The Indian textile and apparel industry is pushing for critical raw material reforms in its pre-budget recommendations, emphasizing the need for globally competitive pricing to bolster its position in the international market. A key concern is the disparity between domestic and international raw material costs, placing Indian manufacturers at a disadvantage compared to competitors like Bangladesh and Vietnam.
Industry representatives argue that while these nations enjoy unrestricted access to essential materials, India’s Quality Control Orders (QCOs) on man-made fibre (MMF) yarn act as non-tariff barriers, hindering imports and creating shortages of specialized varieties. This, in turn, artificially inflates domestic prices. The industry is calling for the removal of import duties on all cotton fibre varieties, asserting that these levies, initially intended to protect farmers, are actually damaging the entire domestic cotton textile value chain. They point out that specialized cotton types, such as contamination-free, organic, and sustainable cotton, are currently unavailable domestically and must be imported.
To address cotton price volatility, the industry proposes a shift to Direct Benefit Transfer (DBT) for Minimum Support Price (MSP) cotton purchases. Furthermore, they are advocating for the establishment of a Cotton Price Stabilisation Fund Scheme. This fund, they suggest, should include a 5% interest subvention or loans at NABARD interest rates (recognizing cotton’s agricultural commodity status), an extended credit limit period for working capital from three to eight months, and a reduction in margin money for cotton working capital from 25% to 10%. Currently, mills can only access working capital for three months, forcing them into a cycle of purchasing large cotton stocks at the start of the season when prices are typically lower, and then relying on traders and the Cotton Corporation of India (CCI) for the remainder of the year, making production planning difficult due to fluctuating market prices.
Finally, the industry is requesting exemptions from certain QCOs for specific product categories, enabling them to effectively serve niche markets that demand these specialized items. These combined measures, the industry believes, are vital for ensuring the long-term health and competitiveness of the Indian textile sector.
