Hike export sops to tackle tariff barriers, says textile industry

The textile industry has urged the Government to increase the export incentives under the Focus Product Scheme to seven per cent from two per cent in order to overcome the tariff barriers imposed by major importing countries such as from the European Union, Canada and China.

Manikam Ramaswami, Chairman, Texprocil, said the Government provides export incentives based on employment generation, freight cost and net foreign exchange earned.

The industry scores on all the three counts as it generates one lakh direct employment for every $1 billion of export and generates almost 100 per cent net foreign exchange as it hardly imports any raw material. The freight cost is among the highest as the consignment is bulky and value is low.

“It is a pity that set-top boxes and push button phones made predominantly with imported components get 300 per cent more incentive than textiles while assembled mechanical goods and pharma chemicals get over 200 per cent than us,” he said.

This apart, he said, the industry is handicapped by tariffs while competing countries such as Pakistan, Bangladesh, Cambodia and Vietnam have negligible duty. For instance, Europe imposes four per cent duty on yarn, eight per cent levy on fabrics and 12 per cent duty on garments imported from India, while shipments from Pakistan, Bangladesh and Cambodia are duty free.

China levies the highest duty of 14 per cent of garments, 8.5 per cent on fabrics and 3.5 per cent on yarn while Pakistan can export garments and fabrics duty free and pays only 3.5 per cent on yarn. Canada imposes tariff of 17.5 per cent on garments imported from India.

The Government wants the textile industry to create 32 million jobs in the next 10 years and increase exports to $45 billion this fiscal from $40 billion last year. Given the long value chain of 4-5 months from processing the cotton to exporting garment and high cost of finance, the industry will be able to meet the target only if the Government lends a helping hand by extending sops, said Ramaswami.

Virender Uppal, Chairman, Apparel Export Promotion Council, said the Government should restore the three per cent interest subvention for all categories of garment exports provided till last March.