by Dheeraj Tagra
01-June-2019 | 7 mins read
Indian textile & apparel sector has the vision to become US $ 350 billion industry by 2024-25; however, looking at past few years’ performance it seems to be a quite difficult task. With the strong NDA government back in power, the industry expects to get policy support, which is one of the most needed aspects to achieve this ambitious target. According to industry estimate, currently the size of Indian textile and apparel industry is around US $ 160 billion.
India, the world’s second largest exporter of textiles and apparels during 2014-17 after China, has fallen to 5th place in 2018 as Germany, Bangladesh and Vietnam have stepped in. India’s T&C exports have declined from US $ 38.60 billion in 2014 to US $ 37.12 billion in 2018 while their imports have increased from US $ 5.85 billion to US $ 7.31 during the same period.
Last 5-year period has been a period of consolidation, policy disruptions and shaping up of a new India where many structural reforms took place in the Indian economy and also specifically in the Textile & Clothing (T&C) Industry.
Sanjay K. Jain, Chairman, Confederation of Indian Textile Industry (CITI) is of the view, “Indian economy enters into a very important phase with the new NDA Government taking charge after the 2019 Lok Sabha elections. Our industry has gone through a phase of consolidation where exports stagnated, aggressive state policies directed investments and domestic demand was disturbed due to demonetisation, banking restructuring and implementation of Goods and Services Tax (GST).” He further adds that now our industry as well as the entire economy are in a very optimistic mood and are looking towards the beginning of a golden era where it will realise its true potential and lead to inclusive growth of the country with considerable employment opportunities, especially for the rural women workforce along with technically qualified skilled manpower.
CITI has a 10-point agenda which it wants to be addressed by the new government on a priority basis which are as follows:
1. Announce National Fibre Policyto ensure win-win strategy for all the stakeholders and ensure adequate availability of quality raw materialsat an international price throughout the year to achieve the potential growth rate of the textiles and clothing industry.
2. Urgent need to negotiate Free Trade Agreements(FTAs) with developed and large markets like EU, Australia, Canada, Britain,etc. to ensure that a level playing field is provided against competitors like Bangladesh, Vietnam, Cambodia, Pakistan, Sri Lanka, etc. Focused approach should be made to sign FTAs or Preferential Trade Agreements (PTAs) with large global markets to provide a level playing field to the industry. Besides, conclusion of FTAs with various countries, which are already under progress, should be expedited.
3. Simplify Technology Upgradation Fund Scheme(TUFS) guidelines and clear all the pending subsidies in a time bound manner (backlog around Rs. 9,000 crores under various TUF Schemes). Time bound subsidy clearances have to be ensured, as owing to variety of reasons thousands of crores of TUFS subsidy are pending for a long time which has made many units go sick.
4. Extend RoSCTL benefit 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.
5. Mission mode approach for promoting MMF sector, as without its growth, the textile industry can never achieve the US $ 150 billion export target by 2024-25. MMF downstream industry must get their raw materials at internationally competitive prices to enable increase its share in the export and also domestic markets. Inverted GST duty structure on MMF sector shouldbe corrected, as there is huge blockage of funds and refunds are difficult as well as time consuming due to non-allowance of service GST adjustment against output liability. Need to have a uniform rate of 12 per cent for MMF sector.
6. Employee State Insurance (ESI)benefits should apply for the entire T&C Industry: The textile industry is still more than 60 per cent unorganised, hence a majority of people are not able to get Employee State Insurance (ESI) benefits. CITI proposes that an ESI-type facility on contribution basis should be made available to the workforce in an unorganised sector like those employed in the organised sector.
7. Address GST issues on T&C,so that refunds can come to the industry quickly and enhance liquidity. Further there are many small GST irritants which need important redressal for which a Special Officer should be assigned to look into all such issues.
8. TMC-II (Technology Mission on Cotton)may be launched at the earliest. Need to focus on improving cotton productivity and address other issues on cotton sector to make Indian cotton internationally competitive.
9. Direct subsidy to cotton farmersshould be introduced when cotton prices fall below the Minimum Support Price (MSP) to ensure that the value-added downstream industry gets raw materialsat market determined prices – in an internationally competitive environment as the industry cannot bear the social subsidy burden.
10. Reduce Hank Yarn Obligation (HYO)from 30per cent to 15 per cent (as already recommended by the office of the Textile Commissioner) and also reduce the number of items from 11 to 3 prescribing the fabric construction details under Handloom Reservation Act to enable ease of doing business.
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