Measures to promote exports of textiles

20 Oct '08

4 min read

The target fixed for the textiles exports for the year 2007-08 was US $ 25.06 billion, against which exports performance was of the order of US $ 22 billion, as per provisional figures. Although the export achievements fell short of the target fixed for 2007-08, there was still an increase of US $ 2.3 billion over the exports performance of 2006-07.

The reasons for the shortfall in export can be partially attributed to the appreciation of the Indian rupee during 2007-08 by over 13%, leading to loss of price competitiveness in the international market. This was further compounded by the fact that there was a general slow down in the off-take of textiles and clothing (T&C) products in some of the major markets abroad.

The share of textiles in the total exports of the country marginally declined to 13.5% in 2007-08 from 15.16% in 2006-07.

To promote exports of textiles from the country and to strengthen the textiles sector of the country, Government has taken a number of measures from time to time as follows:-

(i) To improve productivity and quality of cotton for manufacture and export of competitive downstream textile products, Government has launched the Technology Mission on Cotton (TMC). The Mission has achieved success in increasing the productivity and reducing the contamination through upgradation of cotton market yards and modernisation of Ginning & Pressing factories.

(ii) The Technology Upgradation Fund Scheme (TUFS) was launched to facilitate the modernisation and upgradation of the textile industry both in the organised and unorganized sector. The Scheme has been further fine tuned to increase the rapid investments in the targeted sub-sectors of the textile industry. The cost of machinery has been further brought down by reducing the customs duty on imports.

(iii) To provide the textile industry with world-class infrastructure facilities for setting up their textile units meeting international environmental and social standards, a Public-Private Partnership (PPP) based Scheme known as the “Scheme for Integrated Textile Park (SITP)” has been introduced in August 2005.

(iv) In 2004-05 Budget, the entire textile sector, except for man-made fibre and filament yarn was provided optional exemption from excise duty. In 2005-06 Budget, Central Value-aided Tax (CENVAT) on Polyester Filament Yarn has been reduced from 24% to 16%. These modifications in fiscal levies aim at attracting more investments for modernization of textile sector.

(v) To facilitate import of state of the art machinery to make our products internationally competitive in post quota regime, in 2005-06 Budget, the customs duty on textile machinery has been brought down to 10% except 23 machinery appearing in List 49 which attracts Basic Customs Duty (BCD) of 15%. The concessional duty of 5% continues to be at 5% on most of the machinery items.

(vi) Government has launched the Debt Restructuring Scheme w.e.f. Sept., 2003 with the principal objective to permit banks to lend to the textile sector at 8-9% rate of interest.

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