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

12-03-2019 81.55 (-0.20)

13-03-2018 92.60

13-03-2017 86.45

New York Cotton Futures (Cents/lb) As on 14.03.2019 (Change from

previous day)

Mar 2019 75.82 (+0.10)

May 2019 76.89 (+0.85)

July 2019 75.10 (+0.18)

14th March

2019

India Cuts GM Cotton Seed Royalty; FSII Expresses Grave

Concerns

Cotton Corp sales to start Apr, 1.1 mln bale procured so far 2018-

19

RBI allows importers to raise $150-m trade credit

E-commerce players join hands to launch its own council, TECI

Designers pledge for child labour-free fashion world

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

Mar 2019 21200 (+200)

Cotton 16090 (+70) Apr 2019 21490 (+180)

Yarn 24855 (0) May 2019 21750 (+180)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- India Cuts GM Cotton Seed Royalty; FSII Expresses Grave Concerns

Cotton Corp sales to start Apr, 1.1 mln bale procured so far 2018-19

US opens new front in trade war, complicates ties with India

In slow mode: on manufacturing and inflation data

RBI allows importers to raise $150-m trade credit

E-commerce players join hands to launch its own council, TECI

Private manufacturing firms made 24.9% net profit growth in Q3: RBI

Designers pledge for child labour-free fashion world

Filatex India to invest Rs 400 crore in capacity expansion

One chart for all

Uttarakhand to open excellence centre for Himalayan fibre

The gaping hole in India’s macro balance sheet

Strata opens new geosynthetics plant in India

Karanj textile park inaugurated in south Gujarat

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

Zero tariffs on EU goods coming into NI in no-deal Brexit

New initiative for tracing organic cotton in textiles

Sri Lanka's trade deficit significantly narrows in December 2018

reflecting the effect of policy measures

Pakistan: Govt releases Rs65.4mn for Statistics, Textile division

projects

FIBRE INNOVATION FROM FINLAND MAY CHANGE TEXTILE

INDUSTRY

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

India Cuts GM Cotton Seed Royalty; FSII Expresses Grave Concerns

(Source: Tooba Maher, Krishi Jagran, March 13, 2019)

It’s for the third time in four years that India has cut the royalties that local seed

companies pay to German drugmaker Bayer AG's Monsanto unit.

According to a farm ministry order, PM Narendra Modi's government has decided to

reduce royalties paid by Indian seed companies to Monsanto for its genetically modified

(GM) cotton by 49% to 20 rupees for a packet of 450 grams. However earlier it

was 39 rupees.

The seed and technology associations have expressed their severe disappointment over

the recent government order on Bt cotton seed price in which the cotton seed price

for Bollgard-II has been reduced to Rs. 730 per bag compared to Rs. 740 last year.

Though there is a marginal increase in seed component of the price, the most impacted is

the trait value with a 49% cut.

Mr. Ram Kaundinya, Director General of the Federation of Seed Industry of India (FSII)

have expressed grave concerns and said, “Such an ad hoc mechanism of price fixation

for Bt cotton makes cotton seed business unsustainable in the long term. The farmer won’t

benefit much with slight price reduction, because the cost of seed is less than 5% of his

revenue.”

He added, “The previous reduction from Rs.800 per bag to Rs. 740 per bag itself caused

a huge cut in the research budgets of cotton seed companies. Further decrease now and

such gradual reductions over the years will cause the cotton seed industry to further cut

their investments in research and upgradation of infrastructure.”

Several cotton seed companies will struggle to exist and the reduction in R&D will lead to

a decline in cotton productivity in the country at a time when the textile industry is

growing and is looking forward to more cotton production in India. We are no longer the

largest cotton producer in the world and with this trend, there is a strong chance that we

will again become a net importer of cotton in the near future, said Mr. Ram Kaundinya.

Dr. Shivendra Bajaj, Executive Director-Alliance for Agri Innovation (AAI)

mentioned, “Further slashing of trait fee will result in putting new innovations on hold

especially, in the cotton sector. The cotton price order is most disappointing. With ever

reducing incentive, technology development will suffer. The paucity of newer traits will

cause stagnating yields and decrease in farmer income in the near future.”

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4 CITI-NEWS LETTER

He also added, “There is a clear need that the short-sighted view taken for trait pricing is

replaced by a growth view that empowers innovation in cotton-based agriculture and

allows industry to flourish.”

According to industry group Cotton Association of India, New Delhi's cotton output is

likely to fall to 32.8 million bales of 170 kg each in the year to September 2019. It is the

lowest in nine years, triggering higher imports of the fibre.

Besides cutting Monsanto's royalties, the government raised the prices of GM cotton

seeds by 1.43 percent to 710 rupees ($10.16) a packet.

New Delhi approved Monsanto's GM cotton seed trait, the only lab-altered crop allowed

in India, in 2003 and an upgraded variety in 2006 which helped in transforming the

country into the world's top producer and second-largest exporter of the fibre.

Monsanto's GM cotton seed technology went on to dominate 90% of India's cotton

acreage. Though, Monsanto became embroiled in a dispute with Indian seed

company Nuziveedu Seeds Ltd (NSL), which argued that India's Patent Act did not allow

Monsanto any patent cover for its GM cotton. Monsanto and NSL are engaged in a maze

of arbitration proceedings and legal cases.

Home

Cotton Corp sales to start Apr, 1.1 mln bale procured so far 2018-19

(Source: Shrikant Kuwalekar and Kavita Desai, CAI Online, March 13, 2019)

The Cotton Corp of India is likely to commence sale of cotton procured in 2018-19 (Oct-

Sep) from next month, a senior official at the state-owned agency said.

"We are planning to sell cotton procured in the current season most probably in the first

week of April," the official told Cogencis. "The procurement has almost reached at 1.1

mln bales (1 bale = 170 kg). We expect 400,000-500,000 bales more in coming weeks,"

the official said.

Cotton Corp has been active in procuring cotton since last couple of months. Procurement

has risen in February after prices fell to a near one-year low.

Of the total procured stocks, around 80% have been purchased from Telangana followed

by Maharashtra. Some small quantity was also procured from Andhra Pradesh,

karnataka, Madhya Pradesh and Odisha.

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5 CITI-NEWS LETTER

The minimum support price for medium-staple variety of cotton is at 5,150 rupees per

100 kg, and that for long staple at 5,450 rupees per 100 kg. The government had raised

the support price for cotton by 26% this year.

Prices have improved 2-4% from the recent lows and currently hovering around 20,800

rupees per bale. Trade officials have been expecting sharp rise in prices from the current

level as China has started buying Indian cotton from the last one month.

In the last two-three weeks, the country is likely to have bought over 600,000 bales from

Indian traders. However, Cotton Corp's sales might cap the upside in prices if not weigh

down the same, trade sources said.

Home

US opens new front in trade war, complicates ties with India

(Source: Atul Dalakoti, Global Times, March 13, 2019)

US President Donald Trump notified Congress on March 4 after months of speculation

that he would terminate the Generalized System of Preferences (GSP) for India and

Turkey, starting a 60-day countdown period, after which the US President has the right

to take action against the two countries on his own authority.

This was after the US had in April last year started a review process of this preferential

program as some US companies had complained of non-tariff barriers being imposed on

their exports to India. India, according to the US, had failed to provide any assurance of

unhindered market access to its products in the Indian market which was perceived by

the Trump administration as creating a negative impact on equitable and reasonable

market access.

The discussions between the US and India were quite extensive and there was hope that

things would be worked out in such a way that India would be able to continue to be part

of the GSP, and the complaints in the area of dairy and medical devices would be looked

into by India.

Under this program, India in 2017 exported duty-free goods worth $5.7 billion, including

auto components, industrial valves and textile materials to the US. India exported a total

of $48 billion worth of goods to the US in 2018 with a trade surplus of $21 billion. India

was also placed on a watch list of the treasury department for currency manipulation.

India had behaved with great restraint to not retaliate when the US unilaterally increased

duty on a range of Indian products. Commerce Secretary Anup Wadhawan said that the

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6 CITI-NEWS LETTER

withdrawal of GSP will have a minimal effect on India's exports and India would keep

working at addressing the issues the US had.

The US has indeed opened a new front in the trade war by taking this decision against

India and Turkey, even when the big issue of working out a trade deal with China is still

ongoing.

For India, which is going into a general election that will be held in seven phases from

April 11 to May 19, the announcement was bad news as the opposition will surely make

use of this as one of the failures of the Modi government, even though the government

spokesperson has pointed toward only an impact of $190 million per year. Already there

is a lot of pressure in India because economic growth has not created the jobs that are so

critical for inclusive development, nor have exports grown as planned.

Exports do create a lot of jobs directly and indirectly. There is indeed a more pronounced

political affect as there are growing voices in India calling for a tougher stand on trade

negotiations with other countries, including the US.

In the US, Trump has made trade negotiations a rallying point and before the next

elections, we are certainly going to see a new round of tensions with key trading nations

and the US.

There is a lot of chatter about the US considering revoking India's Most Favored Nation

status. Here again most Indians feel that this is more positioning intended to put pressure

on India to give more access to US companies. India has its own domestic concerns which

make it not possible to give into the pressures of the US administration.

This first salvo from the US side of giving notice of its intent to terminate India from its

GSP will put a lot of pressure on the Indian side, and it will need to take the bilateral talks

on the liberalization of its economy with the US much more seriously.

As the general elections are just round the corner in India, where there will be 900 million

voters taking part in this election to select 543 seats in the lower house, one can't expect

much will happen in the next 60 days as things will only start to move after the election

results are out on May 23.

The relationship between India and the US is very important, and both sides realize the

importance of having a fair and equitable trade mechanism in place.

Politically, it is quite likely that we will see both countries working together more closely

in many areas. Being large countries with strong democratic political systems, there is a

lot of common ground to build a future relationship on.

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7 CITI-NEWS LETTER

But certainly, they have to treat each other with respect, and the US has to understand

the political and economic compulsions of any government in New Delhi and give them

the right environment to open up further and at the same time be able to achieve higher

growth rates. This should be a win-win for both countries.

After 2017, the US, Japan, India and Australia have become closer with the Quadrilateral

Security Dialogue being revived. All eyes will now be on the economic relationships and

how these two important partners of the QUAD group sit across the table to work out their

trade differences. Looking at the bigger picture, we can be quite optimistic of a good

outcome.

The author is executive director of Federation of the Indian Chambers of Commerce and

Industry.

Home

In slow mode: on manufacturing and inflation data

(Source: The Hindu, March 14, 2019)

Manufacturing, inflation data give monetary policy makers room for an interest rate cut

Manufacturing activity in the country continues to remain becalmed. The latest Index of

Industrial Production data show that output across the broad sector expanded 1.3% in

January, a clear loss of momentum from the 3% pace in December and a drastic slowdown

from the 8.7% growth seen in January 2018. Overall, industrial output growth slumped

to 1.7%, from 2.6% in December, and 7.5% a year earlier, as production in 12 of the 23

industry groups that comprise the manufacturing sector shrank from a year earlier. These

are quick estimates that are likely to be revised. But the fact that key job-creating

industries, including textiles, leather and related products, pharmaceuticals, rubber and

plastic products, and motor vehicles, reported contractions hardly bodes well for the real

economy. A look at the use-based classification of industries also gives little cause for

cheer. Capital goods, a closely watched proxy for business spending plans, contracted

3.2%, a telling contrast with the 12.4% expansion posted 12 months earlier. A sustained

revival on this vital front may still be some time away. A recent survey by IHS Markit of

business activity expectations, conducted over two weeks in the latter half of February,

shows that Indian businesses plan to curb outlays on hiring and capital spending, with

sentiment on capex at a one-year low. And growth in consumer durables output was an

anaemic 1.8% (7.6% in January 2018), another clear sign that spending on consumption

of non-essentials remains in search of favourable winds.

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8 CITI-NEWS LETTER

If the IIP poses cause for concern, retail inflation data hardly provide much reassurance.

While price gains measured by the Consumer Price Index accelerated to a four-month

high of 2.57% in February, it is the persistent deflationary trend in the prices of some farm

items that is deeply disquieting, reflecting as it does a collapse in pricing power in the

agrarian heartland. Vegetables, fruits and pulses and products all posted negative rates of

inflation from a year earlier, of –7.69%, – 4.62% and –3.82% respectively. While urban

consumers may cheer the increased affordability of vegetables and fruits, rural demand

for manufactured goods will remain depressed unless there is a meaningful turnaround

in the farm sector’s economic fortunes. Looking ahead, with Saudi Arabia committed to

deepening its production cuts in order to keep crude oil prices well-supported, it appears

unlikely that India’s fuel and energy costs will stay soft for much longer. And with political

parties sure to open the spending spigot in a bid to woo voters, inflationary impulses will

quicken. For now, though, with growth slowing and inflation still comfortably within the

Reserve Bank’s 2%-6% target range, monetary policy makers would feel justified in

pressing ahead with one more interest rate cut at their meeting next month.

Home

RBI allows importers to raise $150-m trade credit

(Source: The Hindu Business Line, March 13, 2019)

In a bid to give a leg-up to oil/ gas refining and marketing, airline and shipping

companies, the Reserve Bank of India’s amended Trade Credit Policy has allowed them

to raise trade credits of up to $150 million or equivalent per import transaction under the

automatic route.

For others, trade credits (TCs) can be raised up to $50 million or equivalent per import

transaction, the central bank said in its amended trade credit policy, which was issued to

banks authorised to deal in foreign exchange (Category-I Authorised Dealer Banks or

ADs). The policy comes into force with immediate effect.

The all-in-cost (including rate of interest, other fees, expenses, charges, guarantee fees

whether paid in foreign currency or rupee) ceiling per annum has been pegged at the

benchmark rate plus 250 basis points spread. TC refers to the credits extended by the

overseas supplier, bank, financial institution, and other permitted recognised lenders for

maturity – as prescribed under this framework – for imports of capital/non-capital goods

permissible under the Foreign Trade Policy of the government.

Depending on the source of finance, such TCs include suppliers’ credit and buyers’ credit

from recognised lenders.

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9 CITI-NEWS LETTER

The period of TC, reckoned from the date of shipment, will be up to three years for import

of capital goods. For non-capital goods, this period will be up to one year or the operating

cycle, whichever is less. For shipyards/shipbuilders, the period of TC for import of non-

capital goods can be up to three years. When it comes to security for TC, the RBI said bank

guarantees may be given by ADs, on behalf of the importer, in favour of the overseas

lender of TC, not exceeding the amount of TC. The period of such guarantee cannot be

beyond the maximum permissible period for TC.

Home

E-commerce players join hands to launch its own council, TECI

(Source: Economic Times, March 13, 2019)

The rapidly growing ecommerce sector launched its own trade association under the

name of The ECommerce Council of India (TECI) on Wednesday.

The founding members of TECI include Snapdeal, ShopClues, UrbanClap, Shop101,

Flyrobe, and Fynd along with online brands like Mamaearth, Superbottoms, and Azah.

TECI members, account for more than 7.5 lakh online sellers and service providers. Every

month, more than 100 million users interact with the online businesses operated by TECI

members. More than 30 global and domestic institutional investors have invested more

than $2.25 billion in the enterprises founded by TECI members.

The e-commerce sector in India is witnessing fast growth supported with the rise in the

number of internet users. While nearly 140 million Indians are already shopping online,

the expansion of digital commerce into Tier 2 & 3 cities has opened the doors for the next

200- 300 million online buyers.

According to a February 2019 Morgan Stanley report, India is adding one internet user

every 3 seconds and the e-commerce sector in India is estimated to reach $230 billion by

2028, accounting for 10% of India’s retail. The fast growth of the digital commerce sector,

fueled by global investments and evolving consumer habits makes it one of the leading

contemporary influences and is expected to have a significant impact on social and

economic landscapes in countries around the world.

Policy makers in various countries, including in India, are engaged in discussion and

debate to determine optimal policy frameworks for the sector, which will enable fast

growth, while balancing the interests of all stakeholders. TECI expects to collate,

crystallise and share the e-commerce industry’s viewpoint in this regard, working

collaboratively with other stakeholders.

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10 CITI-NEWS LETTER

Besides policy advocacy, the council seeks to define and encourage the use of industry

best practices relating to data privacy, logistics, payment processes, resolution of

disputes, consumer protection, MSME development and other relevant issues.

Siddharth Munot, Co-founder of Bewakoof.com, said in a statement, "TECI is one of a

kind industry association that would help the industry and will work in line with other

trade bodies for the betterment of the e-commerce sector and digital-first brands."

TECI will provide a neutral and objective platform for discussion and debate on

noncompetitive issues relating to the development of the e-commerce sector in India.

Moreover, it also expects to provide thought leadership for the e-commerce sector and

articulate the voice of the sector in the media. It will work in collaboration with trade

bodies in India and outside to further the objectives of the association.

Pratik Agarwal, Co-founder of Breya, said in a statement, “We believe TECI will play a big

role in making major policy decisions in e-commerce sector, a more consultative process

keeping in mind the larger interest of Indian Economy. We look forward to working with

TECI members in a constructive way."

Home

Private manufacturing firms made 24.9% net profit growth in Q3: RBI

(Source: Millenium Post, March 13, 2019)

The private companies in manufacturing sector posted a 24.9 per cent growth in net profit

in the October-December quarter of the current fiscal on annual basis, benefitting from

lower tax provisions, the RBI said Wednesday.

The analysis is based on the performance of private corporate sector during the third

quarter of 2018-19 drawn from abridged financial results of 2,703 listed non-government

non-financial (NGNF) companies, it said.

"The manufacturing sector continued to record strong growth in net profits, benefitting

from the lower tax provisions in Q3:2018-19," the RBI said while releasing the latest data

on performance of the private corporate business.

The companies posted a net profit of Rs 77,500 crore in the third quarter of the fiscal

compared to Rs 57,800 crore in the year-ago period. Their profit was Rs 71,900 crore in

the July-September quarter of 2018-19.

However on the sales front, demand conditions in the manufacturing sector weakened on

year-on-year basis.

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11 CITI-NEWS LETTER

"This moderation was observed mainly in textiles, iron and steel, motor vehicles and other

transport equipments industries whereas sales growth improved for consumer-driven

sectors such as food product and beverages, and pharmaceutical," the central bank said.

The interest expenses incurred by manufacturing sector also witnessed a dip from a year

ago level, reflecting ongoing deleveraging in the corporate sector.

In IT sector, RBI said, sales growth remained broadly unchanged in relation to the

previous quarter, while the services (non-IT) sector maintained the pace of sales growth,

riding on the improvement recorded by the transport and storage services industries.

The telecommunication sector continued to experience contraction in sales.

As per the RBI, pricing power in terms of operating profit and net profit margins

remained flat in manufacturing sector.

Net profit margin of the IT sector declined marginally.

Home

Designers pledge for child labour-free fashion world

(Source: Outlook India, March 13, 2019)

Nobel laureate Kailash Satyarthi, a campaigner against child labour, on Wednesday led a

group of designers to pledge a child labour-free supply chain in the Indian fashion

industry.

"There are about 500 million children in the world who are forced into child labour.

Through this pledge, we promise to stop hiring children at workplace," Satyarthi said

while addressing the media on the first day of Lotus Makeup India Fashion Week

(LMIFW) Autumn Winter 2019 here.

The Fashion Design Council of India (FDCI) has collaborated with Kailash Satyarthi

Children's Foundation (KSCF) to launch #Notmadebychildren campaign. The campaign

aims to stop child labour in India's fashion and textile industries.

According to Satyarthi, the initiative is the "start of a new movement in India".

"There are so many people who follow fashion. So, I feel this is one of the great platforms

to raise voice against child labour. Fashion industry is not only about beauty and glamour.

People involved in fashion are also responsible for creating awareness and education

among people.

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12 CITI-NEWS LETTER

"This movement will enhance the inner beauty and outer beauty of the fashion industry

and of course will help in changing the lives of our children."

Fashion designers like Rina Dhaka, Rahul Mishra and Reynu Taandon were a part of the

pledge ceremony.

LMIFW, which began on Wednesday, will continue till Saturday at the Jawaharlal Nehru

Stadium here.

Home

Filatex India to invest Rs 400 crore in capacity expansion

(Source: Economic Times, March 14, 2019)

Polyester yarn manufacturer Filatex India NSE -9.20 % plans to invest around Rs 400

crore in expanding the capacity of its plants in Dadra and Dahej, besides setting up a

captive power plant to reduce the company’s energy costs.

The Delhi-based company has earmarked Rs 275 crore to augment the yarn

manufacturing and polymerisation capacity of its plants from 3.28 lakh MT per annum to

3.65 lakh MT by next year.

A 30-MW captive power plant, with an investment of Rs 145 crore, in Dahej would be

operational by 2020. “The environmental clearance for the plant is in advanced stage,”

said Madhu Sudhan Bhageria, Chairman & Managing Director, Filatex India.

The company, which exports manmade yarn to 34 countries globally, also has in the

pipeline a fabric plant to make fabrics from the yarn it produces. Its yarn is used in

manufacture of carpets, rugs, tapes, ribbons and zippers.

On the US’ recent move to end preferential benefits to Indian exports, Bhageria said the

industry is unlikely to get impacted majorly.

Processed food; leather products other than footwear; plastic products; building material

& tiles; hand tools such as spanners, wrenches, drilling equipment; engineering goods

such as spark ignition, turbines and pipes, parts of generators, cycles; made-ups including

pillow/cushion covers; woven women’s dresses were eligible for higher benefits under the

US’ Generalized System of Preferences scheme.

Home

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13 CITI-NEWS LETTER

One chart for all

(Source: Daily Pioneer, March 14, 2019)

The introduction of the ‘Indian standard size’ for apparel will not only boost online

shopping, but also the country’s textile industry as a whole.

A recent research study revealed that approximately 40 per cent of apparel purchased

online are returned or exchanged. For most customers, the top reason was the cloth’s poor

fit. Well, shopping comes with a lot of problems. But there’s one that rules them all —

choosing the perfect size. For instance, for some brands, a woman could be size 10 but

size 12 for some others. How is she supposed to decide her perfect fit online?

Hence, consumers aren’t satisfied or confident about the fits unless they try on a garment.

The end result? Lost profits, increased labour and shipping costs, wasted inventory,

logistical nightmares, frustrated customers, and a failure to take advantage of online

services.

Initially, it was noticed that when parents would get garments stitched for their child as

per their sizes, in order to save the efforts, the same garment would be passed down to

the next sibling. This is when it was noticed that the range of body dimensions did not

vary too much. Set of people’s sizing did not vastly differ from each other. This paved a

way for the creation of the ‘Standard Sizing’ apparel, which has henceforth evolved as a

common methodology for sales in the US, UK and Europe today. It is a suitable option

which is cost-friendly for the makers and convenient for the buyers.

However, the sizing charts could indeed be confusing when it comes to choosing them

online. Well, now it is India’s turn to be on the sizing chart and create its own standard

size for apparel. Researchers say that setting up the Indian chart will not just help the

consumers but the Indian textile industry as a whole.

The ‘India size’ specifications will require a lot of data and insights to prepare a final chart

of standard sizes. With the onset of convenience shopping, this could be a welcome move

for the Indian textile industry since consumer shifts and mindsets are towards its tangent.

The industry will be further benefitted through the B2B trade, as our partners are

becoming more aware of their end customers’ needs. Since such a study has never been

done before, it becomes imperative to finally ascertain the magnitude of textile

consumption in India. It will help the industry to project better forecasts and thereby

improve overall sector growth.

The entire process of determining sizing sets will begin with a ‘Mass Measurement

Movement’ by noting down sizes of people from across the country. This will include —

(i) Horizontal torso, including the shoulder, neck, bust-line, rib-cage waist, upper hip and

lower hip measurements; (ii) Vertical torso, including the back, waist to shoulder length,

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14 CITI-NEWS LETTER

shoulder to bust length, waist to bust length and the two waist-hip lengths’

measurements; (iii) Sleeve measurements; (iv) Height measurements.

It will be a mammoth task but once completed, the analysis collected during this process

will be a gold mine of knowledge and data. High-level machinery would be employed to

craft a standardised size-chart that will lead to well-fitting clothes extended to both offline

and e-marketplaces for costumers to choose.

Post measurements, the sizes will have to be grouped into the ‘same bracket’ ranges so as

to mark the number variations and deviations. On the basis of that, the categories are

further sub-grouped to create a standard size that would accommodate two ranges.

Well, the best part about the exercise is that once the standard size charts are finalised,

they will positively affect a variety of sectors, ranging from sub-divisions of the apparel

industry (fitness, casual-wear, party-wear) to diverse ones like aerospace, because the

collected data would be useful for their products and services being offered to Indians.

However, it is indeed wonderful that India will soon get its standard size chart, carving a

way for million Indian consumers who get baffled up when the size chart showing the UK,

US and Europe’s sizes pop up on online shopping sites.

Home

Uttarakhand to open excellence centre for Himalayan fibre

(Source: Fibre2Fashion, March 13, 2019)

Uttarakhand has decided to set up a centre of excellence for Himalayan fibre in Kumaon

region’s Almora district. The decision was taken recently at a cabinet meeting in

Dehradun, according to state urban development minister Madan Kaushik. The centre

will be set up with support from the Northern India Textile Research Association (NITRA)

in Ghaziabad.

A proposal to allot land for the centre at Bercimi village in Almora was also approved, a

news agency quoted Kaushik as saying.

Setting up of the centre is part of the state’s efforts to optimise the use of local trees such

as pine, bhimal (Grewia optiva) and oak.

It was on Tamta's request that NITRA explored the possibility of using pine needles to

make fibre products. Work is under way to produce a blend of fibre and yarn, said Shweta

Saxena, a senior scientific officer at NITRA.

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15 CITI-NEWS LETTER

Bhimal, another common tree of the lower Himalayan region the leaves of which make

for excellent fuel and cattle fodder, is now being used to make fibre from which products

like slip-ons, baskets, mats and bags are prepared.

A group of women, supported by the Bhartiya Gramotthan Sanstha in Rishikesh, is

experimenting with bhimal fibre and jute to produce handloom items.

Home

The gaping hole in India’s macro balance sheet

(Source: Niranjan Rajadhyaksha, Live Mint, March 13, 2019)

It is no secret that the Indian economy is hostage to the gyrations in the global commodity

markets. Rising commodity prices create stress. Inflation goes up. The trade deficit

widens. The rupee comes under pressure. Falling commodity prices bring relief on all

three fronts.

There are implications for economic growth as well. High commodity prices cut domestic

purchasing power while low commodity prices add to it. The most significant commodity

in this context is oil. Indian economic stability is often hostage to what happens under the

hot Arabian sands or in the air-conditioned rooms where the global oil cartel meets.

The international terms of trade—or the ratio of the price at which a country sells to the

world to the price at which it buys from the world—are thus a key concern for Indian

policymakers. India’s import basket is dominated by commodities while Indian exports

have significant manufactured items such as engineering goods, textiles and

pharmaceuticals.

There are two special cases as well. Part of the oil import bill is to feed domestic refineries

that export their products. The export of jewellery is based on imports of pearls, precious

and semi-precious stones. The India's balance of payments is also supported by software

exports as well as NRI deposits.

A new database created by two economists at the International Monetary Fund (IMF)

puts a lot of this into perspective. Bernard Gruss and Suhaib Kebhaj have created a

database of the commodity terms of trade for 182 countries from 1962 to 2018. India is

one of those countries. They have used data on 45 commodities—including gold—to create

indexes of import prices, export prices and terms of trade. Their database provides

information on commodities rather than merchandise trade as a whole. So, for example,

the import and export of machines or cars or garments are not part of the database.

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16 CITI-NEWS LETTER

India is a net importer of commodities, so the trends in global commodity prices are

especially important. The second chart here shows the index of the price that India pays

for its commodity imports, including oil. The weights in the index depend on how

important a particular commodity was in a particular year. The third chart shows the

movements in the net export prices since 1962, or the difference between the price of

commodities a country exports and the price of commodities it imports.

These charts together give a good sense of how the commodity terms of trade moved for

India—and the economic impact. Some of the periods when commodity import prices

went up sharply coincide with moments of intense domestic stress—from the political

unrest after the first oil shock of 1974, the need to go to the IMF for a lifeline after the

second oil shock of 1979, run on the rupee in 2013. There were also benign periods such

as the 1980s. It is interesting that the deterioration in the terms of trade was relatively

modest before the 1991 crisis.

The other interesting period is during the synchronized global boom between 2004 and

2008. India saw its commodity terms of trade deteriorate. Yet, the Indian economy was

in fine fettle because the effect of higher commodity import prices on the balance of

payments was negated by a splendid export performance.

This is what distinguishes India from China. The latter also has a trade structure

dominated by commodity imports and manufactured goods exports. Its commodity terms

of trade also deteriorate in a broadly similar way. Yet, it has been less prone to topple over

when terms of trade deteriorate because its exports are robust.

Competitive exports insure China from global commodity shocks to a great extent. For

India, they represent the insurance missing in its economic structure right now.

Niranjan Rajadhyaksha is research director and senior fellow at IDFC Institute.

Home

Strata opens new geosynthetics plant in India

(Source: Innovation in Textiles, March 13, 2019)

Strata Geosystems, a joint venture of Glen Raven, headquartered in Mumbai, and a

leading specialist in the soil reinforcement industry, has opened a new state-of-the-art

manufacturing facility in Daheli, Gujarat, last month, to meet the growing demand for

geotechnical products in India and around the globe.

“We are indeed a truly unique company,” said Ashok Bhawnani, Founding Director of

Strata Geosystems, during the grand opening ceremony of the company's new

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17 CITI-NEWS LETTER

manufacturing facility located in Daheli, Gujarat. “As the largest reinforced soil wall

builder in India, we differentiate ourselves by using re-engineered yarn to build high-

performance structures for highways.”

Strata began as a manufacturer of geogrids in 2004 and has evolved to become both a

manufacturer and India's largest developer for reinforced soil structures. Today, Strata

has built over 400 bridge ramps on national highways across the country and is a leader

in the technical textiles industry. Reinforced soil technology has been adapted across the

country, which led the company to expand its capacity and more effectively cater to the

growing infrastructure needs in India.

“Using geogrids to reinforce soil is analogous to using steel for concrete reinforcement,

and this technology is being used for a wide range of applications including ramp

construction, landfills, mining dykes, and other engineered structures,” said Narendra

Dalmia, CEO and Director.

Strata had the honour of hosting its joint-venture partners from Glen Raven, a global

performance-textile company headquartered in the USA. Among Glen Raven's attendees

were Leib Oehmig, CEO and Harold Hill, President of the Technical Fabrics division.

“This is a tremendous milestone for the entire Strata global organisation,” said Harold

Hill.

The plant was constructed using Strata's own technical textiles for flooring, internal

roads, water-proofing, slopes and embankments, and loading aprons, providing a

testament to the products' benefits.

Further reiterating its commitment to India and Prime Minister Modi's ' Make in India'

vision, this new facility is the largest geogrid plant and will provide sufficient capacity to

cater to India's demand while continuing to strengthen existing export markets. The plant

enables the production of the widest geogrid, (made on 245" knitting machines), high-

strength uniaxial and biaxial geogrids, and improved technical parameters like enhanced

stress strain values.

Additionally, the facility, located over 10 acres, houses an exclusive, custom-built coating

machine, efficient material handling capabilities, and an advanced laboratory, which will

be accredited with global standards. This new facility also aligns with the efforts of The

Ministry of Textiles towards the promotion of technical textiles in critical infrastructure

applications.

Home

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18 CITI-NEWS LETTER

Karanj textile park inaugurated in south Gujarat

(Source: Fibre2Fashion, March 13, 2019)

Surat could play a pivotal role in VisionNXT, a trend forecasting initiative of the

government to create an indigenous fashion forecasting service, textiles minister Smriti

Irani said inaugurating the ₹300-crore Karanj Textile Park in Mandvi taluka in south

Gujarat recently. Entrepreneurs from Surat can immensely contribute to that initiative,

she said.

Surat is India’s largest man-made fabric hub. The trend forecasting lab was recently

started in Delhi.

Irani also appreciated the environment concerns at the textile parks in south Gujarat

where the country’s first zero liquid discharge (ZLD) has been set up at the Gujarat Eco

Textile Park (GETP) at Palsana under the Integrated Power Development Scheme (IPDS)

scheme of the central government.

More than 90 per cent of waste water from the GETP plant will be recycled at the ZLD

plant, a report in a top Indian English-language daily quoted the minister as saying.

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19 CITI-NEWS LETTER

GLOBAL:

Zero tariffs on EU goods coming into NI in no-deal Brexit

(Source: RTE, March 13, 2019)

The UK will not introduce any new checks or controls on goods moving across the land

border into Northern Ireland if the UK leaves the European Union without a deal, it has

been announced.

Under a temporary and unilateral regime announced by the British government, EU

goods arriving from the Republic and remaining in Northern Ireland will not be subject

to tariffs.

However, tariffs will be payable on goods moving from the EU into the rest of the UK via

Northern Ireland under a schedule of rates also released this morning.

The British government insists that this will not create a border down the Irish Sea, as

there will be no checks on goods moving between Northern Ireland and Britain.

Instead, normal compliance and intelligence methods will be used to detect any traders

attempting to abuse the system.

MPs accepted that the new regime will cause "concerns" to Northern Irish businesses and

farmers about the impact on their competitiveness.

But they said these were the only steps that could be taken to deliver on the government's

commitment to avoiding a hard border in the case of no-deal.

MPs said that, overall, the changes would represent a "modest liberalisation" of the UK's

tariff regime.

Home

New initiative for tracing organic cotton in textiles

(Source: Innovation in Textiles, March 13, 2019)

A pioneering new initiative, called the Organic Cotton Traceability Pilot, is proving the

use of cutting-edge technology to trace organic cotton through its value chain.

“With the work we have done to trace organic cotton from farm to gin, we are confident

that in the next phase we will be able to make the leap from gin to consumer, eventually

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20 CITI-NEWS LETTER

making it possible to swiftly and efficiently trace organic cotton straight from the farm to

the consumer. This is good for farmers, good for consumers, and good for the entire

industry,” explained Daniel Jones, founder and CEO of Bext360, the lead technical

partner of the initiative.

The apparel supply chain is notoriously fragmented and complex, making tracing

garments to their origins a difficult task. At the same time, the pressure for greater

transparency and sustainability in the fashion industry is intensifying. Consumers are

more aware than ever of the ethical and environmental impact of fashion, while

governments are beginning to demand accountability from brands and retailers. New

technologies are beginning to offer brands innovative tools to efficiently and reliably

verify materials, but until now these have not been successfully applied in the garment

industry.

Technology behind initiative

This pilot initiative combines multiple technologies to trace and identify the origin, purity

and distribution of organic cotton. While these technologies have already been used

before other supply chains, they have not been yet been used in fashion.

While blockchain technology allows for efficient integration of data from multiple sources

in the supply chain, the use of machine vision, artificial intelligence, micro-biome

sequencing and on-product unique markers (including the physical markers: NFC, IN-

Codes and fluorescent Li-Code's) help to guarantee data integrity as well as grade the

quality and purity of materials. For machine readable technologies like product markers,

this can usually be done without altering the product itself.

At the farm level, the solution’s digital trail is creating transparency not only by verifying

the material but also by ensuring the that fair price brands are paying are reaching the

farmers. Additionally, the digital trail simplifies logistical transactions for farmers and

enable banks to provide them loans.

At the consumer level, the technology sheds a light on the suppliers and manufacturers

that are behind a final product, increasing trust and transparency.

Multi-stakeholder effort

As a traceability solution that has seen success in other complex supply chains like coffee,

cocoa, and palm oil, Bext360 was chosen to participate in the Fashion for Good Scaling

Programme. Seeing the potential of the model, an unprecedented group of partners came

together to pilot whether the technology solution be applied to organic cotton.

Lead technical partner, Bext360, was backed in logistics, planning and technology by

supporting technical partners Haelixa, Tailorlux, and InCode Technologies, and ongoing

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21 CITI-NEWS LETTER

field trails are being carried out in Pratibha Syntex farm groups in India. Other partners

include Fashion for Good, C&A Foundation, and the Organic Cotton Accelerator (OCA),

as well as Kering, Zalando, PVH Corp, and C&A.

“As a global platform for innovation with many brands behind us, we are excited to see

how the scaling of one of our innovators turned into a multi-stakeholder effort from which

the whole industry will benefit. These technologies will improve how companies can map,

audit, certify, and monitor their value chains, allowing them to tackle issues head on and

build transparent processes,” said Katrin Ley, Managing Director of Fashion for Good.

Results and next steps

With testing underway to trace organic cotton from farm to gin, the next step will trace

from gin to consumer and finally it will need to be proven at scale. If taken to this level,

this initiative has potential to become a leading end-to-end traceability solution not only

for organic cotton, but for other preferred fibres.

“The time was ripe to take a bold step towards full traceability in the organic cotton value

chain. We believe this technology solution has potential and are eager to support the

experiment to prove it. It has been exciting to see so many actors come together, and we

invite more of the industry to join us on this journey, commented Anita Chester, Head of

Sustainable Raw Materials of C&A Foundation.

Home

Sri Lanka's trade deficit significantly narrows in December 2018 reflecting

the effect of policy measures

(Source: Colombo Page, March 13, 2019)

The year-on-year deficit in the trade account narrowed significantly in December 2018

following a notable decline in the import expenditure, the Central Bank said today in its

External Sector Performance review for the month.

Earnings from merchandise exports grew marginally by 1.4 percent in December 2018 to

US$ 1.033 billion compared with December 2017, mainly driven by industrial exports

while agricultural exports continued to decline.

Earnings from industrial exports grew by 2.1 percent during December 2018 due to higher

exports of textiles and garments, while earnings from agricultural exports fell by 1.4

percent, reflecting the poor performance in almost all categories except coconut, seafood

and vegetables.

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22 CITI-NEWS LETTER

On a cumulative basis in the year, year-on-year

exports earnings increased by 4.7 percent to US$

11.89 billion from US$ 11.36 billion a year earlier.

Reflecting the effect of policy measures taken by

the Central Bank and the Government,

expenditure on imports declined by 15.3 percent

(year-on-year) to US$ 1.734 billion in December

2018 from US$ 2.048 billion a year ago recording

the lowest import value for the year.

All major import categories namely intermediate goods, consumer goods and investment

goods contributed to this decline, the Central Bank said.

On a cumulative basis, expenditure on merchandise imports increased by 6.0 percent to

US$ 22.233 billion in 2018 in comparison to 2017 mainly driven by higher expenditure

incurred on fuel, personal motor vehicles, textiles and textile articles and fertilizer

imports.

The trade deficit declined to US$ 701 million in December 2018 from US$ 1.029 billion a

year earlier. Cumulatively trade deficit increased 7.5 percent from US$ 9.62 billion to US$

10.343 billion in the year.

Earnings from tourism remained healthy with a 4.8 percent

(year-on-year) growth in December 2018, resulting in a total

income of US$ 4.4 billion in 2018, a growth of 11.6 percent from

2017.

Workers' remittances recorded a marginal decline of 2.1 percent

in 2018 to US$ 7.0 billion, including the drop of 13.0 percent in December 2018.

In the financial account, the government securities market and the Colombo Stock

Exchange (CSE) recorded outflows in December 2018.

The government securities market continued to experience a withdrawal of foreign

investments recording a net outflow of US$ 162 million in the month of December, raising

the net cumulative outflow to US$ 802 million by the end of the first eleven months of

2018.

Meanwhile, foreign investments in the CSE, including both secondary and primary

market foreign exchange flows, recorded a net outflow of US$ 55 million during the year

2018.

As at end December 2018, gross official reserves were estimated at US$ 6.9 billion, which

is equivalent to 3.7 months of imports. Total foreign assets, which consist of gross official

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23 CITI-NEWS LETTER

reserves and foreign assets of the banking sector, amounted to US$ 9.6 billion as at end

December 2018, which is equivalent to 5.2 months of imports

During the year 2018, the Sri Lankan rupee depreciated by 16.4 percent against the US

dollar. However, during 2019 up to 13 March, the Sri Lankan rupee appreciated by 2.2

percent against the US dollar.

Home

Pakistan: Govt releases Rs65.4mn for Statistics, Textile division projects

(Source: Ary News, March 13, 2019)

The government has thus far released the funds worth Rs 65.4 million for Statistics

Division and Textile Industry Division under the Public Sector Development Programme

(PSDP 2018-19).

Solely, for statistics division’s project for upgradation of rural area frame for the conduct

of census or survey, an amount of Rs 52.8 million has been released under the PSDP.

Though, the total cost of the project has been estimated at Rs 249.4 million, according to

the latest data released by the Ministry of Planning, Development and Reforms.

Whereas for the Textile Industry Division’s Faisalabad Garment City Training Center

project, the government released Rs12.6 million.

Overall, the federal government has so far released Rs 365.99 billion for several ongoing

and new schemes of different divisions against the total allocation of Rs 675 billion under

PSDP (2018-19).

The Planning Commission of Pakistan releases funds after following a specific

mechanism. During first quarter (July-September) it releases 20 per cent of development

funds, in second quarter (October-December) 20 per cent, third quarter (January-March)

30 per cent and fourth quarter (April-June) 30 percent.

Home

FIBRE INNOVATION FROM FINLAND MAY CHANGE TEXTILE INDUSTRY

(Source: David J. Cord, Finland.fi, March 13, 2019)

The modern clothing industry is a marvel. Walk into any fashion store and you have your

pick of thousands of different items in a huge variety of styles. Yet the industry is also

marked by its unsustainability.

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24 CITI-NEWS LETTER

Some of the most popular materials, such as polyester, are derived from petroleum.

Plastic microfibres from synthetic fabrics end up in the oceans and enter our food chain.

In turn, production of natural fibres such as cotton demands an enormous amount of

water.

The very nature of fashion encourages people to toss their old clothes in landfills and buy

the next popular thing. It is a monumental problem, but people are now aware of it.

“Sustainability is becoming very important to the consumer today,” says Anna-Kaisa

Auvinen, managing director of Finnish Textile and Fashion, a textile and clothing industry

organisation.

“In Finland we have great fibre innovations that will help the industry be more

environmentally friendly. Increasingly we see new startups being formed in Finland with

corporate social responsibility as the core of the company.”

Several Finnish organisations have been puzzling over the issue of a sustainable raw

material for textiles for years, including VTT Technical Research Centre of Finland and

Aalto University. Pirjo Kääriäinen, professor of design-driven fibre innovation at Aalto,

estimates that seven or eight different projects are currently under way, and some of them

have graduated out of the laboratory.

Kääriäinen is involved in Ioncell, a project that has developed a method of creating high-

quality textile fibres from wood or recycled materials.

They found the perfect publicity for their product when Jenni Haukio, the First Lady of

Finland, wore a dress made from birch-based Ioncell fibre to the annual Independence

Day gala.

“Traditional methods of creating fibre from cellulose, like rayon, require heavy

chemicals,” Kääriäinen says. “The whole Ioncell production process is safe and non-

harmful. It can even keep the colour: if you recycle red T-shirts you can get red fibres out

of the process without needing to re-dye it.”

Another company active in the field is Infinited Fiber. Its roots date back to the 1980s,

when various Finnish corporations and VTT studied viscose production.

“The breakthrough came in about 2010, when we discovered how to use waste paper as a

raw material,” says CEO Petri Alava. “We can now use a huge variety of raw materials,

like paper, carboard or textile waste. Availability is a big issue for the industry, but some

of the infrastructure is already in place for these materials, like cardboard.”

Infinited Fiber was spun off from VTT in 2015 and now has a pilot plant in operation.

Their process separates fibre, turns it into a liquid, and transforms the liquid into a new

cotton-like fibre. Cotton is a major material for the mainstream textile market, and

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25 CITI-NEWS LETTER

Infinited Fiber plans to license their technology to big global producers. Their denim has

already met 100 percent of commercial quality requirements.

“It’s encouraging to see the high interest we are receiving from the market,” Alava says.

“The younger generation wants environmentally sustainable clothing, and this is a major

challenge for fashion brands.”

Spinnova is located in the central Finnish city of Jyväskylä, at the heart of Finnish forest

country. They use wood pulp as their raw material, but their process has a different spin.

“We use no harmful chemicals at all,” says CEO Janne Poranen. “We use a mechanical

process to spin the natural fibres through small nozzles to create textile filaments.”

The only by-product of Spinnova’s technology is water that evaporates during drying and

is reused in the spinning process. The closed-loop system caught the attention of Finnish

fashion icon Marimekko and a partnership began. At the time of writing, the two

companies are planning to bring their product to customers in the near future.

“Our pilot plant is in the startup phase and then we will begin to scale up,” Poranen says.

“In two or three years we expect to see big volumes.”

Finnish innovators such as Spinnova, Ioncell and Infinited Fiber have a huge goal: to find

a sustainable process with sustainable materials for the world’s textile needs. They employ

different methods, but there’s more than one way to stride down a catwalk.

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