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News Clips 17 July, 2013

[ India plans massive duty cut on Pakistan textile imports ]
[ STPF 2012-15: government to incorporate textile industry's input ]
[ Major fire breaks out in textile mill ]
[ India: Garments exports jump 11% to $3.5 billion ]
[ India: Govt to write-off Rs 3500cr worth textile sector loans ]
[ India to contest blacklisting of textile products by US ]
[ Bangladesh: JICA pledges $1bn for apparel industry ]
[ Asian garment industry to undergo further segmentation ]

India plans massive duty cut on Pakistan textile imports   [ top ]

BUSINESS STANDARD, Nayanima Basu , July 17, 2013
In an unprecedented move, India is planning to drastically slash tariff on import of textiles from Pakistan in an effort to normalise trading relations between both countries.

Currently, India imposes 30-45 per cent duty on textile products from Pakistan. The government is planning to bring it down to five per cent and has not ruled out the option of allowing duty-free access too.

This would be done by reducing the sensitive list of items India maintains for Pakistan, under which certain items are not allowed from there. This list is maintained under the South Asian Free Trade Agreement (Safta).

“Once the reduced sensitive list under Safta is notified, most of the textile lines would be out, for the benefit of Pakistan. We might bring it almost to the level of Bangladesh,” said a senior commerce department official involved in the process.

In 2011, India allowed duty-free access to Bangladeshi garments and apparel products.

This, however, would be done only when Pakistan grants most favoured nation (MFN) status, or non-discriminatory market access, to India, the official added.

Pakistan’s global exports basket has been dominated by products from the textiles and clothing sector, which, however, is not consistent with its exporting pattern to India.

These products are found listed in India’s sensitive list, thus restricting the possibility of Pakistan being able to formally export these products. The main items of informal trade from Pakistan to India are textiles and garments.

Interestingly, the new Pakistani government under Prime Minister Nawaz Sharif has renamed the official name of their Ministry of Commerce to Ministry of Commerce and Textile Industry, probably to highlight the importance of the industry to the world. While Sharif is himself handling the commerce portfolio, Qasim M Niaz has been appointed the new commerce secretary.

Nisha Taneja of the Indian Council for Research on International Economic Relations said, “Pakistan’s textile export basket is small. It depends on what products under this category would be opened up by India, which is crucial. They are heavily banking on textiles. And, I do not see a problem in granting them easy access because if we can take on Bangladesh, then there would be no problem with Pakistan.”

Pervez Lala, chief executive officer of a Pakistani apparel brand, Lala Textiles, which recently participated in an exhibition in Surat, told Business Standard Pakistani textile importers also had to face several non-tariff barriers in India, which affected their business. This issue of granting preferential market access to textile imports from Pakistan was discussed last month during the first joint business council meeting in Islamabad.

STPF 2012-15: government to incorporate textile industry's input   [ top ]

BUSINESS RECORDER, Tahir Amin, July 14, 2013
The government has decided to review the Strategic Trade Policy Framework (STPF) 2012-15 to incorporate the input of textile industry to enhance textile exports, well-placed sources told Business Recorder. The new government, contrary to the previous government has started negotiations with all stakeholders to enhance textile export of the country, said sources, adding that in this regard as a first initiative STPF (2012-15) would be reviewed where the input of textile industry would be incorporated, which was ignored in the past.

The Commerce Division has approached the Textile Division and sought their input for the remaining period of STPF (2012-15), sources added. The decision would also help textile industry to get maximum benefits from the proposed European Union's Generalised Scheme of Preferences (GSP) Plus. Pakistan is seeking GSP-Plus status to secure greater access to the EU markets, sources added.

The previous government had announced five-year Textile Policy (2009-14) envisaging textile export target of $25 billion while total textile exports are no more than $13 billion mainly because the key initiatives of the policy are yet to be implemented, sources added. Even after a passage of about four years of the policy, SROs incorporating only 30 percent of the announced schemes have been issued while the remaining are yet to be issued. The government had announced different schemes as well as Drawbacks on Local Taxes and Levies (DLTL) for textile sector in the Textile Policy. The pre-policy 60 percent Research and Development (R&D) pending dues that the policy committed to releasing have not yet been cleared.

The Textile Policy also committed to providing regular supply of gas and power to the textile industry. However, it has failed to provide these facilities resulting in huge loss to the industry. The previous government announced Technology Upgradation Support in textile policy and later issued Technology Upgradation Support Order 2010 (April) to provide incentives to textile machinery and technology with the objective of attracting investment in the textile sector. However the specifications of the machinery/equipment eligible under the fund is yet to be decided which resulted in delaying implementation of the incentives for textile sector.

Expressing full confidence in the new government, Pakistan Apparel Forum Chairman Javed Bilwani said that the government has started negotiations with all stakeholders for enhancing textile export, which is a good sign. In this regard last week a meeting was held, chaired by Secretary Commerce where proposals were sought from the value-added textile sector, Bilwani said, adding that they proposed to the government to give priority to providing utilities, relaxation in taxes and clear the outstanding dues under different schemes.

All Pakistan Textile Mills Association (Aptma) Chairman Ahsan Bashir told Business Recorder that textiles is one of the most important foreign exchange earners of the country, besides creating employment therefore the government should take all the stakeholders on board in policy making. The government should give priority to this sector in utilities including gas and power, said Bashir, adding that the industry should be taken on board prior to finalising the new energy policy.

Major fire breaks out in textile mill    [ top ]

THE NEWS, Correspondent Report, July 17, 2013
Karachi: A major fire broke out in warehouses of a local textile mill in the Sohrab Goth police limits on Tuesday, causing loss of millions of rupees.

According to the Central Fire Station the fire broke out at about 1:30pm in Mahtab Enterprises warehouses of the second floor and within minutes it spread to other parts of the warehouses due to which valuables worth millions of rupees were burnt to ashes.

There were 11 fire engines of the KMC and one bowser reached the spot later on.

It was early afternoon due to which the warehouses were open and the fire tenders rushed to the leaping flames while thick black smoke could be seen from far-flung areas of the city. Cause of the fire was short circuit. The KESC and SSGC rushed to the scene and disconnected the power gas connection. However fire tenders controlled the fire after four hours.

India: Garments exports jump 11% to $3.5 billion   [ top ]

TIMES OF INDIA, July 16, 2013
NEW DELHI: India's garments exports have climbed over 11% to $3.5 billion as local exporters cornered a bigger share of the market in Latin America and most of Asia to offset the impact of poor demand in the US and Europe.

The rise comes after garment exports fell nearly 6% to $12.9 billion in 2012-13. Buoyed by the success, the government and the Apparel Export Promotion Council are now egging exporters to target nontraditional markets such Uruguay, Columbia, Israel, Brazil, Australia, South Africa, and Japan, A Sakthivel head of the industry body said on Monday.

Although data is currently unavailable, Indian garment exporters witnessed a reversal in fortunes in April, at least in the US with the value of shipments surging over 16% to $337 million. For January-April, they continued to remain in the red with exports falling 0.8% to $1.2 billion. The story was much the same in the European Union, where exports rose almost 16% in April to $525 million, while January-April shipments are estimated to have decreased 2.6% to $2.1 billion.

According to the latest available data, among the top eight exporters to the US, India and Mexico are the only two countries that have seen the value of shipments decline, while others such as China and Bangladesh have continued to witness an increase.

With the tide turning a little, textiles minister K Sambasiva Rao on Monday asked apparel exporters to step up their overseas sales target to $20 billion in 2013-14. "You assure me that you are going to increase the exports — not from $14 billion to $17.5 billion this year, but to $20 billion," he said.

India: Govt to write-off Rs 3500cr worth textile sector loans   [ top ]

MONEY CONTROL, July 11, 2013
The ministry of textiles announced on Thursday that the government would write-off the principal amount and is working on total interest waiver for handloom sector loans. The loan write-off for the sector could be about Rs 3,400 crore, reports CNBC-TV18. Speaking to CNBC-TV18, Union textiles minister K Sambasiva Rao also assured that labour problems affecting the textile sector would be addressed and added that the textile export target has been hiked to USD 43.5 billion from USD 36 billion for FY14. The minister's announcement follows a meeting held by the Prime Minister on Wednesday that discussed measures to revive manufacturing, the steel sector and the textile industry.

Union textiles minister K Sambasiva Rao said that the government had spoken to banks regarding the problems of finance in the textile sector. “We have potential to overtake China in textile exports,” Rao told CNBC-TV18. The minister also said that women would be allowed to work in night shifts at textile units.

India to contest blacklisting of textile products by US    [ top ]

BUSINES LINE, Amiti Sen & Richa Mishra, July 14, 2013
The Textile Ministry will contest the US Government’s decision to include garments, carpets and embellished textiles produced in India among items that use child labour or forced labour.

“We do not agree with it. We have discussed the issue within the Ministry and will soon take it up with the US Government,” Textile Minister K. Sambasiva Rao told Business Line.

List of violators

The US Labour Department carries out an annual exercise of identifying countries and sectors using child labour. In 2012, the country blacklisted 21 items from India which included garments, zari, yarn and fabric.

Although blacklisting by the US Labour Department does not lead to restrictions on exports of the identified items, it harms the image of the exporting country and influences buyers’ decisions.

The Textile Ministry will try and ensure that the items blacklisted by the US this year do not include products from the textile and garment sector.

“We have worked hard with the industry to ensure that the players adhere to international norms. The incidence of employment of child labour has come down significantly,” a Textile Ministry official said.

The Apparel Export Promotion Council, that promotes exports under the Textile Ministry’s aegis, has taken several initiatives to ensure that the industry is free of child or forced labour.

AEPC President A. Sakthivel said the council has Government enforcement data that show a sharp reduction in violations. “Last year, we went for an open house with the US Labour Department and our presentations were well appreciated. We are confident that this year, we can supply the required documentation that child labour is not used in the apparel sector and we can present our case successfully,” Sakthivel told Business Line.

To increase awareness about good labour practices, the AEPC together with the Textiles Ministry, has started the project DISHA under which garment factories undergo training through vigorous capacity-building in 11 key areas.

These include hours of work, wages and benefits, health and safety and prohibition of child labour and bonded labour. “There is a growing social awareness among buyers that is forcing the Indian industry to adopt good practices. This has to be recognised. We should not continue to be blacklisted,” the official said.

Fewer children working

The number of working children in India has gone down in the NSSO Survey 2009-10 to 49.84 lakh from 90.75 lakh in 2004-05 and 1.26 crore in the 2001 Census. However, although the Union Cabinet approved the amendment in the Child Labour (Prohibition and Regulation) Act, 1986, banning employment of children aged up to 14 in any form of industry, homes or farms, it is yet to be approved by Parliament.

Bangladesh: JICA pledges $1bn for apparel industry    [ top ]

DHAKA TRIBUNE, July 12, 2013
Japan has decided to redirect a Tk1bn fund from its SME financing project to the apparel industry of Bangladesh for improvement of working conditions.

The development emerged three days after a group of 70 global retailers, mostly from EU, agreed a plan to conduct inspections of garment factories within nine months in Bangladesh in an attempt to improve the safety standards.

Bangladesh Bank and Japan International Cooperation Agency (Jica) have reached an agreement in disbursing soft loans among the vulnerable factories to be identified by JICA experts and Public Works Department (PWD) engineers.

“The financing initiative is expected to commence soon on a pilot scale, with JICA’s fund contribution of TK1bn,” Bangladesh Bank Governor Atiur Rahman told a press briefing at Bangladesh Bank yesterday. The fund size of SME financing project is Tk5bn, which was launched by BB in June last year.

The independent government agency’s credit offer comes at a time when Bangladesh is facing global criticisms over safety concerns at the factories, after more than 1,100 people, mostly garment workers, died in nine-story building collapse at Savar on April 24, which is the largest ever industrial disaster in Bangladesh.

The idea of this initiative first came from the ambassador of Japan to Bangladesh, Shiro Sadoshima, which was supported by the governor and JICA chief in Bangladesh Takao Toda.

Vulnerable factory owners having membership of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and financial institutions will be eligible for this fund.

To ease stresses from cost burdens of rebuilding the factories, banks participating in this initiative will lend to the factories at an interest rate not exceeding 10% per annum, against which banks will draw refinance from BB out of the JICA funds at a concessional interest rate of 5%. But interest rate can be fixed on the basis of customer-banker relationship.

The financing scheme will be for a long term of up to 15 years, including a two-year grace period. The amount of financing for any individual factory shall not exceed Tk100m. A five-year time frame is envisaged for disbursements of JICA funds against the retrofitting or rebuilding loans by participating banks.

Bangladesh Bank Governor Atiur Rahman said the process will start with joint assessment of the factory building by a team of JICA experts and PWD engineers on the need of retrofitting or rebuilding and related cost implication, he said.

He said utilization of the loans will also be monitored jointly by PWD and JICA experts. In addition, the financing banks will also monitor the pace of implementation within their usual framework, he said. Costs of relocation of factories in unsafe rented premises, and costs of procurement of safety equipment will also be eligible for financing support under this initiative.

“Appallingly high fatalities and human distress in the recent Tazreen Fashions fire and Rana Plaza building collapse tragedies have brought home the pressing urgency of comprehensively and concertedly addressing issues in ensuring safe working environment for apparels sector workers in Bangladesh, for substantial visible progress in the near term,” said the governor.

Japanese ambassador Sadoshima said the amount of the fund is not so important… it will work as catalytic factor for raising awareness to come out of the national crisis.

“It is just a beginning. Cooperation continues to be extended to the need for taking immediate actions to address the RMG sector issues to rebuild the image of the sector and the country as well.”

Toda stressed on the speedy launch and implementation of the initiative to restore the confidence of international community on the RMG sector of Bangladesh.

Asian garment industry to undergo further segmentation   [ top ]

CHINA DAILY, Liu Xiaozhuo, July 15, 2013
The Asian garment manufacturing industry will undergo further segmentation in the next three to four years as competition becomes more intense, experts said. China, Thailand and Vietnam will mainly produce high-end clothing, while Bangladesh, Laos, Burma and Cambodia will mainly produce low-end clothing.

At present, the majority of garments within the global marketplace are produced in Asia. Between 2005 and 2011, Vietnam's garment export increased by 32 percent and China's increased by 15 percent. Percentage number increases for India, Turkey, Malaysia and Thailand were at about 7 percent, according to data from the Vietnam Textile & Apparel Association (VITAS).

Statistics from the Thai Garment Manufacturers Association (TGMA) have revealed that garment exports from China account for 35 percent of the world's garment export business. Bangladesh, India, Pakistan and Sri Lanka occupy 16 percent to 18 percent of the global market. For Southeast Asian countries the numbers range from 10 to 12 percent.

As start-up capital is not high and Asia has plenty of cheap labor, the garment manufacturing and textile industry play important roles in the economic development of many of Asian countries while also having a significant effect on people's interests. Lu Qijian, secretary-general of the Garment Manufacturers Association in Cambodia said that Cambodia's garment and textile exports make up more than 80 percent of the country's gross export business. Its contribution to the nation's GDP accounts for 15 percent to 18 percent. The garment export income of Bangladesh makes up about 78 percent of the country's annual foreign exchange income. Though the garment industry in southern and Southeast Asian countries is booming, its development still faces limitation challenges. One major problem has been the rise in labor costs.

Cheap labor has always been an advantage of the Asian textile and garment industry as it is more evident in South Asian countries. But in recent years, labor costs have been rising. Minimum wage in Vietnam has gone up by 20 percent, and Indonesia and Laos are at 20 percent and 22 percent this year. The average monthly salary for a Cambodian is almost 100 dollars, which leads to labor shortage issues.

In addition to labor, investors also have to deal with low productivity and bad product quality concerns. Moreover, it has been hard to raise Southeast Asia's garment industry net value because it is too dependent on raw material imports.

A general manager of a Thailand textile company said that at present only Thailand can carry out production of all the domains within the garment industry. Cambodia and Bangladesh are lacking in raw materials and can only produce ready-to-wear apparel. According to Vietnamese media, 11.8 percent of the fabric needed by the Vietnam garment industry is produced domestically. Most high-end fabric is imported. In 2012, Cambodia imported from the Chinese mainland, Taiwan, Thailand, Japan and South Korea raw materials worth $3.12 billion.

Compared to China, Southeast Asian countries and South Asian countries have more labor advantages. Therefore, some Chinese low-end garment manufacturers are moving there. Lu Qijian said that the high-end garment industry still thrives in China because China has advanced technology and high-end skills