Putting Indian Textiles on the Map
With the Indian textile industry being a crucial element in India’s growth story, Anurima Das takes a look at the Government’s recent efforts to support the industry.
A look at the Government’s recent efforts to support the apparel industry
The textile industry in India has been a key contributor to the country’s GDP for decades. Since Independence, the Indian textile industry grew rapidly due to various government policies and domestic factors. From the start, the industry has employed more than 45 million people through direct employment and 60 million people indirectly; indeed, it is the second-largest employment generating sector after agriculture in the country.
By 2024-25, the industry is aiming to reach a production level of US$350 billion, according to the Ministry of Textiles. In order to build a smooth road to growth for the industry, the ministry is taking further steps and introducing better incentives for the textile industry as a whole. These initiatives have been taken keeping in mind the domestic textile industry.
POLICY FOR GROWTH
Much to the relief of the textile industry, the Indian government has recently announced that they are ready to double the import duty on as many as 328 textile products to 20 per cent. This has been done in an effort to provide a boost to the domestic manufacturing segment of the textile sector. Domestically manufacturing these items in the country will help add more revenue and growth to the home-grown textile industry.
In a statement released recently, the Minister of State for Finance Pon Radhakrishnan declared that the Government is seeking to increase customs duty on 328 tariff lines of textile products from the existing rate of 10 per cent to 20 per cent, under Section 159 of the Customs Act, 1962. The ministry believes that the increase in duties would give an edge to domestic manufacturers, as imported products are currently cheaper. Increase in manufacturing activity will help create jobs in the textile sector, which employs around 10.5 crore people.
The Government had only a month ago doubled the import duty on over 50 textile products–including jackets, suits and carpets– to 20 per cent, as the first move to promote domestic manufacturing. Through a notification, the Central Board of Indirect Taxes and Customs (CBIC) had hiked import duties as well as raised the ad-valorem rate of duty for certain items. According to the textile industry experts, this was a much-needed move as India was not able to give any direct exports incentive to the textile sector, so a support like this will encourage the domestic manufacturing segment.
To draw a comparison, the imports of textile yarn, fabric, made-up articles grew by 8.58 per cent to US$168.64 million in June 2018. On the other hand, exports of cotton yarn/fabrics/madeups, handloom products grew by 24 per cent to US$986.2 million. Man-made yarn/fabrics/ made-ups exports shot up by 8.45 per cent to US$403.4 million.
Apart from this recent move by the Government, the Ministry of Textiles has put forth a series of policies, which the domestic industry can utilise to their best abilities and to bring about a change in their revenue earnings. Here are the initiatives and schemes in brief:
• SCHEME FOR INTEGRATED TEXTILE PARKS (SITP) Under the SITP, the Government provides funding for infrastructure, buildings for common facilities like design and training centre, warehouse, factories, and plant and
INCREASE IN MANUFACTURING ACTIVITY WILL HELP CREATE JOBS IN THE TEXTILE SECTOR, WHICH EMPLOYS AROUND 10.5 CRORE PEOPLE.
machinery. Until now, 74 textiles parks have been approved and are at various stages of implementation, with 18 parks operational and 32 under implementation.
• INTEGRATED PROCESSING DEVELOPMENT SCHEME (IPDS) The Government, under this scheme, assists the existing textile processing units to follow relevant environmental standards using the latest technology. This is a way in which the ministry ensures that all textile production follows the environment-friendly approach.
• AMENDED TECHNOLOGY UPGRADATION FUND SCHEME (ATUFS) ATUFS as a scheme has been designed to provide incentives to entrepreneurs and business owners so that they can fund technology upgradation for the production
THE CENTRAL GOVERNMENT WILL PROVIDE 15 PER CENT SUBSIDY TO THE GARMENT, APPAREL AND TECHNICAL TEXTILE SECTORS.
process. Upgraded technology will help scale up the production and will add value to their production. A one-time capital subsidy is on offer to the business owners undertaking technical textiles production, garment manufacturing, and weaving. The Central Government will provide 15 per cent subsidy to the garment, apparel and technical textile sectors. This is subject to the ceiling of US$4.62 million on upgradation. Other subsectors will receive 10 per cent subsidy for upgradation. A fund of US$2.7 billion has been allocated for the ATUFS, which was launched in January 2016. The funds will be spent over the span of the next seven years. ATUFS facilities are expected to receive an investment of US$15 billion and create three million jobs in the country.
• MARKETING DEVELOPMENT ASSISTANCE (MDA) In order to encourage exporters to conduct promotional activities for their products, MDA was launched. The Assist Focus export promotion programmes are organised in specific markets such as Latin American Countries (LAC), Africa and Association of Southeast Asian Nations (ASEAN) to fuel exports. The objective of this programme administered by the E&MDA Division of the Department of Commerce is to develop the already established markets overseas for Indian textiles.
• MERCHANDISE EXPORTS FROM INDIA SCHEME (MEIS) ` According to the Ministry of Textiles, the textile sector is one of the biggest beneficiaries of the MEIS. This scheme has been put into place to stimulate the growth of textiles exports from India in various traditional and emerging markets. The scheme has been finalised after consulting various stakeholders. Recently, the market coverage of the MEIS has been extended. The Government has sanctioned US$3.2 billion to fuel the scheme. Alongside all these incentives and the special schemes focused to give a growth impetus to the textile industry, a ‘special package for the Textile and Apparel sector’ has also been put into action. Under this package, the Government plans to generate more than 10 million jobs in the textile industry over the next three years. With an expectation to push forward the Indian textile export to US$30 billion within the next three years, the ministry is also paying special attention to the labour laws practised within the textile industry in the country. Moreover, reforms in terms of tax incentives, provident fund, employment terms, and production capacity alterations are also underway. Only time will tell now if these various reforms and incentives fulfil their objective of promoting the Indian textile industry and position the country as a leading textiles supplier worldwide.