Textiles Exports: Ways Ahead

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Amit Guin | 17 Aug, 2013
Playing the role of the most important constituent of the manufacturing sector in India mainly due to its contribution towards employment, the Indian textile and clothing sector adds about 14 percent to industrial production and four percent to Gross Domestic Product. Its current share in total exports is around 11 percent. The textile export basket consists of readymade garments, cotton textiles, man-made fiber textiles, wool and woolen goods, silk, handicrafts, coir and jute. During the XIth Plan period, exports during the first four years showed varying trends. The year 2008-2009 saw a decline in exports mainly on account of the global recessionary conditions and financial crisis. Exports during fiscal year 2009-2010 marked an increase of 6.92 percent as the world recovered from the recessionary conditions. The recovery continued in the years 2010-11 and 2011-12 before plateauing out in 2012-13. The Ministry of Commerce suggests ways to accelerate the pace of export growth, if the country has to meet with the obligations arising out of a Balance of Trade (BoT) deficit and Current Account Deficit (CAD), a target of USD 45.50 for the textile and clothing sector by 2013-2014 should be met at a Compound Annual Growth Rate (CAGR) of 27.72 percent during the three year period i.e. 2011-12 to 2013-14.

The trends during the Eleventh Five Year Plan show that against an expected target of achieving USD 55 billion by the end of the 11th Plan, exports from the textile and clothing sector are likely to reach around USD 32.35 billion. The labour intensive garment sector needs to be encouraged to increase exports and also seek higher investments. While efforts are being made separately through the National Fiber Policy to enhance the production of man-made fiber yarns and fabrics, there is also a need to encourage exports of man-made fiber textiles in all their value added forms. On the other hand, with India having the strength of home grown cotton and a vibrant spinning industry, export of cotton textiles in their value added form as yarns, fabrics and home textiles will find customers around the world.

To achieve the target of USD 65 billion by the end of the Twelfth Five Year Plan, there is a need to put in place differentiated strategies for different products considering the vast diversity in product range and fiber content in the sector. Deliberations across various relevant sectors have put on the drawing table different strategies to meet the projected export targets. To achieve the projected export growth targets, the need of the hour is to provide adequate confidence to the exporters to substantially enhance their market presence in traditional markets and aggressively seek out new markets. At the same time, it is pertinent to continue with the existing incentive schemes such as duty drawback, tax benefits, and interest subvention scheme. Improvement in infrastructure related to exports, reducing transaction costs, and providing full refund of all indirect taxes and levies, form the three crucial pillars of the strategic reforms.

A renewed thrust needs to be given to Technology Upgradation with special emphasis on eco-friendly products and green technology. Textile Research Associations should also be upgraded and encouraged to seek collaboration with overseas testing laboratories and other like minded institutions.

The mulling process also came up with detailed sectoral strategies for achieving the desired targets in different product export sectors. It is to be noted that while Readymade Garments is the single largest contributor to exports in the textile sector, it is also this sector only which offers the scope for maximum growth. While a substantial increase in production capacities is required on one hand, a huge potential also exists on the other hand for increasing exports by undertaking capacity building in the sector.

Indian man-made fiber textile industry has a large production base which is complemented by self-sufficient raw material production base. To meet the objectives of high growth and increasing the competitiveness of Indian man-made fibers, it is necessary to negotiate with important regions of the world like Latin American MERCOSUR countries, Egypt and Morocco in WANA region, Russia and Uzbekistan in CIS countries, to reduce the tariff structure. India has an inherent advantage in the cotton sector owing to the abundant availability of raw material, long tradition of craftsmanship and design and presence across the entire value chain. The export competitiveness of this sector is very significantly affected by the cost and reliability of power supply, logistics and transaction costs. In order to boost the export performance, it is essential that the National Fiber Policy should target enhanced competitiveness of cotton fiber, as well as ensure most judicious and efficient utilisation of the country's strength for sustainable development of all the sub-sectors of the cotton economy through backward and forward integration.

The efficiency of the jute industry can be given a boost by providing sufficient incentive to the industry for large scale adoption of available new technology machines. Streamlining the existing Jute Technology Mission Schemes to improve its delivery system can also encourage production and bring improvement in the quality of raw jute. In order to encourage farmers to adopt sericulture practices, there is a need to increase the thrust on developing silkworm races that are not only resistant to drought or change in climatic conditions, but are also disease-resistant, and high-yielding. At the same time, it would be important to design time-bound, result-oriented incentivised schemes for better implementation of research and development activities. There is also a need for the introduction of advanced systems of quality-based pricing mechanism for cocoons for appropriate and better price realisation by the cocoon growers. In order to make the wool sector globally competitive, it is important to rationalise import duty on raw wool and on woolen yarn and fabrics. On the non-fiscal side, efforts should be focused on implementing programmes for producing highland wool in the hilly tracts of the country. The industry should undertake collaborative research projects with the major wool producing countries, with necessary support from the Government. The research should focus on breed improvement and overcoming the diseases in sheep breeds and producing disease-resistant stud rams.

The indigenous development of speciality fibers is highly dependent upon the demand for the fibers in the domestic market from the downstream industry, i.e. the technical textile manufacturers. Therefore, besides a push to the speciality fibers, it is also necessary to focus on technical textile products with a view to increase their consumption and production in India. The Government can mull over a plan to enable Indian or foreign companies to set up manufacturing facilities for speciality fibers, thereby strengthening the raw material base for Indian technical textile industry. Incubation centres could also be set up for transfer of technology and acceptance of innovative technologies by the industry. In order to boost the consumption of technical textile in India, the Government should increase awareness about the usage and beneﬁts of these products.

The data from the Textile Ministry shows that during April-May 2013, apart from an upward trend in the total cloth production, almost all sub-sectors of the textile industry showed positive growth. On the other hand, the Technology Upgradation Fund Scheme (TUFS), since its inception on April 1, 1999, has propelled investment of more than Rs. 243721 crores. During 2012-13, the figure for the funds allocated and disbursement made under TUFS stood at Rs. 2,323.03 crores and Rs. 2,151.35 crores respectively. The Planning Commission has now approved an allocation of Rs. 11,952.80 crore for the 12th Five Year Plan. The Restructured TUFS is also expected to trigger additional investments of approximately Rs. 1,50,000 crore during the 12th Five Year Plan. Earlier this year in April, the Ministry launched 21 New Textile Parks approved under Scheme for Integrated Textile Parks (SITP). Out of the 21 new parks, six are in Maharashtra, four in Rajasthan, two each in Andhra Pradesh and Tamil Nadu and one each in Uttar Pradesh, West Bengal, Tripura, Karnataka, Gujarat, Himachal Pradesh and Jammu & Kashmir. So far, 750 units have been registered with the Ministry as technical textile manufacturing units for availing 10 percent capital subsidy with a total investment in proposed machineries to the tune of approximately Rs. 4289.9172 crores. (PIB Feature)