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Trade Talk | October 2016

Excise duty cut on MMF hinted at FICCI TAG meet

The Government hinted at lowering excise duty on man-made fibre (MMF) in the new Textile Policy in order to boost investment to meet growing demand from the synthetic textiles industry. While cotton fibre attracts no duty, the Government levies 10 per cent excise duty on MMF. The industry has sought excise exemption on MMF on the grounds that the garments produced through MMF are primarily used by the economically weaker sections of society. Kavita Gupta, Textile Commissioner, Ministry of Textiles, confirmed it on the sidelines of FICCI TAG 2016 — the 8th Annual Conference on Textile and Apparel Industry organised by industry body FICCI on September 2 at Hotel Lalit, Mumbai. During the event, Prashant Agarwal, Jt MD, Wazir Advisors, presented a knowledge paper on global shifts in textile industry and India’s position. “The current global apparel market is worth $1.7 trillion and it constitutes around 2 per cent of the world’s GDP. The European Union, USA and China are the world’s largest apparel markets with a combined share of approximately 54 per cent. The top 8 apparel consuming nations form a dominating share of 70 per cent of the global apparel market size. The global apparel market size is expected to reach $2.6 trillion in 2025 growing by a projected rate of 4 per cent. The major growth drivers of the global apparel market will be the developing economies, mainly China and India, both growing in double digits. China will become the biggest apparel market adding more than $378 billion in market size by 2025 while India will be the second most attractive apparel market adding around $121 billion by 2025,” said Agarwal, while speaking during the FICCI TAG event.

He added, “The top 10 markets in the world for textile and apparel constitute for 48 per cent of India’s total textile and apparel exports. The USA is the largest market for India making up for 18 per cent of India’s overall textile and apparel exports. However, India’s share in the total imports of USA is only 6 per cent with an export value of $7 billion in 2014. Similarly, it can be seen that amongst the entire top 10 markets of textile and apparel in the world, India’s share in their less than even 10 per cent.”

“The cumulative FDI in Indian textile sector from 2000-01 to 2014-15 is approximately $1.5 billion During the initial years, the FDI inflow in textiles was very low. Growth has been seen immediately after MFA phase-out in 2005, depicting the confidence of the foreign investors in the Indian textile industry,” said Agarwal.

Ujjwal Uke, Principal Secretary (Textiles), Government of Maharashtra, said “Maharashtra has the distinction to be named as the pioneers in textiles. Mumbai was created specifically for textiles and now is the hub of textile industry. Today, 25 per cent of cotton is grown in Maharashtra and about 50 per cent of powerlooms are in the State. The State has taken various initiatives with regards to policy. We are in consultation to formulate a new policy, which will be for 2017 onwards. We are also in consultation to bring out more facilities for the garment sector. At this moment, we are in the discussion stage.”

He added, “The policy also states that after April 2016 the term loan sanctioned will be getting 25 to 35 per cent capital subsidies. And 10 per cent extra subsidy has been given apart from the normal subsidies to the areas of Vidarbha and Marathwada and northern Maharashtra, which are the backward regions of Maharashtra. These are also the main cotton growing areas in Maharashtra. We are in the process of setting up 16 textile parks. Nine per cent additional grant has been given by the State Government in addition to the 40 per cent given the Central Government. And we are in the process of having nine new textile hubs of which Amravati has already started and eight more are in pipeline like Yavatmal and Kudal, etc.”

Sushil Kumar Jiwarajka, Past Chairman, FICCI-MSC and Chairman, Omnigrid Micropower Co Pvt Ltd, spoke on Make in India and how India stands in global trade.

The first panel discussion of the day was on: Is India aligned with the changes in the global textile industry? This session focused on how Indian textile industry can respond and position itself amidst the changes in the global industry dynamics. Speakers — Aniruddha Deshmukh, MD & CEO, Mafatlal Industries Ltd; Rakesh Mehra, Vice Chairman, Banswara Syntex Ltd; RK Rewari, ED & CEO, Morarjee Textiles Ltd; Ajay Arora, MD, D’Décor Exports Pvt Ltd; and Anil Biyani, Executive Director, Damodar Industries — discussed around points such as emerging manufacturing destinations, FTA challenge from competing nations, relative slowdown of China and the opportunity ahead, etc. The second panel discussion was on: How India can improve its manufacturing competitiveness and attract large scale investments? The session focused on ways to make Indian textile industry more competitive in manufacturing and attract large scale investments. Speakers were: MK Talukdar, VP, Kusumgar Corporates Pvt Ltd; GV Aras, Director, ATE Enterprises Ltd; and Avinash Mayekar, MD & CEO, Suvin Advisors Pvt Ltd. Moderator was Vijaya Krishnappa, Lead Consultant – Corporate Advisory, IMaCS.

The last panel discussion was on the topic: New opportunities for the Indian textile industry and key issues and challenges. This session focused on the new product and market opportunities present for the textile industry and the challenges faced by the sector. Speakers discussed around points such as new product opportunities such as intimate wear, outerwear, technical textiles, developing manufacturing capabilities for these products, large and growing domestic market, new export markets, challenges and issues faced by the industry, current government schemes and policies and required changes and interventions, etc. Speakers include: Karun Tyagi, Head – Business Development, Huntsman International (India) Pvt Ltd; Kumarjit Dasgupta, Director, Texperts India Pvt Ltd; Sanjiv Khandelwal, Founder, XSTOK; and Vijaya Krishnappa, Lead Consultant – Corporate Advisory, IMaCS.

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