India's ICRA seeks more budget fund to raise textile export

20 Jan '18

2 min read

Indian rating agency ICRA recently sought adequate allocation for schemes like refund of state levies and interest subvention benefits in the next budget to improve textile exporters’ competitiveness. The textile sector, one of the major contributors to the country's export earnings with a 13 per cent share, is under pressure, ICRA said in a pre-budget note.

Intense competitive pressures have led to apparel exports growing at a slower pace and decline in demand from China led to pressure on yarn exports, according to a news agency report.

The budgetary allocation for the Technology Upgrade Fund Scheme (TUFS) was lowered by 23 per cent from Rs. 2,610 crore in 2016-17 to Rs. 2,013 crore in 2017-18, a level even lower than in 2014-15, ICRA senior vice president Jayanta Roy said in the note.

As India continues to be highly dependent on textile intermediaries for export earnings, indicating a potential for further value-addition, investment is needed in the downstream segments, like apparel and home textiles, said the note.

A higher allocation towards TUFS subsidy for 2018-19 would attract investments in the downstream segments, facilitating higher value addition and an even higher contribution by the sector to the country's gross domestic product and foreign exchange earnings, Roy said.

ICRA estimates apparel exports may go up by 3-3.5 times, if raw materials and intermediaries currently being exported, get processed further into apparel. This has the potential to double the cotton-based apparel exports and increase total textile exports from the country by 50 per cent in value terms. (DS)

Fibre2Fashion News Desk – India

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