There is a good news for renewal and enhanced global competitiveness of India’s textile and clothing industry which has been in doldrums since 3rd quarter of 2019 and,for further devastated by Covid for entire of 2020.
It is thus in high time that the Govt realised the rapidly falling exports of India s textile/clothing industry with strong headwinds of competition from new challenging players like Vietnam, B.Desh, Turkey,Pakistan,others which have not allowed India to be amidst 5 top textile exporters despite its no. 1 position of strength in cotton and cotton yarn production.The Key difcult areas have been falling garment exports and,very low share in exportof MMF and synthetic textile products which have nearly 60% share in global trade.
With the agriculture sector dependent on much wanted rains, and share of industry declining in national GDP; the govt now seems to be changing focus to `manufacturing` sector to bring in self reliance and reduction of imports of non essential goods, and much desired industrial and urban employment for teeming millions of qualified educated `youth for job`.India s textile and clothing industry can play such pivotal role with the target of increasing its turnover and size to USD 300-350 Billion in next 4-5 years.
In this context India a national Budget of o1 Feb 2021, has come is as a true saviour and driver for Textile and clothing industry to drive export earnings.
`A Review of Budget snippets and Implications for India s Textile Industry`
Some of the key areas and issues addressed for India s Textile and clothing industry in the 01 Feb Budget are to be understood as per below:
- There has been a rationalisation of import duties on Synthetic raw materials , and esp. for reducing the BCD _Basic Customs Duty to 5% level on Nylon chips, fiber and yarns. This will create level playing field for the Nylon sector and especially help the lagging MMF industry in key hubs of Surat and south India to produce MMF textiles at internationally competitive prices, and help increase export share.
** However,textile industry s demand for uniform GST structure ,and abolishing ADD_Anti Dumping Duty on VSF/VFY materials for manmade textile value chain Yet remains an issue for the manufacture of MMF textiles that have increasing demand esp.the sportwear and fashionwear
- The above move Along with abolition of ADD-Anti Dumping Duty on PTA [ the basic RM for polyester value chain ] will lead to enhance the export of Manmade textiles from India,and help grow India s Textile industry size to $ 300 to 350 Billion,and also enhance its share in global exports from present day 5 % to about 7% by 2024; and to slot India amongst first 5 exporters of T & C by improving share of India s MMF exports.This will address the long pending demand of MMY sector.
- The reduction in BCD for Nylon raw materials ,and abolition of ADD on polyester basic RM/PTA, will help India s downstream Textile/fabric and garment sectors to be internationally competitive and gain export share in the non cotton T &C sector which commands large volumes.
- Another 6 keys areas of Budget support for India s textile sector are summarised below for the new /additional benefits doled in the Budget;
A] Provision of funds of approx. Rs 1450 Crore,[that is INR 14500 Million] for NTTM_National Technical Textile Mission over the years 2021 to 2024.This allocation will help Indian Tech Tex sector to replace and offset imports worth $ 16 billion ,with Indeg. Tech -tex/non woven textiles, for high tech and advanced technical textiles & industrial en uses like industrial and infrastructure /geo- Textiles.
B] Budget allocation has been provided to create 7 no. global size Mega Textile Parks, of 1000 Acre plus,in the country over the next 3 years. This will help attract FDI from global textile investors and MNC brands.
C] The ATUF_ Amended TUF scheme budgetary allocation gets extended to Rs 700 Crores, that is INR 7000 Million vis a vis past allocation of only Rs 500 crore ,
D] In addition to the expanded budget for the ATUF scheme, a provision of Rs 100 Crore [INR 1000 Million ]been provided for the ISSD_Integrated scheme for Skill Development,and
E] Towards enhancing the stuck up working capital needs of the industry, the Budget has cleared `digital` refund to the textile exporters of duties and levies[that is central and state level taxes], under the Ro DTEP scheme.
F] the budget 2021 has also cleared the long standing demand for working of `women workers`in the night shift ;with reduction of Compliance burden and,with easy registration/licencing via Online procedures.
The one area with mixed impact seems to be increase on import duty on Cottons to 10% ,from earlier level of 5%. Unless, the CCI in India plays the balancing act ;there is risk of cotton states increasing the price of cotton and which will upset the applecart of yarn/fabric mills.
It seems the 4-5 main Wish list of the Indian Textile industry has been duly addressed in the recent budget 2021. Also, with setting up of global scale textile manufacturing complexes/Mega Textile Parks; the one missing area which will be a true blessing and game changer will be to forge dedicated FTA agreements with EU,the UK, Japan and possibly USA
The one core area yet needing Govt s intervention is to open up public sector buying and create much required Domestic market consumption.
By Munish Tyagi- Global Textile Leader, and
International Textile Industry Consultant