No. PR- 001
April 6, 2021
PHDCCI recommends a reduction in import duty on selected items in the textile industry to make it more competitive
The hardships faced by textile industry players during the COVID lockdown influenced a lot of them to diversify in the manufacturing of PPE kits and N95 masks to generate business worth Rs 7000 crores in India which is a testimony of the zeal and tenacity of the textile industry, stated Shri Jogiranjan Panigrahi, Joint Secretary, Textile Infrastructure & Investment, Government of India. He was speaking at a virtual event on the topic ‘ Investment Avenues in India’s Textile and Apparel Industry’ organized by the Industry Affairs Committee of PHD Chamber of Commerce and Industry (PHDCCI).
Speaking at the event, Shri Panigrahi explained that the Indian textile manufacturers have already become the second-largest exporters of PPE kits during the COVID period. He explained that almost 80- 90 percent of the machines used in the textile industry are imported. The imports over the last few years of these machines are valued at Rs 28000 crores. Shri Panigrahi stated that the ministry of Textile has already identified 60-65 machines that can be manufactured domestically and would save crores of rupees to the Indian textile manufacturers.
According to Shri Panigrahi, initiatives from the central government like the production linked incentive (PLI) scheme and the MITRA program where 7 mega textile parks would be set up over the next three years would result in a huge boost to the domestic textile manufacturers. Also the removal of the anti-dumping duty on the man-made fiber has also resulted in making this segment more competitive, he said.
Shri Upender Kumar Gupta, Deputy Advisor, Niti Aayog explained that India is the second-largest textile manufacturer after China globally; however, it faces a lot of challenges. He explained that though China’s share in the global textile market amounts to around 34 percent, India’s contribution is just around 3-4 percent.
He revealed that our country is facing competition from countries like Pakistan, Bangladesh and Vietnam due to several factors. He informed that Bangladesh has witnessed a 14 percent CAGR in its textile sector due to the duty-free export grants from the European Union, while India faces a 9.5 percent duty handicap. Also the size of the Indian textile manufacturing unit is very small and is almost one third the average size of a textile manufacturing unit in Bangladesh, so we cannot take the advantage of economies of scale.
According to Shri Gupta, the central government has also taken several structural reforms in the last few years, due to which the textile sector in the country would witness exponential growth in the near future. He added that due to the liberal FDI policy in the country, there has also been a huge foreign inflow to the tune of $323 billion in the year 2019-2020.
Shri Sandeep Aggarwal, Chairman, Industry Affairs Committee, PHDCCI added that India was one of the largest exporters of textile products till the year 1850, however during the British regime, India was forced to import finished textile products from the British mills. The initiatives taken by the central government in the last few years will ensure that India regains its past glory.
He added that the production linked incentive (PLI) scheme would be a game-changer and would provide a huge boost to the Indian textile sector.
Shri Sharad Jaipuria, Former President, PHDCCI and, Chairman and Managing Director, Ginni International Limited explained that the domestic textile industry which is currently at the size of $137 billion can reach the figure of $300 billion by the year 2025. He explains that though China dominates the world textile market, its share is falling due to an increase in its labor cost and decrease in its domestic consumption. Shri Jaipuria explained that India has a huge opportunity to dominate the sector due to its lower cost of labor and its trade relations with other countries.
He adds that India needs to identify states like Maharashtra and Gujarat which have good ports and increase its investments there. This will reduce the cost of logistics and make Indian textile more cost-effective. Shri Jaipuria also explained that the government should take steps to expedite regulatory clearances like setting up single-window clearances so that production time is not lost in unnecessary paperwork.
Shri Vishwanath, Co-Chairman, Industry Affairs Committee, PHDCCI stated that the central government should ensure that Silk and Silk blends should also be included to be a part of various government schemes like PLI and MITRA. This would ensure revenue generation and additional job creation in the textile industry.
He added that the import duty for selected items for the textile industry should be brought down to the minimum to make it more competitive. Pointing out several loopholes, he stated the government has imposed a duty restriction of 15 percent on silk yarn for countries like China, while the same for Vietnam is zero percent. He added that many Chinese companies are taking advantage of these regulations and are routing their silk yarn through Vietnam to India where it is repacked. The Indian government should take note of this loophole he said.
Shri Mukesh Aggarwal, Co-Chairman Haryana Committee stated that there are several roadblocks faced by the industry which the government needs to address. Firstly, the industry is paying almost Rs 7.5 per for each unit of electricity consumed, the same needs to be brought down to around Rs3.5 or Rs 4 per unit to make manufacturing more competitive. Secondly, while several industry players are ready to invest in solar power, the government needs to support them so that they can sell it to the local electricity boards as well.
Shri Aggarwal also explained that the government needs to ensure that gas charges for the textile industry are kept fixed for a certain time period. He also informed that the textile industry spends on an average Rs 3-4 crore every year on generators. Shri Aggarwal explained that the industry can save money if the government ensures an uninterrupted power supply to the textile industry.
The event ended with a vote of thanks by Shri Vikram Aggarwal, Co-Chairman, Industry Affairs Committee, PHDCCI.
PHD Chamber of Commerce and Industry