The Hindu Business Line : `Continue Cenvat chain for textiles'

THE city-based Chamber of Textile Trade and Industry (COTTI) has urged the Union Government to continue the existing Cenvat chain from yarn to finished garment manufacturing level.

While suggesting that a uniform rate be maintained across the value chain, COTTI has stated that any change should be across the chain and maintain uniformity and a level playing field.

The chamber, which represents all segment of textiles trade industry including exporters, fears that any roll back of Cenvat or the addition of any exemptions to the existing ones would only hamper growth and affect the competitiveness of the industry in the free quota regime which is to begin from January, 2005 in compliance with the WTO guidelines.

Explaining his chamber's stand on Cenvat, the Chairman of international trade committee of COTTI, Mr Pramod Modi, told Business Line, that the implementation of Cenvat had led to a paradigm shift, thereby thriving from exemptions and evasions to a good business environment, fair business practices with a focus on competitiveness.

In the emerging scenario, Mr Modi stressed the need for removal of all excise exemptions and concessions including exemptions of hank yarn. Mr Modi said that the changes should be carried out only after collective efforts in bringing about industry-wide consensus among all segments and sectors of the domestic textile industry. A rational policy would lead to $ 560 billion growth in the next five years from $ 360 billion in 2002. Growth would be dominant in the garment sector with a share of about 65 per cent.

He said that the trend of manufacturing in textiles was fast moving to low cost and developing economies. China and India were expected to be the beneficiaries of the quota phase out in 2005. China has already geared up to take a large share of global trade. Currently, its exports exceeded $ 60 billion as against the country's $ 12 billion. He was of the view that the domestic textile industry needed to move fast to seize this opportunity and to secure a large share in global markets mainly through garments. In fact, this could lead to the creation of about 60 million jobs. The new textile policy should, therefore, be directed to India assuming "co-leadership" with China, he suggested.

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