In our review of the year 2010 in our January 2011 issue, we found, to our discomfiture that we were deeply into uncertainties about the future, which were based on the then fragile world economy, particularly advanced economies that provided eternally for a pulsating and vibrating hopes of sustenance. We had hoped that the year 2011 would end up differently – hopefully on better grounds. It proved to be a hope against hope.
In fact, the things turned out to be worse than before, and if I may so, even worse than what was anticipated by more conservatives than us. The world has hopped from one of uncertainties to what looks like despair. The US has failed to achieve the recovery it had expected and things certainly turned out to be worse from the European point of view. The contagion effect of Euro Crisis crossed over more borders to inflict more nations, even giving rise to doubts if Eurozone could re-emerge unscathed with all its members – old and new – remaining closely knit as one entity.
There are now new areas, unfortunately the most unsuspected ones, that too have succumbed to the world economic slowdown. You guessed it right. I am talking about China, whose economy has taken a beating, though it continues to be the fastest growing economy in the world. Its production had declined and so has its growth rate. That was natural, as when the economies all over the world are slowing down, particularly the formidable combination of the US and the EU, some slackening of demand and consequently production has to move in the same direction.
What started as a doubt about the re-visit of economic slowdown in the world economy, has acquired a greater certainty, which could be much worse than what was witnessed in 2008 world economic slowdown. Of course, several economists discount such a possibility, but this is real and coming, if the present economic situation and its immediate prospects as seen in the trade winds, are any guide. The only comfort in the present scenario is that the US economy seems unlikely to fare as bad as it did last time and the situation there is, in any case, better than the EU.
Back home, situation is anything, but happy. Our exports are going down and the earlier euphoria of achieving an export target of $ 300 billion during 2011-12 seems to have evaporated and yielded place to serious doubts of its achievement. Even the die-hard Government functionaries have confirmed this in no uncertain terms that we will have to reconcile to a new, likely achievement of $ 280 billion. My apprehension is that even this revised “likely achievement” has not taken in to full account all the facts including nose-diving production figures, consistently rising inflation, persistently declining of value of Indian Rupee, repeated raises of interest rates, the ever-present proclivity of crude prices attaining new heights, ebbing business confidence leading to pressing of “pause” button on expansion programme by industry, a sure decline in the export orders for merchandise and a steeper decline even in service sector, which had come to occupy a place of pride in our export earnings. India Inc. has gone on record to state that the Government has lately fallen into inertia with its machinery grinding very slowly, if not having stopped completely. The credentials of the Government being a “reformist” has also taken a serious beating, and as if adding insult to injury, a “bold” decision of opening up Indian market to FDI in retail, which many critics have dubbed as subservience or succumbing to the international retail lobby, has back-fired with the Opposition refusing to bail the Government out, giving a further blow to the image of Government, and of India in the world opinion today.
A journey back into 2011 year would bring out the broad contours of policy and of events to provide us with a “feel” of all that happened during the period.
JANUARY
In our Cover Story, we concluded that the year “2010 has been tumultuous one for textile and garment sector including and particularly garment exports. On the back of poor performance of the year 2009, Indian garment exports failed to pick up as it was confronted with various problems, notwithstanding that there were high hopes of garments exports picking up after the benumbing effect of global economic slowdown that hurt the humankind, cutting across all continents.” In a special feature, we concluded the world trade value slowed in Q3 of 2010. In separate features, The Stitch Times brought out the facts of US T&C sector being a divided house and that the EU’s trade strategy shows concern on Chinese protectionism.
On international trade fairs, we previewed Techtextil coupled with Source-it makes Texprocess a formidable combo. Also the top players booked heavily in knitting and hosiery machine zone in ShanghaiTex 2011. Our review of AAMA-TEX showed that the event radiated buoyant optimism. On Trends, we made a welcome departure of publishing Style Sight Students Winners in Spring/Summer 2012 : Prints and Graphics Competition, which was highly appreciated by our readers. Our Embroidery section provided an article on “New Generation Embroidery Machines : Increasingly Profitable”. The icing on the cake was an article by Pascal Lamy, Director General, World Trade Organisation, on “Addressing Macro-economic Imbalances Through Co-operation.” Our Innovation Section dealt with the subject how can a cloth clean up toxic waste.
FEBRUARY
This is a lobbying time for various trade bodies to make presentations to the Government, I mean, to the Finance Minister, as to what is their expectations from the Budget and why, by churning out Magnacartas, on what they deserve. Some of the recommendations being made by them do merit serious, even sympathic consideration. The demands like continuing with the popular schemes like DEPB, interest subvention and status holders incentive scheme and extending the benefits like 2% bonus and additional 2% interest rate subvention for pre-shipment credit available to other sectors like silk carpets and leather products etc. should be conceded and extended to garment exports too, as was made by AEPC and seconded by others like GEA. CITI was more in favour of including abolishing import duty of all man-made fibres, optional Excise duty for textile products needs to be continued at a uniform rate of 4% for all products irrespective of the fibre content and reduction of Excise duty on man-made fibres to 4%. FIEO was emphatic on need of provision of infrastructure while FICCI wanted no roll back of the stimulus measures at a time when the global economy was still not out of woods.
Our international trade fair section previewed Canton Fair, which expected over 200,000 business visitors as also Shanghaitex 2011 which underscored the attraction of China’s strong domestic demand for the textile machinery manufacturers, apart from Texprocess 2011 that promised Fashion at warp speed. Our reviews showed that GT Expo was an undiluted success; twin-progress success at Heimtextil 2011 with more exhibitors and visitors and Interfiliere exuded marked optimism, serenity and confidence. In an interview, Sumit Sharma, Regional Manager, German Engineering Federation (VDMA), North India Office disclosed that “Bridge Head” VDMA is poised to have a bigger footprint in India.
MARCH
In this issue, we analyzed the Budget Proposals that the Finance Minister presented for the year 2011-12, and complimented him for having “gone beyond the usual rut of accepting humungous demands being made on him by a number of lobbies……. He has taken bold steps like reduction in tranacti8on cost and self assessment of Customs duty, which a few could conceive was likely.” The Budget Proposals were welcomed by all trade bodies, including FICCI, Assocham, CITI, FIEO, AEPC and GEA as also by The Stitch Times. We gave him 8 out of 10 marks for his “vision, dare and commitment to growth.”
There were, as usual, a number of international features including one on “The Changing Face of Garment Sourcing”, explaining how the garment sourcing has changed over a period of time. Another feature spoke of encouraging news of garment exports picking up 40% during December over its previous month, but it was dented by abrupt rise in cotton prices. Yet another feature details the investigation leading to uncovering of widespread textile pollution in China.
A number of important trade fairs were previewed including Texprocess 2011 which had a focus on solutions to improve sustainability in apparel industry; Euratex and Cematex agreeing on close collaboration; Megatech and international Technical Textile Conference joining to Promote Pak Textile Industry and InFashion that was unveiled in Mumbai. Reviews included GT Expo, which was an undiluted success and Tex-Trends India 2011 that fascinated the world. Hong Kong Fashion and World Boutique came to a riveting close was the conclusion of the review of the events. An article on “Novel Beachwear Designs for Eco-conscious Wearer” was liked by a number of our readers.
APRIL
Our Cover Story on “Export Strategy : Planning Without Vision” analyses and dissects the draft Strategy Paper, aiming at doubling exports from 2011-12 trough 2013-14 which contained a number of recommendations including some of which do not stand any chance of acceptance by the Government like “100% depreciation on capital expenditure on textile machinery for Income Tax purposes.” There were several other recommendations that were too vague and lack specificity leaving too many loose ends or even loose thoughts.
This issue was replete with a number of features including “The Myth of Indian Garment Exports”, “Ecology Comes at a Cost”, “Challenges Stare at Sustainable Growth” “Designers and Retailers Fret over Mandatory 10% Excise duty on branded goods”; among others. Trade fair previews included Texprocess 20111 and ITMA 2011. Reviews included Texworld, where action and colour themes captivated everybody; Premiere Vision Pluriel : ModAmont registered substantial increase in attendance. The icing on the cake was Lakme Fashion Week, which attracted a larger number of buyers.
MAY
The Government of India had constituted a Task Force on Transaction Cost to “look into various issues affecting the competitiveness of Indian exports” which submitted its report. In our scathing analysis, we concluded that the total projected savings, on account of implementation of its recommendations, would not be more than Rs. 2,100 core, which is only 1.9% of total transaction cost of Indian exports and even more brazen fact that 21 out of 23 issues identified by the Task Force for reducing transaction cost had already been implemented even before the Task Force Report was the light of the day.
There was copious coverage of important international trade fairs like the 12th China (Dongguan) International Textile & Clothing Industry Fair and Megatech Pakistan that showcased machinery for value addition. Other events that were covered were inFashion 2011 and Knit-Tech 2011 that presented the latest technology. We also presented a widely appreciated report on Wills Lifestyle India Fashion Week.
An article on “Eco-friendly and UV Protective Summer Wear for Toddlers” drew high appreciation from our readers, who also like Oeko-Tex’s proud achievement of issue of 100,000th certificates. In Innovation section, Dow Corning’s Fascinating Silicone helping revolutionize the textile industry was found to be highly informative.
JUNE
The proposed phase-out of Duty Entitlement Pass Book (DEPB) from 30 June did ring alarm bells for Indian exporters and attracted a lot of criticism and dark, even presumptuous prophecies. The Government justified its withdrawal on grounds of loss of over Rs. 8,000 a year as also that the record high of 36.7% increase in exports show that exports are on a stable upward course and do not need the prop of DEPB. On this issue, there was a friendly match between Commerce and Finance ministries, with the former expressing itself in favour of continuation of DEPB and the latter opposing it. The Stitch Times stood by the side of Finance Minister on the issue.
Important features like “CITI now rolls out demand for meeting challenges of declining cotton prices”, “Apparel Export Up 12% during April” and “EU shakes up GSP Preferences for clothing Imports” drew our readers’ appreciation. A report on “Brainstorming sessions on Sourcing at Prime Source Forum” was found to be immensely interesting and Pearl Academy’s Threadworks 2011 was found to be an interesting event.
In international trade fair section, Shanghaitex 2011 was found to be perfect platform for energy-saving textile machinery, while the review of GT Expo at Jaipur showed it bloomed in desert State capital of Rajasthan. Coverage of Brother, Sipami, Alpine and Pegasus’s joint show at Bangaluru was found to be informative. There was sprinkle of colour in Trends – Women’s colour report F/W 2011-12 Design Options. An article on 4L Minimization approach to productivity increase was an advisory to the industry.
JULY
The US Executive Order 13126 on the “prohibition of Acquisition of Products Produced by Forced or Indentured Child Labor” that was signed on June 12, 1999 continued to haunt the world garment trade, including India, which was black-listed for the second year in running causing considerable consternation among Indian garment exporters. The justification of including India in such list was vehemently opposed by AEPC, who roped in Northern India Textile Research Association (NITRA) to investigate and prepare a report, which, however, failed to find acceptance with US Department of Labor. What US Executive Order 13126 is; what are the basis for including India in its list and the feeble attempts that were made by AEPC without any results were analyzed by The Stitch Times in its Cover Story.
Informative features on “Value-added” is a better measurement of the World Trade’ by Pascal Lamy, Director General WTO, “Global Trade Talks Now to Focus on LDCs and Cotton”, “Cotton Pricxes Climb Downb, but Apparel not Affected” were highly appreciated by our connoisseur readers. Trade fair Section included previews of Premiere vision and Hong Kong Fashion Week were well received. Reviews included the fairs like “Texprocess” which made a successful debut along with Texprocess Innovation Award, Techtexil that increased is lead as Innovation powerhouse and Index 11 that provided a new classification for non-wovens.
Other important contents included article on “Business as Unusual : Strategic Deployment : Real Change Starts Here !”, apart from a crisp interview on “Techtexil + Texprocess : An Ideal Combination” as brilliantly explained by Elgar Straub, MD, VDMA in the course of an exclusive interview with The Stitch Times. There was a stunning report on “Revaluing China’s Currency Would Create 2.25 million US Jobs”, apart from Trends for Autumn/Winter 2011-12 : Principle of Evolutionary Thoughts received readers’ accolade. Euratex discussed Future Relations between Textile and Clothing and Retail Sectors in a conference, which was reported in this issue.
AUGUST
All is not that well with China and there are a number of factors like appreciation of Yuan, volatile and high cost of raw materials and soaring labour costs that have been impinging upon the unchallenged supremacy that China enjoyed in matter of garment exports, elevating it to a position of numero uno. How grave are these problems and how much Chinese advantages like reliability and quality, increase in productivity and the State aid could help China to sustain its supremacy have been discussed in detail, in the Cover Story for the month. Our conclusion is that China’s supremacy in garment exports would continue undisturbed because of basic strengths and continuing increase in productivity.
International Trade Fairs Section includes preview of Canton Trade Fair and YIWU H&G, a professional knitting and hosiery event. Reviews include Texprocess Part II, Hong Kong Fashion Week and Sourcing Show, Shanghai Tex 2011, 47th IIGF, which attracted a record number of 1900 buyers and National Garment Fair that got the exhibitors applause. “Brand Surat” was organized and showcased as a New Mantra for Success.
Reserve Bank of India seems to have passionate obsession for raising interest rates as an unfailing tool for arresting inflation that has proved actually ineffective. A feature on “Need to Look Beyond Monetary Reforms” discusses how the attempts of RBI to tame inflation through monetary tools have failed. Pascal Lamy pleads for “WTO Trade Facilitation Deal to Reduce Costs and Boost Trade” in an article. In an interview, Anand Sharma, Founder and CEO of TBM Consulting Group explains how by using time-based management techniques, competitive advantages can be achieved and profits enhanced.
SEPTEMBER
The downgrading of the US by Standard and Poors from AAA to AA+ sent shock waves all over the world, which had never happened before and was least expected. There were American fears of this downgrade leading to a possible recession, particularly when the damage that 2008 recession had caused had not been recouped. How did the world as also China, which is sitting on heavy US Treasuries react to this situation and how could it impact India was discussed at length was the subject of Cover Story. In its Lead Story, The Stitch Times did analyse the Chinese reaction and the possible ways that US downgrade could render Yuan stronger with its ramifications on Chinese exports.
The unstoppable Governor of RBI deciding on increasing interest rates with an alarming frequency and yet failing in the objective of achieving a lower inflation rate was the subject matter of a feature in this issue. Another feature on “On-site clearance audit in Public domain” shows that while it may be well intentioned document, but it failed to enthuse exporters. A WTO report says that Asia has a leading edge in matter of new trade pacts, according to WTO report.
Preview of CISMA 2011 informs our readers of the event growing green and deals extensively as to what to expect and where. Another preview speaks of extended fibres and yarn area at ITMA 2011. Yet another preview tells us that Hightex 2012 and ITM Expo would be held simultaneously. In our review section, we discussed abaout the re3cord visitation and exhibitor participation in Texworld USA and that Pitti Filati 69 opens with optimism, and closes with satisfaction.
OCTOBER
The anxiety of Indian Prime Minister to break new grounds and taking bilateral relationship with Bangladesh to the next level led him to offer duty-free import of Bangladeshi garment in to India. which was rightly criticized by Indian garment manufacturing fraternity. CMAI was for limiting opening of duty-free imports only for 14 out of 46 announced products. AEPC protested that it would open “flood-gates”. The Stitch Times found, in the course of its analysis, that it was apparently an unbalanced approach in view of uncompetitiveness of Indian garment industry as reflected in Indian apparel exports increasing by 5% as compared to Bangladesh’s exports registering 18% growth. The Stitch Times favours the strict application of worldwide accepted principle of “Rules of Origin”, in order to avoid Chinese products making clandestine entry in to Indian market under garb of Bangladeshi products.
Important features included in this issue are : “Marks & Spencer on a Trail of Each Product it Sells” and “Abysmal Exploitation of Labour Triggers Supply Chain Transparency” which drew readers’ appreciation. Our international trade fair section included preview of Fespa Digital 2012 which should help printers plan their business journey and India Itma 2012, which is the most anticipated textile machinery show of 2012. Reviews covered “Intertextile Shanghai Home Textiles Attracts Over 41,000 buyers” and CPM Exhibitors Post Good Turnover.
Lot of appreciation poured in for Lakme Fashion Week, which was called as Carnival of Stalwarts and GenNext.
NOVEMBER
The announcement of sops in Annual Supplement to Foreign Trade Policy by Commerce Minister Anand Sharma on 13 October would be as insipid as these turned out to be was beyond the reasonable expectations of garment exporting community. The Annual supplement could have, at best, qualified for an Executive Order rather than Foreign Trade Policy announcement. This was also highly incompatible with the statement by Indian Prime Minister, who agreed “The slowdown is a matter of concern…”, but then his Commerce Minister failed to rise to the occasion particularly when there was a downward trend observed in the Indian garment exports.
Features this time were : “LDCs to conditionally lose EU concessions”, and “Why luxury apparel brands are betting big on India”. International trade fair previews covered JIAM 2012, which is slated to be held in Osaka, Japan. Heavy weight trade fair ITMA 2011 was widely covered as it generated exciting business opportunities. Another premier trade fair Premiere Vision gave us a reason to believe in ourselves even in difficult times. Articles on “Serious Labour Shortage in Hosiery Industry” and “The Way forward for India T&A Industry was well received.
Crisp write-ups on “Can Yuan Graduate into an Investment Currency” and “IIT, Delhi Develops Fabric Feel Tester” attracted lot of attention and admiration.
DECEMBER
The Euro Zone debt crisis has struck again at the heart of Europe when Spain became the fifth Government to be toppled by debt crisis, after Portugal, Ireland, Italy and Greece. European Economic and Monetary Affairs Commission Oilli Rehn called it “hitting the core of the Euro Zone”. With the major export destinations like the US and the EU suffering from slowdown, Indian garment exports are suffering additionally from a number of internal factors like steep depreciation of Indian Rupee and Inflation, volatility of Indian Rupee and soaring interest rates. A quick feedback from industry on the prospects of Indian garment exports is somewhat depressing. AEPC is busy convincing the Government to pay heed to the needs and demands of Indian garment exporters, but with what results… Only time will show.
Highly informative features, this time, included “Does China Face risk of Stagflation?”, “FDI Proposal Makes Headway withy Cabinet Approval” and “Is Your Factory Eco-friendly ? Take a Cue from M&S” were also published in our December 2011 issue. International trade fair section previews HANNOVER MESSE returns to India, while the Review Section covers Intertextile Shanghai Apparel Fabrics, which had a strong focus on quality of buyers and suppliers; Third Edition of Techtextil India Attracts 130 Exhibitors and 3,814 Visitors, while Source Zone 2011 Showcases World Class Products. This issue also covers Award bestowed by AEPC on top garments, who basked past glory of their outstanding performance in the yesteryears.
An event that stood out was the celebration of Golden Jubilee by Rajasthan International at New Delhi. Oeko-Tex is set to create larger footprint in India was the message that the top notch leadership of Oeko-Tex and Hohenstein Institute, Germany conveyed in their press conference in New Delhi. New Institute for Operational Excellence to support embattled Indian textile and apparel industry could provide a good news for Indian garment exporters.
OUTLOOK FOR 2012
DARK CLOUDS ON HORIZON
The sky is no longer beautiful; there are dark clouds on the horizon and seem to be advancing to threaten the total sky. We seem to be on the threshold of another slowdown, which looks set to be worse than what we had seen and experienced in 2008. What makes the Indian scenario somewhat depressing is that the Indian state stands besieged by a host of unfavourable factors. A few statistics would reveal where exactly we are placed in.
The projected GDP growth has been revised by the Government of India from 9% as projected in the Budget for the current year to 7.5%, which many including the author do rate as quite optimistic (a softer term for unrealistic). Other indicators are : India’s average monthly inflation rate for the last seven months is 9.62%; upward revision of interest rates 13 times in the last 20 months; 16% fall in the Rupee’s value in terms of US dollar during last two months; a sharp decline to 1.9% growth in factory output in September, the lowest in two years; Excise mop-up dips 6.5%, when compared to corresponding period last year; lowest business confidence during last 4 years and poor investment sentiment. To cap it all, there is an utter sense of helplessness and drift on the part of the Government, which has been charged by India Inc and of course Opposition of “policy paralysis”.
Though it is not our intention to be prophet of gloom, but it would also be naïve – and even dishonest – to turn a blind eye to the ground realities. How and how soon can the Government get out of the crisis that it has landed itself into and what would be garment export scenario for India, is something that the Commerce Ministry alone can make a guess, which could be widely off from our estimate of apologetic growth during 2011-12. Lately; in fact only the other day, the Commerce Minister has announced the export target of $ 14 billion for the year 2012-13, to which we only agree to disagree as he has not disclosed the basis on which his eternal optimism is based. Since the Indian garment exports are low on hopes.
