The Indian textile and clothing industry is finally on the verge of a turnaround.
The Indian textile and clothing industry is finally on the verge of a turnaround. After months of decline, the export of textiles and apparels has increased by 11% in July 2018 over the corresponding period, said the Confederation of Indian Textile Industry (Citi).
Continuous support from the union government is expected to put the industry back on track with the textile and apparel exports growing by 7% while imports staying flat in 2018-19.
Quoting the directorate general of commercial intelligence and statistics (DGCI&S), Citi said that the textile and apparel exports for July 2018 has touched Rs 19,636 crore as compared to Rs 17,692 crore in July 2017.
Exuding confidence, Citi chairman Sanjay Jain said the worst is over for the textile and clothing industry and it is finally witnessing positive momentum. Being the single largest industrial employment provider with 10 crore people, textile sector has been benefited with the continuous support from the union government with a slew of measures on all fronts.
The overall growth in exports during April-July 2018 has been 3% vis-a-vis the same period last year. Further, the MMF segment, which is expected to be the growth driver of the industry in the coming years has seen increase in production. Growth has been observed in production of man-made fibre, spun yarn and fabric during April to June 2018. For the period April-July 2018, the man-made fibre has grown by 5% to 335 million kgs as compared to 319 million kgs in the same four month period of last fiscal. Similarly, the spun yarn grew 1.1% during the said period to 1,435 million kgs as against 1,419 million kgs in the same period last fiscal. The fabric grew by 2.5% to 17,184 million sq mtr as against 16,771 million sq mtr in the April-July 2017 period, he pointed out.
According to him, the imports growth has come down significantly. While the imports of T&C has increased from $1.78 billion in April-June 2017 to $1.87 billion in the same period this year, an increase of 5%, it is significantly lower than the growth of 16% last year. The measures taken by the government to increase the import duty on various textile and apparel items will help in further reducing the imports in coming months.
Jain also highlighted that as per RBI Financial Stability Report- June 2018, the stressed advance ratio of textile subsector has also improved from 23.7% in September 2017 to 22.3% in March 2018, indicating signs of recovery.
A strong turnaround in textiles and clothing sector is due to a number of measures of the union government, including scheme for capacity building in textile sector (SCBTS) named ‘Samarth’ of the union ministry of textiles with a sizeable outlay of Rs 1,300 crore along with other parallel skilling programmes will go in a big way to reduce the skill gap of the industry and more specifically provide a value added employment opportunity to rural women.
Devaluation of rupee by 9% in the last few months has made the industry competitive globally and imports dearer. Import duty on about 400 items has been enhanced, providing relief to the industry which was hit by huge imports post GST implementation due to import barriers reducing significantly.
Two important GST decisions in last 3 months which has allowed refund of excess ITC to the processing and fabric industry has reduced the cost of fabric by 3-4%, especially MMF fabric.
The other measures, including relief to the SME manufacturers (industry is largely populated by SME) by easing the GST returns procedure and other GST reforms. Accelerating the refund of GST dues to the industry has eased working capital pressures on the industry. Domestic demand is picking up due to settling down of GST systems and rural demand is also rising due to MSP increase and good monsoons.
Jain also stated that maintenance of a competitive exchange rate is an essential prerequisite in labour intensive manufacturing in mature industries like textiles. The currency management by the government has benefited the exports and is discouraging imports.