Indian textile industry displeased by the new foreign trade policy

Textile industry is the second largest employment provider in the country and whose contribution to the country’s growth has been well recognized. But in terms of strengthening the manufacturing base, promoting exports and generating employment, has not got its dues in the Foreign Trade Policy. Textile mills have expressed disappointment over the foreign trade policy announcement as it does not address some of the sector-specific issues. While, Textile exporters feel let down by the new foreign trade policy (FTP), which they said has ignored the cotton yarn sector

R.K. Dalmia, chairman of Cotton Textiles Export Promotion Council, points out that there is no announcement on extension of interest rate subvention. The government should recognise the potential of the textile and clothing sector and support it with adequate incentives.

According to T. Rajkumar, chairman of Southern India Mills’ Association, the 2 percent duty scrip has been announced only for mainstream cotton products and 5 percent for handloom, carpet and coir products. The industry has been seeking 3 percent interest subvention to manage high cost of funding. There should be incentives for yarn, fabric and garments.

Prem Malik, chairman of Confederation of Indian Textile Industry, said that amalgamating Focus schemes under the Merchandise Exports from India Scheme, cotton yarn has been ignored. Similarly, the 2 pc incentive for man-made fibre yarn and woven and knitted fabric was only for exports to European Union, the U.S., Canada, and Japan and not to the south Asian countries.

Knitwear exporters in Tirupur have welcomed some of the key announcements in the policy. According to Raja M Shanmugan garment exporter and state council member of Confederation of Indian industry said that the proposal to focus on free trade agreements will be a boost for exports in sectors such as textiles, where many of their competitors are having an edge over them primarily.

There are several announcements that will reduce the transaction costs for exporters.

According to Prabhu Damodaran, secretary of Texpreneurs Forum, there are several annoucements made that will reduce the transaction cost for exporters. The decision to make duty credit scrip transferable and usable for payment of customs and excise duties and service tax, and integration of various export promotion schemes for merchandise exports, are welcome measures.

The Textile Ministry should liaison more with Commerce Ministry to ensure that textiles sector gets due credit in all the trade pacts signed with other nations, he said.

Tirupur Exporters’ Association president A. Sakthivel said that the policy not only aimed at increasing exports but also at improvement of the entire trade eco system. The initiative to permit self-certification by status holders for the goods that originated from India will benefit those exporting to countries that had trade agreements with India. He appealed to the Union Government to include Australia, New Zealand, Mexico, Russia, Switzerland and Latin American countries under the MEIS reward rate.

In the case of the engineering sector, V. Lakshminarayanaswamy, president of Southern India Engineering Manufacturers’ Association has said hat the local capital goods industry will be encouraged as the export obligation for domestic sourced capital goods has been reduced.

Efforts to encourage new entrepreneurs and micro, small and medium-scale manufacturers in global trade will benefit the manufacturing sector.

However, the pump set industry will be affected as the incentives provided for export of agricultural pump sets under the focus product scheme has been reduced to 3 percent from five percent.

D. Nandakumar, president of Indian Chamber of Commerce and Industry, Coimbatore, has said that the policy focuses on export of quality products and this will improve the credibility of Indian products.

The trade policy has included areas such as ease of doing business, job creation, transaction simplification and speedy approvals.

The government has set the goalpost of $900 billion by 2019-20 from the current level of $465.9 billion in 2013-14.

Efforts should be made to negotiate tariff reduction with the South East Asian Countries like Vietnam so as to link up with the value chain in the region which is no less in importance than the South Asia.