The Council in a SOS sent to the Textile Ministry has lamented that suddenly the notifications earlier issued by the DGFT has been discontinued creating huge otherwise avoidable losses.
The chamber says although our country is predominantly exporting to China and Bangladesh, the spinning sector is capable enough to caputure markets in South American countries like Colombia, Peru, Venezuela, Chile, Argentina and also countries like Morocco, Tunisia with the support of the 4% FMS benefit. These markets could not be accessed earlier due high freight cost. The mills producing yarn currently have export commitments to these countries up to three months. The sudden withdrawal of FMS benefit would make the mills to incur huge losses apart from losing valuable overseas cutomers.
The much needed benefits to the textile industry in the Annual Supplement 2013-14 and also in the Union Budget 2013-14 to accelerate textiles and clothing exports especially the cotton yarn had given tremendons boost to this sector. These benefits propelled the yarn export of country. India exported 593 million kgs of yarn during April to August 2013 as against 397 million kgs of yarn exported during the same period last year. The increased exports of yarn fetched huge foreign exchange for the country during the period of economic crisis.
ASSOCHAM believes that the country should not depend only on China and Bangladesh which account more than 65% of the yarn exported from the country. Considering the huge volume of surplus cotton produced in the country and also availability of surplus spinning capacity, the FMS benefits are essential to capture new markets (other than China and Bangladesh), achieve a sustained growth rate, sustain the viability of the spinning sector and also to ensure a viable income for the cotton farmers.
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