FTP continues to draw mainly negative reactions

07 Apr '15

3 min read

While two more textile export bodies have criticised the Foreign Trade Policy, a shoes and apparel major has welcomed it. Over the last week, several textile trade bodies have slammed the new policy for ignoring their concerns.

Apparel export promotion council (AEPC) chairman Virender Uppal said that the garment export industry being the highest employment generating sector, with high domestic content and women intensive garment industry should have been given an edge over others. Though FTP 2015-2020, mentions that labour intensive sectors should get more concessions especially favouring the women workers in apparel manufacturing industry, the incentives and concessions for the same are missing in the policy announcements.

Uppal said the council is sore that features like incremental exports incentive, status holder scrips have not been covered at all in the new policy. Therefore, there is virtually no encouragement for small exporter to grow from micro to small, small to medium and medium to large exporter in a reasonable time frame.

He also criticised the government for not unveiling a systemic road map of future trade once export subsidies are phased out. According to him, the government’s commitment to move away from export subsidies in view of WTO-ASCM, needs to be viewed in the light of the fact that India apparel manufacturers are already grappling with higher tariff barrier artificially pulling them down in terms of global cost competitiveness.

According to Uppal, the maintenance of average export obligation has also become much more difficult to achieve where EPCG is used by exporter, which prescribes six times of duty saved as export obligation, over and above maintenance of average export obligation. The council has demanded the fixation of export obligation without over and above average, which has not been met. The industry is forced to pay 11-12 per cent rate of interest to bank, making its exports highly uncompetitive.

The garments exporters association (GEA) has also expressed disappointment with the FTP, saying it has not provided any specific proposal or export promotion strategy to reverse the recent downturn in garment exports.

Pritam Goel, president of the GEA, pointed out that the government has not given due consideration to various representations submitted by the garment exporters for grant of adequate commercial relief to meet the new challenges of increasing international competition.

Goel said the FTP could have taken better care of the genuine needs and demands of the garment export sector. According to Goel, the industry was expecting extension of 3 per cent interest rate subvention and upward revision of duty script from 2 to 5 per cent for the labour intensive garment sector of the textile industry.

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