I would like to express my sincere gratitude to Union Finance Minister, Shri Arun J aitley for being sensitive to the problems of the textile industry. I am thankful to the Cabinet Committee on Economic Affairs for approving Rs. 1300 crore package for the textile sector for skill development and capacity building for the period 2017-2018 to 2019-2020. It will have the National Skill Qualification Framework (NSQF)-compliant training courses with funding as per the common norms notified by Ministry of Skill Development and Entrepreneurship (MSDE). Though, the new package may not address all concerns completely, but as productivity level goes up, the sector’s global competitiveness will certainly improve. It has come as a New Year gift for the textile industry.
However, the textile manufacturing and trade of the country is still under stress owing to the ongoing transition in the domestic economic environment. Moreover, as per RBI Financial Stability Report, textile sector is amongst the top 3 stressed industries in the economy. Many old textile mills have been shut down while new capacities are coming up at the cost of tax payer’s money. Indian spinning industry had performed well in cotton yarn exports during 2013-14 taking advantage of various export incentives and achieved a record export of around US$ 4,555 million. However, in 2014, the benefits of export incentives provided to cotton yarn were withdrawn due to some inexplicable reasons.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 only around US$ 3,352 million, registering a decline of 26%. This policy decision has adversely affected cotton yarn exports to China, the largest importer of cotton yarn. Further, China imposed 3.5% import duty on yarn from India under Asia pacific Trade Agreement (APTA) while duty free access is given to Vietnam. This has led to large capacity expansion in yarn manufacturing in Vietnam, which has surpassed India to become the largest supplier of cotton yarn to China.
Moreover, post GST, India’s import of garments from Bangladesh is increasing at a very high rate. There is a great need to impose safeguard measures such as Rules of Origin, Yarn Forward and Fabric Forward Rules on the countries like Bangladesh and Sri Lanka that have FTAs with India to prevent cheaper fabrics produced from countries like China routed through these countries. Garment manufacturers in India have to pay duty on imported fabrics, while Bangladesh can import fabric from China duty free and convert them into garments and sell to India duty free. This is putting Indian garment industry at a major disadvantage and it is feared that this figure will go up further in the coming days as more Indian brands shift sourcing from India to low cost duty free countries like Bangladesh and Sri Lanka.
CITI has recently given a representation to the Hon’ble Textile Minister on the issue of release of committed liabilities (Rs.6000 crores) under M-TUFS and R-TUFS which is pending since last three years due to third party verification. The Cabinet Committee had approved the amount in December 2015, however, industry is yet to receive the subsidies. In the 1st meeting of IMSC held in October 2016, it was decided to entrust the study to NABCONS giving a timeline of two months. However, till date NABCONS has not delivered its report and now it appears the study is a failure. We have requested the Hon’ble Minister to constitute a task force comprising representatives from Financial Institutions (Banks), Industry Bodies and Ministry of Textiles to finalise the committed liabilities on a war footing and release the subsidies at the earliest to ease the severe financial crunch being faced by the textile mills and also avoid further losses in this regard.
I am happy to inform the industry that the Hon’ble Textile Minister Smt. Smriti Zubin Irani has consented to inaugurate the 9th Asian Textile Conference (ATEXCON) CITI’s flagship event scheduled on 14th March 2017 in Mumbai. The event will witness participation from all the stakeholders such as senior government officials, policy makers & trade experts who will be present to deliberate on important aspects of the textile and clothing industry. It is my pleasure to invite all my fellow stakeholders to the Conference and deliberate on important issues affecting the Textile & Clothing Industry. As the new year is starting, I wish the entire textile and clothing fraternity a very warm, prosperous and delightful 2018 ahead!