The Union Cabinet Chaired by the Prime Minister approved certain reforms to boost employment generation and exports in the made-ups sector that has been facing challenges in the international market due to high costs of production, non-refund of State levies, high tariff barrier when compared to the competing nations such as Pakistan, Vietnam, etc.
The reform package include 10 per cent enhanced capital subsidy under Technology Upgradation Fund Scheme (TUFS), extension of Pradhan Mantri Paridhan Rozgar Protsahan Yojana (PMPRPY) Scheme for providing additional 3.67 per cent share of Employer’s contribution in addition to 8.33 per cent already covered under Pradhan Mantri Rozgar Protsahan Yojana (PMRPY) for all new employees enrolling in EPFO for the first three years of their employment, Rebate of State Levies (ROSL) by way of enhanced Duty Drawback, relaxed labour norms such as increased over time upto 100 hours, optional EPF, etc. The interventions are expected to boost exports and create employment for up to 11 lakh persons in the next three years.
M Senthilkumar, Chairman, The Southern India Mills’ Association, thanked Prime Minister, Union Textile Minister and Minister of State (I/C) for Commerce and Industry for considering the representation made by the Association and including the made-ups sector under the Rs 6,006 crore special export package announced for the garment sector during June 2016. He has highly appreciated the strenuous efforts put in by Ministry of Textiles under the dynamic leadership of Union Minister for Textiles Smriti Irani.
He has stated the package is yet another remarkable achievement of the Union Textile Minister within a short span of time after assuming charge.
M Senthilkumar has stated that the policy intervention would greatly help the made-ups segment to improve its global competitiveness in the global market. He has stated that reforms would also create more demand for fabrics, yarns and fibres in the domestic market and thereby help the down sectors that have been suffering due to excess production capacity to a certain extent.
SIMA Chief has appealed to the Prime Minister, the Union Cabinet Committee, Union Minister for Textiles and Union Minister of State (I/C) for Commerce & Industry to extend the 2 per cent MES and 3 per cent IES benefit for cotton yarn export, a long pending demand of the spinning sector that has been reeling under long drawn recession during the last three years due to deep fall in cotton yarn export. He has appealed to extend the benefit as an interim package till the gap in the supply-demand mismatch is resolved to prevent several hundreds of spinning mills that had made huge investment from becoming NPAs. Made-ups sector generates the largest employment per rupees one crore investment, over 120 jobs per Rs one crore investment especially to the rural women. The finished fabrics are largely converted in apparel garments and made-ups.
Both the sectors have the same manufacturing activities of “Cutting and Sewing”.
The global made-ups market size currently is around US $ 40 billion and India accounts around 13 per cent (around $7 billion). Made-ups textile products are broadly group into bed linen, kitchen linen, table linen and toilet linen categories. In the recent years the global demand for made-ups with special finishes such fire retardant, water repellent, stain resistant, easy care, wrinkle free, anti bacterial and microbial, fragrance, etc., are increasing exponentially. The Indian textile industry has started making huge investments across the textile value chain (from spinning to finishing) to meet the global demands.
However, the FTA/PTA benefits enjoyed by competing nations such as Pakistan, Cambodia, Vietnam, Bangladesh, etc., the non-refund of State levies and increased costs of production make India made-ups products uncompetitive in the global markets. In the total Indian made-ups exports, US accounts around 45 per cent followed by UAE with 9 per cent, UK with 5.5 per cent and Germany 5.1 per cent share.
In EU Indian made-ups attract 9.6 per cent duty while Pakistan, Bangladesh, Vietnam and Cambodia enjoy zero duty. In China, for India the duty is 14 per cent while Pakistan, Vietnam and Cambodia have zero duty. In Canada, India has 17.5 per cent while Bangladesh and Cambodia have zero duty. Therefore, there was marginal growth in the made-ups segment that consumes woven fabric and therefore the handloom, Powerloom and spinning segment had a stagnated growth in the domestic market.
The industry has been pleading the Centre to announce special export packages giving thrust for finished products to remain competitive in the global market till the FTAs are concluded. In June 2016, the Union Cabinet Committee announced a Special Apparel Export package of Rs 6,000 crore for the apparel sector included enhanced duty drawback rates to refund State levies, duty drawback for garments produced out of fabric imported under special advance license authorisation scheme, 10 per cent additional Technology Upgradation capital subsidy benefit, 3.67 per cent EPF benefit, optional PF benefit, permitting over time up to 100 hours, flexible labour employment provision, etc.