Cooperation in Kazakhstan’s Textile Sector Potential and Opportunities Embassy of India, Astana

Snap Shot of Kazakhstan’s Textile Sector Market Size: US$2.5 billion (92 % import) Limited range of textile products production - Produces cotton, cotton yarn, processed cotton, wool yarn, carpets and limited quantities of cotton fabrics Over 90 % of total domestic demand is met by imports. Local producers supply 8-10 %. 50% of imports constitute apparels, garments and footwear 2.2 million are employed in this sector The total harvested area of seed cotton in Kazakhstan is about 1% of the total arable land.

Production in Kazakhstan Raw Cotton: 300,000 – 325,000 tons Cotton Yarn : 18,000-20,000 tons Processed Cotton: 50,000-70,000 tons Cotton Fabrics :22,000 – 26,000 m2 Wool Yarn :225-250 tons Carpets : About 2000 sq metres

What is imported and from where? Total Imports : Between US$ 500-625 million in last 4 years Total Imports in 2016: US$ 516 million Major Import items: Cotton Fabrics US$ 13 million MMF materials US$ 26 million Carpets US$ 30 million Man Made Staple Fibres US$ 21 million Woolen Garments US$ 14.5 million Knitted Apparels US$ 152 million Non-knitted Apparels US$ 158 million Textile fabrics US$ 52 million Footwear US$ 79 million Major Suppliers: China, Russia, Kyrgyzstan , Turkey and Uzbekistan

What is exported and to where? Total Exports: US $ 133 million (2016) Major export items: Raw Cotton Raw Wool Knitted Apparel and Clothing accessories Textiles, garments Non-Knitted apparels Major Export Target countries: Russia, Tajikistan, Turkey, Moldova, China and Belarus

India Kazakh Textile Trade Kazakhstan’s Imports(2016):US$ 510.93mn. Imports from India (2016): US$ 9.03 million. India’s share of Kazakh market (2016): about 2% India’s textile exports to World: US$ 35.50 bn. No exports to India from Kazakhstan in last 3 years

Tariff Structure Product HS Code Duty in % of value Yarn Silk 5003-5006 5% Wool 5105-5110 Cotton 5204-5207 Man-made fiber 5401-5406/5501-5511 0-12 Woven Yarn 5007 0-3 5111-5113 11.7-12.5 5208-5212 10-13 5407-5408/5512-5516 5-16.7 Knit Fabric 60 3-8 Non Woven Fabric 5603 5 Industrial Fabric 59 5-12.5 Apparel 61-62 5-18.3 Home Furnishings 63 10-18.3 Carpet 57 * Footwear 64 8-18.3 Travel Goods 4202 0.17.7

Non-Tariff Barriers Currently there are no bans, quotas, or other restrictions on textile trade. Kazakhstan Government requires certain goods to be labeled in both the Kazakh and Russian languages. The following items of textile and apparel products are affected by this labeling law: Carpets and other textile floor coverings; Machine-knit or hand-knit clothing and clothing accessories; Textile clothing and textile clothing accessories (except machine knit or hand-knit)

Ontustik” Special Economic Zone in Shymkent City Kazakhstan created the Ontustik” Special Economic Zone specially for production of textiles in 2006 to offer a range of incentives until 1 July 2030. Primary activities in the SEZ include weaving and the production of finished textiles, clothing, carpets and leather goods. About 100 hectares of available land Developed internal infrastructure Close to ‘Western Europe–Western China’ transit corridor

Incentives Offered at SEZ As long as the unit stays in the SEZ the following are offered: 0 % Corporate & Income Tax 0% Land Tax 0% Property Tax Exemption from Social Tax up to 5 years Exemption from customs duties and VAT for products consumed within SEZ Low labor cost in the region: average monthly salary 180-250 USD Low electricity costs, average rate US$ 2-3 cents per KWh

India Kazakhstan Cooperation in Textiles Bilateral cooperation formalized in 2007. The Joint Statement “Tej Kadam” issued during the visit of PM Narendra Modi to Kazakhstan in July 2015 identified textiles as one of the “promising areas of cooperation” between India and Kazakhstan. 4 meetings of the Joint Working Group on Textiles (JWGT) already held between India and Kazakhstan. Last meeting was held in April 2017 in Shymkent City. A 3-member delegation from IL&FS visited Kazakhstan in Sept 2015 to formulate an Integrated Cotton and Textile Strategy for Kazakhstan, Uzbekistan and Turkmenistan. Kazakh companies have been participating in Buyer-Seller Meets organized in India by SRTEPC and Textile Conclave.

Opportunities for India The potential of cooperation may be viewed from the perspectives of export of Indian textile goods and services to Kazakhstan as well as an important destination for sourcing raw materials. Development of the downstream value chain in Kazakhstan Promotion of exports and investments from India Technology upgradation and transfer of technology Providing technical assistance, knowledge sharing and capacity building:

Recent Interactions During the 4th meeting of JWG on textiles held in April 2017, the following were discussed: Kazakhstan’s participation in ‘Textile India Conclave-2017’ Signing an MoU between Cotton Corporation of India (CCI) and a counterpart organization in Kazakhstan on establishment of regular consultations for mutual development of cotton sector of the two countries Both sides agreed to examine two spinning projects which are termed as “stressed” for possible take-over by Indian companies.

Follow up Mission sent details of the ‘stressed assets’ to Ministry of Textiles in May 2017. Ensured Kazakh participation in Textile Conclave 2017 Cotton Corporation of India was requested to forward draft MoU on establishment of regular consultations for mutual development in this sector for consideration of the Kazakh side.

Thank You