As we near the end of another fiscal year (2018 -2019), we have some excellent news as the Government has decided to reimburse the embedded State & Central level embedded taxes for Garments and Made- Ups. This is a historical decision as exports of the highly labour intensive and value added segment of the complex textile value chain has become “Zero Rated”. This augurs well for the industry & trade as it will be able to overcome the intense competitive pressures from nations having a cost advantage on account of various factors including preferential access. The Garment and Made- Ups Sector should now rise up to the faith imposed in them by the policy makers by providing higher employment generation and increase exports by making a quantum leap.

At the same time we appeal to the Government to extend the facility of reimbursement of Central & State level embedded taxes to the Yarn and fabric sectors so that the entire value chain in India can grow in a robust manner.

Withdrawal of GSP benefits by USA

The last week also saw the USA withdrawing India’s participation in the Generalized System of Preferences (GSP), a preferential trade deal with developing countries. Currently, there are 120 beneficiary countries in the American GSP, including Pakistan, Sri Lanka, and Afghanistan.

According to the US, India has failed to give “assurances that will provide equitable and reasonable access to its markets in numerous sectors”. According to them, while India is trading duty-free in the US, American products are paying import taxes.

India’s termination from the GSP may not be commercially significant for the Textile & Clothing Sector but sends out a signal that any request for preferential access will have to be matched by corresponding offers of granting reciprocal access.

Reports also suggest that during the recently held India - China bilateral discussions, China is seeking duty free access for 80% of the Indian tariff lines.

With India's domestic market holding great allure & promise for the outside world, gaining preferential access in overseas markets without accommodating requests for similar access to the home market will become increasingly difficult.

We hope that the Government will overcome these challenges with some imaginative & astute negotiations

16th Intl. Istanbul Yarn Fair, Turkey

On the export promotion front, the Council participated in the 16th International Istanbul Yarn Fair held during February 28 to March 2, 2019 in Istanbul, Turkey. The market continues to be lucrative for Indian cotton textiles products under the purview of Council. 10 Indian companies participated in the fair through TEXPROCIL. The Council also had a booth for itself which served as an information centre. The Council’s booth also saw a steady stream of visitors. Discussions at the fair have shown that Turkey holds good promise for Indian Textile Exports.

However, the issue of arbitrary tariffs imposed by Turkey on Imports of Cotton Yarn & Fabrics continue to severely restrict the scope for increased exports from India. The Council has taken up the matter with the Government at various levels & we hope the issue will receive due attention as exports can be substantially increased to Turkey if it strictly abides by the common external tariffs agreed with the EU as part of its Customs Union and the WTO Agreements . The present tariff increases are not justified as they have not been imposed either as part of an Anti - Dumping or Safeguards investigation.

Preview in Daegu 2019, South Korea

The Council’s Vice Chairman Shri Manoj Patodia along with the Executive Director led discussions with leading trade associations and international trade visitors during the Council’s participation in the Preview in Daegu 2019 fair held during March 6-8, 2019 in Daegu, South Korea. The market provides huge scope for export of Cotton textiles from India. The overall export of T&C into South Korea in 2017-18 achieved a level of US$ 384 million out of which the Cotton textile (Yarn / Fabrics / Madeups) exports stood at US $ 220.15 million during this period. 

In view of the current potential for exports of Cotton Yarn, Fabrics and Made ups to South Korea, 26 Indian companies had participated in the fair through TEXPROCIL. . Under the Indo-Korea FTA, there is zero duty on import of fabrics, made ups, home textiles and garments into South Korea from India, thereby offering greater market access for Indian textiles into this market.

Fruitful discussions were held with the Daegu Textile Industries Association and a three pronged strategy is being worked out in terms of selling raw materials, like Fabrics, sending semi- finished products like duvet covers which can be then finished and packed in Daegu and finally sending finished goods like bedding, mattresses, pillow cases, towels, table linen etc.

By following this strategy, we hope that in the coming months we would be able to increase exports of Made- Ups to South Korea in the same manner as Grey Cotton Fabrics

Way forward

Friends with the Government addressing the taxation issues to a very substantial extent we should not afford to lose any more time and rise up to face the challenges around us. It is time now for us to recalibrate our strategies and focus on creating opportunities for increasing our trade by taking recourse to value addition. Stepping up investments and rejuvenating our marketing efforts by focussing on newer emerging markets should be the logical second step. A third step is to overcome the headwinds of sluggish demand by making timely changes to our product offerings and maintaining our market share.

All these steps would require a high level of dedication and determination on the part of all of us as entrepreneurs and together we can achieve high levels of export performance in the near future matching the pace of growth of our competitors.

(Dr. K. V. Srinivasan)