Ministry of Textiles (MoT), Government of India seems to be aggressive on decision making as there are six major decisions that have been taken back to back in the recent months. Industry is also strongly of the view that synergy between them and the Ministry is on the peak. Though few of these decisions were pending from a long time and the industry raised requests time and again for the same. The good aspect of these decisions is that most of the supply chain has been taken into account and small to giant players are expected to get the advantage. Prime Minister’s ‘5F’ Formula insists on covering the entire supply chain from farm to fibre; fibre to factory; factory to fashion; fashion to foreign..
Apparel Resources analyses these major decisions as to how they will help the industry, which particular segment will get benefits, if any specific region of the industry will get the benefits, what impact will these have on job creation, how much of fresh investment may be there.
Decision 1: RoSCTL for Apparel & Made Ups continued
Analysis: The Rebate of State and Central Taxes and Levies (RoSCTL) was launched in 2019 and was supposed to continue till March 2022. But now the scheme has been extended till March 2024, with the same rates as notified by the Ministry of Textiles for exports of apparel and made-ups.
Through the extension of this scheme, the Government is trying to ensure a stable and predictable policy regime.
This continuation is expected to make the products globally competitive by rebating all embedded taxes/levies which are currently not being given any debate under any other mechanism. It will ensure a stable and predictable policy regime and provide a level playing field to Indian textiles exporters. Further, the Government claims that this step will help generate additional investment and give direct and indirect employment to lakhs of people.
Decision 2: RoDTEP for textile products other than Apparel & Made Ups covered in RoSCTL
Analysis: RoDTEP scheme covers yarns, fabrics and other products. The other textile products (excluding Chapters-61, 62 and 63) which are not covered under the RoSCTL shall be eligible to avail the benefits under RoDTEP along with other products as finalised by Department of Commerce.
Decision 3: Budget of Rs. 56,027 crore in FY 21-22 in order to disburse all pending export incentive dues (including textile exporters, over and above RoSCTL & RoDTEP)
Analysis: This step will help the industry especially as they will have more liquidity and crunch of working capital will reduce. It will help apparel exporters bag additional export orders for the coming festive season. For example, only Tirupur’ apparel industry has RoSCTL pending claim of Rs. 3,750 Crore since 1st January 2021 and 31st August 2021. MSME organisations will also be benefited by this step as they have major concern with regard to resource crunch.
Decision 4: Removal of anti-dumping duty (ADD) on several key raw materials such as PTA, Viscose Staple Fibre(VSF), Acrylic Fibre (AF), Nylon; Imposing ADD on Polyester Spun Yarn (PSY)
Analysis: All these steps are mainly to boost the MMF-based textiles industry, like the removal of the ADD on acrylic fibre (AF) originating in or exported from Thailand and imported into India. AF is known as poor man’s wool due to its affordability. The continued imposition of ADD on AF for more than two decades, against almost all the exporting countries, makes the raw material of AF costlier for domestic acrylic yarn producers eventually making the value-added downstream sector uncompetitive.
This decision is going to be beneficial for Indian sweater and shawl manufacturers as now they will get AF at competitive price.
Decision 5: PLI Scheme for MMF & Technical Textiles
Analysis: Rs.10,683 crore has been allocated for over five years to boost domestic manufacturing of MMF, garments and technical textiles under this scheme. This scheme is expected to attract fresh investment of above Rs. 19,000 crore and additional production turnover of over Rs.3 lakh crore in five years as envisaged by the Government.
A chunk of industry strongly believes that the conditions of investment and annual growth are not realistic; so the scheme will benefits only those companies which are having very deep pockets.
Decision 6: PM MITRA approved
Analysis: PM Mega Integrated Textile Region and Apparel (MITRA) was announced in the Union Budget 2021 taking great strides in the man-made fibre (MMF) segment and technical textiles, which constitute two-third of the global apparel trade. Apart from the Government and the industry working to promote production and exports from these segments, PM MITRA will also give a major push for the same. Secondly the parks under this scheme will have world-class infrastructure with plug and play facilities to enable and create global champions in exports. Through this initiative, investment of Rs. 4,445 crore is expected in 5 years. As per industry estimates, this step is likely to generate 7 lakhs direct and 14 lakhs indirect employment opportunities.
As infrastructure and capacity are considered as the two major bottlenecks for the Indian textile and apparel industry, this scheme will get solutions to a certain extent.
Decision 7.: Push on FTAs , textile products prioritised in FTA negotiations
Analysis: India is set to conclude three major trade agreements with the UAE, UK and Australia by 2022.
India is also negotiating with the EU and very recently two more countries have shown interest that they want to start talks for FTA. FTA is a big focus for Commerce and Industry Minister Piyush Goyal. Indeed, they are the need of the hour for the country’s textile and apparel industry as the UK, the EU, the UAE and Australia are major markets for Indian apparel exporters.
India has been facing a tariff disadvantage of 9.6 per cent as against countries like Bangladesh due to the EU’s Generalised Scheme of Preferences (GSP). India’s apparel exports to the UK fell by 0.8 per cent to US $ 1,606 million in 2019 from US $ 1,619 million in 2018, cutting the UK’s share in India’s exports to 9.7 per cent from 10.3 per cent. Similarly, the EU accounts for 49 per cent of India’s total apparel exports.
Therefore, recently the Government has started prioritising textile products in FTA negotiation. It has now set an ambitious target of increasing the textile business size to US $ 350 billion, including US $ 100 billion exports by 2025-26.
Some of the major schemes for textile and apparel industry
| For MSMEs | For MSMEs as well as big companies |
| Credit Guarantee Scheme for Micro & Small Enterprises | MITRA |
| Incubation Centres in Apparel Manufacturing (for emerging entrepreneurs) | RoSCTL |
| Pradhan Mantri MUDRA Yojana (PMMY) | RoDTEP |
| Revamped Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
|
ATUFS |
| Lean Manufacturing Competitiveness for MSMEs | Integrated Skill Development Scheme (ISDS) |
| Design Clinic for Design Expertise to MSMEs | Market Access Initiative (MAI) Scheme |
| One District One Product (ODOP) | |
| Trade Infrastructure for Export Scheme (TIES) | |
| Advance Authorization Scheme | |
| Interest Equalization Scheme |
Note: There are a few schemes like PLI for big companies. Various state governments have also come up with schemes especially for MSMEs.
