Chinese reaction to a textile trade deal signed with the United States ranged from relief to bitterness and uncertainty on Wednesday as Chinese exporters waited for details of the new quotas. The deal that Chinese Commerce Minister Bo Xilai and U.S. Trade Representative Rob Portman sealed on Tuesday limits Chinese exports of 34 clothing and textile categories, such as shirts, trousers and underwear, for the next three years. "The deal struck over Chinese-U.S. textile trade will create a stable, predictable environment for the trade, and greatly strengthen the confidence and determination of Chinese businesses and U.S. importers to accept and make orders," said the China Chamber of Commerce for Import and Export of Textiles in a written statement. But even Bo and other Chinese officials voiced frustration at U.S. efforts to block rising Chinese textile exports after a global quota system expired at the start of this year. Immediately after signing the deal, Bo said the quotas were "a far cry from our original expectations". The deal generally sets growth rates for clothing imports from China at 10 percent in 2006, 12.5 percent in 2007 and 15 percent in 2008. For textile products, the rates are 12.5 percent in 2006 and 2007 and 16 percent in 2008. After that, U.S. rights to restrict such imports will shrink. The quotas are higher than the 7.5 annual growth allowed by current U.S. safeguard restrictions, and China's Ministry of Commerce and state-sponsored industry associations said the deal was the best Chinese manufacturers could expect. A former Chinese trade negotiator, Zhou Shijian, told the Chinese-language China Business Daily: "China was in an innately unfavourable negotiating position" because of U.S. trade rules. "REMOVES UNCERTAINTY": Many Chinese-based manufacturers said they welcomed an end to uncertainty but were waiting for the Ministry of Commerce to explain the quotas. "The deal is good for us, because it removes uncertainty for buyers," said Zuo Quntao, a manager at the Weida Garments, a shirt maker in the eastern Chinese province of Zhejiang that exports nearly all its shirts. But Zuo said that Weida and other exporters had not seen the details. "For real buyer confidence, we need to know the details of how quotas will be allocated," he said. While some manufacturers welcomed the deal, other manufacturers said that if the quotas threatened growth, they may move some production to Southeast Asian countries, or use those countries for final processing so orders escape quota restrictions. "We've mostly remained outside the limits. We've been using other countries in Southeast Asia to transfer shipments," said a sales manager at Aotin Enterprise, a clothes exporter in the far southern province Guangdong, who gave his surname as Luo. The deal came after five months of grinding negotiations between China and the United States. Washington imposed quotas after U.S. manufacturers and trade unions complained that cheap Chinese clothes threatened their survival. Chinese textiles and clothes exports grew to $13 billion in the first months of this year, a rise of 65.5 percent on the same period last year. In the deal, the United States said it would exercise "restraint" in using "safeguard" limits on Chinese textiles. But Fan Dabiao, the general manager of Soho International, a clothes exporter in eastern China, said he was worried about more restrictions. "The U.S. promised only to exercise restraint, so who knows what the variables may be in the future," he told the Chinese-language International Business Daily. http://textile-news-updation.blogspot..com/
Thanks to, http://www.dailytimes.com.pk/

Textile firms, NBFCs lead profit pack this season

Despite India Inc slowdown in net profit growth in the quarter ended September 2005, as many as 172 companies managed to go into the black, posting a collective net profit of Rs 364 crore against a net loss of Rs 346 crore. Rise in other income and decline in interest cost scripted the turn-around story. Out of the 172 companies that registered net profits, 25 are textiles companies and 12 non-banking financial companies (NBFCs). The IT, media and sugar sectors had eight companies each; six of engineering; five from breweries and distilleries, four hotels and three each of plastics and petrochemicals.

While income from other sources helped a fourth (43) of the companies put up a good show, 16 firms reaped the benefit of interest cost. Siel, Force Motors, Polar Pharma, Bhilwara Spinners, Tips Industries, Simbhaoli Sugar and JCT are some of the companies which went black owing to growth in their other income, which more than doubled during the quarter. JK Agri Genetics went black with a net profit of Rs 4.67 crore against a net loss of Rs 1.56 crore by virtue of the Rs 7.37 crore other income generated through sale of investments.

These 43 firms reported Rs 172.89 crore other income in the July-September quarter, over four times their other income —Rs 40.35 crore — from other sources in the corresponding quarter last year. They posted net profit of Rs 94.74 crore against net loss of Rs 54.69 crore. Interest burden of Ashima, Blue Bends, Prakash Industries, Snowcem India, Prima Agro and Millers India declined more than 70 per cent during the quarter.

Better price realisation and reduction in input cost have helped the sugar companies achieve positive growth in their bottomlines. Eight sugar firms together posted Rs 40.03 crore net profit against Rs 25.53 crore net losses in the previous year quarter. Sakthi Sugars reported a net profit of Rs 8.93 crore against a net loss of Rs 7.07 crore; Oudh Sugar Mills registered Rs 5.17 crore net profit (Rs 1.45 crore net loss) and Upper Ganges Sugar Rs 4.41 crore net profit (Rs 6 crore).

Among other turnaround stories, Himachal Futuristic Communications has posted net profit during the July-September quarter after six quarters of continuous net losses. The company posted net profit of Rs 16.29 crore compared with net loss of Rs 70 lakh in the comparable quarter last year. www.textile-news-updation.blogspot.com

Thanks to, http://www.business-standard.com

US, China agree in principle to 3-year textile pact - report

The US and China have agreed in principle to a three-year textile pact giving Chinese producers more room to increase shipments to the US, but imposing controls on Chinese access to the American market through 2008, the Wall Street Journal reported.The newspaper, citing unidentified sources, said the Sino-US accord provides for escalating annual growth rates in 34 individual categories of textiles and apparel. But because the increases are based on this year's tightly restricted trading levels, effective shipments under the three-year deal are expected to increase a total of only 3.16 pct above what would have been allowed under the previously imposed 7.5 pct annual cap, the paper said in its online edition. A handful of issues must still be worked out, including details of a plan to release into the US market apparel that was embargoed under the limits imposed earlier this year, the paper said. But those unresolved issues aren't considered major impediments, the paper said, citing individuals familiar with the deal. The final pact could be signed as early as this week when US Trade Representative Rob Portman visits London and Geneva, the headquarters of the 148-nation World Trade Organization.Under the agreement, which takes effect Jan 1, Chinese shipments next year would increase by 10 pct for apparel products and 12.5 pct for textiles, the paper said, citing individuals familiar with the deal. In 2007, US imports would grow for all products by 12.5 pct, except for two categories -- fiberglass and thread -- in which shipments would increase by 15 pct. For 2008, US imports would grow 15 pct for a special category of eight products deemed sensitive by US producers, including cotton shirts and trousers, bras and underwear. Imports for four products -- thread, fiberglass, knit fabric and window blinds -- would be allowed to grow by 17 pct. All other categories would be limited to 16 pct growth. bjburo@xinhuafinance.com

Thanks to, http://www.forbes.com and www.textile-news-updation.blogspot.com

Textile exporters welcome RBI credit policy

The textile and garment exporters are ecstatic about the new credit policy, announced by the Reserve Bank of India (RBI). For the first time, the central bank has allowed Indian banks to counter-guarantee the loans that they raise from foreign financial institutions.

Speaking to Business Standard, chairman of the Federation of Indian Exporters Orgnisation (FIEO),western region S K Saraf said, “This year onwards, after the removal of quota-based restrictions on textile and clothing exports, Indian textile exports are poised for a quantum jump and the new RBI policy has given, a shot in the arm to the textile industry.”

Out of around $80 billion Indian exports, nearly 20 per cent comes from the textile and garment sector, Saraf pointed out.He further said, “While foreign financial institutions offer loans at 3-5 per cent interest rates, in India, the rates are between 8-10 per cent. In the case of textile exports, it used to be even more than that, as at one point of time, much of the non-performing assets (NPA) of the Indian banks came from the textile sector. With the RBI allowing Indian banks to counter-guarantee foreign loans raised by the textile exporters, the textile sector can access, cheaper finances from abroad and increase their competitiveness in the world market.”

This will not only give the textile exporters access to cheaper finances from abroad, but also force the Indian bankers to change their outlook towards the textile sector and offer competitive interest rates so that they don’t lose business to foreign banks, he claimed.
The chairman and managing director of Dena Bank M V Nair said, “India has a competitive advantage in the textile sector and the new credit policy from the RBI will help the Indian banks.”

Thanks to, http://www.business-standard.com and www.textile-news-updation.blogspot.com
     

Govt unveils textile policy

The Andhra Pradesh government has announced a five-year textile and apparel promotion policy offering various incentives including power subsidy and free land to new units besides removing certain restrictions on working hours and service conditions.  
Under the policy, the state government will notify all textile and apparel parks as public utility services and will also ensure the implementation of Essential Service Maintenance Act (ESMA) to provide facility of engaging workers beyond the normal working hours for achieving higher productivity and to attract export market.  
  
The Andhra Pradesh State Contract Labour Act will be made applicable to the apparel and textile industry. The government has promised to provide flexible and conducive labour environment by implementing labour reforms in this regard. The policy, which was approved by the state Cabinet recently, aims to achieve 15 lakh employment in the state by 2010.  
  
According to a press release issued by the state information & public relations minister Mohammed Ali Shabbir during the Cabinet briefing, the state government will provide a special package of incentives to all the mega projects that will create employment of more than 2,500 people or invest Rs 100 crore or above.All the new apparel and textile units will get a power subsidy of 25 paise per unit in addition to 75 paise subsidy announced in the new industrial policy recently. By 2008, all the major textile /apparel units will be permitted to produce captive power by utilising the natural gas.  
  
The government will also give a one-time grant of Rs 5,000 for each worker employed by garmenting, weaving, knitting or processing units towards their training apart from a one-time infrastructure grant of Rs 1,000 per worker. It will also acquire land on the applications of SPVs for setting up integrated textile parks wherever required. These parks will be developed with public-private participation.  
  
Keeping in view the labour-intensive nature of the industry, the units started in export parks will be given free land for the construction of barracks to house the workers at the rate of one acre per 1,000 workers. The government has also offered infrastructural provisions like water and power at the doorsteps of the units.  
Thank you to http://www.business-standard.com
And www.textile-news-updation.blogspot.com

Rapid increase in India’s apparel and textile exports

India’s integration into the global apparel market has been quite a different experience than many of its competitors as it did not depend so centrally on prior participation in regional trade agreements, on major FDI or on deep integration into the world’s major clothing value chains. According to a study by the Indian Council for Research on International Economic Relations (ICRIER), India’s rather quick emergence as a successful textile and garment exporter after years of inward orientation had more to do with changes in domestic policy that took place in 1980s and 1990s.
As per the study, India’s apparel and textile exports have risen rapidly in the past eighteen years. From barely $ 30 million in 1970, India’s apparel exports rose over 270 times in 34 years to $ 8.3 billion in 2004. The study points out that this growth was based on the domestic presence of a vast fibre and textile base, mainly cotton, and that this growth was achieved with very little foreign direct investment (FDI). Between 1991-2004 the Indian textile and apparel industry had received only $351 million in cumulative FDI, or 1% of the total FDI inflows during that period. In contrast, foreign-invested firms account for a third of all of China’s apparel exports (UNCTAD 2005); Bangladesh’s apparel industry received over 27% of the country’s total FDI. Similarly, Sri Lanka has an estimated 1000 garment export firms from 55 countries. India’s textile and apparel exports are dominated by domestic firms like Arvind Mills, Indian Rayon & Industries and Raymond, said the study.
Though, the biggest names in apparel like Gap, Banana Republic, Ann Taylor, Nike, Reebok, Liz Clairborne etc are sourcing directly from India, it is striking that till the late 1990s and early 2000s few global players had significant direct presence in India.
Also, India’s recent export growth has occurred despite its absence from every major regional free trade agreement (RTA).
Courtesy: http://www.financialexpress.com

Textile inventories begin piling up

Inventories in the textile sector, particularly in yarn and fabric, have started piling up due to mounting inflationary pressure, over-expansion and little access to leading international markets besides rising production cost.“This could be the same old story, as it was before the BPD-29 introduced by the State Bank of Pakistan in order to get sick textile units out of crisis,” said one industrialist, fearing: “Reversal has started up.”“Losses accruing out of piled-up inventories have started pinching that may lead to partial closure of production units soon,” said another seasoned textile miller. Former chairman of the All Pakistan Textiles Mills Association (APTMA) Tariq Saigol had also pointed out the issues such as rising interest rates, inflation and inadequate infrastructure in the presence of top notches of finance ministry at a recent roundtable conference and feared a slowdown in economy sooner than later. Sources in the industry said inflation had already crossed nine percent that had given rise to interest rates making them uncompetitive in the international market. “The exporters can’t export inflation,” said one industry analyst, adding there was an immediate need for inflation adjustment. Asked about the way to ensure inflation adjustment, he said compensation should be ensured to exporters at the level of exchange rate. He also pointed out the absence of six percent research and development fund for the basic textile, announced by the federal government for garments and knitting sectors a few months earlier.
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