As the festive season ended and the month of October rolled by, the   pressures of the ongoing global trade disruptions continued to manifest themselves. So much so that the slowdown is expected to remain well into the first half of next year. Added to this is the steady loss in India's competitiveness on account of various internal factors like lack of  scale, high utility & transaction costs including longer lead times which has also not enabled it to attract any significant investments as a result of the trade friction between China & USA.

In textiles and garments, it is observed that Bangladesh, Indonesia, Vietnam are proving more attractive over India in attracting investments. Even in manufacturing, the reorganizing of global supply chains necessitated by rising Chinese wages is favoring these countries rather than India.

A recent UNCTAD report summarizes the present global situation and serves as a warning to undertake timely measures to avoid an economic disaster in waiting. The report points out that the ongoing “lose-lose” trade war is not only harming the main contenders, it also compromises the stability of the economy and future growth in rest of the world.

A good example of this trend is the steady decline in exports of Cotton Yarn from India. Exports of cotton yarn in the first six months of the current fiscal year 2019-20 i.e. from April to September 2019 has declined sharply by 38.80%. Exports during this period touched US$ 1276 million as against US$ 2086 in the same period in 2018-19. Cotton yarn exports have also registered negative growth in all the months since April 2019.  Exports to leading markets such as China, Bangladesh, Vietnam, South Korea, Colombia, and Turkey have seen a significant drop.

The Council has, therefore, appealed to the Government to extend export benefits like MEIS, 3% Interest Equalization scheme and the ROSCTL (Rebate of State Levies & Taxes) scheme to Cotton Yarn so that the declining trend in exports can be salvaged to some extent.

India’s retreat from RCEP

Friends, as you are all aware, India has been pro-actively, constructively and meaningfully engaged in the RCEP negotiations since inception. The country has always extended support for greater regional integration as well as more free trade and adherence to a rule-based international order.

Even in the case of RCEP, India was looking at greater integration through the trade deal and had made efforts in that direction from the very beginning. However, in view of the huge trade deficit that India has with the 16-nations participating in the trade deal and the absence of adequate safeguards to prevent a surge in imports from China, there were growing apprehensions towards signing the treaty.  Since the country’s concerns were left unaddressed, India has decided not to   be a part of the mega RCEP trade deal for the present.  In case, India's concerns are adequately addressed the decision can always be reviewed.

We welcome the Government’s decision of not succumbing to global / regional pressures and compromising economic interests by opening the Indian market through "weak FTAs". We are confident that the decision taken keeping in mind the interest of stakeholders, especially the manufacturers and the MSMEs amongst others, will lead to protection of the national interest particularly with regard to controlling trade deficit, stronger safeguards against unfair imports and better market opportunities for Indian products.

New Scheme - RODTEP

A scheme to refund certain un-refunded taxes or duties [levied at the State and Central level], was notified by the Ministry of Textiles for the readymade garment and made-ups in March 2019 (Rebate of State and Central Taxes and Levies- RoSCTL). The Government is now contemplating to formulate a new Scheme to cover other export sectors also under a similar framework so that refund of these un-refunded taxes or duties/levies, not exempted or rebated at present by any other mechanism can be done. The contours of the proposed new Scheme for Remission of Duties and Taxes on Exported products (RoDTEP) are being worked out and will be notified separately.

Meanwhile, the Government has started its exercise of working out the rates and value caps for different HS LINES. In this regard, the office of DGFT has sought data and recommendations from the Council in prescribed formats.  The Council vide Circular No. EPS/37/2019-20 dated 6th November 2019 has circulated the formats to the trade.

The data will be examined by the Sectoral RoDTEP Committees (SRC) in DGFT headquarters. We request all our members to please send us the data urgently so that the Council can submit to the Government at the earliest.

Meeting with HMOT

The Council was invited to the 11th edition of Confederation of Indian Industry (CII) led flagship initiative for Textile and Apparel Industry – TEXCON 2019 held on 4th November 2019 at New Delhi. The theme for this year’s event was “Textile Industry: Driving India to a USD 5 Trillion. The Council participated at this event which has been highly successful in creating a platform for the concerned stakeholders to deliberate and outline the strategies for the growth and development of the Textile sector in India.

Along with Shri R K Dalmia & Shri Ujwal Lahoti, Past Chairmen of the Council and the Executive Director, I met Smt Smriti Zubin Irani, Hon’ble Minister of Textiles and Women & Child Development who was the Chief Guest at TEXCON 2019. We apprised the Hon’ble Minister about the various issues affecting the export sector & invited her to be the Chief Guest at the Awards Function to be organized shortly at Mumbai.

Way forward

Friends, as we have been stating in these columns, the exporting community is passing through uncertain times!  The trying times beckon us to push for export growth against all the odds relying very heavily on the innate resilience of our manufacturing and trading systems.

While promises of steps being taken in a positive direction are being held out by the Government in all our meetings with them at various levels so far, we can only hope that it gets better with the times.

(Dr. K. V. Srinivasan)