The new foreign trade policy (FTP) has not provided any additional benefits to the textiles sector, though the measures announced for improving ease of doing business and simplified procedures would be beneficial to it.
In a statement here, Mr. Prem Malik, Chairman, Confederation of Indian Textile Industry (CITI), has welcomed the announcement of the Minister that the policy will have continuity during the five-year period and only a mid-term review will be made. However, he noted that some benefits for the textile sector have been removed or scaled down.
While amalgamating Focus Schemes and the other Chapter 3 schemes into Merchandise Exports from India Scheme (MEIS), cotton yarn has been completely ignored. Chapter 3 benefits on cotton yarn had earlier been withdrawn when cotton yarn was brought under the restricted list. After withdrawing the requirement of registration of export contracts, this product had been brought under free list, but Chapter 3 benefits were not restored under the earlier FTP. This anomaly has not been corrected under the new policy either.
Man-made fibre yarn as well as woven and knitted fabrics have been provided two per cent reward in the EU, the US, Canada and Japan. This would mean that these products would not be eligible for any reward under MEIS in China, Bangladesh, Sri Lanka, Turkey, Vietnam, South Korea, etc., which are the major destinations for these products. In the case of made-ups and garments also, only two per cent reward has been provided for the same countries. Man-made fibres used to get benefits under Focus Schemes, but do not have any under MEIS.
Thanking the Commerce and Industry Minister for continuing the EPCG scheme and reducing the export obligation marginally for domestically procured capital goods under the scheme, Mr. Malik stated that this is a welcome step both for the textile and machinery industries.
The FTP statement talks about providing interest subvention on identified sectors for a period of three years. The sectors have not been indicated and no definitive announcement of the subvention has been made. “I hope textiles will find a place when the announcement comes”, added Mr. Prem Malik.
Immediate disposal of procured cotton urged
With market arrivals dwindling and the Cotton Corporation of India (CCI) sitting over 83 lakh bales of cotton, there has been a shortage of cotton at several production centres in spite of the fairly large production of 390 lakh bales during the current cotton season. The beleaguered textiles industry has urged the Minister for Textiles, Mr. Santosh Kumar Gangwar, to direct CCI to dispose of the procured cotton immediately in order to avoid an artificial shortage in the market and to bring cotton prices to reasonable levels.
In a letter addressed to the Minister, Mr. Prem Malik, CITI Chairman, has pointed out that most of the cotton of the current season has already arrived in the market and therefore increase in cotton prices at this stage would only help cotton traders and not farmers. Further, with a huge quantity remaining with CCI, traders are also finding an opportunity to hoard cotton and push up prices further. The only way to force traders to bring out cotton to the market is by disposing of CCI’s cotton stock through e-auctions and at reasonable prices.
Mr. Prem Malik has pointed out that export of cotton yarn has been coming down in recent months, and this has seriously affected the spinning industry. Undue increase in cotton prices is making cotton yarn export even more difficult and eating into the profitability of the entire textile value chain.
Mr. Prem Malik has sought immediate personal intervention of the Minister to ensure disposal of all procured cotton by CCI without further delay through e-auctions at reasonable prices.