DNA Money Edit: India’s textile sector needs a push
Textile industry in India has been facing numerous challenges since the implementation of goods and services tax (GST) in July 2017. Adding to the plight was the withdrawal of duty drawbacks, which, coupled with free trade agreements (FTAs) with some of the neighbouring nations, made Indian textile products expensive in the international markets.
Textile industry in India has been facing numerous challenges since the implementation of goods and services tax (GST) in July 2017. Adding to the plight was the withdrawal of duty drawbacks, which, coupled with free trade agreements (FTAs) with some of the neighbouring nations, made Indian textile products expensive in the international markets.
The increased cost of production threatened the survival of micro, small and medium enterprises (MSMEs) as FTAs resulted in cheaper finished textile products flooding the domestic textile market. The industry players have been leaving no stone unturned to convince the decision makers about the ground reality.
The government has doubled import duty on 328 textile products to 20% thereby curbing rising imports from China and giving a boost to domestic manufacturing. However, a majority of imports into India is from countries like Bangladesh, Vietnam and Indonesia, thanks to FTAs. India will not be able to give any direct exports incentive to the sector, so there is definitely a need to support exporters to encourage domestic manufacturing.
While the government’s duty hike move is certainly positive for the sector, it is too early for textile industry players including MSMEs to rejoice and pop the champagne bottle.