The new Foreign Trade Policy has come under fire from two major textile trade bodies. The Confederation of Indian Textile Industry or CITI says the new policy has not provided any additional benefits to the textiles sector, though measures announced for improving ease of doing business and simplified procedures would be beneficial to the textile sector. In a statement CITI chairman Prem Malik pointed out that some benefits for the textile sector have been removed or scaled down.
While he welcomed the government’s announcement that the policy will have continuity during the 5 year period and only a midterm review will be made, he said that while amalgamating Focus Schemes and the other Chapter 3 schemes into Merchandise Exports from India Scheme (MEIS), cotton yarn has been completely ignored. Chapter 3 benefits on cotton yarn had earlier been withdrawn when cotton yarn was brought under Restricted List. After withdrawing the requirement of registration of export contracts, this product had been brought under Free List, but Chapter 3 benefits were not restored under the earlier FTP. This anomaly has not been corrected under the new policy either.
Man-made fibre yarn as well as woven and knitted fabrics have been provided 2 per cent reward in the EU, the US, Canada and Japan. This would mean that these products would not be eligible for any reward under MEIS in China, Bangladesh, Sri Lanka, Turkey, Vietnam, South Korea etc. which are the major destinations for these products. In the case of made ups and garments also, only 2 per cent reward has been provided for the same countries. Man-made fibres used to get benefits under Focus Schemes, but do not have any under MEIS.
Thanking the commerce and industry minister for continuing EPCG scheme and reducing the export obligation marginally for domestically procured capital goods under the scheme, Malik stated that this is a welcome step both for the textile and machinery industries.
The Foreign Trade Policy Statement, released along with the FTP, talks about providing interest subvention on identified sectors for a period of three years. The sectors have not been indicated and no definitive announcement of the subvention has been made. “I hope textiles will find a place when the announcement comes,” said Malik.
Another textile trade body, the Southern India Mills Association (SIMA) said the FTP failed to address sector specific issues although it had constructive policies on a macro level. The Association pointed out that the Indian textile industry, which provides jobs for over 105 million people, has been demanding a slew of measures in the Foreign Trade Policy to have a level playing field in the emerging markets. The Union Budget has not considered the demands of the mother industry except extending the optional Cenvat route for cotton textiles.