Interim Budget: Spinning sector seeks relief, policy clarity as textile sector eyes growth
The Indian textile industry walks a tightrope balancing between cautious optimism and lingering unease after the interim Budget. While acknowledging the 27.6 per cent increase in Budget allocation for textiles, a closer look at the data reveals potential shortcomings and missed opportunities.
Glimmer of hope, but stats different picture
Investment and R&D boost: The Rs 600 crore allocated for cotton MSP operations is welcome, but pales in comparison to the industrys’ estimated Rs 50,000 crore debt burden. Increased R&D spending is crucial, but historical data shows slow utilization of such funds, raising concerns about implementation efficiency. As Confederation of Indian Textile Industry (CITI) Chairman Rakesh Mehra pointed out the need for relief for the financially stressed spinning sector. He noted the 27.6 per cent increase in Budget allocation for textiles, mainly due to Rs 600 crore allocated for cotton MSP operations.
RoSCTL scheme extension: Garment exports contribute significantly to India's GDP, with a 10 per cent year-on-year growth in 2022-23. Extending RoSCTL is positive, but industry demands a higher allocation based on data-driven projections of export growth potential and global market challenges. The Apparel Export Promotion Council (AEPC) Chairman Sudhir Sekhri urged for higher allocation in the full Budget considering global market challenges.
Persistent concerns and need for demand data-driven responses
Spinning sector in distress: Stats reveal a worrying 20 per cent decline in cotton yarn exports in 2022-23, highlighting the spinning sector's distress. Addressing import duty on cotton, currently at 10 per cent, becomes crucial. Industry estimates suggest a 5 per cent reduction could boost yarn exports by 15 per cent, potentially generating an additional Rs 20,000 crore in revenue. As Sanjay Jain, Chairman, ICC National Textiles Committee, opined the lack of major policy announcements, specifically on raw cotton import duty and minimum import duty on knitted fabrics to counter Chinese dumping.
Slow implementation and policy gaps: PLI scheme implementation delays are concerning, with data showing only 30 per cent of approved investments materialized in the first year. Streamlining processes and ensuring faster disbursement are essential. The lack of policy changes on minimum import duty for knitted fabrics (currently zero per cent) allows for underpriced Chinese imports, impacting domestic manufacturers. Stats reveal a 10 per cent minimum duty could create one million new jobs in the knitwear sector.
Industry leaders urge the full Budget to address concerns with data-driven solutions. They want relief for the spinning sector by utilising data to assess the exact financial stress and design targeted relief packages. Consider duty waivers on cotton imports based on specific yarn export commitments. They also want the Budget to address raw material issues. Analyse global cotton price trends and domestic production data to determine optimal import duty levels that balance affordability and competitiveness. Explore alternative domestic sources like recycled cotton or organic cotton to reduce reliance on imports.
They also want faster implementation of policies. The need is for implementation of data-driven performance monitoring for schemes like PLI to ensure timely disbursement and track impact. Conduct cost-benefit analyses of proposed policy changes like minimum import duty on knitted fabrics to inform data-driven decision-making.
The interim Budget provided a glimpse into the government's potential approach, but industry stakeholders seek data-driven solutions in the full Budget. Addressing concerns with evidence-based policymaking can unlock the textile industry's true potential, propelling it towards a sustainable and competitive future. The coming months will be crucial as the industry awaits the full Budget, hoping it translates aspirations into concrete data-driven action for a brighter textile future.