Cotton textiles need interest subvention to return to growth: Texprocil

Exports of cotton textiles in August 2015 registered a decline of 7.39% at $863.18 mn

India's cotton textile industry needs interest rates subvention, re-calibrated product market matrix to include exports to emerging markets as exports are growing in developed markets from the countries with preferential access, said R K Dalmia, Chairman, The Cotton Textile Export Promotion Council (Texprocil).

India's exports of cotton textiles in August 2015 registered a decline of 7.39% to $863.18 million as against $932.02 million in the same month last year.

Exports of cotton textiles during April - August 2015 registered a decline of 2.16% at $4.24 billion as compared to same period of the last year.

While speaking on the occasion of the Platinum Jubilee celebration of All India Exporters' Chamber here on Thursday, Dalmia said, textile, as it stands today, the export trends are not very encouraging.

While a slowdown in exports widens the gap in trade deficit in this sector, surplus capacity finds an outlet only through the channel of exports. A large part of the reason for the sluggish growth lies in the overall slowing of demand in the overseas markets too.

Apart from a general decline in overseas demand, over-dependence on China especially for cotton and cotton yarn exports, is magnifying the overall decline in exports as China slows down.

Further, the high cost of export finance which is around 10% in India as compared to 3-4% in competing countries like Vietnam, Bangladesh and Pakistan is also having an impact on India's competitiveness.

The new Merchandise Export from India Scheme (MEIS scheme) introduced in the Foreign Trade Policy of 2015-20 has included exports of very few products to select markets.

Many important markets like African countries, South Korea, China and Vietnam have been left out of the scheme. Non-coverage of exports of mainstream products to leading markets under the MEIS is having its own impact on India's textiles exports as the margins have shrunk due to price pressure from competing countries.

He further added that Indian cotton textile products also suffer the disadvantages of differential duties in major markets. Competing countries like Pakistan, Bangladesh and Vietnam get the benefit of zero duty or preferential duties in major markets like the EU.

Available data clearly demonstrates that the only countries recording positive growth currently in the falling EU market are the countries with preferential access like Bangladesh, Vietnam and Pakistan.