Centre considers Bi-lateral agreements with new nations to boost Textile exports
CHENNAI : As free trade agreements (FTAs) with major countries in Europe and US getting delayed, the Ministry of textiles is looking at countries like Australia, CIS, including Russia and Africa, to boost exports through bi-lateral agreements. This comes on the back drop of the ministry's target of doubling textile exports in the next 10 years from the current level.
The Textiles Ministry has set a target to double textiles exports from the current level in the next 10 years. However, the challenge remains lack of FTAs, credit availability, old labour laws, which currently puts India at competitive disadvantage, Textiles Secretary Rashmi Verma said.
Textile export target for 2015-16 was $47.5 billion. Till December, export clocked was around $32 billion. “We might be little short of target, but by and large we will achieve it,” said Verma.
Last year, textile export was around $42 billion, large of part of it cotton and yarn, said Alok Kumar, Union Development Commissioner (Handlooms) adding that current global environment is challenging.
Verma added since India doesn’t have FTAs with US and EU, our sector is at big disadvantage compared to Bangladesh and Vietnam. They are exporting at zero duty, while Indian exports subject for 10-14%. Garment sector can double exports in a year's time if FTAs are in place, added Verma.
The Textile Ministry also requested the Finance Ministry to give some kind of tax incentives to the weavers to make this sector attractive. The suggestion includes offering tax holidays and interest subvention among others.
Verma also wanted relaxation in Labour Laws including allowing women to work at night and want modification in Contract Laws, said Verma, adding that the Ministry will introduce new Textile Policy in the next two months.
"The new modified and simplified textile policy is ready, we are in the process of sending it to Cabinet. We should be able to bring it out in two months time,", she said.
The policy will focus on productivity of textile sector, generating more employment, bringing down the cost of production, penetrating into newer markets, and increase value added products contribution from the current 25%.
Commenting on WTO guidelines and its impact, Verma said most of the incentives or subsidies given by the Ministry are production related. Those related to processing and skilling would be continued, she said. A meeting of all stakeholders would be held next month to take stock of current situation. It would also review which are the subsidies and concessions that could be continued or phased out.
On the revised Textile Upgradation Fund Scheme (TUFSW), Verma said revised guidelines have been finalised. It is being placed before the Cabinet.
Thrust will be value addition, which is currently around 25%, said Verma. Traditionally the focus has been exporting raw material, but the fabric and the garmenting was not happening much since our products were not competitive in the international market due to duty structure.
"We are trying to balance the value chain and trying to focus on fabric and garmenting so that value addition can take place within the Country. Raw material share will come down, when the overall exports grow and that is what we want.”
On cotton, Verma said, this year we did not had any problem, since market rate was higher than MSP. But, yes with the shortage of cotton export has to be seen whether we need to encouraging, that is why the Ministry want to focus on value addition.