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Foreign investment and market presence was not very high in India’s textile and apparel sector. With liberalisation in investment and the subsequent the removal of quantitative restrictions on several textile products, the Indian market now has the presence of several international brands. However, the presence is more in the nature of brand licensing with Indian players rather than direct investment. U.S. brands have a larger presence in the market than others. A few companies have also set up export-oriented manufacturing facilities in India. Notable names include La Perla, and Brinton, a leading carpet manufacturer from the U.K. Some of the world’s most popular apparel brands entered the Indian market. They include: Levi’s, Lee, Wrangler, Benetton, Pepe, Reid and Taylor, Zegna, Arrow, Louis Philippe, Van Heusen, Lacoste, and Ralph Lauren.
A new trend in recent years has been the arrival in India of expatriate and western designers (from France, Italy, UK) who are beginning to form joint ventures with Indian designers to cater to the domestic and export markets. Italian companies are investing in capacity expansion and striking manufacturing, distribution and franchising deals with India Inc. Carrera is to invest US$ 252.7 million in textile projects in India.
Other legislations Regarding the Textile Sector
Ministry of finance has added 165 new textile products under duty drawback schedule. The new products included wool tops, cotton yarn, acrylic yarn, viscose yarn, various blended yarn/fabrics, fishing nets etc. Further, the existing entries in the drawback schedule relating to garments have been expanded to create separate entries of garments made up of (1) cotton; (2) man made fibre blend and (3) MMF. Separate rates have been prescribed for these categories of garments on the basis of composition of textiles.
After the phasing out of quota regime under the MFA, India can envisage its textile sector becoming $100 billion industry by 2010. This will include exports of $50 billion. The proposed targets would be achieved provided reforms are initiated in textile sector and local manufacturers adopt measures to improve their competitiveness. A 5-pronged strategy aiming to attract FDI by making reforms in local market, replacement of existing indirect taxes with a single nationwide VAT, liberalization of contract norms for textile and garments units, elimination of restrictions that cause poor operational and organizational performance of manufacturers, was suggested.
The Union Minister said that the Board for Industrial and Financial Reconstruction (BIFR) had approved rehabilitation schemes for sick NTC mills at a cost of Rs 39 billion. Of the 66 mills, 65 unviable mills have been closed after implementing Voluntary Retirement Scheme (VRS) to all employees. According to him, the government has already constituted assets sale committees comprising representatives of Central and state governments, operative agency, BIFR, NTC and the concerned NTC subsidiary to effect sale of assets through open tender system. Proposals for modernization of NTC mills have been made to the consultative committee members, including formation of a committee of experts to improve management of these mills. Even the present status of jute industry was under the scanner of the consultative committee.
The Government had announced change from the value-based drawback rate hitherto followed to a weight-based structure for textile exports that will discourage raw material exports and also curtail the scope for misusing the drawback claims by boosting invoice value of exports.
NCDEX has launched its silk contract (raw silk and cocoon). With this launch, the total number of products offered by NCDEX goes up to 27. The launch of the silk contract will offer the entire suite of fibres to the entire value chain ranging from farmers to textile mills. With the objective of protecting the interests of those affected by the WTO agreements and globalisation process, Government of India jointly with NCDEX has adopted a policy of encouraging future contracts of silk.
The Government will run during the Eleventh Plan period a Scheme for the Development and Growth of Technical Textiles (SDGT) at an outlay of Rs 960 million to promote indigenous manufacture of technical textiles. The scheme would also provide infrastructure support by setting up centres of excellence for manufacture of technical textiles.
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Participants