Textile industry welcomes revised rates under RoDTEP scheme

Source: Financial Express, 13 January 2023

Ease of Doing Business for MSMEs: The textile and clothing industry has welcomed the recent revised rates notified by the Ministry of Commerce under the Remission of Duties and Taxes on Exported Products (RoDTEP) Scheme for 65 HS codes in the textile and apparel sector, as per a report by The Hindu.

The implementation of the committee report would increase export of items such as yarn and fabric of polyester and viscose, denim fabric, knitted fabric of cotton, etc, stated T.Rajkumar, chairman of Confederation of Indian Textile Industry, in a statement.

RoDTEP is one of the most significant schemes for export promotion that was introduced with the objective to refund duties, taxes, and levies borne on the exported product at the central, state, and local level. It includes prior-stage cumulative indirect taxes on goods and services, he said.

The rates for several products including denim, polyester staple fibre spun yarn have been increased, said Ravi Sam, Chairman of Confederation of Indian Textile Industry in the press release. Further, the rate and value cap for viscose rayon spun yarn has increased to 2.5 per cent from 0.9 per cent with a value cap of Rs 6 per kg.

RoDTEP for woven fabrics of artificial staple fibre has also increased from 1.2 per cent to 2.5 per cent, said Sam.

Hailing the increased RoDTEP rates, he said that the enhanced rates would push exports. The development is in accordance with the Production Linked Incentive Scheme announced by the government aimed at enhancing the global competitiveness of Indian textiles and clothing products, he added.

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Meanwhile, for export promotion, the Union Cabinet on Wednesday approved setting up and promoting a national-level multistate cooperative export society under the Multi State Cooperative Societies (MSCS) Act, 2002. The approval is “for undertaking exports of all goods and services produced by cooperatives and related entities,” a statement noted.

Citing the reason for setting up the cooperative export society, the cabinet said that the proposed society will provide “thrust to exports from the cooperative sector by acting as an umbrella organisation for carrying out and promoting exports. This will help unlock the export potential of Indian cooperatives in global markets.”

New Incentives: Mega textile parks near ports to boost exports

Source: Financial Express, 13 September 2021

The centre will grant incentives to investors to set up the proposed mega textile parks with plug-and-play facilities over large areas of at least 1,000 acres each, while states will pitch in with land, textiles secretary UP Sing told FE.

The move is aimed at “building scale” across the textiles and garment value chain that has remained fragmented for decades, resulting in the country ceding export market share to much smaller economies, such as Bangladesh and Vietnam. Singh said it will also complement the recently-approved Rs 10,638-crore production-linked incentive (PLI) scheme for man-made fibre and technical textiles segments.

The parks will preferably be close to ports and house all sorts of textile and garment firms, including integrated facilities, to create a robust eco-system, according to Singh. The centre will likely release the incentives to investors in two instalments — upon the completion of about 60% and100% of work.

The investors will not just build infrastructure but even manage maintenance and other related facilities. They will be given to operate the park for a period of 25-30 years and they can collect fees from the companies that set up units there. Even small firms or fashion designers will be able to set up shop quickly, thanks to the plug-and-play facilities, Singh said.

Such mega parks will be able to better draw overseas buyers by offering a broad range of products and cater for large orders, given the greater synergy among its resident entities.

“Seven mega parks will be set up in the first phase. However, if a greater number of states, who are willing to offer land, approach us for the setting up of the parks, we will undertake a ‘challenge method’ to select the top seven of them, using certain criteria,” Singh said. The parks were announced as part of the FY22 Budget proposals.

The selection criteria could include the proximity of the land to ports, raw material availability and modes of transportation, among others.

The mega parks are the latest in a series of attempts made by the government to promote formalisation and build scale in the labour-intensive sector that has been hamstrung by millions of small units, supported by lackadaisical official policies for decades. Consequently, an overwhelmingly large percentage of firms, with very limited financial and operational heft to handle bulk orders, are scattered across the country, stunting its ability to raise exports exponentially and grab the space being vacated by China in this segment.

When India finally removed some of these shackles (by removing SSI reservation between 2001 and 2005, allowing fixed-term employment in garments in 2016, scrapping an anti-dumping duty on a key input for polyster staple fibre in the Budget for FY21, etc), low-cost economies such as Bangladesh and Vietnam — in addition to dominant China — had consolidated their positions in the world market and beaten India.

While Bangladesh’s garment exports have been bolstered by duty-free access to the US and the EU due to its status as a least developed country, Vietnam has made good use of its trade pacts with large markets, freer trade policies and massive Chinese investments. Of late, even much smaller countries like Cambodia and Myanmar, too, have recorded fast growth in garment exports.

The textile secretary expected that with a raft of initiatives undertaken by the government in recent years — including the announcement of the PLI scheme, introduction of export tax remission schemes like RoDTEP and RoSCTL and easier labour norms — and the mega parks now, India’s textile and garment industry is well-poised to record impressive growth and recapture lost heights.

Textile and garment exports shrank 8.6% on year to $33.7 billion in FY20 and saw a more dramatic, Covid-induced contraction of 10% last fiscal, worse than a 7% drop in overall merchandise exports. However, in the first four months of this fiscal, such exports have grown at a phenomenal pace of 106%, driven by an economic resurgence in advanced markets and aided partly by a conducive base.

Gujarat textile industry sees jump in export orders

Source: Financial Express, Jan 05, 2021

After an increase in purchases by domestic buyers, the textile industry in Gujarat is now witnessing encouraging export demand from Europe, USA, Australia and New Zealand.

The textile industry went through a tough period from April to July 2020 following the Covid-19. Now, however, demand is high on both the domestic and international fronts.

“From August, textile units started functioning again amid scattered orders from domestic buyers. By Diwali, most textile manufacturers got many orders from all across the country.

Not only were manufacturers able to exhaust unsold inventory, but also the entire textile value chain, especially in Ahmedabad and Surat, experienced unprecedented business opportunities,” Gaurang Bhagat, president of the Ahmedabad-based New Cloth Market, said.

He said that from December 2020, home textile, cotton and synthetic fabric manufacturers started getting exports orders too.

Bhagat, who is also the trade committee chairman of the Gujarat Chamber of Commerce & Industry (GCCI), claimed that some importers from the US, Europe, Australia and New Zealand have decided to source textiles from Indian suppliers instead of China, Pakistan and Turkey.

He said the industry is also benefitting from the textile exhibition FABEXA 2020, in which participants from 52 countries took part. Organisers were forced to hold the exhibition online, but the efforts seem to be translating into real business, Bhagat said.

Sanjeev Sancheti, CFO Welspun India, said that domestic textile players are getting extra export business as global brands are finding it risky to depend on suppliers from a single country due to the pandemic. “China being the dominant supplier is obviously losing some part of supply to India. This new situation is advantageous for smaller textile players.

Welspun, being a big company, already has long-term supply orders. However, we are expecting a significant upside in the flooring textile space,” Sancheti said. Anand Prakash, general manager of Ahmedabad-based Nandan Terry, said his company recently received export orders till June this year. “Retailers in Europe, US and other markets have run out of stock and need to create inventory for four to five months, which is a huge quantity. Suppliers in Pakistan and Turkey have capacity restrictions. In the case of China, there is a trust deficit due to the outbreak of coronavirus. Hence, the Indian textile industry is benefitting,” Prakash said.

As coronavirus spreads, textile and garment exports may decline by 40%

Source: Business Standard, Mar 17, 2020

Mumbai: India’s export of textile and garments are likely to decline by 40 per cent in coming months due to halt in shipment to coronavirus (Covid -19) countries.

The Covid-19 virus is spreading rapidly not only in China but also in other parts of the world including India. While the government in collaboration with corporate has taken remedial steps to contain the spread of the virus across the country, its impact on the economic activity including the export and import business is bound to happen.

“As per the current estimates, India’s textile exports will decline by over 40 per cent in the coming months, if the situation does not improve,” said K V Srinivasan, Chairman, Texprocil.

Srinivasan urged the government to extend urgent policy interventions/support in order to provide fiscal relief and ensure credit flow with extension of the Remission of State and Central Taxes and Levies (ROSCTL) scheme to cotton yarn and fabrics so that India’s competitiveness is enhanced at a time of the falling markets. Also, there is a need to extend interest subvention of 3 per cent beyond March 31, 2020, and also cover cotton yarn within that to ease the financial burden, etc.

The spread of Covid-19, especially in the United States, leading markets of Europe like Spain, Portugal, Italy and even the United Kingdom has led to cancellation/deferment of orders on a very large scale. Buyers and major retail shops importing home textiles from India have put development of any further business on hold.

The exports of cotton yarns and fabrics have virtually come to a standstill.

T Rajkumar, Chairman, Confederation of Indian Textile Industry (CITI) pointed out that the demand for textile products and also domestic sales have come down to a grinding halt due to the panic situation created by the outbreak of Covid-19. He also pleaded an urgent need for a relief package to mitigate the crisis. Besides affecting order flows, this could potentially result in renegotiation of realisations as well as an elongated receivables cycle for the exporters.

Govt nod to Technical Textile Mission with Rs 1,480-crore outlay

Source: Business Standard, Feb 26, 2020

The Cabinet on Wednesday approved the Rs 1,480-crore National Technical Textiles Mission set to run for the next four years. Technical textiles are a futuristic segment of textiles used for a vast array of applications such as agriculture, roads, railway tracks, bullet and fire-proof jackets and high altitude combat gear etc.

Indian technical textiles segment is estimated at $ 16 billion or 6 per cent of the $ 250-billion global market. According to the government, the penetrat-ion level of technical textiles is low in India, varying between 5 and 10 per cent against the level of 30-70 per cent in developed countries. The mission targets an average growth rate of 15-20 per cent annually and domestic market size of $ 40-50 billion by 2024.

Mega textile parks on the anvil; government revamps scheme

Source: The Economic Times, Jan 31, 2019

NEW DELHI: To attract higher foreign investment in the textile sector, India has planned a complete overhaul of a scheme to create world-class infrastructure facilities for setting up textile units.

The government is considering a plan to set up 1,000-acre mega textile parks as it revamps the Scheme for Integrated Textile Park (SITP) whose slow progress is attributed to delay in obtaining land and other statutory clearances from state governments and slow fund mobilisation by the textile parks.

Launched in 2005, the scheme aims to provide industry with state of the art world-class infrastructure facilities for setting up their textile units. A total of 59 textile parks have been sanctioned under SITP by the textiles ministry out of which 22 textile parks have been completed and rest are under various stages of construction Textiles ministry has circulated a cabinet note, a senior government official told ET.

As per another official, the overhauled scheme could be part of the proposed textile policy for which many detailed studies are going on. “The idea to make mega textile parks is to attract FDI,” said another official.

From April 2000 to September 2019, India’s textiles sector received Rs 19,398.71 crore or $3.3 billion of FDI which is 0.74% of the total inflows.

Under the SITP, infrastructure facilities for setting up of textile units are developed in a Public-Private-Partnership (PPP) model, with the government granting upto 40% of project cost with ceiling limit of Rs 40 crore for each park.
An expert committee on textiles had in 2015 suggested the idea of mega textile parks and proposed the ministry to partner with states to set these up so as to be able to absorb about $5 billion per year of fresh investment. It recommended that Mega Textile Parks should be developed especially in the planned Industrial Corridors and be provided cheaper and reliable power supply. Textile manufacturers and exporters concurred that the extant textile park scheme is not successful.

“The government is not happy with the existing scheme and the size of the parks now which can be anything above 20 acres. These are smaller parks and they also have not taken off very well,” said a Delhi-based manufacturer of textiles and apparel.

As per the manufacturer, there is empty space in the parks and a lack of investment climate has hindered the scheme’s progress.

Experts said the government may also revamp the Technology Upgradation Fund Scheme (ATUFS) which is used to promote technical textiles and generate employment in the apparel and garment sectors.

Textile industry worried as Govt scraps export sops

Source: The Hindu Business Line, Jan 23, 2019

Mumbai: The textile industry has expressed shock and anguish over the withdrawal of four per cent incentive given under the Merchandise Export Incentive Scheme on made-ups and garments, with retrospective effect from March 7, 2019.

Further, it was said that all incentives under MEIS that was granted to the exporters of made-ups and garments on exports till July 31, 2019 will be recovered.

Expressing deep concern over the announcement, KV Srinivasan, Chairman of the Cotton Textiles Export Promotion Council, said withdrawal of MEIS with retrospective effect has caused deep crisis for exporters and has indeed come as a big shock.

Exporters of cotton made-ups are already facing a tough situation financially due to the non-implementation of the Scheme to Rebate State and Central Taxes and Levies (RoSCTL). Nine months after it was first announced, the scheme to refund taxes announced to boost export of made-ups and garments is yet to be operationalised, he said.

Further, MEIS of 4 per cent was also freezed for made-ups and garments from last August. Moreover, there are some pending claims under the erstwhile ROSL scheme which was discontinued from March 7, 2019.

“Exporters are already facing serious working capital problems affecting their day-to-day operations,” said Srinivasan.

While negotiating with the importers, Indian textile companies have factored in the 4 per cent MEIS incentive and RoSCTL scheme which together account for 8.2 per cent of export prices. Export orders have to be executed in the next nine months. With the removal of MEIS benefits, exports at the prices agreed upon will become uneconomical and exporters have to bear huge losses and start defaulting on their bank loans.

Many of the exporters have also paid advance tax on their receivables as required under the Income Tax Act, which has further aggravated the problem.

Scrapping export benefits with retrospective effect will make the new Textile Policy unrealistic. Any changes or modification of existing benefits should be with prospective effect, he said.

Urging the government to restore the benefits, Srinivasan said exporters are already working against tough competition from Bangladesh, Sri Lanka, Vietnam and Pakistan notwithstanding the high import duties levied by the US, EU and China on shipments from India.

Unusual Trend: Textile imports zoom as exports falter

Source: Financial Express, Jan 10, 2019

India’s textile and garment trade is witnessing an unusual trend: imports are rising at a brisk pace even as exports are falling. While the export slump is ascribed to a host of factors, including global demand slump and the continuing inability of Indian exporters to have the desired competitive edge in key markets, the double whammy that demonetisation and goods and services tax (GST) dealt to the unorganised sector, the backbone of the domestic textile and clothing industry, appears to have necessitated increased imports.

Weavers, fabric processors, texturisers and garment units in key textile hubs have borne the brunt of the twin policy steps taken in quick succession, in what impacted domestic supplies significantly.

Textiles and garment imports, as percentage of such exports, surged from just about 13% in FY14 to a record 25% in the first eight months of this fiscal. Similarly, at 1.7%, the share of textiles and garments in the country’s overall imports in the April-November period was the highest in recent memory.

On the other hand, the labour-intensive sector’s share in the overall merchandise exports has been sliding consistently in recent years, having dropped from as much as 13.7% in FY16 to just 10.27% this fiscal (up to November), the lowest in at least a decade.

In the April-November period, while textile and garment imports surged 18.6% y-o-y, albeit at a relatively low base, to $5.5 billion (despite a contraction in overall merchandise imports), exports plunged by 7.9% to $21.7 billion, showed the DGCIS data.

Importantly, imports of cotton fabrics and made-ups jumped as much as 17.3% y-o-y to $396 million, even though India has been a major player of cotton-based textiles and garments.

This suggests a Rs 6,600-crore package for garments exporters, announced in 2016, hasn’t helped much in turning the sector around, although industry executives argue the fall in outbound shipments would have been even sharper without the succour.

Khadi gets separate unique HS code, export to get a boost

Source: IBEF.org, Nov 07, 2019

Khadi has once again come out of its customary veil, marking its presence in the exclusive HS code bracket, issued by the central government on 4th Nov’19 to categorize its products in export. In a long-awaited move to make export of Khadi, exclusively categorized from the general league of textile products, the ministry of commerce and industries has allocated separate HS code for this signature fabric of India this week.

Khadi and Village Industries Commission (KVIC) Chairman Vinai Kumar Saxena said that this decision of government will open a new chapter in the field of Khadi export. Earlier, Khadi did not have its exclusive HS code. As a result, all the data regarding export of this signature fabric used to come as a normal fabric under the textile head. Now, we will be able to keep a constant eye not only on our export figures, but it will also help us in planning our export strategies.

HS Stands for Harmonized System and it is a six-digit identification code. It was developed by the WCO (World Customs Organization) and custom officers use HS Code to clear every commodity that enters or crosses any international border.

Khadi and Village Industries products are eco-friendly and natural and are in great demand in the International Markets. Recognizing its potential to generate exports and its eco-friendly importance, the Ministry of Commerce had accorded deemed Export Promotional Council Status (EPCS) to KVIC in 2006, to boost the export of Khadi products. However, in the absence of separate HS code, the export of Khadi products was difficult to categorize and calculate.

The KVIC Chairman added that getting exclusive HS code would have remained a mirage for KVIC, had Union MSME Minister Shri Nitin Gadkari, Union Commerce Minister Shri Piyush Goyal and Union Finance Minister Smt Nirmala Sitaraman not taken personal interest in it.

Spate of global free trade pacts threaten Indian apparel exports

Source: The Hindu Business Line, Sept 24, 2019

Mumbai: Free trade agreements signed between major consuming countries and manufacturing countries pose a major challenge for Indian apparel exporters. This threat comes even as the growth in exports moved back to the positive zone after two years.

Continued access to export incentives remains crucial for the Indian apparel exporters to garner a larger pie of the global apparel trade, though recent measures announced by the central government have provided some relief.

After a fall in exports for the last two consecutive years, apparel exports were up 4 per cent in the last four months of this fiscal.