The textile sector, a key contributor to the national economy, is seeking reforms in the upcoming Budget to address several challenges. The industry, which accounts for around 4% of the country’s GDP, 13% of industrial production, and 8% of merchandise exports, is also the largest industrial employer, providing direct employment to approximately 45 million people.
Among its primary requests, the industry is advocating for streamlined compliance processes, incentives for sustainability and digital initiatives, and enhanced support for micro, small, and medium enterprises (MSMEs) and startups.
A significant concern is the widening gap between domestic and international cotton prices, following the imposition of 11 custom duties on cotton imports in 2021. According to the Northern India Textile Mills Association, the higher cost of Indian cotton has made cotton spinning operations in India less viable, with international cotton prices remaining lower over the past two years. The sector is calling for the removal of the custom duty on cotton to make imports more affordable and support local production.
The industry is also raising alarms over the widespread under-invoicing of knitted fabrics, particularly imports from China. The practice is estimated to result in a loss of approximately Rs 5,000 crore annually in government revenue, alongside its damaging effects on the domestic textile sector. The industry has called for permanent solutions to address the undervaluation of imports and its role in fostering a parallel economy.
The government’s extension of the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme until September 30, 2024, has been welcomed, but the industry is pushing for an extension through September 2025 to meet its export target of USD 350 billion by 2030, with USD 100 billion specifically from textiles. The industry also seeks the restoration of RoDTEP rates for textile products.
Currently, the Production Linked Incentive (PLI) scheme applies only to synthetic fibers, and the textile industry is advocating for its extension across the entire sector to encourage further investment in textiles and garment manufacturing.
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