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Government policies to help drive textile sector growth

Monday, October 24, 2016
By Dominic Rebello

The global apparel market majorly comprises world’s large economies of United States of America (USA), European Union (EU), Japan and China. USA and EU are the world’s largest apparel importers accounting for 60% of the total global imports, followed by Japan with a share of 7-10%. Countries such as China, Bangladesh, Vietnam, India and Cambodia dominate the exports market, with China accounting for over 40% of the total apparel exports backed by favorable government policies towards the textile sector coupled with economies of scale.

The Indian textiles industry is estimated to be at around US $108 bn and is expected to reach US $223 bn by 2021. The textiles sector is one of the largest contributors to India’s exports with approximately 11% of total exports. The Industry is the second largest employer after agriculture and contributes approximately 5% to India’s GDP and 14% to overall Index of Industrial Production (IIP). The textile industry employs about 40 million workers and 60 million indirectly. India's overall textile exports during FY 2015-16 stood at US$ 40 billion.

“The Government of India (GoI) is increasingly focusing on policy to create jobs that are good for development. Export-oriented apparel Industry provides significant opportunity for employment creation due to relatively low skill requirement. Furthermore, it also has a unique ability to attract female workers. GoI, in its budget for 2016-17, has allocated a sum of Rs.1,480 crore towards the Amended Technology Upgraded Fund (A-TUF) Scheme incentive and Rs. 100 crore under the Scheme for Integrated Textile Parks (SITP) said CARE Rating in its report on Indian Apparel Sector.

GoI recently announced Rs.6,000 crore package for textile and apparel sector which includes additional incentives for duty drawback scheme for apparels, flexibility in labor laws and tax and production incentives to garment manufacturing units. This would also fuel the growth in the Indian garment sector, CARE added.

Last week Union Minister of Textiles Smriti Irani on her visit to Mumbai declared that her Ministry is actively considering another special package for Made-ups and Home Textile Sector, similar to Rs. 6000 crore special package announced for garment sector. Thus, the Textile Industry may be celebrating one more Diwali, after the current Diwali.

"The Ministry is actively considering to extend the special package recently approved for the garment sector to be made-ups and home textile. An announcement for the same is likely to be made around Diwali," Irani said in her address after presenting the Texprocil Awards in Mumbai last week.

Irani appreciated the industry's efforts to remain leading exporter and assured all help to it from her Ministry. The Minister further stated that Prime Minister Narendra Modi has a vision of doubling the income of farmers by 2022. "We are happy the farm yield has already increased and the country hopes to become a leading producer of cotton”.

R K Dalmia, Chairman, Texprocil in his opening remarks congratulated all the award winners for facing the challenges of a slow global demand and intense price pressures to emerge leaders in their respective line of businesses during the year 2015-16. The special package of Rs 6,000 crore for the apparel sector is a step in the right direction given the current scenario of world trade and international competitiveness.

Dalmia complimented the government on the announcement of the special package of Rs. 6000 cr. for the apparel sector which he said was bearing fruit as the September export figures for apparel showed a growth of 12% compared to a downward trend for most other sectors.

Considering that textile is a low margin industry, introduction of such packages can lead to an exponential leap in export performance. This can be seen from the fact that in September 2016 export of garments showed a 12% growth amid a downward trend in most other sectors, Dalmia said.

He said the Government needs to move with vigour to expedite the negotiation of Free Trade Agreements with EU, Australia and Canada. "We are glad the Ministry is already reviewing the various FTAs that India has signed so far, as it will enable India to be on a level playing field with other competitors in different markets."

As part of the international promotion campaign for Indian cotton textiles, the Minister released Texprocil’s newly designed corporate promotional literature including corporate brochures and pamphlets.

Govt plans overseas roadshows to boost textile exports
Government plans to conduct roadshows to promote the country's textiles in non-traditional markets like Russia, South America and select countries in West Asia, at a time when shipments from the sector have been declining. Textile exports from India remained flat in 2015-16 at USD 40 billion as compared to USD 41.4 billion in the previous year.

Moreover, Indian textile and apparel exports have been losing their competitive edge to countries like Bangladesh and Vietnam in recent years. "We are eyeing non traditional markets like Russia, South America and some countries in West Asia which are relatively free from turmoil like Saudi Arabia, Kuwait, Qatar and the United Arab Emirates. We will hold roadshows to showcase Indian textiles in these markets," a senior official said.

However, China has also been gradually ceding ground due to rising labour costs, creating space for India in markets like Russia, which have been dependent on China for sourcing its textile and apparel needs. "The roadshows will help attract FDI and create jobs in India. According to a World Bank report on apparel sector, international buyers are looking at economies which have the entire value chain. India is the only politically stable economy apart from China, which can offer that.

At this juncture, the roadshows will provide an opportunity to capitalise on India's potential in the sector," Secretary General of the Confederation of Indian Textile Industry, Binoy Job said.

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