INDIA: Sops for the Textiles Industry

In his announcements for the Foreign Trade Policy (2009-14) here yesterday, Shri Anand Sharma, the Union Minister of Textiles, announced various incentives for the Textiles sector. The sector is reeling under economic uncertainty at global level and pulls and pressure at domestic levels.

Announcing the incentives Minister said, "we adopted a multi pronged strategy by providing a stable policy regime, adopting a conscious market diversification plan and providing additional support to sectors hit badly by the global recession. We encouraged technological up-gradation of export sectors, and undertook simplification of procedures to reduce transaction costs.  We decided to consolidate our traditionally strong sectors of economy while focussing on sunrise sectors as well". 

Addressing to the needs of Textiles industry, the Minister stated that, "As Textiles Minister, I have to also ensure that the commercial interests of textile exporters is particularly protected and in my several interaction with the textile industry, including the one day before yesterday, has highlighted that there is a serious concerns on exports to USA and EU.  I have decided to extend Market Linked Focus Product Scheme (MLFPS) for exports under Chapter 61 and 62 and 2% duty credit will be available to them for exports made to US and EU from 1st April 2011 to 31st March 2012". 

Shri Sharma announced, subvention of 2% on Rupee Export Credit, which has been extended till 31st March, 2012 for handlooms, handicrafts, carpets and all small and medium enterprises.  In order to extend the coverage of products under the Focus Product Scheme, the Minister decided to include 130 new items, covering 10 product sectors, specifically including chemicals, pharmaceuticals, textiles, handicrafts, engineering and electronics sector which will get 2% duty credit under the scheme. Chemicals such as soda ash, textile items like polyester yarn, woven cotton fabric denim, unbleached or bleached cotton fabrics, knitted and dyed cotton fabrics are covered under the scheme. 

Following are the measures announced by the Minister for the Textiles sector:

Support to Apparel Sector
Exports of items under Chapters 61 and 62 have shown a declining trend during 2010-11 compared to year 2009-10. The total exports to USA under Chapters 61 and 62 during 1.4.2010 to 30.09.2010 were Rs. 6129.69 crore. The exports during 1.4.2011 to 30.09.2011 declined to Rs. 3897.29 crore. Similarly the total exports to EU under Chapter 61 and 62 during 1.4.2010 to 30.09.2010 were Rs. 10365.01 crore. The exports during 1.4.2011 to 30.09.2011 declined to Rs. 7869.02 crore.  This sector has high potential to achieve higher level of exports and generate great employment opportunities. USA and EU are also our major markets and these two countries are having their own myriad problems at present. 

The chapters 61 and chapter 62 items were granted duty credit under MLFPS for export to USA till 30.9.2010 and for exports to EU up to 31.3.2011. However, at present the readymade garments are not covered under the FPS/MLFPS. It has been decided to extend MLFPS for exports to USA and EU under chapter 61 and 62.

The scheme would cover all the items covered under chapter 61 and 62.  The duty credit would be available to exports made during 1.4.2011 to 31.3.2012 @ 2 % of FOB value of exports.

Focus Product Scheme
The list of items under FPS has been expanded to include 130  additional items. These items are mainly in the sectors of Chemical/ Pharmaceuticals, Textiles, handicrafts, Engineering and electronics sector.

Textile items like polyester textured yarn, fully drawn yarn of polyester, viscose rayon type yarn, polyester chips, woven cotton fabrics denim 85% cotton over 200G/M2, unbleached or bleached cotton fabrics, dyed cotton fabrics knitted or crocheted have been included under the scheme.

The items covered under FPS are entitled to get duty credit scrip @ 2% of FOB value of exports.

'Niryat Bandhu' - A scheme for International Business Mentoring
We are devising a novel 'Niryat Bandhu' scheme for mentoring first generation entrepreneurs. The officer (Niryat Bandhu) would function in the 'Mentoring' arena and would be a 'Handholding' experiment for the Young Turks in International Business enterprises.

Under the scheme, officers of DGFT will be investing Time and Knowledge primarily to mentor the interested individuals who want to conduct the business in a legal way. Over time, it would be expected to develop a class of businessmen who carry out the international business in an ethical manner.

Procedural simplification
The application of IEC has become online w.e.f. 1.1.2011. This reduces the interface of exporters with the Regional Authorities of DGFT.  An effort is also on to update the IEC database containing more than 7.6 lakhs IEC.  All the IEC holders are being urged to cooperate in this effort and update their details on-line. This exercise would be completed by 31.3.2012. 

DGFT has also become India's first digital signature enabled department in government of India, which has introduced a higher level of Encrypted 2048 bit Digital Signature. Digital certificate provides a high level of security for online communication such that only intended recipient can read it. It provides authentication, Privacy, non-repudiation and Integrity in the virtual world.

Shri Sharma later informed that, "One of the key pillars of our new approach has been a strong agenda of market diversification, recognizing the risks associated with concentrating on our traditional destinations or waiting for them to rebound to pre-recession levels.  We added 41 new markets for incentives in Africa, Latin America, Oceania and Central Asia.  Labour intensive industry received our special attention as we acknowledged the need of protecting the interests of millions of people engaged in textiles, leather, gems and jewellery with fluctuating global demand". 


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Added: October 14, 2011 Source: Agencies
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