The Union Government has withdrawn the 7.67 percent concession given to cotton yarn exporters under the Duty Entitlement Pass Book (DEPB) scheme. This has a led to a hue and cry amongst the cotton yarn manufacturing and export sector, but at the same time, a section of the textile value-added chain, the garment exporters are euphoric, over the withdrawal of the incentive.
The domestic and export apparel manufacturing sector had mounted pressure on the Union Textile Ministry to take concrete action, to rein in the galloping prices of cotton yarn, which have shot up by more than 30-35 percent in the last few months. The Finance Ministry acted on the recommendations of the Textile Ministry, which too was in favour of reining in prices of cotton yarn.
Mr Ashish Bagrodia, President, Northern India Textile Mills Association (NITMA) expressed shock over the move and said that, at the cost of the spinning sector, the government¸ was trying to appease a downstream sector, which has low labour productivity as compared to competing countries and disproportionately high overheads, all which have rendered the knitted garment sector entirely non-competitive.
Mr Shishir Jaipuria, Chairman, Confederation of Indian Textile Industry, observed that these are the wrong medicines for a genuine ailment and added by saying that, it is also true that this increase has been triggered by a runaway increase in cotton prices and significant increase in power and labour costs for the spinning mills and that solutions need to be found to this problem, rather than taking measures that would render the already beleaguered upstream sub-sectors also unviable.
Mr.Subhash Mittal of Payal International Limited and also a garment exporter, said, “Yarn exporters will raise a hue, as they will suffer due to the withdrawal and farmers too, as raw cotton prices will also go down, but in the long run, as the prices of cotton will decrease, cost of producing a garment will go down, which will help us become globally competitive.”
Mr GL Dadhich, General Manager of the more than a century old, Maharashtra based RSR Mohota Spinning and Weaving Mills Ltd, which has a capacity of 10,000 tons of yarn and 20 million meters fabric per annum, said, “We have just now received a circular, asking us to register our exports with the Textile Commissioners Office in Mumbai, but this decision is definitely bad news for cotton yarn exporters”. He, however, was not willing to comment further than this.
Mr Shivakumar, Senior Merchandiser at the Bangalore based Lifestyle International Private Limited, an export house of repute, was very forthcoming, when he said, “Yarn prices have been revised three times in the last three months. Yarn manufacturers prefer to export, since they are getting better prices, but at the same time it is the garment manufacturer-cum exporter, who is in trouble.
“One has to understand that, fabric prices in China are far lower than those prevailing in India and if we are allowed to import fabrics at a lower import duty, our cost of production will come down considerably. It also has to be understood that, the apparel industry is a labour-intensive industry and the government in its wisdom has done the right thing to save the jobs in the sector, by withdrawing the incentive”, he concluded by saying.
Fibre2fashion News Desk - India