Exporters in competing countries are getting export credit at a lower rate of 6%, whereas in India the interest subvention for packing credit that provided export credit at BPLR (Benchmark Prone Lending Rate) minus 4.5% was withdrawn by Government w.e.f. 30th September 2008.
Besides, there is a need to increase custom duty on PSF (Polyster Staple Fibre) & PFY (Polyster Filament Yarn) to 10% from the existing 5%. Currently, there is a surplus capacity of synthetic fibres and yarns globally.
Also, as a result of steep increase in the price of Naptha (from Rs.27000/MT to Rs.52000/MT since April 2007) the entire chain of Polyester fabrics has suffered. The difference between the raw material price and selling price of finished product (PSF & PFY) has reduced so much that it does not cover even the variable cost, FICCI pointed-out.
FICCI further noted that the growth of textiles industry has come down from 8% in 2005-06 to merely 0.8% in April-August 2008-09. Looking at the Industrial Entrepreneur Memorandum (IEMs) filed, the investment has come down drastically in the current year, FICCI observed.
Last year, 174 IEMs were filed during April to July representing an investment of Rs.9477cr. However, this year only 108 IEMs have been filed for April-July with an amount of Rs.3000cr. only, FICCI study pointed-out.
FICCI emphasised that the Government needs to swiftly announce a package for textiles industry that would not only make our exports competitive but also incentivise investment.
While neighbouring countries like Pakistan has already announced one such package for its textile industry, the other neighbouring country i.e. Bangladesh is optimistic that the demand for their garments would increase despite these crises since their garments are the cheapest.
Unless the package is announced now by the Government, Indian textiles industry would lose out to its competitors like Bangladesh, Pakistan etc in international markets, FICCI said.
Click here to read FICCI detailed study on slowdown in India's textile industry.
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