The Government’s recently announced special package has come as a shot in the arm for the textile industry. At a time when the sector is facing stiff competition from countries like China, Bangladesh, and Vietnam, the Rs. 6,000-crore package is likely to help it create one crore new jobs, generate $30 billion in exports, and attract investments worth $11 billion over the next three years. Adding to the good news has been the development on the GST front.
In an exclusive interview to The Textile Magazine, Dr. A. Sakthivel, President, Tirupur Exporters Association (TEA), and Chairman of the Apparel, Made-ups and Home Furnishings Sector Skill Council, shared his views on a variety of topics related to these developments.
At the very outset, Dr. Sakthivel welcomed the proposed roll-out of GST. “The main advantage of GST is that we will have a one-tax structure. When it comes to exports of textiles the GST Council is going to play a vital role. The exporters concern till now is whatever tax that they pay on the input should be refunded or they should be exempted from paying it. Paying upfront and getting back the refund has always been a problem. So, exporters should be exempted from the input tax, because they cannot export taxes. This is what has been the exporters’ concern with respect to GST and this is what we have been requesting the Government With the roll-out the refund mechanism for input taxes is expected to become very clear. But, undoubtedly, it is a welcome move.”
“This is the best time to have an agreement with the UK. It is one country that has had friendly relations with India for long. During my recent meeting with the Prime Minister, he had mentioned that the talks on FTA with Canada and Australia are likely to yield results. Once all these measures start yielding results, I have no doubt that the exports from Tiruppur will double in three years’ time and we will be touching the Rs. 50,000-crore mark.
– Dr. A. Sakthivel, TEA President
Dr. Sakthivel is confident of GST being effectively rolled out very soon. Commenting on it, he said: “The Finance Minister is very firm that the GST should be there on 01/04/2017. The majority of the State Governments are already supporting the Bill. It should be a reality very soon.”
Appreciating the Government’s special package for the textile industry announced recently, Dr. Sakthivel said: “With respect to new employments, the EPF (Employee Provident Fund) scheme reform, under the package, which says the Union Government will bear the entire 12% of the employer’s contribution will help for the next three years. And also, the subsidy under the Amended Technology Upgradation Fund (ATUF) has been increased from 15% to 25%. This will help exporters go in for modernization. Overall, the package will help not only the exporters in Tirupur but also those all over India. It will help them compete with countries like Bangladesh.
According to Dr. Sakthivel, the norms for the ATUF as well as the other reforms under the package are expected to be announced any time. The package has been well received by entrepreneurs in Tirupur. “In the last few years, exports have been growing at an annual rate of 12% here. This year, we are expecting exports to touch a level of Rs. 25,000 crores, thanks to the new measures announced by the Government. I have already met the new Union Minister for Textiles, Ms. Smriti Irani. She is very positive and keen to do something for the exporters.”
Commenting on the issue of the signing of the Free Trade Agreement (FTA), Dr. Sakthivel said: “This is the best time to have an agreement with the UK. It is one country that has had friendly relations with India for long. During my recent meeting with the Prime Minister, he had mentioned that the talks on FTA with Canada and Australia are likely to yield results. Once all these measures start yielding results, I have no doubt that the exports from Tiruppur will double in three years’ time and we will be touching the Rs. 50,000-crore mark.”
Queried on the kind of investment that will be required to achieve the targeted turnover in three years’ time, he said that in the apparel sector, huge investments are not required in spinning or weaving.
With respect to the manpower required to meet the additional capacity, he observed: “I am myself heading the Apparel, Made-ups and Home Furnishings Sector Skills Council. We have about 200 training partners. We have already trained about 150,000 people. This year, we want to train 250,000 people. I think the skill gap deficit will be definitely met within the next two or three years. Here the Government is heading in the right direction.”
Dr. Sakthivel added now that Tiruppur has also been declared a ‘Smart City’. One of the projects under the program is building of quarters for the workforce in the city.
When asked whether exporters from Tiruppur are primarily catering to the lower end of the knitwear segment, Dr. Sakthivel replied: “It is a notion that is slowly changing. Value addition is something that entrepreneurs here are doing in a big way. With respect to cotton, we have reached some kind of a saturation point. In fact, that is one of the reasons why we have been saying that the duty on manmade fibers should be reduced. Right now we are catering only to the European market during summers. With the increase in production of manmade fibers, we will have year-round business.”
Exporters in Tiruppur have already started importing fabric from countries like Taiwan, Korea, and China for the purpose, he added.
Dr. Sakthivel felt that exporters in Tirupur are always looking for ways to upgrade technology. He said: “Now with the ATUF proposal, the exporters here are geared up for capacity expansion. They believe in investing in the latest technologies and upgradation of the same, keeping in tune with the changing market trends.
Referring to technical textiles that offer huge potential for exporters in Tirupur, he said: “Technical textiles such as radium-coated traffic policeman uniform, textiles used in the medical field, defense, etc., offer a huge market. Gradually, entrepreneurs here are diversifying into these product lines.”
Talking about the initiatives that TEA has taken to strengthen the Tiruppur brand, Dr. Sakthivel stated that the Association has been regularly participating in international fairs. He also felt that the fund allocation towards export promotion needs to be increased. “I have requested the Ministry of Textiles to increase the fund allocation. Right now, the Ministry of Commerce allocates about Rs. 6-7 crores for the purpose. I feel that the figure should be at least Rs. 300-500 crores. Whenever we participate in big trade fairs outside the country, we see countries like China coming with a huge contingent and dominating the show. Therefore, it is important to increase the allocation towards export promotion.”