Cotton textiles are amongst the select few items in the textile & clothing basket that have shown positive growth in exports during 2012-2013. Current trends in exports indicate that they will surpass the target of $9 billion set for the sector and reach $9.56 billion. Overall growth in exports during 2012-2013 is expected to be around nine per cent over the previous year against the backdrop of adverse market conditions in the European Union and the US.
The textile industry seems to have fully recovered from the losses it has incurred in the previous years when there was a severe volatility in the national and international markets. Capacity expansion is once again beginning to happen. The Union Budget 2013-14 has provided much for modernization and expansion of the textile industry.
Robust export growth is very essential for the financial health of the textile industry. It is very important to have continuous additional capacity creation required for the existing huge potential by way of becoming the most cost efficient manufacturer of cotton textiles and start towards achieving a growth rate of 20 per cent. The Textiles Ministry and the Commerce Ministry are extremely appreciative of the efforts made by Texprocil so far.
Domestic cotton prices are ruling three-five per cent higher than international prices in spite of India having surplus cotton overall. This is due to artificial scarcity in the market created by procurement agencies holding over 20 lakh bales of cotton procured during November-December 2012 and January 2013. Private traders are also holding large inventories.
Texprocil has urged the Government to request CCI and NAFED to start selling their large inventory to remove the artificial shortage and restore international price parity which is most important to help maintain the export momentum.
The following policy interventions will enable greater increase in exports:
* Notifying export benefits under the Focus Product Scheme & Market Linked Focus Product Scheme at 2-digit level HS Code for Home Textile Sector instead of 6-digit or 8-digit levels. This will also ensure against unwanted exclusions.
* Treating “cut & sew” products like garments, made-ups and bags on par for all export promotion benefits. Just as jewellery export does not discriminate between ‘bangles’ and ‘necklaces’, export of ‘cut & sew’ products should not differentiate between garments and home textiles.
* Ensuring that Indian cotton is made available at international prices or lower. In this connection Government procurement agencies should not hold undue inventories of cotton and unwittingly contribute to increase in domestic prices to the disadvantage of exporters.
* Importing cotton at higher International prices would only exacerbate the current account deficits (CAD) at a time when the country needs to increase exports and reduce CAD.