OVERVIEW:       

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:

  1. 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

  1. 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.
  2. 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.
  3. 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