Ease of Doing Business for MSMEs: India’s textiles and apparel sector is the second-largest employer with direct employment creation of 45 million and another 60 million in allied industries. The country is also the second-largest manufacturer of PPE kits globally.
Ease of Doing Business for MSMEs: The government’s decision to extend the Rebate of State and Central Taxes and Levies (RoSCTL) scheme on apparels and made-ups till 31 March 2024 and other existing schemes for the sector will likely add another 4-6 million jobs ahead, according to the apex textile body The Textile Association (India). The Union Cabinet on Wednesday had announced RoSCTL continuation with the same rates as notified by the Ministry of Textiles in March 2019 on the export of apparels and made-ups (non-apparels such as bed linen, carpets, etc). According to the government, the move is “expected to make these products globally competitive by rebating all embedded taxes/levies which are currently not being rebated under any other mechanism. It will ensure a stable and predictable policy regime and provide a level playing field to Indian textiles exporters. Further, it will promote startups and entrepreneurs to export and ensure the creation of lakhs of jobs.”
“From the last three-four years, textile exports were stagnant at around $38-40 billion. The government is now targetting to touch $80 billion by 2024-25. In the upcoming textile policy, the government is also aiming to make Indian textiles more competitive in the world. The biggest beneficiary here would be MSMEs and enhance India’s competitiveness against Bangladesh, Vietnam, Myanmar, etc. With all these schemes implemented properly, then another 4-6 million jobs will be created,” RK Vij, Vice President, The Textile Association (India) told Financial Express Online.
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India’s textiles and apparel sector is the second-largest employer with direct employment creation of 45 million and another 60 million in allied industries. The country is also the second-largest manufacturer of PPE kits globally. PPEs global market is currently expected to be more than $92.5 billion by 2025, up from $52.7 bn in 2019, according to the government’s Invest India initiative. While FDI in the textiles and apparels sector had hit $3.75 billion in March 2021, the country’s exports of textiles and apparel are likely to grow to $65 billion by 2025-26, growing at a CAGR of 11 per cent.
Textiles ministry in a statement on Wednesday had noted that that there are various taxes/duties that are levied by central, state, and local government but are not refunded to the exporters. Such taxes and levies get embedded in the price of the final exported product that increases the price of the apparel and made-ups and makes it difficult for them to compete in the international market. These embedded taxes include duties and cesses on fuel used for transportation of goods, generation of power and for the farm sector, mandi tax, duty on electricity charges at all levels of the production chain, stamp duty, GST paid on input such as pesticides, fertilizers, purchases from unregistered dealers, etc., and cess on coal or any other products.
On Wednesday, Apparel Export Promotion Council (AEPC) Chairman A Sakthivel welcoming the move said that the move will help “the Indian textile value chain attain $100 billion annual exports in next three years.”
Post lockdown last year, textile activity witnessed contraction before it started to recover back in September with an increase in yarn prices. The recovery had hit around 80 per cent of the production capacity by December last year. “Up to March last year, all textile units were running up to 80-90 per cent of their capacity before they contracted in production capacity to 30-40 per cent. The activity picked up in September and by December it scaled to 80-90 per cent production capacity. Cotton and synthetic yarn made great profits with the increase in prices,” TK Sengupta, immediate past president, The Textile Association (India) had told Financial Express Online.