Lack of Free Trade Agreements (FTAs) with different countries is badly affecting the growth of the Indian textile sector. Exercising control over cotton prices throughout the year is also essential to stimulate the growth of the sector.
P. K. Chatterjee
It is no longer a new information that India is the second largest textile exporter in the world. The country is just behind China, as per the latest data available from UN Comtrade. However, before we talk about further improvement, we need to have a glance at the present business landscape, and judge how conducive is the environment to accelerate growth of the Indian Cotton Textiles Industry.
The Cotton Textiles Export Promotion Council Of India (TEXPROCIL), the oldest Export Promotion Council (EPC), has completed 60 years since its establishment in 1954. The 60-year-old council, which has recently obtained the ISO 9000 certification, has been facilitating exports of cotton textiles from India including yarns, fabrics, home textiles and made-ups since its inception.
The council promotes exports through buyer seller meets, participation in trade fairs, in-depth market studies and through leading delegations. Last year the council members exported close to 11.3 bn US$ of cotton textiles, and this year they have an ambitious target to exceed 13.5 bn US$ of exports.
With a view to encouraging the exporters of the cotton textiles, TEXPROCIL organises an award ceremony every year. This time it was arranged in Mumbai on 12thSeptember (2014). These awards are recognised worldwide by textile importers, and hence exporters attach great importance to these awards. This year TEXPROCIL distributed 71 awards based on 29 criteria, including the coveted Gold Trophy for the highest global exports.
THE COTTON TEXTILES EXPORT PROMOTION COUNCIL, MUMBAI
EXPORT AWARDS FOR THE YEAR 2013-2014
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On pretext of the award ceremony, Chairman of the council Shri Manikam Ramaswami, said, “We have been able to identify the requirements in trade policy that will ensure harmony across the value chain and clearly articulated it. No more quantity restrictions for any part of the value chain... All parts of the value chain will be able to access international prices. Draw back calculation will be modular – and incentives will start from the finished goods and flow up stream with smaller numbers to ensure that at all times Indian products from ‘cotton to yarns to fabrics’ will be available cheaper to Indian value-adding companies, so that the value addition within India gets encouraged.”
Drawing attention on an existing big challenge, the TEXPROCIL Chairman said, “We have a situation where, in a cotton surplus country, every year the cotton prices go above International prices from February onwards until the new season, severely impacting our competitiveness. This needs to be addressed. TEXPROCIL has already articulated a revenue positive solution to the ministry – and hope it will be implemented within this cotton season itself.”
Lack of Free Trade Agreements (FTAs) with different countries is badly affecting the growth of the sector. Highlighting the present scenario thereon, he said, “On the tariff front, we need to have FTAs with EU, Canada and Australia; favourable duty in China similar to Pakistan, Bangladesh etc., who have negotiated reciprocal benefits with China. We have a 34 billion US$ deficit with over 12 Billion US$ imports taking place at less than 5% duty. We need to bargain a reciprocal benefit for our textiles. China imports 20 billion US$ of textiles. We can improve our exports by a huge amount should we get a level playing field.”
Relative tariffs (import duties) of Cut and Sew items into different large markets (EU, Canada and China) for India
It can be clearly seen that India suffers very high relative duties into all markets. It cannot overcome these huge adverse tariff barriers without government support. In addition, India has higher power costs, logistics costs, interest costs than the competing countries.
All these things have been presented to the government, however, translating the proposals into actions take time. Prudently considering to compensate this time lag, Shri Manikam Ramaswami suggested, “Until such time all these things happen, our government needs to assist us. Fortunately, we do not need anything more than an honest implementation of the stated incentive policy. Incentive policy clearly states that incentives will be given to those products that create maximum number of jobs for a given turnover; maximum net foreign exchange earned for a given turnover; freight compensation when exported to distant markets.”
He asserted, “On all these three counts, the textiles, especially garments and home textiles, score several times more marks than any other product exported out of India.” Pointing to the lack of focus on this perpetually growing sector, Shri Manikam Ramaswami said, “Sadly the previous regime did not stay true to its stated policy and chose to give the highest incentive to an assembled electronic product made out of predominantly imported components. Set top boxes and push botton telephones top the chart and sadly the labour intensive 100% net foreign exchange earner, textiles, is right at the bottom.” According to him, one billion US$ exports creates one lac jobs directly and similar amount indirectly in our value adding sectors.
“Textile is a highly potential industry for India. We have to encourage the Indian Textile brand for zero defect and high quality. Every stake holder’s sincere co-operation only can take the industry to the next level,” said Shri S. K. Panda, Secretary, Ministry Of Textiles, GoI, who was also present on the occasion.
On the occasion of TEXPROCIL EXPORT AWARDS FOR THE YEAR 2013-2014, the awards were distributed by Hon. Minister of Textiles, Shri Santosh Gangwar. In his assuring speech, he said, “After agriculture, our textile sector has the highest potential to grow. After China, we stand second in the global textile export arena. In the last 100 days, our Prime Minister Shri Narendra Modi has initiated a great reform in the country. I believe with your co-operation, we can take the Indian textile industry much forward. As the textile sector has a huge potential to generate employment in the country, its growth is essential for the economic progress of the people. From the government’s end, we will provide all kinds of support in your mission to grow.”
Although, it is too early to expect a big action from the new government in the external front, it is expected that the government should concentrate on removing the internal encumbrances with immediate effect. Indian textile industry is an export-oriented industry since the time immemorial, and it is the second major sector for employment generation. Considering these, steps to facilitate its export also should be taken within a reasonable time. We must target to be on the top of the UN Comtrade within a few years.
Pic.: Hon Minister of Textiles, Shri Santosh Gangwar is giving the Gold Trophy for the highest global exports to Vardhman Textiles Ltd. (Group Companies).
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