India : FTP continues to rile textile sector

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Home / Knowledge / News / Textiles / FTP continues to rile textile sector

FTP continues to rile textile sector

06
Apr '15

The government’s new Foreign Trade Policy has come under fire from two other constituents of the textile industry. The cotton textiles export promotion council or TEXPROCIL and the synthetic and rayon textile export promotion council (SRTEPC) have said that the textile sector has not got its due under the new FTP despite it being one of the largest employment providers in country, according to media reports.

TEXPROCIL chairman RK Dalmia said that at a time when the textile sector which is amongst the most competitive sectors in the world is facing challenges of high tariffs barriers on account of preferential tariff arrangements has been granted duty scrips of 2 per cent only for mainstream cotton textile products but higher rates have been given for handlooms, carpets, coir products under the merchandise exports from India scheme (MEIS).

Sectors like cotton yarn have been totally ignored especially at a time when exports of these products have declined sharply and face high logistic cost when exported to markets like Latin America, Dalmia said.

The SRTEPC’s reaction was even more hard hitting. In a statement, it said that the agony of man-made textile industry which is highly capital intensive and the only sector capable of attracting FDI has been discriminated against vis-à-vis the cotton industry. The council said it was unfortunate that a sector which can help the government achieve its ambitious target has not been mentioned in the list of items granted liberal MEIS benefits under the FTP announced on the first of this month.

The council also pointed out that the cotton textile sector, which pays no taxes, has still been treated favourably in the FTP’s new scheme, MEIS, while the MMF textiles that contributes Rs 7000 crore as taxes and holds high potential has been given lower reward. For Europe and the US, MMF products have been given lower incentives as compared to cotton textiles.

The council is particularly upset because the benefits for promoting exports to major emerging markets for MMF textiles such as Latin America, Far East and African countries have been completely stopped in the new FTP without giving the sector’s exporters any scope for adjustment. The statement said the sector needs incentives for a couple of years to establish and stabilise MMF textiles in emerging markets.

Last week, two other textile trade bodies – Confederation of Indian Textile Industry or CITI and the Southern India Millis Association (SIMA) had also criticised the FTP. While CITI said the new policy has not provided any additional benefits to the textiles sector and instead removed or scaled down benefits for the textile sector, SIMA said the FTP failed to address sector specific issues although it had constructive policies on a macro level.

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