Cotlook A Index - Cents/lb (Change from previous day)

03-10-2019 71.95 (+0.25)

01-10-2018 86.00

02-10-2017 78.55

New York Cotton Futures (Cents/lb) As on 07.10.2019 (Change from

previous day)

Oct 2019 60.71 (+0.19)

Dec 2019 61.76 (+0.16)

Mar 2020 61.23 (-0.43)

07th October

2019

FM to inaugurate National e-Assessment Centre of Income Tax

Department Tomorrow

Cotton Crop in Top Grower to Soar on Best Monsoon in 25 years

Indian states' fiscal battle amid economic slowdown

Companies optimistic despite consumption slowdown: It’s not all

turbulence for luxury goods market

Hundreds of West Java Textile Industry Bankrupt

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Oct 2019 19690 (-140)

Cotton 12085 (-120) Nov 2019 19130 (0)

Yarn 20040 (-45) Dec 2019 19040 (+60)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- FM to inaugurate National e-Assessment Centre of Income Tax

Department Tomorrow

Cotton Crop in Top Grower to Soar on Best Monsoon in 25 years

Indian states' fiscal battle amid economic slowdown

Companies optimistic despite consumption slowdown: It’s not all

turbulence for luxury goods market

Ahmedabad: Textile markets seek buyers ahead of Diwali

What India can learn from China's 70 years of growth

Knitting up a miracle economy: What India should learn from

Vietnam’s textile revolution

Vietnam's gain: Why factories leaving China aren't coming to South

Asia

Viscose yarn puts Centre in a Catch-22

Organic cotton farmers from Telangana get luxury boost

------------------------------------------------------------------------------

US funds face near-term headwinds from a range of global concerns:

Experts

Bangladesh: Exports dip by 7.3% in September

Zimbabwe: Private sector gears up for AfCFTA

Turkish firm now exporting heating fabric

Hundreds of West Java Textile Industry Bankrupt

--------------------------------------------------------- ----------

NATIONAL

---------------------

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

FM to inaugurate National e-Assessment Centre of Income Tax Department

Tomorrow

(Source: Press Information Bureau, October 06, 2019)

The Income Tax Department is ushering in a paradigm shift in its working by introducing

faceless e-assessment to impart greater efficiency, transparency and accountability in the

assessment process. There would be no physical interface between the tax payers and the

tax officers.

The setting up of National e-Assessment Centre (NeAC) of the Income Tax

Department is a momentous step towards the larger objectives of better taxpayer service,

reduction of taxpayer grievances in line with Prime Minister’s vision of ‘Digital India’ and

promotion of ease of doing business.

Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman

will inaugurate National e-Assessment Centre ( NeAC) in New

Delhi tomorrow in the presence of Shri Anurag Singh Thakur, Minister of State for

Finance & Corporate Affairs . Dr. Ajay Bhushan Pandey, Revenue Secretary, Shri Pramod

Chandra Mody, Chairman, CBDT will also be present . Officers of the Income Tax

Department and other dignitaries shall also be linked through Multimedia Video

Conferencing at Mumbai, Chennai, Kolkata, Delhi, Ahmedabad, Hyderabad, Pune and

Bengaluru.

Under the new system, tax payers have received notices on their registered emails as well

as on registered accounts on the web portal www.incometaxindiaefiling.gov.in with real

time alert by way of SMS on their registered mobile number, specifying the issues for

which their cases have been selected for scrutiny. The replies to the notices can be

prepared at ease by the tax payers at their own residence or office and be sent by email to

the National e-Assessment Centre by uploading the same on the designated web portal.

This is another initiative by CBDT in the field of ease of compliance for our tax payers.

Home

Cotton Crop in Top Grower to Soar on Best Monsoon in 25 years

(Source: Pratik Parija, Bloomberg, October 03, 2019)

Production seen climbing by more than 15% from year earlier; Government urged to give

incentives to encourage exports

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4 CITI-NEWS LETTER

Cotton output in India, the world’s biggest producer, is set to surge after the heaviest

monsoon rain in a quarter century, adding to global supply at a time when prices are near

their weakest in more than three years.

The crop may reach at least 36.5 million bales of 170 kilograms each (375 pounds) in the

year that started Oct. 1, said Vinay N. Kotak, director at brokers Kotak Commodity

Services in Mumbai. That’s more than 15% higher than output a year earlier, according

to estimates from the Cotton Association of India.

More supply from the South Asian producer will

weigh on world prices, hurting farmer incomes and

benefiting textile manufacturers. Rising shipments

from the country will intensify competition among

global exporters as they struggle to grab a bigger

share of the Chinese market.

“The distribution of rain has been good and that will

improve yields,” said Kotak, who has about 30 years experience in the industry. Damage

from excess rain in some areas will be offset by higher yields, he said in a phone interview.

Benchmark cotton futures in New York have slumped 20% in the past year on ample

supplies after China slapped retaliatory tariffs on U.S. imports as part of their ongoing

trade war. Textile exporters in the Asian country are also facing a decline in overseas

demand because of American import tariffs.

India has just enjoyed its best monsoon in 25 years. In Gujarat, the top producing state,

rainfall was more than 40% higher than the long-term average from June to September,

while in Maharashtra, the second-largest, rain was 30% above normal. Planted area also

increased to 12.77 million hectares from 12.1 million a year earlier, farm ministry data

show as of Sept. 27.

The country’s cotton exports may climb to 5 million bales this year from 4.4 million bales

in 2018-19, Kotak said. Sales to China could advance to as much as 1.5 million bales from

1.2 million a year earlier, he said. India is facing increased competition in almost all

markets and the government should provide some incentives to make exports attractive,

he added. Traders have so far contracted to ship about 100,000 bales from the new crop,

compared with 500,000 bales to 600,000 bales a year earlier, he said.

Home

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5 CITI-NEWS LETTER

Indian states' fiscal battle amid economic slowdown

(Source: Abhishek Waghmare, Business Standard, October 06, 2019)

The RBI study shows that the aggregate debt level could go beyond 25 per cent of GDP in

the current year itself if off-budget guarantees are taken into account

The Reserve Bank of India’s annual study on state budgets underlines weaknesses in

financial position of states.

A large number of states are running fiscal deficit beyond the upper limit of 3 per cent of

gross domestic product, laid down by the Fiscal Responsibility and Budget Management

(FRBM) framework (Chart 1). Moreover, most of them are laggards in terms of per capita

income levels. Owing to the tight revenue situation and the pressure on exchequer

emanating from power utilities and farm sector support (loan waivers and income

support), states are being compelled to borrow more (Chart 2). The RBI study shows that

the aggregate debt level could go beyond 25 per cent of GDP in the current year itself if

off-budget guarantees are taken into account. Notice that debt level surged after 2016-17

due to UDAY.

This has put limitations on development-related spending, as interest payments and

other compulsory spending is set to grow faster than capital expenditure this year (Chart

3). Higher debt levels are associated with lower economic growth, the study shows (Chart

4).

To make the debt sustainable, revenues need to grow at 14 per cent per year, higher than

what the last three years have achieved.

Though revised estimates for 2018-19 show a higher growth, provisional actuals show a

drop. Higher budgeted growth in 2019-20 has been flagged down by near stagnation in

the financial year to date. The debt requirement is increasingly being catered to by market

borrowings (Chart 6). But the market for state government bonds is too illiquid to be

attractive with trade happening only for less than a third of trading days in several states

(Chart 7).

As a result, foreign investors have stayed away from state government bonds. This

financial year, FPI’s have put money in less than 3 per cent of the available limit to invest

Home

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6 CITI-NEWS LETTER

Companies optimistic despite consumption slowdown: It’s not all turbulence

for luxury goods market

(Source: Economic Times, October 07, 2019)

What’s the state of India’s luxury goods market? Not so good in the immediate term, but

better beyond, although the answer depends also on whom you are asking. There are

definite signs of a chill in sales this festive season, in line with the slowdown in India’s

consumption engine. But there are brands and segments that continue to do well.

Indians continue to buy luxury during travels overseas, and gilded digital stores are taking

off in a big way, too. It’s around 9 pm on a Thursday night. Diwali is just three weeks away.

At the DLF Emporio mall in Vasant Kunj, New Delhi, home to top international luxury

brands such as Louis Vuitton, Burberry, Jimmy Choo and Gucci, the air is scented and

thick with anticipation. A luxury shopping festival is underway to prod buyerson this

festive season. Stores are decked up, the latest wares are smartly displayed and charming

shop attendants, trained to compliment your shoe, are spiffy and ready. But customers

aren’t walking in. Except a few window-shoppers, there’s hardly anyone in sight carrying

a shopping bag. Store managers say in informal conversations that things are muted

compared with last year.

At the Palladium mall in Mumbai, the destination

for such elite brands in India’s commercial capital,

the story was no different on Friday night. The

luxury goods sector, which witnesses a big chunk of

its annual sales during the festive season, is

watching the unfolding scenario closely. Having

been at the receiving end of various policy changes

in recent years, it was hoping this year would

finally see strong sales. “We are not seeing a negative sentiment. Some of our brands are

doing exceedingly well and some are seeing tepid sales. But we will get to know a much

clearer picture in the next couple of weeks, closer to Diwali,” said Dinaz Madhukar,

executive vice president at DLF’s luxury retail and hospitality vertical, which runs upscale

malls such as Delhi’s Chanakya and Emporio.

Gayatri Ruia, director of Phoneix Mills that runs Palladium, also has a similar outlook.

“We are expecting a growth of anywhere between 5-6% this year. Consumers are still

spending on luxury goods,” she says. Because luxury is small, secretive and vaguely

defined, authoritative industry figures are hard to come by. Statista estimates India’s

luxury goods segment to be worth $8 billion and forecasts 6.6% CAGR growth during

2019-23. It’s a minnow compared with the US market, worth $62 billion in annual sales,

and China, worth $41billion. Market research firm Euromonitor provides rosier

estimates. It forecasts that the luxury segment in India will grow at 18.1% during 2019-

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7 CITI-NEWS LETTER

23. It counts luxury eyewear, jewellery, leather goods, time pieces, writing instruments

and consumer electronics for its estimates. Due to the massive expansion in India’s

economy in the post-liberalisation decades, India was seen to be emerging as a major

market for luxury goods. But compared with China, for luxury brands, India is yet to live

up to its potential.

Perceptible slowdown

In other luxury segments such as watches and air charters, executives say there’s a

perceptible slowdown. According to the Federation of the Swiss Watch Industry, a leading

trade association, Swiss watch exports to India between January and August this year fell

to 96.3 million Swiss Franc, or CHF (approximately .`685 crore), from 98.7 million CHF

during the same period last year. Yasho Saboo, founder and chairman of Ethos Watch

Boutiques, which retails brands such as Ulysse Nardin, Chopard, Longines, Jaeger-Le-

Coultre and Rolex in India, says after a very robust growth in 2018, there is a slowdown

which is especially being felt after April 2019. “I think it is partly due to macro-economic

conditions and soft consumer sentiment, as well as cyclical and global factors,” Saboo

says. Air charters are also witnessing a slump. “Corporate clients are shying away from

chartering jets for travel. I think it’s got more to do with the prevailing economic

sentiment. Companies have turned conscious about how much to spend and on what,”

says Rajeev Wadhwa, chairman of Baron Luxury Lifestyles, a company that charters

business jets, choppers and yachts.

Air charters attract a GST of 18%, compared with 5% for commercial airliners. Taxes are

a dampener in other luxury segments as well. Saboo of Ethos says that while the reduction

from 28% to the current level of 18% GST has made the Indian tax regime comparable

with many other countries, at around the same time the basic import duty was increased

from 10% to 20%, so there was no net benefit. “The combined effect of this and GST is

quite high.” In 2016, the government mandated that purchases above .`2 lakh need a PAN

card. This and increased scrutiny by the taxman has made people wary. Many prefer to

make luxury purchases overseas. That and the rise of online channels also make arriving

at an accurate picture of luxury consumption a difficult task. TataCliq, Elitify, Darveys

and Ajio gold are popular online channels for luxury.

Nakul Bajaj, founder of Darveys.com, says business has been strong. “There has been an

18% growth in our business and it is accelerated by customers who were earlier buying

full price from flagship stores,” says Bajaj. Going strong Some luxury brands have

demonstrated growth. Reliance Brands, which operates the largest number of luxury

brands in the country, reported an operating profit of Rs 378 crore in FY19, up from Rs

336 crore the previous fiscal. Aditya Birla Fashion & Retail’s The Collective, a retail chain

that houses a number of international brands such as Versace, Armani, Alexander

McQueen and Ted Baker, will expand through two more stores in the next 8-9 months in

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8 CITI-NEWS LETTER

Pune, and one more store in Delhi. “Our businesses have done well and we have witnessed

double-digit, like-to-like growth this year. We have expanded our network with brands

like Ralph Lauren and Ted Baker this year. We track competition and they are taking a

bit of a hit. Generally, walk-ins have been lower in malls like the Emporio and Palladium

but we have a loyal base of customers,” says Amit Pande, its brand head and head of

international brands at the company. Luxury companies are now betting big on the ‘high

earners, not rich yet’ (HENRY) consumers with significant discretionary income and a

strong chance of being wealthy in the future, Deloitte said in its 'Global Powers of Luxury

Goods 2019’ report.

(With inputs from Shailesh Menon in Mumbai)

Home

Ahmedabad: Textile markets seek buyers ahead of Diwali

(Source: Keyur Dhandeo, Daily News & Analysis, October 06, 2019)

Floods in Bihar, crop damage have resulted in subdued demand

With just weeks left for Diwali, fabric and garment traders in Ahmedabad are worried as

markets are yet to witness normal footfalls. They say that the upcoming week will be

crucial for the earnings in the season. They said that demand has dropped by about 25%

this year in local markets as well as in other states. Ahmedabad is a major hub for supply

of garments and fabrics to almost all the states in the country and therefore a barometer

of the demand in the sector.

“Footfalls are just trickling in. The demand and buying is not as per our expectation. This

week is to watch out for. Post Diwali, marriage season would set in on November 20. We

can expect buying then as well,” said Kirit Patel, president of Panchkuwa Kapad Market,

a wholesale market for fabrics catering to various states. Patel caters to Maharashtra and

Chhattisgarh and said that there is a fall in demand, irrespective of states.

He said that retail markets are key as they create demand for wholesale markets and

thereby for manufacturers. He informed that sales of fabrics dropped by 60% in August

this year compared to the previous year. However, it grew 20% in September. “All eyes

are now on October. We would be happy if sales of previous year are maintained. Anyway,

sales would be lower by 25-30% on an annual basis,” said Patel.

Manufacturers of garments said they had factored the drop in the demand very early and

therefore tuned accordingly or else would be worried about the pile-up in the inventory.

“We had reduced production by about 35-40% about 12-18 months ago. So we can sell

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9 CITI-NEWS LETTER

what we have produced. The drop in demand is uniform across the states,” said Arpan

Shah, vice president of Gujarat Garment Manufacturers Association (GGMA).

Shah said that conducive rains earlier during Monsoon had raised hopes of a rise in

demand but the last spell has ruined crops and resulted in floods in many parts of country.

“In Bihar, sherwanis displayed in front of shops were half-submerged in floodwater. We

do not expect payments to come soon from Bihar. With standing crops getting destroyed

due to rains and floods, farmers will earn less and rural demand will take a severe hit,”

Shah told DNA.

Gaurang Bhagat, president of Maskati Market Kapad Mahajan said that payment cycles

have already extended to over 120 days, an indication that goods are not sold in retail

market. “There are undated cheques lying with the traders. But they have no cash.

Rotation of money has drastically decreased in market. Businesses have been consistently

slowing down since 2015-16. There is a sustained contraction in demand,” said Bhagat.

Changes in consumer behaviour and choices have also hurt markets. “Fabrics are no

longer in demand. Retailers are now stocking both ready-made garments and fabrics.

Consumers do not have the patience to buy suiting and shirting, give it to the tailor for

stitching.

Now, they do not have the luxury of time. They are buying ready-made garments,” said

Patel. Moreover, the trend of online shopping among the young generation has hurt

footfalls in shops and showrooms. The recent festival discount by Amazon and Flipkart

has pre-empted the footfalls. Those who would have come to shops, have made deals

online,” said Patel.

Shah said that 12% GST is levied on garments priced over Rs 1,000. Others have five per

cent GST. So manufactureres are tweaking quality, rolled back on value addition. This has

caused job losses in the sector, reduction is outsourcing for value addition. “In addition

to textile and garments, other sectors are also facing a slowdown. There are layoffs,

salaries have stagnated, causing the retail demand to drop. The government should take

immediate and concrete steps to revive consumer demand,” he said.

Home

What India can learn from China's 70 years of growth

(Source: Amit Kapoor, Economic Times, October 06, 2019)

China celebrated the 70th anniversary of becoming a communist republic with much

fanfare. Back in October 1949, when China was adopting the communist model of societal

organisation, India was framing its constitution. Less than four months later, India was a

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10 CITI-NEWS LETTER

democratic republic. The two nations in their current identities were, thus, born out of

the ashes of the colonial world around the same time but adopted a contrasting system of

economic and social development. After seventy years, the two nations stand at very

different levels of development in terms of their economic, military and technological

progress. China's prowess on these fronts is incomparable to that of India.

China's rise is quite extraordinary from the Indian viewpoint as the two nations were at

par with each other in 1950. In fact, China was at a disadvantage on some aspects of

development. Over the nineteenth century, the two countries had been following the

opposite trajectory. As per Maddison estimates, India's per capita income grew from $533

in 1820 to $673 in 1913 (in 1990 dollars). During the same period, China's per capita

income declined from $600 to $552. In the first half of the twentieth century, the per

capita incomes of both nations declined. Between 1913 and 1950, India's per capita

income declined from $673 to $619 while China's per capita income declined from $552

to $439. Thus, in 1950 when India became a republic, it was ahead of China in economic

terms.

Even as recently as 1978, the per capita GDP of China was $979, and India was $966. The

excesses of Mao's rule that culminated in the disastrous programmes of the Great Leap

Forward and the Cultural Revolution kept economic progress of China subdued in the

first three decades. However, all that changed with the coming of Deng Xiaoping in 1978.

As a result, China's per capita income today is about 4.6 times than that of India. Despite

all the demerits of the authoritarian rule in China, the performance of the Chinese

economy in just the last four decades is noteworthy and holds key lessons for India as

well. The first, and probably the most important thing that China did well right from the

start was its focus on human development. Even under Mao, China's emphasis on

education for all and the healthcare facilities provided by its communes helped the

country perform well on human development. While the human development index

(HDI) was introduced in 1990, its long run calculations have been provided by Nicholas

Crafts. The HDI numbers for China and India are, thus, available for 1950 and 1973. While

both the countries had almost similar HDI scores in 1950 (0.163 and 0.160 respectively),

Chinaa¿s score was markedly higher in 1973 (0.407 against India's 0.289).

So, the improvement in human development poised the society perfectly for the reforms

that would be imposed under Deng's China. The development of a vast pool of human

capital primed the economy for economic reforms and, therefore, allowed the country to

maximise its gains form it. On the other hand, education and health have always been an

area for concern for India. By the time India began undertaking economic reforms in the

early 1980s, India's health and education levels were still poor. An average Indian died at

the age of 54 in 1980 while merely 43.6 percent of its population was literate. By

comparison, life expectancy in China was 64 years and its literacy rate was 66 percent

around the same time. The second key difference was the focus on the type of industries

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11 CITI-NEWS LETTER

by the two countries. China focussed on industries that were more labour-intensive

leveraging on its pool of cheap labour. Industries like textile, light engineering and

electronics received higher investment. China also introduced special economic zones

(SEZs) as early as 1980, which pushed manufacturing growth and setting up of export-

oriented industries. India, on the other hand, focused more on heavy industries that were

capital-intensive and employed less labour. Moreover, the policy focus on attracting

foreign investment through instruments like SEZ came much later. As a result, by 1998

China had FDI investments of $183 per capita as per Maddison estimates and India was

merely at $14.

As India hardly pushed for labour-intensive manufacturing growth, the sector never

picked up and the country became a services-led economy. China, on the other hand,

became the manufacturing powerhouse of the world. A similar edge is being created by

Bangladesh in recent times. The export-industries that are moving out of China due to

rise in labour costs and the trade war with the United States are being effectively captured

by countries like Bangladesh. The country has eclipsed India's growth rate since 2017 and

has become the fastest-growing country in South Asia. Most of its growth is being led by

its manufacturing sector, which implies that the country will be able to create high

employment for its citizens and improve their standard of living at a higher and more

equitable rate than India; exactly what China has achieved over the last four decades.

Thus, India has a lot to learn from the development trajectories of its neighbours. The

focus on health and education parameters for long-term growth and market-oriented

policies in the short term has been an effective strategy for Asian countries. Perhaps it is

time that India does the same.

— With contributions from Chirag Yadav

Home

Knitting up a miracle economy: What India should learn from Vietnam’s

textile revolution

(Source: Economic Times, October 06, 2019)

Vietnam’s rise from the rubbles is the stuff post-war dreams are made of. From its war-

torn past to its glorious present, the South Asian country has transformed into a rising

star among emerging-market economies. India has a lot to imbibe from Vietnam’s textile

sector which has remained nearly resilient even amid a global slowdown…….

Home

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12 CITI-NEWS LETTER

Vietnam's gain: Why factories leaving China aren't coming to South Asia

(Source: Irene Yuan Sun, Business Standard, October 06, 2019)

The fantasy that India might somehow "leapfrog" from a rural, agriculture-heavy

economy straight to a services-based economy is wrong.

Vietnam seems to be the consensus pick for winner of the U.S.-China trade war, as

Chinese and other manufacturers shift production to the cheaper Southeast Asian nation.

If there’s a loser, at least in terms of missed opportunities, it may be the countries of South

Asia.

To understand why, remember that the trade war has only accelerated an important trend

a decade in the making. Faced with rising costs, Chinese manufacturers must decide

whether to invest in labor-saving automation technologies or to relocate. Those choosing

the latter present an enormous opportunity for less-developed countries, as Chinese

companies can help spark industrialization and much-needed economic transformation

in their new homes.

There may not be another such chance this generation. The only proven pathway to long-

lasting, broad-based prosperity has been to build a manufacturing sector linked to global

value chains, which raises productivity levels and creates knock-on jobs across the whole

economy. This was how most rich nations, not to mention China itself, lifted themselves

out of poverty.

Yet the evidence suggests that South Asian countries are lagging behind in

attracting manufacturing investment. It’s not just Vietnam that’s racing ahead. African

countries, too, are making manufacturing a top priority. Ethiopia alone has opened nearly

a dozen industrial parks in recent years and set up a world-class government agency to

attract foreign investment. The World Bank has lauded sub-Saharan Africa as the region

with the highest number of reforms each year since 2012.

By contrast, in terms of foreign direct investment as a percentage of GDP, South Asia lags

both the global average for least-developed countries and sub-Saharan Africa. While

South Asia’s total GDP is more than 70% greater than Africa’s, the continent received

three-and-a-half times the investment from China that South Asia received in 2012, the

most recent year for which the United Nations has published bilateral FDI statistics. In

the last five years, the American Enterprise Institute’s China Global Investment Tracker

has recorded 13 large Chinese investment deals in Africa and only nine in South Asia.

Bangladesh is a striking illustration of the problem. The country needs to create 2 million

jobs per year at home just to keep up with its growing population. Yet, despite a world-

class garments manufacturing sector, it seems unable to cut red tape and enact the

reforms needed to attract investment to diversify beyond apparel. In the past few years,

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13 CITI-NEWS LETTER

Bangladesh has fallen to 176 out of 190 countries in the global Ease of Doing Business

country rankings. DBL Group, a Bangladeshi company, is investing in a new apparel

manufacturing facility that will generate 4,000 jobs -- in Ethiopia.

'India's overconfidence'

The fantasy, most common in India, that a country might somehow “leapfrog” from a

rural, agriculture-heavy economy straight to a services-based economy is just that: a

fantasy. South Asia can’t afford to lose this chance to grow its manufacturing sector.

Attracting manufacturing investments will require, first and foremost, that governments

in the region acknowledge the competition is passing them by. India, for example, must

abandon its overconfidence that investors will come simply for its large population.

Pakistan needs to stop relying on its government-to-government friendship with China.

Chinese state financing of infrastructure won’t automatically lead to manufacturing

investment, most of which is dominated by private Chinese companies motivated by

competitive forces, not government diktats.

Secondly, South Asian countries need to undertake a concerted, whole-of-government

push to boost investment levels. Specifically, they need to create the conditions

manufacturers need to thrive, from steady power supplies to efficient port operations and

customs clearance.

Moreover, they need to understand the specifics of these businesses. Factories have

unique requirements depending on what they make. For example, cloth and clothing

factories, despite their seeming similarities, have extremely different requirements: The

former is capital-intensive, with huge amounts of power-hungry machinery churning out

bolts of cloth, whereas the latter is labor-intensive and features rows of workers cutting

and sewing.

Countries need to analyze which manufacturing sub-sectors they are best positioned for,

meet the requirements those manufacturers have in order to set up shop, and target the

regions of China (and elsewhere in the world) where those types of manufacturers are to

be found.

The good news is that all of these measures are eminently feasible. And in many cases, the

first steps are already being taken, such as with the construction of Bangladesh’s first deep

sea port at Matarbari. The bad news is that unless South Asia moves faster, others may

have already seized the opportunity to industrialize.

Irene Yuan Sun is author of “The Next Factory of the World: How Chinese Investment is

Reshaping Africa.” She is a visiting fellow at the Center for Global Development and a

research fellow at the Harvard Humanitarian Initiative.)

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14 CITI-NEWS LETTER

Home

Viscose yarn puts Centre in a Catch-22

(Source: Rajalakshmi Nirmal, The Hindu Business Line, October 06, 2019)

Low import duty has resulted in increased dumping of the yarn in India. While spinners

want this to stop, weavers want it to continue

The Indian textile sector already has problems aplenty — from loss of market share in

export markets to slowing consumer demand in the domestic market. Now, one more has

been added to the basket — cheap viscose yarn being dumped into the country.

Home

Organic cotton farmers from Telangana get luxury boost

(Source: Sruti Venugopal, Telangana Today, October 07, 2019)

Startup Amouve makes bed linen from organic cotton sourced from Telangana and

surrounding areas

Providing space to organic cotton farmers from Telangana and surrounding regions is a

Bengaluru-based startup Amouve. The brainchild of Ami Sata, the company was born out

of love for sustainability and the need to provide a sumptuous organic bed and bath by

cutting out middlemen. The cotton used to make the bedsheets, pillow covers, cushion

covers, comforters and quilts is sourced from about 500 farmers, who are part of a

cooperative.

“The cotton from the organic farms here goes to the factory and is weaved into soft linen

that gets softer with each wash. Our partners are GOTS (Global Organic Textile Standard)

and Fair Trade certified and maintain authenticity all through. Through our company we

are providing eco-friendly bedding option to consumers and also helping organic farmers

become sustainable and profitable,” said Sata, founder of Amouve that recently stepped

into offline retail and showcasing its products in by partnering with Danube Home in

Hyderabad.

According to Sata, the company will continue to work with farmers in Telangana and

surrounding region. The company sells only single-ply 300 thread count sheets and its

towels are super soft in 700 grams per square metre, crafted with a low-twist proprietary

weave. The idea of Amouve came when Sata visited Sweden and found that the sheets

used in a hotel where organic and the raw material was traced back to India. “We wanted

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15 CITI-NEWS LETTER

to challenge the convention and trace the cotton back to the farm and re-engineer it from

the ground up,” she informs.

On the need for organic bed linen, the founder says that most of the linen available in the

market is plastic packed with no information on what the material is and conventional

cotton uses plethora of pesticides which is not good for the skin and health of the user.

“On the other hand, polyester fabric releases plastic microfibres into waterways and these

persist indefinitely, contaminating lakes and oceans, getting ingested by animals, and

indirectly by humans. Thus, to reduce an environmental impact of fabrics, sustainable

fabrics are the way forward,” she tells.

Amouve plans to be present in five more stores in the next one year and targets to achieve

a year-on-year growth of 25 per cent.

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16 CITI-NEWS LETTER

GLOBAL

US funds face near-term headwinds from a range of global concerns: Experts

(Source: Jash Kriplani, Business Standard, October 06, 2019)

Experts say diversification through international funds is an important allocation

strategy to deal with market volatility

US funds, which have generated robust returns year-to-date, have slipped on the

performance scorecard over the last one month. US funds have given negative returns of

close to 2 per cent in one month.

In the same period, large-cap, mid-cap, and small-cap schemes have generated around 5

per cent of returns. According to experts, US funds have been facing near-term headwinds

from a range of global concerns. "The US-China trade tensions, the impeachment inquiry

against US President Donald Trump and the attack on oil facilities in Saudi Arabia have

been some of the recent ...

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Bangladesh: Exports dip by 7.3% in September

(Source: The Daily Star, October 06, 2019)

While the country’s export has been experiencing slowdown for months, its major

competitor Vietnam's textile and apparel export posted a 2.2% growth to $3.37 billion in

August

The country’s merchandising exports have continued to plunge as work orders are shifting

to competing economies, causing the exporters to lose competitive edge to their rivals.

Export earnings dropped by 7.3% to $2.92 billion in September, the second consecutive

month to face negative growth, amid sharp decline in apparel exports.

While the country’s export has been experiencing slowdown for months, its major

competitor Vietnam's textile and apparel export posted a 2.2% growth to $3.37 billion in

August.

According Apparel Promotion Council (India), RMG exports were to the tune of $1.26

billion in August, with a decline of 2.44% against the corresponding month of

August,2018 which was $1.29 billion.

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17 CITI-NEWS LETTER

In August, the second month of the current fiscal year, Bangladesh earned $2.84 billion

from exporting goods, down by 11.49% compared to the same period last year.

According to the Export Promotion Bureau (EPB) data released yesterday, Bangladesh

earned $2.92 billion in September, down by 7.30% from the same month of last year.

However, the export earnings during July-September, the first quarter of the current

fiscal year, plunged by 2.94% to $9.65 billion.

The apparel sector, which accounts for 84% of total exports, witnessed a 4.70% decline to

$2.34 billion in September.

As per the data, knitwear products earned $1.25 billion, down by 3.45%, while woven

goods fetched $1.09 billion, posting a 6.09% fall.

In the first quarter, exports from the RMG sector declined by 1.64% to $8.06 billion.

Why exports continue to slide

For the bleak export performance, trade analysts and manufacturers have blamed

appreciation of the taka against the US dollar and slower order flow from the buyers.

Commenting on the downswing in export earnings, BGMEA President Rubana Huq said:

“Work orders are less and next couple of months the trend will probably be low.”

“Sustained growth is not easy at this point. Vietnam is getting fair share of orders. Orders

are being diverted to Pakistan and India as these countries are offering incentives and

privileges to boost their exports,” added Rubana.

Elaborating the state of affairs, she said the perception about Bangladesh was that we

had been doing well and growing. If we took years compound annual growth rate, the

growth was already dipping, she claimed.

“Apparel exporters are losing competitiveness to its competitors such as China, India,

Pakistan and Vietnam. This is because of devaluation of their currencies against the US

dollar, while Bangladeshi Taka is very strong against US dollar,” Md. Moshiul Azam

Shajal, vice president of Bangladesh Garment Manufacturers and Exporters Association

(BGMEA) told Dhaka Tribune.

In the face of the sharp appreciation of the Taka and rise in production cost due to

implementation of new wage structure from last December, export earnings from the

apparel sector were showing continuous fall, said the association leader.

On the other hand, ease of doing business was another key factor for the export oriented

businesses and deficiency to this was helping shift work orders to our competing

countries, said Shajal, also Managing Director, Fame Sweaters Ltd.

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18 CITI-NEWS LETTER

As per the Real Effective Exchange Rate (REER), Bangladeshi Taka was around 6% over

valued against the US dollar, which casted negative impact on export earnings, said

former World Bank Dhaka office lead economist Dr Zahid Hussain.

It was said that Bangladesh gained from the US-China Trade war, which diverted work

orders to Bangladesh, he mentioned, adding, “But the current export performance does

not reflect it. It is assumed that diverted orders are not coming to Bangladesh.”

What is ways forward

"Devaluation of the Taka could affect import adversely. Keeping overall situation in mind,

we could ask for policy cooperation," said Rubana Huq, also managing director of

Mohammadi Group.

In absence of policy supports, export would dip and factory closures continue, she added.

“The downward trend in export earnings is likely to continue till December, while there

is a possibility of a turnaround by the first quarter of next year. To prop up the export

earnings, the government should devalue currency to make exporters competitive in the

global markets,” Mohammad Hatem, first vice president of Bangladesh Knitwear

Manufacturers and Exporters Association (BKMEA) told Dhaka Tribune.

He also urged the government to introduce separate exchange rate for export oriented

sector to attain the export target of $50 billion from the sector by 2021.

Export performance of other major sectors

Among other major sectors, agricultural products registered a negative growth by 10% to

$267 million during the period.

Export earnings from the leather and leather goods also declined by 5.06% to$354.39

million, while home textile exports saw an 11.67% fall to $179 million.

Specialized textile sector saw a marginal 0.64% rise to $33.24 million, while plastic

exports rose by 18.01% to $31.51 million during the month.

Besides, export earnings from the pharmaceuticals sector rose by 16.93% to $35 million,

while live fish export grew by 12.91% to $3.41 billion but the exports of frozen fish declined

by 8.870% to $10.48 million.

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19 CITI-NEWS LETTER

Zimbabwe: Private sector gears up for AfCFTA

(Source: The Standard, October 06, 2019)

Zimbabwe’s private sector actors say they are ready to fully seize various opportunities

presented by the historic African Continental Free Trade Area (AfCFTA) Agreement.

The statement was made by Christopher Mugaga, CEO of the Zimbabwe National

Chamber of Commerce, during a joint high-level workshop organised by the African

Union (AU) Commission, the UN Economic Commission for Africa (ECA) and the

government of Zimbabwe to sensitise the country’s private sector on the AfCFTA.

“We are for the AfCFTA. As you know, Zimbabwe’s private sector pushed for ratification

of the agreement. It is, therefore, important for us to remain seized with ensuring that our

government continues to address issues to improve the ease of doing business in the

country.

“This will ensure that we reap the benefits that will come with the AfCFTA,” an ECA

statement quoted Mugaga as saying.

Mugaga also noted that the value addition of Africa’s resources would help the continent

in its quest for economic transformation, which in turn would change the lives of its

citizens for the better.

“The value addition, coupled with increased intra-African trade and a continent speaking

with one voice, will no doubt see Africa scaling to dizzy heights in terms of sustainable

development,” said Mugaga.

He also lauded Africa’s increasing ability to speak with one voice on global issues, as seen

with the AfCFTA, saying “this is crucial if the continent is to continue transforming and

become a major player in the global arena”.

“We cannot afford to continue speaking with many voices as a continent. It weakens us

on the negotiating table, that is why we continue to emphasise the importance of us

speaking with one voice,” said Mugaga, noting that the benefits of intra-African trade

could not be over-emphasised.

According to the ECA, the private sector sensitisation meeting “will tackle topics that will

help the business community understand the AfCFTA Agreement, the protocol on trade

in goods, dispute settlement, Zimbabwe’s emerging schedule of tariff concessions (CTC),

as well as understanding the protocol on trade in services and the ancillary instruments

of the AfCFTA”.

The national meeting to sensitise Zimbabwe’s private sector on the AfCFTA was held on

the margins of the high-level AfCFTA Strategy Validation Workshop for Zimbabwe, which

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20 CITI-NEWS LETTER

runs from October 2 to 3 under the theme Expanding Industrial and Trade Growth

through the AfCFTA, it was noted.

AfCFTA Strategy Validation Workshop for Zimbabwe, among other things, aims to review

and finalise Zimbabwe’s AfCFTA strategy and its implementation plan, according to the

ECA.

The AfCFTA entered into force on May 30 this year for those countries that had deposited

their instruments of ratification before this date.

Including Zimbabwe, 27 AU member states have so far deposited their instruments of

AfCFTA ratification to the AU Commission.

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Turkish firm now exporting heating fabric

(Source: Daily Sabah, October 07, 2019)

A Turkish entrepreneur is now exporting a heating fabric, developed from 100% local

sources, for 20 euros (approximately $22) per square meter, said executives of the firm

on Saturday. The innovative new fabric can dissipate heat with a low voltage and can be

used in numerous fields, such as the automotive, health, textile and defense sectors,

Ayhan Prepol, a co-founder of İltema, which makes the fabric, told Anadolu Agency (AA).

The firm, which works with Turkish automotive and furniture producers, made its first

export delivery to Germany. The heating fabric was used for wetsuits for the German army

and won significant praise, he added.

Saying that İltema sent prototypes to Ireland and the U.K., he added: "Motorbike users

tested the fabric in the U.K., while an Irish company wanted the fabric for an acoustic

project." The fabric can dissipate heat at various ranges from 15 C to 300 C (59 F to 572

F), he stressed. "While our competitors can be used at a constant temperature, we can

adjust the heat when we produce our fabric," he said.

Prepol also said that the company – based in the Aegean province of İzmir – is continuing

its research and development (R&D) activities and hopes to reach 2 million euros in

exports in 2020.

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21 CITI-NEWS LETTER

Hundreds of West Java Textile Industry Bankrupt

(Source: Mahinda Arkyasa, Tempo, October 06, 2019)

The West Java Manpower and Transmigration Agency revealed that from January 2018

until September 2019, a total of 188 textile and textile products industries have declared

bankruptcy. The bankrupt industries later relocated their business to Central Java.

"As a result of the bankruptcy of 188 garment factories, as many as 68,000 laborers were

dismissed," said Hemasari Dharmabuni, a member of the West Java Acceleration Team

for Manpower Division of the West Java Manpower and Transmigration Agency on

Friday, October 4, 2019.

Hema said that the majority of the textile industry in West Java declared bankruptcy and

relocated to other regions because of imported textile products from China. "And the

majority of garment companies in West Java who were bankrupt originated from

Majalaya, Bandung Regency," Hema said.

In addition to the influx of imported textile goods from China, Hema said that another

factor causing bankruptcy among textile factories in West Java, especially in Majalaya,

was the inability to adapt with technological advancement.

"So, in Majalaya, the industry is old and even in 2019, there are still weaving tools used

by the factories that are not machines," Hema explained.

Hema asserted that the West Java Manpower and Transmigration Agency has carried out

various efforts to prevent the remaining textile industries from going bankrupt.

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