Reports coming through various sources are suggesting that there is a robust demand across markets and sectors. The demand especially in the Americas is steadily keeping pace with supply.
The exporters are enthusiastic about the steady recovery seen in global trade which in turn is helping their order books. However, at the same time, they are seeking urgent attention from the government on the runaway freight rates, rampant container shortages and other policy constraints, including the release of pending benefits under earlier export incentive schemes.PLI Scheme
As we write this column the Government has announced the Production Linked Incentive (PLI) Scheme for man-made garments and fabrics and also technical textiles. This incentive based scheme is open only to Indian manufacturers.
There are two types of investment possible with different sets of incentive structures. In the first part, any firm / company willing to invest minimum ₹300 Crore in Plant, Machinery, Equipment and Civil Works (excluding land and administrative building cost) to produce products of Notified lines (MMF Fabrics, Garment) and products of Technical Textiles, shall be eligible to apply for participation.
In the second part, any firm / company willing to invest a minimum ₹100 Crore shall be eligible to apply for participation in this part of the scheme.
In addition, priority will be given for investment in Aspirational Districts, Tier 3, Tier 4 towns, and rural areas. Due to this priority Industry will get incentivized to move to the backward areas. This scheme is expected to positively impact States like Gujarat, Uttar Pradesh, Maharashtra, Tamil Nadu, Punjab, Andhra Pradesh, Telangana, and Odisha which have textile clusters.
It is estimated that over the period of five years, the PLI Scheme for Textiles will lead to fresh investment of more than Rs.19,000 crore. Cumulative turnover of over Rs.3 lakh crore is expected to be achieved under this scheme. The scheme is also expected to create additional employment opportunities for more than 7.5 lakh jobs in the sector and several lakhs more for supporting activities. The textiles industry predominantly employs women, therefore, the scheme will empower women and increase their participation in the formal economy.
Friends, the PLI Scheme for Textiles is a landmark effort to create "Champion Companies" in the Textile Sector especially in the man- made fibre segment. It's extension to Technical Textiles sector will also give the much needed focus and fillip to this fast emerging sector The Technical Textiles segment is a "new age" textile, whose application in several sectors of economy, including infrastructure, water, health and hygiene, defense, security, automobiles, aviation, etc. will improve the efficiencies in those sectors of economy.
The industry should come forward and take advantage of the scheme and set up world class companies to cater to both the domestic and export markets.Trade Data
The data released by the Ministry of Commerce, on top 10 major commodity groups covering more than 80% of total exports, have shown positive growth in August 2021 over corresponding month of previous year. India’s merchandise exports in August touched US $ 33.14 billion, 45.17% higher than August 2020 and 27.5% over the pre-pandemic level of August 2019.
The exports of cotton textiles (yarn/fabrics/ madeups, etc.) under the purview of the Council achieved a level of US $ 1298 million during August 2021 recording a growth of 56% over August 2019 (US $ 832 million) and 21% over August 2018 (US $ 1072 million). The cumulative exports of cotton textiles during April–August 2021 have achieved a level of US $ 5973 million, recording a positive growth of 43% over the same period in 2019 and 24% over 2018 wherein the exports were valued at US $ 4177 million and US $ 4811 million respectively.Meeting of Hon’ble Minister of Commerce and Textiles with Exporters
A meeting was convened by Hon’ble Minister of Commerce & Industry, Consumer Affairs, Food & Public Distribution and Textiles, Shri Piyush Goyal, at New Delhi on 3rd September, wherein the leading exporters of the Textile Sector were invited to discuss plans to increase the country’s textile exports.
At the meeting, the Hon’ble Minister emphasized that India must aim to boost its textile exports three fold from the present value of 33 billion dollars to 100 billion dollars at the earliest. He appealed to all the leaders of the textile industry present at the meeting to collectively resolve to reach the target of US$ 44 billion dollars of exports in 2021-22 for textiles and apparel, including handicrafts.
Along with the Executive Director of the Council, I attended this meeting and informed the Hon’ble Minister that the cotton textile exports are well on their way towards achieving the target of US $ 13.59 set for the fiscal year 2021-22.
On behalf of the cotton textile exporting community, we welcomed the efforts undertaken by the Ministry of Textiles to promote exports by organizing the interaction with leaders of the textile industry. We also thanked the Hon’ble Prime Minister and the Textile Minister for extending all the policy support to the trade and industry which has infused a new confidence amongst the exporters.Meeting with Ministry of Commerce (Logistics Division)
The Council attended an online meeting held under the Chairmanship of OSD (JS level), Logistics on 17th August 2021 with the Ministry of Textiles, Textile Export Promotion Councils, and other industry bodies to discuss solutions for high shipping freight rates and container shortage.
Following challenges faced by the industry were highlighted by TEXPROCIL:
a. High rates of containers (increased 2 to 5 times)
b. Road transport: Due to congestion at the border with Bangladesh, the transit time has increased to 25 days from 10 days.
c. The rail schedules need to be fixed in advance which will enable seamless transport of goods and matching of activities.
d. 48 hours’ time is provided for container de-stuffing at Chattogram Port. This model can be studied and replicated.
At the meeting, all those present were assured that the government is brainstorming the options put across by the export promotion councils and private players to come up with a solution for the ongoing container crunch. The Commerce Ministry is expected to announce short-term measures to ease the situation of acute container shortage and high shipping freight rates caused by the Covid-19 pandemic.Suggestions for the Union Budget 2022-23
The Government has started its annual exercise of collecting inputs for the next Union Budget. In this regard, the Department of Revenue, Ministry of Finance has sought suggestions from the Council for the Union Budget 2022-23.
The Council has requested the member companies to send their suggestions for the Union Budget 2022-23 in the format circulated vide E-Serve No.119, dated August 13, 2021. Member suggestions may include changes required in duty structure, broadening of tax base on both direct and indirect taxes and on any other issues related to the Union Budget 2022-23.
We solicit your support and cooperation in the matter and look forward to receiving your suggestions at the earliest so that comprehensive and consolidated proposals can be sent to the Government.Way forward
Friends, you will all agree that the last fifteen years of liberalization of the real economy have allowed India’s economy to surge ahead. To achieve higher rates of growth, both corporate and infrastructure investments must increase.
At a time when the industry is reeling under the economic uncertainties mounted by the Covid-19 pandemic, robust financial reforms are needed to provide long-term funding. Efforts are also required to help the MSME sector in meeting the ongoing challenges and staying afloat the devastating impact of the crisis.
The recent initiatives by the Government in extension of the RoSCTL scheme (upto March 2024); announcement of RoDTEP scheme (guidelines and rates); and announcement of PLI scheme will provide opportunities for the Indian textiles and clothing sector to achieve its full potential. The time is right for all of us to sustain the current pace of recovery and attain the targeted growth in the current fiscal.