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

17-05-2019 77.35 (+0.50)

16-05-2018 92.05

16-05-2017 94.90

New York Cotton Futures (Cents/lb) As on 21.05.2019 (Change from

previous day)

July 2019 68.04 (+0.13)

Oct 2019 65.99 (-0.40)

Dec 2019 66.88 (+0.50)

21st May

2019

New system of measurement units now operational

WTO quarterly trade growth indicator still at nine-

year low

Surat takes big leap in manufacturing women’s wear

Italy's fashion industry growth stalls due to trade

tensions

Cotton and Yarn Futures

ZCE - Daily Data (Change from previous day)

MCX (Change from previous day)

May 2019 21330 (+60)

Cotton 14525 (-215) June 2019 21570 (+60)

Yarn 22645 (-485) July 2019 21740 (+70)

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2 CITI-NEWS LETTER

-------------------------------------------------------------------------------------- Additional tariff of 25% imposed by the US on China is an opportunity for

Indian textile exporters: CITI

Upload daily reports online or lose licences: Maharashtra to pvt markets

New system of measurement units now operational

WTO quarterly trade growth indicator still at nine-year low

Surat takes big leap in manufacturing women’s wear

Next govt should abolish MSP in 3 years, cut corporate tax to 5 pc: Surjit

Bhalla

‘US withdrawal of GSP not to have long-term effect on bilateral trade’

EU firms caught in crossfire of US-China trade war

Delay in cotton sowing may hit dept’s target

Warning signals from the external front

Bag a bargain

The national focus needs to be on the economy now

Art of commuting

---------------------------------------------------------------------------------- Tariffs: How to weigh in on duties planned for home textiles

Nigerian Garment Manufacturers Would Benefit Greatly From AGOA Textile

Visa Stamp-Awolowo

Italy's fashion industry growth stalls due to trade tensions

Trade between Eastern Europe, Vietnam hit $10.1 bn in 2018

China’s loss in specialty chemicals benefits India

Focus on Industry 4.0 at ITMA 2019

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

NATIONAL

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

GLOBAL

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3 CITI-NEWS LETTER

NATIONAL:

Additional tariff of 25% imposed by the US on China is an opportunity for

Indian textile exporters: CITI

(Source: KNN India, May 20, 2019)

With the ongoing trade war between US and China, textile exporters in India are

optimistic that the additional tariff of 25 per cent imposed by the US on China has

opened up the trade opportunities for India.

According to Confederation of Indian Textile Industry (CITI) analysis, the list of notified

$ 200 billion imports from China on which additional tariff imposed by the US places

Indian textile exporters at an advantageous position.

Of the $200 billion of imports from China, textile items comprise just $ 3.9 billion of the

value, but it still provides enough scope to exporters in India, said Sanjay Jain,

Chairman of CITI.

Whereas, USA’s total imports of these textile products from India is approximately US$

1.71 billion in 2018, which is 43% of USA’s imports from China. Out of the total textile

products, cotton textiles account for the largest number of tariff-lines (520 at 10 digit

level), he added.

In terms of value, the most imported products belong to floor coverings, nonwoven

cordage and manmade filaments, Jain pointed.

Home

Upload daily reports online or lose licences: Maharashtra to pvt markets

(Source: Nanda Kasabe, Financial Express, May 21, 2019)

Private markets in Maharashtra will now have to upload their daily sales reports on the

website of the State Marketing Directorate, failing which they stand to lose their

licences.

Private markets in Maharashtra will now have to upload their daily sales reports on the

website of the State Marketing Directorate, failing which they stand to lose their

licences.

A decision to this effect was taken at a recent meeting of the stakeholders with the

marketing directorate. Confirming this development, AL Gholkar, joint director,

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4 CITI-NEWS LETTER

Marketing, State Marketing Directorate told FE that uploading the daily sales

information is one of the pre-conditions when the licences are granted to such markets.

Maharashtra now has 57 private markets, he said, adding that although these markets

are slowly beginning to find their feet, it was noticed that several such markets did not

upload any information. An in-built software now ensures that notices are automatically

sent to such markets in the event of their failure to upload their daily reports within a

period of 15 days, he said. Around 307 Agriculture Produce Market Committees and 57

private markets will henceforth have to upload daily reports online. The markets will

have to upload information on the commodities that have been brought in for sale, daily

market prices and the sales concluded for the day.

Senior officials said that this would also make it easier for the farmers to decide if they

wished to sell their produce in these markets based on the market prices. The meeting

was also called to collect financial information from these markets to mark the end of

the fiscal.

At present, around 250 market committees upload information on a daily basis online.

The turnover of private markets has gone up from `1,500 crore to `5,000 crore for the

financial year 2018-19.

Although Maharashtra encouraged private markets, the state marketing directorate had

no direct hold over such markets since the information was not available. The

directorate therefore has begun taking steps to monitor the functioning of these

markets. These were meant to overcome the monopoly of agriculture produce market

committees and bring in professionalism in the functioning of such markets. There are a

total of 307 agriculture growth trading yards and 600 sub-yards as compared to barely

57 private markets in the state. APMCs have been in existence for over 50 years while

private markets are new to the state since the last 5 years.

The private markets deal in most commodities including soybean, maize, pulses and

foodgrains. The Directorate has now approached the state government seeking creation

of branches at the district and taluka levels for establishing ground level framework for

this purpose.

Gholkar said the Directorate has sought additional staff of 10 people at the district level

so that they could monitor operations and also promote the concept of private markets

and direct marketing licences. The Marketing Directorate currently only has a head

office and daily operations are taken care of by District Deputy Registrars for whom this

is an additional charge and therefore not a priority.

Farmers also are not aware that such options exist and they can go to private markets to

get better prices, he added.

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5 CITI-NEWS LETTER

The state has issued licences for 57 private markets, 1,000 direct marketing licences and

35 single licence holders, Gholkar said. If the government agrees to expand the scope of

direct marketing, agriculture marketing in the state can get the required push, he added.

Home

New system of measurement units now operational

(Source: Business Standard, may 20, 2019)

The new System of Units (SI) to measure weight, temperature, amount of substance,

and current came into operation in India from Monday on the occasion of the

World Metrology Day, an official release said.

The resolution to redefine four of the seven base units - the kilogram (SI unit of weight),

Kelvin (SI unit of temperature), mole (SI unit of amount of substance), and ampere (SI

unit of current) - was adopted at the 26th General Conference on Weights & Measures

(GCWM), which is comprised of 60 member countries, in November 2018.

"This decision has now enabled scientists and researchers to base the SI units entirely

on fundamental properties of nature, which will ensure their ongoing refinement and

improvement for years to come," the Science and Technology Ministry Ministry said in a

release.

"The fundamental constants are invariants of time and space and successfully replaced

the artifact-based units, and aptly opened up the new era for quantum world by linking

all seven base units to fundamental constants/quantum standards."

The existing definition of the kg is over 130 years old. The new SI system, which is

defined in terms of Planck's constant, would be stable in the long term and practically

realisable.

The new SI System will be helpful in bringing in accuracy while dealing with

international trade, biotechnology, high-tech manufacturing and human health and

safety.

The new definition of kg involves accurate weighing machines called 'Kibble balance',

which uses Planck's Constant to measure the mass of an object using a precisely

measured electromagnetic force.

Home

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6 CITI-NEWS LETTER

WTO quarterly trade growth indicator still at nine-year low

(Source: The Hindu BusinessLine, May 21, 2019)

The World Trade Organization’s quarterly outlook indicator showed on Monday that

global goods trade growth was likely to remain weak, with a reading of 96.3, unchanged

from February, the lowest since 2010.

“The outlook for trade could worsen further if heightened trade tensions are not

resolved or if macroeconomic policy fails to adjust to changing circumstances,” the WTO

said, adding that the latest indicator did not reflect major trade moves in the last few

days.

Below-trend growth

A score of below 100 in the indicator, a composite measure of seven drivers of trade,

signals below-trend growth in global goods trade, which the WTO’s April forecast

estimated at 2.6 per cent this year, the mid-point of a forecast range from 1.3 per cent to

4.0 per cent.

But WTO economists warned that there were several scenarios that could pull trade

growth towards the bottom end of that range, including worsening trade tensions

between the US and China, or Britain leaving the European Union without a deal on

their future relationship.

Since April there has been no resolution to the Brexit impasse and US President Donald

Trump has ordered a massive increase in tariffs on Chinese goods and said car imports

are a national security threat, although he postponed a tariff he had threatened to

impose on cars from around the world.

Trade volume

The quarterly indicator is based on merchandise trade volume in the previous quarter,

export orders, international air freight, container port throughput, car production and

sales, electronic components and agricultural raw materials.

Home

Surat takes big leap in manufacturing women’s wear

(Source: Times of India, May 21, 2019)

The country’s largest man-made fabric (MMF) hub in Surat has taken a big leap from

manufacturing saris and dress material to readymade garments. About 100 readymade

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7 CITI-NEWS LETTER

garment manufacturers from the city have come under one roof to take on their

counterparts in Ahmedabad, Jaipur, Kolkata and Delhi. More than 105 shops of

readymade wholesale garment will be inaugurated at the supermarket located in the

textile hub of Ring Road on Tuesday where garments including gown, legging, jeggings,

kurtis, salwar kameez, plazzo sets, Indo-western etc. will be made available to the buyers

from different states on wholesale rates. Anoop Agarwal member of Surat Readymade

Garment Manufacturers Association (SRG) told TOI, “Surat is fast emerging as the

readymade garment hub in Gujarat after Ahmedabad. There are over 200

manufacturers making complete range of ladies wear products.” Agarwal added, “Two

years ago, the annual turnover of readymade garments in the city was pegged at Rs 400

crore, which has seen a phenomenal rise to Rs 1,500 crore in 2018-19.”

The garment manufacturers said that they have advantage over other garment

manufacturers in other parts of the country as they have wide range of synthetic fabric

available to suit different quality and products of ladies wear.

Home

Next govt should abolish MSP in 3 years, cut corporate tax to 5 pc: Surjit

Bhalla

(Source: Business Standard, May 20, 2019)

The next government should reduce corporate tax by 5 per cent, should expand income

support scheme, abolish the minimum support price (MSP) mechanism in the next

three years and bring reforms in agriculture sector, noted economist Surjit Bhalla said

Monday.

An estimated 61 crore Indians voted during the seven-phase general election. The

counting of votes is slated for May 23.

"The next government should cut corporate tax by 5 per cent, should expand income

support scheme formers, abolish MSP in the next three years. There should be zero

interference in agriculture.

"The cost of capital and corporate tax in India is high. The RBI is on misguided path for

certainly 5-6 years. We can't have effective real interest rate of 3.5 per cent," he said

while speaking at an event organised by industry body FICCI.

Bhalla further said India's potential growth rate is around 8-8.5 per cent per annum.

The former Economic Advisory Council to the Prime Minister (EAC-PM) member also

said India is unlikely to fall in the middle income trap.

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8 CITI-NEWS LETTER

"Middle income trap concept is the most misunderstood economic concept and Indian is

not heading towards middle income trap," Bhalla said.

Recently, EAC-PM member Rathin Roy had said the Indian economy is heading for a

structural slowdown.

On the US-China trade tensions, he said China has taken undue advantage of the world

economy for a long period and it is now paying for extra advantage it took earlier.

Terming the ban on cow slaughter as anti-Muslim, Bhalla said this policy needs to go as

it is hurting Indian economy also.

"This anti-Muslim policy called banning of cow slaughter is despicable, and policy needs

to go. It's hurting Indian economy, its hurting Muslims," he said.

Asked to rate performance of Prime Minister Narendra Modi, Bhalla said it is the most

inclusive government that any country has seen in the past 4-5 years.

"Modi needs to look as a visionary and in the same league as Singapore's Lee Kuan

Yew. He has the vision and mission and getting majority(in the general election) is very

much part of the mission," he said.

Home

‘US withdrawal of GSP not to have long-term effect on bilateral trade’

(Source: the Hindu Businessline, May 20, 2019)

Withdrawal of GSP (generalised system of preferences) by the US administration will

have a short-term effect on bilateral trade, but the disadvantages will even out in the

long term, said KV Kumar, Chairman and CEO, Indian American International

Chamber of Commerce (IAICC).

“In the long term, business will take care of itself. There may be short-term impacts of

GSP withdrawal,” he told the media here on Monday.

Trade volume

Bilateral trade in goods and services has registered a 12.6 per cent rise to $142 billion in

2018, compared with $126 billion in 2017.

The target is to take it to $500 billion by 2023-24.

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9 CITI-NEWS LETTER

The IAICC works with entrepreneurs, professionals, businesses and governments to

develop entrepreneurship and commerce through mentor-protégé programmes,

seminars, etc.

According to Kumar, one of the major disadvantages that India faces in the US is the

absence of “lobbying” and “proper marketing of its goods and companies.” In fact, other

countries have been much better at lobbying and marketing themselves because of

which their voices are heard more often, he added.

“India is not doing enough when it comes to lobbying in the US. Some countries are

known to spend millions of dollars on marketing themselves,” he said. Speaking on the

rising trade tensions between the US and China, Kumar said “China is now a strong

country” and it was a matter of debate whether trade concessions should continue or

not.

MoU with Bengal Chamber

Meanwhile, the Bengal Chamber has signed an MoU with IAICC with a view to offering

greater trade advisory services to small businesses of India and the US.

The Chamber could collaborate in facilitating B2B connects between American

businesses and its Indian counterparts from East and North-East.

According to Kumar, a plan is afoot to build a B2B platform, which will help small

businesses tap the global market.

Home

EU firms caught in crossfire of US-China trade war

(Source: The Hindu Businessline, May 20, 2019)

European firms are caught in the crossfire of the US-China trade war and fewer are

optimistic about their future in the world’s second-largest economy, a business survey

showed, on Monday.

The clash between Beijing and Washington does not benefit European companies,

contrary to what some might have hoped at the beginning of the dispute last year,

according to the European Union Chamber of Commerce in China.

“Now the trade tensions are seen as another uncertainty on the business environment,

something that won’t be sorted out quickly whether there is a deal or not,” said

Charlotte Roule, Chamber Vice President.

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10 CITI-NEWS LETTER

“The trade tensions, according to our members, are not good for business,” she said.

According to the survey, the trade war is one of the top concerns for European firms in

China, about 23 per cent(23 per cent), after the Chinese economic slowdown (45 per

cent), the global economy (27 per cent) and rising labour costs in China (23 per cent).

The study, which received replies from 585 firms, was conducted in January, as trans-

Pacific trade tensions eased.

They ratcheted up again in early May with the United States and China slapping steep

increases in punitive customs tariffs on each other.

But early this year, a quarter of European companies in China said they were already

suffering from the US increase in tariffs on Chinese products.

Many European companies manufacture products in China and export them all over the

world.

A small number (six per cent) have already relocated to circumvent the US penalties, or

are planning to do so elsewhere in Asia or Europe.

But Europeans say they share many of the grievances raised by the Trump

administration in its campaign against Beijing.

“The fundamental issues driving the trade war need to be resolved by addressing market

access barriers and regulatory challenges while also tackling SOE reform and forced tech

transfer,” Roule stressed.

Technology transfers

Around 20 per cent of the companies surveyed, complained of being forced into

technology transfers for the benefit of a Chinese partner, double the figure two years

ago.

“The authorities are saying there are no technology transfers any more but this is not

what we see in our survey,” she said.

Chinese foreign ministry spokesman, Lu Kang, reiterated Beijing’s denial.

“We do not have a national policy of forcing foreign companies to transfer technology,”

Lu said at a regular press briefing as he recalled the country’s rubber-stamp parliament

adopted in March, a foreign investment law that prohibits the use of “administrative

means” to force the transfer of technology.

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11 CITI-NEWS LETTER

More than half of the companies said legal protection of intellectual property was

inadequate, and 45 per cent say they suffer unequal treatment compared to their

Chinese counterparts.

State firms and their subsidies are their main bone of contention.

The Europeans largely accuse these companies of enjoying preferential treatment, with

62 percent saying they have better access to public contracts.

And the outlook is getting gloomier: only 45 per cent of the firms surveyed say they are

optimistic about growth prospects for their sector over the next two years, compared to

62 per cent a year ago.

Half do not expect to see a level playing field in the next five years or even beyond.

Fifty-three per cent say business has become more difficult in the past year, up from 48

per cent a year ago, with ambiguous rules and regulations topping the list of obstacles

cited by companies.

Difficulties with access to the internet, which is closely monitored and censored by the

Communist government, is an unfavourable factor for 51 per cent of respondents.

Despite the problems, China remains one of the top three global destinations for future

investment by 62 per cent of the surveyed companies, a slight increase from last year,

while 56 per cent plan to expand their business in the country this year.

Home

Delay in cotton sowing may hit dept’s target

(Source: The Tribune, May 21, 2019)

Though the Agriculture Department last month revised its target area for cotton

cultivation at 4 lakh hectares, experts say it is unlikely to achieve the same, particularly

in view of the fact that the cotton sowing has already got late due to delay in harvesting

of wheat in the state. As per PAU recommendations, the ideal time for sowing cotton is

before May 15.

Interestingly, the department had earlier set a target of 3 lakh hectares, but later

increased it in view of increase in cotton prices at the fag-end of the season. The

department felt that it may persuade more farmers to opt for cotton farming in the

Malwa region.

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12 CITI-NEWS LETTER

However, talking to The Tribune, former North India Cotton Association president

Ashok Kapur said, “Cotton sowing has been a rather low key affair this time, primarily

due to delay in harvesting of wheat crop in the aftermath of a spell of rainfall last month.

Besides, the election too seems to have taken a toll on sowing activity.”

He felt that the Agriculture Department has pegged the target area on the higher side, as

he doesn’t expect the area to increase from 2.84 lakh hectares in 2018-19 to 4 lakh

hectares in 2019-20. He, however, said the area might cross 3 lakh hectares this time. “It

is true the farmers fetched a price of above Rs 6,000 per quintal when the season was

coming to close, but they were the ones who had holding capacity. Not all the farmers

can hold their produce for long and a majority of them sell it off early in the season.

However, I still feel it will prompt more farmers to opt for cotton, but only time will tell

to what extent,” he added.

PAU’s senior farm economist Dr GS Romana admitted, “Cotton sowing is comparatively

slow this year, as rough estimates suggest that only 50 per cent sowing has taken place

till May 15, which is the ideal period for it.”

He said another factor that delayed cotton sowing was delay in repair of canals and

release of water in them. He said the farmers still have few days left for sowing cotton,

though that too would be late.

He said the risk would further increase from June 1 onwards due to hot weather

conditions, as it would affect the growth of cotton plant. He also opined that the target

area of 4 lakh hectares seemed “unachievable”.

Incidentally, though the area under cotton cultivation was 2.56 lakh hectares in 2016,

the cotton produce fetched prices up to Rs 6,500 per quintal, which encouraged more

farmers to go for the cotton crop in 2017 and the area under it rose to 3.83 lakh

hectares. However, it again declined to 2.84 lakh hectares in 2018. Cotton is primarily

cultivated in Bathinda, Mansa, Muktsar, Faridkot, Fazilka, Sangrur, Barnala and Moga

districts.

Home

Warning signals from the external front

(Source: C P Chandrashekhar/Jayati Ghosh, The Hindu, May 20, 2019)

The significant rise in gold imports has been the most worrying aspect of the rising trade

deficit. The new government will have to sort out the mess in foreign trade

As if all the bad news from the domestic economy were not enough, foreign trade data

suggest worrisome trends on the external front as well. The latest report of monthly

trade data from the Ministry of Commerce and Industry indicates that merchandise

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13 CITI-NEWS LETTER

exports (in US $ terms) in April 2019 increased by only 0.64 per cent over April 2018,

while imports grew by 4.48 per cent.

This stagnation of exports is truly worrying because it is well below the rate of growth of

world exports in the same period.

But is this just some current problem, or have external trade concerns been building for

a while? Figure 1 considers the movement of the trade balance over the past 15 years,

since the start of the first UPA-1 government.

The year 2014-15 showed a seriously large merchandise trade deficit for India, at $138

billion. This declined in the subsequent two years, but then started rising again so that

in 2018-19 it reached as much as $184 billion — or a whopping 6.7 per cent of the

estimated GDP!

In normal times, this would have been ringing alarm bells for any government, and

when combined with the bad news within the economy such as falling investment, clear

evidence of sagging demand, falling employment and historically high open

unemployment rates, it should have been seen as another indicator of economic

emergency. But the government has been adept at deflecting attention from this, to the

country’s detriment.

Consider then how the trade indicators have performed under the tenure of the Modi

government. It is often argued that India’s external trade balance is hugely driven by the

world oil price, since India remains a significant net importer of oil and petroleum

products.

Figure 2 shows that for the first half of its tenure at least, the Modi government was a

major beneficiary of the decline in global oil prices. By mid 2016-17, these had caused

the oil import bill to fall to less than half of its level in the first quarter of 2014-15, when

the government assumed office.

Rising oil imports

Thereafter, as oil prices have risen, so has the oil import bill. But this increase was not as

much as could be expected, because domestic demand has not been rising in sync with

the supposedly high GDP growth.

What may be more alarming is the continued increase in the non-oil deficit. As Figure 3

indicates, non-oil exports have been growing sluggishly if at all, except for an apparent

spurt in the most recent quarter. However, non-oil imports have continued to increase

suggesting greater substitution of domestic production in a situation of already stagnant

demand. This bodes ill for domestic producers, especially small producers that are more

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14 CITI-NEWS LETTER

threatened by cheaper import competition, and therefore it is no surprise to learn of

survey data pointing to significant declines in manufacturing output.

Indeed, the latest monthly trade data suggest that the sectors showing the most rapid

increase in imports in April 2019 are precisely those manufacturing sectors that also

include many small and medium sized enterprises: pulp and waste paper; textile yarn

and fabrics and made-up articles like garments; leather and leather products; dyeing,

tanning and colouring materials; machine tools; electronic and professional goods;

chemicals and pharmaceuticals.

In such a context, we can hardly be surprised that employment in such manufacturing

activities has been declining.

But one of the biggest reasons for the rising trade deficit is also one of the least

desirable: the significant increase in gold imports. Figure 4 shows how these have

exploded in the past year, with the value in April 2019 as much as 60 per cent higher

than in the previous year.

In fact, non-oil non-gold imports actually declined by 2.2 per cent in April 2019 (year-

on-year) which shows how significant the role of gold imports has been in causing this

ballooning trade deficit. By April 2019, gold imports alone accounted for nearly 30 per

cent of the trade deficit.

The gold factor

India has always been “a sink for precious metals” as Keynes described it nearly a

century ago, but gold imports tend to rise particularly in periods of domestic economic

uncertainty. But these completely unnecessary imports can also be controlled through

appropriate policy action, which has unfortunately simply not happened recently. This is

one more economic problem that could be quite simply and effectively dealt with by a

proactive government, yet nothing is being done about it.

It is surprising — and speaks volumes for the subservience of India media — that, while

the last few years of the UPA-2 government were condemned for their “economic policy

paralysis”, there has thus far been very little negative commentary on the economic

mismanagement of the Modi regime. Problems created within the country by

incompetent economic policies are being multiplied by headwinds from the global

economy.

As a result, whichever government is formed after May 23 will face many major

challenges in dealing with the economy, including in sorting out the mess in the foreign

trade account.

Home

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15 CITI-NEWS LETTER

Bag a bargain

(Source: Joshi/ Tandon, Indian Express, May 21, 2019)

India can benefit from the US-China tariff war if it plays its cards well

A year into the US-China tariff war, its implications for India are still unfolding. The

glass, as it were, could be seen as half empty, or half-full. What we know is India is

losing its surplus with the US. It is gaining exports, and hence, narrowing its deficit with

China. What we are yet to find out is if India can take the space vacated by the warring

partners.

Here are some points to consider.

No doubt, the simmering tensions between the world’s two largest economies has

wrought a knock-on effect, taking down global growth, disrupting trading arrangements

and production systems and, above all, injecting uncertainty into the already fragile

global environment and weakening investor sentiment. India hasn’t escaped unhurt. Its

exports slowed to 5.5 per cent in the second half of fiscal 2019, compared with 12.7 per

cent in the first half. Overall growth for the fiscal printed at 8.6 per cent on-year, lower

than 10 per cent in the previous year. These overall figures, however, hide some crucial

details, which tell us not all is lost. Specifically, India’s exports with US and China have

seen sharp reversals.

India’s trade surplus with the US had increased significantly since fiscal 2012. However,

this surplus started to shrink in fiscal 2019, as export growth slowed to 9.5 per cent from

13.4 per cent in fiscal 2018, while import growth rose sharply to 32.6 per cent from 19.3

per cent. Protectionist measures by the US were beginning to tell on India’s exports. Key

items hit by US tariffs last year were iron, steel, and aluminum. The impact, though, was

not significant, as these account for less than 1 per cent of India’s total exports.

The opposite was the case with China.

India’s trade deficit with China has risen rapidly over the past decade. However, this

deficit narrowed in fiscal 2019, as exports to China galloped 25.6 per cent, while imports

declined by 7.9 per cent. In fact, the top exported commodities to China in fiscal 2019 —

petroleum products, cotton, chemicals and plastic products — were products on which

China imposed import tariffs on the US last year. A word of caution here, though.

Declining imports from China were accompanied by a rise in same products from Hong

Kong. Such instances have signalled that the current trade war could lead to trade

diversion rather than trade destruction. Until now, the tariff actions by US and China

have been one-on-one, making imports from each other expensive. What that has done,

quite unintentionally, is also to improve relative competitiveness of other economies

exporting the same products.

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16 CITI-NEWS LETTER

If this trade war continues over a longer horizon, it could even result in shift of

production bases and restructuring of global supply chains. Chinese firms are already

moving production to their plants in other countries. India also figures in the list of such

probables.

But such opportunities for growing exports have come and passed earlier too. Even

before the trade war, low-end manufacturing (readymade garments, leather garments

and footwear) had started moving out from China, as labour costs rose and it moved to

more sophisticated manufacturing. However, India fell behind countries like Vietnam

and Bangladesh in capturing export share in these sectors because of higher costs and

lower incentives.

That brings us to a more fundamental issue. What hinders India from becoming an

export powerhouse? First, it lags in competitiveness. At 58, India still ranks below China

(28) in World Economic Forum’s Global Competitiveness Rankings for 2018. In World

Bank’s Logistics Performance Index 2018, it ranks 44, below China (26) and Vietnam

(39). Land and labour reforms are still pending, hindering largescale investments in

export sectors. Two, India remains a tightly regulated market. Under the World Bank’s

Doing Business rankings, India ranks 77, compared with China at 46 and Vietnam at 69.

Three, India’s slow progress in drafting trade agreements impacts its ability to

participate in global value chains, affecting export growth.

India must proactively address these concerns. Reaping every opportunity that presents

itself has become more crucial now, given that the global environment is in for even

more challenging times.

Joshi is chief economist and Tandon is junior economist, CRISIL Ltd

Home

The national focus needs to be on the economy now

(Source: Ajit Ranade, Live Mint, May 21, 2019)

Should it win a second term, the NDA should get right down to pursuing urgent

economic reforms

More than 50 different exit polls in Australia were proved wrong in the surprise victory

of the coalition led by the Conservatives. This is in a country whose population is barely

2% of India’s. Three years ago, the outcome of the Brexit poll in Britain also shocked

most of the forecasters. Not only did the pundits get it wrong, but even the punters, who

put their money where their mouth is, got it completely wrong. Apparently, five times

more money was riding on a non-Brexit outcome. After Brexit came the surprise victory

of US President Donald Trump, who defied all experts in not only defeating competitors

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17 CITI-NEWS LETTER

from his own Republican party, but also a strong and well-funded rival from the

opposition Democratic party. There’s a lesson in all these outcomes, but it is not

obvious. Is it that people have started being coy of truthfully answering the

questionnaires of exit pollsters? Is there a deep distrust of the so-called elites, who

dominate and control the narratives on media, and even social media? Is this a sort of

revenge of the silent majority, the unseen undercurrent? This is enough fodder for

political scientists and sociologists for years to come.

As of writing this column, it appears most likely that the National Democratic Alliance

will cruise to an easy victory in the Lok Sabha elections just concluded, and Prime

Minister Narendra Modi of the Bharatiya Janata Party will return to power for a second

term. If so, it would be an unprecedented outcome, much like the one in 2014, which

was also unprecedented. This would be the first time in the post-Jawaharlal Nehru

period of Independence that a party is given a second strong mandate by voters in the

absence of an extraneous factor like a sympathy wave or a single dominant theme. A

second term would be a time for consolidation and for reaping the gains of investments,

physical, social and financial, for the ruling party. However, it should be clear that the

economy needs urgent attention and top priority.

The latest monthly economy report published by the department of economic affairs in

the finance ministry highlights a highly worrisome three-year trend. Gross domestic

product (GDP) growth has been steadily declining from its peak of 8.2% three years ago.

The last quarter figure was 6.7%, and if it declines further, this would be a four-year

trend. This is at a time when world growth is quite steady and improving.

Second, the country’s investment-to-GDP ratio has remained stagnant at 28% for nearly

four years. It was at a peak of 38% in 2008. Clearly, we need to move it up at least a

couple of percentage points, which would translate into investments of nearly ₹3

trillion. The challenge, of course, is that this has to come mostly from the private sector.

That would mean urgently addressing debt issues in such large sectors as power,

telecom, and civil aviation. It also means ensuring that the contribution of mining in

GDP doubles. India is rich in mineral wealth, but all of it lies beneath the land or sea

and does not translate into jobs, investments, and incomes. The manufacturing sector is

seeing tepid growth because of lack of perceived demand, pressure from imports, debt-

stressed balance sheets, and most importantly, still-unwieldy regulations that hurt the

ease of doing business. State and local regulatory requirements are still a significant

drag. Labour- intensive sectors such as textiles and garments, construction, agro-

processing, footwear and tourism need a leg up. The footwear industry was disrupted by

new laws on cattle slaughter and transportation. This needs to be modified.

The third trend evident from the ministry’s monthly report is on the current account

deficit. It has risen steadily in the past three years and is closing in toward 3% of GDP.

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18 CITI-NEWS LETTER

The net growth in exports over the past five years was zero. This can be attributed to a

variety of factors, not all oaf which can be fixed easily. However, surely zero-rating of the

Goods and Services Tax (GST) on exports is essential. Or at least instant refunds. The

cost of delayed refunds completely wipes out profits and this especially hurts small and

medium entrepreneurs. The still-strong rupee is also an export impediment. All of East

Asia and China rode their export-led growth for decades on the back of an undervalued

currency. Surely there’s a lesson in that?

India must also aggressively explore the possibility of rupee-linked trade with Iran.

Paying for imports of Iranian crude oil in rupees does not give the sellers access to hard

currency dollars, so this should not displease the US, if that is what is preventing rupee

trade. India must also aggressively woo tourists, especially from China, as this will also

go some way towards reducing the bilateral trade deficit.

The fourth trend in the monthly report is the decline in agricultural output, or gross

value added (GVA), over three years. We have to aggressively promote farmer producer

companies with downstream linkages with farm production, with the use of tax and

other incentives.

Lastly, India’s current fiscal situation is quite bleak, as the headline numbers hide the

true picture. This is slow acting poison, but is surely detrimental to medium and long

term growth. The dust will soon settle on election outcomes and celebrations and a

honeymoon period will begin. That’s the time to move decisively ahead and spend some

early political capital on hard decisions that need to be taken on economic reforms.

Ajit Ranade is economist and senior fellow, Takshashila Institution

Home

Art of commuting

(Source: The Pioneer, May 21, 2019)

New metro stations double up as galleries

Most Indians may still need a push to visit art galleries and museums, but when the

national capital’s favourite commuting mode Metro Rail doubles up as a contemporary

art gallery itself, it is not uncommon to see Delhiwallahs stop, look and even click an

occasional selfie.

Whether it is abstract or realistic art, colourful ceramic tiles or informative panels, the

wide station network of Delhi Metro Rail Corporation (DMRC) seems to have it all

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19 CITI-NEWS LETTER

covered, as the modern transport service that began in 2002 and continues to expand,

zooms in on art and culture.

The artworks at Pink Line’s Johri Enclave station is a tribute to the eminent classical

artists of India. Creative portraits of great artists like shehnai maestro Bismillah Khan,

noted flautist Hariprasad Chaurasia, popular vocalist Shubha Mudgal and sitar maestro

Pandit Ravi Shankar dot the station premises.

The Pink Line and Indian cultural symbols seem to coalesce in more stations, especially

Gokulpuri and Shiv Vihar, which exhibit different dance cultures of our country —

Dhunuchi, Bhangram, Dandiya Raas, Bharatanatyam, for the former and Chhau, Cham

and Kathaputli for the latter.

On the Hauz Khas station, an intersection of the Yellow and Magenta Lines, historical

monuments galore. Lodhi Tombs, the Gurudwara Bangla Sahib, Jama Masjid and

Humayun’s Tomb reflect the diverse cultural fabric of India. Many other metro stations

are ready takers of art on history and heritage. Mandi House comes first to mind.

The works here chronicles the journey of the area from brick kilns to a culture hub. Its

panels display digital prints of original maps and vintage photographs, like a rare aerial

view of the Modern School at Barakhamba, an old photograph of India’s first Prime

Minister Jawaharlal Nehru opening the Sapru House, and actor Naseeruddin Shah in a

1973 theatre production by theatre doyen Ebrahim Alkazi.

Rare images of Dadi Pudumjee, under whom the Sri Ram Centre established the first

modern puppet theatre are also on display.

At the INA metro station, the DMRC, in collaboration with the Ministry of Textiles, has

also installed 58 panels of handicrafts and handlooms created by craftsmen from across

India — from Mithila paintings from Bihar to terracotta tiles from Rajasthan.

Two stations on the long and busy Blue Line, Karol Bagh and Karkardooma, use ceramic

artworks and painted wall works to show signs of a modern, progressive society.

While the Karol Bagh murals feature development aspects like education and

technology, the Karkardooma station, which opens near the Karkardooma District

Court, has references to the judiciary — a set of scales and hands, handcuffs, police and

a colossal Ashok Chakra.

Nature enthusiasts who commute by metro are not disappointed as well, as Mandawali-

West Vinod Nagar has its focus on flora and fauna, and the walls of this station feature

vibrant paintings of leaves, flowers, toucans and Koi fish.

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20 CITI-NEWS LETTER

Regular metro commuters would also know of the Metro Museum at the Patel Chowk

Metro Station, which traces the genesis of the Delhi Metro which took 32 years to reach

the operational stage from the drawing boards.

As per DMRC, Delhi Metro stations that cover almost every corner of the NCR today are

perfect spaces for the promotion of India’s art and culture

“Such projects have also contributed towards the beautification of the city in general.

We have also tried to portray the heritage and history of the areas around the stations.

For example, the stations passing through old Delhi has artworks related to that area,” a

spokesperson from DMRC said.

For now, Delhi Metro’s present span of over 370 km and 271 stations (including the

Noida-Greater Noida Aqua Line) has a lot to offer to its average daily ridership of about

30 lakh people.

Home

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21 CITI-NEWS LETTER

GLOBAL:

Tariffs: How to weigh in on duties planned for home textiles

(Source: Home Textiles Today, May 20, 2019)

USTR provides instructions to companies seeking to comment

The US Trade Representative (USTR) is now accepting comments on the latest proposed

round of 25% tariffs, which will impact home textiles imported from China.

The Home Fashion Products Association (HFPA) and its members are submitting their

arguments against imposing tariffs on home textiles and are asking to appear at the

June 17 hearing to testify on the matter.

Individual companies can also make their case to the USTR by submitting written

comments by June 17. Comments must include:

• The specific tariff subheadings to be subject to increased duties, including whether the

subheadings listed in the Annex should be retained or removed, or whether subheadings

not currently on the list should be added.

• The level of the increase, if any, in the rate of duty.

• The appropriate aggregate level of trade to be covered by additional duties. According

to the USTR commenters should address specifically whether imposing increased duties

on a particular product would be practicable or effective to obtain the elimination of

China’s acts, policies, and practices, and whether imposing additional duties on a

particular product would cause disproportionate economic harm to U.S. interests,

including small- or medium- size businesses and consumers.

During an earlier round of proposed tariffs, the HFPA and the American Down and

Feather Council were able to successfully get imported feathers from China removed

from a list.

All submissions must be in English and sent electronically via www.regulations.gov.

Enter docket number USTR–2019–0004 on the home page and click ‘search.’ The site

will provide a search-results page listing all documents associated with this docket. Find

a reference to this notice and click on the link titled ‘comment now!’

For further information on using the www.regulations.gov website, consult the

resources provided on the website by clicking on ‘How to Use Regulations.gov’ on the

bottom of the home page.

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22 CITI-NEWS LETTER

USTR will not accept hand-delivered submissions. The www.regulations.gov website

allows users to submit comments by filling in a ‘comment’ field or by attaching a

document using an ‘upload file’ field. USTR prefers comments are submitted in an

attached document.

If you attach a document, it is sufficient to type ‘see attached’ in the ‘comment’ field.

USTR prefers submissions in Microsoft Word (.doc) or searchable Adobe Acrobat (.pdf).

If you use an application other than those two, indicate the name of the application in

the ‘comment’ field.

According to Robert Leo, HFPA legal counsel, due to the expected large amount of

companies, associations and individuals planning to testify, the hearings could last five

days or longer.

“The effective date for the List 4 additional duties is likely in mid- to late July but could

be earlier depending on the negotiations’ status,” said Leo, a partner at Meeks,

Sheppard, Leo & Pillsbury. “The notice provides no specific information on exclusion

requests for either List 3 or 4.

Home

Nigerian Garment Manufacturers Would Benefit Greatly From AGOA

Textile Visa Stamp-Awolowo

(Source: National Wire Nigeria, May 20, 2019)

Recently, the Nigerian Export Promotion Council (NEPC) AGOA Trade Resource

Centre, Lagos unveiled the AGOA Textile Visa Stamp. The Textile Visa Stamp according

to the NEPC would enable garment manufacturers in Nigeria to have tariff concession

on textile and garments manufactured in the country for export to the USA under

AGOA. In this interview, CEO of the NEPC, Mr. Olusegun Awolowo in this interview

with FRIDAY EKEOBA, explained the Textile Visa Stamp; its importance and benefit for

Nigerian garment manufacturers. Awolowo who was represented at the Asian-African

Chambers of Commerce and Industry’s inauguration in Lagos recently is of the opinion

that the NEPC and the Nigerian Customs Service would synergise to ensure the Textile

Visa Stamp is well utilised for the benefit of garment manufacturers to bring more

revenue to the Federal Government of Nigeria. Excerpts:

NEPC – AGOA Trade Resource Center recently organised a workshop on

utilisation of the AGOA Textile Visa Stamp, can you enlighten the public on

this Textile Visa Stamp?

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23 CITI-NEWS LETTER

The AGOA Textile Visa Stamp is an instrument established by the US government for

use by the AGOA eligible countries for textiles and apparels export into USA. The

instrument is to be administered by the Nigerian authorised Customs Officers on the

Commercial Invoice of garment manufacturers exporting to the US under AGOA. It is a

major requirement for the export of textiles and garment under the scheme and has to

be strictly adhered to by Nigerian garment exporters in order to benefit from the tariff

concession provided by the Act.

What was the role of the Nigerian Customs at the Workshop?

The esteemed uniformed officers of the Customs were invited to the Workshop because

they are the sole administrator of the Visa Stamp. The Stamp is in their custody and

they need to be informed on its application and as well as interface with the Nigerian

garment manufactures. More importantly, the interface facilitated expression of

challenges by garment manufactures in accessing the Visa Stamp from the Customs.

Are the Nigerian Customs officials well trained on this AGOA Textile Visa

Stamp’s administration since they are the officials Nigerian exporters

would be interacting with at the export desks?

They are now well informed on the Visa Stamp administration so also on AGOA. The

Custom Officers were always invited to training programmes on AGOA organised by the

NEPC AGOA Trade Resource Center. The garment manufactures now know the

locations of Customs officers to access the Visa Stamp.

What would the Nigerian Garment manufacturers benefit from the Visa

Stamp?

Nigerian Garment manufacturers have a lot of gains by utilising the Visa Stamp. Their

products – textiles and apparel will enjoy duty-free access to the US market under

AGOA. The tariff concession will give made in Nigeria products more competitive

advantage over non-AGOA countries that must pay normal tariff rates to enter the

United States. They will also be able to retain market share regarding certain apparel

products. More jobs related to apparel manufacturing are created through increased

production. Trade relationship with US investors and other sub-Saharan AGOA eligible

countries counterparts will be built. Through technical assistance provided for garment

manufacturers they will be able to comply with US standards as well as international

market standards in the garment world.

Nigerians still depend largely on imported garments, especially from Asia.

Do you think Nigerian manufacturers can ever meet the garment needs at

home?

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24 CITI-NEWS LETTER

Indeed, the Nigerian garment markets are saturated with products from Asia but

Nigerian garment manufactures through trainings are now informed and have

embraced the value chain production systems. They only need to be encouraged and be

well funded because, value chain system of mass production is capital intensive and

many of the manufacturers are still at the workshop level struggling to meet delivery. If

they are well funded for expansion into large factories, backed up with firm-level

technical training and government policy support for solely made in Nigeria garments;

the Nigerian manufacturers can meet the needs at home because it will be more

profitable. Take the case of the use of General System of Mobile (GSM) telephone, it

started late in Nigeria, but within a limited period, market women of course now use

mobile phones such that Nigeria is now the largest user of mobile telephones in

Africa. When there is a will, there will be ways.

What is NEPC’s role in addressing this?

The Council established the Human Capital Development Center (HCDC) in 2006, with

modern industrial machines and engaged both local and international garment experts

to train and manage the Center for mass production of garments for export under AGOA

into the US. In 2016 to be precise, the NEPC engaged five garment experts from The

Philippines and four local resource persons to train at the garment factory on how to

make garments of international standards within limited time and the value chain

system of mass production. Each batch of training at the center was usually for a

minimum period of three months on pattern drafting and garment production except

for special requested cases. NEPC has consistently offered this service at Zero cost to

the trainees and even offered free lunch for students.

The good news is that after graduation, some of the students were retained at the NEPC

Factory to perfect their skills and then employed to produce for other fashion designers,

a few were gainfully employed by some Nigerian garment factories thus reducing

unemployment, others form synergy and established enterprises to mass produce T-

shirts for sale and for other industries. Kudos to Vlisco Academy Nigeria, which at one

time collaborated with NEPC for training at the HCDC in Lagos. So far from inception,

over 850 people have been trained and graduated from the HCDC.

In addition to the above, the NEPC is currently providing technical support for export

ready garment companies by bringing into Nigeria and paying for the services of

international garment experts from Sri Lanka and Ghana. The technical support started

with the Calabar Garment Factory in Cross Rivers State where firm-level training was

conducted for over 600 factory hands in December 2018. The garment experts are now

at Wessy Creations garment factory in Abeokuta, Ogun State. This is to assist in

bringing the companies to the level of mass production in line with international

standard practice and for export to the US under AGOA.

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25 CITI-NEWS LETTER

With individual efforts, government supports (policy wise and financially) for the

existing garment factories, navigation of the numerous garment workshops to factories

and establishment of more garment factories, the garment manufacturers can meet the

garment needs of Nigerians because we have cheap labour readily available.

Home

Italy's fashion industry growth stalls due to trade tensions

(Source: Euronews, May 20, 2019)

Italy's fashion industry increased revenues by just 0.2% in the first quarter of 2019, held

back by trade tensions between the United States and China, the national sector body

said on Monday.

The industry, whose annual revenues account for around 4 percent of Italy's gross

domestic output, has grown by 3% on average every year in the last decade, said Carlo

Capasa, chairman Italy's National Fashion Chamber (CNMI).

"We hope to recover in the second part of the year," Capasa told reporters at a press

conference to present Milan's Men Fashion Week, which will take place on June 14-17.

Turnover in the Italian fashion industry rose 2.8% to 66.6 billion euros (£58.3 billion) in

2018, according to CNMI estimates. Including textiles, leather and shoes, sales reached

89.3 billion euros, up 2.3% year on year. Exports accounted for over 75% of sales.

Capasa urged the Italian government not to raise the sales tax on fashion goods.

Speculation the government could hike VAT on targeted products, including luxury

items, has increased amid concerns Rome could struggle to manage deteriorating public

finances in the second half of the year.

Home

Trade between Eastern Europe, Vietnam hit $10.1 bn in 2018

(Source: Fibre2Fashion, May 20, 2019)

Despite Eastern European countries being an important export market for Vietnamese

goods, the total trade revenue between both sides fell short of the potential, with

bilateral trade reaching $10.1 billion in 2018—2.65 per cent of the country’s total export

revenue, according to Vietnam’s deputy minister of industry and trade Hoang Quoc

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26 CITI-NEWS LETTER

Vuong.

Items like textiles and footwear, seafood, fresh and processed fruit and vegetables,

electronics and electronic components, will have more opportunities to be exported to

this market, he noted.

Vuong was speaking at the Vietnam-Eastern Europe Trade Forum with the theme

‘Promoting Vietnam’s agricultural, textile and footwear exports to Eastern European

countries in the new situation’ organised by his ministry in Ho Chi Minh City last week.

Institutions and legal frameworks for developing cooperation between both sides

include 14 intergovernmental committees, a mechanism for economic cooperation

consultation between Vietnam and Poland and a free trade agreement between Vietnam

and the Eurasian Economic Union, a Vietnamese newspaper report quoted the deputy

minister as saying.

Home

China’s loss in specialty chemicals benefits India

(Source: Deccan Chronicle, May 21, 2019)

China's loss is India's gain. Atleast, that's what, when it comes to chemicals, especially,

specialty chemicals market. The downturn in China's chemicals and specialty chemicals

market in the recent years, has come as a boon for the Indian chemicals and specialty

chemicals industry, said a recent Crisil Research report.

Traditionally, the European Union (EU) and the US were the key chemical hubs

globally. Together they contributed nearly 40 per cent of global chemical sales till 2006.

However, the 'Great Recession' of 2008 changed everything. Developing countries

started faring better than the relatively mature economies of the West. Over the last

decade, the core of the chemical industry has shifted from the West to Asia, with China

being the key benefactor.

However, China's specialty chemicals market has seen a downturn in recent years, for

more reasons than one, most prominent being the introduction of stringent

environmental norms, which has led to the shutdown of several chemical plants. The

labour cost (hourly cost of compensation) in China was lower than that of India till

2007. However, over 2005-2015, the average labour cost in China increased nearly 19-

20 per cent CAGR, against 4-5 per cent CAGR in India. In fact, over the last five years,

this cost has more than doubled compared with India, rendering Chinese

manufacturers' uncompetitive vis-à-vis India in labour cost.

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27 CITI-NEWS LETTER

"The domestic chemicals industry in China is witnessing a slowdown as a result of an

overall slower economic growth. Over the next 2-3 years, China's GDP is projected to

grow at 6-6.5 per cent, against 8-10 per cent witnessed over the last decade (2009-

2018). This slowdown would translate into lower off-take of specialty chemicals from

large segments such as construction, automobiles, textiles and consumer durables.

Thanks to shutdowns in China and lack of capacity additions in other developed

countries, India stands to benefit in the export market. Also supporting the growth in

India is its ability to manufacture at a lower price compared with its western

counterparts. This along with the emergence of established players bodes well for Indian

manufacturers," said the report.

Interestingly, India also faces threat from environmental concerns. However, the threat

is limited only to smaller players and shall serve as an opportunity for larger players.

Home

Focus on Industry 4.0 at ITMA 2019

(Source: Innovation in Textiles, May 20, 2019)

The future of the textiles industry is more and more determined by Industry 4.0, which

has many dimensions and possible fields of application. In three of them (smart

services, operations and factory), key solutions are provided by the machinery industry.

The other ones from smart textile products, marketing and sales, employees up to

strategy and organisation are specific know-how issues for textiles mills.

At the ITMA 2019 in Barcelona, next month, visitors will have the chance to see how

Industry 4.0 solutions are impacting the textiles process chain. Six weeks prior to the

show, Nicolai Strauch, press officer of the VDMA Textile Machinery Association,

Germany, spoke to experts of VDMA member companies about their products and

services with regard to digitisation and Industry 4.0.

Interview partners were: Andreas Hannes, Marketing Manager, Sedo Treepoint;

Maximilian Kürig, Managing Director, KM.ON, a software start-up company of Karl

Mayer; Wilhelm Langius, Division Head, Neuenhauser; Andreas Lukas, Managing

Director, Andritz Küsters; Rainer Mestermann, Managing Director, Mahlo; Axel Pieper,

CEO, Brückner Trockentechnik; Eric Schöller, Managing Director, Groz-Beckert; and Dr

Christof Soest, CTO, Trützschler.

Nicolai Strauch: Dr Soest, what is Trützschler’s latest I4.0 innovation?

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28 CITI-NEWS LETTER

Dr Soest: We have developed intelligent, self-optimising machines and connect them

through digital monitoring systems. The latest examples are cloud-based monitoring

solutions which enable customers to literally steer and optimise their spinning mill

anytime from anywhere in the world. This combination of complete, intelligent

machinery solutions and digital support systems means a big step in automation and

ensuring high quality.

NS: And what is the exact benefit for a spinning mill?

Dr Soest: Customer benefits range from improved productivity and quality to fewer

downtimes, machine failures and reduced scrap. One of our monitoring systems, for

example, warns operators about potential issues or optimisation needs. It also specifies

where exactly they occur and advises what needs to be done. There is no need for time-

consuming searches for the source of the issue. This saves a lot of time and money! By

connecting all machines in a unified data set, we eliminate the information silos that

made it difficult to steer production in the past.

NS: Let’s stay in the spinning sector. Mr Langius, company Neuenhauser

specialises in the handling of yarn packages within the yarn spinning

process. Are transportation systems also influenced by Industry 4.0?

Langius: Indeed, a good example is a new development for the automated handling of

sliver cans. Have you ever heard of AGVs?

NS: Should I?

Langius: AGV stands for Automatic Guided Vehicles, a technology that has been

around for many years but has been fuelled recently by the introduction of Industry 4.0.

Neuenhauser saw with the recent advances in autonomous vehicles and navigation

systems that an AGV is also a good solution for spinning mills.

We thought it is a useful tool to automate the labour-intensive handling of sliver cans in

a spinning plant. Within twelve months, our team developed a state-of-the-art transport

system using a large fleet of intelligently controlled automated guided vehicles. The AGV

will pick-up sliver cans which are filled with cotton sliver material and deliver them to

the spinning frame where empty cans will be exchanged with full cans. The empty cans

are then returned to the equipment which will refill the sliver cans with cotton sliver to

repeat the cycle. Within a typical spinning mill, very large numbers of sliver cans are

required to be moved each hour.

NS: And how do you make sure these vehicles find their way in a spinning

mill?

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29 CITI-NEWS LETTER

Langius: The vehicles are equipped with the latest state-of-the-art safety sensors to

ensure the vehicles operate safely alongside plant personnel who need to share the same

floor space and aisles within the spinning mill. The plant personnel are also equipped

with specialised sensors they wear on their safety vest, to inform the AGV where the

operators are working and moving around within the manufacturing floor. With such a

system both the AGVs and local plant personnel can work safely together within the

same manufacturing area.

NS: Let’s go a step forward in the textiles chain. Industry 4.0. is also an

issue in fabric production. Mr Kürig, at ITMA ASIA 2018 Karl Mayer

launched its own digital brand, KM.ON. What is new in the associated

digital solutions portfolio with regard to production?

Kürig: KM.ON’s range of features has been extended considerably. A good example

from Karl Mayer is a new digital tool that combines a PDA system with a ticket system to

enable any disruptions in production to be managed efficiently.

The relevant information can be input easily and quickly at the machine and forwarded

to the appropriate location in real time. Any problems can be dealt with quickly, and the

root cause can be tackled rapidly by displaying the relevant sequence.

NS: What does this tool mean for the machine operator? Is it an operator

friendly technology?

Kürig: This system is very easy to operate, which means that this new development can

be used immediately.

NS: Integral parts in knitting, warp knitting and sewing are needles. Mr

Schöller, will needle handling also move to a digital level?

Schöller: Yes, indeed. Groz-Beckert has developed a quality and life cycle management

system for needles. It organises each needle in a clearly structured process and

documents them digitally, from arriving at the factory to leaving for recycling.

NS: How do customers benefit from this system?

Schöller: This quality management system makes it possible to efficiently conduct

audits and, as part of the digitalisation process, provides a complete overview of KPIs

(Key Performance Indicators) with the option of implementing predictive maintenance

measures. Customers also benefit from the ability to improve machine utilisation and

identify weak points in production. The use of the system reduces needle consumption

at factories by up to 10%. Downtime during needle changes also decreases by 50% on

average. Moreover, the risk of contractual penalties due to non-compliance with brand

owner specifications goes to zero.

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30 CITI-NEWS LETTER

The use of the system also eliminates the need to store used needles for documentation

purposes; the needles can be sent for recycling right away – a decisive benefit in the

sense of sustainability.

NS: Mr Lukas, Andritz Küsters specialises in technologies for the

nonwovens industry. Which steps have been taken recently to address the

topic I4.0?

Lukas: Andritz has pooled its relevant expertise under a new technology brand that

covers smart sensors, big data analytics and augmented reality.

NS: Augmented reality is a good topic that has not been mentioned so far.

What are the advantages of this technology?

Lukas: Portrayal of important information where operations are taking place and

always with respect to the product or object are compelling arguments in favour of using

Augmented Reality.

Other benefits for customers: Conventional operating manuals are converted into digital

instructions, virtual tools can be displayed in the real work environment, and users can

perform difficult work sequences with a lower error rate.

NS: Gentlemen, in the daily press I get sometimes the impression that I4.0 /

digitization is an end in itself. Mr Pieper, in textile finishing, energy

consumption plays a crucial role. Can I4.0-solutions help to reduce energy

costs?

Pieper: Brückner has developed an intelligent machine assistance system that

monitors the settings of the entire system in the background. Deviations from default

values are immediately signaled to the machine operator and stored in the production

history logbook. A new simulation tool helps the machine operator to get the highest

possible productivity and/or energy savings out of the system. Maintenance and spare

part suggestions are displayed preventively after a certain interval. Upcoming

maintenance tasks are comprehensively visualised for the maintenance department and

can even be retrieved from mobile devices.

NS: How can a finishing company realise savings potentials with this

solution?

Pieper: During production, a production assistance system helps the operator to decide

which parameters need to be adjusted to make the system even more energy-efficient

and productive. Optimised recipes can be stored for future processes and are therefore

very easy to reproduce. At the customer's request, we can also connect his system to a

higher-level control station system.

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31 CITI-NEWS LETTER

This allows recipe data to be researched in a central data base and to be shared with

other users. This new intelligent assistance system in combination with the simulation

tool allows productivity increases of up to 40%. Energy consumption can be reduced by

up to 30% with these systems.

NS: Let’s stay in the finishing process. Mr Mestermann, company Mahlo

develops and produces measurement and control equipment for the textiles

and nonwoven industry. A basic idea of Industry 4.0 is collecting and

processing data for better production results. How is Mahlo addressing this

issue?

Mestermann: A new platform from Mahlo realises these ideas of industry 4.0 with

digital technologies. In the digitisation concept for all Mahlo products, the

functionalities are grouped, optimised and standardised as "services". This results in

modular hardware and software function blocks that can also be retrofitted. There are

modules, e.g. for the acquisition and processing of measured values, for control tasks or

for the long-term archiving, data logging and analysis.

NS: Why should manufacturers and finishers of textile fabrics invest in

your solutions?

Mestermann: Our new platform makes it easier for customers to use data in a

meaningful manner to optimise their processes. Networking of Mahlo devices with each

other and with other systems ensures consistent data exchange and enables the

bundling of information as a basis for process improvement. Higher machine

availability through remote maintenance via better product quality by adaptive control

or flexible data analysis as the basis for better decisions provide immediate monetary

benefits.

NS: Can you quantify the benefits, please?

Mestermann: One example is the control module in our weft straighteners. Together

with a renowned university, the distortion control was revised and digitised. Optimised

hardware and software resulted in a faster and more efficient controller.

Evaluations confirmed by customers prove that the control module regulates 20% faster

and more precisely than before. Better straightening results reduce the production of

second-choice goods and the need to pass the same fabric through the stenter several

times.

NS: Mr Hannes, tell us something about the portfolio of Sedo-Treepoint.

Hannes: We are known for smart factory integration and offer integrated textiles

management systems along the textiles production chain, such as spinning, weaving,

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32 CITI-NEWS LETTER

knitting, dyeing, finishing, printing and inspection. For all departments, PPS, routing of

orders (track and trace) or energy management is available. Existing ERP systems are

integrated as well, so double entry of existing information is avoided.

NS: What can we expect from your company at ITMA in Barcelona?

Hannes: We will introduce a new series of our dyehouse controllers. The new series is

specially designed for Industry 4.0. The open connectivity on production and machine

level improves the M2M-communication. Important information for the production

floor is displayed wherever required.

NS: Gentlemen, thank you very much for this discussion. More than 200

VDMA member companies will exhibit at ITMA end of June. We are eagerly

looking forward to a fantastic and successful ITMA in Barcelona.

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