The rating agency said that India is currently on the cusp of a potential growth cycle in the global textile market. Besides the US-China trade war issues, the China Plus One sourcing policy is being endorsed by several large consuming regions across the globe, to reduce risk in events like the Covid-19 pandemic, and increasing concerns on the use of Xinjiang cotton are fuelling this opportunity.
As China is currently the leader in the global textile market and is likely to shed some share in the near to medium term, India remains one of the potential beneficiaries of this shift. Nevertheless, challenges remain intense in the form of competition from other low-cost/more efficient peer nations, the evolving free trade agreement landscape with some peers already enjoying duty-free access to some of the major markets, as well as domestic issues such as infrastructure bottlenecks.
It added “Greater emphasis is likely on the man-made fiber (MMF) value chain, apparel and technical textile segments, which offer immense growth opportunities in the global trade, and where India has been lagging so far. In line with its thrust on Make in India for the world, the government has adopted several policy initiatives including the announcement of the PLI scheme, an extension of the Rebate of State and Central Taxes and Levies (RoSCTL) Scheme for apparel and made-ups for three years, the announcement of the Remission of Duties and Taxes on Exported Products (RoDTEP) rates for the other textile segments and notification of seven textile parks under the PM-MITRA Scheme, during the past one year. While the policy initiatives are all steps in the right direction, effective implementation remains crucial, for which adequate provisioning in the Budget is necessary.”
Further, with the implementation period of the ATUFS getting over in March 2022, the extension of the same or the announcement of a new scheme, particularly for the downstream segments and/or for captive renewable power capacities, could encourage investments and enable the companies to reduce their carbon footprint while being more cost-efficient”
