Mr. Sanjay Jain, CITI Chairman, has stated that the sector which was heavily hit by the demonetization, implementation of GST, rupee appreciation and high domestic cotton prices, is now showing some signs of recovery. As per the RBI Financial Stability Report – June 2018, the stressed advance ratio of the textile sub-sector has improved in March 2018 from the levels of September 2017.
While, as per RBI, the textile sector has reported a high transmission of stress to the banking sector, recovery is expected owing to rupee depreciation, picking up of domestic demand and progressive policies of the Government.
Mr. Jain has expressed his gratitude to the Government for its strong support to the textile sector. All the support extended by the Government, including the Rs. 1,300-crore Samarth scheme for skilling and the Rs. 6,000-crore package for apparel & made-ups, along with various State incentives, is expected to create a strong turnaround in the textiles & clothing sector and put the industry back on the growth path. The Government has also been very receptive in resolving many GST issues, though there are still a number of issues which the industry is hopeful will get resolved very soon.
Mr. Jain has pointed out that the only urgently required and missing piece in the success jig saw puzzle is the Government policy support for stopping excess imports and refund of all duties and taxes on exports across the value chain. In the financial year 2018, imports of textiles and apparel has touched $7 billion, which is 16% higher than the previous year value of $6 billion. All the categories across the value chain have seen a drastic rise in imports as indicated in the accompanying table:
Moreover, Mr. Jain has cited that the embedded duties, which are in the range of 4 to 6% across the value chain, are not getting refunded. This is one of the key factors for decline in exports, apart from blockage of funds due to delay in GST refunds and rupee appreciation. The biggest game changer that could transform the Indian industry and put it at par with its competitors such as Vietnam and Bangladesh is the Free Trade Agreement (FTA) with the EU, Australia, Canada and Britain for made-ups and garments and reduction in import duty on Indian cotton yarn and fabric by China.
He has added that he is very optimistic that the Government would intervene and continue to support the textile industry. It is one of the unique industries whose performance directly impacts farmers and the labour workforce, particularly women, in a very big way.