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TIRUPUR exporters demanding ban on cotton and cotton yarn exports

Written By Views maker on September 11, 2013 | 9/11/2013

Unprecedented increase in cotton prices has forced
garment industry stakeholders in Tirupur, the knitwear hub of
the country, to adopt resolutions demanding suspension of
cotton and cotton yarn exports for three months among other
things.
According to associations of stakeholders of Tirupur garment
sector, the high increase in the cotton yarn prices has
significantly affected the knitwear garment sector of Tirupur and
sustenance of stakeholders has become increasingly difficult as
a result.
A meeting of the stakeholders of the garment sector held on
Tuesday in Tirupur presided over by Dr A Sakthivel, president of
Tirupur Exporters Association, adopted several resolutions to
seek protection for the textile industry.
The meeting said as the cotton exports have already crossed
90 lakh bales. The cotton yarn exports touched 590 million kg
in the first five months. The cotton yarn advisory board has
estimated only 1000 million kg of cotton yarn exports for the
whole year. Moreover, 60% of cotton yarn exports are destined
for competing countries like China and Bangladesh ultimately
giving stiff competition to country's garment exports. The
meeting wanted both exports to be suspended for three months.
The other resolutions are that Cotton Corporation of India
should sell cotton only to actual users and not to the traders, a
request to the associations of mills to advice their members to
slash the cotton yarn prices by Rs 8 per kg to Rs 10 per kg and
roll back to the price level in last month and that the
associations do not have any objection to the farmers getting
right price for the cotton produced by them.
The meeting decided to send the resolutions to the Prime
Minister, and the union ministers handling finance, commerce,
textiles and agriculture. If the government does not concede to
their demands, the associations will meet and decide on the
next course of action. The conference also appealed to the
Central government to implement free trade agreement with EU
nations to increase exports from Tirupur.

9/11/2013 | 0 comments

Micro spinning Machine video

Written By Views maker on August 04, 2013 | 8/04/2013

8/04/2013 | 0 comments

India to relax garment import quota from Sri Lanka

Written By Views maker on September 21, 2012 | 9/21/2012

India will increase a garment import quota by three million pieces a year to eight million without a sourcing requirement being imposed on Sri Lanka, the island's industry ministry said citing a statement by a visiting Indian official.

Sri Lanka's ministry of industry quoted India's textile ministry secretary Kiran Dhingra as saying in Colombo when she led a textile industry delegation to the island on September 19.

Dhingra had said that from September 06, India has removed duty for HS code 61 and 62 apparels, the industries ministry statement said.

In 2011, Sri Lanka had exported 50 million dollars of garments, woven fabrics and other textiles to India, making it the 14 largest buyer.

Sri Lanka's industry minister Rishad Bathiudeen had invited Indian textile factories to invest in the island.

"We also look for support to strengthen textile supply chain such as raw material, yarn, for example," the minister was told the visiting Indian secretary.

"Though our apparel sector technology is strong, our textile sector is weak in this regard and we believe that India know-how can support technology transfer in this regard.

"More importantly we invite Indian investors to Sri Lanka for joint ventures and strategic alliances."

The statement quoted Dhingra as saying that a 500 acre industrial zone called 'India-Sri Lanka Concept Integrated Textile Cluster' with 350 million initial investment, could be started to supply Sri Lankan manufacturers.

India and Sri Lanka has a free trade agreement through which nationalist Sri Lankan producers have blocked 1,198 items being freely bought by citizens of the island through a so-called 'negative list'.

India has a negative list of only 196 items but there are some quota and non-tariff barriers that have prevented Indian citizens from freely accessing Sri Lankan products including apparel.

Especially after independence from British rule India and Sri Lanka descended into mutual poverty by blocking free trade among its citizens.

9/21/2012 | 0 comments

How textile SMEs are mismanaged

The business line has published a nice article on textile SME’s in tamilnadu

(It’s business line article <click to read it>)

It is reported that 79 micro-, small and medium enterprises (MSMEs) fall sick in a day, probably three units an hour. Out of 1.33 crore sick units in the country, more than two lakh are currently sick and 29,000 units are being added to the list every year. In financial terms, these units account for more than Rs 7,000 crore of outstanding loans.

A unit is deemed to be sick in the following circumstance: when, after borrowing from financial institutions, it has not paid its instalments on due dates; the situation continues for more than six months in this way; and there is an erosion in net worth due to reported losses to the extent of half of its net worth in the previous accounting year.

In Tamil Nadu, for example, out of the 14 lakh SME units, 25,433 units are sick with 566 of them eligible for rehabilitation according to the guidelines of the Reserve Bank of India. Recently, there was a strong representation from textile units on the need to rehabilitate sick textile units, involving about Rs 50,000 crore.

After a lot of deliberations, the reference by the Ministry of Finance to the RBI did not elicit a positive response. It was thought that since only 22 per cent of the textile units had suffered, a mass-crisis approach to the problem was not warranted.

Thanks to some initiative by financial institutions, a relief package is likely to come of these discussions. But to ensure that efforts to help MSMEs in the sector do not lead to nought, the problems of these units should be understood. Or else, it might become a case of throwing good money after bad.

A study of each case will reveal some common factors, which can act as an insight for both financial institutions and new MSME players.

The textiles story involves unscrupulous speculative trading in cotton, pushing prices high and bringing it down in a short span, resulting in losses at lower prices of yarn. While this is the macro-reality, the nitty-gritty of management need to be accorded some attention.

How can a turnaround of textile MSMEs be brought about?

INFORMATION DEFICIT

Review and Documentation: Lured by the promise of some promoters of industrial/textile parks in Tamil Nadu, we find some first-generation entrepreneurs, who have traditionally been farmers, selling their land and starting micro-units in textile weaving, with little technical know-how. They find it difficult to break even, due to the unfulfilled promises of such industrial park promoters on issues such as power, export potential, water and roads.

As a result, the capital outlay and bank finance become non-performing assets, resulting in wastage of resources. Hence, any first-generation entrepreneur must take professional advice on documentation and technical details of the project, by earmarking a small portion of his capital outlays to this end.

Bankers, instead of rushing to give loans to such MSMEs, must also study the viability of industrial parks, as they have the wherewithal to evaluate such industrial parks.

Emu farming in the Tamil Nadu belt is one instance where promoters lured innocent farmers into a financial crisis. The Tamil Nadu Government, in its recent Budget, outlined the New Entrepreneur-cum-Enterprise Development Scheme for first-generation entrepreneurs. But it is yet to be effective.

Quantity versus Quality of Turnover: In their rush to record higher turnover, MSMEs tend to undercut prices, which affect their profitability. They resort to giving long-duration credit, impacting their break-even levels and triggering a liquidity crisis. MSMEs must strive for quality of turnover with lesser delays in realisation, enabling more turnaround of their working capital.

Export Risks: We find many MSMEs weak on the quality control side. Emboldened by the success they see in small exports, they resort to high volume exports without adequate safeguards, such as quality approval by their overseas customers. Not being exposed to export formalities, many MSMEs face rejection of their goods.

Products, involving a two to three months’ production cycle, are stuck up at destination points on account of quality problems raised by overseas buyers. This causes a liquidity crisis. Trade associations can play an effective role and arrange for effective advisory services.

DEBT TRAP

Lack of Qualified Accounting Personnel: We find that even Rs 300-crore units in Tirupur do not have qualified professionals to handle their finance, leaving the function to lesser qualified yes-men. As a result we find the absence of good MIS reporting standards and periodical review of operations on a broader scale.

The first golden rule of effective monitoring of operations monthly is sacrificed for preference for semi-qualified non-professionals. In the case of small units which cannot afford qualified professionals, the relevant trade associations can pave the way for advisory services.

Working-Capital Management: MSMEs must realise that working-capital funding is need-based and is not a permanent item to appear in their books. MSMEs must strive to reduce their exposure on this account when they show growth in sales and profitability, instead of constantly upgrading their exposure in times of plenty and struggling to service the debt in times of crisis.

In the absence of good financial reporting and planning, many MSMEs tend to ignore the need to trim or optimise their working capital.

They fall into a debt trap, thanks to the overenthusiastic financial consultants that they employ to secure renewals. To ensure more transparency in the financials, banks must reinforce independent audit of current assets of MSMEs to ensure that all is well with their portfolios.

A close look at the ailing units reveals that statutory payments such as PF, income tax and TDS slowly fall into arrears, indicating cash-flow problems. Any attempts to gloss them over and look for avenues of enhanced credit will lead to a debt trap. Perhaps this is vital factor leading to the liquidity crisis. Credit rating agencies must include this as one of the parameters while assessing the effectiveness of financial management.

Constant monitoring and guidance can prevent resource wastage of the partners of the enterprise, that is, the bankers, the lender, the supplier, the client, the staff and the Government.

9/21/2012 | 0 comments

Maharashtra claims Rs 2400 cr investment in textile sector – reports times of India

Written By Views maker on September 04, 2012 | 9/04/2012

Textiles minister Naseem Khan claimed the Maharashtra government's new textile policy had helped in attracting investments to the tune of Rs 2400 crore in this sector.
The state and Centre had approved 263 textile projects which will provide employment to nearly 18,000 people in the state, he said. Khan said the government now plans to hold road shows in Gujarat to attract the state's textile magnets to set up plants in Maharashtra.
Gujarat has a highly flourishing textile industry. Though Maharashtra is the largest cotton producer in the country, an absence of an effective textile policy meant that over 80% of the cotton is exported to neighbouring states for processing. <<this is a Times of India article, click to view it>>

9/04/2012 | 0 comments

Increasing yarn price..

Expressing concern over volatility in yarn prices, the Apparel Export Promotion Council (AEPC) has sought early Government intervention to overcome the situation.

In a letter to Commerce and Industry, Textile Minister Anand Sharma, the AEPC said cotton yarn prices should be carefully monitored, as small manufacturers and handloom weavers were considerably impacted due to the steep price hike.

AEPC Chairman A. Sakthivel said, “Unfortunately in the last few months, we have experienced volatility in the price of cotton yarn. While cotton has gone up by about 3-5 per cent in the last two months, yarn prices have increased over 15 per cent in the same period. Also, Indian cotton yarn prices are higher than in other countries such as Pakistan”.

He said at the recently concluded Cotton Yarn Advisory Board meet on August 23, a rather grim scenario had emerged as the total production estimate of cotton yarn stood at 3.5 billion kg. While exports of cotton yarn were projected at 920 million kg, based on current estimates it may exceed one billion kg.

AEPC said that to tide over the situation, the Government needed to put a cap on exports of cotton yarn or free imports of cotton yarn.

“At this stage, we are not advocating any cap on exports, but at the same time, we request that the custom duty of 10 per cent on cotton yarn be completely removed and yarn imports made duty-free. Also, drawback may be allowed on export of garments manufactured from such imported cotton yarn,” he added

9/04/2012 | 0 comments

Tamil Nadu to invest Rs 104 crore in 5 textile mills

<< The times of India article>>  The state government will modernise five co-operative textile mills at the cost of Rs 104 crore, said principal secretary, textiles, Tamil Nadu, G Santhanam. The government also plans to re-open the closed co-operative textile mill in Ramanathapuram district at an outlay of Rs 18 crore.

Speaking at the sidelines of a conference organised by Indian Cotton Federation here on Saturday, Santhanam claimed that the five mills located in Kanyakumari, Theni, Ettayapuram, Pudukottai, and Krishnagiri, have started to make profits. The total capacity of the five mills up for modernisation would be around 1 lakh spindles. Another 12 sick mills would either be revived or the excess land in these places allotted to other government departments, Santhanam added.

Joint secretary, union textiles ministry, V Srinivas, who was in town to attend the conference said several projects floated under the 'National Fibre Policy' (NFP) have been incorporated into the 12{+t}{+h} Five Year Plan that begins this year after their financial requirements turned out to be higher than what was projected.

"We have been working on the policy for 30 months but difficulties were there in (getting) the financial outlay," said Srinivas. Since the policy would require financing for the next 10 years, projects under NFP had come under review.

The Technology Upgradation Fund Scheme (TUFS) has been extended to the 12th plan period and an outlay of Rs 15,886 crore has been made for the scheme during this period, Srinivas said. The working group on textiles has recommended an outlay of around Rs 34,000 crore for the plan period, he said.

Processing parks would be set up in seven states under the integrated processing development scheme, Srinivas said. The parks would be set up on a public-private partnership model. "Considerable emphasis has to be laid on strengthening the weaving and processing sectors," he said, while speaking at a conference on challenges facing the cotton trade and industry 2013 organized by the Indian Cotton Federation.

India's inherent strengths in cotton yarn need to be augmented by fabric manufacturing and processing, Srinivas noted. Emphasizing the need for timely data on the cotton crop, he said that the Cotton Distribution (Collection of Statistics) Bill 2012 has been framed to put in place a system for improved data transparency and make available real time data for considered policy making.

"We hope to put in place legislation in the coming months to provide India with a system of data collection that will strengthen our databases significantly," Srinivas said. Though the south-west monsoon has been lower in some places and consumption is expected to increase in the current cotton season (October-September), there has been no demand on restricting exports, he said.

"It would be a good year for cotton," Srinivas said. Since adequate stocks are available in the domestic market, conditions appear favourable for the cotton trade in the 2012-13 season, he said.

Meanwhile, the cotton industry has appealed to the state government to slash the 5% sales tax on yarn. They argue that it is just 2% in states like the Andhra Pradesh, a major competitor for TN. Similarly, the industry has demanded that the state government do away with a 1% market committee cess on waste cotton, which is collected by the Agriculture Produce Marketing Committee.

9/04/2012 | 1 comments

Cotton advisory board expects 12 lakh bales to be imported

The Cotton Advisory Board has estimated that Indian textile mills may import 12 lakh bales of natural fibre in the current season (October-September).

“The Cotton Advisory Board (CAB) has estimated cotton imports in 2011-12 season (ending September 30, 2012) at 12 lakh bales, including short staple cotton,” Textile Minister Anand Sharma said in a written reply in the Lok Sabha.

In July 2012, prices of Indian cotton crossed world cotton prices, making imports of other varieties of the natural fibre more economical, he said.

Other reasons for India’s rising natural fibre imports include availability of international credit finance at lower interest rates, savings in the carrying cost for textiles mills, higher yarn realisation and better quality cotton, the minister added.

Till date in the current season, 4.8 lakh bales of natural fibre have been imported, Sharma said. In the 2010-11 year, the natural fibre imports stood at 5 lakh bales.

Asked if there is acute shortage of cotton in the country, Sharma said: “There is no acute shortage of cotton in the country. As per the estimates of the CAB closing stock is expected to be at 28.46 lakh bales (for 2011-12) which account for more than 30 days of inventory for textiles mills.”

Also, he said, the government does not envisage any import curbs on cotton. Textiles mills are free to import cotton depending on commercial viability.

The CAB has pegged India’s cotton production at 353 lakh bales this season against 339 lakh bales last year and its exports at around 127 lakh bales this year as compared to over 76 lakh bales in 2010-11.

9/04/2012 | 0 comments

Thai textile exports to shrink by 15%

Written By Views maker on July 14, 2012 | 7/14/2012

The Thai Industries Federation is predicting that the country’s textile and garment exports will shrink considerably this year, due to the fallout from the global economic problems.

Federation of Thai Industries (FTI) Vice President Vallop Vitanakorn commented on Wednesday that the Eurozone debt crisis and the problem in Chinese economy could pose considerable impact on Thailand’s exports of textile products and garment in 2012.

Mr. Vallop expected the fallout to shrink Thai textile and garment exports by as much as 15 percent this year because of a drop in purchase orders from Europe, brought on by higher Thai produce prices and the new 300-baht daily minimum wage.

He said that the higher cost in Thailand has driven a number of business operators to relocate their production bases to neighboring countries.

The FTI Vice President is also worried that the new daily minimum wage may force some local entrepreneurs, particularly those located in the upcountry, to shut down, due to rising logistics costs and inferior quality of labor when compared with Bangkok.

7/14/2012 | 0 comments

Pakistan Likely to seeking duty free exports of textiles

Written By Views maker on April 15, 2012 | 4/15/2012

DK Nair, Secretary General Confederation of Indian Textile Industry (CITI), said, “Pakistan is the only country in South Asian Free Trade Area (SAFTA) that does not enjoy duty-free access to Indian market for its textile and garments. There is a proposal by the Department of Commerce to provide zero-duty access for all textile products of Pakistan in the Indian market. The proposal is based on geo-political considerations, and not economic factors.”

Elaborating on the present status of textile exports permitted by respective countries, he said, “As of now, Pakistan has a negative list of over 1,200 products which India is not permitted to export to them. This includes 78 textile products. On the other hand, India has a sensitive list of 878 products for import from Pakistan, which includes 288 textile products.”

“But, the fundamental difference between the two lists is that India only avoids tariff concessions for products in sensitive list, whereas Pakistan prohibits imports of products that are in their negative list. Pakistan has stipulated such a negative list only for India and not for any other country,” he said.

Analysing the competitiveness of Pakistani textile items with Indian products, Nair said, “Pakistan is a competitive producer of textiles, perhaps more competitive than India in products like wide width fabrics, pv/pc fabrics, made-ups and garments. Further, since textiles are largest export item of Pakistan, the government gives certain incentives to this sector that enhance its competitiveness.”

“However, there is still scope for improving textiles trade between India and Pakistan. But measures towards this should be mutual and fully reciprocated by Pakistan, so that both the countries can benefit from competitiveness of each other in various segments of textile value chain,” he opines.

“We have made a request to the Indian Government that no unilateral concessions may be extended to Pakistan in textiles trade, as it would have serious negative implications for our industry, especially the decentralised and SME sectors,” he said.

4/15/2012 | 0 comments

Cotton exports good for farmers says Pawar

Agriculture Minister Sharad Pawar has written to Prime Minister Manmohan Singh saying that the restriction on cotton exports would have an adverse impact on farmers. Targeting the ministries of food and textiles, Pawar wrote to the prime minister Tuesday saying that the policies of the two departments were going against the interests of the farmer. The letter came a day after a group of ministers Monday restricted cotton export to 13 million bales for the current year. “Cotton farmers should not be asked to bear the burden of subsidising textile mills,” Pawar said in his letter, indicating that the decision would benefit textile companies. Gujarat Chief Minister Narendra Modi has also opposed the restriction on cotton exports. Experts said farmers are suffering due to high input cost and low return from the cotton produce. Pawar also expressed his concern on sugar exports and said: “The negativity prevalent in the department can be gauged from the fact that though the decision to allow sugar exports of 10 lakh tonnes was taken on 26 March no orders have been issued till date.” Sources said Pawar’s move was aimed at building pressure on the government.

4/15/2012 | 0 comments

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