The textile sector is the largest employment generating sector of India, especially for low-skilled workers, and needs to be supported. The Textiles Ministry held preliminary discussions on the matter related to textile industry with officials in the Commerce Ministry and the Directorate General of Foreign Trade. They have forwarded all the complaints received from the industry. The Secretaries from the two ministries are also in touch.

The Textiles Ministry has demanded sops for the yarn and fabric sectors, which were ignored in the five-year Foreign Trade Policy announced early this month. It has also made a case for inclusion of garments in the interest subvention scheme being finalised by the Commerce Ministry to help the sector compete with Vietnam, Sri Lanka and Bangladesh, which get favourable access to developed markets.

Man-made fibre yarn as well as woven and knitted fabrics, in addition to garments, have been extended a 2 percent incentive (in the form of fully transferable duty scrips) in the EU, the US, Canada and Japan. However, sops in these markets do not help yarn and fabric producers as they export very little to these markets.

The Merchandise Export Incentive Scheme (MEIS), however, ignores markets such as China, Bangladesh, Sri Lanka, Turkey, Vietnam and South Korea, which are major destinations for yarn and fabric from India.

The official said that by excluding key markets, the policy has virtually ignored fabric and yarn producers, who also need support in the shrinking world market.

Also the garments sector which is facing a tough time competing with smaller economies such as Vietnam, Sri Lanka and Bangladesh, which get preferable access into the EU and US markets. Interest-rate subvention will give it some relief.

The Textiles Ministry is making all effort to convince the Commerce Ministry to include garments and other sectors in the new interest subvention scheme being finalized by it. Under the scheme, exporters from select sectors will get credit at a 3 percent subsidy for the next three years.