Category Archives: Editorials

Regional Comprehensive Economic Partnership: Dangerous For India?

GDJASUJAThe 10-member Association of Southeast Asian Nations (ASEAN) has free trade agreements with six partners namely People’s Republic of China (ACFTA), Republic of Korea (AKFTA), Japan (AJCEP), India (AIFTA) as well as Australia and New Zealand (AANZFTA). The Regional Comprehensive Economic Partnership (RCEP) was established by the 16 participating countries on the basis of existing ASEAN+1 FTAs with the spirit to strengthen economic linkages and to enhance trade and investment related activities. RCEP negotiations started in 2012 and participating countries included ASEAN members – Indonesia, Malaysia, Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar, Cambodia – and six Asia-Pacific countries with which ASEAN has free trade agreements – Australia, China, India, Japan, South Korea and New Zealand. Continue reading Regional Comprehensive Economic Partnership: Dangerous For India?

Exclusion of India from GSP Could Be a New Beginning For Exporters

GDJASUJAThe United States has decided to remove India from the list of eligible GSP countries. The reason for this move is that the Trump administration feels that India has failed to provide the United States with assurances that “it will provide equitable and reasonable access to its markets in numerous sectors.” The Generalized System of Preferences (GSP) is a U.S. trade program aimed to promote economic growth in the underdeveloped or least developed countries and also in the developing countries by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP is in existence since January 1, 1976. The scheme provided India tariff-free access to the US market. All benefits have stopped since June 5, 2019. India had been the largest beneficiary nation under the GSP and exported goods worth $6.35 billion every year. Continue reading Exclusion of India from GSP Could Be a New Beginning For Exporters

Fresh Thinking is Needed to Guarantee “Living Wage”

GDJASUJAMillions of workers across the globe are deprived from the minimum wage required to live a decent life. For them, the Living Wage, a voluntary pay rate set above the statutory minimum wage, is still but a distant dream. Many employers who do not pay the Living Wage argue that they simply cannot afford to. According to them, a minimum wage destroys jobs, particularly for the young. Is their argument about greed – the quest for maximum profit from the bodies and labor of others? We are NOT talking about vulnerable persons who fall victim to traffickers, from desperation, deception, or coercion. Continue reading Fresh Thinking is Needed to Guarantee “Living Wage”

GSP: Altering Preferential Status is ‘Significant’ or ‘Insignificant’?

GDJASUJAThe US administration’s withdrawal of the generalized system of preferences (GSP) status for India is being discussed by all the stakeholders including exporters of ready-made garments because the US accounts for 30-35% of exports of this sector. There is no clear indication as to how much negative impact this would cause on India’s exports to the US, if at all there is going to be any effect. Around $5.6 billion worth of exports from India – covering 1,784 textiles, engineering, gems and jewellery and chemical products – will be impacted when the decision comes into force by May this year. If we look at the pattern of the decision making involved in this case by the US Department of Commerce, it is abundantly clear that the process was initiated after the US dairy and medical devices sectors lobbied against India’s so-called trade barriers affecting their exports. If the statement of the US commerce secretary, Wilbur Ross, is any indication, the final trigger could have come when India announced ‘stringent e-commerce rules’ that negatively affected two of the giant US companies – Amazon and Walmart-owned Flipkart. Continue reading GSP: Altering Preferential Status is ‘Significant’ or ‘Insignificant’?

“Manchester of the East” Gets New Textile Policy

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First the ritual statement: The Textiles industry is the second most important economic activity in terms of employment generation after agriculture. It contributes 15% to the country’s total export earnings and has a 7% share in the total industrial output. Gujarat is the largest producer of Manmade Fibre, Synthetic Fabric and Denim. The state contributes about 12% to the country’s total textile exports. Gujarat contributes 35% to India’s total cotton production and 50% to the total manmade fibre production. Gujarat accounts for around 30% of India’s fabric production coming from the mill sector. Gujarat, with more than 30 sanctioned textile parks, ranks second highest among all the states. Moreover, Gujarat accounts for about 40% of the total MMF fabric production and about 25% of the country’s total output of technical textiles. In view of these facts, the government – both at central and state levels – must consider measures to support the industry which provides livelihood to millions of people.

“Moralization” or “Re-moralization” of Globalization?

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The World Economic Forum Annual Meeting is being held from 22—25 January 2019 in Davos-Klosters, Switzerland. The 2019 event will focus on the theme, ‘Globalization 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution’. The stated mission of the World Economic Forum is to improve the state of the world. I came across a statement of Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, in which he says a “re-moralization” of globalization is needed. He said globalization produced many “winners” over the last generation or so. “But now we have to look after the losers, after those who have been left behind.” The intensity of this revealing statement drove me to write this piece and its title in the form of a question is equally revealing. This question needs to be earnestly answered if any meaningful dialogue has to happen for the required course correction.

East Africa: Potential Opportunities for Investments in Textile & Clothing Sector

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For East African countries, duty-free incentives for exports to the US under the African Growth and Opportunity Act (AGOA) provide an immense opportunity to integrate the currently fragmented cotton-textile-apparel value chain and bring remarkable trade and economic growth to the region. The existing value chain is underdeveloped and incomplete despite the fact that the region has a potentially growing cotton sector and a vibrant export-oriented apparel industry. The sector has largely remained underdeveloped. It is reported that seventy percent of cotton produced in the region is exported, while export-oriented apparel factories in East Africa have to rely on imports instead of local supplies. Key textile inputs, accessories, and machine parts also have to be imported. This has resulted in higher costs, long delivery times, outdated technology, shortage of skilled manpower, and overall inefficiency in the sector which is characterised by the high-volume, low-margin market segment. Within the East African region, Kenya and Ethiopia are believed to be the top sourcing destinations of greatest interest to global buyers. Hence, they have the highest potential to achieve regional integration of the cotton textile apparel value chain. Kenya and Ethiopia have a rapidly growing garment sector with companies focussed on exporting to the US.

Time to shift into the reverse gear?

GDJASUJAIn good old days, Direct mail used to be a tool to generate sales, and now it’s moving customers from their desk top or mobile into stores. Stores remain a key part of the customer experience. Even now, consumers are more comfortable shopping clothes in stores and they can perhaps motivate Amazon to open up its own fashion apparel stores, featuring Amazon private labels. Or, Amazon might just buy an already existing chain of retail stores. The journey from Brick-and-mortar —-> Online —-> Online + brick-and-mortar….Amazon's Great Indian Sale 2018 Continue reading Time to shift into the reverse gear?

Exploring Safer Chemistry for Textile Industry

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Thanks to the EU’s tough policies with regard to the use of hazardous chemical substances in textiles, consumers of textiles and clothing in advanced countries have a pretty good idea about the complex chemistry embedded in their clothes involving chemicals detrimental to the health and the environment. The EU’s REACH regulations have successfully created global awareness about the need of using safer chemicals in the industry. These laws enacted by the EU have now become almost mandatory for textile and apparel manufacturers the world over who wish to export their products to these countries and those who aim at achieving high reputation.

The Global Village is Breaking Up

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The liberalization, privatization and globalization (LPG), as we know today, was the brainchild of some of the most developed countries aimed at tremendously enhancing their market reach. The advancements in technology as a result of extensive research and development helped them to invent novel new products and services that could have huge potential globally. So, the idea of free market was floated in a way that would sound as a path towards prosperity for most countries around the world – a win-win for all. The market restrictions prevented them to scale up their businesses beyond their borders but slowly, other countries started easing up in the hope of selling their own products also to the developed world at lucrative prices.