Textiles sector seeks a leg-up from government

Textiles sector seeks a leg-up from government

Context

 A couple of major issues have impacted the country’s textile and clothing sector in the past year. Expectedly, the industry’s aspirations for the Union Budget are related to the revival of exports and the GST

‘Stagnant exports, technology upgradation need attention’

According to data available with the industry and the export promotion councils, readymade garment exports grew less than 1% between April and November 2016 in dollar terms and dropped 3.03 % in rupee terms

Exports data

• Fabric exports were to the tune of $230.37 million in April 2017 and slumped to $113 million in October
• Yarn exports fared better in value terms at $267.33 million in April and $354.05 million in October last year. However, in terms of volume, yarn exports stayed almost flat.
• Apparel exports dropped 8% in December alone compared with a year earlier.

Vietnam taking over

“For the last three years, exports have almost stagnated. Countries such as Vietnam have overtaken India in yarn exports to China.”

Effect of Demonetisation and GST

The two major policy decisions of the government in the recent past, demonestisation and GST, have impacted the industry more than the economic slowdown

Stimulus package needed

• A stimulus package will give relief to the units,said Sanjay K. Jain, chairman, CITI
• Rebate of State levies (ROSL) is critical for revival of exports
• Towards this, the government should sanction adequate funds for ROSL and extend it to all products instead of just garments and made-ups, said Mr. Jain.

ROSL

• According to data available with the ministry, the allocation for ROSL for 2017-2018 was ₹1,555 crore and it has been exhausted
• However, according to the industry, garment exporters got ROSL only for April and May and made-up exporters received rebates till July this financial year

‘Allocations must rise’

• The industry estimates it needs about ₹2,100 crore to clear pending ROSL reimbursements and another ₹2,500 crore for the next fiscal
• So, allocations need to go up substantially, sources said.

Steps Centre should take

• The Centre should announce the drawback rates, restore the pre-GST level of incentives for exports and increase the import duty, said representatives of industry associations.
• The Apparel Export Promotion Council has said that under schemes such as Advance Authorisation and EPCG, applicants should get early approvals. This will lead to higher investments.
• Officials in the ministry said thrust areas now were going to be powerlooms, technology and export promotion.