion award 2018-19 to Dr. Mukesh Kansal, Chairman, CTA Apparels. The award was given
in recognition of the distinguished achievements, innovations in the area of Cotton Garments Manufacturing and Exports achieved by CTA Apparels in the year 2018-19. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 15
AppArel / budget
Interim Budget 2019-20 to drive textile and apparel consumption in India
T
he Interim Budget 2019-20 announced by the Finance Minister, Piyush Goyal was welcomed wholeheartedly by the textile industry. Industry stalwarts
believe the budget will drive textile and apparel consumption in India by increasing the purchasing power of middle class and farmers. The announcements highlight the commitments of the present government to improve overall socio-economic condition of the country by touching upon the healthcare
16 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
AppArel / BuDGET
ROSL rates which would need more funds. Procurement of Cotton by CCI under Price Support Scheme has increased from Rs 924 crore to Rs. 2018 crore. Allocation for Central Silk Board has also been increased, which is a welcome step by the Government.
A boon for handloom weavers, MSME workers sector, infrastructure, ease of doing business, more beneficial schemes for low income strata of the society by enhancing their purchasing power, protecting them through pension scheme, minimum income through MGNREGA, etc. The 2 per cent interest subvention for Micro, Small and Medium Enterprises (MSMEs) loans with a ticket size of Rs 1 crore will give a thrust to MSMEs to boost employment and economic growth. A few banks exiting PCA, relaxation for MSMEs on funding and interest rates will benefit 80 per cent of the textile and clothing industry which falls under MSMEs.
Reduction in outlay worries the textile sector The outlay for textile sector has been reduced from Rs 6943.26 crores to 5,831.48 crore. The Budget allocation for A-TUFS has been decreased from Rs. 2, 300 croreto Rs. 700 crores.The Budget for ROSL has also been reduced significantly which is a cause for great worry to the industry as this could lead to working capital blockages and delay in ROSL receipts. Further the industry has been expectingupward revision in
The budget has also allocated Rs 6,000per year for farmers having below two hectares of land under Prathan Mandri Kisan Samman Nidhi Programme. Additionally, a pension scheme for the workers in the unorganised sector enabling them to receive Rs3,000 per month as pension after attaining 60 years has also been announced. This scheme would largely benefit handloom weavers and powerlooms and also the workers of several other small, micro units from other segments of the industry. The decision of doubling the income tax exemption limit from Rs2.5 lakh per annum to Rs 5 lakh per annum apart from enhancing the standard deduction limit from Rs 40,000 to Rs50,000 has also been approved by the trade bodies as it would benefit several lakh middle class employees in the textile industry.
Retailers to benefit from increased consumption Retailers believe that the budget gives huge resources in the hands of people. As it focuses on fiscal consolidation, it will bridge the divide between India and Bharat. They also welcomed tax exemption upto Rs 5 lakh income as it will increase consumption, both through online and offline retail. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 17
AppArel / Trade
AEPC advocates strategies for accelerating exports in the apparel sector
D
r. Sakthivel, Vice Chairman, AEPC submitted a presentation on “Strategy for Accelerating Exports in Apparel Sector” to Suresh Prabhu, Union Minister of Commerce & Industry, in the Board of Trade Meeting held in New Delhi on February 15, 2019 In his presentation Dr. Sakthivel highlighted various constraints faced by the apparel export industry in internationally and nationally. These included • World apparel growth limited to 4 per cent • Major foreign apparel brands are facing challenges due to emerging competition in e-commerce, rationalisation in stores, reduction in margins; leading to price pressures on suppliers. • Foreign apparel brands are adopting digitisation in supply chain and process set up; inadequate adoption by India’s manufacturing set up due to lack of institutional support.
Local constraints in the apparel export industry • Despite additional policy support by Ministry of Commerce, there is a gap of 6.93 per cent in benefits in pre & post GST period. 2.70 per cent due to drawback & 4.23 per cent due to embedded taxes not refunded. • Benefit of GST not visible in lower input prices like fabrics. • Reduction in financial support for export promotion activities through budgetary mechanism - MAI scheme (Rs.19.20 Cr. In 2013 – 14 to Rs.6.02 Cr. In 2018-19) • Duty free status at par with other competitive countries. Further, he submitted the following specific measures to optimise the export earnings of the Apparel Export Industry.
• To achieve the Target of US$ 33219 MN by 2023–24 from US$ 16650 MN (Estimated) in 2018-19, the projections are aimed to progressively achieve an yearly growth rate from 12.2% to 18% in 5 years period. • Setting of Smart Factories – 4.0 Technology – Reduction in Waste • Capacity building by digitization • Strategy to enhance women employment in the apparel sector • Product development through HS Code wise strategy to arrest the decline and propose atleast growth of 5 per cent, 8 per cent, 12 per cent & 15 per cent in next 5 years. He also submitted the following recommendations for the consideration of Board of Trade (BOT: Refund of embedded taxes and deficit in policy support in post GST; 6.93 per cebt on FOB value of exports through Rebate on State Levies (ROSL) route - (Ministry of Finance). FTA with EU and CEPA with Australia & Canada - (Ministry of Commerce). Addition to Gender Budget- A wage support of 10 per cent from Union Budget for Women Workforce – (Ministry of Finance) IV. Enhance the ambit of interest equalisation scheme – 5 per cent interest Equalization to all apparel exporters – (Reserve Bank of India) V. Provident Fund support from Employer’s share. • Govt. contribution of 12% of wages up-to 2023-24 period. • Extension of Terminal Date of Registration of new workmen beyond 31.3.2019 – (Ministry of Labour& Employment) VI Uniform State support to Apparel Industry • Land & flatted factory sheds - The Policy may add “plug & play’ factories on lease basis. • Power Subsidy - 50% tariff support • Freight Subsidy - 50% freight subsidy for Fabric/ Made Ups/RMG units • ESI - Full Support VII. Institutional Framework of Export Promotion Council in Foreign Trade Policy (FTP) • Export Promotion Councils be notified as charitable institution under general public utility and advancement of any other object of general public utility. • India has reached an overall ranking of 77 in Ease of Doing business. However, on the topic of paying taxes, it is ranked 121. n
18 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | March 2019
AppArel / Initiative
Textile Ministry to boost small weavers
T
he Union Textile Ministry recently signed agreements with leading clothing/textile players like Raymond, Welspun, Titan, Reliance Retail and the Sachin Tendulkar-promoted True Blue, which will help these companies to procure more from the weavers directly.The initiative aims at exploring
the synergy between culture and textiles and the initiative will be extended to rest of the country. All its schematic assistance including provision of loans, skilling, provision of yarns etc is
aimed at lowering the cost of production and enhance the income of weavers. The ministry is also introducing QR coding post registration and pre-registration of all its weavers for geographical indication tags. n
Yarn bank set up in Ludhiana
Indian cotton yarn exports decline by 25 per cent
A
I
prices of yarn fluctuate every day. A few companies
Indonesia are duty free but Indian yarn carries 3.5 per cent import
had developed a cartel and buyers were being
duty.
yarn bank has been set up in Ludhiana to facilitate the garment industry in procuring yarn without any middleman. There will be no
price issues. Yarn sellers fix rates arbitrarily and yarn
exploited. While input costs were increasing the
n the last five years India’s exports of cotton yarn have declined by 25 per cent and fabric exports have declined by seven per cent. Reason: duty disadvantage faced by Indian exporters in
major markets. Chinese imports of cotton yarn from Vietnam or
The decline in exports is impacting the whole value chain from farmers, spinners to weavers and knitters as there is considerable
customer was not ready to pay more. As of now, only the power loom and loom
export surplus in the country.Exports of Indian spinning mills
industries can avail of the facilities at the yarn bank.
were good during 2013-14 when cotton yarn was covered under
Knitwear manufacturers also want to be included
schemes such as the two per cent incremental export incentive,
in the scheme, arguing the procedure of making cloth is the same, the only difference being that the knitwear industry uses machines while the other industry uses looms. A
special
purpose (SPV)
vehicle has
formed members
and
been 13 have
been selected from Ludhiana and who will be purchasing the yarn and will also control its input cost. As much as two crore rupees
the two per cent interest subvention and the three per cent focus market incentive.
have been given to the SPV for three years without
However, suddenly all incentives were withdrawn, leaving
any interest by the Textile Department. If three to
spinning mills in the lurch.India’s cotton yarn exports to China have
four transactions are done in a year then it can
fallen 48 per cent from 2013 to 2017 but exports from Vietnam
be approved further. n
and Indonesia have increased 129 per cent and 55 per cent respectively in the same period. n
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE
| March 2019 / 19
AppArel / trade treaties
Post Brexit, Britain to focus on India-UK trade relationship
P
ost Brexit, UK will be able to strike its own trade deals with various countries. This inevitably places India high on
its wish list.
India-UK exports scores low
However, the present India-UK trade relationship does not look particularly special. In 2016, the UK was the fifth-largest export destination for Indian exports, behind the USA, the UAE, Hong Kong and China. It accounted for only 3.3 percent of Indian exports, valued at $8.66 billion (â‚Ź7.6 billion). This is miniscule in comparison to the almost 16 per cent of Indian goods exported to other EU countries. In terms of imports,
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AppArel / TRADE TREATIES
the UK is not a significant exporter for the Indian market and overall, it barely scrapes into India’s top 20 trade partners. Yet, according to Kevin McCole, COO, UK India Business Council, this is not the full picture of the economic relationship between the countries. While India-UK trade relationship “is not as strong as it could be,” the key to the overall relationship is the bilateral ties which include the level of investment from both countries into each other, and the level of shared innovation and research projects companies and institutions from the countries work on.
EU-India trade need of hour McCole points out, growth in trade and investment between Britain and India will be driven by the tech sector. The EU has been in negotiations with India over a trade deal since 2007. While little progress has have been made since the Brexit vote, the EU is still eager for a deal. It believes that there is plenty of room to expand trade and investment relations and make them more fruitful. The business sentiment within India is not as anti-Brexit. Shortly after the 2016 Brexit vote, the Federation of Indian Chambers of Commerce & Industry (FICCI) conducted a survey of 45 Indian companies that do business in the UK.
While 28 per cent said Brexit would have a negative impact on their business within the UK, 41 per cent said it would be either good for business or would make no difference. Similarly, 48 per cent said their primary reason for being in the UK was the UK market, rather than access to the EU market as a whole. This is a view that certainly can be found within some of India’s major export areas. Clothes and textiles are one such area, accounting for a whopping 13 per cent of all Indian exports. The EU is the largest apparel market for India, with the UK taking in the biggest share of that and accounting for more than 10 percent of all Indian exports in apparel. Yet as appealing as the advancement of UK-India business ties are to Brexit-supporting politicians or to those businesses with a particularly strong India-UK basis, they can hardly be seen in isolation from the central question currently gripping the entire Brexit debate. n
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Developing, emerging economies to lead world economic growth
D
eveloping, emerging economies to lead world economic growth. Global fashion business’ has turned around with changing environment, an economic downturn and protectionism threatening to mark the development of the two biggest world economies -- US and China. As the world undergoes a transformation, and fashion, as a global player, needs to adapt and transform with it.
Fashion, one of the most global sectors, has to change, in which volatility, uncertainty, complexity and ambiguity (VUCA) mark the spirit of the age. The term VUCA was coined in 1987 to describe volatility, uncertainty, complexity and ambiguity in the world after Cold War, though it was not until early 21st century when it started to be widely used outside military settings.
Reversal of globalisation leads to new growth centres
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Meanwhile, the economic framework faces the end of a cycle. At the end of last year, the OECD assured “the global growth had touched the ceiling” and the International Monetary Fund’s (IMF) forecasts consider the rise of the Gross Domestic Product (GDP) to be around 3.7 per cent this year. The OCED, in its report highlights the risks of the trade war in global growth, forecasts an advancement of only 2.13 per cent for advanced economies, facing 2.36 per cent expected for 2018 and 2.34 per cent for 2017. In fact it’s the emerging powers that will carry the burden
best growth perspective is for Yemen, where it is expected to rise 14.7 per cent. The country, deep into a humanitarian crisis due to civil war, will see its economy relatively lifted thanks to the increase in the price of oil. Libya, Dominican Republic, Ethiopia and Rwanda will complete the top five. India is placed in seventh position, with a rise of 7.4 per cent, while China falls to 22th position, with a growth of 6.2 per cent, below 6.6 per cent in 2018 and 6.9 percent in 2017. Global commerce will slow down as well. In September, the WTO lowered its growing forecasts to 3.7 per cent for 2019, two tenths below 2018’s figure. The organisation, which expects a growth of the economy of only 2.9 per cent, underlines in its report that the hardening of monetary policies and protectionist threats affected predictions.
A year of change
of growth. Twenty years ago, China was the seventh biggest economy, post-World War II, globalisation led a move to the Western world. Twenty years later, China and India, the two largest powers in the world, threaten to revert globalisation and doctrines deemed to belong to the past come back to political speeches. Brazil and Russia, which alongside China and India promised to be growth motors at the beginning of this century, have wavered, only India reached the expected growth rates.
Europe’s growth to slow down
This fiscal year will be the key for many countries. On one hand, Trump and Xi Jinping trade battle, even in the truce, will impact economic development of China and India. China’s manufacturing PMI closed below 50 points in December for the first time and Shanghai’s stock market suffered several corrections during the fiscal year. The United States’ GDP, started to slow down, once the effects of Trump’s tax reform wear off, with an increase of 3.5per cent in the third quarter, compared to 4.2per cent in Q2. Tensions in emerging markets like Brazil, Russia or Turkey, alongside continued terrorist threat in Europe and the refugee crisis will mark the agenda during the year where many countries have their future at stake. n
Indeed the European model, which seems to be solid 20 years ago, is in doubt, under the pressure from the refugee crisis, Brexit and advancement of anti-European and populist movements in large powers The Eurozone, will slow down at 1.9 per cent, one tenth below 2018 and, while Germany and France will maintain growth rates, Italy and Spain will slow down two and five tenths, respectively. As per Themds projections, for emerging economies, the
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AppArel / market
Global garments market grows at CAGR of 4 per cent he global garments market is growing at a
T
The global garments market is divided on the
compound annual growth rate of 4.4 per
basis of gender, type of product and distribution
cent.High-end luxury brands are capitalising
channel. Women’s and men’s garments account for
on consumers’ inclination toward discretionary
63.8 per cent of the revenue, and the rest is generated
expenditure and instant gratification by moving
by hosiery, sports and swimwear, intimate apparel, and
toward a see-now-buy-now model.
clothing accessories. The market is still dominated by brick and mortar stores. n
Global lingerie markets witnesses’ moderate growth
A
Direct to consumer denim brands catching up especially among men
s per Lingerie Market: Global Industry Analysis, size, sales and forecast by 2024,
the global lingerie market is
experiencing moderate growth in the apparel segment as nowadays individuals are more inclined towards branded items, most of which are usually priced on the higher end. People from all backgrounds and income group want to avail a comfortable and lasting inner wear that can be fashionable as well as skin-friendly. There are many local brands or companies that manufacture cheap quality products to cater to the wide population in the under developed or
developing
countries.
Mergers
and acquisitions are a
strategic
entering
the
D
irect-to-consumer denim brands have stepped up to ensure consumers make the best purchasing decision. Brands selling jeans via digital-only channels need foresight, an astute eye for
fabrics, nimbleness and effective communication to sell.
of
More than the price benefits associated with shopping direct-to-
market
consumer, men like the brands’ home try-on program. Since men don’t
way
understanding
like shopping and don’t like going to the mall shopping online feels more
the current needs and
natural. Brands are educating consumers about the benefits of shopping
preferences
direct-to-consumer brands.
and
of
the
population. Through this, the large companies
Warp + Weft, based in Pakistan, is a direct-to-consumer men’s and
will benefit in capturing the market and at the
women’s line of size inclusive denim launched in 2017. The jeans are
same time, will enable the small companies to
produced in an energy efficient, fully-integrated manufacturing facility.
fight for a better position in the market. n
Forty per cent of the business comes from men’s. The brand is introducing a tech platform aimed at offering men a more personalized experience. n
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US to continue being the largest jeans market
T
he US is predicted to maintain its position as
significant part of the clothing and
the largest jeans market globally, with China
apparel industry, are mostly popular
following in second place. Nearly half of China’s
among the young. Denim jeans
jeans production stays inside the country. Around
provide street style fashion to lifestyle.
22 per cent of the jeans manufactured in China are
Adding leather boots gives a rough
traded outside of traditional retail markets in exchange
look. Denims jeans are a tough
for goods or services rather than currency.
and durable material, cost effective
Denim jeans are a specific type of trousers made of denim or dungaree cloth. Denim jeans, a
Global athletic footwear expanding at a CAGR of 5.3%
T
he global athletic footwear market is expanding at a CAGR of 5.3 per cent. Footwear refers to garments worn on the
clothing to wear and stylish at the same time. n
Knitwear and heritage brands increase their range of woolen wear
K
nitwear brands and heritage labels have increased their range of all-wool designs.Italian labels with pedigree are stepping out on new paths. Old ways of rearing local sheep for wool and natural
dyeing are being explored.
feet which basically serve as protection from
Menswear autumn/ winter 2019-20 layers cosy, comfortable clothes
dampness, cold, roughness, dust and heat
with serious performance in warm high-quality fabrics. Looks ranged
while walking, standing and running. Athletic
from tough, rugged and ready for the outdoors, accessorised with ice-
footwear includes shoes used in exercise,
axe, ropes and boots, to a sporty, colorful approach, some featuring
sports, aerobics, hiking and walking.
flocked logos on knit blousons, stripes and badges, techno features
Running and walking shoes dominate
mixing technology with challenge, referencing skiwear old and new.
the global athletic footwear market. Wide
Many wool fabrics are teamed up with the latest membranes,
availability in different price ranges followed
finishes or fleece-filled duvet jackets. The colorful trend for large and
by daily use by the mass population is
bold pattern seen earlier in the year at important fabric and yarn shows
expected to propel the growth of this
have evolved into stripes, checks, plaids in bright colors like yellow, red,
segment. Economy footwear is widely
black. n
favored by all age groups. Men dominate the global athletic footwear market. Online retail is expected to be the fastest growing segment
owing
to
growing penetration of e-commerce in countries including India and China followed by ease and convenience of shopping. Asia Pacific is the most significant market and holds the largest market value and volume share. n
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Brands, designers to impact menswear fashion in 2019
Y
ear 2019 promises to be a year of change in the world of men’s fashion. Events like high-profile label hookups, industry shakeups, and a focus on sustainability will rattle the Richter scale for menswear in the next 12 months with several brands starting off trends, change and quite probably a purchase or two.
Timberland Christopher Raeburn plans to take over the reins of the American lifestyle brand. The designer, with a strong focus on eco-friendly
production and purposeful design, will incorporate bleeding edge materials and a utilitarian design that has a streetwear tinge into the brand’s offerings to offer wearable clothes.
Louis Vuitton Marking the dawn of a new era in menswear, Louis Vuitton appointed Off-White founder Virgil Abloh as its art director last year. Abloh’s debut collection shook up the fashion status quo, not just in terms of design but also with its efforts to normalise diversity within the industry. This year promises to be a defining one for two of these biggest names in the fashion world.
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Zara In 2018, Spanish retail juggernaut Zara came under scrutiny, for contributing to world textile pollution through its fast-fashion offerings. The brand has now pledged to stop sending all of its unused textiles to landfill by 2020. Its market-leading position enables it to introduce world-changing reforms in fashion and retail.
Calvin Klein
Fila The sneaker, introduced by Fila last summer, appealed to both sexes and was easily picked up on the high street. Its success was the centrepiece for the retro Italian sportswear label, which is now based in the South Korea. The brand forged several collaborations in 2018, from Fendi to Weekday via Liam Hodges. It plans to form associations with MVP sportswear, Killer, Champion or Kappa, etc.
Nike The release of the Yeezy Boost 350 back in 2015 gave rise to a new era of sneaker design at Adidas and other brands. It popularised the use of oversized sole units, knitted uppers, sock-like fits and uncaged lacing systems. In 2019 Nike’s Air Fear Of God 1 collection will introduce new silhouettes from the Swoosh.
Stella McCartney Designer Stella McCartney, was once ostracised by her contemporaries for her unfaltering commitment to sustainable fashion. She has introduced a vegan Stan Smith sneaker in collaboration with Adidas. Now, the same people who once scoffed are being forced to follow suit, making McCartney look like one of the most important designers of 2019 and beyond.
After two years of launching a new luxury line, Raf Simons quit as the chief creative officer at Calvin Klein in late December 2018. Questions like who like replace him and future of the brand’s 205W39NYC collection continues to haunt the brand and the industry.
Perry Ellis Miami-based Americana brand Perry Ellis went private in 2018.The brand recently launched the revamped collection of streetwear-inflected staples, courtesy of the brand’s ‘America Perry Ellis’ line.
Barbour Kicking off with a stellar presentation at London Fashion Week Men’s, Barbour recently introduced a limited edition line of hero jackets inspired by its extensive archives, alongside a collaboration – the Director’s jacket – with fellow north-east legend Sir Ridley Scott. n
Serac Serac is set to shake up outerwear in 2019. The label will bridge the gap between fashion and functionality by utilising a British Millerain shell fabric, which is the world’s first fullywashable and waterproof 3L waxed cotton. This groundbreaking material is highly technical, yet ages and weathers like leather, making each garment unique to its wearer.
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Mothers-to-be being wooed by designers, brand and retailers
I
ll-fitting silhouettes and long overalls for pregnant women is passé. Maternity wear today is a growing market with designer’s investing on pregnant women’s style quotient.
Expectant mothers high on style The latest to jump in the bandwagon is Zara with its new maternity collection. The brand has introduced 25 maternity items – including knitted dresses, sweaters, overalls
and jeans – styled with other pieces from the main Zara range, which are either oversized or made from stretchy, bumpfriendly materials. Other high street and online retailers attempting to tap into the spending power of expectant and new mothers include H&M, Next, Topshop, Asos and Boohoo. Plus-size retailer Simply Be also launched its first maternity collection online in September. Retail analytics company Edited’s study shows the number of maternity items sold across 30 major US and UK retailers quadrupled between 2014 and the third quarter of 2017.
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Maternity fashion influenced by highstreet styles As per GlobalData, the UK maternitywear market, which was worth £199 million in 2017, grown in the number of style-savvy ‘mum-fluencers’, as well as a spate of public royal pregnancies. The maternity fashion choices of the Duchess of Cambridge have boosted business for brands such as Séraphine. Brands are now focusing on Meghan Markle, the Duchess of Sussex, who is expecting her first child in spring. The influx of high street maternity styles is pressurising specialist retailers and brands to offer complete value to mothers investing in expensive, technical maternity and nursing clothing, which is not always as fashion forward. Londonbased maternity wear retailer Isabella Oliver plans to launch an activewear range in January 2019 for expectant mothers. The brand works with sustainable fabrics with fits and designs that can be worn throughout pregnancy without having to size up. The brand invests a lot of time fitting each product on various ‘bump’ sizes, to create designs that are practical, comfortable and stylish.
Styling up nursing mothers With most nursing styles being designed for pregnancy, the market for breastfeeding clothes is still relatively untapped. Sainsbury’s Tu, in August 2018 announced its plans to expand the number of styles suitable for nursing mothers, after one of its jumpsuits was recommended on the facebook group ‘Can I Breastfeed In It?’ and sold out online within four weeks. Other brands such as SilkFred and Closet London, for example, have edits on their websites that show customers which of their dresses are suitable for breastfeeding. With more attention being paid to the pregnancy and post-childbirth fashion, the pressure on specialist players to set themselves apart in the comfort and technical design stakes will continue to grow– promising good times ahead for this group of consumers. n
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Indian fashion comes of age as global designers/brands eye lucrative market
A
s per McKinsey & Company’s ‘The State of Fashion 2019’, India is likely to be a centrepoint for global the fashion industry this year as its strengthening manufacturing sector and burgeoning middle class will create a whole new class of consumers.
India’s growth to designers/brands
attract
global
One of the fastest growing economy in the world, India is predicted to grow at 8 per cent between 2018 and 2022. The middle class will expand by 19.4 per cent a year over the same period, outpacing China, Mexico and Brazil. As a result, India is set to move from being an increasingly important sourcing hub to
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one of the most attractive consumer markets outside the Western world. As McKinsey’s FashionScope reveals, India’s apparel market will be worth $59.3 billion in 2022, making it the sixth-largest in the world, and comparable to the UK ($65 billion) and Germany ($63 billion). India continues to inspire Western designers, who pay tribute to the Indian weaves which is a unique mix of vivid colors, silks, motifs and silhouettes. International labels like Emilio Pucci,
of infrastructure with luxury malls popping up more frequently. The supply side of the industry is robust and growth of textile and apparel exports is expected to accelerate. The country is endowed with huge stock of raw material such as cotton wool, silk and jute which enable participation in the entire fashion value chain.
Western brands woo Indian designers And it is a fact that Western fashion brands woo Indian designers. It started to become a trend when in 2011 with Paco Rabanne asking Manish Arora to be the creative director of a chic women’s wear collection based on ancient know-how. Today, there is an extraordinary generation of Indian fashion designers who are pulling those unique inherited techniques into cutting-edge visions of beauty. The Indian fashion scene is vibrant and dynamic. Given all these considerations, investing in India’s expanding apparel market could be a clever move as a burgeoning middle class is keen to demonstrate an unprecedented “desire” to express their identity through fashion. n
Christian Dior, Missoni and Christian Labotin are mersmerised by the Indian textile production and have reinterpreted India’s exquisite repertoire of imagery.
Buzzing domestic stakeholders
market
attracts
As per ‘The State of Fashion 2019’ report, over 300 international fashion brands are expected to open stores in the country in the next two years. Many of these have plans to enter new markets while others plan to expand existing operations. The report says, the Indian market offers great promise despite structural challenges that include inequality, infrastructure and market fragmentation. There are signs of improvement in terms
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AppArel / fast fashion
Growing awareness about fast fashion’s impact on economy, environment, society
I
n a world of accelerating demand for apparel, consumers want and can also afford new clothes after wearing garments only a few times. Entire business models are built on the premise of fast fashion, providing clothes cheaply and quickly through shorter fashion cycles. However, this
linear fashion model of buying, wearing and quickly discarding clothes has several economic, social and environmental implications. Some of these include:
Environmental footprint of fast fashion The economic loss from fashion waste is tremendous. The
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on using more materials to meet increasing customer demands. Companies that want to compete in tomorrow’s markets will need to decouple their business growth from resource use in order to stay profitable.
Recycling a strong option
annual value of clothes discarded prematurely is over $400 billion globally. North Texas is literally burying tens of millions of dollars in recoverable materials each year, according to the annual Texas Campaign for the Environment State of Recycling report. Early research also shows the economic benefits of slowing fast fashion down. A report showed that addressing environmental and social problems created by the fashion industry would provide a $192 billion overall benefit to the global economy by 2030. Several North Texas cities like Aubrey, Little Elm, Corinth, The Colony, Lancaster, Bedford, Haltom City, Richland Hills and, Plano have adopted curbside collection for textiles. Higher quality textiles are resold, while lower quality materials may be used as rags in auto shops or mining operations. As per Environmental Protection Agency emissions calculator, making a pair of Levi’s jeans produces as much greenhouse gases as driving a car more than 80 miles. And it takes 2,700 liters of water to make just one cotton shirt, enough to meet the average person’s drinking needs for two-and-a-half years.
Early signs of an industry in transition are visible. Business models based on longevity, such as Rent the Runway and Gwynnie Bee, are supporting reuse instead of rapid consumption. The Nordstrom Men’s store in New York houses a Levi’s Tailor Shop, where men can have their damaged jeans repaired and customized instead of thrown to the curb. There are options for consumers to lease clothes rather than buy and stash them in their closets. Ideally, an end-of-ownership model for apparel will be implemented in a way that considers impacts on jobs, communities and the environment. To meet growing demand for clothes, companies will need to design, test and invest in business models that reuse clothes and maximise their useful life. If sustainable apparel is done right, companies can reap rich environmental, economic and social rewards, all while providing their customers better experiences. Consumers, on the other hand, need to seriously consider the volume of apparel they consume and its impacts. n
Social issues impact of fast fashion Clothing production has also created a number of social challenges. A 2018 US Department of Labor report found evidence of forced and child labor in many countries of the world. Rapid consumption of apparel and the need to deliver short fashion cycles stresses production resources, often resulting in supply chains that put profits ahead of human welfare. A growing number of policies and regulations around the world require emissions cuts and reduced resource use, such as the EU Waste Framework Directive. Businesses won’t be able to out-innovate the problem of growing consumption based
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AppArel / business
India Ratings maintains a stable outlook for Indian textile sector
I
ndia Ratings has maintained a stable outlook for the
of players in the sector is likely
textile sector for 2019-20 following strong domestic
to remain adequate, alongwith
demand, waning impact of the disruptions due to
an improvement in operational
GST and demonetisation and rising exports aided
cash generation, backed by
by a weak rupee. Textile companies are likely to
steady raw material costs and strong demand from end-user segments.
improve cash-flow from operations in FY20, as their
The domestic and global stock-to-use ratios will remain under pressure
working capital would stabilise as challenges related
during cotton year 2018-19. Global cotton production is likely to decline in
to demonetisation and the GST subside. The sector
cotton year 2018-19 owing to a low acreage and adverse weather conditions
is likely to continue deleveraging gradually in FY20 in
in key cotton-growing nations.Meanwhile, India’s textile exporters are likely
view of strong annual growth generation and some
to continue to benefit from improved cost competitiveness due to a weak
moderation in the debt level. Liquidity of the majority
rupee, which would drive volume growth. n
Indian inverted duty structure boosts synthetic fiber imports
T
he inverted duty structure in India
US imports of Chinese apparels increases by 0.91%
I
mports of apparel from China by US companies rose by 0.91 per cent in the January to November period. US companies are looking to source apparel from countries other than China. During
the same time, apparel shipments from Vietnam—the number two
makes it easier for textile industry to
supplier to the US—rose 5.83 per cent. Cambodia posted the largest
import synthetic textiles rather than
increase, gaining 12.37 per cent. Similarly apparel shipments from
manufacture them domestically.Synthetic
Bangladesh rose by 6 per cent, shipments from Pakistan rose 5.93
fiber is taxed at 18 per cent, yarn at 12 per
per cent and India’s shipments rose 2.8 per cent.
cent and final output at five per cent, creating
The trend is likely to continue at least until the trade war between
a tax structure where rate on inputs is higher
the US and China is resolved. There is a March 1 deadline that
than that on output.
threatens a 25 per cent tariffs on goods expected to include
The inverted duty structure has made
apparel and footwear. Among the suppliers to the US in the western
imports 15 per cent to 20 per cent cheaper
hemisphere, imports from Honduras increased by 1.83 per cent.
for the domestic industry.
Mexico’s shipments fell by 5.33 per cent and imports from El Salvador
Also
dipped by 0.64 per cent. n
the
absence
of
refund on input tax credit on the domestic sale of synthetic fabrics is said to have blocked the working capital
of
the
textile
industry.Refund of inverted duty is allowed but the industry feels it is complicated and leads to working capital blockage for months. GST on capital goods is not refunded. n
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US imports of apparels from China dwindles
I
mports of apparel from China by US companies
Among the suppliers to the US in the western hemisphere, imports
rose by 0.91 per cent in the January to November
from Honduras were up
period.US companies are looking to source
1.83 per cent. Mexico’s
apparel from countries other than China. During the
shipments fell 5.33 per
same time, apparel shipments from Vietnam—the
cent and imports from
number two supplier to the US—rose 5.83 per cent.
El Salvador dipped 0.64
Cambodia posted the largest increase, gaining
per cent.
12.37 per cent. Similarly apparel shipments from
In November, US
Bangladesh rose by six per cent, shipments from
imports
Pakistan rose 5.93 per cent and India’s shipments
were down 2.7 per
rose 2.8 per cent.
cent in square meter
The trend is likely to continue at least until the
of
equivalents
apparel
compared
trade war between the US and China is resolved.
to the same month a
There is a March 1 deadline that threatens a 25 per
year earlier. This included declines from every major supplier except China,
cent tariffs on goods expected to include apparel and
which ticked up 0.1 per cent. For the year to date, apparel imports were
footwear.
up 2.2 per cent in square meter equivalents and up 2.9 per cent in value. n
India registers uptick in apparel imports from Bangladesh
B
angladesh’s apparel exports to India
introduced a uniform taxing policy across its states – lifting a
have grown significantly in the last
major trade barrier and proving a boon for business. Also,
two years.The country has duty-free
international brands and stores are opening up in India, which
access to the Indian market. India’s exports
demand more apparel products from Bangladesh.
to Bangladesh are also growing. Bangladesh
Also, many renowned fashion brands are exploring Indian
is a major importer of cotton and active
market now – opening outlets across states. These fashion
pharmaceutical ingredients from India.
brands and outlets are demanding apparel items from
Bangladesh
is
developing
special
Bangladesh. n
economic zones for Indian investors. A river cruise between Bangladesh and India will begin from March this year. The value of Bangladesh’s knitwear exports rose 107 per cent in July to December 2018 compared to July to December 2017. The value of woven exports rose 161 per cent. India has been growing into a big potential market for Bangladesh’s apparel exporters. Last fiscal, Bangladesh’s apparel exports witnessed a 100 per cent gain in India – a trend which is continuing through to this year and expected to rise. India recently
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AppArel / supply chain
Latest technologies, nearshoring speed up deliveries for apparel companies
T
hree primary apparel regional supply chains operate in the world today. These are:
The Asian supply chain: Here economically advanced Asian countries such as Japan, South Korea, China and India supply textile raw material to the less economically developed countries such as Bangladesh,
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AppArel / SUPPLY CHAIN
Cambodia, and Vietnam.
European supply chain:
Faster supply chain to meet demand
Here developed countries in Southern and Western Europe such as Italy, France, and Germany, serve as the primary suppliers. Products for the mass markets are produced by developing countries in Southern and Eastern Europe such as Poland and Romania, whereas high-end luxury products are
Clothing and footwear brands are being pushed to look outside China and nearer home for manufacturing. In a highly competitive market that’s splitting ever more into winners and losers, a fast, flexible supply
mostly produced by Southern and Western European countries such as Italy and France.
chain is increasingly an advantage. It allows brands to respond better to the needs and wants of today’s demanding, internet-enabled shoppers. That’s why brands like Nike, Adidas, Levi’s are changing the way they make their products—and investing in automation and moving production nearshore.
US supply chain In this regional supply chain, the United States serves as the leading textile supplier, whereas developing countries in North and South America (such as Mexico and countries in the Caribbean region) assemble imported textiles from the United States or elsewhere into apparel. The majority of clothing produced in the area is eventually exported to the United States or Canada for consumption. Associated with these regional production and trade networks, three trade flows are important to watch:
Asian countries major sourcing hub for Asia Close to 80 per cent of Asian countries’ textile imports come from other Asian countries, up from around 70 per cent in early 2000.
Nearshoring option
a
popular
A McKinsey and Germany’s RWTH Aachen University study states western companies sourcing from across Asia will shift production to neighboring countries by 2025. British fashion brands like Burberry and others have already moved some of their production back to England as the tag ‘Made in England’ became attractive to luxury buyers after an import boom in the
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AppArel / SUPPLY CHAIN
1990 and early 2000. Hugo Boss, the German fashion label, has started selling a ‘Made in Germany’ collection, produced completely in Metzingen, the company’s corporate seat. Producers in China, Vietnam and Bangladesh are concentrating on delivering quickly to markets in their immediate neighborhood, creating capacity shortage for Western buyers.
New technologies speed up deliveries Fashion companies are embracing new technologies to speed up deliveries. McKinsey assumed a hypothetical scenario where all major technologies currently in development were implemented, and worked with an iniversity in Aachen, Germany, and the Digital Capability Center Aachen to calculate the cost savings in time and labor for producing a pair of jeans. Based on their calculations, to produce jeans in China with automation and import them into the US, the
final cost is around $11.40. But to produce them in Mexico with automation and import them into the US, the cost would be about $10, plus the assorted benefits of a shorter lead time. Ultimately, it’s not a question of whether garment production will move away from China and closer to Western markets, rather it will be how much of the supply chain will be rerouted, and when. n
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AppArel / Brand RetaiL
US retail sales registers worst nine year drop
U
S retail sales fell to its worst drop in nine years in
online stores — falling 3.9 per cent,
December 2019. Overall sales declined by 1.2 per
the most since November 2008. The
cent from the prior month. Excluding automobiles
broad-based weakening reflected
and gasoline, retail sales slumped by 1.4 per cent. The
lower sales from clothing stores and
steep drop however is at odds with figures showing a
gasoline stations. Auto dealers and
healthy job market and steady wage gains. The slump
building materials stores were the
also may prove temporary as stocks have regained
only sectors to record increases.
ground following December’s plunge. All except two of 13 major retail categories showed a decline, with non-store retailers — which includes
Sales of US online luxury fashion grow
U
Receipts at health and personal care stores fell two per cent, the most since October 2016. Sales at sporting goods, hobby, musical instrument and book stores tumbled 4.9 per cent, the biggest drop since September 2008. n
Adidas to double shoes production in 2019
S online sales of luxury fashion items are showing significant growth in key segments such as footwear,
accessories, and apparel.Much of the nearly 50 per cent increase in recent years can be attributed to an increase in buyer spending. The biggest increase in spending
A
didas plans to double its production of shoes containing recycled plastic waste, from five million to 11 million pairs of shoes in 2019. The brand intercepts plastic waste on beaches before it
reaches the oceans in collaboration with environmental organisation
within the online luxury market comes from
Parley for the Oceans. This upcycled plastic waste is then made into a
apparel sector which is growing 17 per cent.
yarn which becomes a key component of the upper material of Adidas
While the frequency of online purchases
footwear. In 2018, the brand saved more than 40 tonnes of plastic
held steady for luxury apparel and fashion
waste in its offices, retail stores, warehouses and distribution centres
accessories both segments saw increases
worldwide and replaced it with more sustainable solutions.
in the amount consumers spent on those
Adidas recently signed the Climate Protection Charter for the
purchases. Fashion accessories increased
Fashion Industry at the UN Climate Change Conference in Poland, and
their average online luxury spend per buyer
agreed to reduce greenhouse gas emissions by 30 per cent in 2030.
by 5 per cent. n
Adidas is also committed to using only recycled polyester in every product and on every application where a product exists by 2024. n
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AppArel / brand retail
Ralph Lauren to increases sales by 2023
R
alph Lauren has ambitious
more careful about discounts and
plans to increase sales by a
promotions, more strategic when it
billion dollars by 2023. The
comes to price, and cutting costs in
marketing spend of the brand will
creative-but-impactful ways. <p>
go up by a $100 million over the next
Ralph Lauren’s net revenues
five years. The goal is to woo the
have grown by 5 per cent. The
next generation of consumers and
American
increase gross margins by improving
also saw a respectable growth
the core product (which makes
in underlying comparable sales.
up 60 per cent of overall revenue),
Bottom line of the brand boosted its
amplifying
operating income by 12.9 per cent
under-penetrated
fashion
retail
giant
categories (including women’s, outerwear and denim)
over last year. A lot of this is attributed to lower discount rates offered by the
and operating with discipline, which constitutes being
company mainly in wholesale channel. n
Zara redesigns its logo
Q4 gross margin of Under Armour touches 45 per cent
U
nder Armour’s gross margin for the fourth quarter rose by 160 basis points to 45 per cent. Its net revenues rose by 1.5 per cent. The 2018 results demonstrate significant progress
against the company’s multi-year transformation toward becoming an even stronger brand and more operationally excellent company.
Z
<p>
ara’s new logo abandons straight lines
By region, North American sales declined by 5.8 per cent while
in favor of curves and presents itself
those in Latin America dropped by 15.1 per cent. Sales in the Asia-
with overlapping letters and, unlike
Pacific rose by 35.2 per cent and sales in Europe, Middle East and
luxury firms’ logos, an updated serif. The
Africa gained 31.7 per cent. By segment, apparel sales rose by 2
redesigned logo had been already used
per cent. Footwear slipped 4.5 per cent while accessories inched
in some of the brand’s marketing material,
down 2.2 per cent.
labels and for capsule collections available
Under
Armour
exclusively at recently opened stores, and
has been improving
now it has made its debut on the online
its
store, where it appears in blue, orange and
including
black. It is also used in Zara’s social media
chain initiatives that
accounts.
are
The logo redesign is the third for Zara
operations, supply
expected
to
help boost 2019’s
following its most recent update in 2010.
gross
Its first ever logo was introduced in 1975. In
The
November last year, Zara expanded its online
accelerated
reach to 106 new countries and regions
innovation agenda, disciplined go-to-market process and powerful
through a new global website, bringing its
consumer-centric approach gives it increasingly greater confidence
online presence to a total of 202 markets. n
in its ability to deliver for Under Armour athletes, customers and
margins. company’s
shareholders. n
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AppArel / Brand RetaiL
Levi Strauss’ net revenues increase by 14 per cent
L
evi Strauss’s net revenues grew by 14 per
The company had 74 more company-operated stores at the end
cent this fiscal year. The company’s strategies
of fiscal 2018 than it did the previous year. Levi Strauss, based in San
to diversify the product portfolio, expand
Francisco, is known for Levi’s jeans.
the direct-to-consumer business and deepen its
While revenue grew in 2018, net income for the fiscal year remained
connection with consumers worldwide have worked,
flat. That was due to higher operating income, lower interest expense,
resulting in both higher annual revenues and gross
gains on hedging contracts in the current year as well as a debt
margins.
refinancing charge in the prior year. For the fourth quarter, net revenue grew nine per cent with net income declining 17 per cent from the previous year. Profits were affected by an increase in selling and general and administrative expenses for the fourth quarter. The increase in costs reflected the expansion of the company’s direct-to-consumer business, higher compensation expenses reflecting the company’s stronger performance and higher advertising expenses. During fiscal 2018, net revenues for the Americas were up 10 per cent. Sales in Europe grew 25 per cent. Sales in Asia grew eight per cent. n
Puma’s Q4 sales increase by 20.1 per cent
P
uma’s sales increased by 20.1 per
operating result (EBIT) improved by 26.1 per cent from € 29.8
cent currency adjusted to € 1,226.4
million to € 37.6 million in the fourth quarter 2018. The improvement
million, compared to € 1,040.2 million
in profitability was due to the strong sales growth combined with
in the previous year. This sales growth was
an OPEX increase at a slightly lower rate than sales.
particularly strong in the Asia/Pacific region
Net earnings in the fourth quarter 2018 improved significantly
followed by the Americas, both increasing at
from € 2.2 million last year to € 15.7 million and earnings per share
double-digit rates. Both apparel and footwear
increased correspondingly from € 0.14 last year to € 1.05. n
showed strong growth in the fourth quarter of 2018, improving 28.6 per cent and 17.4 per cent respectively. For footwear, it was the 18th consecutive quarter of sales growth. The gross profit margin in Q4 remained stable at a high 47.1 per cent, despite negative currency impacts in the quarter. Operating expenses (OPEX) increased by 17.1 per cent to € 544.9 million in the fourth quarter, caused by higher sales-related, variable costs and a step-up in retail investments, including e-commerce. marketing
Football
initiatives
for
sponsorships, new
footwear
franchises and the launch of the basketball category led to higher marketing costs. The
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AppArel / sustainability
Demand for eco-friendly, sustainable materials for high quality garments on the rise
A
recent research indicates, clothes made from synthetic fibres, such as polyester and acrylic, may damage the environment throughout their
usage, by releasing hundreds of thousands of tiny synthetic particles with every wash. This awareness has created a desire among brands, retailers and consumers to return to higher quality garments that are less damaging and retain their value longer.
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This has given rise to greater demand for natural fibres, such as US cotton.
Growing demand for cotton apparels A research commissioned by Cotton Incorporated in the US, UK, India, Germany, Italy, Mexico and China in 2017 revealed around 61 per cent of participants preferred cotton clothes that can evaporate sweat more quickly, making them a
superior choice in athletic wear’. Cotton is set to become the latest performance player. As a Cotton Incorported Lifestyle Monitor Survey mandates, around 63 per cent consumers a product made of cotton is the most comfortable, sustainable, softest, of highest quality and more versatile. Shoppers also make a point of looking for cotton fiber when shopping for apparel gifts during the holidays due to its comfort and easy care. However, cotton garments can’t compete with synthetic garments in the sports and outdoor market as it cannot manage moisture across its surface on being wet. This is now being addressed, with R&D focused on spinning technology and innovative finishes. Till now cotton has been seen as not environmentally friendly as it appears and requires massive amount of water, chemicals and arable land to grow is being addressed by Cotton USA and BCI through their responsible and sustainable measures. The introduction of new environment-friendly materials ranging from recycled polyester, upcycled and regenerated fabrics, recycled cotton and cellulosic fibers have fastracked
developments in apparel industry.
Growing demand for wool in activewear There a growing acceptance for wool in activewear due to its beneficial properties. Softness and odour-resisting properties are luring brands like Adidas and Lululemon who are ensuring that the trend catches on. Wool’s inherent properties such as breathability and moisture-wicking capabilities are expected to drive up demand. Wool’s natural properties make it ideal for next-to-skin items such as underwear, base layers, socks or T-shirts. One of the most important is breathability. Wool can absorb large quantities of water vapour – twice as much as cotton and 30 times as much as polyester – and allow it to evaporate. Greater Than A, the sportswear brand of Norwegian alpine ski racer Aksel Lund Svindal, an Olympic gold medallist, uses wool in his sportswear brand. The brand aims to make functional clothing that looks and feels fantastic and at the same time causes no harm to the planet.
Blended fiber yarn sees good demand in home décor products segment Surge in demand for handcrafted products coupled with home décor including wall hangings, bed linen products and rugs & carpets is boosting the growth of blended fibers market in India. In India, the blended fiber yarn market, last year, saw a couple of rather pivotal incidences that would have a commendable influence on future Indian market trends in the years to come. These include: Sutlej Textiles and Industries (STIL), one of most prominent participants of blended fibers market, recently acquired the design and distribution unit and the brand name of the Pennsylvania-based American Silk Mills (ASM). This acquisition is likely to strengthen Sutlej’s home textiles portfolio. Welspun
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AppArel / SUSTAINABILITY
launched its newest collection at Heimtextil India, including quilts, towels, duvet covers, bed sheets, curtains, carpets, rugs, bedspreads, bathrobes, and bath mats. Welspunâ&#x20AC;&#x2122;s initiative is also expected to influence other leaders in the home textiles and interior decor sectors to launch their fabric collections and conform to latest consumer demands.
RMG segment spandex market
to
boost
The major growth driver for spandex will be the apparel industry which uses spandex in manufacturing leggings, gloves, cycling jerseys and competitive swimwear etc. The global spandex market is estimated at over 760 kilo tonne in 2015, is likely to cross 1,550 kilo ton by 2023. It is likely to grow at a CAGR of over 8 per cent from 2016 to 2023. China dominated the Asia-Pacific market in 2015, accounting for 60 per cent of the total volume. Invista, under Lycra, has introduced bio based spandex for apparels. Bio spandex contains approximately 70 per cent of the sustainable feedstock made out of renewable butanediol from dextrose which is derived from corn. The company markets this as a specialty product and sells it at a premium rate.
manufacturers has increased due to increasing demand for naturally derived fibers. The product finds its application in various segments such as baby diapers, home textiles, apparels, automotive filters, surgical products and many more. The healthcare and wound care textiles segment is likely to grow at a robust pace, owing to the evolving technologies for recovery of surgical wounds, thus propelling lyocell fiber market.
Brands adopting Tencel with Refibra Technology Tencel with Refibra technology has been adopted by six brands of late: Country Road, Patagonia, Our of the Woods, Reformation, Marco Polo and Mara Hoffman, and four more brands are expected to adopt the fiber, which substitutes traditional Tencel in the fabric construction. Lenzing has also expanded the production of its Ecovero brand of viscose fibers to its Lenzing Nanjing Fibers facility in Nanjing, China. Ecovero, a fiber derived from sustainable wood pulp from certified and controlled sources, has been produced in Lenzingâ&#x20AC;&#x2122;s Austrian facility since it was launched this past Fall, and since then demand has been strong, which prompted plans to increase production capabilities to accommodate it. n
Lyocell and petrochemicals fibers grow in usage Fashion trends have changed rapidly over the past few years and will continue to do so in coming years, which will drive industry growth. Modern technology and fibers have been developed which have escalated the use of better quality materials and has driven lyocell fiber marker demand. Brands have started focusing on fibers that can be recycled and reused after the end of a productâ&#x20AC;&#x2122;s lifecycle. Petrochemical fibers have been substituted by cellulosic manmade fibers which have spurred product adoption in manufacturing processes. The pressure on synthetic fiber
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AppArel / Sustainability
Hanes Brands takes leadership position in CDP 2018 Climate Change Report data since 2010 to CDP, which was formerly known as the Carbon Disclosure Project. The company scored in the top six per cent of nearly 7000 companies that participated in the most recent report and achieved the highest score in the apparel industry. Among the companyâ&#x20AC;&#x2122;s 2020 objectives are goals to reduce
H
energy consumption and carbon emissions by 40 per cent from its anes Brands has earned an A- score and
2007 benchmark. Since 2007, the company has reduced energy
taken a leadership position in the CDP
intensity by nearly 21 per cent. It has partnered with universities to
2018 Climate Change Report. Hanes
educate the next generation of business leaders about the importance
has voluntarily reported its carbon emissions
of integrating environmental stewardship in business strategy. n
Asics collaborates with Charity I:Collect to recycle used sports apparels and footwear
Digital textile offers solution for rotary screen printing
D
J
meter. Digital textile printing uses smaller
work together to collect used sports apparels and footwear for reuse
quantities of color, typically 10 per cent of
or recycling.The programme will enable the recycling and reuse
the volume used when compared to screen
of Asics products at eight marathons happening across EMEA
printing. Using pigment inks as an example,
(Europe, Middle East and Asia).
igital textile printing offered an efficient solution compared to traditional water usage for rotary screen printing which
is in the region of 50-60 liters of water per
apanese sportswear companyAsics, is collaborating with the Charity I:Collect on a sports apparel recycling and reuse initiative in Europe. The initiative will be launched at the
Barcelona Marathon on March 10, 2019 where two companies will
and its requirement for fixation
The Japanese brand has claimed that any merchandising and
only finishing (no washing)
promotional apparel developed for the races is generally made from
uses less than 10 liters of water
sustainable materials.The move is followed by announcement made
per meter.
by Asics to collect more than 30,000 pieces of sports apparels
Digitally
cotton
from the consumers in Japan.The collected pieces will be further
the
recycled by the year 2020. Both initiatives aim to cut greenhouse
consumption of water and the
gas emissions by 55 per cent across the globe by the year 2030. n
virtually
printed eliminates
discharge of noxious effluents. It uses low volumes of liquid dispersions of pigment colors, therefore offering a positive environmental impact. Digital Textile Printing using Pigments also removes the need for water and energy greedy post processing, since color fastness is achieved by heat fixation alone as opposed to lengthy steam fixation and washing off procedures. n
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AppArel / sustainability
Ignoring aesthetic appeal, brands now focus on eco-friendly products
D
espite offering consumers a mode of self-expression, celebration of originality and fine craftsmanship, or temporary pleasure, fashion remain one of the worldâ&#x20AC;&#x2122;s most polluting and wasteful industries. A recent Ellen MacArthur Foundation study
reveals, global textile production has more than doubled in the past 15 years, while the average shopper holds on to clothing for half that long. Over 85 per cent of discarded clothing in the US ends up in landfills, and this cycle of make/use/waste comes at a considerable cost as the industry generates more greenhouse gas emissions than do international maritime shipping and aviation combined.
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AppArel / SUSTAINABILITY
Sustainability initiatives with ecofriendly fabrics This colossal irresponsibility on part of the brands sparked the idea for Veja, the footwear industry’s initiative for sustainable fashion. In 2005, while other brands set up their online stores, François-Ghislain Morillion and Sébastien Kopp opted for physical stores. These two entrepreneurs devoted all their resources to a sustainably manufactured product. Today, they also use upcycled tilapia hides; recycled plastic bottles; and flannel, silk, and other eco-friendly materials for their shoes. Till date, they have sold nearly 2 million pairs of shoes around the world and continue to push and emphasise the importance of a sustainable business.
More transparency in luxe business However, top brands, with their embedded supply chains
and manufacturing facilities, face a bigger challenge. Kering, publicly announced its quantitative objectives in sustainability through 2025. Chief among them included reducing its environmental footprint overall by 40 per cent. The rest of its actions, which touch every step of the supply chain, as well as manufacturing, distribution, and R&D, are explicitly outlined online, suggesting transparency is no longer an enemy to luxury’s aura of exclusivity. Though traditionally, change was unlikely in the rarefied world of high-end jewelry, Place Vendome, the Parisian mecca of the world’s most prestigious and jewelery brands, is currently facing disruption. Courbet was launched in May as the first 100 per cent ethical and sustainable line, using recycled, traceable gold and lab-grown diamonds of the highest color grade. These are 30 per cent less expensive than mined diamonds—the latter producing 15,000 times the pollution of lab-grown ones, which are made with solarpowered machines. Department stores worldwide have already started placing with the local interest being instantaneous. However, in an attempt to protect the environment, brands are ignoring the aesthetic value of their products. This is why many eco-only brands have failed to attract their consumers. As for a product to sell, it has to be pleasing both in manner and appearance. n
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AppArel / retail
New tools, customisation to drive retail growth this year
I
n 2019, a major upheaval in the fashion and fashion related businesses in the past few years and a cooling economy is likely to restrict consumer spending. This could be further aggravated by the growing trade war between US and China that began last summer when the Trump administration levied a 10 per cent tariff on $200 billion worth of goods coming
from China. Paula Rosenblum, Managing Partner at market researchers RSR Research feels if the trade war continues prices of low-end and moderately-priced products will increase significantly and the impact of this price-rise will be swift.
New tools to tackle challenges Western brands woo Indian designers Another problem plaguing retailers this year is the growing number of returns being made by online shoppers. An
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AppArel / RETAIL
estimated 15 to 30 per cent of online orders purchased during the holiday 2018 season will be returned, according to a recent report from real-estate and investment company CBRE. Online returns could cost as much as $37 billion for the 2018 holiday season compared with $32 billion for the 2017 holiday season. But new tools of trade might help retailers battle some challenges. One tech item expected to become more popular this year is voice-activated retail such as Amazon Echo. This is a voice-activated retail that enables consumers to order a product anytime they want by vocalizing a request into a machine. Personalisation and customisation will be increasingly important to consumers. Mercedes Gonzalez of retail
consultants Global Purchasing Companies says strides in manufacturing will allow companies to offer more unique looks to consumers. n
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AppArel / Tech trend
Levi Strauss to pilot use of block chain technology
U
S denim brand Levi Strauss will pilot the use of
updated instantly.
block chain technology to monitor factory safety
That means the
in supply chains. A promising new solution could
records are public
potentially augment and replace external factory health
and verifiable and,
and safety auditors with a self-reporting infrastructure by
since there’s no
factory workers.
central
Three Levi Strauss’ factories located in Mexico
it
location,
is harder to
employing 5,000 workers will be the first to use the system
hack since the
this year, while another pilot is planned for next year.
information exists
Block chain is the technology which underpins digital
simultaneously in
currency such as Bitcoin, Litecoin and Ethereum. The
millions of places.
technology allows digital information to be distributed,
One of block chain technology’s most promising applications is in supply
but not copied, meaning that each individual piece of
chain and inventory management. Fashion supply chains are often opaque,
data can only have one owner.
involving the sourcing of raw fibers and materials from farmers, fabrics and
This information is constantly reconciled into a database, which is stored in multiple locations and
leathers from textile mills and tanneries, and garments from cut and sew and finishing factories. Distribution networks are vast and complex. n
Manchester University develops new method of graphene use in wearable textiles
T
he
University
of
Manchester
has
developed a simple and cost-effective
graphene oxide in solution and then coated the textiles with the reduced form.
method to manufacture graphene-
By making coating the ultimate step, it becomes possible to
based wearable electronic textiles on an
use a coating technique termed padding, which is currently the
industrial scale.This could easily be scaled
most commonly used method of applying functional finishes to
for many real-life applications, such as
textiles in the textile industry. For instance, water-repellent and
sportswear, military gear, and medical
wrinkle-free clothing are often made by padding. n
clothing. Graphene is predicted to be one of the most prominent materials in wearable e-textiles. The new technique could allow graphene e-textiles to be manufactured at commercial production rates of 150 meters per minute. In the new method, the researchers have reversed the previous process of coating textiles with graphenebased materials. Conventionally, the textiles are first treated with graphene oxide, and then the graphene oxide is reduced to its functional form of reduced graphene oxide. Instead, the researchers first reduced the
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AppArel / Trends
World fiber production rises in 2018
W
orld production of all fibers rose to 111 million metric tonne in 2018, a one- year increase of four million tonne, and a
rise over the past decade of 35 million tonne. Of the world total, natural fibers accounted for 32 million tons in 2018, an increase of less than two million tons in 10 years. The share of natural fibers in world fiber production fell from 41 per cent in 2008 to less than 30 per cent in 2018. Cotton production in 2017-18 is estimated at 26.72 million tonne. World production of jute fell to less than three million tonne because of poor weather in India and Bangladesh. Jute markets in Bangladesh and India showed increases in value and decreases in volumes during 2018.
production, and stocks are being reduced. It is likely that prices
A decreased jute production caused by poor
could continue to increase during 2019. Production of wool fell in
weather means that consumption exceeds
2018. Wool production figures have been declining since 2000. n
Indian textiles to do trend analysis
T
hThe Indian textile sector will start trend
will be prepared. Joint ventures with other countries are being
forecasting soon.
planned on technical textiles and specialty fibers. An India-
This will help determine what will be
in vogue in the near future, as India gears up to influence global fashion trends.
specific apparel sizing is being undertaken. The Remission of State Levies Scheme is being reexamined. A hike in rebates is likely. Embedded duties will be
Schemes will be firmed up for the apparel
refunded fully. Indiaâ&#x20AC;&#x2122;s share in world trade in textile and clothing
and made-ups sectors which are WTO-
is estimated to be 4.95 per cent. With these exports, India is
compliant. This will be an added incentive
ranked second among suppliers in the world. n
for exporters and allow them to compete with the EU and other countries. India is unable to compete in apparel exports with countries like Bangladesh and Vietnam, which enjoy zero duty access. More incentives are in the pipeline for the apparel sector under the Merchandise Exports from India Scheme. An innovation and incubation center is also being set up which will incubate startups in the sector and handhold them to move forward. A repository of various indigenous crafts
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AppArel / human resources
Most fashion industry professionals satisfied with their job: Study
B
usiness of Fashion recently carried out a study to understand satisfaction levels among professionals working in the fashion industry with respect to their jobs. The survey spoke to over 1,400 fashion professionals and analysed a sample set of 418 respondents — working in the UK, the US, France, Italy and Germany.
The results showed, majority of fashion industry professionals are satisfied with their jobs, almost 54 per cent. And in line with this statistics, almost a fifth of individuals working in the industry —around 19 per cent — are very satisfied with their job. However, over 20 per cent were actively dissatisfied with their jobs, with 7 per cent identifying as unsatisfied with their role.
UK professionals most satisfied,
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AppArel / HUMAN RESOURCEs
Germany, the least Given the UKâ&#x20AC;&#x2122;s bleak economic outlook under Brexit, it is perhaps surprising that professionals in the country are the most satisfied with their roles out of the five geographies analysed. With 57 per cent respondents satisfied or very satisfied, the UK narrowly beat Italian and French industries, who scored satisfaction rates of 56 and 55 per cent respectively. Seemingly, London continues its tradition of flourishing in crisis. On the other side of spectrum, surprisingly given how robust its economy has been, analysing the data through a geographic lens identifies fashion professionals in Germany as the least happy among those surveyed.
Those at the start and zenith of their careers are notably happier at work. At the top, over 74 per cent of entrepreneurs and business owners would classify themselves as satisfied with their roles, with just 2 per cent stating they were very unsatisfied with their jobs. Similarly, 59 per cent of chief executives described themselves as
US professionals a mix bag The survey indicated, fashion professionals in the US have the most polarised working experience, with 51 per cent satisfied and 30 per cent unsatisfied in their roles. In terms of job satisfaction, the land of the free and the home of the brave is divided between the haves and have not. Indeed, despite having the highest dissatisfaction rating in the survey, American entrepreneurs and business owners scored the highest satisfaction rating of any demographic cohort.
Beginners, senior professionals most satisfied The data by level of seniority indicates some interesting trends. satisfied or very satisfied. Interestingly, despite accepted wisdom that individuals at the beginning of the career ladder suffer the most in fashion, the results of the survey indicate that middle and senior management find their employment significantly less satisfying than their juniors. Respectively, 29 per cent and 27 per cent of middle management and senior manager respondents stated they were unsatisfied with their current role, compared to just 16 per cent of interns. For those looking for most nurturing and fulfilling environments to begin their careers in fashion, the rising specter of Brexit may complicate matters. The industryâ&#x20AC;&#x2122;s happiest interns are those working in the United Kingdom, while Franceâ&#x20AC;&#x2122;s entry-level and junior professionals are the most satisfied globally. n
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AppArel / events
Interfiliere Hong Kong to focus on innovations, sustainability
E
urovet Group, the organiser of leading international trade show events for lingerie, swimwear and active-wear supply chain and different sectors from Indonesian Lingerie Industry joined the develoPPP.de programme of the German Federal Ministry for Economic Cooperation and Development (BMZ), in partnership with sequa gGmbH. Under the framework of the development
partnership, Eurovet will initiate different activities to promote sustainable and circular lingerie manufacturers from Indonesia and to contribute to the development of the Indonesian lingerie industry through awareness creation, capacity building, knowledge transfer, practical implementations and the Interfilière Hong Kong trade fair. The 13th edition of Interfiliere Hong Kong will be held on March 20-21, 2019 at Kai Tak Cruise Terminal, Hong Kong. The event will featuring intimatewear, swimwear and athleisure will focus on innovation,sustainability and performance in Hong Kong, the
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AppArel / EVENTs
hub of Asia. The event will bring the BEST exhibitors & visitors together around Asia with new initiatives and innovation
Exhibits to focus on sustainability Over 500 innovative products selected by a steering committee will be displayed at the interactive gallery. Out of these 3 per cent will be fibers, 7 per cent embroidery, 24 per cent lace, 33 per cent fabrics, 16 percent accessories, 17 per cent OEM/ODM. Around 50 per cent of the exhibitors will showcase eco-friendly solutions (collection or production process)
The Creativ’Lab and seminars
and technological innovations, materials, accessories, colors, prototype displays made by exhibiting mills and curated by Concepts Paris. The Interfiliere Hong Kong Creativ’Lab decrypts a preview of Autumn / Winter 2020-2021. The event will also host high-level trend conferences, discussion panels or talks with visionary keynote speakers. The topics will cover the future of our industry, the current industry progress and challenges and more. n
The Creativ’ Lab will showcase a selection of samples
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AppArel / AEPC events
AEPC interacts with Hon’ble Minister of Commerce and Industry through video conference
AEPC interacts with Minister of Commerce and Industry through video conference
D
r. A. Sakthivel, Vice Chairman, AEPC along with EC Members of AEPC joined an interactive session with Suresh Prabhu, Minister of Commerce and Industry through a video conference. This interactive session was organised on 18th Feb’19. During the session Hon’ble Minister of
Commerce and Industry Mr. Suresh Prabhu had briefed the initiatives taken by his Ministry in the interest of trade and commerce. He had also said that during 2018 nearly 62 billion US Dollars received as Foreign Direct Investment (FDI) and expecting it will reach 100 billion USD in the coming years. Dr. A. Sakthivel noted that this is the first time a minister interacted through a video conference and the initiative should continue in future also. n
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APPAREL / GST UPDATE
Reverse Charge Mechanism under GST Law: Comprehensive Analysis {Incorporating Amendments effective from 1st February’2019} “Reverse charge” means the liability to pay tax rests with the person receiving goods or services or both instead of the supplier of such goods/services under section 9(3) or 9(4) of CGST Act. If a vendor who is not registered under GST, supplies goods to a person who is registered under GST, then Reverse Charge would apply. This means that the GST will have to be paid directly by the receiver to the Government instead of the supplier. For Inter-state purchases, the buyer has to pay IGST. For Intra-state purchases CGST and SGST has to be paid under RCM by the purchaser. As per the earlier provision of section 9(4) of the CGST Act, 2017 The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both This provision created difficulties in making inward supplies from unregistered suppliers and then making payment of tax in cash under RCM by self and also to maintain records of such supplies. This also resulted in increased working capital blockage of the registered persons. This provision also caused hardships for small unregistered suppliers, because every registered supplier was avoiding dealing from unregistered Supplier. But this hardship was relaxed by Notification No. 8/2017Central Tax (Rate) dt 28.06.2017 issued by Central Government exempted intra- State inward supplies from unregistered persons. The said exemption was not applicable where the aggregate value of such supplies of goods or service or both received by a registered person from any or all the suppliers, who is or are not registered, exceeds five thousand rupees in a day. Inter -state supplies from unregistered was still taxable. Later, vide Notification No. 38/2017- Central Tax (Rate) dt. 13.10.2017, The Central Government suspended the taxability on inward supplies from unregistered persons on reverse charge basis and this taxability was suspended w.e.f. 13th Oct 2017 till 31st March 2018. This exemption was further extended till 30th June 2018 and after that till 30th September 2019 by further Notification No.22/18Central Tax (Rate) dated 6.8.18
CBIC has notified that Exemption from tax under ‘Reverse Charge Mechanism (RCM)’ under GST stands rescinded w.e.f. 1st Feb. 2019 in respect of Intra-state Purchases of Goods and Services from unregistered Dealers (of value up to Rs. 5,000 per day), in view of bringing into effect of the amendments (regarding RCM on supplies by unregistered persons) in the Amended CGST/ IGST/ UTGST Acts 2018. However, it may be noted that this Notification has nothing to do with restoring the RCM provisions u/s 9(4) of the CGST Act, 2017 w.e.f. 1st Feb. 2019 which were kept in abeyance till 30 Sept. 2019 vide CGST Notification 22/2018 dt. 6th Aug. 2018, in view of the fact that provisions of CGST Amendment Act, 2018 have been effected from 1st Feb. 2019. Amended provisions of Section 9(4) of the CGST Act, 2018 provides as under: “The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”. Here, the important point is that provisions of Section 9(4) of the CGST Act, 2018 are now applicable only to specified categories of supply of goods or services or both and that too to a specified class of registered persons. At present, no such categories of supply of goods or services have been specified which implies that as of now, RCM U/s 9(4) of the CGST Act, 2018 is not applicable. The blanket exemption given to one and sundry earlier becomes superfluous from 01.02.2019 and hence it was removed. In our opinion, this is a very good step as it will reduce the burden and the hardships for registered supplier to maintain details of such supplies and reduce the burden of tax payment in cash and related compliances thereof. This will also facilitate the small unregistered dealers to get away from the compulsion of registration and follow the compliances of paying tax , maintaining proper invoices even for small supplies and also from filing returns on timely basis.
Latest Amendment ON RCM under Section 9(4)
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APPAREL / NOTIFICATIONS
Subject: Online Module for Filing & Tracking Quality Complaints/Trade Disputes relating to International Trade DGFT in its Trade Notice No. 47/2015-2020 dated 11th February 2019 stated that in in an endeavor to resolve complaints or trade disputes relating to international trade and to create confidence in the business environment of India, a mechanism to address such issues has been provided in Chapter 8 of the Foreign Trade Policy/Handbook of Procedures, 2015-2020. These largely relate to a) Complaints received from foreign buyers in respect of poor quality of the products supplied by exporters from India; b) Complaints of importers against foreign suppliers in respect of quality of the products supplied; and c) Complaints of unethical commercial dealings categorized mainly as non-supply/ partial supply of goods after confirmation of order; supplying goods other than the ones as agreed upon; non-payment; non-adherence to delivery schedules, etc For Full Notifications: http://dgft.gov.in/sites/default/files/Trade%20Notice%20No.%2047%20dated %2011-02-2019.pdf
Sub: Interest Subvention Scheme for MSMEs
As you are aware, Government of India, on November 2, 2018, has announced ‘Interest Subvention Scheme for MSMEs 2018’. A details salient features and operational guidelines for implementation of the scheme, released by the Ministry of Micro, Small and Medium Enterprises (MSME), Government of India, are given at https://rbi.org.in/ Scripts/NotificationUser.aspx?Id=11478&Mode=0 Small Industries Development Bank of India (SIDBI) is the single national level nodal implementation agency for the scheme. Salient features of the scheme are1. Purpose, Scheme and Duration- The scheme encourages both manufacturing and service enterprises to increase productivity and by providing incentives to MSMEs. The scheme will be in operation for two financial yeas 2018-19 and 2019-20. 2. Eligibility for Coverage- All MSMEs who meet certain criteria will be the beneficiary of the scheme. The required list of all the eligibility conditions will be in the notification enclosed. 3. Operational Formalities- The interest relief will be calculated at two percentage points per annum (2% p.a.), on outstanding balance from time to time from the date of disbursal / drawal or the date of notification of this scheme, whichever is later, on the incremental or fresh amount of working capital sanctioned or incremental or new term loan disbursed by eligible institutions. 4. Claim Submission- Small Industries Development Bank of India (SIDBI) is the single national level nodal implementation agency for the scheme. The required information the same is in the annexures in the notification enclosed. For details click the link https://rbi.org.in/Scripts/NotificationUser.aspx?Id=11478&Mode=0
Subject: Amendment in the ANF 3D for E commerce exports under para 3.05 of the FTP 2015-20 DGFT in its notification no. 72/2015-20 dated 5th February, 2019 had amended ANF 3D for E commerce exports under para 3.05 of the FTP 2015-20. For Full Notification: http://dgft.gov.in/sites/default/files/PN%2072%20english_0.pdf
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APPAREL / NOTIFICATIONS
Subject: Discontinuation of physical copy of Advance / EPCG Authorisations issued from 01.03.2019 onwards, for EDI ports DGFT in its Policy circular no. 18/2015-20 dated 14th February, 2019 stated that in order to improve ease of doing business and improving online transactions, it has been decided to discontinue copy of Advance/EPCG authorization issued on or after 01.03.2019 by Regional Authorities, in respect of EDI ports. For Full Notification: http://dgft.gov.in/sites/default/files/Policy%20Circular%2019%20of%20 2015-20.pdf
Sub: Facility of Clubbing of Authorizations: DGFT in its PUBLIC NOTICE No. 70/2015-2020 had made an amendment Hand Book of Procedures of FTP 20152020, related to Facility of Clubbing of Authorizations. Para 4.38 of HBP 2015-10 is amended to read as under: Para 4.38 Facility of Clubbing of Authorisations: (i) No clubbing of Authorisations issued on or before 315t March, 2009 shall be allowed. (ii) Request for clubbing shall be made in ANF - 4C to the concerned RA who has issued the Authorisations. (iii) Facility of clubbing of Advance Authorisations shall be available only for redemption 1 regularisation of such Authorisations and no further import or export shall be allowed. (iv) Facility of clubbing shall also be available for Advance Authorisations for Annual Requirement issued during Foreign Trade Policy period 2009-14 and 2015-20, wherever exports and imports have taken place as per Standard Input Output Norms (SION) notified. (v) Only Authorisations under which similar duty exemption has been availed shall only be allowed to be clubbed. Such Authorisations may pertain to different financial years. (vi) Only such Authorisations shall be clubbed which have been issued within 18 months from the date of issue of earliest authorisation that is sought to be clubbed, whether such authorisations are valid or not. This is further subject to condition that upon clubbing only imports made within 30 months from the date of issue of earliest authorisation shall be considered. Any imports made beyond 30 months of earliest authorisation shall be regularised under Para 4.49 of the HBP. (vii) Exports made during initial or extended EO period of individual authorisations (after payment of composition fee as per provisions of Para 4.42 of HBP) shall be clubbed. (viii) Upon clubbing, if shortfall in value or quantity is noticed, the same shall be regularized under the provisions of Para 4.49 of HBP 2015-20. (ix) Clubbing of Authorisations issued with different EO periods shall also be allowed. (x) Inputs which are common in all authorisations shall be clubbed and duty free inputs shall be accounted for as per SION/ad-hoc norms fixed by NC. In other words all inputs covered in all authorisations need not be same. (xi) Minimum value addition as prescribed in FTP and Procedures for the export product will be required to be maintained on clubbing. (xii) After clubbing, Authorisations shall for all purposes, be deemed to be one Authorisation. The value addition would be calculated on the basis of total CIF and total FOB arrived at after clubbing the Authorisations. For Full Notification: http://dgft.gov.in/sites/default/files/public%20Notice%2070%20English_0.pdf
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AppArel / aepc event calendar
2019
CALENDAR OF EVENTS -
1
July, 2019, HONG KONG
2
July, 2019, JAPAN
Hong Kong Fashion Week at Hong Kong
3
August, 2019, USA
India Trend Fair (ITF) at Tokyo, Japan
4
September, 2019, France
Sourcing at Magic, Las Vegas, USA
5
October, 2019, SPAIN
WHO’s Next, Paris – France
6
November, 2019, AUSTRALIa
India Apparel & Accessories fair at Madrid, Spain
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International Sourcing Expo Australia