Shri Sanjay Kumar Jain, Chairman, CITI, welcomes the Government’s decision to reduce the Hank Yarn Obligation (HYO) from 40% to 30% of the total weaving yarn produced for domestic consumption. This step would remove the anomaly of excessive obligation of hank yarn and save the ailing spinning industry from the extra burden. He stated that this is an historical step, as the industry was facing this extra burden for more than a decade now. He specifically thanked the Hon’ble Union Minister of Textiles, Smt. Zubin Irani for this historic announcement.
Mr. Jain stated that HYO provision had compelled the textile mills to produce a minimum of 40% of the weaving yarn for domestic consumption as Hank Yarn, which was inhibiting the growth of the industry. The actual cotton hank yarn requirement by the handloom sector is less than 15% of the total as per the estimate based on the Handloom Census 2009-10 data. It is estimated that now the requirement for hank yarn would have fallen to about mere 10% of the total weaving yarn produced for domestic consumption. Mills were under severe stress to meet this obligation as there was not sufficient demand for hank yarn in the country.
Chairman-CITI further stated that he is very thankful to the Government for considering the long standing demand of the industry. This will help the spinners bring down the cost and improve their competitiveness, thereby enabling Ease of Doing Business for the entire cotton textile industry. Last time, this obligation was reduced was in 2003 from 50% to 40% and the industry had to wait for about 15 years for the next round of reduction despite actual requirement percentage reducing every year.
CITI hails the Scheme to Rebate State and Central Embedded Taxes to Support the Textile & Clothing Industry
Shri Sanjay Kumar Jain, Chairman CITI, welcomed the Cabinet decision approving the Scheme to Rebate State and Central Embedded Taxes to Support the Textile Sector. CITI Chairman thanked the Union Cabinet chaired by Hon’ble Prime Minister, Shri Narendra Modi for approving the scheme as it will enable the Government to take various measures for making exports of apparel and made-ups free of any embedded Central and State levies.
Presently, apparel and made-ups segments are supported under the Scheme for Rebate of State Levies (RoSL). However, certain State as well as Central Taxes continued to be present in the cost of exports.
The Cabinet decision provides for a scheme to rebate all embedded State and Central Taxes/levies for apparel and made-ups which have a combined share of around 56% in India’s textile export basket. Rebate of taxes /levies has been permitted through an IT-driven scrip system at notified rates. The proposed measures will boost India’s competitiveness in export markets and ensure equitable and inclusive growth of apparel and made-ups sector.
CITI Chairman pointed out that the new scheme only covers apparels and made-ups but does not cover other important sectors like fabric and cotton yarn. To ensure that no taxes are exported and to make Indian cotton yarn and fabric globally competitive, CITI request the Government to include cotton yarn and fabric in the new proposed scheme. It will not only help to boost cotton yarn and fabric exports but also increase the employment opportunities and inclusive growth in the entire textile value chain. It is estimated that there are many blocked/embedded taxes/levies/ surcharges of about 6-7% for spun yarn and fabric sector which are not reimbursed and adding to the cost of exports.
The Chairman pointed out that India’s cotton yarn and fabric exports are also struggling because of the duty disadvantage faced by the Indian exporters in the major markets. CITI analysis reveals that there has been a continuous decline in exports of cotton yarn and fabric from 2013-14 to 2017-18. India’s exports of cotton yarn declined by 25% from US$ 4,570 mn in 2013-14 to US$ 3,443 mn in 2017-18. In the same period fabric exports declined by 7% from US$ 4,941 mn to US$ 4,598 mn.