The unsettling trade situation between the United States, the world’s leading cotton exporter, and China, one of the world’s leading users, is expected to place India’s cotton and textile sector in a better situation. Some of these effects can perhaps be seen in the export data for the period April-July 2018 wherein cotton textiles have shown a growth of 30.44 per cent. Whether this buoyancy in exports is maintained in the coming months remains to be seen even as reports in the market place suggest that demand for Indian cotton textile goods is intensifying.

Considering the need to step up exports in the wake of widening trade deficit, a meeting was convened by the Ministry of Commerce & Industry in New Delhi on 27th August, 2018 which was chaired by Shri Suresh Prabhu, Hon’ble Union Minister of Commerce & Industry.

Simultaneous efforts were made to understand the evolving Chinese market in view of the tariff escalation by USA. In this regard the Council organised a Trade Delegation to China from 22nd to 28th August, 2018. 

At home, the Council continued to adhere to the exporters concerns arising out of GST, implementation of E-Way Bill, EXIM issues in Coimbatore in cooperation with SIMA. Further the emerging opportunities under the Indo-Korea CEPA were explained to the exporters based in the textile cluster of Karur.

Meeting convened by Commerce & Industry Minister

In a meeting convened by the Ministry of Commerce & Industry in New Delhi on 27.8.2018 which was chaired by Shri Suresh Prabhu, Hon’ble Union Minister of Commerce & Industry, the Council took up various issues related to the exports of Cotton textiles.

The Council’s proposals for covering Cotton Yarn under MEIS and 3% Interest Equalization Scheme and to increase the MEIS rates for fabrics from 2% to 4% were discussed with the Hon’ble Minister. Also, a request was made to the Hon’ble Minister to  introduce a payment mechanism for exports to Iran  in the context of the US sanction on that Country , engage in a dialogue with China to reduce import duty on Indian fabrics to 5%  and to take up the issue of Additional duty of 20% imposed by Turkey on Indian  fabrics .

A comprehensive Note consisting of all the suggestions were handed over to the Hon’ble Minister. We hope favourable consideration and will follow up with the Hon’ble Minister in the coming weeks.

Trade Delegation to China

To understand the recent developments in the Chinese textile and apparel sector in view trade war between China & USA and to explore possibilities of increasing export of Indian yarn, fabrics and home textiles to China, a trade delegation comprising of seven exporters of yarn and fabrics visited China from 22 to 28 August 2018.

The delegation visited textile clusters in Haimen, Tongzhou, Nantong & Shanghai and met with some of the manufactures of leading bedding product brands. During the B2B meetings, visits to individual companies’ offices and factory visits, there was a keen interest to source Indian high quality cotton yarn for conversion into value added bedlinen and sell in domestic market as well as for export.

On 28th August 2018, we met His Excellency Shri Gautam Bambawale, Ambassador of India to China in Beijing and explained possibility of increasing export of fabrics from India to China manifold, provided, level playing field is worked out in tariff structure at par with Pakistan and Vietnam. The Ambassador assured us that the issue will be take up with the Chinese authority at appropriate forums.

GST Reforms

With regard to the refund of accumulated Input Tax Credit on account of inverted duty structure, CBIC has issued a clarification on many of the areas related to this facility. However, the main issue related to the “lapse of all accumulated Input Tax Credit as on 31.7.2018” remain unresolved. The Council has represented to the GST Policy Wing under CBIC to allow the accumulated Input Tax Credit balance as on 31.7.2018 for discharge of GST liability on goods both for domestic sales as well as for exports instead to making the ITC null and void.

The Council has highlighted the fact that the exporters have actually paid the GST to the Government and it is grossly unfair to make the ITC lapse as it will add to the costs for the exporters. We hope that the Government will come out with a solution to this problem very soon.

It is a matter of serious concern that there are a large number of applications for refund of un-utilized Input Tax Credit on exports under Bond / LUT that remain pending for payments even after the final acknowledgments have been issued by the concerned GST Commissionerates.  The Council has taken up this issue with the Department of Revenue and we hope this problem will be addressed at the earliest.  

It has also been noticed that, in recent times, there has been inordinate delays in the release of Duty Drawback claims by JNPT Customs. We are given to understand that the delay is due to a change in the system of payment of Duty Drawback amounts at JNPT customs and the problem will get resolved very soon. The Council has taken up this matter with the Department of Revenue. 

Interactive Meeting with exporters in Coimbatore

SIMA in association with TEXPROCIL organized an interactive meeting with the exporters in Coimbatore at its Conference Hall on August 10, 2018.  The objective of the meeting was to update the participants regarding the changes that have taken place in the GST Laws and address issues faced by the exporters with regard to the refund of IGST and un-utilized Input Tax Credits on exports. Other issues like refund of accumulated Input Tax Credit on account of inverted duty structure, transitional credits, filing of Returns, issues related to GSTR-3B were also discussed in the meeting.

Seminar in Karur on Exports to South Korea

The Council organised a seminar in collaboration with Karur Exporters’ Association at its premises in Karur, Tamil Nadu on August 11, 2018. Shri A. Ravi Kumar, Joint Director, TEXPROCIL made a presentation on “Potential to Export Textiles to South Korea”. The objective of the seminar was to highlight the increasing opportunities to export Indian cotton textiles in the wake of zero duty on fabrics and made ups (including home textiles) exported from India to South Korea under Indo-Korea CEPA. Also there is an increasing awareness amongst the South Korean buyers about the capacity of the Indian textiles sector to supply high quality products as per their requirements. The seminar was well attended by the exporters from Karur which is an important centre for home textiles.   

Way forward

Friends, as the current global trade tensions play out, we in the Indian cotton sector should look out for opportunities which are bound to come our way as we have the raw material, labour and investment climate to increase our export growth manifold. We should also work towards setting up economically feasible projects that can attract both domestic and export markets.

Enhancing the product offerings, strengthening the downstream processing and developing value-added textile sectors such as contract and technical textiles could offer near- to long-term benefits for India’s textile industry.

Ujwal Lahoti