‘Domestic Textile Industry Fails To Take Advantage Of Government Schemes’

Trade & Policy

‘Domestic Textile Industry Fails To Take Advantage Of Government Schemes’

The domestic textile industry has not been able to fully utilize the benefits and incentives provided by the government under various schemes and that is something hampering the growth of the industry. Kavita Gupta, textiles commissioner, ministry of textiles, Government of India is of the view that it is the lack of proper awareness on the part of the senior management of the industry as regards various government schemes, that has led to under utilization of resources provided under various government schemes. In fact, this has also resulted in lopsided growth of the textile value chain and thus the industry is often finding it difficult to face global competition effectively.

"Over the years, the government has come up with various schemes to promote the industry. However, these schemes have not borne desired results due to lack of awareness on the part of senior management. It is high time that the industry gears up and take full advantage of the means and resources, offered under the schemes," stated Gupta recently at FICCI's 9th Annual Conference on Textile & Apparel held recently in Mumbai. She added, "If we want to synergise and augment the efforts, we have to complement these efforts rather than encourage completion among ourselves. Today, the entire world is looking at India and hence as an industry there is no way we cannot be complacent, looking only outward."

The textile commissioner urged the industry to come up with proper roadmap wherein apart from ramping up the production base, it is imperative to chalk out a suitable promotional strategy in the market. "Approach of the industry has not been holistic. We have not been able to sell ourselves despite the fact we are one of the major players in the outsourcing business. We also have to work for ourselves and build our own brand," believes Gupta.

Meanwhile, the domestic industry has struggled lately on the exports front. Exports of cotton yarn, where India is one of the largest players in the world, have already seen a decline of 10%. During April-September 2017, exports of cotton yarn declined to 464 million kg from 517 million during the same period last year.

Sanjay Jain, chairman Confederation of Indian Textile Industry (CITI) has attributed this fall in exports to various policy lapses. He has pointed out that Indian spinning mills performed well in exports during 2013-14 taking advantage of the 2 per cent incremental export incentive, 2% interest subvention and 3% focus market incentive and achieved a record export of around US$ 4,555 million of yarn during 2013-14. However, in 2014, the benefits of export incentives provided to cotton yarn were withdrawn due to some inexplicable reasons. During the year 2016-17, the cotton yarn export was around US$ 3,352 million, registering a decline of 26%. This is despite adding over three million spindles and 62,000 rotors spinning capacity during this period.

He has further stated that India is today exporting more than 60 lakh bales of cotton every year i.e. about 20% of the total cotton production. Exporting of raw cotton bales instead of value addition by converting to yarn is leading to loss of valuable foreign exchange, employment and better remuneration to farmers. This season cotton prices are feared to touch MSP levels due to a big crop & strained capacity of the domestic spinning industry to buy more cotton and stock due to financial and market constraints. In RBI Financial Stability Report, textile industry has one of the highest levels of NPAs & is marked as a stressed industry. As per CITI chief when export benefits such as MEIS and IES were introduced in lieu of aforesaid export benefits, every other segment in the textile value chain including MMF spun yarn were provided with the benefits while cotton yarn was not considered. This policy decision has adversely affected cotton yarn exports to China, the largest importer of cotton yarn. China has shifted from India to Vietnam/Indonesia as they have duty free access, while Indian yarn carries 3.5 per cent import duty. From 2013-14 to 2016-17, there has been a decline in India's cotton yarn exports to China by 42 per cent, while exports from Vietnam and Indonesia has increased at a remarkable rate of 83% and 14%, respectively.