CITI Demands ROSCTL for Yarn and Fabric Exports

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The Indian Textile and Apparel Industry, the largest Industrial Employer of the Indian Economy today suffers from various infirmities and thus lack export competitiveness in the international markets”, said Shri Sanjay K. Jain, Chairman, CITI.

Mr. Jain stated that CITI analysis of the quick estimates of Exports of T&A for July 2019 shows that there is an increase in the exports of Apparel while exports of Cotton Yarn and Fabrics have declined by 9.98% and 10.54%, respectively on Year-On-Year and cumulative basis, as shown below in Table-1.

                                       Table-1: CITI Analysis of Exports of T&A for July 2019 (In US$ Million)

Particulars July-18 July-19 % Change Apr’18-July’18 Apr’19-July’19 % Change
Cotton Yarn/Fabs./made-ups, Handloom Products, etc. 915.41 824.01 -9.98% 3738.99 3344.86 -10.54%
Man-made Yarn/Fabs./made-ups etc. 376.39 399.32 6.09% 1616.61 1554.31 -3.85%
Jute Mfg. including Floor Covering 28.90 30.58 5.81% 104.98 109.13 3.95%
Carpet 112.77 123.40 9.43% 467.02 469.39 0.51%
Handicrafts excl. handmade carpet 150.54 151.68 0.76% 594.53 614 3.27%
Textiles 1584.01 1528.99 -3.47% 6522.13 6091.69 -6.60%
Apparel 1274.65 1364.67 7.06% 5320.49 5535.09 4.03%
Textile and Apparel 2858.66 2893.66 1.22% 11842.62 11626.78 -1.82%

Source: DGCI&S and Press Information Bureau

Mr. Jain pointed out that the change in the trends of exports of Apparel and Cotton Yarn/ Fabrics is mainly due to the Scheme “Rebate of State and Central Taxes and Levies (RoSCTL)” announced by the Government of India in March 2019 for the Apparel and Made-ups. RoSCTL scheme has been introduced to provide reimbursement of Central and State Taxes to make sure that taxes are not exported along with the products. However, Yarn and Fabric Segments have been kept out of the same, hence both the sectors are at present suffering badly and exports are declining while others for which RoSCTL is granted have shown growth. Its pertinent to note that some categories like Cotton Yarn has seen a Year-On-Year fall of 35% in exports in the first quarter of the Financial Year while in June month only it was at a staggering 50% low.

CITI Chairman also pointed out that there is a downfall in India’s position in global T&C exports (Table-2). India, which was the world’s second largest exporter of T&C products in 2014-17 after China, fell to 5th position in 2018 as Germany, Bangladesh and Vietnam stepped in. Further, India is also witnessing a substantial increase in T&C imports during the past five years (Table-3).

    Table-2: India’s Exports of Textiles & Apparels

India’s Exports   Value

(US$ Bn)

Global Ranking
  2017 2018 2017 2018
Textiles 19.9 21.4 3rd 3rd
Apparels 17.3 15.7 6th 6th
T&A Combined 37.2 37.1 2nd 5th
Source: ITC Trade Map  
            Table-3: India’s Exports & Imports of T&C  (US$ Bn)

Particulars FY 15 FY 19 % Change
Exports 37.7 37.5 – 0.4%
Imports 6.0 7.4 22.8%
Share of T&A in Total Exports 12.1% 11.4%  
Share of T&A in Industrial Production 14% 7%  
Source: DGCI&S & Ministry of Textiles

Mr Jain stated that the space vacated by China in T&C products has been largely consumed by Bangladesh, Vietnam, Pakistan and others LDCs. While, India on the other hand, has not been able to capture the space vacated by China due to its competitive disadvantages and trade barriers in the international markets.

Mr. Jain further stated that the obvious reasons for lacking export competitiveness in the international markets are the high costs of raw materials and embedded State and Central taxes which are not refunded to the exporters at any stage, amongst others. This makes our intermediate and final products costlier. The estimated calculations shows that Cotton Yarn and Fabrics has non refunded taxes 5 to 6% of FOB value, and this is where Indian products lack export competitiveness to our immediate competitors like China, Vietnam, Indonesia, Sri Lanka, Bangladesh, etc. Many of our competitors, especially the Least Developed Countries (LDCs) have the advantage of differential duties in major export markets like USA, EU, China and India as well.

CITI Chairman makes an earnest appeal to the Hon’ble Prime Minister of India, Shri Narendra Modi Ji and to the Government of India to extend the benefits of currently announced RoSCTL to the Yarn and Fabric Segments as well to help the textile Industry to boost up its export competitiveness in the international markets to achieve higher growth trajectory and generate more employment opportunities to the masses, especially youths and women workforce.

Mr Jain concluded by saying, India has all the potential to become a super-power in Textile and Apparel and is second to none in terms of technological advancement and quality of the products, however, it requires the Government support through policy reforms to make it not only globally competitive but an Epicentre – Make In India – for sourcing textile products, which is also one of the biggest dreams of our Hon’ble Prime Minister.