Economic Times: July, 2016
New Delhi: The recently announced Rs 6,000-crore textiles package that envisages significant flexibility in labour laws is part of a larger policy for the sector which will boost exports and generate employment, says textile secretary Rashmi Verma . In an interview to ET's Arpita De , she says the ministry will seek lower excise duty on man-made fibre. Edited excerpts:
Q- India has lost a lot of business in textiles to other developing countries such as Vietnam and Bangladesh. Can this policy help recoup some ground?
A- Absolutely. We have come up with this package keeping that in mind. We thought that if some special boost is given to the garment sector then there'll be more investment and it will also boost exports. There is a lot of potential for employment generation in this sector, especially for women. On the other hand, we will make our garments more competitive in the international market by reducing cost of production.
Q- The special package is part of the larger textile policy. Can you talk more about what we can expect from the policy?
A- We have almost finalised the new textile policy. The draft is ready and we are in the process of consulting other stakeholders, other ministries. This package is an integral part of that policy wherein we are proposing to adopt a strategy which will lead to value addition within the country.
We are producing $11billion worth of fibre but garments of only $3.6 billion. We are currently exporting lots of fibre and yarn. Through this policy we want specific interventions which will encourage value addition in the country and we should in the end become an exporter of value-added products rather than just raw material.
A similar kind of package is suggested through the policy for made-ups (home textiles such as bed sheets). A number of initiatives are also being proposed to promote the technical textilesBSE 3.31 % sector.
One more step which is very necessary for promoting the textile sector is having a rationalised duty structure for man-made fibre. Currently man-made fibre is subjected to 12% duty, both excise duty and import duty, whereas for cotton there is no duty at all. It is not able to compete either in the domestic market or international market.
All these big sourcing companies like Zara and Uniqlo are looking more for man-made fibre products. We are suggesting it should be brought down to 6% in the first stage; later, maybe, we should have fibre neutrality.
Q- The package proposes a set of labour reforms. Do you foresee any opposition?
A- The proposed package for the garmenting sector has support from the ministry of labour and there has been a lot of discussion on it. The package is on the lines of ILO (International Labour Organization) guidelines, so we do not expect any resistance.
Q- It will also require some legislative changes. How will you get that done?
A - Some of the measures which we are proposing in the textile policy will not require legislative changes, only some revision in the policy, in the guidelines. Some new schemes will have to be formulated. Some labour laws will have to be modified for which legislation might be required, which the ministry of labour will be taking to Parliament. Given the fact that everybody understands the importance of promoting the textile sector bringing in more employment, I am sure we will get support.
Q- Are you confident of meeting your target of attracting investments of Rs 74,000 crore in textiles in three years?
A- We are expecting that with this package there will be a boost to the investment in the garmenting sector and the industry will think it attractive enough to invest. Our calculation is that with the capital subsidy and tax incentive which we are offering, aboutRs 74,000 crore worth investment will come in the garmenting sector.
Q- Given that about 70% of the people working in the garment industry are women, will the textile policy address issues such as maternity leave?
A- Yes. In fact, we are proposing schemes. We already have a scheme for supporting working women hostels, but we are going to enhance that scheme and give greater incentive to all those units which employ about 70% women. We will be giving them more support in terms of giving subsidy for construction of working women's hostel and other kinds of facilities.
Q- What steps has the ministry taken to increase exports to markets such as South America and Russia that it plans to target?
A- In our marketing plan we have given a lot of focus to these new markets and are going to participate in fairs there and run marketing campaigns in this area. We are also looking for special agreements with countries like Russia and Brazil, so that some preferential tariff pacts can be signed. These countries have lot of potential and we have taken it up with the commerce ministry to look for some kind of treaty with these countries.