JOINT MEMORANDUM SUBMITTED BY ALL TEXTILE ASSOCIATIONS IN SOUTH INDIA TO SMT.SMRITI ZUBIN IRANI, HON’BLE TEXTILE MINISTER, GOVERNMENT OF INDIA ON 28TH APRIL 2017 AT "EMPEROR II", RADISSON BLU, AVINASHI ROAD, COIMBATORE.

 

Respected Madam,

We are extremely thankful to the Hon’ble Minister for providing an opportunity to the textile industry to have an interaction today at Coimbatore.  We are also thankful to the Hon’ble Minister for paying visit for two days to the largest textile clusters in India viz., Erode, Tirupur and Coimbatore.  Your visit would greatly motivate us to strengthen our manufacturing activities and achieve the vision set by your goodself and the Hon’ble Prime Minister.

 

Madam, for the first time, we are fortunate to have a very dynamic and hardworking Minister for our industry.  We are extremely thankful to the Hon’ble Prime Minister and your goodself for all the initiatives taken so far and also for providing long term plans including the apparel and made-ups export package, Power Tex India scheme for powerlooms, revamping CCI’s commercial activities and more importantly organizing a mega international event, Textile India 2017, during June 30 to July 2, 2017 at Gandhinagar, Gujarat.  Madam, we would participate in large numbers from this part of the country and make the event a grand success.  We are sure that the event would throw enormous opportunities for the industry to enhance its export performance and also strengthen its brand image in the international market.

 

Madam, your goodself have been kind enough to address the various challenges threatening the global competitiveness of the textile industry from the day one your goodself assumed charge.  Though there are numerous challenges, we humbly submit that the Hon’ble Minister may kindly consider the following issues to enable the Indian textile industry to achieve its potential and sustained growth rate especially in the global market:-

 

 

1)    5% GST rate for all textile goods and services

The entire cotton textile value chain is currently enjoying the zero per cent Central Excise benefit under optional Cenvat from 2004.  Under this scenario, a uniform levy of 5% (lowest slab) GST on all textiles and clothing products would ensure smooth migration of entire textile value chain from the present tax structure to GST tax structure with full compliance, creating win-win strategy for all the stakeholders and would bring substantial revenue to the exchequer when compared to the existing revenue. 

 

 

The net revenue that is being realized with the current optional central excise duty, 2% CST and reduced VAT rate (in various States) is less than 3% of the revenue to be collected.  This revenue will double if the GST rate is fixed at the lowest slab of 5% without any exemption across the value chain.  The deserving sectors like handlooms could be given the benefit of refunding of taxes under direct benefit transfer system.  In addition, all the State levies like Market Committee Cess in the nature of entry tax should also be subsumed.

 

2)    Continue drawback benefits and garment/ made-up package export benefits under GST regime

Madam, we humbly submit that all the existing export benefits including AIR duty drawback rates, ROSL benefits, MEIS, IES, EPCG and other benefits announced under garment/ made-ups export package need to be continued for some time after the implementation of GST as the industry has just begun taking advantage of these schemes and grabbing global export opportunities.  All the existing export benefits could be continued till its expiry period in the case of apparel and made-ups package and for two years for all other export benefits, as the industry has no level playing field in the international market due to delay in concluding FTAs with various potential markets.  Option could be provided to the exporters by announcing two AIR drawback rates and ROSL rates, one while availing GST credit and another without GST credit.  In addition,  1% drawback rate benefit extended for cotton with zero rate of duty should be extended in case cotton is exempted from GST.  The various other taxes and levies like electricity tax, taxes paid on fuels and consumables, Market Committee Cess, etc., that might not be subsumed under GST should also be refunded with suitable drawback rates after the implementation of GST.

 

3)    Expedite conclusion of FTAs with the potential importing countries

The strengthening of Rupee and high import tariffs up to 20% on various textile products in almost all the major importing countries make Indian textiles and clothing industry uncompetitive.  In addition, as per WTO norms and GST tax structure, the various export subsidies and benefits that are not WTO compatible need to be phased out in a shorter duration.  Therefore, we humbly appeal to the Hon’ble Minister to persuade the Ministry of Commerce & Industry and Prime Minister’s Office to conclude FTAs with all the potential importing countries especially EU, Britain, China, USA, Canada, etc., to enable us to compete with the countries like Vietnam, Bangladesh, Pakistan etc.

 

4)    Technology Mission on Cotton - II

Madam, The Technology Mission on Cotton (TMC) implemented by the earlier NDA Government led by Shri Atal Bihari Vajpayee was a boon for the cotton farmers and made Indian cotton textile industry a global leader.  The cotton production that prevailed around 178 lakhs bales during 1999 increased upto 398 lakh bales during 2013-14.  The area under cotton has increased from 92 million hectares to 128 million hectares during the TMC period (accounting 36 to 38% of the global cotton acreage). Now India is the largest cotton producer in the world and has become a net exporter. 

 

 

Madam, the TMC was closed few years back stating that necessary benefits would be made available through different schemes of the Ministry of Agriculture.  In the process, cotton has lost its importance.  The productivity has dropped below 500 kgs per hectare from 580 kgs per hectare and the annual cotton production has dropped below 340 lakh bales from 398 lakh bales and it might go below 300 lakh bales soon in the absence of an immediate policy intervention by the Government.

 

Madam, the National average yields in Australia, Brazil, China, Turkey, Mexico and Israel are more than 1500 kg lint per hectare.  The existing BT technology that helped the country to increase the yield to a certain extent expired few years back and currently cotton farmers are seriously suffering due to technology obsolescence and the absence of proper transfer of technology.   

 

 

Over the past 10 years, ICAR-CICR has developed 21 varieties of Desi cotton that yielded excellent results. These projects highlight that the farmers’ income can be increased more than two fold if appropriate cotton technologies are developed and implemented. But the Indian scientists could not make further progress without adequate funding support. 

 

 

 Against this background, we humbly appeal to the Hon’ble Minister to recommend to the Hon’ble Prime Minister to bring back the Technology Mission on Cotton in a revised format (TMC II) with the following four Mini Missions (giving major thrust for MM1 and MM2):-

 

Mini Mission – I

Cotton Technology Development

Mini Mission – II

Cotton Technology Transfer

Mini Mission – III

Cotton Lint Preparation (on par with international cotton quality parameters)

Mini Mission – IV

Branding of Indian cotton and its textiles & clothing products (like SUPIMA brand developed by PIMA in US)

 

Madam, though cotton comes under Ministry ofTextiles, the cotton farmers have several options and already few State Governments started advocating the cotton farmers to avoid cultivating cotton due to uncertainty in production.  The Ministry of Agriculture and the Departments of Agriculture of different State Governments also do not give equal importance for cotton and therefore, the production, productivity and quality are on the declining trend.  Cotton has been the engine of growth for the Indian textile industry as the manmade fibre prices are not globally competitive.  The growth of the textile industry that provide jobs to 105 million people and has potential to create another 22 million people by 2025 would be severely affected, if immediate Policy intervention is not taken by the Government.  Madam, the Textile Commissioner has already formed several Working Groups under CAB and is in the process of preparing a detailed proposal for TMC-II.  The Ministry of Textiles may kindly take up the proposal with the PMO and Ministry of Agriculture and launch the TMC-II in a revised format at the earliest.

 

 

5)    Proposed anti-dumping duty on Polyester Staple Fibre

The Indian textiles & clothing exports account only around 5% of the global share. Cotton textiles & clothing exports account 80% while the MMF textiles & clothing exports account only 20%.  This is mainly due to the expensive raw material prices of manmade fibres and filaments (23 to 30% higher price due to 5% import duty, 4% special additional duty, 12.5% central excise duty, applicable cess on duties, 5% VAT and different rates of anti-dumping duty).  Chinese MMF textile & clothing exports account 80% of their global trade.  We have been pleading the government to remove the import duty and withdraw all anti-dumping duty on MMF so that India could compete in the global market and improve its exports. Since more than 80% of textiles & clothing manufacturing units are MSMEs in nature and undertake job work activities, they are not in a position to take advantage of duty free imports under Advance Licensing Scheme.  Under this scenario, the proposed anti-dumping duty on polyester staple fibre has come as a rude shock for the Indian textile industry.  Therefore, we humbly appeal to the Hon’ble Minister to kindly take necessary action so that the proposed anti-dumping duty is dropped.

 

6)    Processing Sector package

Madam, the Ministry of Textiles under your dynamic leadership has started giving major thrust for value addition and job creation and has already announced special packages for garments, made-ups and powerloom sectors.  Your goodself are already under the process of getting necessary inputs from all the stakeholders of processing sector, the weakest link in the textile value chain to come out with a special package for processing segment.  Though the existing schemes like IPDS, SITP and TUFS provide some benefit, they are not adequate to attract large scale investments in the textile processing due to the inherent weaknesses, challenges on the pollution and environmental front, water availability, etc. 

 

 

Even with 5% interest subsidy and 10% capital subsidy, R-TUFS could attract 13% and RR-TUFS 7% while  A-TUFS with only 10% capital subsidy could attract 10% of the total investments made under TUFS.  Madam, now enough awareness has been created in the industry to give priority for making investment in processing. The technology has also been established to meet the environmental standards that are highly capital intensive with higher O&M cost.  The MSMEs with CETP and common infrastructure facilities cannot afford to make investments in the latest technology like continuous dyeing range due to the scale of size. Therefore, it is essential to extend 15% additional capital subsidy without any limit so that optimum scale of capacity could be created. Hence, we request your goodself to kindly expedite the announcement of processing package and also extend 25% capital subsidy without cap on investments with effect from 13.1.2016 to make the investments that are in pipeline financially viable.

 

 

7)    Relaxation of NPA norms for SMEs

The recent financial stability report of RBI reveals that the textile industry has the highest number of NPAs at 8.8% followed by cement industry because the present norms of RBI has no redressal mechanism for the SMEs while the corporate have CDR facility.  Therefore, it is essential to revise the NPA norms to sustain the smooth functioning of SMEs in the textile industry.

 

8)         Reduction of  Hank Yarn Obligation

For the current level of cotton yarn production, the actual requirement of hank yarn for the handloom capacities reported in the Handloom Census 2009-2010 works out to less than 10 per cent.  We have been pleading the Government for the last 15 years to reduce the hank yarn obligation so that the spinning, powerloom and handloom sectors could have a win-win strategy.  Based on the various inputs given to the Textile Commissioner, the Chairperson of Hank Yarn Price Monitoring Committee, the Office of the Textile Commissioner made a detailed study and we understand OTXC has already recommended to reduce the hank yarn obligation from 40% to 15% with several justification. Therefore, the hank yarn obligation could be reduced to 15% immediately and facilitate ease of doing business.

 

9)         Revamp Handloom Reservation Act

At present, eleven items of textiles are reserved for production only by handlooms, violation of which is punishable with imprisonment up to six months and fine.  Most of the aforesaid varieties are unviable to produce out of handlooms and are practically produced out of powerlooms.  Technically, it is impossible to produce the fabrics beyond certain thread count and width using handloom that are currently being produced by shuttleless looms and the Handloom Department very often harass the powerloom sector and independent weaving sector. It may also be noted that such fabrics are imported freely from countries like Pakistan that hurt the powerloom sector seriously. It is submitted that the number of reserved items may be reduced to 3 or 4 immediately.  In the globalized environment, such a control has become redundant.

 

Madam, Tamil Nadu accounts for 1/3rd of the textile business and several lakhs of cotton farmers, weavers and other stakeholders involved in the entire textile value chain highly depend upon the performance of the textile industry in this part of the country.  Therefore, it is essential for the Ministry of Textiles to pay more attention to the clusters like Tirupur, Coimbatore and Erode so that the value addition and exports could be enhanced on a fast track mode.  Hon’ble Minister, Secretary (Textiles), Textile Commissioner and other officials of MoT could visit all the major clusters in Tamil Nadu frequently and encourage the growth of the industry in this part of the country.

 

We fervently appeal to the Hon’ble Minister to kindly consider our aforesaid pleas and take necessary action.

Thanking you,

 

Yours faithfully,

 

  • THE SOUTHERN INDIA MILLS’ ASSOCIATION (SIMA)
  • TAMIL NADU SPNNING MILLS ASSOCIATION (TASMA)
  • TIRUPUR EXPORTERS’ ASSOCIATION (TEA)
  • INDIAN TEXPRENEURS FEDERATION (ITF)
  • THE SOUTH INDIA SPINNERS’ ASSOCIATION (SISPA)
  • INDIAN COTTON FEDERATION (ICF)
  • POWERLOOM DEVELOPMENT & EXPORT PROMOTION COUNCIL (PDEXCIL)
  • HANDLOOM EXPORT PROMOTION COUNCIL (HEPC)
  • SIMA COTTON DEVELOPMENT & RESEARCH ASSOCIATION (SIMA CD& RA)
  • INDIA SPINNING MILLOWNERS ASSOCIATION (ISMA)
  • ANNUR SPINNING MILLS’ ASSOCIATION (ASMA)
  • MADURAI SPINNERS’ ASSOCIATION (MSA)
  • RAJAPALAYAM SPINNERS FORUM (RSF)
  • TAMIL NADU OPEN END SPINNING MILLS ASSOCIATION (TNOESMA)
  • KARUR TEXTILE MANUFACTUER EXPORTERS’ ASSOCIATION (KTMEA)
  • SOUTH INDIA HOSIERY MANUFACTURERS’ ASSOCIATION (SIHMA)
  • INDIAN TECHNICAL TEXTILE ASSOCIATION
  • ANDHRA PRADESH SPINNING MILLS’ ASSOCIATION (APSMA)
  • TELANGANA SPINNING MILLS’ ASSOCIATION (TSMA)
  • KARNATAKA TEXTILE MILLS’ ASSOCIATION (KTMA)
  • DYERS ASSOCIATION OF TIRUPUR (DAT)
  • THE SOUTH INDIA TEXTILE PROCESSORS ASSOCIATION (SITPA)
  • POWERLOOM ASSOCIATION, SOMANUR

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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