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.

Apparel - - Contents -

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.

GROWTH INI­TIA­TIVES

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.

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