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.

Read the rest of this entry »

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 20191108-1exclusive 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. Read the rest of this entry »

Robust textile exports help India reduce trade deficit with China

Source: The Hindu Business Line, Apr 14, 2019

Mumbai: Robust export of cotton textiles to China has helped India reduce its trade deficit with that country. The recent government move to reimburse all State and Central levies on textile exports boosted shipments to major consuming countries.

Cotton textile exports to China increased 69 per cent between April 2018 and and February 2019 to $1.55 billion, against $920 million in the previous year period.

KV Srinivasan, Chairman, Cotton Textile Export Promotion Council, said exports can increase further if the Centre addresses the tariff disadvantage of 3.5-10 per cent that the Indian industry suffers vis-a-vis textile exporters in Vietnam, Pakistan and Indonesia. Read the rest of this entry »

Indian cotton fabric, yarn exports fall due to high duties: Study

Source: The Economic Times, Feb 10, 2019

New Delhi: India is lagging in cotton exports to major markets due to a duty disadvantage vis-a-vis Bangladesh, Vietnam and Pakistan, a Confederation of Indian Textile Industry (CITI) study found.

Indian export of cotton yarn to the likes of the European Union (EU) and China slumped 25% in the past five years, while fabric export fell 7%. Read the rest of this entry »

India’s textile and apparel exports jump by 14% in November

Source: Business Standard, Dec 19, 2018

Mumbai: After a staggering 38 per cent jump in October, India’s textile and apparel exports growth moderated to 14 per cent in November due to a sharp volatility in the rupee against the dollar.

Data compiled by the Union Ministry of Textiles showed India’s textile and apparel exports at Rs 189.65 billion for the month of November 2018 compared to Rs 167.07 billion in the corresponding month last year. For the period between April and November, however, total textile and apparel exports witnessed a growth of 7 per cent to Rs 1600.10 billion for 2018 versus Rs 1492.54 billion in the same period last year.

In dollar term, however, India’s textiles and apparel exports recorded a mere 2 per cent jump to $2.64 billion for November 2018 versus 2.57 billion for the same month last year. For the period between April and November, however, total textile and apparel exports remained flat at $23.18 billion. Read the rest of this entry »