Indian Textile Ministry formulating new approach to boost textile exports
The textile and the commerce ministries both are engaged in formulating new strategies to boost exports in the textile and clothing sector, as it is the largest employment provider after agriculture, accounting for some 45 million jobs. The government is also likely to renew focus on some of the segments that are already doing relatively well so that India’s dominance is further entrenched in those areas, according to official sources.
The Centre is seeking to make it more attractive for exporters to tap markets with immense potential for outbound shipments of textile and clothing items, notably Africa, to widen the geographical spread of the export market and reduce dependence on the developed world — mainly the US and the EU.
Although it will not be easy to reduce the dependence on such markets meaningfully in the near future and remain unaffected to any slowdown there, given the scale of exports to these nations, the diversification to Africa will help India in the long run.
The need to tap new markets has also arisen more than ever, as China’s economy is set for a prolonged slowdown and the developed world is still struggling with a fragile recovery.
The Textile Secretary Sanjay Kumar Panda said that to promote textile exports in new markets, the government has raised support to outbound shipments of more textile products under the Merchandise Exports from India Scheme (MEIS). Most of the textile and garment items, which were earlier not availing much of a benefit, are now granted 3% duty credit scrip under the MEIS to tap markets such as those in Africa.
Recently, the government introduced 110 new tariff lines, includes textile in the MEIS and increased the duty benefit rates or the country coverage, or both, for 2228 existing tariff lines. The commerce ministry’s move to partially tweak the MEIS came after the finance ministry had agreed to raise the allocation for the scheme to R21,000 crore (USD 31418.34) for the current fiscal from R18,000 crore (USD 26936.67) announced earlier.
Under the MEIS, the government provides exporters duty credit scrip at 2%, 3% and 5% of their export turnover, depending upon the product and the country, as envisaged in the foreign trade policy 2015-20. The scrip can be transferred or used for payment of a number of duties, including the basic customs duty.
Similarly, higher support has been granted to certain textile products, many of which are manufactured by MSMEs. Even readymade garments and handmade woollen shawls have been offered more support.
Panda said that the country’s total exports contracted for an eleventh straight month through October, overall textile and clothing exports — which also include those of handicrafts and carpets — put up a somewhat better show. Amidst the gloom, the textile and clothing sector not just managed to beat a global slowdown but also rose a tad.
According to the latest data, overall textile and garment exports rose 0.6% to almost USD18 billion in the first half of the current fiscal from a year before, while the country’s overall exports plunged by 17.6% during the period. Consequently, the share of such textile and clothing exports in the country’s overall exports have risen to 13.5% in the April-September period this fiscal from 11.1% a year before.
The textile ministry plans to further intensify the focus on segments like handicrafts that have witnessed good growth in exports and have immense employment potential.
China is the biggest market for textiles, accounting for over 70% of India’s cotton and 40% of yarn supplies, the US and the EU are the largest markets for Indian apparel, and making up for roughly 65% of garment exports.
According to TEXPROCIL chairman RK Dalmia, cotton fabrics – both woven and knitted – and made-ups exports to markets such as Africa could raise 10-15% annually as India can offer products at competitive prices as it now enjoys benefits such as the duty credit scrip benefits.