Textiles

The Indian Textile industry occupies an important place in the economy of the country because of its contribution to the industrial output, employment generation and foreign exchange earnings. At present, the contribution of the textile industry to GDP is about 4 percent. The textile industry provides direct employment to about more than 30 million people and is the second largest employment provider in India after agriculture. The contribution of this industry to gross export earnings is about 37% and it adds less than 1.5 % to the gross import bill of the country.

The textile industry is a self -reliant industry from the production of raw materials to the delivery of final products with considerable value addition at each stage of processing. The industry was delicensed in 1991 and under the current policy no prior government approval is necessary to set up textile mills.

• Textiles account for 14 per cent of India's industrial production and around 27 per cent of its export earnings. From growing its own raw material (cotton, jute, silk and wool) to providing value added products to consumers (fabrics and garments), the textile industry covers a wide range of economic activities, including employment generation in both organised and unorganised sectors.
• Manmade fibres account for around 40 per cent share in a cotton-dominated Indian textile industry. India accounts for 15% of world's total cotton crop production and records largest producer of silk.
• It is the second largest employer after the agriculture sector in both rural and urban areas. India has a large pool of skilled low-cost textile workers, experienced in technology skills.
• Almost all sectors of the textile industry have shown significant achievement. The sector has shown a 3.66 per cent CAGR over the last five years.
• India's cotton textile industry has a high export potential. Cost competitiveness is driving the penetration of Indian basic yarns and grey fabrics in international commodity markets. Small and flexible batches of apparels can be manufactured in India and can provide a larger variety of casual wear and leisure garments at significantly lower costs.
• Besides natural fibres such as cotton, jute and silk, synthetic raw material products such as polyester staple fibre, polyester filament yarn, acrylic fibre and viscose fibre are produced in India.
  

Export Promotion Measures

In order to encourage upgradation of textiles sector and to give a fillip to exports of textile products, some of the important initiatives taken are as follows:

i) Announcement of New Textile Policy: One of the main objectives of the New Textile Policy (NTxP-2000) announced in November 2000 is to facilitate the textile industry to attain and sustain a pre-eminent global standing in the manufacture and export of clothing. The policy endeavours to achieve the target of textile and apparel exports from the present level to US $ 50 billion by 2010, of which the share of garments will be US $ 25 billion. Subsequent to the announcement of NTxP- 2000, woven segment of readymade garment sector has been de-reserved from SSI and the announcement has been made for de-reservation of knitwear from SSI.

The Schemes applicable last year, such as follows, continued during the year for promotion of exports:

ii) Technology Up-gradation Fund Scheme: In view of the urgent need for stepping up the process of modernisation and technology upgradation of the textile industry in India, Ministry of Textiles launched a Technology Upgradation Fund Scheme (TUFS) for the textile and jute industry for a five years time frame w.e.f. 01.04.1999 to 31.3.2004, providing for 5% interest reimbursement in respect of loans availed thereunder from the concerned financial institutions for investments in benchmarked technology for the sectors of the Indian textile industries specified thereunder. An amount of Rs. 7148.89 crore involving 2634 applications has been sanctioned upto 29th February, 2004. Out of which, an amount of Rs.5129.81 crore stands disbursed to 2227 applicants.

iii) Liberalization of FDI Policy: Government has allowed foreign equity participation upto 100%, through automatic route, in the textile sector with the only exception in knitwear/knitting sector which is still reserved for SSI. SSI investment limit for the knitwear/knitting sector has been increased from Rs.1 crore to Rs. 5 crore w.e.f. 9th October, 2001.

(iv) Export Promotion Capital Goods (EPCG) Scheme: The scheme facilitates import of capital goods at 5% concessional rate of duty with appropriate export obligation. Import of second hand capital goods is allowed under the EXIM Policy as announced on 31.03.2003.

(v) Advance Licensing Scheme: With a view to facilitating exports and to access duty-free inputs under the scheme, standard input-output norms for about 300 textiles and clothing export products have been prescribed and this scheme remained under operation.

(vi) Duty Exemption Pass Book (DEPB) Scheme: DEPB credit rates have been prescribed for 82 textiles and clothing products. The nomenclature and rates for DEPB entries pertaining to certain textile products have been rationalized.

(vii) Duty Drawback Scheme: The exporters are allowed refund of the excise and import duty suffered on raw materials under the scheme so as to make the products more competitive in the international market. Changes in All Industry Drawback Rates for year 2003-04 were last revised on 29.01.2004, which came into effect from 09.02.2004. These changes were effected consequent on reduction in Basic customs duty from 25% to 20% and abolition of SAD(Special Additional Duty).

(viii) Construction of Apparel International Mart: Apparel Export Promotion Council is constructing an Apparel International Mart at Gurgaon with assistance from Government. For this purpose a grant of Rs. 15 crore was released during the year 2001-02 and of Rs. 30 crore has been released during the year 2003-04. The total area of the plot is 5 acres and it is proposed to build an Apparel International Mart (AIM) Complex and 250-300 showrooms also which will be allotted to the exporters. This will provide a world class facility to the apparel exporters to showcase their products and will serve as one stop shop for reputed international buyers. The work for construction of apparel mart is in progress. The apparel international mart is expected to start functioning from November/December.

(ix) Setting up of modern laboratories: The Ministry of Textiles has assisted the Textile Committee in setting up of modern textile laboratories to ensure that the textiles exported from the country meet all international environmental standards.

(x) Apparel Park for Exports Scheme: A centrally sponsored scheme titled "Apparel Parks for Exports Scheme" has been launched. The scheme is intended to impart focussed thrust to setting up of apparel manufacturing units of international standards at potential growth centres and to give fillip to exports. Since the inception of scheme in March 2002, eleven Project Proposals has been sanctioned for setting up Apparel Parks at Tronica City & Kanpur (U.P.), Surat (Gujarat), Thiruvananthapuram (Kerala), Visakhapatnam (Andhra Pradesh), Ludhiana (Punjab), Bangalore (Karnataka), Tirupur & Kanchipuram (Tamil Nadu), SEZ, Indore (Madhya Pradesh) and Mahal (Jaipur, Rajasthan).