Blog: Leonie BarrieIndustry grapples its grievances

Leonie Barrie | 22 November 2010

In an unprecedented move, owners and senior managers in India's apparel industry last week took part in a nationwide protest against a shortage of cotton yarns and rising prices. The one-day strike was organised by the Apparel Export Promotion Council (AEPC), which also wants the government to ban cotton yarn exports - at the moment, restrictions only apply to shipments of raw cotton - to ensure there is enough available for domestic producers.

Indian garment makers believe they are losing out to competitors like China and Bangladesh. But by halting production for a day their action is also likely to impact on customers by disrupting the shipment of orders. And if their demands are eventually met, a ban on the export of cotton yarns would also lead to higher prices in countries where their customers also source garments.

Indeed, a group of textile bodies from the US, EU, Turkey and Mexico is already blaming restrictions on raw cotton exports by the Indian government for contributing to global shortages and rocketing prices of the fibre.

Demonstrations have also taken place in Pakistan's major industrial cities in protest against yarn shortages, the 15% reformed general sales tax (RGST), and gas cuts for the textile and leather industries. Plant owners believe the combined effects are making foreign buyers shift their orders to Bangladesh and China. But some disruptions seem to be of the factory owners' making too, after garment workers in Faisalabad took to the streets to protest against non-payment of their salaries before the Eid religious holiday.

Changes to European Union (EU) import rules from January 2011 should make it easier for developing countries like Cambodia and Bangladesh to access the EU's preferential trade arrangements. One of the biggest changes is that they won't need to use locally-sourced raw materials to qualify for duty-free access. But there are of course worries this will lead to protests from Bangladeshi spinners or weavers who stand to lose out.

For two of Sri Lanka's most prominent manufacturing groups, the loss of the GSP+ (generalised system of preferences) status with the EU has, however, had less impact than expected. Executives from Brandix and MAS have told just-style that a global rebound in apparel sales has helped offset higher duty levels, and that a focus on design, innovation and research has helped add value to their orders.

Elsewhere, currency concerns are preoccupying US textile producers, who want the Senate to pass a bill that would give companies the ability to defend themselves against currency manipulation - with China the most likely target - before lawmakers adjourn for the year. And after the recent G-20 summit ended with only modest progress in the so-called 'currency wars,' we take a look at what's going on.


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