Less MMF players does not necessarily imply a constraint: CFO, Grasim

25 Sep '10

5 min read

He also brings to notice that the reason for growth of cotton based imports is primarily the fiscal and non-fiscal levy differential that historically existed between cotton and MMF. 'As also exemplified in the policy'- he pointed in specifications, and continued further saying that the Indian yarn sold in domestic market is usually costlier only because of trade practices in the Textile Hubs/Clusters.

For Mr Gupta, the MMF yarn price is higher than for export because the middle men/traders operate domestic yarn sales through buying and brokering deals; payment terms vary from 10 days to 120 days from days of dispatch the cost of which is therefore included in the price; risk of receiving short payment due to the large exposed credit period is also self ensured through a higher pricing.

The finance guy without fail also counts up on the determinants behind these minisculed MMF fabric exports. He spoke- “It is due to higher production cost in India for fabric with available technology, inadequate factoring of various duty and tax structures in drawback and DEPB routes, and high end dyeing and finishing is limited to few.”

Taking the point of discussion towards areas that still need to be worked on in DNFP, Mr Gupta suggested that fabric export policy particularly from textile hubs need to be formulated with special support on fabric testing and four point system inspection by Textile Committee. Import duty on man-made fibre based apparel is higher in large importing countries. Import duty of a cotton trouser is around 16% and a man made fibre trouser is around 28% in USA. Policy to understand the import duties of other countries and thereafter align structures would help, he noted.

Besides that, the finance officer also talked about certain other broader issues on which the policy can be strengthened. They were - working of the various boards in unison for the development of the textile sector as a whole is essential. The mechanism to ensure the same has not been laid out, according to him. He claims that the policy does not lay down clear measures to increase investments, productivity and efficiency of this sector. Apart from laying down fiscal incentives and relaxing interest rates under TUFS, it does not lay down specific steps on assisting and improving the future growth of the sector. More investments may need to be made in processing & garmenting sector in order to strengthen the entire value chain. There needs to be an increased focus on use of technology on integration of various industry platforms, especially to reduce middlemen, he opines.

“In all while the decadal perspective (2010-20) provides stability and the objective to place India firmly on to the World Fibre Map instills hope and sows the seed for a better tomorrow, it remains to be seen how this draft NFP is implemented in true body and spirit,” Mr Gupta closed the talk in anticipation.

Fibre2fashion News Desk - India

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