The joint report ‘Weaving the Way: Breakout Growth Agenda for the Indian Apparel, Made-ups and Textile Industry’ by the Confederation of Indian Industry (CII) and Boston Consulting Group (BCG) outlines challenges and develops solutions in the Indian apparel, made-ups and textile industry.
It says that the domestic market could account for a 2.5 times jump to $150 billion and even the foreign exchange earnings could go up to a similar size by the year 2025. Challenges to meet this potential include small scale, fragmented clusters, restrictive labour laws and unpredictable wage movements, high operating costs due to taxation and subsidy structures, market access barriers in key markets such as the EU and the US, poor infrastructure, logistics delays, and lack of product development and process improvement.
The report also calls for a Free Trade Agreement (FTA) with the EU. An added provision could be to treat the poor states of India on a similar basis as least developed countries. (LDC). An incentive for innovation and technology is also recommended.
The new apparel package has taken many steps in the right direction. A landmark provision in the policy is to allow more flexible work hours and fixed term employment, as per industry concerns. The government has devised innovative means for direct benefit transfer to new workers, and has promised to contribute 12 per cent of the salary directly into new workers’ accounts.
Export drawbacks for the first time include state taxes and cesses, which are expected to further be extended with the roll-out of the goods and services tax.
Job-linked scale through a ‘Make in India’ scheme could provide a slab-based incentive linked to the number of additional jobs created, to be availed of by entrepreneurs or industrial parks, it says.
The report suggests that state governments should promote infrastructure with plug and play facilities. Also, different operating models can be built, such as the hub and spoke model, or notified apparel parks.
Duties and taxes must be rationalised to avoid inefficiencies and high energy and overall costs. A power subsidy, inclusion of power charges under GST, and similar rates for both cotton and synthetic products are recommended.
The report suggests the China model of VAT rebates, and the exempt-credit-offset method of carrying forward unadjusted rebates to encourage hybrid domestic-export models. Logistics support is a key recommendation, especially integration with Bangladesh through single-day transit. Shipping turnaround times must be improved and adequate hinterland connectivity built with key textile parks. (KD)
Fibre2Fashion News Desk – India
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