The Federation of Indian Chamber of Commerce and Industries (FICCI) has urged the Indian government to introduce more skills training for workers in the textiles and garments sector and raise duty drawback rates if it wants to avert a crisis in the sector.

At a meeting with the country's textiles minister Dayanidhi Maran yesterday (17 June), the FICCI also called for cheap export credit and exemption from income tax on garment export earnings.

"The government's skill development programmes need to be scaled up to train at least two million people in a year," the chamber said in a statement, noting that textiles is the second largest employer after agriculture.

It also pointed out that measures are needed to offset weak demand in traditional markets like the US, where India's textile exports fell by around 14% in the first four months of 2009.

Also of concern is that fact that competitors such as Vietnam and Bangladesh have overtaken India's 5.7% share of the US apparel market - with a share of 8% and 6.1% respectively.

FCCI recommends the duty drawback for the textiles sector should be raised by at least 5% to ensure that all duties (including local taxes) are reimbursed to the exporters.

And it would like to see 100% risk coverage through cheaper Export Credit Guarantees for exports to countries in Latin America and the Middle East.

FICCI also asked the government not to lift the Minimum Support Price (MSP) of cotton in the coming season and stressed that a comprehensive National Fibre Polic is needed urgently.

Other suggestions include exempting export earnings from income tax for the next two to three years, and providing export credit at the rate of 7% until 2010.

While India's exports to the US have declined, those of Bangladesh and Vietnam have increased by 12% and 5.2% between January and April.

The country's textiles and apparel production also fell by 1.2% in 2008-09, compared to growth of 11% and 6% in 2006-07 and 2007-08 respectively.

FICCI believes changes to India's labour laws would boost large scale production.

The textiles minister has already said he is looking at ways of providing relief to India's textile industry.

As well as a number of short-term aid measures he wants to create up to 10m new jobs in the sector over the next five years and boost its annual growth rate from around 6% to 8-10%.