The Indian textile industry is facing one of the worst ever crisis in its history since April 2014 due to slow down in the global market for textiles and clothing, conclusion of regional FTAs by several competing countries thus reducing the exports from India due to tariff barriers, expensive cotton and manmade fibre price when compared to the international price, undue delay in disbursement of TUF subsidies, etc. Under this scenario, the industry has been demanding to extend additional incentives under Merchandise Export from India Scheme (MEIS) and also 3% interest subvention for export of all textile products till the Indian textiles and clothing exports reach its potential growth rate and a level playing field is created in the open market.
In a recent press release, Mr.M.Senthilkumar, Chairman, The Southern India Mills’ Association (SIMA) has welcomed the amendment of 2% export benefit under MEIS permitting the export of fabrics and manmade fibre spun yarns including leading markets such as African countries, Middle East countries, Sri Lanka and Bangladesh. Earlier, the benefit was confined only to countries in Group A and Japan in Group B and Bangladesh & Sri Lanka in Group C for fabrics. In the case of manmade fibre spun yarn, the benefit was extended only to countries in Group A and Japan in Group B. Now the benefit has been extended to all countries in Group A, B & C for both fabrics and manmade fibre spun yarn. In the case of made-ups and garments, the benefit was extended to all countries in Group A and only Japan in Group B. Now the benefit has been extended to all countries in Group A and B.
Mr.Senthilkumar has stated that this amendment has come as a sigh of relief to the textile industry which is under severe stress and struggling with excess production capacity, particularly in the spinning sector. He has stated that cotton yarn also could have been included as the highly capital and labour intensive spinning sector is under more stress when compared to other segments. He has added that the relief given to the manmade fibre spun yarn might slightly increase the exports and help the spinning sector to certain extent. He has further said that the domestic demand for yarn might slightly improve if the fabric and other value added product exports increase taking advantage of the benefit. SIMA chief has appealed to the Government to expedite the announcement of interest subvention for all textile products which is under consideration for the last one year.