The Hindu Business Line : `Textile industry ready for zero duty regime'

EVEN as the Government has cut down the peak customs duty from 25 per cent to 20 per cent, the textile industry, in general, and the high-value-added apparel industry, in particular, will have no problems even if the tariffs on textile are brought down to zero level.

Mr A Sakthivel, who has taken over as the Chairman of Apparel Export Promotion Council (AEPC), told Business Line that in this way "we will have reciprocal arrangements so that our textile goods to Europe and the US will have the same zero duty so that the benefits bestowed through preferential treatment to other cost-efficient and comparative advantage textile producers such as Bangladesh and Pakistan would get neutralised when our textile goods could also compete with them effectively."

Alongside, the AEPC chief has called for restricting the indiscriminate yarn exports, particularly in a year when China's cotton crop has not been so good. He said while one kg of yarn by way of export fetched Rs 100, the same quantity through value-addition in the form of garments export could yield Rs 300-400.

On his priorities as the head of AEPC, Mr Sakthivel said: "My foremost task is to prepare the exporters mentally for the quota-free regime" by conducting a series of seminars and workshops and sensitising them to the need for being competitive in terms of price and quality. The second task was to double the export of readymade garments from the existing level of $6.5 billion to $12 billion by the end of 2007. He said he would utilise the infrastructure of AEPC for export promotional activities.

He said once the quota regime goes, it would not be mandatory for the exporters to take endorsement.

But Commerce Ministry could nominate AEPC to endorse the shipment made by exporters so that the apex exporters' organisation could monitor statistics pertaining to textile industry, instead of waiting for the figures on textiles trade from the Directorate-General of Commercial Intelligence & Statistics, Kolkata. Mr Sakthivel said he also proposed to make the Apparel Training and Design Centres, currently functioning in Delhi, Chennai, Bangalore and Mumbai, popular in all State capitals so that a lot of skilled workers could be trained. The textile industry needs them in larger numbers to face the competition once the quota regime ends by 2004.

He said AEPC would also organise two "mega" textile shows in New York and Dallas in the US this year. About 70-80 top Indian exporters would showcase their designer products to the discerning consumer in the world's biggest apparel market. He said similar mega shows would also be launched in four or five countries in Europe during September/October 2004.

He said a textile delegation would visit South American countries of Peru, Chile and Brazil in March 2004.

Stating that China remains by far the biggest threat to India in textile trade as its currency continued to enjoy patronage vis-à-vis the dollar even as the Indian rupee gains against the dollar, Mr Sakthivel said domestic textile industry should at least be extended benefits that were being given to export-oriented units and units in special economic zones.

He said if any textile exporter exported over 80 per cent of production, he should be treated at par with exporters in EOUs/SEZs.

Again, he said, with imminent competition knocking at the country's doors, raw material import, particularly purchase of fabrics and embellishments, should be made more liberal, while the existing advance licensing scheme was a little cumbersome.

Instead of giving import licence against future performance, it should be given based on past performance, he said, adding that at the end of the year the exporters would submit to the Director-General of Foreign Trade their account of imports contracted and exports performed.

This form of "green book" facility would be beneficial to the exporters of non-quota countries too, he said.

Mr Sakthivel said: "We should have productivity-linked wages and export be treated as essential services and I would bring outside experts to train our exporters in increasing productivity, mainly in sewing/stitching" for the apparel industry.

He said the garment industry would do well in the post-MFA quota-free phase as already big chain stores from Europe and the US had set up their offices in India to source our textile products, particularly sensitive category items like menswear, casual wear, lady's blouses and T-shirts for men and women.