Once again, the Government is the focus of discussion in the industry. The Recent days have seen some major announcements being made by the Government, and which have received a positive response from the trade associations. Decisions include the refund of accumulated Input Tax Credit (ITC) at fabric stage; rates cut on Chenille fabrics and other fabrics under heading 5801; allowing the quarterly filing of return for the small taxpayers having turnover below Rs. 5 crore; decision to increase import duty on 76 textile and apparel items (24 knitted apparel categories, 24 woven apparel categories) at 6 digits level to protect the domestic manufacturers from rising imports; and not to forget the announcement of 28 per cent hike in Minimum Support Price (MSP) of cotton.
Irrespective of the above decisions, I can see long-term planning and policy formation still missing in the Government’ vision and action. Just 8 months back, the Government increased basic customs duty on imported polyester fabrics from 10 per cent to 20 per cent owing to threat of cheaper imports… But did the Government ever ponder over India’s slow capability to grow its polyester-based garment exports till date before taking this decision? The reason is simple! Indian polyester is not of good quality and with the increased customs duty on imported polyester, it is furthermore difficult for the Indian apparel exporters to be competitive. Can Indian polyester ever compete with the quality of polyester made in Indonesia, especially when it comes to prints? To add on, the cotton price is today costing somewhere around Rs. 51,000 per bale which was somewhere around Rs. 39,000 per bale just a few months back. So, how can the apparel exporters plan for long-term or even survive when there is such a fluctuation in price happening every other day?
Look at China… It keeps with itself a buffer stock usually of nearly 120-150 lakh tonnes of cotton, which by this August, is expected to drastically go down to barely 25-40 lakh tonnes. So, China is planning to import at least 20 lakh bales from India for the new season to control its market. The question then arises is when will India learn from its neighbours about having a proper stock or system in place to keep the price in control for its exporters…?
In a similar context relating to advanced measures for its apparel industry, has India prepared itself to be saved from the impact of cotton price globally which might shoot up any time? The US, which is the third biggest cotton-producing country, has faced significant destruction of cotton crop which will set off a sudden hike any moment.
A close analysis of these circumstances corroborate the fact that the Government is just trying to appease small-time manufacturers of polyester fabric… Whatever profit we might receive at one end will be lost at the other end due to lack of awareness and sufficient foresight. This is not a win-win situation for anyone. All this is happening because our Government still does not believe in long-term planning or policy formation…!
