After losing the advantage of low labor costs, where will China’s textile and apparel companies go? In particular, labor-intensive garment enterprises have been hit harder. In addition to the continuous transformation and upgrading of enterprises themselves, more and more enterprises are setting their development goals overseas, taking advantage of the substantial reduction in comprehensive costs brought about by cheap labor costs overseas to enhance their overall competitiveness. At the same time, the development opportunities provided by the country under the “Belt and Road Initiative” have further motivated domestic textile and garment enterprises to determine to build factories and invest overseas.
However, overseas investment and establishment of factories does not happen overnight. Enterprises need to fully understand the textile and apparel policies, financial policies, tax policies, domestic political and security environment, land prices, related supporting facilities, labor conditions, etc. of each target country. Conduct a comprehensive and complex series of assessments.
my country’s very large textile and apparel companies have already built their own textile parks in overseas countries and have achieved good profits. These successful experiences have also prompted more domestic companies to seek development overseas. However, other domestic companies also want to go global, but they put it aside because they do not understand overseas national policies, or they are troubled by the need to find suitable textile and garment parks in overseas countries…
In the countries along the Belt and Road, the current main investment directions are the two major economic corridors – the China-India-Myanmar-Thailand Economic Corridor and the China-Pakistan Economic Corridor, and the four major hotspot areas of South Asia, Southeast Asia, East Africa, and Central Asia.
Indian textile and clothing preferential policies
As the world’s second most populous country, an important cotton producer and the world’s second largest textile and apparel exporter, India’s textile industry currently accounts for 14% of the total domestic industrial output value, 4% of the GDP, and 13% of the foreign exchange earned from exports. . As one of the largest cotton-producing states in India, Andhra Pradesh has a mature textile industry and good development of spinning and textile processing industries. It has formulated a series of preferential policies such as loan subsidies, energy subsidies, and tax concessions for the development of the textile and garment industry.
At present, the loan interest subsidy provided by the Andhra Pradesh government in India is controlled within 12.5% per year, of which the Andhra Pradesh government provides cotton ginning, cotton spinning, weaving, printing and dyeing and processing, knitting, ready-made garments/finished products, machinery Annual interest subsidy of up to 8% is provided for carpet making, machine embroidery enterprises and any other processing activities within the textile value chain such as hemming, crimping, twisting, winding and styling; up to 7.5% is provided for spinning and modern ginning interest subsidy. The electricity subsidy for spinning and modern cotton ginning factories is 1.00 rupees/unit, and the subsidy for other types of textile and garment enterprises (including technical textiles) is 1.50 rupees/unit.
Purchase of semi-finished products/raw materials will result in refunds of VAT, Central Sales Tax and Special Goods & Excise Tax; for any end products/semi-finished products in the entire textile industry value chain (from cotton to ready-made garments and Finished products), can enjoy tax rebates on VAT/Central Sales Tax/Special Goods & Excise Tax; for fixed capital investment in eligible equipment and machinery, can enjoy tax rebate rates up to 100%.
Pakistan Textile and Clothing Preferential Policies
Pakistan is the fourth largest cotton producer in the world, and its spinning capacity accounts for 5% of the world’s total capacity. Pakistan’s textile industry is the country’s largest industry, accounting for 46% of the manufacturing industry. The country’s textile industry employs 15 million people. Employees in the manufacturing industry account for about 40% of the total employment rate and about 30% of the entire employment rate. The contribution rate to the gross national product is 8.5%.
In the “Textile Policy 2014-2019” issued by the Ministry of Textile Industry of Pakistan in July 2014, a plan was proposed to develop the labor skills of textile workers, aiming to provide skilled labor for the development of Pakistan’s textile industry and promote the country’s The development of the textile industry has made the country’s textile products more competitive in the international market.
Moreover, according to the new textile policy, the Pakistani government will provide approximately 64.1 billion rupees in financial support to the textile industry, involving tax rebates, tax exemptions, loan subsidies, and development subsidies; of which 40.6 billion rupees will be used for tax rebates, technology upgrades, brand development, etc. 23.5 billion rupees for technology development, product exhibitions, building a world textile center, textile city, incubation center and setting up textile awards, etc.; discount interest rate will be reduced by another 2% from the current 7.5%; long-term loans to the value-added sector of the textile industry Convenient, with an interest rate of 9% and a term of 3-10 years; exporters whose export volume has increased by 10% compared with the previous year (2014) will enjoy local tax rebates, including 4% tax rebate for clothing, 2% tax rebate for miscellaneous products, and 1% tax rebate for processed fabrics. %; the tax exemption policy for imported textile machinery and equipment will be extended for another two years, and the preferential policy for upgrading and renovation funds will also be extended.
Pakistan is very open to foreign investment. Not only does it have no minimum investment limit, it also has flexible financial and foreign exchange policies. There are no restrictions on foreign investors owning and transferring land; except for a few industries, all fields in Pakistan are open to investment; Foreign equity can reach 100%.
Mature Textile and Garment Park
Brandik Garment City, a mature textile and garment park in India, has cost advantages, labor advantages, tax advantages and location advantages.
Compared with the workers’ wages of 3,000-4,000 yuan in domestic textile and garment factories, Brandik (BIAC) is 135 US dollars.The labor salary of � (approximately 838 yuan) is quite advantageous.
In addition, companies that move into Brandik (BIAC) can also fully enjoy a series of policy benefits such as loan interest subsidies, energy subsidies, tax incentives, training subsidies, and fixed investment capital subsidies formulated by the Andhra Pradesh government. Receive a subsidy of 20% of the investment amount, with the maximum amount reaching 1.6 million US dollars; and sign free trade area agreements with ASEAN, Japan, and South Korea, and enjoy low tax or even duty-free concessions for exports; Brandik (BIAC)’s port location is even more Enterprise transportation provides convenient transportation conditions.
In addition, BIAC’s complete infrastructure, including temporary factories, sewage treatment plants, power plants, living facilities, etc., allows companies to move in with their bags.
Whether it is the policy opportunities and tax opportunities in South Asian countries, or the low labor costs, investment subsidies and supporting services provided by on-site parks… they all provide opportunities and benefits for domestic textile and garment enterprises to “go global” and cross-border investment and development. Domestic textile companies should fully seize the development opportunities along the Belt and Road to obtain greater profit margins and room for growth.
