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The Southern India Mills’ Association

Committed to Foster the Growth of the Textile Industry

Texprocil: Export incentives needed for competitiveness

Without a level playing field and burdened by high transaction costs, inadequate export benefits, the Indian textile industry’s export competitiveness is taking a hit.
The industry has sought a hike of the duty drawback incentive to 3-4 per cent ( at 1 -2 per cent now) and extinguishing of embedded tax (in the GST regime such as electricity duty and on petroleum products) to be able to bounce back, Ujwal Lahoti, Chairman, The Cotton Textiles Export Promotion Council (Texprocil) said.
Highlighting the opportunities and challenges in export of cotton yarn, Lahoti said that India is the largest exporter accounting for 26 per cent of the global share. “Our yarn quality is well-accepted. Yet, because of the export duty that Indian yarn attracts, we are losing our market share in China.”
India exported 603 million kg (mkg) of cotton yarn to China in 2013-14. This fell almost by half to 315 mkg in 2017-18. At the same time, Vietnam’s exports to China increased from 287 mkg in 2013-14 to 718 mkg in 2017-18. Currently Vietnam’s export is well over twice that of India’s export to China.
China is importing from India only to bridge the gap in demand from supplies from its domestic spinners.
Vietnam has no raw material base but imports from the US, India and China. It competes with Indian suppliers due to the advantage of zero tariff in most of the importing countries.
Texprocil and the Southern India Mills Association have taken up this tariff correction issue both at the Asia Pacific Trade Agreement (APTA) and RCEP (Regional Comprehensive Economic Partnership) forum, seeking some concession, Lahoti said. The problem is more severe in fabric than yarn.
Despite being the world’s largest exporter of cotton yarn, India’s share fell from 30 per cent in 2015 to 25 per cent in 2017. Vietnam is second with with a share of 19.94 per cent.
The ratio of yarn production to export slipped to 26 per cent in 2017-18 from 33 per cent in 2013-14 indicating a growth in domestic consumption. (Yarn production grew from 3,900 mkg in 2013-14 to 4,065 mkg in 2017-18). Though over 3 million spindles and 60,000 rotors were added to the spinning capacity in the last five years yarn production has stagnated at around 4100 mkg as 1.6 million spindles were scrapped and capacity is under utilised, he said.
The industry is showing an uptick as cotton yarn prices are tending to increase over the last two months mainly due to continuous increase in cotton prices from mid-February, he said.