Drawback rates need to be restored - Texprocil

25 Jun '09

6 min read

Hon'ble Union Minister of Textiles Shri Dayanidhi Maran, Dr. J. N. Singh, Joint Secretary (Textiles) and dear friends, It gives me a great pleasure to extend a warm welcome to Shri Dayanidhi Maran, Union Minister of Textiles, who has taken up the task of restoring Indian textiles on the path of rapid growth.

Within days of assuming office, Shri Maran has clearly spelled out his thrust areas to push the industry growth rate to 8-10%, which includes attracting higher investments for technology upgradation to the tune of Rs. 1,55,000 Cr over the next five years.

Sir, your visit is very crucial for us as the Indian textile industry is currently facing unprecedented challenges to its export competitiveness. The record growth achieved during the first two years of post-quota period had instilled a sense of confidence in the industry resulting in higher levels of investments for technology upgradation and creation of new capacities in order to achieve economies of scale.

Contrary to these expectations, Indian textile exporters have been facing tremendous challenges over the past two years or so and are witnessing considerable fall in exports.

India's textile exports are estimated to have declined by about 2 per cent to US$ 21.75 billion in 2008-09 as the demand has slumped in the markets of US and EU, which together account for over 60 per cent of exports.

In USA, against an overall Textiles & Clothing import growth of 0.57% from the entire world, our exports to USA recorded a decline of (-)5.95% during 2008-09, clearly indicating that India is losing out to its competitors. Same is the situation in the European Union too.

Sir, we are extremely thankful to you for taking out your precious time and holding consultations with the exporters in order to gain first hand knowledge about the problems being faced by this complex industry.

While various issues relating to Indian textile sector would be explained to you in detail by the Vice Chairman of our Council, I would like to highlight only some points.

In the short term the government needs to consider the following:

The drawback rates need to be restored to the levels existing prior to September 2008.

The quality of India's finished textile products is severely impacted on account of contamination in yarn and fabrics arising due to use of white polypropylene bags meant for packaging of fertilizers and pesticides. The contamination levels can be brought down significantly by mandating the use of coloured polypropylene bags for packing of fertilizers and pesticides. This change needs only a notification from the Ministry of Chemicals & Fertilizers and does not exert any financial burden on the stakeholders.

Sir, we have yet to receive our dues from the TUFS Scheme, refund of Service Tax on export related services and accumulated cenvat credit on capital goods.

Another important issueimpacting our competitiveness is the high cost of inland transportation. Measures such as liberalisation of inland transportation by allowing international carries to operate on domestic routes will reduce inward-outward freight. The ports like Kandla, Nhava Sheva & JNPT always have surplus containers which are transported as empty containers to other ports. If they are allowed to carry cargo to southern ports such as Cochin, Chennai and Vizag, the industry will be able to get raw material at lower transportation cost resulting in our enhanced export competitiveness.

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