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CHAIRMAN PAGE

As the month of September passes us, we embark on our journey into the last quarter of 2018 and a review of events suggests that global trade as we have understood it so far is in for some trying times. In this connection various theories are being put out that will shape business strategies in the upcoming year.

The biggest risk facing the global economy right now—and rapidly moving from risk to reality—is that the trade war between the US and China may widen and lead to depressions in the global trade growth prospects. Year 2019, the economists believe, will be the year that the trade war becomes real and one sector that will be strongly affected are the low wage industries like textiles.

To date, most of the threatened tariffs have not yet been introduced, but that is likely to change over the next few months. For business, this will be one of the major operational challenges of 2019. Bangladesh and Vietnam, on the one side, are in a strong position to take market share from China. The other side has the US fixated on bilateral goods trade balances, and Vietnam already has the fifth-largest such surplus with the US (after China, Mexico, Japan and Germany). Regardless of the trade regime that evolves over the next few years, it is the more efficient economies that will corner opportunities.

Given this situation an emerging market such as India can only wait it out, while being quick and flexible enough to spot opportunities in this transformation. India needs to gear up for this phase and must also use this phase to enhance the efficacy of its domestic economic architecture.

Current Trend – Quick Estimates August 2018

Reports of exporters facing challenges both internal and external continue to be received by the Council. However, despite a difficult situation, exports of Cotton textiles (Yarn, Fabrics & Made-ups) have increased in the month of August 2018 by 39% in Rupee term and 28% in US Dollar terms as compared to exports in August 2017.  Further, exports of Cotton textiles have grown by 28% in Rupee term and 22% by US$ term during April – August 2018 as compared to exports during April – August 2017. The dynamism and efforts of our exporters has made this possible and they deserve our wholehearted compliments.

During this period (April – August 2018), Textile & Clothing sector reached US $ 14.99 Billion as compared to US $ 14.90 Billion over the last year period (April – August 2017), maintaining the last year’s level to record a slight growth of 1%.

While Textiles recorded a growth of 14% during the period April – August 2018 exports of Clothing continue to be in the negative territory.

Meetings & Representations

During the month of September the Council representatives attended several meetings with the Government at various levels in which all the issues affecting exports of Cotton textiles were raised. This includes a meeting on Sectoral Export Strategy chaired by the Hon’ble Minister for Commerce & Industry, Shri Suresh Prabhu. In these meetings, the Council once again discussed its proposals to cover Cotton Yarn under the MEIS and to increase the MEIS entitlement for fabrics from 2% to 4%. The Council emphasized on the fact that these products from India face the disadvantage of differential duties in major export markets as compared to similar products from competing countries. We hope the Government will consider and accept the Council’s proposals in this regard.

We also had a meeting with Smt Smriti Zubin Irani Hon’ble Union Textiles Minister and requested her to issue the Notification for the revised ROSL rates for Made ups. The Minister has assured of all support in this regard.

GST Update

The Council is glad that the Government has extended the IGST exemption under the Advance Authorization, EPCG and 100% EOU schemes from October 1, 2018 to March 31, 2019. This will enable the exporters to take a long term perspective while negotiating export orders. The Council has received many representations from it’s members pointing out the difficulty faced by them due to the Government decision to make those exports on which benefits of deemed exports have been taken, ineligible for the refund of IGST.

We have taken up this matter with the Government and we hope it will get resolved soon. With regard to the Government’s decision to lapse the balance of accumulated Input Tax Credit on account of inverted duty structure as on July 31, 2018, the Council has represented to the Government that such credits should not be lapsed but should be allowed to offset GST liabilities on the outward supplies.

Meeting with Sri Lankan textile delegation

The Council participated in a meeting with a textiles delegation from Sri Lanka organized by the Ministry of Textiles in New Delhi on September 26, 2018. Various issues of common interest were discussed. As a follow up measure, the Council is proposing the visit of a trade delegation to Sri Lanka some time during mid-November this year. The details of the delegation visit are being worked out which will be communicated to the members shortly. We urge our members to participate in the delegation to Sri Lanka.

Preview in Seoul, South Korea

The Council participated in “PREVIEW IN SEOUL-2018” held in South Korea from September 5-7, 2018. “Preview In Seoul” is an established trade fair which takes place every year. The industry sectors covered in this fair are textiles (including yarn), home textiles and fabrics. The fair has over the years gained a reputation and attracts a large number of buyers from South Korea as well as from other Countries. The event is widely publicized and this year also it accommodated a large number of exhibitors.

The Council had a booth in the fair which served as an information centre. Also samples of some of the members were displayed in the Council’s booth. The Council’s booth received enquiries from buyers both from South Korea and other Countries for various products like cotton yarn, fabrics, home textiles, synthetic yarns and fabrics. The Council will continue to make all efforts in the future also to enhance exports of cotton textiles to South Korea as part of its strategy to diversify exports into new markets.

Heimtextil Russia, Moscow

Heimtextil Russia is the main trade fair for home and interior textiles in Russia. This year, the fair was held in IEC Crocus Expo in Moscow from September 18-20, 2018. The Council’s officials visited Moscow during the fair for making a comprehensive assessment of the opportunities available for Indian exporters for increasing the market access in the textile sector.

Apart from meeting importers/ traders in and around Moscow, the Council’s Executive Director, made a presentation on 19th September 2018 at the fair on “Advantages of sourcing Indian fabrics and home textiles for the Hospitality Segment” at a session dedicated to the 'Hospitality sector and textile equipment of the Hotels'. The idea was to disseminate information amongst the Russian importers regarding the capabilities of Indian exporters to meet their sourcing requirements in the hospitality, contract and institutional segments. The presentation was well received by the trade visitors attending the fair and many of them enquired at the Council’s booth for sourcing from India.

Along with the Council 4 other Indian companies participated at the Heimtextil Russia Fair. These companies exhibited products like Furniture fabrics, Fabrics for interior decoration, Bathroom textiles, Bedroom textiles, Kitchen textiles, Carpets and textile flooring etc. The organizers offered the Council, an information booth of 9 sqm mt at the exhibition. The effort was to understand the home textile market in Russia and get inputs for scaling up the level of participation at the fair to be held next year.

Première Vision, Paris

The Première Vision is a unique opportunity for business meetings and exchanges between buyers and fashion makers. It is a platform for exhibitors and designers to showcase the trends of the fashion world in the coming season. The Council participated at Premiere Vision Fair held at Paris, France (PV Paris) from 19 to 21 September 2018. Visitor profile at the Council’s information stand was very good with enquiries to source Indian cotton yarn and processed fabrics.

42 Indian companies exhibited at this edition of PV Paris displaying value added Yarns, Fabrics, Accessories and Designs. Feedback from the Indian exhibitors indicate that the overall quality of the visitors / importers were better than the previous year edition held in September 2017.

Conclusion

Friends as the Monsoon fades away and the global cotton market ventures into a new season 2018-19,the textile world is keenly watching the likely developments. The crop is expected to generate surplus for exports and the farmers are also likely to get remunerative prices on the back of revised MSP rates.

With the raw material prices remaining positive so far, all of us should report better results in the remaining quarters of the current fiscal year. However, we must keep a vigil on any future volatility that we may anticipate given the external factors playing a vital role in the trade dynamics.

The last couple of years have been tough on India’s merchandise exporters, who have suffered an erosion in their competitiveness. The only durable solution to their problems is an acceleration of and more integrated approach to domestic reforms. Moreover, the fallout of the trade war between US and China provides a country like India opportunities which didn’t exist a few months ago. The recent news suggest that the US and EU companies with a large manufacturing base in China are seeking to de-risk their operations by shifting some of it out. So far, it’s the more agile Vietnam and other Southeast Asian nations which have cornered the benefits. However, India too must put its act together in a strategic manner to be in the game.

Ujwal Lahoti
Chairman