 "Dumping, lack of FTAs, incentives hurting textile industry")
After Tuesday's meeting between the Prime Minister and top business heads, the textile industry is expecting the central government to take quick action on its problems.
The measures hoped for include action on free trade agreements (FTAs), on export incentives and release of funds under the Technology Upgradation Fund scheme (Tufs), among others. The textile and clothing industry’s yearly turnover is pegged at $105 billion, of which exports form 35-40 per cent. Capacity utilisation, especially in yarn, has declined by 15-20 per cent in the past couple of months due to decline in export competitiveness. K Selvaraju, secretary general of the Southern India Mills Association, investments worth Rs 1 lakh crore have not received any subsidy benefits under Tufs.
“While the recent rupee depreciation has helped textile exporters in some ways, the industry continues to get hurt in many other ways. For instance, as against the rupee, India's export target nations have also seen currency depreciation, which has almost nullified any benefit. Also, not only is the excise duty on synthetic textile products of 12.5 per cent hurting the industry, the reduction in duty-free scrips from two to four per cent to zero to two per cent has reduced export competitiveness,” said O P Lohia, chairman of Indo Rama Synthetics.
Another charge is that China has a lot of surplus capacity, used to dumped into countries like India through other routes. “India has signed an FTA with Bangladesh, which allows any garment converted in Bangladesh, whether the fabric is from that country, India or any other country like China, to arrive duty-free in India. Such agreements are hurting India, where even Chinese products can now come duty-free. India was competent enough in yarn exports. However, China has stopped buying yarn from India and instead begun producing,” said Sanjay Lalbhai, managing director of textile conglomerate Arvind Ltd.
Lalbhai says while competing nations Sri Lanka, Pakistan and Bangladesh have signed FTAs, such as with Europe, we have got left out. “India has to become part of FTAs. India is not part of any major FTA, unlike its competing nations. If agreements like the Trans-Pacific Partnership agreement come through, India could get completely marginalised,” he said.
“The situation has aggravated in the past couple of months, with imports growing, especially from China. In such a scenario, the Centre needs to provide a level playing field. Unlike our competing nations like Vietnam, Bangladesh and Cambodia which have duty-free access, all textile products from India attract four to 15 per cent duties. We have demanded an export incentive of three per cent for yarn, five per cent for fabric and seven per cent for garments,” Selvaraju said.
