06th

February

2023

Cotton and Yarn Futures Cotlook A Index - Cents/lb (Change

ZCE - Daily Data MCX (Change from previous day) from previous day)
(Change from previous 02-02-2023 100.95 (-0.40)
day) Dec 2023 28300 (-20)
Cotton 15000 (-160) 03-02-2023 140.15
Yarn 20915 (-320)
04-02-2021 87.70

New York Cotton Futures (Cents/lb)

As on 04.02.2023 (Change from
previous day)
Mar 2023 85.30 (-1.09)

May 2023 85.97 (-1.13)

July 2023 87.21 (-0.51)

2 CITI-NEWS LETTER

Govt to install quality barriers against inferior Chinese goods

NATIONAL
The right way to skill the world

Foreign trade policy to focus on long-term strategy to boost exports

Technology to reduce water use in textile sector

We make, they buy

Textile cluster faces encroachment hurdle

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Pak-IMF policy level talks begin tomorrow

GLOBAL
Four-day Dhaka international textile machinery exhibition will begin on Feb
15

The 80/20 rule for maximising foreign exchange earnings

Global fashion retailer C&A warns C&A Textiles of legal action for using same
name

China's textile, apparel exports see stable growth in 2023

Vietnam urged to issue carbon certificates to exporters, retailers

Luxuriously soft velvet fabrics made from recycled plastic

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3 CITI-NEWS LETTER

NATIONAL:
Govt to install quality barriers against inferior Chinese goods

(Source: Dilasha Seth, Ravi Dutta Mishra, Live Mint, February 05, 2023)

• Quality control on 345 items to raise competitiveness of Indian goods in global

market as well

• Department for promotion of industry and internal trade is to bring in close to

70 QCOs

The government has identified 345 products to frame quality standards in a bid to
prevent imports of substandard products from China and improve competitiveness of
Indian goods in the global market.

The department for promotion of industry and internal trade (DPIIT) plans to come up
with close to 70 quality control orders (QCOs) for these products ranging from cotton
bales and furniture, to smart meters, sports goods, fire extinguishers and wood-based
boards.

According to an internal note reviewed by Mint, the department’s top priority are the
QCOs on 53 chemicals under the Rotterdam convention, 35 chemicals under Stockholm
convention and 47 under the Chemical Weapons Convention.

While the Rotterdam Convention was designed to facilitate informed decision-making by

countries on the trade in hazardous chemicals, the Stockholm convention aims to protect
human health and the environment from persistent organic pollutants (POPs).

The Chemical Weapons Convention prohibits the development, production, stockpiling

and use of chemical weapons.

The DPIIT is holding stakeholder consultation for 31 draft QCOs covering 171 products,
including cookware and utensils, pumps, bolts, air cookers, nuts and bicycles.

The nodal department has already come up with 11 draft QCOs covering 55 products,
including building products and sanitary wares, last month that are being vetted by the
Bureau of Indian Standards (BIS).

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4 CITI-NEWS LETTER

The government is also developing product-specific online tool boxes for easy access to
standard and procedures for certification by small and medium enterprises.

It is organizing exposure visits for SMEs to familiarize them with quality control measures
and equipment.

So far, the DPIIT has issued around 34 QCOs covering 134 products, while the ministry
of steel has issued one, covering 145 products.

The department of chemicals and petrochemicals has issued 58 QCOs covering 53

products, and the ministry of textiles has issued one covering six products. Going forward,
151 textile products have been identified for QCO.

For 19 geotextile products and 12 protective textile products, the ministry of textiles has
circulated draft QCO and circulated to stakeholders for consultation.

Earlier, the Central Consumer Protection Authority (CCPA) had issued notices to e-
commerce entities, Amazon, Flipkart and Snapdeal for sale of toys in violation to
standards directed for compulsory use by the central government, the Ministry of
Consumer Affairs, Food & Public Distribution said in a statement.

CCPA has sought response from the e-commerce entities within 7 days from issuance of
notice, failing which necessary action may be initiated against them under the provisions
of the Consumer Protection Act, 2019.

President Droupadi Murmu in her Budget day speech said that toy imports have
plummeted by 70% while exports have jumped by over 60% after the government’s efforts
to push manufacturing. The Bureau of Indian Standards in July 2023 had published 10
Indian Standards on safety aspects of toys related to physical safety, safety against
chemicals, flammability, electrical safety, and so on. These standards were aimed at
preventing the use of unsafe and toxic materials in manufacturing of toys.

Queries sent to the commerce and industry ministry remained unanswered till press time.

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The right way to skill the world

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5 CITI-NEWS LETTER

(Source: Business Today, February 05, 2023)

G20 countries have to pivot from being talent takers to talent makers

With India having taken over the presidency of the G20, it’s an opportunity to reshape
the global economic governance agenda. Among other things, an area that needs priority
is the future of work and associated skilling. The remote work experiment began in March
2020 when Covid-19 struck. Rapid digitalisation facilitated remote work and new
technologies secured productivity. As people return to the workplace, we are seeing
hybrid meeting environments, improvements in asynchronous collaboration, novel
applications to sustain interpersonal connections, and the use of VR and AR.

New kinds of jobs have emerged, and consequently new skills—such as digital technology
(AI and big data analytics, IoT, cloud computing, cybersecurity, RPA, blockchain, AR/VR,
3D printing), design thinking, critical and metacognitive thinking, communication, and
skills in self-management such as active learning, resilience, stress tolerance and
flexibility—have become critical.

New communication channels, digital platforms and social networks have led to the
growth of gig work, throwing the longevity of the traditional employment model into
question.

While all these changes were happening prior to 2020 also, the pandemic accentuated the
shift. Amid decelerating labour force growth, abundant capital, and the growing
importance of intangible assets like intellectual property and customer networks, the
balance of power has shifted from capital to talent. Today, the workforce is a firm’s most
precious resource and business leaders are aware that they need to change the way they
think about their workforce to stay ahead of the technological and sociological changes.

Workforce transformation

The future workforce needs to be readied at three different levels:—First, skills have to
become the new business and organisational imperative. Even as in-demand skills are
changing, skill gaps are becoming wide. Assessing skill gaps, developing a skills strategy
and delivering skills transformation at scale must become urgent priorities for
companies.Industry-wide skill development programmes (such as MeitY-Nasscom led
FutureSkills Prime) need to be promoted to democratise learning.—Second, supporting
continuous education and research aspirations of employees is important. In this context,

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6 CITI-NEWS LETTER

the New Education Policy 2020 ticks all the right boxes. It is bold, forward-looking and
transformational, and aims to make higher education more holistic, flexible,
multidisciplinary and well-suited to the needs of the future workforce. It is also
reimagining vocational education.

These aspirations are in line with the OECD Future of Education and Skills 2030 project,
which states: “We need to replace old education standards with an educational framework
that combines knowledge with the 21st century skills of creativity, critical thinking,
communication and collaboration.”—Third, strike a balance between skill requirements
across projects, geographies and countries to ensure seamless mobility of skilled
workforce. This calls for evolving a framework where both employees and employers
deposit a part of their earnings into a universal social security system, which can be
leveraged for workforce mobility.For businesses in G20 countries to stay ahead of the
game, they have to pivot from being talent takers to talent makers. This requires scaling
investments in learning, thinking laterally about career journeys and cultivating a growth
mindset.

The author is founder chairman, Cyient, and chairman, CII National Education Council

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Foreign trade policy to focus on long-term strategy to boost exports

(Source: Business Today, February 05, 2023)

Final call on announcement of the policy will be taken by March-end

With fast-evolving global developments affecting international trade, the government

may roll out the much-awaited foreign trade policy (FTP) with a focus on India’s long-
term strategy on trade, people aware of the matter said…..

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7 CITI-NEWS LETTER

As global uncertainty looms, here's how India's manufacturing sector can

take off

(Source:Business Today, February 05, 2023)

As manufacturing takes off in India in the midst of global uncertainty, a large talent pool,
digitisation and labour arbitrage will be the key differentiators for the sector

Arun T. Ramchandani looks out of the window of his sparsely furnished room at L&T’s
office in Powai, Mumbai and remembers the early days. He joined the organisation
straight from IIT Delhi in 1984 after graduating with a degree in mechanical engineering.
“Even then, there was a joy in manufacturing,” he says.

Four decades is a long time and in the context of how technology has evolved to engulf
our lives within this time, it suddenly seems even longer. As Executive VP at L&T Defence,
Ramchandani is in the midst of a decisive phase of the Indian manufacturing story. The
pressure on China is palpable and India—from being a modest challenger a decade ago to
becoming a versatile player well on its way to consolidating its position globally—has
come a long way. Of course, the long and arduous journey ahead is not going to be easy,
and a lot of things need to fall in place, from flawless execution to the correct strategy, to
achieve the desired results.

“We never had enablers like 3D CAD (computer-aided design), or advanced CMM
(coordinate measuring machine) systems. There used to be a heavy engineering and
switchgear factory here, and we had to go to Tata Institute of Fundamental Research to
run our programs,” narrates Ramchandani. If that is harking back to a bygone era, he is
hugely chuffed about what he sees today. Just in the defence sphere, L&T today has a large
spread of product offerings, among which are land-, air- and naval-based weapon systems
and communications to name just a few.

Arguably, Indian manufacturing has never had it so good. There is a sense of optimism in
the industry that is flush with a talented workforce and backed by the willingness of large
global and domestic firms to cut the big cheques. The building blocks of creating a
compelling manufacturing tale by 2047 looks good, and it is up to the stakeholders to
make the most of the opportunity.

At 14 per cent of India’s GDP, manufacturing, says K.C. Jhanwar, MD of UltraTech

Cement, is expected to grow by 9 per cent over the next five years. “This is distinctly much

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8 CITI-NEWS LETTER

more than many other countries in Asia. We have a huge labour supply with more than
half the population under 30; and in terms of cost per hour, India is at about a quarter of
China (92 cents here, compared to $3.5 there). More importantly, we have a skilled labour
base coupled with the second-largest English-speaking population after the US,” he
points out. For international majors looking to make India a global hub, it is a seriously
attractive proposition. “Of course, there is also the domestic market with a huge untapped
opportunity.”

What enthuses Ramchandani is how the younger lot is looking at manufacturing now.
“Some momentum was lost during the IT boom and a lot of qualified manufacturing talent
preferred to go to the Middle-east,” he says. But with each phase of growth, the way in
which manufacturing is perceived changes. “Now, with Industry 4.0 (the operation of
machinery with tech connected through the internet), 5G and other advancements, the
next few years will be hugely exciting.”

It is a sentiment shared by all stakeholders remotely linked to manufacturing. A focus on

digitisation or tech is not a five- or a seven-year plan. “It needs to take place today. There
are clear signals that Industrial Revolution 4.0 or 5.0 will go hand in hand with the digital
and tech revolution. We will need to master the disruptions and learn to go into the future
with agility and resilience,” says Vyankatesh Kulkarni, Executive Director and Head of
Operations at Mercedes-Benz India. For a company that has manufacturing locations
around the globe, he is well-positioned to speak on the China-plus one theme that has
gained prominence recently. “There are other economies as well that offer opportunities,
but India has the potential to emerge as a responsible industrial country and position
itself as a competitive alternative. It is important to understand that China-plus one does
not mean China-plus India,” says Kulkarni, adding, if many countries around the world
have shown cyclic or segment-specific growth, India’s pace has largely remained steady
and stable. He attributes the trend to investments in education and skilling, among other
areas.

As much as manufacturing has the makings of a robust story, the policy initiatives
introduced in recent times—such as the production-linked incentive scheme (PLI)—are
just as critical. UltraTech’s Jhanwar refers to the National Logistics Policy 2022 that has
a focus on reducing costs by 4 per cent of the GDP. “That will help catalyse both efficiency
and scale. Already, with India’s net-zero commitment by 2070, we are seeing a shift with

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9 CITI-NEWS LETTER

40 per cent of installed capacity coming from renewable energy. Today, India is one of the
global leaders in solar generation capacity,” he says.

It is the scale of ambition that will determine manufacturing in 2047. Globally, the
situation is conducive for the country. Europe is in a state of flux while China is dealing
with its own issues. India, meanwhile, will need to shift into top gear. Ramchandani, while
pointing out the huge strategic advantage available due to our large population and
demographics, says a significant improvement in the skilling process is absolutely
necessary. Being in the thick of things will be a key factor.

The comparison to China or other Asian markets is inevitable. That said, the approach to
India will need to be entirely different due to the range of challenges—from the level to
which manufacturing has evolved in India, the complex regulatory structures
surrounding land acquisition and the many more peculiar issues that crop up while
setting up an enterprise in India. It boils down to how persevering one can be to get the
most out of what India has to offer. Sanjeev Sharma, Country Head and MD of
engineering major ABB India, who has worked across continents, speaks of some
similarities between China and India’s development journey. “I was involved with China
from 1994, and those who got into the country early, succeeded. There is that similarity
with India and much of the same constraints; but the potential far outweighs everything
else,” he says. His company has been in existence for 130 years, and in India for over a
century. “We have been manufacturing for 78 years and there is absolutely no doubt that
success in India comes only from having a long-term commitment.”

To him, manufacturing, regardless of the stage of development, will always provide a

multiplier effect. “In India’s case, we have a low per capita income. Therefore, when you
expand, there is a significant re-distribution of wealth that takes place,” says Sharma.

A growing GDP with a higher proportion from manufacturing makes for the most potent
combination. “If we look at the past 8-10 years and manufacturing’s contribution to GDP,
the aspiration was always to be 25 per cent or more. However, that number has always
remained between 15-17 per cent,” says Soumyadeep Ganguly, Partner at McKinsey &
Company. To him, the target of 25 per cent in a $5-trillion economy is achievable. For
that to take place, some factors—such as strong domestic demand, the need for
employment generation, growth in FDI and the export opportunities that will be available
with the supply chain transformation currently underway globally, along with India’s

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10 CITI-NEWS LETTER

ability to attract capital from diverse sources that complement the government’s own
capex, and finally, the push for sustainability and new tech emerging thereon—are critical.

Ganguly believes there are sectors such as electronics, capital goods, chemicals and
speciality chemicals, textiles and apparel, and auto and auto components that will lead
India’s growth in manufacturing. “All these are well poised today. Besides, we have
investments coming in here and a lot of supply chain solutions already making the shift
to India,” he explains. That said, one also needs to look at the sunrise sectors among which
are aerospace and defence, low carbon tech and semiconductors. He says that these
upcoming sectors would be large drivers of the Indian manufacturing story. On the supply
chain aspect, Jhanwar says the reconfiguration is for greater reliability and resilience.

For their part, firms think that the government’s initiatives such as Make in India and the
push for electrification augur well for the country. “We launched our first luxury electric
vehicle (EV) in India, which is running successfully,” claims Kulkarni. Over time, the
confidence levels of those putting in the money have taken off too. “It is not just OEMs or
product makers who are evolving, but India has become a hub for many global Tier I
suppliers as well. A mature ecosystem with skilled manpower, cost advantage and digital
prowess makes us believe that we can enhance our manufacturing footprint in India,” he
says. Speaking of sustainability, his company has set a target of making its new fleet of
passenger cars CO2-neutral over the entire life cycle of the vehicle by 2039.

An important aspect of manufacturing is to find ways to grow exports. In defence, for

instance, domestic production is around Rs 80,000 crore, with the government wanting
to increase that to Rs 1.75 lakh crore by 2025. Compare that to exports in 2014, which
amounted to Rs 500 crore, and is now at Rs 15,000 crore. “By itself, that is not a large
number and we are a small player with a presence across segments. A defence industrial
complex is being created,” says Ramchandani. That said, he expects India to be a larger
player in 2047 , and defence to account for “a healthy share of manufacturing”.

In the midst of all this, the government has a role to play too. ABB’s Sharma attempts to
highlight a difference between manufacturing and everything else. “If you look at services,
the progress has been tremendous, but it was driven by IT infrastructure. That is now at
a high stage of maturity and India is well placed,” he explains. However, manufacturing
calls for physical infrastructure and that is not something that can be glossed over. Citing
cases of nations such as Mexico, Vietnam, Malaysia and, of course China, he elaborates
on how the infrastructure was created much before industry came in. “That

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11 CITI-NEWS LETTER

[infrastructure] could be the existence of vast tracts of land or high-quality ports. It gives
industry high levels of comfort when all these are in place,” says Sharma. India will need
to adapt to this template, and if that does take place, the resultant progress would be
multifold. “Creating an ecosystem means suppliers are locked in, making the whole
process of doing business extremely conducive.”

Since 2047 is still a quarter of a century away, there will be many things that will come to
fruition along the way. India in the next two decades, Jhanwar predicts, will be a hi-tech
and R&D-intensive manufacturing economy. “An extensive adoption of digitalisation,
robotics and analytics would provide a multiplier effect or the key ‘productivity to
prosperity’ driver,” he says. To him, the multitude of factories and machinery generating
copious amounts of data is the foundation to harnessing deeper insights. “In fact, the
cascading effects of policy, tech and research-based growth will lead to many SMEs
making the transition to manufacturing unicorns. Technology for the future will primarily
originate from the start-up ecosystem.”

Think manufacturing and go global is the credo. “We are manufacturing for the world.
India is looking to exploit its digital strengths, take that to manufacturing and provide a
robust alternative to China,” explains Ramchandani. He says there is little doubt that by
2047, India will have made the transition from relatively small-scale manufacturing to
becoming a global manufacturing hub. Digital alone has the ability to ramp up the
manufacturing sector. Enabling free-flowing access to information on the digital
backbone helps in paving the way for higher productivity and transfer of knowledge. If
Industry 4.0 is here, maybe, we could be seeing an Industry 7.0 in 2047. That’s how much
of a profound impact digital can have, Ramchandani explains.

Looking into the future, ‘manufacturing next’ is a phrase Jhanwar picks to define an
industry resilient to frequent disruptions. “It could be supply chain shocks, technology
shifts, volatile energy prices, product obsolescence or innovative business models. India
has access to all the key ingredients and a great foundation to become a leading player in
manufacturing next,” he says, with a generous dose of hope and confidence. Our place
under the manufacturing sun is just around the corner.

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Technology to reduce water use in textile sector

(Source: Tribune India, February 05, 2023)

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12 CITI-NEWS LETTER

The Indian Institute of Technology, Ropar, has developed an innovative green technology
— air nano bubble — that can reduce the use of water up to 90 per cent in textile industry.
Nearly 200 litres of water is required to process 1 kg of cotton fabric.

The laboratory reports suggest the air nano bubble dispersed in water could reduce the
water consumption and chemical dosage by 90-95 per cent.

This ultimately also saves 90 per cent of the energy consumption, said Dr Neelkanth
Nirmalkar, who has developed the technology.

IIT Ropar director Rajeev Ahuja said, “eco-friendly technology has been developed at the
IIT, Ropar, under a startup which is also working towards cleaning the environment and
is expanding in developing new applications ranging from water treatment to healthcare.”

In the textile industry, the water is used at many steps, including for dyeing, finishing
chemicals in the textile substrates, desizing (process of removal of sizing material from
yarn), scouring, bleaching, and mercerizing (chemical treatment of fabric to enhance
affinity towards dye).

At the same time, the textile industry also produces the highest volume of waste water.

Dr Nirmalkar said the technology was based on nano bubbles of air and ozone.

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We make, they buy

(Source: Times of India, February 05, 2023)

Industry in Tamil Nadu is bullish about exports to the UAE, which is the gateway to Africa
and the Arab world, and to Australia, a vast continent with a growing market. India signed
free trade agreements with both countries in 2022 and they have been in effect for months
now. The effects are already showing (see table). Satyakam Arya, chairman, CII Tamil
Nadu, said IT, textiles, leather, footwear, furniture, engineering products, agricultural
equipment, pharmaceuticals and automobiles are the major sectors that would benefit
through the two FTAs. “The ‘India-UAE Startup Bridge’ would act as a one-stop platform
where information will be easily accessible to entrepreneurs and stakeholders from both
countries. Tamil Nadu with its strong ecosystem for startups and entrepreneurship will
benefit immensely,” he says. Tamil Nadu exported $253 million worth of readymade

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13 CITI-NEWS LETTER

garments to the UAE and Australia from April to November last year. Of this, UAE alone
accounted for $159 million. A Sakthivel, Federation of Indian Export Organisations
president who was part of the business delegation that had visited UAE and Australia after
the trade agreements were signed in 2022, says the apparel trade between India, Australia
and UAE will double in three years. “We are positive the two FTAs will benefit Tamil
Nadu. Australian buyers are showing a keen interest in importing readymade garments
from the state. There are several businesses in the UAE that source readymade garments
from India and export them to Gulf Cooperation Council (GCC) countries. Against this
backdrop, duty-free access to the UAE will boost apparel exports from Tamil Nadu.”

Export of finished leather products -- Tamil Nadu accounts for 50%-60% of the total
exports from India -- to the two countries is set to boom. Though India exports $5 billion
worth of finished leather goods annually, the share of UAE and Australia is hardly $200
million now. The exports will rise to at least $400 million in two-three years, says Yavar
Dhala, executive committee member of the Indian Finished Leather Manufacturers and
Exporters Association. “The FTAs facilitate zero duty, paving the way for Indian leather
products to become competitive when compared with leather goods sourced from Italy
and western Europe. The two countries will increase their leather purchase from India,”
he says. Data sourced from Guidance Tamil Nadu, the state government’s nodal agency
for investment promotion, reveals that TN

collectively exported more than $1,323 million of commodities to the UAE and Australia
from April to October in the current fiscal. Of this, the UAE alone recorded exports of
$1,000 million during the period. In the financial year 2021-22, the state’s collective
exports to the two countries stood at $1,948.9 million. The top products exported from
Tamil Nadu include pearls, imitation jewellery, vehicles and parts, apparel and clothing
accessories, machinery, mechanical appliances and rubber.

While India will benefit from preferential market access provided by the UAE for more
than 97 % of its tariff lines, Australia is offering zero duty access to 100% tariff lines from
India. Australia and India also agreed to enable fast-track approval for patented, generic
and biosimilar medicines. J Jayaseelan, chairman, Indian Drug Manufacturers’
Association, Tamil Nadu, Puducherry and Kerala, says TN exports pharmaceuticals worth
`3,000 crore to `4,000 crore every year, of which UAE and Australia account for less than
5%.

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14 CITI-NEWS LETTER

Textile cluster faces encroachment hurdle

(Source: Times of India, February 05, 2023)

Encroachment on land proposed for textile cluster at Sukhpuri in Burhanpur has delayed
development work, claimed industrialists urging local administration and micro, small
and medium enterprises (MSME) department to intervene.

The MSME department has proposed to develop a textile cluster at an estimated cost of
Rs 56 crore on 63 hectare at Sukhpuri village in Burhanpur. The cluster will be developed
under MP government’s new policy described under MSME Rule 2021. Burhanpur
Sukhpuri Textile Cluster Association director Prashant Shorff said, “Development work
at proposed textile cluster can start once issues are addressed. We have raised concern
regarding encroachment on proposed land to the local administration and MSME
department. The district collector has assured full cooperation to clear the encroachment
from the proposed site. The land also has very deep pits that needs to be levelled.” A 12-
member Special Purpose Vehicle has been incorporated for the textile cluster. The cluster
is expected to attract an investment of over Rs 800 crore and generate employment for
more than 7000 people. In the cluster, 225 textile and related industries are expected to
come up, according to District Trade and Industries Centre. An official from the MSME
department wishing anonymity said, “We are in touch with industries and the work on
four proposed clusters are at different stages. All these clusters will be developed in phases
and we are working on issues to expedite the work.

The state government will contribute up to 60 per cent of the development cost or Rs 20
crore for developing the cluster. Industries said, we had to select land from available
options, but government should intervene so that the development work can start.

Shroff said, “Burhanpur is a hub for power looms and thousands of cottage, micro and
small industries. The cluster will help in giving a level playing field to small units by
cutting down on operational cost and use of advanced technology support.”

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GLOBAL
Pak-IMF policy level talks begin tomorrow

(Source: TBS News, February 06, 2023)

Pakistan and the IMF will kick-start policy level talks from Tuesday as both
sides will strive again on Monday (today) to reconcile the yawning gap in the
fiscal framework.

Pakistan and the IMF will kick-start policy level talks from Tuesday as both sides will
strive again on Monday (today) to reconcile the yawning gap in the fiscal framework.

The IMF assessed that Pakistan faced primary deficit gap of 0.9 percent of GDP equivalent
to Rs800-850 billion mainly because of less tax and non-tax revenues and increased
expenditures.

However, the Pakistani side did not accept such fiscal gap and argued that it was
estimated to the tune of 0.5 to 0.6 percent of GDP in the range of Rs400 to Rs450 billion
for the current fiscal year.

The IMF assessed that the FBR might face a shortfall of Rs130 billion in achieving the
desired tax collection target of Rs7,470 billion.

The government and the IMF might agree to abolish the reduced electricity tariff for the
export-oriented sector and link it with export proceeds.

The textile sector is selling 40 percent of its produced items in the domestic market, so it
is wrong to get subsidy on power and gas tariff on the whole production.

Home

Four-day Dhaka international textile machinery exhibition will begin on Feb

15

(Source: The Financial Express, February 06, 2023)

The four-day-long Dhaka International Textile and Garments Machinery Exhibition

(DTG–2023) will begin on February 15 after a pause of three years mainly due to Covid.

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16 CITI-NEWS LETTER

The 17th edition of the DTG will take place at the International Convention City
Bashundhara in the city, jointly organised by Bangladesh Textile Mills Association
(BTMA) and Yorkers Trade and Marketing Service Co Ltd, according to a statement.

The business-to-business exhibition will offer an opportunity for the local textile and
apparel manufacturers to meet with their global suppliers of the latest machinery under
an umbrella.

The exhibition will remain open to all from 12:00pm to 8:00pm every day until February
18.

The DTG has been the biggest trade show in exhibiting state-of-the-art technology in
textile and garment machinery products for almost two decades, organizers said in the
statement.

A total of 1,200 international brands from 32 countries will take part in the show at 1600
booths to offer complete machinery solutions to garment and textile sector businesses in
the country.

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The 80/20 rule for maximising foreign exchange earnings

(Source: Business Recorder, February 06, 2023)

Pakistan’s economy has been facing a number of challenges in recent years, including low
growth, high inflation, large fiscal and current account deficits, and declining foreign
exchange reserves. Despite various efforts to spur economic growth, the country’s GDP
growth rate has remained relatively low, averaging around 3-4% in recent years.

In the last 5 years, Pakistan has received a total of $32 billion as loans from various
sources including China, Saudi Arabia, Abu Dhabi, World Bank and the Asian
Development Bank. In contrast, Pakistan has while earned $140 billion from exports.
Expats have contributed $140 billion as workers’ remittances to the country during the
same period. Given these inflow volumes and the 80/20 rule, Pakistan should focus on
these two sectors aligned with relative weights of the expected outcome.

Both exports and workers’ remittances are important sources of foreign currency for
Pakistan and play a crucial role in its balance of payments, contributing 80% of total forex
revenues. However, the relative economic importance of these two sources is significantly

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different where exports contribute directly to GDP growth, employment generation and
provide the only sustainable long-term solution. Workers’ remittances, on the other hand,
provide limited and indirect support to the GDP, as well as employment and are not
considered as preferential source of forex.

Pakistan’s exports have seen an upward trend especially during FY20-FY22 where textile
exports grew by a phenomenal 55% in just two years. Workers’ remittances also posted a
growth of 50% in these two years but are dependent on the world economic conditions
especially the state of the economies from which they originate and hence not considered
stable or sustainable in the long run.

However, the state of remittances as well as exports is now depicting an alarming future.
During H1 of the current fiscal year, remittances from 10 European Union countries
(including Italy, Spain, Germany, France and Greece) sent to Pakistan showed negative
growth. The number of remittances from the EU member countries decreased from
$1.750 billion in the same period of the previous fiscal year to $1.544 billion, representing
a decrease of 11.77%.

With continued socioeconomic turbulence, Pakistan has always been relying on Foreign
Economic Assistance (FEA) in various forms. FEA refers to government aid aimed at
enhancing the economic growth and well-being of developing nations. This aid can take
the form of concessional loans, grants, and technical support, and may be provided by
both bilateral sources and multilateral organizations such as the World Bank, Asian
Development Bank (ADB), Islamic Development Bank (IsDB), Asian Infrastructure
Investment Bank (AIIB), or the United Nations (UN).

Pakistan has had a history of being heavily dependent on FEA since its inception, which
is not an ideal situation for a country’s long-term economic growth and development.
There are several reasons for this:

First, reliance on FEA often leads to a lack of fiscal discipline and weak revenue collection
efforts. Governments tend to rely on external aid to finance their spending, which can
lead to large fiscal deficits and a buildup of government debt over time.

Second, FEA can create a culture of dependence, where the recipient country becomes
reliant on external aid for its development and growth. This can lead to a lack of incentives
for domestic reforms and a reduction in the country’s capacity to generate its own
resources and finance its own development.

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Third, FEA can distort the local economy by providing resources to sectors or projects
that may not be aligned with the country’s domestic priorities or economic strengths. This
can create a misallocation of resources and reduce the overall efficiency of the economy.

Fourth, FEA can also have negative impacts on the country’s currency, as large inflows of
foreign aid can lead to an appreciation of the local currency and reduce the
competitiveness of the country’s exports.

Pakistan attracted more than $25 billion in the real estate sector in 2021. According to a
research study, 25-30% of remittances went into the real estate sector while 21-22% from
the Roshan Digital Account were invested in the sector. Traditionally, expats have
invested in real estate sector of Pakistan through remittances. A slowdown in the real
estate sector necessarily negatively impacts investments and remittances.

Remittances have decreased drastically over time, increased tax on property being the
primary reason. Previously, even resident Pakistanis used to invest their savings in the
real estate sector; however, exorbitant property tax rates have forced them to spend their
savings in buying gold, and/or dollars, thus parking their funds in non-productive assets.
In order to reverse the decline in workers’ remittances, overseas Pakistanis including non-
resident persons may be exempt from advance tax payable under section 236K of the
Income Tax Ordinance 2001 on the purchase of immovable properties in Pakistan.

Expats may only be liable for Advance Tax on Sale/Transfer under section 236C of the
Income Tax Ordinance 2001. Remittances can be augmented to uplift Pakistan’s
economic growth through this way.

Focus on export growth necessarily involves promoting textiles as this sector contributes
62% of all exports. Pakistan’s textile industry, however, is facing a major crisis as it is
rapidly losing credibility and competitiveness in the global market.

The $19.3 billion industry, which relies heavily on exports, is experiencing a decline in
global shipments. This situation is causing concern among its loyal international
customers, who are becoming increasingly skeptical about the industry’s ability to meet
deadlines and fulfill orders in a timely manner.

The situation is further compounded by the shortage of dollars and basic raw materials,
including cotton, dyes, and chemicals, which is causing many exporters to hesitate when
booking new orders. As a result of which, the future of the industry looks uncertain, and

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unless measures are taken to address these challenges, the textile sector in Pakistan may
continue to face a downward spiral.

Expanding our exports especially in the textile sector and removing all hurdles for
remittance inflows should be of utmost importance. No doubt, we should also continue to
maintain strong relationships with our current lending partners and work towards
attracting investment from new sources. However, time has now come to consider that
despite the current challenges faced by Pakistan’s textile industry, it is crucial that
immediate steps are taken to re-invigorate the sector. Some of the critical steps are: 19.3

The cost of conducting business in the textile sector has become unmanageable due to the
elimination of Zero-Rating (SRO 1125) and the implementation of a 17% GST on export-
oriented industries. The high sales tax has led to an increase in working capital and
interest rates, causing a surge in smuggling, fraudulent activities, and the import of
second-hand clothing. To alleviate the situation and secure working capital, it is
imperative to immediately reinstate Zero Rating for the entire textile sector through SRO
1125.

Address the looming liquidity crisis in the textile sector of Pakistan, caused by factors
such as non-release of funds, high taxes, increased competition, and high energy costs. It
is imperative to release all held-up funds such as deferred sales tax, TUF etc. as well as
enhance working capital limits in accordance with rupee devaluation and increasing
textile exports.

Moreover, in order to ease the liquidity crisis and avoid defaults, moratorium on capital
repayment from July 1st, 2022 to June 30th, 2023 may be implemented during the period
of this financial hardship to allow the industry time to stabilize and recover.

The current allocation of gas resources in the economy is unsustainable. To secure a

sustainable gas supply and improve competitiveness, the priority of gas distribution to
various sectors needs to be reevaluated. Priority should be given to productive sectors
such as textile industry, with a focus on export-based industries over the domestic sector.
This strategy would lead to increased exports, improved competitiveness, job creation,
and a positive impact throughout the value chain. The current pricing disparities and
promotion of non-productive use of limited resources in the gas sector should be
addressed through reforms, such as the weighted average cost of gas (WACOG) and
pricing that accurately reflects the economic value-added through gas.

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The maintenance schedule for

industrial feeders disrupts 25% of
the industrial production of
businesses and negatively impacts
industrial production and exports. The country is already facing low exports and
industrial production, making it crucial to improve the quality of electricity supply. To
address these issues, it is imperative to redouble efforts to improve the quality of
electricity supply and mitigate the negative impact on industrial production and exports.

The long-standing issue of provision of RCET’s to the entire textile value chain needs to
be also resolved expeditiously. Likewise, the assessment and announcement of reasonable
open excess charges of power (Wheeling) should also be promoted while it is also
important to enhance the limit of 1 MW on solar to 5 MW for industrial net metering for
promotion of alternative energy supplies. Increasing the limit of 1MW will also contribute
to the economy by receiving the burden of setting up new solar plants providing them
‘Take or Pay’ contracts and killer sovereign guarantees. The government must reconsider
its decision to sponsor new solar projects given this very real alternative.

The curtailment on import of raw materials and spare parts has resulted in an acute
shortage of both. This has led to non-maintenance of machinery, breakdown and running
out of raw material leading to closure of textile mills. An urgent corrective action is
needed.

To achieve economic and political independence, Pakistan must focus on its textile
industry to get out of the debt cycle it is stuck in. To do this, it must prioritize adding value
to its exports, especially in the highly productive textile sector, through supporting higher
value addition. Investment and improvement in production and export capacity is crucial
and requires a long-term textile policy and access to energy resources. Increasing exports
will also help create jobs and prevent social and economic unrest.

In conclusion, while FEA can provide valuable resources for a country’s development, a
heavy reliance on it can lead to a number of negative consequences for a country’s
economy. It is important for countries to strive for greater self-reliance and to implement
reforms that increase their own resource generation and strengthen their domestic
economies.

Home

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Global fashion retailer C&A warns C&A Textiles of legal action for using same
name

(Source: TBS News, February 05, 2023)

One of the largest global fashion retailers C&A has warned Bangladesh's C&A Textiles of
taking legal action for using the same name, which, as the complainant says, is creating
confusion among its clients.

In an announcement published in newspapers through India-based intellectual property

law firm Selvam and Selvam, the multinational company said it has been sourcing from
Bangladesh for a long time. Hence, the name has become well known in the country.

"In such a situation, the global brand has noticed that an unknown third party called C&A
Textiles is doing business under the same name. But C&A has nothing to do with it," read
the notice.

"So the textile company has been warned against using this name. If the textile company
does not change its name, then legal action will be taken against it through court."

The notice cautioned the public and said that the global fashion retailer brand will not be
held responsible for any unwary consumers or the general public harmed by the company
infringing the C&A trademark. Instead, the public is urged to notify the law firm of any
information that an authorised person is doing business under this name.

Selvam and Selvam published the notice through the Bangladeshi firm IP Conservator
Bangladesh.

According to the notice, the global brand under the C&A trademark is trading clothes,
apparel, and accessories with a reputation across the world. This name is registered in
several countries around the world. Registration is pending in several other countries.

Enamul Hoque, team leader of IP Conservator, told The Business Standard, "We work
with trademark and intellectual rights. The Indian law firm has assigned us the C&A
trademark issue. The C&A trademark is registered in Bangladesh in the name of the
foreign company. So no one else can use this name."

C&A Textile, which is engaged in manufacturing textiles and garments, was registered in
2001. It has a factory in Chattogram.

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The company ceased production in 2017 due to its owners' irregularities and loan defaults.
Then in 2021, Alif Group, another garment trader in the country, bought the company.
Currently, Alif Group has managed to bring the company back to partial production.

Alif Group's Managing Director Azimul Islam told TBS, "I don't know why legal notice or
notification about the name came so long after the company got registered. We have not
received any notice in this regard. Rather we are working to re-launch the closed
company."

The Netherlands-based C&A has been in business since 1841. The company has been
sourcing from Bangladesh for over three decades. About 156 garment companies in the
country manufacture garments for C&A.

C&A Textiles got listed on the stock market in 2014. At that time, it raised Tk45 crore by
issuing shares in the capital market. After the listing, the owners of the company exit by
selling shares secretly.

Several cases have been filed against its then managing director Rukshana Morshed by
banks and non-bank financial institutions concerned about defaults on loans.

Besides, the Bangladesh Securities and Exchange Commission (BSEC) fined the
company's board and senior officials.

The company's Tk10 face value share fell to Tk1 on the Dhaka Stock Exchange after
production was halted due to owners' irregularities and corruption.

After that, the share price rose to Tk11.20 on the news of Alif Group taking ownership of
the company. Its shares are currently trading at Tk10.20.

Home

China's textile, apparel exports see stable growth in 2023

(Source: China Daily, February 05, 2023)

China's exports of textile and apparel products registered stable growth last year, data
showed.

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The export volume reached $323.3 billion in 2023, up 2.6 percent year-on-year, according
to the China National Textile and Apparel Council.

Textile exports gained 2 percent from a year ago to total about $148 billion, while exports
of apparel and accessories rose 3.2 percent to over $175 billion.

Large textile enterprises saw their combined operating revenue climb 0.9 percent year-
on-year to nearly 5.26 trillion yuan ($780 billion) in 2023.

Home

Vietnam urged to issue carbon certificates to exporters, retailers

(Source: Fibre 2 Fashion, February 05, 2023)

Vietnam’s industry insiders and policymakers feel the country must start monitoring and
issuing carbon certificates to exporters and retailers in response to the European Union’s
(EU) recently-passed carbon levy. Instead of buying the EU's carbon certificate, domestic
businesses could take steps to reduce their own carbon footprints during production,
experts feel.

The European Parliament’s (EP) EU Carbon Border Adjustment Mechanism (CBAM) will
"put a fair price on the carbon emitted during the production of carbon-intensive goods
that are entering the EU, and to encourage cleaner industrial production in non-EU
countries."

The bloc requires exporters to report their commodities' carbon footprints, on which a tax
may be levied should carbon emissions during the production of said commodities exceed
the EU's carbon regulations.

CBAM will hit major Vietnamese exporters and retailers first, especially those dealing
with products with higher carbon footprints, giving smaller players some time to prepare,
industry experts said.

Some Vietnamese businesses, who had been anticipating the new carbon tax, have already
implemented measures to reduce their carbon emissions, according to a report by a
Vietnamese media outlet.

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Andrew Wyatt, deputy head of the International Union for Conservation of Nature
(IUCN) in Vietnam, urged the government to establish policies to monitor and issue
carbon certificates to Vietnamese exporters and producers by 2025. The IUCN, the
ministry of natural resources and environment and the ministry of agriculture and rural
development have been working closely together in recent years to build policy
frameworks related to the global carbon market, he added.

Home

Luxuriously soft velvet fabrics made from recycled plastic

(Source: Architect and Interiors India, February 05, 2023)

Luxury home furnishings brand, Maishaa, has launched a new collection by Clarke &
Clarke – Riva Collection. The collection carries bold and strong upholstery designs and
colour palettes.

Continuing to build on Clarke & Clarke’s ‘Eco’ portfolio of recycled fabrics, Riva is made
entirely from 100% recycled plastic. Transformed into luxuriously soft velvet, this dual-
purpose sustainable fabric is GRS-certified (Global Recycling Standard). In all, an array
of 25 colour combinations is available, offering a stunning selection of textiles. The
opulent tones evoke a vibrant and enchanting environment.

Glamorous and stylish, Riva can be styled in multiple ways making it highly versatile. The
collection can be used to dress up any space and the solid shades of colours allow for a
variety of visual patterns that can be created. The blended fabrics of Riva also comprise
intriguing weaves, and stylish textured plains. A clever combination of these designs and
tones can yield an incredibly interesting look in any interior.

Home

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