Man-made fibre sector has huge potential

– Rakesh Mehra, Chairman, SRTEPC

Exports of Indian MMF textiles were not encouraging during 2012-13. The exports of man-made fibre textile which grew consistently during last 10 years have declined by 9 per cent during 2012-13 compared to the previous year and amounted only US $5.37 billion. This is the first time exports of Indian MMF textiles have witnessed negative growth after achieving consistent growth during last 10 years. The slowdown in the developed world and the political crisis in the Middle East adversely affected our exports.

There are positive signs for 2013-14. The Euro zone is showing indication of stabilisation. The depreciation of rupee is also likely to make our exports competitive. I may inform you that from July 2013 exports of Indian MMF textiles are showing positive trends. In August, September and October 2013 exports have witnessed a growth of 16%, 14% and 17% respectively. In the coming months of current financial year, exports of Indian MMF textiles are likely to be buoyant. Hence, I feel that export of Indian MMF textiles is likely to touch US $6 billion (around Rs 36,000 crore) during 2013-14.

I believe that it is possible to increase our share globally because the basic advantages of the trade which China used to have are no more valid. Their labour costs have gone up and currency has also appreciated. In contrast our depreciating rupee has made exports more competitive. Moreover, Indian textile products are recognised worldwide for its quality and our exporters for their excellent service and honouring contractual obligations.

Indian MMF textile sector has huge potential to grow. Currently India´s share in global exports of MMF textiles is only 3 per cent whereas our competing countries like China dominates with 30 per cent (US $51.40 billion) share. Thus, in order to maintain the momentum in growth and increase our share in global exports of MMF textiles, I would like to suggest the following policy measures to be implemented on priority:

I suggest reduction of Excise Duty on Man-Made fibres to 4 per cent from 12 per cent which will ensure fibre neutrality and play a major role in reviving MMF Textile Industry and thus exports. Globally MMF textiles constitute 68 per cent of total fibre consumption, whereas in India it is only 41 per cent which gives scope for tremendous growth. Since global fibre consumption trends in future is likely to further tilt in favour of Man-made fibres, it is imperative to reduce the existing excise duty of Man-Made fibres to 4 per cent to revive growth of industry and trigger growth in exports.

For encouraging more exports it is essential to re-instate the Central Excise Rule 12B. The re-instatement of the CE Rule 12B shall allow our merchant exporters to avail cenvat credit of duties on inputs and give a big boost to the competitiveness of merchant exporters who are the backbone of our exports and contribute significantly to our export endeavour. The cost of credit for exports in India is estimated to be about 11 to 15 per cent which is very high compared to less than 2 per cent in the US and Europe and below 5 per cent in much of the ASEAN bloc. This excessive rate impacts our costs substantially and hampers growth of exports. Thus, I suggest that RBI and Government to take adequate measures so that the Rupee Credit available to our exporters in line with our competitors. Alternatively, it is suggested that lending for exports may be considered at par with the priority sector lending rate at 7 per cent. I am sure that it will go a long way in enabling our exporters to compete globally.

I also suggest the interest subvention benefit to be extended to all the tariff lines of MMF textiles. This will reduce interest burden on exporters during these difficult times and improve competitiveness.

Another important policy initiative for encouraging exports is expansi