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India’s textile sector needs a Budget booster to face present challenges and headwinds, according to an industry expert. India’s minister of finance Nirmala Sitharaman is going to present the Budget for financial year 2023-24 (beginning April 1) in Parliament on February 1.
The (textile) industry is eagerly awaiting the government’s support in the form of incentives, programmes and investments to help the sector overcome the obstacles and achieve sustainable growth in the future.” He said that the textile industry in India has faced a plethora of obstacles in the past fiscal year, including a decline in global demand, lacklustre domestic demand, and a shortage of cotton. The skyrocketing prices of cotton in India affect profitability and margins of spinners, leading to sub-optimal capacity utilisation and an accumulation of inventories, as well as a decline in merchandise exports. The volatility of currencies and the uncertainty in the European market, coupled with the ongoing Ukraine war, have also presented a challenging situation for the industry.
To overcome these challenges, the industry is eagerly awaiting the annual Budget 2023-24 to include measures that will provide further support to the sector. These could include additional incentives for exports, extension of existing programmes such as the Remission of State Levies and the Interest Equalization Scheme and the introduction of new programmes that support the textile industry. Furthermore, the industry is expecting the Budget to include measures that will reduce the cost of labour, raw materials, and other production costs, as well as measures to promote innovation and technology in the sector.
“Additionally, the industry is hopeful for increased investments in the sector, both from the government and the private sector. These investments may include increased funding for research and development, providing infrastructure support, and creating a conducive environment for MSMEs and start-ups,” said Sharma.
To remain competitive, the industry expects immediate removal of the 11 per cent import duty on cotton, and cotton waste. Additionally, the industry is seeking export incentives and additional credit support in the Budget to provide easy liquidity at competitive costs for export-oriented units.
The industry veteran said that the industry also needs an incentivisation scheme for both producers and exporters who meet the requirements of traceability of inputs used, especially cotton, and sustainability, such as the use of technologies that require lower consumption of water and electricity, lower discharge of hazardous chemicals, and at least 20 per cent recyclability of materials used. In today’s global market, traceability and sustainability have become essential for exporting textiles and apparel products to western markets such as the UK, the EU, and the US.
The government may provide funds for promoting R&D on new technologies and a subsidy for users to implement these technologies. Furthermore, waivers of electricity duty would greatly enhance competitiveness of Indian textiles, he said.
Discalimer: this information has been collected through secondary research and posted by third party therefor textilemarket. In is not responsible for any errors in the same.
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