CITI stresses need for proper perspective

19 Jan '11

5 min read

Shri Jaipuria lamented that the textile and clothing industry that employs over 35 million workers is at the crossroads at present because they find it impossible to pass on the increased fibre cost to the customers and consumers. He stressed that prices of man made fibres have also been increasing and high excise and customs duties have been contributing to such increase. The spinning mills, most of which have gone through rescheduling of loans and many even had to resort to Corporate Debt Restructuring in recent years, are again facing the risk of defaulting on loan repayments. The garment and home textile units have been complaining that they are not able to obtain price increases from their global customers to match their increased raw material cost. Increase in fibre cost has a cascading effect that affects the entire textile value chain. In this context, Chairman, CITI, has urged government to take the following measures urgently to avoid the impending crisis in the textile value chain:

A firm and unequivocal statement may be issued that cotton exports would be restricted to the quantity of 55 lakh bales already decided by government, until and unless credible data on actual cotton arrivals indicates a need for revisiting this issue. This will stabilize cotton prices and avoid any increase in cotton yarn prices.

Excise duty on man made fibres should be reduced to 4 percent and customs duties and anti dumping duties on them should be withdrawn.

Cotton yarn exports of 890 million kilos may be permitted during the current fiscal, since there is no shortage in the domestic market and prices are lower than global prices. Exemptions from the export ceiling may be provided to all units which have export obligations imposed by government under various schemes.

Since all contract registrations allowed earlier have expired and no export of cotton yarn is taking place at present, the process of allowing fresh shipments may be resumed immediately.

In order to avoid any speculation as noticed in the recent allocation of cotton export quotas, exports of cotton yarn may be allowed only against LC or advance payment and to those who have some export performance in the past.

The objective of restricting cotton yarn exports during this year has been achieved through export ceiling. Therefore, refund of duties to cotton yarn exporters under DEPB and Draw Back schemes that had been withdrawn earlier may be restored immediately.

Cotton yarn may be removed from the restricted list for exports from next fiscal onwards, since production has been increasing steeply and domestic consumption is not keeping pace. This will also encourage spinning mills to invest further and enhance production in the coming years in order to meet any increase in demand at home and abroad.

Confederation of Indian Textile Industry (CITI)

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