Dear Friends,

The textile and apparel industry continues to draw the attention of the Government at various levels. The recent export performance of the T&C sector with exports reaching a level of USD 44 billion in the financial year 2021-22 has also highlighted the immense potential of this sector to contribute towards the export-led growth in India. The sector is thereby expected to sustain the present momentum of growth in exports. However, plenty of challenges – on account of high inflation, geo-political conflicts, resurgence of COVID cases in China leading to delays in delivery, coupled with the supply chain disruptions caused by non-availability of containers and above all the extraordinarily high raw material prices – are affecting the production in textile clusters, thereby becoming a threat to sustaining the present level of export growth.

Raw Material situation in India

The raw cotton prices are historically the highest ever in India and are having their effect on the entire textile industry and has become a cause of concern for almost all segments of the industry. High raw cotton prices have also led to rise in prices of yarn and fabrics and their availability at competitive prices for use by the finished goods segment is a matter of serious concern.
In the valued-added home textiles segment though there has been a good demand in the international market but due to overall increase in production cost on account of the rise in raw material prices and packing materials the margins of the manufacturers have been affected.

Given this context, the Council drew the attention of the Government at various forums, making suggestions and representations at the meetings held with the Ministry officials.      

Meeting with Hon’ble Commerce, Industry and Textiles Minister

Textile industries are suffering because of the disproportionate increase in domestic raw cotton prices as compared to the other international markets. In this regard, the Council has urged the Government to intervene in this matter urgently so that prices of raw materials remain stable and exporters of value-added segments like home textiles and fabrics can take a long-term perspective while negotiating export orders.

The Hon’ble Minister for Commerce & Industry and Textiles Shri Piyush Goyal held a meeting with the stakeholders — including garment manufacturers, weavers, spinners, farmers and traders of cotton and cotton yarn — on 17 May, 2022 in New Delhi to discuss various options of dealing with the situation. Along with the Council’s Vice Chairman, Shri Sunil Patwari and Executive Director, I attended the meeting. The various stakeholders present in the meeting made suggestions towards augmenting the availability of cotton fibre by taking steps for increasing production and improving productivity (in terms of yield per hectare) of the cotton grown in the country as India has the lowest yield per hectare in the world.

Improving the cotton yield requires immediate intervention in seed variety, introducing overall integrated crop management, outsourcing technology and responsive support from the Government by introducing some of the key initiatives like – Reviewing all Seed Varieties, Adopting High Density Plantation, Encouraging Mechanised Picking of Cotton, and Linking the Mapped Cotton Growing Areas on real-time basis to the Gati–Shakti Portal. If some of the aforesaid steps are taken, productivity can increase from the present level of 450 kgs per hectare to at least 800 kgs per hectare.

At the meeting, Shri Piyush Goyal announced the formation of an informal committee under the Chairmanship of Shri Suresh Bhai Kotak. The proposed Council will have representation from the Ministry of Textiles, Agriculture, Commerce, Finance, Commerce and Industry, Cotton Corporation of India and Cotton Research Institute. The 1st meeting of this Council is proposed to be held on 28th May 2022 with an agenda to discuss, deliberate and prepare a robust action plan for bringing out a tangible improvement in this field.

The Hon’ble Minister called upon the spinning and trading community to ensure hassle free supply of cotton and yarn first to the domestic industry, appealing to them to divert only surplus raw cotton and yarn for exports. He also emphasised the need for holding hands of cotton farmers besides extending all possible support to stakeholders engaged in backward and forward integration

He assured that the Government is actively considering the demand of the textile sector for exemption from import duty on those import contracts in which bills of lading are issued upto 30th September 2022. Further, the Hon’ble Minister also exhorted all stakeholders to resolve raw cotton and yarn price issues, in the spirit of collaboration rather than competition and super profiteering.

Meeting with Minister of States for Textiles

The Minister of States for Textiles and Railways, Smt. Darshana Jardosh inaugurated “Gartex Process Exhibition” at Mumbai on 12 May, 2022. Jointly organised by Messe Frankfurt India and MEX Exhibitions, the trade fair facilitated acceleration of technological advances in the Indian textile and garments industry through a showcase of innovative and competitively-priced products from over 120 exhibitors. During the event, an exclusive Denim Talks series was also held to present Digital manufacturing and Bio Dyeing technique for the first time in India, while the first-ever Flash dyeing technique of indigo was also made public at this key textile industry gathering.

We took the occasion to meet the Hon’ble Minister and apprise her about the difficulties faced by exporters on account of the high raw cotton prices. The Council members, especially the medium and small exporters have reported that production costs have gone up to such an extent that export orders taken a few months back or earlier are now being executed only at a loss. Even the delays in production and delivery due to under-replenished stocks of raw material are being responded to by penalty clauses in contracts leading to further loss for the manufacturers.

Meeting with Hon’ble Finance Minister

The Council was invited to a meeting with Hon’ble Minister of Finance Smt. Nirmala Sitharaman organised by CITI and SIMA in Coimbatore on 9 May, 2022. I along with the Council’s Executive Director attended the meeting and presented suggestions on the steps that could facilitate further growth in exports and lead to sustained employment generation.

At the meeting, we highlighted the historic growth in exports of Cotton textiles which has been made possible due to Government support such as the coverage of Yarn and fabrics under the RODTEP scheme and the continuation of the RoSCTL scheme for Made ups and Garments till 31st March, 2024. We thanked the Hon’ble Minister for removal of export duty on cotton till 30th September, 2022 which will facilitate growth of value addition in textiles. While appreciating the support and encouragement that the Government has always extended to the exporters, we also pointed areas where support was required as follows:

(1)    To extend the facility of Duty-free Import of specified items/goods (introduced in Union Budget 2022-23) to exporters of Made ups.
(2)    Increase RODTEP Rates for Home Textiles (Quilts) covered under Chapter 94.
(3)    Credit of RODTEP benefit directly to the Exporter's Bank Account

We hope that our submissions will meet a favourable response from the Government.

Way Forward

Friends, in the new financial year, emerging and fast-moving trends are gaining traction. On the one hand, China’s loosening grip on world textile trade has opened a door of opportunities. On the other hand, the fast-evolving trading landscape and the shifting sourcing patterns are causing disruption for businesses globally.

In the post pandemic era, no doubt, it is important to advance carefully but at the same time economic activity needs to be pushed in the light of employment creation and development. The country’s ‘transitory’ inflation has reached the tipping point making it difficult for the RBI to continue with the accommodative policy stance and keep interest rates lower for longer duration to ensure a durable economic recovery.

For companies too, it’s a fight to protect margins, trying hard to strike a balance between sluggish demand and the need for higher sales and profits. While it is a tough balancing act, there is no other option other than to implement the carefully selected strategies that will allow our businesses to grow in the times to come.