Friday, 22 December, 2017
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1 Friday, 22 December, 2017 Mr Arun Jaitley, Honourable Finance Minister, Ministry of Finance, Government of India, North Block, NEW DELHI Copies to:- 1. Smt Smriti Zubin Irani, Honourable Information and Broadcasting and Textiles Minister, Ministry of Textiles Government of India, Udyog Bhavan, NEW DELHI mot_fb@nic.in 2. Dr Hasmukh Adhia, Secretary Finance, Ministry of Finance, Government of India, North Block, NEW DELHI rsecy@nic.in 3. Mr Anant Kumar Singh, Secretary, Textiles, Ministry of Textiles, Government of India, Udyog Bhavan, NEW DELHI secy-textiles@nic.in Sub: Pre-Budget Memorandum Respected Sirs and Respected Madam We are extremely grateful to you and your colleagues in Ministry of Finance and Ministry of Textiles, for asking us to provide our perspective, ideas and recommendations, vide your communication dated and , received from Government of India, Ministry of Textiles, for Revival and Rapid Growth of Indian Textile and Clothing Industry. We give below our Recommendations for implementation in Union Budget :- 1. Reduction of GST Rate on Man-made Fibre from 18% to 12% GST rate on Man Made Fiber (MMF) is 18%, while on MMF Yarn and MMF Fabric it is 12% and 5% respectively. We recommend that GST rate on Man Made Fiber is reduced from 18% to 12%. The Man Made Fibers to be covered in this reduction are polyester staple fibre, viscose staple fibre and acrylic staple fibre. The high duty on MMF (18%) and MMF Yarn (12%) has created an anomaly between GST on MMF (18%) and MMF Yarn (12%) and the same has resulted in inverted duty structure. We request the Government to reduce GST Rate on Man-made Fibre from 18% to 12%. Considering that global orientation is an important feature of Indian textile industry and India s textile exports constitute about 30% of the industrial output, the issue of inverted duty structure and high incidences of taxes on MMF will force the sector to confine itself to the cotton based products. To promote the consumption of man-made fibres in the country, it is pertinent to increase the consumption of man-made fibre based production in the country to meet the global challenges faced by the MMF sector of Indian textile industry. In view of the above, it is in the larger interest of the MMF based textile value chain to strike off this anomaly at the earliest.
2 -2-2. Low Import Duty on Man made Fibre Yarn, Cotton Fabric and Garments Threat to Domestic Market The MMF fabric sector is affected by cheaper imports from China and Indonesia, where fabric industry is subsidized to increase their share of fabric in the world trade. This situation will further lead to import of MMF Yarn from competing countries like China and Indonesia. Moreover, Indian fabric manufacturers have no protection from FTA countries that have been exporting fabrics from China, Bangladesh, Sri Lanka and selling garments made from such fabric to India. We request the Government to increase import duty on MMF Yarn, Garments and Cotton Fabrics as well as to give ample protection to the local yarn, fabric and garment producers, from cheap import threats especially from FTA nations like Bangladesh and Sri Lanka. 3. Indian Textile Industry has Tremendous Growth Potential The Indian textile and clothing industry has tremendous potential for growth from the current level of US$150 billion output per annum, to US$350 billion output per annum and create 35 million jobs, by the year India s textile export market size is today US$40 billion and domestic market size US$110 billion. India is facing severe competition from other countries, including Vietnam, China, Indonesia, Sri Lanka, Cambodia, Bangladesh and Pakistan. India continues to be one of the largest markets of textiles in terms of domestic demand, because of growing population. This a big hope and textile industry should take advantage of consumerism and the increasing incomes of Indian consumers. We request Government to enunciate a strategic policy and ensure its quick implementation, for us to realise value added opportunities for Indian textiles, in the global market. For example, India is exporting US$9 billion worth of cotton yarn, spun yarn and polyester filament yarn and if these products are converted into value added products, India could export US$90 billion worth of finished textile products. We are providing value added opportunities to our competitors, by not creating facilities in our country. We request Textiles, Finance, Industry and Commerce Ministries, of Government of India, to create facilities for cashing in on such value added opportunities and increase India s textile trade in the global market. 4. Strategic Policy Implementation for attaining US$350 billion Textile Output India can attain US$350 billion textile and clothing output. India is blessed with abundant quantity of textile raw materials, such as raw cotton and synthetic fibres and filament yarns. However, with limited growth opportunities in cotton, most of the growth is expected to come to come from synthetic fibres and filament yarns. The scale of production and efficiency needs to be improved. Cotton yarn, synthetic fibres and filament yarns sector, should look more for value-added opportunities, where there is adequate profitability, and not just capture market for commodity products. Commodity products are not going to give adequate profitability to the textile industry and that is not going to help in the investment process.
3 -3- We request Government to set up Fully Integrated Textile Parks. In the light of cotton yarns, spun yarns, synthetic fibres and filament yarns products tremendous export opportunities for value added products, it is necessary to set up Integrated Textile Parks, near the Sea Coast, with a view to having fully integrated textile mills, comprising of spinning, weaving, processing, knitting, printing, dyeing and finishing and finally garmenting. Although, this involves large investments, it is essential to incur capital investment, if India has to mature into producing higher-value added products, thus getting out of the commodity products like fibres and yarns. India has already lost enough opportunities in the global market and we should attempt to reverse this situation, through appropriate policies and ensure its quick implementation. 5. Home Textiles and Technical Textiles Output Can Substantially Increase India s Home Textiles and Technical Textiles output could substantially increase and this could be utilised by penetrating indigenous market and increasing exports. Indian Home Textiles and Technical Textiles companies have to work on creating sustainable international brands, with a view to increasing the Home Textiles and Technical Textiles Exports, thereby capturing global markets. Textile Industry should Focus on Medical, Automobile and Construction Textiles, which have enormous potential for exports. We request Government to increase subsidy for Home Textiles and Technical Textiles Exports, to encourage manufacturers in these sectors, to go for rapid expansion, thereby, increasing India s Export earnings,from the Textile Sector. We request Government to Focus on encouraging entrepreneurs to set up Textile Units for manufacturing Medical, Automobile and Construction Textiles. Summary of Our Recommendations for Union Budget Reduce GST rate on Man Made Fibres from 18% to 12% 2. Take necessary steps to Curb Textile Imports by Increasing Import Duty on MMF Yarn, Garments and Cotton Fabrics 3. Set up Integrated Textile Parks, near Sea Coast, to realise Value Added Opportunities 4. Increase subsidy for Home Textile Exports 5. Focus on Manufacturing Value Added Product - Medical, Automobile and Construction Textiles Indian textile industry has an exponential growth potential and Indian entrepreneurs, must focus on value added opportunities. Indian textile industry has a long way to go, to realise value added opportunities. We request Government of India, to focus on setting up Fully Integrated Textile Park and consider lowest GST rate on all textiles, to encourage Indian textile industry to rapidly increase output. 6. We are Grateful to Ministry of Finance and Ministry of Textiles, Government of India We are Grateful to Government of India, Ministry of Finance and Ministry of Textiles, for asking us to submit our Ideas and Recommendations. We request Government of India, Ministry of Finance and Ministry of
4 Textiles, to implement our Recommendations in Union Budget , for rapid growth of Indian textile industry. Our Mission is to work with Government of India and Indian Textile Industry, by periodically recommending "Strategic Policies for Growth of Indian Textile Industry", to Government of India. The Vision Document of Government of India, Ministry of Textiles has targetted to attain US$350 billion Textile output and create 35 million jobs by 2025, as against current output of US$150 billion.we are committed to serving our country, by working with Government of India, Ministry of Finance and Ministry of Textiles, in our Honorary Capacity to attain this target. 7. Textile India Progress Commitment to Work with Ministry of Finance and Ministry of Textiles, Government of India Textile India Progress, a textile journal, is committed to serving Indian textile industry, with the objective of attaining US$ 350 billion textile output and create 35 million jobs by 2025, as against current textile output of US$ 150 billion. We have been consistently interacting with Government of India, for the last three years and many of our recommendations have been accepted implemented, as Government Policies, by Ministry of Finance and Ministry of Textiles. 8. Our First Detailed Personal Meeting with Mr Santosh Kumar Gangwar, Honourable Minister of State for Finance, Government of India We wish to apprise you that we had our detailed first personal meeting with Honourable Mr Santosh Kumar Gangwar, Union Minister for State for Finance, Government of India in January, 2015, when Mr Santosh Kumar Gangwar, was Union Minister for Textiles (Independent Charge). Thereafter, Ministry of Textiles has implemented several recommendations made by us. We are grateful to Government of India, for doing so. We are hopeful, that under your guidance and leadership, Ministry of Finance, Government of India, would implement all our above recommendations in the Union Budget for I will be Happy to Come Personally and Clarify any Points, If Required I shall be happy to come and meet you personally, Sir, if you require any clarifications on our above recommendations. Your sincerely for Textile India Progress -4- Raju Chandran Managing Editor Textile India Progress Journalist, Economist & Financial Analyst textileindia@vsnl.com
5 Thursday, 21 December, 2017 Smt Smriti Zubin Irani Hon ble Information and Broadcasting and Textiles Minister Ministry of Textiles Government of India, Udyog Bhavan, NEW DELHI Copies to:- 1. Mr Arun Jaitley, Honourable Finance Minister, Ministry of Finance, Government of India, North Block, NEW DELHI office@arunjaitely.com 2. Dr Hasmukh Adhia, Secretary Finance, Ministry of Finance, Government of India, North Block, NEW DELHI rsecy@nic.in 3. Mr Anant Kumar Singh, Secretary, Textiles, Ministry of Textiles, Government of India, Udyog Bhavan, NEW DELHI secy-textiles@nic.in Sub: Pre-Budget Memorandum Respected Madam and Respected Sirs We are extremely grateful to you and your colleagues, for asking us to provide our perspective, ideas and recommendations, vide your communication dated and , received from Government of India, Ministry of Textiles, for Revival and Rapid Growth of Indian Textile and Clothing Industry. We give below our Recommendations for implementation in Union Budget :- 1. Reduction of GST Rate on Man-made Fibre from 18% to 12% GST rate on Man Made Fiber (MMF) is 18%, while on MMF Yarn and MMF Fabric it is 12% and 5% respectively. We recommend that GST rate on Man Made Fiber is reduced from 18% to 12%. The Man Made Fibers to be covered in this reduction are polyester staple fibre, viscose staple fibre and acrylic staple fibre. The high duty on MMF (18%) and MMF Yarn (12%) has created an anomaly between GST on MMF (18%) and MMF Yarn (12%) and the same has resulted in inverted duty structure. We request the Government to reduce GST Rate on Man-made Fibre from 18% to 12%. Considering that global orientation is an important feature of Indian textile industry and India s textile exports constitute about 30% of the industrial output, the issue of inverted duty structure and high incidences of taxes on MMF will force the sector to confine itself to the cotton based products. To promote the consumption of man-made fibres in the country, it is pertinent to increase the consumption of man-made fibre based production in the country to meet the global challenges faced by the MMF sector of Indian textile industry. In view of the above, it is in the larger interest of the MMF based textile value chain to strike off this anomaly at the earliest.
6 -2-2. Low Import Duty on Man made Fibre Yarn, Cotton Fabric and Garments Threat to Domestic Market The MMF fabric sector is affected by cheaper imports from China and Indonesia, where fabric industry is subsidized to increase their share of fabric in the world trade. This situation will further lead to import of MMF Yarn from competing countries like China and Indonesia. Moreover, Indian fabric manufacturers have no protection from FTA countries that have been exporting fabrics from China, Bangladesh, Sri Lanka and selling garments made from such fabric to India. We request the Government to increase import duty on MMF Yarn, Garments and Cotton Fabrics as well as to give ample protection to the local yarn, fabric and garment producers, from cheap import threats especially from FTA nations like Bangladesh and Sri Lanka. 3. Indian Textile Industry has Tremendous Growth Potential The Indian textile and clothing industry has tremendous potential for growth from the current level of US$150 billion output per annum, to US$350 billion output per annum and create 35 million jobs, by the year India s textile export market size is today US$40 billion and domestic market size US$110 billion. India is facing severe competition from other countries, including Vietnam, China, Indonesia, Sri Lanka, Cambodia, Bangladesh and Pakistan. India continues to be one of the largest markets of textiles in terms of domestic demand, because of growing population. This a big hope and textile industry should take advantage of consumerism and the increasing incomes of Indian consumers. We request Government to enunciate a strategic policy and ensure its quick implementation, for us to realise value added opportunities for Indian textiles, in the global market. For example, India is exporting US$9 billion worth of cotton yarn, spun yarn and polyester filament yarn and if these products are converted into value added products, India could export US$90 billion worth of finished textile products. We are providing value added opportunities to our competitors, by not creating facilities in our country. We request Textiles, Finance, Industry and Commerce Ministries, of Government of India, to create facilities for cashing in on such value added opportunities and increase India s textile trade in the global market. 4. Strategic Policy Implementation for attaining US$350 billion Textile Output India can attain US$350 billion textile and clothing output. India is blessed with abundant quantity of textile raw materials, such as raw cotton and synthetic fibres and filament yarns. However, with limited growth opportunities in cotton, most of the growth is expected to come to come from synthetic fibres and filament yarns. The scale of production and efficiency needs to be improved. Cotton yarn, synthetic fibres and
7 -3- filament yarns sector, should look more for value-added opportunities, where there is adequate profitability, and not just capture market for commodity products. Commodity products are not going to give adequate profitability to the textile industry and that is not going to help in the investment process. We request Government to set up Fully Integrated Textile Parks. In the light of cotton yarns, spun yarns, synthetic fibres and filament yarns products tremendous export opportunities for value added products, it is necessary to set up Integrated Textile Parks, near the Sea Coast, with a view to having fully integrated textile mills, comprising of spinning, weaving, processing, knitting, printing, dyeing and finishing and finally garmenting. Although, this involves large investments, it is essential to incur capital investment, if India has to mature into producing higher-value added products, thus getting out of the commodity products like fibres and yarns. India has already lost enough opportunities in the global market and we should attempt to reverse this situation, through appropriate policies and ensure its quick implementation. 5. Home Textiles and Technical Textiles Output Could Substantially Increase India s Home Textiles and Technical Textiles output could substantially increase and this could be utilised by penetrating indigenous market and increasing exports. Indian Home Textiles and Technical Textiles companies have to work on creating sustainable international brands, with a view to increasing the Home Textiles and Technical Textiles Exports, thereby capturing global markets. Textile Industry should Focus on Medical, Automobile and Construction Textiles, which have enormous potential for exports. We request Government to increase subsidy for Home Textiles and Technical Textiles Exports, to encourage manufacturers in these sectors, to go for rapid expansion, thereby, increasing India s Export earnings,from the Textile Sector. We request Government to Focus on encouraging entrepreneurs to set up Textile Units for manufacturing Medical, Automobile and Construction Textiles. Summary of Our Recommendations for Union Budget Reduce GST rate on Man Made Fibres from 18% to 12% 2. Take necessary steps to Curb Textile Imports by Increasing Import Duty on MMF Yarn, Garments and Cotton Fabrics 3. Set up Integrated Textile Parks, near Sea Coast, to realise Value Added Opportunities 4. Increase subsidy for Home Textile Exports 5. Focus on Manufacturing Value Added Product - Medical, Automobile and Construction Textiles
8 -4- Indian textile industry has an exponential growth potential and Indian entrepreneurs, must focus on value added opportunities. Indian textile industry has a long way to go, to realise value added opportunities. We request Government of India, to focus on setting up Fully Integrated Textile Park and consider lowest GST rate on all textiles, to encourage Indian textile industry to rapidly increase output. 6. We are Grateful to Government of India We are Grateful to Government of India, Ministry of Textiles, for asking us to submit our Ideas and Recommendations. We request Government of India, Ministry of Textiles and Ministry of Finance, to implement our Recommendations in Union Budget , for rapid growth of Indian textile industry. Our Mission is to work with Government of India and Indian Textile Industry, by periodically recommending "Strategic Policies for Growth of Indian Textile Industry", to Government of India. The Vision Document of Government of India, Ministry of Textiles has targetted to attain US$350 billion Textile output and create 35 million jobs by 2025, as against current output of US$150 billion.we are committed to serving our country, by working with Government of India, in our Honorary Capacity to attain this target. 7. Textile India Progress Commitment to Work with Government of India Textile India Progress, a textile journal, is committed to serving Indian textile industry, with the objective of attaining US$ 350 billion textile output and create 35 million jobs by 2025, as against current textile output of US$ 150 billion. 8. Our First Detailed Personal Meeting with Mr Santosh Kumar Gangwar, Honourable Minister of State for Finance, Government of India We wish to apprise you that we had our detailed first personal meeting with Honourable Mr Santosh Kumar Gangwar, Union Minister for State for Finance, Government of India in January, 2015, when Mr Santosh Kumar Gangwar, was Union Minister for Textiles (Independent Charge). Thereafter, Ministry of Textiles has implemented several recommendations made by us. We are grateful to Government of India, for doing so. We are hopeful, that under your guidance and leadership, Ministry of Textiles, Government of India, would implement all our above recommendations in the Union Budget for I will be Happy to Come Personally and Clarify any Points, If Required I shall be happy to come and meet you personally, if you require clarifications on our above recommendations. Raju Chandran Journalist, Economist & Financial Analyst Managing Editor Textile India Progress textileindia@vsnl.com
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