Indian textile industry expects incentives to bounce back

25 Aug '23

3 min read

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Insights

The Indian textile industry faces a stagnant market and needs to double its capacity to meet 2030 targets.
Industry organisations are calling for government incentives to revive the sector.
Industry leaders recommend fast-tracking FTAs with the EU, UK, and Canada, allowing duty-free imports of specialty fibres, and new investment incentives.

The Indian textile industry must double its production capacity to reach the 2030 targets set by the government. It has faced a stagnant global and domestic market for the past year, leading to underutilisation of production capacity. Industry organisations have created an extensive wish list to get back on track, and they anticipate that the government will consider some incentives in the coming months.

T Rajkumar, chairman of the Confederation of Indian Textile Industry (CITI), told reporters that the industry is currently experiencing stagnation at both global and domestic levels. He stated that the government must incentivise the industry to recover from the recession, and it may announce measures in December.

Sanjay Jain, managing director of TT Industries and former chairman of CITI, told Fibre2Fashion, "The industry has faced slow demand from both global and domestic markets. However, there are signs of improvement in the coming months. The industry is receiving more export inquiries from foreign buyers who need to bolster their inventories." On the subject of government incentives, he said it was too early to comment.

Industry experts predict that demand will likely increase for the upcoming summer season. A textile trade fair will be held in New Delhi in February 2024, and there are hopes that the government may announce incentives to create a positive atmosphere at the fair. Incentives may also be considered in the supplementary budget for the fiscal 2024-25, as the NDA-led government will not present the budget in February 2024 due to the Lok Sabha election in the first half of next year.

CITI and other industry bodies have advised fast-tracking FTAs with the EU, UK, and Canada to provide duty-free market access. The industry must at least double its capacity to reach a market size of $350 billion (including $100 billion in exports) by 2030.

The industry has called for allowing duty-free imports of all specialty fibres not manufactured domestically and for incentivising the entire MMF value chain to ensure capacity expansion. It has also recommended implementing the Technology Mission for Cotton 2.0 with a focus on Advanced seed technology and a Mission Mode to address various industry needs.

Industry organisations expect new investment incentive schemes to encourage scaling up, innovation, and sustainable technology. They have called for expedited finalisation of an alternative scheme for the Technology Upgradation Fund Scheme (TUFS) and an early announcement of the second version of the Production Linked Incentive (PLI). They have also suggested more gradual implementation of quality control orders (QCOs) to ensure uninterrupted supply of fibre and yarn.

Fibre2Fashion News Desk (KUL)

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