Is Apparel Coming Home?: Manufacturing

EAI 01 ISSUE 08
100
Is apparel
manufacturing
coming home?
TRENDS
Streetwear’s
growing
popularity
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018
Final_All_Pages.indd 1 10/31/2018 3:37:32 PM

AppArel / Chairman’s Message
Dear Friends,
T
he first half of this financial year
has ended on a low note with
regards to apparel exports. The
export performance for April-
September, 2018, largely triggered by significant
decline in emerging markets, declined by 15.96
per cent. However, the traditional markets like
USA grew by 5.3 per cent.
With the peak season approaching, it is

time to introspect on the inherent weakness
in Indian apparel sector which is constraining
our growth. While the overall exports have
increased by 12.6 per cent, after GST issues
submitted settling down, export in apparel
sector could not recover its downward trend.
The Council had partnered with the I welcome the new Executive Committee
Government of India’s initiatives of “Swatchhta members of AEPC who were elected/re-
Hi Seva” in all apparel clusters. With an aim to elected at the 39th AGM held on 28.9.2018 at
improve the health and hygiene of the factories, New Delhi.
its neighborhood and apparel clusters at large, I
feel that such initiatives can bear direct impact
on the health and productivity of workers With the hope that the second half of 2018-
and thus have a positive impact on the overall 19 brings prosperity, health and happiness to all
business. I am thankful to our members for stake holders of the apparel industry in India, I
having joined us in this campaign. wish you all Happy Diwali!
HKL Magu, Chairman, AEPC
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 /1

C O N T E N T S
04 | The BROADCAST
India’s Ready-Made Garment (RMG) Export Update for
FY (April-September) 2018-19
05 | The BROADCAST
IIndia’s Textile & Ready Made Garment (RMG) Update
for Index for Industrial Production (IIP) for FY (April-
August) 2018-19
06 | AEPC EVENTS
AEPC seeks BASA inclusion and initiation of
international flights from Coimbatoree
CHAIRMAN AEPC
Mr. HKL Magu
08 | AEPC EVENTS
Richa Global awarded with Responsible Leadership
CHAIRMAN EP 2018 Awards
Mr. Sudhir Sekhri
10 | BUSINESS
Rupee on a free fall, industry divided about its impact
ADVISOR AEPC on exports
Mrs. Chandrima Chatterjee
PUBLISHER
12 | EXPORT
Apparel Export Promotion Council IMF cuts global growth forecast
13 | EXPORT
Bangladesh earns 142 per cent more from Indian
exports
14 | TRADE WAR
Tariffs Impact New avenues of growth open
up for businesses
16| TRADE WAR

• US imposes tariffs on wool and related products
• US tariffs to affects Chinese luxury market
Editor-in Chief & Publisher & CEO - • US-China trade war to damage Asian economies
Sanjay Chawla
Director - Salil Chawla
17| POLICY
India raises import tariffs to reduce current account
Managing Editor - Sujata Dutta Sachdeva deficit
VP-Corporate Communications
Shraboni Mukherjee 18 | SOURCING
• Protectionist Policies lead to uncertainty in US fashion
Assistant General Manager - Saqib Meer
industry
Editorial - Narayan Subramaniam
Editorial Asst. - Ranjit Kaur 20 | TRADE TREATIES
Correspondent - Ajay Kumar Goswami, • India, Uzbekistan to conduct feasibility study for PTA
Special Contribution Editorial - Ajanta Ganguly • New trade agreement with Canada and Mexico to
boost US textile production
Supported By - Abdul Hussain, Sumit Masand
Graphic Designer - Sanjeev D. Sonavane 22 | COVER STORY
Production & Admn. - Dhansukh Rathod, • Nearshoring paves a new way for global apparel
Dinesh Poojary manufacturers
28 | MARKET
Mumbai Office: 38/314, Unnat Nagar 4, • Indonesia to be top Muslim fashion center by 2020
Off M. G. Road, MHADA Colony, Goregaon (W), • UK govt committee to review environmental
Mumbai - 400 062. Ph: 022 2875 5181 initiatives of fashion retailers
e-mail: dfuif@yahoo.co.in / dfu@rediffmail.com
30 | MARKET
UK apparel industry’s resurgence stymied by skills
Dehli Office: Salil Chawla, Business & Mktg: New Delhi
shortage
- 110017, Mobile: +9193503 18639/
95601 79633 e-mail: dfudelhi@yahoo.co.in 32 | CONSUMPTION
Consumer expenditure on fashion to touch $72.7 bn
Printing Press: VIBA Press Pvt. Ltd. C-66/3, Okhla by 2022
Industrial Area, Phase-II 34 | CONSUMER
New Delhi-110020 • Well-informed consumers boost demand for
e-mail: info.vibappl@gmail.com premium fashion in India
2 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | August 2018

36 | RETAIL
• Traditional retailers need new
ways to compete with fast
fashion
37 | COMPLIANCE
• Oeko-Tex reassures product
standards
• M&S, British High Commission
launch program to promote
gender equality in Indian RMG
factories
38 | BRAND CASE STUDY
Burberry takes positive steps
towards sustainability, circular
economy
40 | BRAND RETAIL
• Interbrand ranks Louis Vuitton
as the world’s most valuable
luxury fashion brand
• British men’s swimwear label
Orlebar Brown acquired by
Chanel
42 | TRENDS
• Streetwear’s growing
popularity sees more brands
jumping in the fray
44 | TECH TRENDS
• H&M’s off-price luxury site
‘Afound’ to perk up company’s
46 | AEPC EVENTS
• AEPC organises SHS
campaign to spread awareness
about the importance of
cleanliness
50 | SUSTAINABILITY
• A new set of sustainability
standards
52| FIBER FABRIC
• Next-Gen, innovative fibers
sets the agenda in global textile
industry
54 | COPYRIGHT
Weak copyright laws plague
global fashion industry
56 | NOTIFICATION
Subject: Extension of date of
payment of Annual Subscription
for the Financial Year 2018-19
57 | GST UPDATE
59 | EVENTS
60 | AEPC EVENT
CALENDAR
CALENDAR OF EVENTS - 2018
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | August 2018 / 3

+++++
APPAREL / THE BrOADCAST
India’s Ready-Made
Garment (RMG)
Export Update for
fY (April-September)
2018-19
India’s RMG Exports
RMG exports were to the tune of USD 1103.32

million in September 2018 with the decline of
-33.58 per cent against the corresponding month of
September 2017, which was USD 1661.19 million.
In rupee term export for the Month of September

2018 was ` 7967.69 cr. as against ` 10704.85 Cr.
in September 2017 with the decline of -25.57 per
cent.
India’s RMG export to World in the April-September

of 2018-19 was to the tune of USD 7716.17 mn.
which has decreased by -15.96 per cent compared
to the same period of previous financial year. During
April-September 2017-18, India’s apparel exports
were to the tune of USD 9181.49 mn.
India’s RMG Export to World

MoM Growth of
FY 2017-18 FY 2018-19
Month 2018-19 over 2017-18 (%)
In INR Crore In US$ Million In INR Crore In US$ Million INR US$
April 11272.24 1747.44 8859.67 1349.81 -21.4 -22.76
May 10342.55 1605.37 9040.63 1338.57 -12.59 -16.62
June 9979.57 1548.59 9202.63 1357.46 -7.79 -12.34
July 8262.94 1281.95 8757.23 1274.83 5.98 -0.56
August 8552.24 1336.95 8986.67 1292.18 5.08 -3.35
September 10704.85 1661.19 7967.69 1103.32 -25.57 -33.58
April-Sept. 59114.39 9181.49 52814.52 7716.17 -10.66 -15.96
Source: DGCI&S, Kolkata, 2018
4 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

APPAREL / THE BrOADCAST
India’s Textile
& Ready Made
Garment (RMG)
Update for Index
for Industrial
Production (IIP)
for
fY (April-August)
2018-19
INDEX OF INDUSTRIAL PRODUCTION

Manufacture of MoM Growth Rate Manufacture of MoM Growth
textiles (In %) wearing apparel Rate (In %)
April 116 114.2 -1.6 155.5 134.6 -13.4
May 116.7 116.1 -0.5 156.8 136.8 -12.8
June 116.4 115.5 -0.8 145.2 151.6 4.4
July 116.4 119.8 2.9 134.2 147.3 9.8
August 116 125.1 7.8 121.4 144.3 18.9
Total April-August 116.3 119.7 2.9 142.6 144.2 1.1
Source: CSO, 2018
SUMMARY
• Manufacturing of Textiles has shown a growth of 7.8% in August, 2018
and growth of 2.9% for the period of April-August, 2018-19
• Manufacturing of Wearing apparel has shown a growth of 18.9% in
August, 2018 and growth of 1.1% for the period of April-August, 2018-19
APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 / 5

AppArel / AEPC events
AEPC seeks BASA inclusion and

initiation of international flights
from Coimbatore
Dr. A. Sakthivel, Vice Chairman, AEPC submitted representation to Hon’ble Shri M. Venkaiah Naidu, Vice President of India
D
uring the visit of .Venkaiah Naidu, to promote their business in international market.
Vice President of India to Coimbatore, They have to catch their international flights either
A.Sakthivel, Vice Chairman, AEPC him from Mumbai, Chennai or Delhi which takes a lot of
briefed on the various avenues for promoting exports time due to transition. Coimbatore also does not come
and submitted a representation on lack in the operation under the Bilateral Air Service Agreement (BASA).
of international flights from the city Coimbatore. Dr.A.Sakthivel, Vice Chairman, AEPC in his
Since, Coimbatore is the commercial capital of Tamil representation urged Naidu to include Coimbatore
Nadu and there are well established textile industries under BASA and initiate operation of international
in the vicinity of the city, the industry needs better flights from Coimbatore. This will foster economic
flight connectivity from Coimbatore. development of the region and save time of
Shakthivel also stated that many businessmen exporters. n
from Coimbatore travel to international destinations

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Richa Global awarded with

Responsible Leadership 2018 Award
M/s Richa Global, Gurugram receiving the award at ascena CONNECTS annual event held at Seoul, South Korea during 11th & 12th October 2018
M
/s Richa Global, Gurugram in Supplier CSR Ownership, Social Compliance of Active &
has been awarded with the Pre-Sourcing Facilities and Environment Conservation.
Responsible Leadership 2018 M/s Richa Global has played an active role in these
Award by Ascena Group Inc., one of the programmes at its factories across India by training over 6,000
top apparel brands holders of USA, for its workers on health and financial literacy programmes. The
outstanding performance in the corporate company is also one of the members of Ascena CONNECTS
social responsibility programmes like – elite global vendor group of top seventeen vendors of Ascena
Herhealth Project, Herfinance Project and Group Inc.
Energy Management & Saving Programmes The Ascena Group Inc. has been working for women
on global level. M/s Richa Global has also empowerment worldwide and plans to cover 100,000 women
been a consistent and sustainable performer workers in its various women-oriented CSR programmes n

AppArel / Business
Rupee on a free fall,

industry divided about its
impact on exports
A
fter falling by over 12 per cent this Divergent views on pros and cons of
year, the rupee has hit an all-time currency fall
low against the US dollar. Though Apparel Export Promotion Council (AEPC) chairman HKL
a weakening rupee works well for exporters, Magu too feels the rupee depreciation will help the industry to
experts from apparel industry are skeptical get more orders. Although big buyers or top stores ask for this
about how it will benefit trade. Harish Ahuja, adjustment, they understand currency fluctuation is in nobody’s
Managing Director, Shahi Exports feels control and this trend will continue in future.
falling rupee benefits apparel exporters as On similar lines, P M S Uppal, MD of Faridabad-based Pee
they get more orders. The depreciation has Empro Exports, and President, Okhla Garment and Textile
been only against the dollar, and not other Cluster (OGTC) points out the situation will benefit small and
currencies. And dollar exports from India is medium exporters. The company is looking to grow at 20 per
only around 40 per cent. cent and a weak rupee helps to consistently achieve this target.

AppArel / Business
Chinese Yuan depreciated nearly 10 per cent
while Turkey’s Lira depreciated more than
50 per cent. Turkey, which earlier was doing
However, Raja Shanmugham, President, Tirupur Exporters’ mainly knitted garment, is now focusing on
Association (TEA), and MD of Warsaw International, disagrees woven garments also. Moreover its proximity
and says Indian exporters can’t get too much benefit as buyers to Europe is boosting imports. Bangladeshi
Taka depreciated 2 per cent, in recent months.
But Dhaka already has a lot of advantage over
India. Indian exporters were already working
on nominal margins and to attract orders, they
are passing on the minor benefit of rupee
depreciation to buyers. If the US imposes
tariffs on Chinese apparel, China will move
more aggressively to EU, and can also supply
apparel at extremely low cost as they have to
keep their capacities occupied.
Experts say a strong dollar leads to
exporters being involved in hedging. Magu
believes most big exporters have hedged their
ask for bonus money in such a case; especially in repeat orders. currency and got Rs 67 or Rs 68 against the
Lalit Thukral, President, Noida Apparel Export Cluster and MD dollar. This will benefit them in the long run
of Maharana of India, seconds the opinion that plummeting when exporters will hedge the dollar for Rs 75
rupee benefits exporters. after one year. Medium level exporters who
normally don’t hedge also have an eye on the
Currency depreciation a global realty situation. Most will hedge only if the rupee
Anil Peshawari, MD of Noida-based Meenu Creations says, goes above Rs 75. n

AppArel / EXPORT
IMF cuts global growth forecast

T
rade wars, tighter credit and darkening among businesses
market outlook have led to the International and consumers. A
Monetary Fund (IMF) cutting its forecast for strengthening US dollar
global growth. Three months ago, the fund and tightening financial
had predicted that the world economy would conditions have
grow 3.9 per cent this year and next. However, increased challenges for
IMF revised its World Economic Outlook to many emerging markets.
3.7 per cent on Oct. 9 ahead of opening its The IMF urged the
annual meeting in Bali, Indonesia. countries to resolve their
While IMF acknowledged global expansion trade disputes, warning that the fracture of corporate supply
as still being the fastest in seven years, recent chains could have “devastating” effects. The organisation has
data suggests a cooling. Factory activity has repeatedly warned that an all-out trade war could curb growth
plunged from Asia to Europe in September. at a time when the world is enjoying the broadest upswing in
The protectionist policy is turning into years. But the US and China are not backing down, leaving no in
“actual trade barrier,” spreading uncertainty sight to a long and bruising dispute. n
Increase in domestic US trade deficit increases

and foreign demands to highest levels in August
T
leads to surge in he US trade deficit in August increased to its highest level
in six months. The trade deficit rose to 8.6 per cent over
manufacturing index the same period in 2017. Businesses rushed to import
goods before tariffs hit on China in late August and September,
N
ikkei India’s Manufacturing
Purchasing Managers’ Index
strengthened in September to
reach 52.2 from 51.7 in August. A
reading of over 50 on this survey-based
index indicates expansion, below that
contraction.
As per the survey report, underpinning
the overall expansion was a firmer including importing products needed in stores for the holiday
increase in levels of new work and gains shopping season, driving up the trade gap.
in both domestic and foreign demand. Exports of tariff-targeted goods declined while American
Moreover, export sales strengthened, consumers snapped up imported cars and mobile phones.
with the net gain the best recorded Retaliatory tariffs imposed by China continued to whipsaw
since the start of the year. Firmer gains American farmers.
in new orders, output and employment Even adjusting for price changes, it looks like the trade deficit
were some of the factors that led widened significantly in the third quarter, greatly slowing growth. The
manufacturing record an improvement gap in goods trade with China rose to $38.6 billion for August and
in growth in September n with Mexico hit $8.7 billion both the highest monthly totals ever. At
$31.1 billion, imports from Mexico also were the highest ever. n

AppArel / exports
Bangladesh earns 142 per cent more from

Indian exports
B
angladesh earned 142 per cent more revenue from exports
to India in the first quarter. The country’s RMG garment
exports to India grew 167 by per cent. Its western and Indian
clothing brands have set up a good number of stores in India
and raised procurement from Bangladesh.
Bangladesh’s earnings from two major export destinations, the
US and Germany, also registered sizable growth. Its exports to
the US and Germany grew by 14.23 per cent and 14.53 per
cent respectively in the quarter while export earnings from most
European countries, except the UK, saw a growth of 10 per cent. fiscal year compared with that of the same
The ongoing trade war between the US and China created period of the last fiscal year. Overall exports
additional demand for Bangladeshi apparel products in the US to Japan and China grew by 31.84 per cent
market contributing to higher growth. US buyers have started and 24.54 per cent respectively. The growth
considering Bangladesh as an alternative sourcing destination in export earnings from Japan and China
besides China. turned around in the period after experiencing
Export earnings from Japan increased due to a surge in frustrating performances in the last few
apparel exports by 49 per cent in July-September in the current months. n
Vietnam exports increase

Subdued global trade
by 17 per cent
forcast to have adverse
F
or the first nine months of 2018, Vietnam’s
exports increased by 17.5 per cent year- effect on Indian exports
on-year, higher than the 15 per cent
S
jump posted in the first quarter. The domestic ubdued global trade forecast of 3.9 per
sector’s positive export performance cent in 2018 and 3.7 per cent in 2019
contributed to a yearly rise of 15.4 per cent is likely to have adverse affect on Indian
in the country’s nine-month export turnover, exports. According to the exporters’ body
nearly double the growth target set for the FIEO, India’s exports in 2018-19 are likely to
whole year. touch $350 billion.
The US remained Vietnam’s biggest export market during the On the global front, sanctions on Iran,
period, with spending up 13 per cent year-on-year, followed by payment problems in Venezuela, huge
the EU (up ten per cent) and China (up 27 per cent). depreciation of currencies of Argentina,
Turkey, South Africa,
Export of 26 commodities contributed to 90.3 per cent of the
Russia, Brazil and
country’s total export revenue. The country’s import value of
banking restrictions
commodities in the period saw a modest surge of 12 per cent.
on large number
Of the sum, the foreign-invested sector’s contribution was up 12
of countries like
per cent while the domestic sector’s contribution was up 11.7
Syria, Sudan,
per cent.
Libya, and Iraq are
Key products imported included electronics, computers and affecting exports.
components, equipment and machinery, telephones and Global exports from
components, fabric, iron, steel, plastics, oil and gas, metal, September to November 2017 grew by over
footwear, chemicals, and garment and textile materials. 25 per cent. On the domestic front , the flow
China was Vietnam’s largest exporter during the period with the of credit to the export sector led to a decline
turnover up 12.5 per cent year-on-year. South Korea’s turnover by over 41 per cent in April-June.n
was up 1.4 per cent year-on-year while Asean countries’ turnover
was up 13 per cent. n

AppArel / Trade War
Tariffs Impact
New avenues of growth open
up for businesses
W
ith Trump’s tariff taking its toll Technology to the aid Ken Wengrod,
on business, experts recommend President, FTC Commercial Corp urges
several ways to deal and adjust
companies to utilise and invest more
business models to cope. Darrin Beer, Western
Regional Manager, CIT Commercial Services
in technology so they can speed up the
advices retailers and importers to seek new creation-to-engineering process by
sourcing alternatives. However, he feels cutting down sampling costs, improving
the process of shifting sourcing overnight yields on their raw materials and reducing
without risking quality, production schedules idle times in transition, especially
or both as virtually impossible. Therefore, he
on the water. In similar fashion, US
advices, retailers and their suppliers to make
their own decisions on how to engage with importers need to find alternative places
tariffs issue and whether to protest through of production within the US and Latin
trade groups or elected representatives. America to reduce their cycle time

AppArel / Trade War
chain, resulting in lower sales and profits for
clients and higher prices for consumers. The
retail industry will likely be impacted in the
same manner.
While Robert Meyers, President, Republic
Business Credit believes the tariffs will impact
clients depending on their category, reliance
on Chinese suppliers and the actual price
sensitivity of customers. Small businesses
like Flintridge Financial Solutions will have to
pass on the higher prices to their customers,
especially if they do significant business
with major discount chains. However, bigger
companies like Wells Fargo Capital Finance
Focus on supply chain would ultimately raise their prices. They will
Sydnee Breuer, Executive Vice President, Rosenthal & continue to have the option of shifting to
Rosenthal recommends tightening the supply chain. She vendors with alternative supply chains.
terms the idea of burdening factories entirely with tariffs as Technology to the aid Ken Wengrod,
unrealistic. Tariffs will impact higher-end brands with their President, FTC Commercial Corp urges
higher margins lesser than lower-margin and lower-priced companies to utilise and invest more in
private-label business. The lion’s share of this price increase will technology so they can speed up the creation-
have to be borne by factories and importers, which in turn will to-engineering process by cutting down
compel them to trim their operating expenses. sampling costs, improving yields on their raw
Rob Greenspan, President and Chief Executive, materials and reducing idle times in transition,
Greenspan Consult believes as companies affected by tariffs especially on the water. In similar fashion, US
will continue to look for sources of production outside China; importers need to find alternative places of
they will try to pass additional costs to the retailer, who will in production within the US and Latin America
turn, pass them to the consumer. This will refrain consumers to reduce their cycle time. The uneasiness
from buying the product. of potential apparel tariffs will thus open
However, Sunnie Kim, President and Chief Executive, business’s mindsets to welcome the change in
Hana Financial is more concerned about the impact on supply environment.n

AppArel / Trade WAR
US imposes tariffs on wool and related products

T
he US has announced the third round of products make up
import tariffs on goods from China. The the vast majority
latest batch imposes a 10 per cent import of US imports of
duty on wool and wool-related products apparel-related
from China. The first two rounds earlier this wool products from
year imposed 25 per cent tariffs on goods China.
imported from China. China retaliated each China accounts
time with its own punitive import duties on US for 53 per cent of all
products, such as cotton, soybeans, wine, fruit US imports of wool
and beef. The latest round of US duties means clothing. An extra
that around 44 per cent of China’s exports to duty would hurt the
the US now have excess duties imposed. trade by pushing
The list does not include any finished wool the price paid
or wool blend clothing, such as suits, jumpers, by US consumers
trousers, coats, overcoats and so on. These higher. n
US tariffs to affects US-China trade war to

Chinese luxury market damage Asian economies
T
he US-China trade war may damage Asia’s export-reliant
economies. China’s economy is expected to grow 6.3 per
cent in 2019, slower than its 6.4 per cent forecast in July.
Southeast Asia will have dimmed growth outlook, with growth
projected to slowdown to 5.1 per cent from the July forcast of
5.2 percent.
T
he US tariffs on Chinese goods are likely Inflation across the region is expected to remain under
to affect mink furs, crocodile handbags, control, helped by country-specific factors like moderate food
leather accessories, silk, handmade lace,
gold leaf, and fabrics used specifically for
ballet, opera and theater sets.
Fur garments made in China and sold in
the US are subject to both import and export
tariffs. Retail prices for mink coats in the US
are likely to increase by as much as 45 per
cent. This will affect American mink farmers,
80 per cent of whose market belongs to
Chinese consumers.
Steeper prices on fancy products will price inflation in India and China and fuel subsidies in Indonesia
affect shoppers of modest products such as and Malaysia. Also Asian countries have enough policy space
leather flat goods. These accessories help a to handle shocks and pressure from currency depreciations.
consumer get the feeling of being in the big China has set a growth target of around 6.5 per cent this year.
league. Leather coats are another example. A The country has started to roll out growth boosting measures as
cowhide version of a coat costs 20 times as the trade war threatens to put further pressure on the already
much as a pigskin version. A 25 per cent tariff cooling economy. Though domestic consumption in China
on a pigskin will eliminate that product from seems to be quite robust and supporting a 6.5 per cent growth
the market and take that choice away from the this year, the effects of further escalation of the trade dispute on
middle-income customer. n consumer’s sentiment not known. n

AppArel / Policy
India raises import tariffs to reduce current account deficit
I
ndia has increased import tariffs on items
such as air conditioners, refrigerators,
footwear, speakers, luggage and aviation
turbine fuel to reduce its widening current
account deficit and tackle the sharp slide in
the rupee. This move could hit imports from
countries like China and South Korea, which
manufacture some of the high-end washing
machines, refrigerators and air conditioners
sold in India.
The decision could also affect India’s
gem and jewelry sector as the tariffs have
been raised on imported diamonds and
gemstones. The current account deficit last
stood at around 2.4 per cent of the GDP, in the
April-June quarter, and it is expected to widen
to 2.8 per cent for the year ending March
2019. The effective import duty may also be
raised on some steel products. rein in the rupee weakness since the demand for the high-end
The rupee has weakened by more than 12 goods is largely price inelastic. It is felt the central bank needs to
per cent this year and is Asia’s worst performing intervene more actively in the forex market to support the rupee
currency. But there are doubts if the move can and that tariff measures won’t help in the long term. n
Sri Lankan VAT on imported fabric reduced to 5%
S
ri Lanka has reduced the value
added tax (VAT) on imported
fabric from 15 per cent to 5
per cent considering the requests
made by stakeholders in the fabric
industry. The ministry noted that
15 per cent rate had been set for
the industry
on Aug. 16 .But smaller
companies not covered by VAT
have protested as the tax would
have a negative impact on them.
The ministry then decided to
reduce the VAT on imported fabric
to 5 per cent in order to lend
helping hand to proposed small-scale industrialists the year compared to the same period
under the Enterprise Sri Lanka Program. This is a a year ago. U.S. apparel imports from
subsidised loan plan introduced by the ministry Sri Lanka declined by 12.15 per cent
to help medium and small-scale manufacturers to 28.93 sq. mt. equivalents in July
obtain fabric at a lower cost. compared to a year earlier. For the year
As per the Sri Lanka Apparel Export through July, apparel imports from Sri
Association, the country’s apparel exports grew Lanka reduced by 4.65 per cent to $1.84 billion worth of goods, giving
by 4 per cent to $2.8 billion for the first half of the country a 4.65 per cent market share. n

AppArel / SoURCINg
Protectionist policies
lead to uncertainty in US
fashion industry
U
nited States Fashion Industry
Association’s (USFIA) tagline:
Dedicated to fashion made possible
by global trade, is very pertinent today with the
kind of policies being pursued by President
Trump. As per the US Trade Commission in
2016, textiles and apparel accounted for 9.7
per cent of imports from China, compared to
39 per cent electronic products. However, the
impact on the sector is of huge significance
not just in the US but also globally.
A recent article ‘Walmart, Nike Suppliers
Put on Notice by China Tariff Threat’ revealed
how Chinese and Hong Kong company Li &
Fung with 64 per cent revenue coming from
the US was most at risk by Trump’s tariffs.
However, the US Trade Representative
18 //AppArel
18 APPARELeXpOrT
EXPORTprOMOTION
PROMOTIONCOUNCIl MAGAZINE||November
COUNCILMAGAZINe November2018
2018
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3:37:45 PM
PM All_Pag
AppArel / SoURCINg
agreements for the US.
Nearly 77 per cent of the USFIA
members supported reduction in documents
required for importing and exporting textiles
and apparel under FTAs. Administration time
and complexity are proving to be a barrier
to existing trade policy benefits that the US
fashion companies might avail of. Exceptions
to the ‘Yarn- forward’ Rules of origin are a
case in point.
uncerTainTy confronTs
Trade
The World Bank describes the rule
whereby cumulation allows producers to
import materials from a specific country
or regional group of countries without
undermining the origin of the final product.
defends President Trump’s policies by saying he is fulfilling However, the interpretation of this rule is
his election promise to push for trade reform to ensure fairer not entirely transparent for example the final
outcomes for US workers and businesses, and more efficient assembly of the Apple iPhone takes place
markets for countries around the world. in China. Yet the added-value in China is
less than 2 per cent (2014 figures) and the
Trump’s proTecTionisT policies a applicable US Rule of origin confers origin
challenge on China.
USFIA’s 2018 Benchmarking Study, based on a survey Similarly, a T-shirt produced in Bangladesh
of 28 executives in leading US fashion companies, reveals that imports around 80 per cent of its yarn.
protectionist trade policy and the uncertainty it causes at every The yarn-forward rule then means apparel
level from markets to supply chain and retail, is the top most goods made up in the country often does not
business challenge. Adding to this is the challenge of increasing necessarily qualify for preferential treatment
production and sourcing cost. If production and sourcing is under FTAs. The outcome is low utilisation
repatriated to the US, it will impact the consumer who may in of trade preferences for apparel. While a
turn choose to change buying preferences. company like the VF Corp may have the
out of the total survey, eight out of the top 10 sourcing resources to untangle such regulations a
destinations are in the Southern hemisphere. The USFIA survey SME does not, putting them at a competitive
notes sourcing from the Western hemisphere is increasing. Free disadvantage. The single biggest challenge
trade agreements in the sector remain underutilised. There facing the industry today is uncertainty. It
is slight, though hardly significant, increase in the utilisation seems, America, like the rest of the world will
of NAFTA, CAFTA-DR and AgoA the main three FTA have to wait and watch. n
APPAREL
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COUNCIlMAGAZINE November2018
2018 //19
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AppArel / Trade Treaties
India, Uzbekistan to conduct feasibility study for PTA
I
ndia and Uzbekistan will constitute a other joint business activities.
group to conduct a feasibility study and Indian universities will offer courses in tourism and hotel
commence negotiations for a preferential management in Uzbekistan. Indian companies have been
trade agreement by the end of 2018. Under a encouraged to set up
PTA, two trading partners reduce or eliminate an IT park in Uzbekistan.
duties on a certain number of goods traded To promote investments,
between them. companies and the
The target is to have bilateral trade worth business community will
$1billion by 2020 and to balance the trade be offered incentives.
between the two countries by reducing India and Uzbekistan
the existing trade deficit. The two countries will enhance cooperation in agriculture and allied activities by
will encourage their business communities, way of exchange of technology in crop production, improved
companies and enterprises to participate in water use efficiency, plant quarantine, animal husbandry, food
exhibitions, trade fairs, business forums and processing and agriculture and food trade. n
India to boost bilateral Philippines, US to start

trade with Bangladesh
free trade negotiations by
November
T
he US and the Philippines
plan to start free trade
negotiations by next
month as the two allies
B
angladesh and India will sign the plan to strengthen their
Comprehensive Economic Partnership economic relationship amid
Agreement (CEPA) to boost bilateral uncertainty over security ties.
trade. If negotiated carefully, the deal will Once completed, the free
benefit Bangladesh immensely. The country trade agreement will be the
currently, as an LDC, enjoys zero-duty benefits US’ second in Southeast Asia
on exports to India for all goods except for 25 after the one with Singapore.
alcoholic beverage items. The move comes after
The deal could lead to more Indian both resolved issues around
investment in Bangladesh, more energy a Trade and Investment Framework Agreement, including
cooperation and aid for trade between. India those related to e-commerce. The talks, which could last one
has signed CEPA with some countries like to three years, are part of President Donald Trump’s strategy to
South Korea and Japan and is in negotiations pursue bilateral rather than multilateral trade agreements to let
with the ASEAN (Association of South East Washington secure the best possible deal.
Asian Nations) to hammer a similar deal. The US ranks among the Philippines’ major trading partners.
The CEPA is a greater partnership deal In 2017, bilateral trade totaled around $20 billion, with the US
between two countries or with any trade bloc, registering a $3.2 billion trade deficit, according to the Census
under which special treatment is given in areas Bureau. The Trump administration has been tough in trade
of trade, investment, energy cooperation, negotiations, but Lopez is upbeat on a win-win deal. For the
logistic support and so on. Under the Philippines, a free trade agreement with the US would upgrade
partnership, both countries will work towards the current Generalised System of Preferences scheme wherein
improving logistic and trade-related capacities the U.S. reviews zero-tariff privileges given to more than 3,000
of Bangladesh. n Philippine products every three years. n

AppArel / Trade Treaties
New trade agreement with Canada and Mexico

to boost US textile production
T
extile production in the US will get a boost due to the
agreement signed with Canada and Mexico. The provisions
will also strengthen customs enforcement and facilitate
broader consultation and cooperation among the parties on
issues related to textiles and the apparel trade.
If passed by all three countries, the agreement promote
greater use of made-in-the-US fibers and yarns by limiting rules
that allow for some inclusion of non-NAFTA inputs in the textile
and apparel trade. The provisions require that sewing thread,
pocketing fabric, narrow elastic bands and coated fabric, when trade, including textiles-specific verification
incorporated in most apparel and other finished products, be and customs cooperation provisions, fostering
made in the region for those finished products to qualify for new tools to strengthen customs enforcement
trade benefits. for fraud and circumvention prevention in this
The agreement establishes a textiles chapter for North American sector. n
Study on CPTPP benefits China to reform WTO

to be completed this year
C
hina, with support from the EU and
Japan, is planning to reform the WTO.
A
study on the benefits and impacts of joining the The country wants to curb the rise of
Comprehensive and Progressive Agreement for Trans- unilateralism within the multilateral trading
Pacific Partnership (CPTPP), a newly formed bloc of 11 system represented by the organisation. It
Pacific Rim nations excluding the US, is likely to be finished later feels reforms in the organisation need to
this year. The Trade Negotiations Department has finished public address the concerns of members, especially
hearings held in all regions throughout the country from August emerging economies, which have a larger
to September to gather feedback from stakeholders about the total population than developed countries.
CPTPP. The public hearings highlighted concern about issues The majority of
relating to market access for goods, services and investment; WTO members
intellectual property (IP) protection; public health; investor-state are developing
dispute settlement mechanisms; and government procurement. countries, and
Thai farmers and civil society organisations also vented their each has its own
concerns about the impact of the new pact’s IP chapter that ideas on WTO
prevents them from saving and reusing seeds that contain reform. China, like
patented plant material. other emerging
Various farmer groups also raised concerns about the dumping countries, follows
of agricultural products from other countries on the local market a primary strategy of promoting economic and
and higher competition from imports. Another roadblock was social development. The growing spending
the possible import of genetically modified organisms (GMOs) if power of consumers in developing countries
Thailand joins the new bloc. n injects vitality into the global market.
China supports the work of the WTO
but it is against the changes proposed by
the US, Japan and EU on the notification
system for domestic industrial subsidies.
These countries and groups feel some
WTO members such as China have failed to
comply with a notification system. n

AppArel / cover story
Nearshoring paves a new way for

global apparel manufacturers
W
ith growing costs in ‘cheaper’ in countries like China. The
Asian destinations and the call very purpose of outsourcing
for bringing production nearer to cheaper destinations is lost
home, many Western companies are slowly and nearshoring has gained
shifting manufacturing closer home. It’s considerable ground at least in
a tussle between speed and marginal cost the US and the Europe.
cutting. With nearshoring gaining ground
global apparel industry could undergo a sea Rising nearshoring for US companies
change in near future Nearshoring is now the new kid on the block for outsourcing
For much of the new millennium, of business processes, to companies in a nearby country, often
outsourcing production to cheaper sharing a border with the target country. Economically both
destinations in Asia was the mainstay of countries benefit from each other due to their close proximity
big global businesses based in the US and of location, time zones, cultural, social, linguistic, economic,
Europe. The approach is however, changing political, or historical linkages. Nearshoring and automation
now with cost advantage of Asian countries could be important enablers in achieving a circular value
declining somewhat with rising labor costs chain in the current economic markets of India and the world.

The bigger apparel companies in the US are now setting up

It is not the only luxury brand
nearshore centers in places like Mexico and Turkey which
offer more stability when compared to offshore units in sourcing closer to home in the
faraway countries like Bangladesh, China or Vietnam. Closer US, UK and Europe who earlier
proximity with the outsourcer and the vendor in the same got their supplies from budget
time zone and similar culture and language leads to better suppliers in China, India and
coordination and communication. With frequent visits to
the near sourcing partner as well as lower cost of freight and
Southeast Asia. Affordable
duties due to the closer proximity, companies work better and luxury brands in particular
react to market fluctuations much faster. This is important in are moving production closer
the apparel segment as fashion cycles, which once embraced a to home, as they seek higher-
six-month turnaround, today faces a market that is capped by
quality suppliers as their
a time period of just around six weeks.
For UK brands, many East European countries are customers become more
important nearshoring destinations. Over the years, the fall discerning.
constraints, they are usually preferred than

of all borders created totally new markets as well as low-wage the earlier outsourcing destinations in India
regions. Today, the industry is at crossroads where speed beats and China since they provide greater social
marginal cost advantage and basic compliance is upgraded to and economic stability.
an integrated sustainability strategy. The traditional supply Nearshoring, automation link well
chain setup is now challenged, and as labor costs converge, In the garment industry, consumers are
brands and retailers are starting to rethink their sourcing and currently well aware of the environmental
production models more broadly. impact of traditional linear apparel
production modes and the wastage
Increased nearshoring and more automated production concerning overstock liquidation of various
models have the potential to enable sustainability further and garment segments. Mass-market apparel
support the adaptation of a circular economy in the apparel players that include automation technologies
sector. When choosing a nearshoring model, businesses move and become faster and more sustainable, will
operations or functions to a physically closer but more cost- be successful in the near future. Nearshoring
effective location, with small time-zone differences and fewer is economically viable in many countries
cultural discrepancies. Since these nearshoring countries during market shifts in the apparel and
within Europe are bound by similar financial and legal garment segment. For many n

Increased nearshoring and
more automated production
models have the potential to
enable sustainability further
and support the adaptation
of a circular economy in the
apparel sector. When choosing a
nearshoring model, businesses
move operations or functions
to a physically closer but more
cost-effective location, with small
time-zone differences and fewer
cultural discrepancies.
W
ith growing costs in ‘cheaper’ The bigger apparel companies in the US are now setting up
Asian destinations and the call nearshore centers in places like Mexico and Turkey which offer
for bringing production nearer more stability when compared to offshore units in faraway countries
home, many Western companies are slowly like Bangladesh, China or Vietnam. Closer proximity with the
shifting manufacturing closer home. It’s a tussle outsourcer and the vendor in the same time zone and similar culture
between speed and marginal cost cutting. With and language leads to better coordination and communication.
nearshoring gaining ground global apparel With frequent visits to the near sourcing partner as well as lower
industry could undergo a sea change in near cost of freight and duties due to the closer proximity, companies
future work better and react to market fluctuations much faster. This is
For much of the new millennium, outsourcing important in the apparel segment as fashion cycles, which once
production to cheaper destinations in Asia was embraced a six-month turnaround, today faces a market that is
the mainstay of big global businesses based in capped by a time period of just around six weeks.
the US and Europe. The approach is however, For UK brands, many East European countries are important
changing now with cost advantage of Asian nearshoring destinations. Over the years, the fall of all borders
countries declining somewhat with rising labor created totally new markets as well as low-wage regions. Today, the
costs in countries like China. The very purpose industry is at crossroads where speed beats marginal cost advantage
of outsourcing to cheaper destinations is lost and and basic compliance is upgraded to an integrated sustainability
nearshoring has gained considerable ground at strategy. The traditional supply chain setup is now challenged, and
least in the US and the Europe. as labor costs converge, brands and retailers are starting to rethink
their sourcing and production models more broadly.
Rising nearshoring for US companies
Nearshoring is now the new kid on the block for Increased nearshoring and more automated production models
outsourcing of business processes, to companies have the potential to enable sustainability further and support
in a nearby country, often sharing a border the adaptation of a circular economy in the apparel sector. When
with the target country. Economically both choosing a nearshoring model, businesses move operations or
countries benefit from each other due to their functions to a physically closer but more cost-effective location,
close proximity of location, time zones, cultural, with small time-zone differences and fewer cultural discrepancies.
social, linguistic, economic, political, or historical Since these nearshoring countries within Europe are bound by
linkages. Nearshoring and automation could be similar financial and legal constraints, they are usually preferred
important enablers in achieving a circular value than the earlier outsourcing destinations in India and China since
chain in the current economic markets of India they provide greater social and economic stability.
and the world. Nearshoring, automation link well

The bigger apparel companies

in the US are now setting up
nearshore centers in places like
Mexico and Turkey which offer
more stability when compared
to offshore units in faraway
countries like Bangladesh, China
or Vietnam. Closer proximity
with the outsourcer and the
vendor in the same time zone
and similar culture and language
leads to better coordination and
communication.
In the garment industry, consumers are currently well aware of emerging trend that may factor into nearshoring
the environmental impact of traditional linear apparel production is automation. It points out that although the
modes and the wastage concerning overstock liquidation of various apparel industry is lagging behind other sectors
garment segments. Mass-market apparel players that include but automating processes like sewing could
automation technologies and become faster and more sustainable, reduce labor cost drastically while moving
will be successful in the near future. Nearshoring is economically forward. Automating sewing process, however,
viable in many countries during market shifts in the apparel and may be a slow transition due to technical
garment segment. For many apparel companies whose lead times difficulties with different fabrics, and the already-
are long and production processes laborious and linear, nearshoring low costs of labor. However, other steps higher in
and automation in their manufacturing process works well. the supply chain are ready for a change and this
There is great saving in freight duties and other port charges and includes gluing/ bonding tech, 3D knitting and
frequent visits for quality control is possible because of proximity. automated finishing processes. All these present
For example, an US apparel company that moves production of opportunities for manufacturers to accelerate
basic jeans from Bangladesh to Mexico can maintain or even production while reducing production costs.
slightly increase its margin, without higher full-price sell-through.
For Europe, unit costs remain significantly lower when sourcing Nearshoring vital for high fashion
from Bangladesh but reshoring from China to Turkey is more brands
economically viable. Landed-cost prices for denim, for example, The wave of nearshoring is currently on an all-
can be 3 per cent lower when sourced from Turkey. Onshoring time high as production and manufacturing
production to Germany or the US, however, will not result in costs in the standard low cost countries keep
breaking even. increasing. In 2005, labor costs in China were
A recent McKinsey & Company report reflects, another about one-tenth that of the US but today it is

around one-third. This kind of rise in prices or Bangladesh may cost 20 per cent less than countries like Turkey
in these so-called labour intensive cheaper and Mexico, when you factor in the much shorter delivery times
countries has shifted manufacturing away to from those countries which is just a few days, versus a full month if
nearshore countries of South America where it a brand manufactures in the other countries, it is not economically
is not that much more expensive than in China viable. Shorter lead times yield a number of benefits, creating an
or Bangladesh. Experts feel the average costing added economic bonus in the longer run as the garment factory
to manufacture a basic pair of jeans in China and operates according to seasonal trends.
then to import it into either the US or Germany, Although China has always been the world’s biggest clothing
is around 12 per cent less than making it in exporter because of their cost efficiency as well as being quick
Mexico. For a company looking to import its and reliable, current fashion trends are now redrawing the world’s
jeans into Germany, Turkey was 3 per cent less garment-manufacturing map. As the mass-market apparel sector is
expensive than China. moving to a demand-focused, agile supply model with labor costs
Nearshoring is vital for European high rising, automation will play a key role in increasing labor efficiency,
fashion brands from Paris or Milan-based brands throughput, and flexibility. In the future, automation will be crucial
who earlier outsourced from Asia. Shipment may to increasing the financial viability of on-demand nearshoring or
take eight to nine weeks plus extra for customs onshoring models.
clearance. Given at least a month in production
time and product development at the start, Nearshoring needs more time
a brand will have to make a commitment on to be viable
volumes sometimes six months in advance, Fashion may lag behind other industries in implementing automated
often well before they have knowledge of manufacturing but companies are starting to embrace new
what will sell. A supplier in Eastern Europe, technologies in their efforts to speed up production. Most global
meanwhile, can deliver to a distribution centre apparel sourcing executives feel a big change in nearshoring for speed
in a few days, allowing a company to react to is quite likely by 2025. Mass-market apparel players that embrace
market demands faster. A similar response in automation technologies to become faster and more sustainable will
the US has also seen the growth in suppliers in likely be tomorrow’s winners. For the bigger US companies, Mexico
Central American nations like Honduras and and Guatemala are the prime manufacturing destinations whereas
El Salvador, ranked seventh and tenth biggest Turkey has emerged for labels selling in Europe.
suppliers of US clothing in 2015, according to About four-fifths of nearly 200 global apparel industry sourcing
Textiles Intelligence. President Trump’s overtures executives says “a step change in nearshoring for speed is somewhat
to impose an additional tariff on Mexican and or highly likely by 2025,” reveals a survey by McKinsey & Co. and
Chinese apparel imports may add to demand for The Sourcing Journal, a trade publication, in September. Most
suppliers in Central America. respondents came from companies based in the Americas or
Every manufacturing country provides different Europe. Almost 80 per cent of the respondents also said it’s “highly
costing figures and it is up to the different likely” or “somewhat likely” that “trade agreements change offshore-
companies in the US to choose whichever option onshore equation.” For starters, China has built up a manufacturing
is the most suitable. Even if producing in China infrastructure and capacity that other countries just can’t match.

Some brands are already moving a share of production to nearby The industry is at a crossroads
countries but a large-scale shift might not be possible until those
countries are able to build factories to handle the workload. One where speed beats marginal
of the biggest hindrances is it is these low cost countries in Asia, cost advantage and basic
specially China that make the actual textiles, especially in the case
of specialized fabrics, like those that athletic brands use. Even if US
compliance is upgraded to
companies want to assemble finished garments in Mexico or Turkey, an integrated sustainability
they still have to buy and import their materials from these countries strategy. The traditional
which are far away. With shipping and freight costs and import and
export duties added on, many of the US and European bands are supply chain setup is now
likely to keep their production in Asia rather than move it nearby. challenged, and as labor
The industry is at a crossroads where speed beats marginal
cost advantage and basic compliance is upgraded to an integrated
costs converge, brands and
sustainability strategy. The traditional supply chain setup is now retailers are starting to rethink
challenged, and as labor costs converge, brands and retailers are
their sourcing and production
starting to rethink their sourcing and production models.
A move to increased nearshoring and more automated models.
production models have the potential to enable sustainability
further and to support the adaptation of a circular economy in the
apparel sector. The escalating trade war between the US and China
is also a hindrance. Experts don’t see a quick resolution, and the
fashion industry is settling in with the expectation that the tariffs
the US is placing on goods from China are here for the long term.
In a highly competitive market, a fast, flexible supply chain is
an advantage. It allows brands to respond better to the demands
of internet-enabled shoppers and is the reason why power brands
including Nike, Adidas, Levi’s are changing the way they make
their products and investing in things like automation and moving
items thanks to years of technical production,
production nearshore. Fashion brands have to deliver goods faster
while Morocco is known for its denim and other
than ever are making it more cost-effective for Western brands to
parts of North Africa tend to produce more basic
produce their simple styles in low-cost countries nearer at hand.
apparel. East European manufacturers also allow
mid-sized companies to order lower minimum
New countries emerge nearshoring hubs
quantities per item compared to bigger producers
It is not the only luxury brand sourcing closer to home in the US,
like China and Bangladesh and frequent physical
UK and Europe who earlier got their supplies from budget suppliers
checks on quality issues before the final product is
in China, India and Southeast Asia. Affordable luxury brands in
shipped across is much easier.
particular are moving production closer to home, as they seek
The successful apparel companies of the near
higher-quality suppliers as their customers become more discerning.
future will be those that take the lead to enhance the
Further the fall in value of the Euro versus the dollar makes the cost
apparel value chain on two fronts of nearshoring
advantage in sourcing overseas. Working with suppliers positioned
and automation. Both must be addressed in a
closer to large consumer markets in Europe allows brands to be more
sustainable way as apparel brands and retailers in
responsive to demand, boosting overall productivity both in the US
Europe and the US can no longer do business as
and across the Atlantic.
usual and expect to thrive. Owing to stagnation in
Close to the US, which is considered to be the world’s largest
Western markets and to the internet, competition
consumer market, countries such as Mexico, Honduras, El Salvador
is fiercer than ever, and consumer demand is
and Guatemala are the hot favourites with a mix of low wages,
more difficult to predict. Having the capability to
technical ability and proximity. In Europe, there are some growing
manufacture close to where customers are located
East European counties that are now competing for business with
can also increase customer responsiveness
traditional Asian hubs. Producing items in Eastern Europe provides
and decrease turnaround times, making the
brands from European fashion capitals with flexibility for late
supply chain more predictable. From offshoring
manufacture in order to add detailing according to changed fashion
of yesterday to nearshoring of today to the
trends and also additional volumes if necessary.
rightshoring of tomorrow, time is money in the
Fashion quality in Eastern Europe is generally better than Morocco
demand and supply value chain and companies
and Tunisia, which are known for denim and basic apparels. Also,
will do what suits them best so to each
Romania and Bulgaria are able to produce complex, sophisticated
his own. n

AppArel / Market
Indonesia to be top Muslim fashion center by 2020
I
ndonesia aims to become one of the world’s of the Organisation of Islamic State Cooperation, which is the
Muslim fashion centers by 2020. The country world’s largest Muslim fashion exporter. Others are Bangladesh,
has adopted a strategy to boost growth of Turkey, Morocco
startups in this field. The country’s exports of and Pakistan.
Muslim fashion products increased by 8.7 The market for
per cent in 2017 from the previous period. Muslim fashion
It will continue to encourage Muslim fashion products is
industrialists and designers to continue making expanding. One
innovations by increasing their productivity of the drivers is the
and strengthening their brands to be able to increase of Muslim
penetrate the export market. population in
At present, the Muslim fashion industry is Indonesia and the
projected to be able to absorb 1.1 million of world. The value of
the total 3.8 million fashion industry workers the global Muslim fashion market is expected to reach $327
in the country. Indonesia has the largest billion by 2020. Muslim consumers spend an estimated $230
Muslim population in the world. In addition, billion on clothing - more than the combined clothing markets
Indonesia is among the top five members of the UK, Germany and India. n
Activewear to witness Sale of women’s jeans

steady growth through 2019 increases by 9 per cent
A
s per research by The NPD Group, the market for women’s
jeans has registered a 9 per cent increase in sales in the
year ending July 2018 compared to a year ago. The
overall sales in the $16.4 billion US jeans market increased by
5 per cent in the year ending July 2018 over same period last
year. Both classic and new jean styles played an important role
in growing the jeans category, particularly women’s jeans.
A
ccording to a recently released study of
Future of Apparel by The NPD Group,
activewear, which currently represents
24 per cent of total apparel industry sales, will
grow steadily through 2019. The total sale
of sweatshirts, in the 12 months ended June
2018, increased by double digits and that of
active bottoms by 5 per cent.
This growth is attributed to the fact the
segment has mainstreamed across ages and
demographics. For instance, social shoppers,
a consumer segment identified in the Future
of Apparel report that represents the largest Skinny jeans are still the most preferred women’s jeans with
portion of the population, are indicative of sales of this style increasing by 6 percent over year ago and
the athleisure consumer. They consider accounting for nearly 40 percent of women’s jean sales.
themselves to be social, fashion, and image According to fashionistas and fashion journalists, more fashion-
conscious and activewear is a big part of their forward style jeans, like high-waisted, straight-leg jeans ,cropped
future purchase plans. n flares, ultra-cuff, and denim sweatpants are more popular with
teens and young adults. n

AppArel / Market
UK govt committee to review environmental

initiatives of fashion retailers
T
he UK House of Common’s committee has written to chief written to include Marks & Spencer, Primark,
executives of the UK’s 10 leading fashion retailers to know Next Retail, Arcadia Group, Asda, Tk Maxx
about the environmental initiatives undertaken by these and HomeSense, Tesco, JD Sports Fashion,
retailers to reduce the environmental and social impact of the Debenhams and Sports Direct International.
clothes and shoes they sell. According to the Westminster’s
The companies that the Environmental Audit Committee has environmental audit committee, the Textile
Recycling Association has already submitted
evidence to show that UK uses 26.7 kg per
capita. This compares to a consumption
rate in the next-highest countries of 16.7 in
Germany and 16 in Denmark - and just 12.6
in Sweden.
Also, there are concerns that the demand
for fast fashion is fuelling the need for quick
turn-around in the supply chain, leading
to poor working conditions in UK garment
factories. n
Millennials upturn luxury Forty-five per cent of

business globally the total luxury market
T to be represented by
he surge of millennial buyers is transforming the traditional
demography at shopping malls. Their increasing incomes
and family financial support is allowing the young to shift millennials by 2025
A
from fast fashion to posh clothing and accessories. ccording to a survey of over 3,000
By 2025, millennials and the Generation Z (people born after consumers across China, Europe and
1996) are expected to consume 45 per cent of luxury fashion the US by UBS Group AG, millennials
sold globally. As millennials account for a big proportion of in the age of 18 to 35 years will represent 45
purchases of high-end brands, traditional outlets have undergone percent of total high-end spending by 2025.
a makeover to They contributed to 85 percent of the growth
make them in the luxury market last year.
millennial-friendly. The favorite brands of these millennials
These outlets are include Gucci and Louis
incorporating Vuitton. Although these
a café look. millennials engage
They have has in online shopping,
a check-in area they prefer to shop in
specifically meant physical stores.
for taking photos. Chinese millennials,
Their stores have a major driving force
their own signature behind sales growth,
color, with red being a symbol of fortune and light blue and allocate about 20 percent of discretionary
pastel pink representing youth. income to purchasing luxury goods, a similar
Also as the main customers of these outlets are youngsters, share as older generations. Younger people in
luxury brands are employing people in similar age groups in Italy and the US spend more than their elders. n
managerial positions. n

AppArel / Market
UK apparel industry’s
resurgence stymied by
skills shortage
T
hough it’s difficult for the millennial to employees, totaling only about 90,000 workers. As expected,
imagine the UK as a mass producer of with a big fall in demand, factories across the UK closed down,
clothing and textiles, in the 1970s UK although some firms specialising in tailoring, outerwear and
had a thriving textile manufacturing industry. premium knitwear clung on to British soil.
The industry started to drift slowly by early
1980s when retailers and brands relocated to A revival in the millennium
emerging markets to cut costs and increase In 2007, Zara swooped on to the global market, creating
margins. The bulk of this manufacturing a fast fashion model that others envied. Some retailers and
drifted to China, which effectively began brands started to bring manufacturing – albeit a small amount
churning out goods for markets across the – back to the UK. This resurgence was also fuelled by a newly
globe. In the early 2000s, the UK clothing and found interest in Made in UK products. The emerging BRICs
textiles sector reached its low¬est number of economies (Brazil, Russia, India and China) created a new wave

AppArel / Market
The biggest increase came
from a rise in the number of
of consumers with new spending power, and they desired
British-made goods.
garment manufacturers, to
The biggest increase came from a rise in the number of 3,830 companies, while the
garment manufacturers, to 3,830 companies, while the number number of textile producers
of textile producers increased to 4,030. This growth was increased to 4,030. This
attributed to the rising cost of overseas production, increasing
growth was attributed to
need for supply control and flexibility, and growing demand for
UK-produced clothing. the rising cost of overseas
The number of people employed in textile and clothing production, increasing
manufacturing (including self-employed) was at its highest level need for supply control and
since 2006, at about 132,000. The UK’s decision to leave the flexibility, and growing demand
European Union also encouraged retailers to look closer home
for UK-produced clothing
for sourcing. The weakness of sterling since the Brexit vote –
and the attendant effect on exchange rates – resulted in higher
import costs, and makes buying in pounds from within the UK fill vacancies, and half said their recruitment
a more attractive prospect than it has been for some time. problems in the past two years had related
to small number of applicants with the
Skill shortage a big drawback experience and qualifications required.
A survey of textiles employers by the Alliance Project in In April 2017 ONS Labour Force survey
2015 revealed, 37 per cent firms felt skills shortages were a found the UK’s textiles workforce stood at
barrier to growth. Almost half (49 per cent) reported hard-to- 127,500 across all skill levels, from packing
and warehouse staff to board directors. The

age profile of workforce is another limitation.
A lot of manufacturing workforce is above 40
years. So brands have to make manufacturing
more appealing to young people and urge
them to take it up as a career. The prospect
of Brexit makes predictions about how UK
manufacturing will pan out, tough. But most
analysts remain ¬optimistic. Certainly, the
industry needs to rally together to help keep
up the momentum. n

AppArel / Consumption
Consumer expenditure
on fashion to touch
$72.7 bn by 2022
W
ith growing economic prosperity, distribution of fashion spending was: business attire (28 per
Asean consumers are spending cent), casual wear (26 per cent), shoes (22 per cent), accessories
more on fashion and lifestyle. (12 per cent), travel goods and handbags (8 per cent), and
As per a Euromonitor International survey, spectacles (4 per cent).
consumer expenditure on clothing and
footwear amounted to $ 51.2 billion in 2017 Fashion’s popular retail concepts
in the Asean region. Over the next five years, Concept stores, department stores and multi-brand stores
this figure is expected to grow on an average are dominant distribution channels for fashion in the Asean
7.3 per cent annually to touch $72.7 billion region. Besides bricks-and-mortar retailers, e-commerce has
in 2022. According to HKTDC’s ASEAN become a strong force in the fashion industry.
Middle-income Consumer Survey, more than Concept stores: Concept stores sell well-curated products
half respondents in Jakarta, Kuala Lumpur, matching that store’s special theme. They constantly seek
and Bangkok are expected to spend more unique items to add corresponding accessory labels to their
on fashion items in next two years. The product offerings.

AppArel / Consumption
own sites (H&M and Adidas). Retailers like
Central Group and MAP Group, have also
embraced e-tailing by creating their own
online platforms.
Luxe brands making inroads

Luxury groups such as Louis Vuitton,
Christian Dior, Chanel, Prada, and many
more, usually enter the Asean market by
opening exclusive flagship stores to ensure
total control of brand image. Sportswear
brands, such as Nike or Adidas, mostly expand
through franchisees. Fast fashion brands, like
H&M, Zara, and Uniqlo open brand stores in
major cities.
Upcoming fashion designers either
approach department stores with their
Department Stores: Department stores are an important portfolio or opt for joint promotion events,
fashion distribution channel in Malaysia. Major department such as a trunk shows. Large brands choose
store chains, such as Parkson and Metrojaya, continue to to participate in large-scale iconic fashion
upgrade their product portfolios to include a wider selection shows in the region, such as the Bangkok
of brands attractive to middle- and high-income consumers. International Fashion Fair and Kuala Lumpur
In Thailand, Central Group has: Central Department Store, Fashion Week. Smaller brands showcase their
Robinson Department Store and Zen, as well as managing collections at private fashion events organised
Marks & Spencer and MUJI. The Mall Group operates The by fashionista and public relations consultants.
Mall department stores, Siam Paragon, The Emporium, and Partnering a retailer to host a trunk show is
The EmQuartier. another alternative.
Meanwhile social media has become an
Online retail essential tool for marketing, public relations,
With just three per cent, e-commerce penetration in Asean and customer service. Brands need to
countries online is still only 3 per cent of total retail sales. make sure that their social media content is
The Asean fashion ecommerce market includes classified timely, engaging, and relevant to their target
sites (Mudah and OLX), C2C (Tarad, Tokopedia, Bukalapak, market. They can also hire influencers to gain
Shopee), B2C (Lazada, Zalora, MatahariMall) and brands’ immediate access to the right customers. n

AppArel / Consumer
Well-informed consumers
boost demand for premium
fashion in India
I
ndia’s fashion and lifestyle segment is luxury segment which is likely to command 20 per cent share
estimated at $80 billion and growing in the overall fashion e-commerce market. This exponential
at a CAGR of 10 per cent. Online growth offers brands an opportunity to reap huge benefits.
fashion contributes around 7-8 per cent Meanwhile improvement in logistics, infrastructure and
or approximately $6 billion. It is further convenient payment channels is leading to the growth of
expected to reach $12-$14 billion by 2020 e-commerce in the country. Availability of numerous options at
with the overall retail market at $100 billion. a single click keeps fashion consumers well-informed and on-
The driving forces behind this growth are: trend. However, to carve a niche, one needs to focus on local
changing consumer preferences, brand needs. The country’s youth is influenced by online research
awareness, increase in disposable income, and on current trends, product quality and company’s production
a rise in tech-savvy millennial population. ethics while making purchases. This leads to growin g awareness
about the brand and its quality.
Global brands show the way Rising purchasing power is luring brands to foray in smaller
International brands foraying in India is cities. As an ASSOCHAM study says, the rise in purchasing
leading to the growth of premium apparel and power of Tier II & III cities has attracted many fashion brands

AppArel / Consumer
source of information from social media, and
many seek personalised, targeted promotions
like emails on new collections and discounts
to these markets. Premium brands are scaling up operations, from brands they wish to own.
offering products at attractive price points. People who are Global luxury fashion brands are
aware about brand value and spend lesser than they would partnering premium e-retailers to leverage
have on a luxury brand, are an attractive market for entry-level growing demand. A Euromonitor, Forrester
premium brands. and McKinsey study reveals digital share of
global luxury market will be around 20 per
Brands tap shifting demand cent by 2025.
Changing buying habits have pushed brands to address the
shift in luxury consumer behavior. E-commerce players offering Social media a big
luxury and premium products are aligning their offerings to the influencer
needs of consumers. Internet boom and the penetration of With the spread of social media shoppers
social media have played an essential role in creating awareness spend a considerable amount of time online,
about premium products. Consumers regularly seek the first and 50 to 60 million consumers buy fashion
online. By 2020, this number is expected to
double. A recent BCG and Facebook study
estimates 70 per cent of the branded apparel
in future will be digitally influenced.
India’s luxury spending is at par with the
UAE, far ahead of Turkey, Thailand, and
Argentina, and growing faster than Singapore
and Australia. The country, with its favourable
trade and FDI policies and penetration of
organised sector, is one of the most promising
markets for investors. n

AppArel / Retail
Traditional retailers need new

ways to compete with fast fashion
F
ast fashion has gained ground in the landscape. Companies like Nordstrom JWN and Kohl’s KSS
millennium. The move started by the have already started taking steps in that direction. For instance,
likes of Zara, IDEXY and H&M, has Nordstrom has laid out a new five-year growth plan that is
today catapulted the global fashion industry. clearly influenced by fast fashion. The plan focuses on boosting
The recent success story is of lifestyle brand the company’s e-commerce as foot falls at malls have started
Urban Outfitters, known for catering to a declining. On the other hand, Kohl’s signed a deal with Amazon
young demography through hip and stylish in September 2017, and the partnership has paid off well.
merchandise. Its major success factor has Traditional companies will have to pursue innovation and
been the ability to accurately adapt latest continue making strategic initiatives to stay at the forefront
fashion trends. Similarly, Japanese brand of retailing. Clothing retailers like Kohl’s that make successful
Uniqlo made waves by partnering tennis changes should see growth, while others could be left behind. n
legend Roger Federer. The brand going ahead
would be labeled as a fast fashion brand that
tracks the world’s latest trends.
Traditional retailers lag

behind
Traditional retailers aren’t happy with the
change and understandably so, as fast fashion
brands are forcing other major brand to make
decisions and decide on how to respond to
changes in today’s retailing and clothing

AppArel / Compliance
Oeko-Tex reassures product standards
A
s confirmed by a recent Oeko-Tex study ‘The
Key to Confidence’, independent product
labels such as the Standard 100 or Made in
Green make buying decisions easier and prove that
children’s clothing can be fashionable, child-friendly
and sustainable. According to the study, transparency,
product stewardship, and trust go hand-in-hand when
parents shop for textiles.
The Oeko-Tex system supports brands,
manufacturers, and retailers as they implement
product responsibility strategies and build more
sustainable supply chains. The range of Oeko-Tex
products in testing, certification and product labeling
has increased significantly.
Globally harmonised standards like those in the
Oeko-Tex system set the bar for defining and measuring
textile safety and sustainability. From raw materials
through to the final product, third party certifications
help brands and retailers reassure consumers that global supply chain easily test their organic cotton products for GMOs
products are made in environmentally and socially (genetically modified organisms). Parents represent the most demanding
responsible ways and are safe for people to use. consumer segment of all with regard to product safety and responsible
Oeko-Tex helps companies throughout the production of textiles. n
M&S, British High Commission launch program to promote

gender equality in Indian RMG factories
T
he British High Commission
and Marks & Spencer have
launched a program to
promote gender equality in the
workplace and prevent harassment
in India’s garment and clothing
factories. Phase 1 of the program
focused on two factories in
Bangalore. Phase 2 covered 11
factories in Delhi NCR, Bangalore
and Chennai.
Workers were made aware of
legal provisions guaranteeing their
safety at the workplace, and trained
to educate fellow employees
also. Supervisors at factories
were trained on gender equality,
protecting rights of women and expected to help the garment industry in India and other businesses
how to work responsibly. address gender issues and empower women to have the skills and
These gender centric programs, sharing confidence to take up leadership roles, contributing to a safe and
learning and open source resources, are gender equal society. n

AppArel / Brand Case Study
Burberry takes positive

steps towards sustainability,
circular economy
L
uxury fashion brand Burberry it is not alone in burning its defective, unused stock. Other big
is working hard to transform its players including H&M and Nike too have been following this
business model, which redefines practice to keep their brand value intact.
waste and embeds the circular economy Indeed, counterfeiting is a huge risk for fashion companies
into an industry pierced with fast fashion and the industry is worth $450 billion. UK’s Anti-Counterfeiting
discrepancies. The announcement came just Group says, counterfeiting and theft of intellectual property
after the brand burned more than £28 million fuels drugs smuggling and cases of human trafficking. The
worth of stock over the past 12 months. But Burberry says, they have careful processes in place to minimise

AppArel / Brand Case Study
The Burberry Foundation, set up as an
independent charity, awarded £3 million
to the Royal College of Art to establish the
the amount of excess stock produced. And when disposal of Burberry Material Futures Research Group,
products is necessary, they do so in a responsible manner and the first of its kind in the world, and expand
continue to seek ways to reduce and revalue waste. the Burberry Design Scholarship Fund.
Burberry, which has been included in the Dow Jones The Research Group is one of the first to
Sustainability Index for three consecutive years, is keen to lead utilise Science, Technology, Engineering,
this transformation. Pauline Bohl, Responsibility Programme Art and Mathematics (STEAM) research to
Director, Burberry says the luxury fashion brand is turning to apply radical thinking to invent sustainable
collaboration and innovation to kick start a journey that pushes materials. The program aims to inspire and
Burberry and the industry towards a resource revolution that get the industry to think about the circularity
promotes closed-loop practices. One of the goals for 2022 is to issue and potential.
revalue waste. Burberry recognises the need to address the issue
of waste, which is a huge one for the industry and to invent new Future plans
approaches that view waste as a resource. Burberry is keen for its products to
The company intends to foster business models that keep not only drive circularity but also improve
clothes in use. Luxury is quality, it is built to last and it’s the core sustainability in the supply chain. Another key
of its products and customer expectations. The second focus pillar for the company’s 2022 goals is to ensure
area is creating renewable materials. that 100 per cent Burberry products have at
least one positive attribute. The attributes can
Fashion waste an ongoing issue range from using cotton sourced through the
In the UK, an estimated 300,000 tons of clothing and fashion Better Cotton Initiative, leather from certified
waste ends up in landfill each year. It is largely driven by the tanneries, or ensuring the person who made
fast fashion industry; accelerated production of cheap clothing the garment is paid a living wage. To date,
that encourages consumers to purchase more items frequently. 14 per cent of Burberry products have more
For luxury brands
like Burberry, it is of
paramount importance
that counterfeit products
don’t end up in this high-
turnover cycle.
An Ellen MacArthur
Foundation’s report
reveals UK economy
loses £82 million through
landfilling of clothing
and textiles annually.
Taking due cognizance
of the situation, Burberry
is keen to partner on
solutions that make products more durable and reusable. The than one positive attribute while 28 per cent
company is a core partner of the Make Fashion Circular initiative have one. Burberry is just starting out on this
from Ellen MacArthur Foundation. This is a project to create journey to promote circularity. As Bohl says,
business models which will keep garments in use, utilise materials all consumers are becoming aware of the
which are renewable and find ways of recycling old clothes into impact of their purchasing decisions. There
new products. Companies like Nike and H&M have also signed is an expectation that being in luxury means
up to this initiative. they are doing business in a responsible way. n

AppArel / Brand Retail
Interbrand ranks Louis Vuitton as the world’s

most valuable luxury fashion brand
I
nterbrand has ranked Louis Vuitton as the
world’s most valuable luxury fashion brand.
The list, based on financial performance,
ability to influence consumer spending and
competitive strength, ranks Chanel on the
second position followed by Gucci.
Having a strong point of view in everything
it does, Louis Vuitton has been relentless with
its engagement with millennials and is noted
for investing in people. Similar trends are seen
at Gucci.
China’s domestic luxury market expanded the report and has an ability to connect to cultures and next
by 20 per cent in 2017, with mainland generations. It has cracked the code by having a point of
growth outpacing the rate of purchases view in the market. Luxury is a space of excellence, whether it’s
made overseas. Luxury is the biggest story of fashion, leather or jewelry. n
Lucrative opportunites VF to reshape brand portfolio

A
pparel, footwear and accessories leader VF Corp is
for American Sports reshaping its brand portfolio by selling brand Reef to
the Rockport Group. The company, which owns brands
brands in China like Vans, The North Face, Timberland, Wrangler and Lee,
aims to deliver sustainable, long-term growth and superior
returns to shareholders. It recently sold Nautica and picked up
performance athletic shoe maker Altra. Prior to that, it acquired
Dickies parent Williamson-Dickie and shed its Licensed Sports
Group. In 2016, VF closed the sale of its Contemporary Brands
business, which included the 7 for All Mankind, Splendid and Ella
Moss brands.
B
ig American sports brands face lucrative
opportunities in China as Chinese
infrastructure of sports marketing
vehicles, including platforms such as WeChat,
Alibaba, Tencent and even videos and selfies,
all contribute to the market being ripe for
development.
Since the millennium, China has made rapid
progress in global sports and is expected to Rockport own brands like Rockport, Aravon and Dunham,
surpass the United States by 2024. With as well as the Cobb Hill collection. The company outfits sailors
1.4 billion people, China is expected to soon with high-tech, nautically inspired shoes. It currently employs
dominate the Olympic Games. The country’s nearly 70,000 people worldwide with operations across over
emerging middle-class is hungry for high- 170 countries. Its Responsible Sourcing program is a global
quality products, which has turned it from collaborative approach to sourcing products responsibly
mostly producing to more global branding. n including collaborating with industry partners and multi-
stakeholder organisations across 50 countries. n

AppArel / Brand Retail
British men’s swimwear label Orlebar Brown

acquired by Chanel
A
fter acquiring a 20 per cent stake in F.P. Journe, luxe brand
Chanel has bought British high-end men’s swimwear and
board shorts label Orlebar Brown. The purchase was made
from the label’s founder Adam Brown, the Piper investment fund
and a few minority shareholders. Adam Brown, who founded
Orlebar Brown in London in 2007, will continue to act as the
brand’s creative director, alongside CEO Paul Donoghue.
This acquisition offers an ideal opportunity for collaboration
between Orlebar Brown and Eres. Orlebar Brown could enable
Eres to boost its digital expertise and optimise its omni-channel ago, and 40 per cent of its current sales are
distribution strategy. Orlebar Brown, on the other hand, can benefit generated via its e-tail site. The label has a
from the retail experience and know-how of a long-established brick-and-mortar network of 24 directly owned
player in the high-end beachwear segment. stores in 11 countries, and is also available at
Orlebar Brown was launched as an online brand 11 years over 250 specialised retailers. n
H&M profit declines US retailer Kohl

by 19 per cent launches woman’s
H plus brand Evri
&M’s operating profit declined by 19 per cent in the three
months to August, marking the tenth decline in 12 quarters.
This decline was mainly due its apparel backlogs. Its stock-
in-trade rose by 15 per cent. The company is working through the
excess stocks and will be able to scale back discounting as a
result, even as it irons out its supply problems.
The retailer has taken the market share in most markets,
largely because its new collections have been appreciated by
customers. However, H&M won’t hit its sales growth target of 10 to
K
15 per cent this year.Online sales were a bright spot for H&M, rising
ohl recently launched a woman’s plus
32 per cent, though the retailer still may struggle to reach its target
sized brand. Evri (Easy, Versatile, Real
for a full-year increase of at least 25 per cent because first-half
value and Inspiring) that aims to empower
e-commerce missed that level.
women with stylish and functional pieces for
Weakness among clothing retailers has pitted them in a battle
all shapes and sizes. Evri will offer a deep
to lower prices. Sales at Gap, discount-clothing retailer Primark
assortment of modern wardrobe essentials
and Esprit have been under pressure, and Inditex reported its
and relevant fashion wear that can be worn
weakest sales growth in four years this month. n
from day to night, with Kohl’s signature quality
and value. The brand’s focus on fit solutions
will also ensure an easy shopping experience
to its customers.
The apparel will feature dresses, tops and
bottoms in sizes that take in account both
shape and height, ranging from short to tall,
with additional options available in more
curvy and less curvy. With this brand, Kohl’s
aims to enhance its women’s plus offerings
to customers. n

AppArel / Trends
Streetwear’s growing
popularity sees more brands
jumping in the fray
S
treetwear has constantly been youth culture sells. In fact, its global mainstream dominance has
evolving in unexpected ways. Offering democratised the entire fashion system.
something for everyone, streetwear has
emerged as an important category today.The A lucrative business proposition
market for US urban streetwear in 2015 was As a category streetwear emerged decades ago, but now its
valued at about $80 billion by Statista. A study witnessing a huge growth, despite the advent of new players,
by Bain & Company last October revealed, luxury collaborations, and high-end designers. Wanting to look
high-end streetwear helped boost global sales different, streetwear caters to ones needs by offering limited
of luxury brands by 5 per cent. A takeaway drops or releases by reputed brands like Nike, Supreme and
from the sportswear segment, streetwear is Johnny Cupcakes
the buzzword in fashion today. From heritage The popularity of streetwear can be gauged from the fact
houses to fast-fashion brands, retailers and that Supreme that started out as a skate brand in New York and
big-budget investors, everyone wants a stake never held a runway show, won the CFDA Menswear Designer
in this category. Almost half a century old of the Year Award last June. In fact, the brand’s recent sale
and hyper commercialised, street fashion is saw jackets, sweatshirts, and the coveted Madonna “Justify My
all about youth culture in its truest form and Love” T-shirt sell out in seconds. The Madonna tee retailed

AppArel / Trends
on Supreme’s site for $48, sold out in all Colorways, and was
reselling later that day for $250 on StockX, the ecommerce
resale marketplace. As analyst and insights director of Edited
Katie Smith points out, the shift towards more comfortable
and functional clothing has led to an increase in activewear as
a trend. But with a saturation point in activewear, consumers
went looking for the ‘new cool’ and turned to the street.
Streetwear has a similar casual aesthetic, with a wider and less
sporty silhouette.
In India, popular ‘street’ brands are not more than five
years old. These include: Noughtone, Sahil Aneja, Huemn or
Theorem. Being new incumbents, these brands are yet to make
a mark and will take a long time to shake the designer fashion
system that continues to be dominated by ethnic wear designers.
However, top designers are incorporating street influences to
give a fresh spin to their work. For example, designer Narendra
high-priced, oversized jackets, sweatshirts,

sweaters, and leggings. According to Monitor
Survey, around 92 per cent of consumers
prefer clothes made from natural fibers like
cotton and 66 percent of them willing to pay
more for them.
Streetwear’s luxe makeover

In recent years, luxury labels like Gucci
Kumar went all out on sport influences, using ‘fakes’ as the and Burberry have joined the category. Other
main theme for his last collection. Similarly, more traditional labels like Louis Vuitton are also adding
Indian wear labels like Ritu Kumar and Anita Dongre, embraced streetwear designers to their brand. There
sporty accessories like elongated belts on saris and bum bags are loads of collaborations happening at
and sneakers with everything in collections. the highest levels like Adidas Originals by
Alexander Wang, Topman x Vision Streetwear,
Cotton the first choice Off-White, and Jimmy Choo. This mixing of
Most brands incorporate cotton fabrics into their streetwear high and low brands and price points is been
offerings. However, Supreme’s Fall/Winter collection also done with great effect. These collaborations
includes denim, a cotton corduroy shirt with flannel hood, lend a taste of luxury to shoppers without
printed and oxford button-front cotton shirts, and cotton twill harming the reputation of the designers.
shirts and pants. The brand prefers to stick to natural fibres. Luxury labels will continue to offer streetwear
The Yeezy collection of luxury labels Kanye West has also because that’s what the consumer wants,
been cotton-rich from the beginning. The Kanye and Adidas bringing their designers recognition among
Originals Yeezy Season 1, launched in February 2015, featured these young buyers. n

AppArel / Tech Trends
H&M’s off-price luxury site

‘Afound’ to perk up
company’s bottomlines
H
&M, the $26 billion Swedish apparel been branching out
company, the second largest in the from just selling pocket
world, launched Afound an off- friendly garments
price luxury site that offers goods from well- and accessories. The
known brands at discounted rates. In fact, the brand, which, once was the fastest brand to offer garments
site offers many of H&M’s own wares such and accessories has of late become archaic compared to
as H&M, Monki, and Cheap Monday labels, ‘ultra-fast fashion’ entities like Fashion Nova, ASOS, Boohoo
accessories from and Other Stories and COS. and Missguided, which offer new items every week. The
group’s shares have lost nearly two thirds of its value after
New strategy to boost achieving record highs in 2015. It lagged behind competitors
market value in adoption of e-commerce capabilities and overall approach
The new acquisition is part of H&M to merchandising.
Group’s strategy, which, in recent years, has These losses have compelled the group to not only address

AppArel / Tech Trends
With Afound, H&M is
also planning to adopt
logistical issues but also broaden the roster by introducing
strategies similar to those
& Other Stories, COS and Arket, its more up-market (than of T.J. Maxx, the off-price
H&M) apparel companies, and Nyden, its millennial-focused retailer which, despite its
“affordable luxury line,” among others. Afound is the latest brick-and-mortar exclusive
addition to the list.
existence, has recorded
The $62 billion off-price market is well-established in the
US, with roughly 80 per cent of sales taking place there. As per remarkable revenues in
Euromonitor, in Western Europe, sales in the off-price retail recent years, in large part,
market for the five years leading up to 2017 grew nearly 50 per due to its affordable prices
cent; in Eastern Europe, they were up by over 90 per cent. In and treasure hunt-like
keeping with this trend, H&M Group launched Afound. The idea
experiential shopping
was to create an innovative marketplace in the off-price segment.
then sell them other products. Afound is
H&M’s winning strategy using the same strategy, particularly since
With Afound, H&M is also planning to adopt strategies its H&M Group-branded items significantly
similar to those of T.J. Maxx, the off-price retailer which, outnumber the Gucci and Prada ones.
despite its brick-and-mortar exclusive existence, has recorded As of now, Afound is accessible to
remarkable revenues in recent years, in large part, due to its consumers through two brick-and-mortar
affordable prices and treasure hunt-like experiential shopping. stores in Stockholm and Malmö, Sweden,
Afound is also incorporating another winning strategy from both of which opened in June, and a Swedish-
its liquidation counterparts: the bait-and-switch. Companies specific e-commerce site, which launched at
such as T.J. Maxx are known to routinely offer quantities of “it” the same time. The ecommerce site is planning
bags and other high fashion items in order to lure consumers. to launch additional stores in Gothenburg,
Once shoppers are in its stores, T.J. Maxx, for instance, can Skärholmen and Kristianstad later this year. n

AEPC organises SHS campaign

to spread awareness about the
importance of cleanliness
Dr. A. Sakthivel, Vice Chairman, AEPC has initiated plantation of Sapling/Tree at Jaivabai Girls Higher Secondary School, Tirupur in the midst of Council’s EC Members Mr. V. Elangovan,
Mr. Raja M Shanmugam, Mr. B. Shanmugasundaram, Mr. K.M. Subramaniam, Mr. D.M.Kumar, Exporters, Head Master, Teachers, Students of Jaivabai School, Officials of AEPC & ATDC
T
he Apparel Export Promotion Council The regional offices initiated the cluster level programme
(AEPC), to spread awareness on the which encouraged the unit to maintain cleanliness in the factory
importance of cleanliness, organised premises as well as the neighborhood.
the “Swachhata Hi Seva” (SHS) campaign from During the campaign, officials of AEPC HO and its regional
September 15-October 2, 2018. This campaign offices, briefed about importance of cleanliness and encouraged
included Swachhata camps in apparel units. to keep the clean the near areas, plantation of sapling, use of
The AEPC regional offices also collaborated separate dustbins for disposal of plastics & papers, keep the dry
with the local Municipal Corporations for & wet waste separately, weeding out of old records, to make
identifying the areas in the cluster where there a habit to watch and take steps to keep the work place and
is no waste disposal system. surrounding areas hygienic. n

Swachhata pledge at M/s CTA Apparels, Noida
Swachhata pledge at M/s Sun Star Apparels, Tirupur Swachhata pledge at M/s Swati Exim, Noida
Swachhata Hi Seva camp at M/s Neetee Clothing, Gurugram

Swachhata pledge at M/s E-land Fashions, Tirupur Plantation of saplings at M/s Himanshu Apparels, Gurugram
Swachhata pledge at M/s Raj Exports, Tirupur Swachhata pledge at M/s Cotton Blossoms, Tirupur
Swachhata pledge at M/s Cheer Sagar, Jaipur

Swachhata pledge at M/s Meenu Creation, Noida
Swachhata pledge at M/s Veenar Fashion, Mumbai Swachhata pledge at M/s Global Fashion, Mumbai
Swachhata pledge at M/s B S Apparels, Tirupur Plantation of saplings at M/s RMX Joss, New Delhi
Cleanliness drive by children at AEPC Day care center in Noida

AppArel / Sustainability
Companies adopt sustainable recycling solutions

C
ompanies around the world are The Great Bubble Barrier from The Netherlands has developed
implementing sustainable and business an air bubble screen for use on riverbeds that catches plastic
friendly recycling solutions. American before it arrives at sea. Approximately 80 per cent of the
start-up AlgiKnit makes fibers from kelp that plastic floating in the
can be spun into yarn. The company offers a oceans enters the sea
solution that can transform the highly polluting via rivers. The barrier
textile industry into a circular economy by sends high-pressure air
using biomaterials. After having been used, through a perforated
this seaweed textile can serve as compost or tube on the riverbed, in
animal feed. order to tackle plastic
This also reduces the carbon footprint of the soup. This creates an
clothing industry, because no harmful fiber air bubble curtain that blocks both the stream of plastic waste
particles are lost during washing, such as is the on the surface and the floating micro particles underwater. The
case with polyester. The company is working plastic then floats to the waterfront along the air bubble curtain,
on prototypes of T-shirt and sneakers. where it is collected for recycling. n
New innovations being GOTS co-organises

made in fiber recycling ICSTS in New Delhi
M
echanical and chemical innovations
are being made in industry scale
G
recycling of pre and post-consumer OTS was the supporting partner for the recently held
waste of cotton that also assures the quality ‘International Convention on Sustainable Trade and
of recycled fiber. Standards’ (ICSTS) in New Delhi. The event was convened
The current fiber system is not really by the Quality Council of India (QCI) in collaboration with the
sustainable. Noble fibers such as cashmere, United Nations Forum on Sustainability Standards (UNFSS). The
mohair, and wool are natural and renewable convention focused on the practical questions of leveraging
resources with low impact on the environment. trade, standards, and global value chains as engines of
Segragating these different types of fibers is a sustainable development. It encompassed sustainable
huge challenge to recyclers. trade concept which acquires a broader conception of
Almost 150 million metric tonne of clothes environmental, economic and social sustainability.
and shoes are sold every year worldwide. GOTS is actively working with national and international brands
This huge consumption negatively impacts to bring in more transparency and accountability in textile
the environment. More than 70 per cent of the supply chains. The criteria include traceability, waste treatment,
world’s clothing eventually ends in a landfill, environment, working conditions and other aspects of social
of which less than 15 per cent is collected compliance. This includes prohibition of child labor, excessive
to recycle. Less than one per cent of this is overtime and insistence on fair remuneration and so on. GOTS
regenerated into new clothing. n can help to improve the supply chain interactions; all certified
operations are listed in a public database for sourcing and proof. n

AppArel / Sustainability
Fashion firms to preserve brand value through

eco-friendly initiatives
F
ashion businesses are adopting eco-friendly initiatives to
preserve their brand value. Popular brand Stella McCartney,
in its 2019 Spring/Summer Collection in Paris, has created an
invitation card that explains its use of environmentally conscious
materials in the format of comics. The brand makes its clothes
from sustainable materials such as recycled nylon.
Upcoming brand Marine Serre has used the upcycled method
to create new dresses out of unsold clothing and material.
Designers, in the current age of clothing abundance, feel no
need to use new materials. For them, it is possible to create
outstanding clothing with materials already available. ¥4.2 billion, bringing significant criticism.
Burberry recently announced it would no longer engage in The LVMH conglomerate, with 70 brands
mass disposal of unsold products. The BBC and other media under its umbrella, touts reducing carbon
outlets had reported in July that in fiscal 2017 alone Burberry dioxide emissions and raising the use of
disposed products such as clothing and perfume worth about renewable energy. n
H&M launches new Gap joins public education

campaign Open to All
upcycled capsule collection
U
S-based Gap has joined the public
S
wedish fast fashion giant H&M has launched a new upcycled education campaign Open to All. The
capsule collection which uses discarded workwear campaign is joined by brands like Yelp,
products to make garments such as jackets, chinos and Levi Strauss, Lyft, as well as more than 1,500
T-Shirts. The new capsule collection consists of jackets, work small businesses and 200 nonprofits. There
chinos, tees, sweats and a bags, all made from discarded are over 2,300 Gap, Banana Republic, Old
workwear to create the worn look. Through this collection, the Navy, Athleta, and Intermix stores in the US.
brand highlights unexplored sources to creating new garments Open to All, launched
through the upcycling of workwear. The process saves on virgin in 2017, is a public
materials, climate emissions, water and chemical use. education effort that unites
The project is initiated by Cheap Monday together with and galvanises national
Re:Textile, a project within Science Park Borås in Sweden which leaders in business, civic
focuses on developing structures for circular processes and engagement, and the
redesign in the textile industry. non-profit sector to take a
The new collection will be rolled out from this month through stand for shared American values of fairness
its Cheap Monday initiative, a pilot lab for its sustainability work. and equality. In addition to the business
Released once a year, the capsule collection explores new members, Open to All includes more than
materials and processes to create more sustainable products. n 200 nonprofit members spanning civil rights
and racial justice organisations; lesbian, gay,
bisexual, transgender equality organisations;
health and disability organisations and faith
organisations.
Gap has been ranked as one of the world’s
most diverse and inclusive companies for
the second consecutive year in the annual
Thomson Reuters Global Diversity and
Inclusion Index. n

AppArel / Fiber Fabrics
Next-Gen, innovative fibers

sets the agenda in global
textile industry
T
he introduction of innovative, bottles. Two years ago, Unifi opened a bottle processing facility
environment-friendly materials ranging in Reidsville, N.C., to convert plastic bottles into polyester fiber
from recycled polyester, upcycled and yarn, a year later it expanded its Repreve Recycling Center
and regenerated fabrics, recycled cotton and in Yadkinville, N.C. That gave the company an annual capacity
cellulosic fibers have fast-tracked developments to produce up to 60 million pounds of Repreve and other
in fibers. Some new innovations in fabrics that premier value-added products.
have taken the textile world by storm are: Last year, Unifi recycled over 10 billion plastic bottles and it
now targets 20 billion recycled bottles by 2020, and 30 billion by
Repreve polyester makes a 2022. The company has recycled 10 billion plastic bottles into
mark fiber for new clothing, shoes, home goods and other consumer
One of most striking examples is the products. This fiber is used by many of the world’s leading
development and widespread commercial use brands including New Era, Levi’s, Target and Ford.
of Unifi Inc.’s Repreve polyester fiber made In January 2018, Unifi introduced its Champions of
from recycled post-consumer plastic water Sustainability Award, which is given to 25 brand and retail

AppArel / Fiber Fabrics
Fall, and since then demand has been strong,
partners that used 10 million or more bottles, and 15 textile which prompted plans to increase production
partners use 50 million or more bottles, through the use of capabilities to accommodate it.
Repreve fiber. At the same time, Lenzing will expand its
capacities of Tencel Luxe filament yarn that
Innovative insulation fibres was first launched in the market last year. The
Polartec recently introduced the upgraded Polartec Power company will invest up to $35 million in a
Fill insulation made from 100 per cent post-consumer recycled pilot line at the Lenzing site in Austria.
(PCR) materials. It is a warm, lightweight package insulation that
is hydrophobic, fast-drying and highly compressible. It’s made C.L.A.S.S. shows the way
of proprietary hollow fibers bonded together through a process Increasing the exposure of sustainable
that reduces environmental impact, while simultaneously fabrics is the mission of C.L.A.S.S., which
providing superior insulating properties, durability and hand. recently launched e-commerce on its
When the insulation was introduced a year ago, it featured 80 revamped website, classecohub.org to make
per cent recycled content. Polartec has now upcycled more than recycled, upcycled and repurposed fabrics
1 billion post-consumer plastic bottles into hundreds of fabric from its consortium of mills available to small
styles and category-creating platforms. designers and students to purchase, with
50-meter maximums.
Fibers from recycled materials Among C.L.A.S.S.’s firms whose uptake
Tricia Carey, Director of Global Business Development of materials have been expanded include
at Lenzing says, Tencel with Refibra technology has been Ecotec by Marchi & Fildi’s collection made
adopted by six brands: Country Road, Patagonia, Our of the from already dyed, pre-consumer cotton
Woods, Reformation, Marco Polo and Mara Hoffman, and four clippings that come in 70 colors, and Cupro
more brands are expected to adopt the fiber, which substitutes fiber from Bemberg by Asahi Kasei made
traditional Tencel in the fabric construction. Refibra is made from the transformation of cotton linter bio-
using the closed-loop Tencel lyocell production process and utility waste converted through a traceable
is the only commercially available fiber made from recycled and transparent closed loop process. There’s
cotton and wood pulp. also Re.VerSo, derived from wool and
Lenzing has also expanded the production of its Ecovero cashmere pre-consumer clippings supplied
brand of viscose fibers to its Lenzing Nanjing Fibers facility in by a collaboration of five premium textile
Nanjing, China. Ecovero, a fiber derived from sustainable wood Italian producers, and Roica by Asahi Kasei, a
pulp from certified and controlled sources, has been produced sustainable elastane fiber that uses 50 percent
in Lenzing’s Austrian facility since it was launched this past pre-consumer materials. n

AppArel / Copyright
Weak copyright laws plague

global fashion industry
D
espite its importance in the global outperformed legal developments especially in the US, which
economy, the fashion industry requires fashion companies and designers to become more
hasn’t been able to gain strong IP strategic in their approach to IP protection.
rights and protection. Even countries like the Moreover ambiguities within copyright laws limit the
US haven’t shown any willingness to address protection of designs in different countries. Fast fashion retailers
this issue. And as a few critics say, fashion have attempted to legitimise and defend their production and
designs are not art, and therefore, do not sale of copied designs. Forever 21 was charged over 50 times
require similar protection, or that current by different designers and has never actually lost a case, instead
laws sufficiently protect apparel and luxury resolving lawsuits in settlements. In 2017, the retailer found
brands. Added to that, the rapid turnover itself involved in three of the most significant fashion lawsuits
of new fashion designs makes IP protection of the year with Adidas and Gucci, but this did not deter the
useless because registrations do not typically brand from producing and selling copies of other brands. In
issue until after copied designs reach the fact, in March 2017 Forever 21 went on the offence, making
market. Ease of pirating fashion designs has the bold decision to file suit against Adidas, calling the German

AppArel / Copyright
may also prevent trademark squatting. Not
only has e-commerce attributed to growth
of copycat designs; fast fashion retailers are
sportswear brand a ‘bully’. IP lawyers are keeping a cautious eye also constantly opening new physical stores.
on these cases to see which way the IP pendulum may swing. Research has shown some e-commerce fast
fashion retailers present an astounding 700
Laws vary in each country new styles per week.
James Donoian and Margarita Wallach, McCarter & English, To address fakes, some countries are
LLP in their analysis stated that France is the only country with adopting a new type of protection, simply
full copyright protection on fashion designs. French copyright laws referred to as ‘design rights’ or ‘design law’.
protect ‘any original work expressed in any form’. The French In 2001, the European Union recognised
system provides copyright protection regardless of the medium of an expansive definition of ‘design’: The
the work. In addition ‘originators of all creations of form, even the appearance of a whole or part of a product
most modest, receive a generous bundle of economic and moral resulting from the features of, in particular,
rights for a term of life plus 50 years from creation.’ the lines, contours, shape, texture and/or
Copyright laws in the United States offer minimal protection. materials of the product itself and/or its
In the US, functional objects such as articles of clothing are ornamentation. This concept has since been
not protected by copyright. However, under the concept of adopted by Japan, Brazil, India and Israel.
separability, copyright may protect authorship in pictorial, Under EU law, design protection exists as
graphic or sculptural designs that can be identified separately a registered or unregistered right. A registered
from or exist independently of the utilitarian aspects of the right protects original designs for a renewable
article (ie, when the design can be separated from the garment period of five years, with a maximum
and stand on its own as a copyrightable work). duration of 25 years from the original filing
date. An unregistered right protects designs
Dealing with fakes from blatant copies for a maximum of three
Fashion companies and designers should register their years from the date the design was first made
brand names as trademarks to deter counterfeiting. Ideally, available to the public. As a result, the new
one should prioritise those countries where the brand is design laws offer protection from infringers
or imminently will be sold or manufactured. While certain to both registered and unregistered designs.
jurisdictions recognise common laws, registration provides most In addition, both design rights and copyright
protection; having an already registered trademark means there can protect fashion designs in countries that
is no battle over who has the rights. Filing a trademark early allow for cumulative protection. n

AppArel / Events
Sourcing, Expo, Footwear and Leather Shows to be held in Australia
T
he Sourcing Expo and Footwear and clothing through to made-
Leather Show, to be held from November to-order pieces, fabric
20 to 22, 2018 in Australia will have over and functional textiles.
4,000 trade visitors. The shows will bring Exhibitors are drawn from
together 700 textile, apparel and footwear India, China, Bangladesh,
manufacturers and agents from 16 countries. Pakistan, Hong Kong, Fiji,
The Sourcing Expo will attract sourcing Indonesia, Vietnam, South
managers for Australia’s large fashion retailers, Africa, Taiwan, Turkey,
niche fashion brands, online outlets and Australia, South Korea, Malaysia and Singapore.
designers. It will allow buyers to meet with more India’s Council for Leather Exports will represent the growing
reputable suppliers than they could physically leather industry in India and showcase the quality of the nation’s
visit on an overseas buying trip. The trade-only products at Footwear and Leather Show. This show will provide a
event will showcase a full spectrum of product novel and excellent platform for Indian companies to showcase
and service offerings from off-the-shelf their products to Australian buyers. n
IATF to hold its ninth The 9th Bangladesh Denim

edition in Dubai Expo to be held in Dhaka
T
he 9th Bangladesh Denim Expo with the motto “Simplicity”
will be held on November 7 and 8, 2018 in Dhaka. The expo
will hold three panel discussions that will focus on different
aspects of the topic.
The first of these discussions will dwell on the simplicity of
collaboration between the designers and consumers. The
second will deal with the need for simplifying the standards and
certificates for the
global textile industry
T
he ninth edition of International Apparel besides clarifying
and Textile Fair (IATF), the sourcing hub the procedures
for fabrics, textile, apparels and more, between producer
with exhibitors from 14 countries, will be held and buyer. The
from November 12–14, 2018 at the Dubai third discussion will
World Trade Centre. deal with simplicity
Organised by Nihalani Events Management, in production.
the fair will be attended by over 110 exhibitors. It will discuss
IATF will bring together manufacturers and their the innovation,
agents along with some of the most influential technology and
buyers and designers to the MENA region. The optimised handling
event will provide an extensive platform to connect of resources in the
and network with industry professionals, create industry.
long and promising professional relationship and Since its premiere
giving all exhibitors an opportunity to expand four years ago, the
their business boundaries. Bangladesh Denim
One of the innovations this year is Incalpaca Expo has proven to
from Peru which will showcase their alpaca be one of the major fairs for the denim community. The expo is
yarn. New and past exhibitors from countries known to be an important hub for innovation and sustainability.
including Turkey, China, Thailand, India, It’s 9th edition in November will present 60 exhibitors from all over
etc will showcase fabric, haute couture and the world who will showcase their offerings in material production,
ready-made apparels and garments. n jeans production, chemicals, equipment and technology. n

AppArel / Notifications
Subject: Extension of date of payment of Annual

Subscription for the Financial Year 2018-19
Dear Sir/Madam
At the outset on behalf of the Council we convey our Greetings to you.
We would like to take this opportunity to thank you for being member of the
Apparel Export Promotion Council and allowing us to serve you.
As per the provision of Memorandum and Article of Association and guidelines
on registration of the council, Annual Subscription for financial year 2018-19 be
deposited up to 31st May, 2018.
It may please be noted that it has decided by the component authority to extend
the last date for receiving of Annual Subscription for the financial year 2018-19
from Members and Registered exporters, with additional charges of Rs. 1000/-
plus GST upto 31st March, 2019 as detailed Below:-
Subscription Additional Total GST Total Amount

Amount Charges (Rs.) 18% (Rs.) Payable
(Rs.) (Rs.) (Rs.)
Member Exporters
(Regn. No 8500 1000 9500 1710 11210*
1 to 10000 &
100000 up to 200000
Register Exporter 80000 1000 9000 1620 10620*

(Other than above Nos.)
(* Including Goods & service tax @ 18%)
Arun Kumar Sharma

Joint Director
Ministry Notification
Sub: Seeks to reduce the import duty on parts/
components used in manufacturing of specified
textile machinery to Nil
CBIC is its notification no 72/2018-Cus, dt-28-09-2018 has reduced the
import duty on parts/components used in manufacturing of specified
textile machinery to Nil
For Full Notification: http://www.cbic.gov.in/resources//htdocs-cbec/

customs/cs-act/notifications/notfns-2018/cs-tarr2018/cs72-2018.
6 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE |APPAREL

September
EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 / 57
2018

APPAREL / GST UPDATE
An update on refund under GST

At the option of the exporter provisional refund can be granted
The administration of tax is run through a mechanism thereby of the 90% of the total refund claim in case of export and same
maintaining a fine balance between the revenue collection and will be paid within the seven days of the acknowledgement.
cash follow available to the business. In every tax statute there However if the supplier was prosecuted during five years
has to be a provision of refund for any amount which was not immediately preceding the refund period, the provision of
levy and collected properly or for the amount which by the provisional refund is not available.
process of law is required to be refunded. The Central Goods
and Services Tax Act, 2017 in Chapter XI has dealt with the b. Payment of wrong tax:
provisions of refund elaborately. In this paper we will examine The payment of tax under wrong head is to be refunded and
the concept of refund in terms of substantial law and Rules as any application in this regard will be entertained without
made available under the statute. subjecting the same to the provision of unjust enrichment.
Section 54 of the CGST Act is substantive provision for c. Refund to casual/non-resident taxable person:
claiming the refund. It plainly says that any person claiming Any advance payment of tax paid by the casual/non-taxable
any refund of any tax and interest or any amount may make person is to be refunded if the advance deposit is more than
an application in prescribed manner within two years of the the actual tax liability on supply.
relevant date. Section 54 visualise certain refunds which
are required to be given if claimed within time. Some of the d. Refund to UN and other notified bodies:
situations for claiming the refund in terms of Sections 54 and Section 55 of the CGST Act mandates that tax paid by the UN,
77 of the CGST Act are as follows: consulate or embassy or foreign county or any other person
specified in this behalf here is to be refunded, the relevant date
1. Export of goods or services is before the expire of the six months from the last date of the
2. Supplies to SEZ units and developers quarter in which was supplies were received.
3. Deemed exports
4. Refund of taxes on purchase made by UN or embassies etc.
5. Refund arising on account of judgement, decree, order or Refund of the accumulated credit:
direction of the Appellate Authority, Appellate Tribunal or any
Court. Any credit accumulated on account of rate of tax of inputs
6. Refund of accumulated input tax credit on account of being higher than the rate of tax on output supply (other than
inverted duty structure Nil rated and fully exempted supply) is to be refunded [Section
7. Refund of CGST & SGST paid by treating the supply as 54(3)(III) of the CGST Act, 2017].
intra-State supply which is subsequently held as inter-State
supply and vice versa Interest
Limitation: Any delay in refund attracts interest @ rate of 9% if tax is

ordered to be refunded in terms of Section 54(5) i.e. where
The claim of refund in GST is subject to limitation of two order to give refund came into force after an appellate order
years from the relevant date, in which the claim is to be filed. which attains finality.
The relevant date is defined in the section itself and it may In any other case the rate of interest is upto 6% as notified by
be different in different situations. Section 54(14)(2) define the government. [Notification No. 13/2017-C.T., dated 28-6-
relevant date and claim of refund is to be made with in relevant 2017].
date is as follow.
Documents attached with the refund application:
Refund of tax in following situations :-
Rule 89 sub-clause (2) prescribes any of the list of documents
a. Zero rated supply: as applicable to establish the refund is due to the applicant,any
It means export goods and services or both and supply to SEZ of the documents mentioned in the list can be attached with
developer or to a SEZ unit. the application.
Here the exporter has two options, he may export the goods The refund provision has been dealt with in the CGST Act
with payment of IGST and get the amount refunded as per and Rules adequately and we can hope that the same will
provision of the CGST Act, 2017. In alternative he may export be granted efficiently in order to accelerate the growth of the
under Bond or LUT and claim the refund of Input Tax Credit as trade.
per statute.

APPAREL / GST UPDATE
Changes in Refund Procedure on Export Goods (Amendments in Rule 96(10) of CGST Rules)
If the exporter has availed any benefits under the above said notifications, the exporter shall not be eligible for refund of IGST
paid on export of goods. These restrictions essentially meant that refund of IGST paid on export is available only when no other
export benefit has been taken in procurement of inputs or export goods.
The said rule is being amended vide Notification 54/2018- Central Tax dated 9th October, 2018 by adding the clause “except so
far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme” related to Customs
Notifications 78/2017 and 79/2017. It means that even if an exporter has availed EPCG benefit for import of capital goods under
EPCG scheme, he shall be eligible for refund of IGST paid on export goods under Rule 96 of the CGST Rules.
Rule 89 (4B) has been reworded to make it consistent with Rule 96(10) of the CGST Rules.
Notification No. 53/2018- Central Tax dated 9th October, 2018 restores Rule 96(10) to the position that existed before the
amendment carried out in the said rule by notification No. 39/2018- Central Tax dated 04.09.2018.
The implications of these changes are as under:

1. Exporters receiving supplies of inputs under advance authorization directly without payment of IGST under Notification
79/2017 – Customs are not eligible for claiming refund of IGST paid on export of goods or services. However, this bar shall apply
prospectively with effect from 09-10-2018 only.
2. Exporters receiving capital goods under EPCG Scheme directly without payment of IGST under Notification No. 79/2017
– Customs have been excluded from the bar on refund of IGST imposed under Rule 96(10). In other words, exporters who are
directly importing capital goods without payment of IGST under Notification No. 79/2017 – Customs can follow the IGST refund
route for their exports.
3. However, an exporter who is importing both inputs as well as capital goods without payment of IGST under Notification No.
79/2017- Customs shall be hit by the above bar because of operation of Sr. No. (1) above.
For Full Notifications:
h t t p : / / w w w . c b i c . g o v. i n / r e s o u r c e s / / h t d o c s - c b e c / g s t / n o t f c t n - 5 3 - c e n t r a l - t a x - e n g l i s h - 2 0 1 8 .
pdf;jsessionid=3FAF17971A2CC810651A343D4C3CF343
h t t p : / / w w w . c b i c . g o v. i n / r e s o u r c e s / / h t d o c s - c b e c / g s t / n o t f c t n - 5 4 - c e n t r a l - t a x - e n g l i s h - 2 0 1 8 .
pdf;jsessionid=8D6CE8B920286EF9B1297D2132708AC0

AppArel / aepc event calendar
CALENDAR OF EVENTS - 2018

1 10-13 Novermber, 2018, TAIWAN
2 12-14 November, 2018, DUBAI
International
Textile &
Taipei In Apparel Fair
Style UAE
Taiwan Dubai
Taipai Fabrics
3 14-16 November, 2018, SRI LANKa

4 20-22 November, 2018, AUSTRALIA
Intex South
Asia International
Sri Lanka Sourcing Expo
COLOMBO Australia
Fabrics/Yarn Melbourne
5 09-10 January, 2019, UK

6 14-17 January, 2019, HONG KONG
London
Textile Fair Hong Kong
UK Fashion Week
London Hong Kong
7 16-18 January, 2019, INDIA

8 10-12 February, 2019, UK
International PURE
Garment Fair London
India UK
New Delhi London

BOOK YOUR SPACE
4-7 Febuary 2019

Las Vegas Convention Centre,
3150 Paradise Road,
89109 Las Vegas, Nevada, USA
This one-of-a Kind Convergence

of Fashion’s Global Supply Chain connects
Established and Emerging Brands to
an unparalleled network of
Manufacturers, Materials, Technology, Logistic Solutions & Talent
Contact for further details : Mr. K S Bisht, Jt. Director (Fairs & Exhibition)
Apparel Export Promotion Council Apparel House, Institutional Area, Sector - 44, Gurgaon-122003, Haryana, (India)
Tel: +91 124 2708156(D), 2708000-003, Fax: +91 1242708004, Mobile: +91 9810527747, Email : kbisht@aepcindia.com
The Application form may be downloaded from our website www.aepcindia.com (Highlights Section)
Limited Stalls available on First Come First Serve Basis

Is Apparel Coming Home?: Manufacturing

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EAI 01 ISSUE 08

Final_All_Pages.indd 1 10/31/2018 3:37:32 PM

With the peak season approaching, it is

HKL Magu, Chairman, AEPC

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 /1

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16| TRADE WAR

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APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | August 2018 / 3

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APPAREL / THE BrOADCAST

RMG exports were to the tune of USD 1103.32

In rupee term export for the Month of September

India’s RMG export to World in the April-September

India’s RMG Export to World

Source: DGCI&S, Kolkata, 2018

4 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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INDEX OF INDUSTRIAL PRODUCTION

APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 / 5

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AEPC seeks BASA inclusion and

6 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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Credit Limit upto $2.5 million.

80% invoice value upfront

Apply now on Speak to our Export Finance Advisor

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Richa Global awarded with

8 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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Rupee on a free fall,

10 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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IMF cuts global growth forecast

Increase in domestic US trade deficit increases

12 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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Bangladesh earns 142 per cent more from

Vietnam exports increase

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14 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018 / 15

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US imposes tariffs on wool and related products

US tariffs to affects US-China trade war to

16 / APPAREL EXPORT PROMOTION COUNCIL MAGAZINE | November 2018

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India raises import tariffs to reduce current account deficit

Sri Lankan VAT on imported fabric reduced to 5%

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India, Uzbekistan to conduct feasibility study for PTA

India to boost bilateral Philippines, US to start

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New trade agreement with Canada and Mexico

Study on CPTPP benefits China to reform WTO