The government is considering a series of measures, including tax incentives like the removal or reduction of basic customs duty on imported organic cotton as well as long-staple cotton in a bid to give a boost to India's robust textile and apparel (T&A) industry. Currently, these products attract a 5 percent basic customs duty coupled with an additional 5 percent duty.
As India is one of the largest T&A exporters in the world the proposed move assumes significance. The share of T&A in India's total merchandise exports stands at 10-11 per cent, with a commendable 5 percent share in global trade. Additionally, providing jobs to more than 45 million people, including 60 per cent women, it is one of the largest employment generators.
With this, any decision made by the government in its upcoming Budget will surely have a larger impact on one of the cornerstones of the economy. Furthemore, a higher allocation to the Micro, Small, and Medium Enterprises (MSME) sector is expected to have a positive impact on the textile sector; 80 percent of its manufacturers are small players.
Cotton contributes to around 60 per cent of the raw material consumption in the country With an average consumption of around 31.6 million bales per year. According to the international market price, if the duty of 11 percent on imported cotton is waived, the cotton price might stabilize. This will significantly provide the much needed relief to the industry.
"We request the announcement of Production Linked Incentive (PLI) 2.0 by fixing the threshold limit for Rs. 15 crore investment, considering the Knitwear Garments MSMEs in Tiruppur Cluster. Also, we request to include cotton in the purview of PLI apart from garments made of MMF," stated KM Subramanian, President of the Tiruppur Exporters Association (TEA).
Furthermore, some of the noteworthy demands coming from the sector include the supply of cotton, polyester, and viscose fiber at internationally competitive prices. Also, downstream synthetic textile manufacturers are also seeking the government to revoke Quality Control Orders (QCOs) on Man-made Fibers (MMF) in the upcoming Union Budget on the other hand.
"QCO suspended on fibers and yarn has so far not equitably imposed on the value-added fabric and garments. It is regressive to stop raw material imports and promote value-added imports," said Sanjay K Jain, Chairman of the ICC National Committee and Managing Director at Delhi-based TT Ltd.
The early conclusion of free trade agreements with the UK, European Union, Gulf Cooperation Council and New Zealand are also one of the targets of the industry. Another major industry demand focuses on implementing an alternative scheme replacing Amended Technology Up-gradation Fund Scheme (ATUFS). Subramanian further added, "Only 15 percent of the fund allotted was utilized and 85 percent remained unutilised. In view of this, the announcement of an alternate scheme in place of the ATUF Scheme will go a long way in promoting the growth of the textile industry and exports."
