The chairman of one of India’s textile trade bodies is calling on the government to implement new policy support measures to help grow the sector as it works to fend off competition from other suppliers including Vietnam and Bangladesh.
Sanjay Jain, chairman of the Confederation of Indian Textile Industry (CITI), says the industry has gone through a phase of consolidation where exports stagnated, aggressive state policies directed investments, and domestic demand was disturbed by demonetisation, banking restructuring and implementation of the Goods and Services Tax (GST).
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He adds that India, which was the world’s second largest exporter of textiles and clothing during 2014-17 after China, fell to fifth place in 2018 behind Germany, Bangladesh and Vietnam. India’s textile and clothing exports have declined from US$38.6bn in 2014 to US$37.12bn in 2018, while imports increased from $5.85bn to $7.31bn during the same period.
CITI has issued a white paper containing a ‘Ten Point Agenda’ detailing the steps it deems necessary for the sector to realise its potential. The paper recommends:
- Simplifying technology upgrade fund schemes (TUFS) guidelines and clearing all pending subsidies in a time-bound manner.
- Extending the Rebate of State and Central taxes and Levies (RoSCTL) benefits for the entire textile value chain. “The export industry should not be forced to bear the cost of cross-subsidies which are in built-in power, financing and other costs, and making Indian exports further uncompetitive in global markets which is visible in the stagnated export figures,” it says.
- Launching a Technology Mission on Cotton to focus on improving cotton productivity and address other issues in the cotton sector to make Indian cotton competitive internationally.
- Introducing a direct subsidy to cotton farmers when cotton prices fall below the Minimum Support Price (MSP) to ensure the value-added downstream industry gets raw material at market-determined prices.
- Announcing a National Fibre Policy to ensure a win-win strategy for all the stakeholders and ensuring adequate availability of quality raw material at an international price throughout the year to achieve the potential growth rate of the textiles and clothing industry.
- A “mission mode” approach for promoting the man-made fabric (MMF) sector. The MMF downstream industry must get its raw materials at internationally competitive prices, it says, to enable it to increase its share in both export and domestic markets. Also, correction of the inverted GST duty structure on the MMF sector is recommended as it is causing a huge blockage of funds, and refunds are very difficult as well as time-consuming. A uniform rate of 12% is recommended for the MMF sector.
- Reducing Hank Yarn Obligation (HYO) from 30% to 15%.
- Employee State Insurance (ESI) benefits for the entire textiles and clothing industry.
- Urgent need to negotiate free trade agreements (FTAs) with developed and large markets like the EU, Australia, Canada, Britain to ensure that a level playing field is provided against competitors like Bangladesh, Vietnam, Cambodia, Pakistan and Sri Lanka.
- Address GST issues on textile and clothing so that refunds can come to the industry quickly and enhance liquidity and; appoint a special officer to look into other GST-related issues.
The detailed paper will be submitted to the new Union Textile Minister on the formation of the new government.
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