Lok Sabha Question No. 4362 (UNSTARRED), answered on 2016-08-11
Subject: International Competition
Ministry: TEXTILES
Asked by: RAMESH POKHRIYAL NISHANK, VIJAY KUMAR HANSDAK, BHARAT SINGH, RAKSHA NIKHIL KHADSE

## LOK SABHA UNSTARRED QUESTION NO. 4362 TO BE ANSWERED ON 11.8.2016

## INTERNATIONAL COMPETITION

## 4362.   DR. RAMESH POKHRIYAL 'NISHANK':

SHRI VIJAY KUMAR HANSDAK:

SHRI BHARAT SINGH:

SHRIMATI RAKSHATAI KHADSE:

## Will the Minister of TEXTILES वस्त्र मंरी

be pleased to state:

- (a) whether the Government has taken steps for making Indian textiles industry more competitive in international market and if so, the details thereof;
- (b) the quantum of textiles and apparels exported from the country during each of the last three years and the current year;
- (c) the  target  set  by  the  Government  for  exports  of  textile  products  for  the  next  five years;
- (d) whether  the  Government  has  taken  steps  to  explore  market  for  these  products  in Iran, Russia, Europe and USA and if so, the details thereof; and
- (e) the steps being taken by the Government for technology upgradation in the textile sector?

## उत्तर

## ANSWER वस्त्र मंरी ( श्री अज ) MINISTER OF STATE FOR TEXTILES

## (SHRI AJAY TAMTA)

- (a) Yes Madam. Government has recently approved special package for Textiles and Apparel sector to make the industry more competitive. The details of package are given in Annexure I.
- (b) The quantum of exports of textile and apparel for last three years and current year is given as under:
- (c) Government has set the target of US$ 48.5 billion for exports of textile products for the  year  2016-17.    Over  next  five  years  India's  textile  and  apparel  exports  is expected to grow substantially.
- (d) Yes  Sir.  Government  Govt.  of  India  has  launched  various  schemes  to  increase country's share in major markets such as Iran, Russia, Europe and USA. The details of the schemes are given in Annexure-II.
- (e) The Government has approved 'Amended Technology Upgradation Fund Scheme (A-TUFS)' for technology upgradation of the textiles industry with one time capital subsidy for eligible benchmarked machinery to attract an investment of Rs.1,00,000 crore and generate employment of 30.51 lakhs.   Allocation of Rs.17822 crore has been made under the scheme for a period of seven years from 2015-16 to 2021-22.

| Year    |   2013-14 |   2014-15 |   2015-16 |   2016-17 (Apr- June) |
|---------|-----------|-----------|-----------|-----------------------|
| Exports |      40.3 |      40.7 |        40 |                  8.85 |

The Government has announced a special package of Rs 6,000  crores for boosting the employment  generation  and  export  potential  of  the  Textile  and  Apparel  Sector.  Salient features of the package are:

## 1. Labour Law Reforms

- a) Government to bear 3.67% of employer's Employee Provident Fund (EPF) contribution  for  new  workmen  in  addition  to  existing  reimbursement  of  8.33% employer contribution under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) for 3 years.
- b) EPF will be made optional for  employees  earning less  than  Rs.  15,000  per  month; thus, leaving more money in the hands of the workers.
- c) Overtime  cap  will  be  raised  from  50  hours  per  quarter  to  100  hours  per  quarter leading to increased earnings of workers.
- d) Considering  the  seasonal  nature  of  the  industry,  fixed  term  employment  will  be introduced for the garment sector. A fixed term workman will be considered at par with  permanent  workman  in  terms  of  working  hours,  wages,  allowances  and  other statutory dues.

## 2. Additional incentives under ATUFS

-  The subsidy provided to garmenting units, under Amended-TUFS, is being increased from 15% to 25%, providing a boost to employment generation.
-  The  package  breaks  new  ground  in  moving  from  input-based  to  outcome-based incentives;  a  unique  feature  of  the  scheme  will  be  to  disburse  subsidy  only  after expected jobs have been created.

## 3. Enhanced duty drawback coverage

-  In a first-of-its-kind move, a new scheme will be introduced to refund the state levies which were not refunded so far.
-  This move will greatly boost the competitiveness of Indian exports in foreign markets
-  Drawback  at  All  Industries  Rate  will  be  given  for  domestic  duty  paid  inputs  even when fabrics are imported under Advance Authorization Scheme.

## 4. Enhancing scope of Section 80JJAA of Income Tax Act

-  Looking at the seasonal nature of garment industry, the provision of 240 days under Section  80JJAA  of  Income  Tax  Act  would  be  relaxed  to  150  days  for  garment industry.

Government  of  India  has  launched  various  schemes  to  boost  competitiveness  of  Indian garment exported to foreign countries and to increase country's share in global markets. The details of the schemes are:-

- i. Merchandize Exports from India Scheme (MEIS): Rewards for export are payable as percentage  of  realized  FOB  value  to  all  the  countries.    The  reward  rates  are  given below:-

| Eligible Products                                            | Reward Rate   |
|--------------------------------------------------------------|---------------|
| Textile and Apparel Products (HS Code 50-63: eligible lines) | 2%            |
| All handloom and handicraft items                            | 5%            |
| All jute, ramie and coir based items                         | 5%            |

The duty reward is available to textile and garment exporters in any country globally. Also,  Government has  withdrawn the requirement of  Landing Certificate to  avail  the benefit of MEIS. This removal of requirement of landing certificate is a major step in ease of doing business.

- ii. Interest Equalization Scheme: Pre and post shipment rupee export credit of 3% is given to Handicrafts, Carpet, Handlooms, Small &  Medium  Enterprises,  Readymade Garments, Made-ups, Fabrics, Coir & Coir Products, Jute & Jute Products.
- iii. Duty Drawback: Duty drawback rates for textile items are given below:

|                 | When CENVAT is not availed   | When CENVAT is availed   |
|-----------------|------------------------------|--------------------------|
| Cotton yarn     | 2.5-4.5                      | 1.2-1.4                  |
| Cotton fabric   | 4.3-7.3                      | 1.4-2.0                  |
| Man-made fabric | 6.6-11.5                     | 1.9-2.4                  |
| Apparel         | 7.2-10.5                     | 2.0-3.5                  |
| Home textiles   | 5.0-10.7                     | 1.9-8.9                  |

## iv. Market Access Initiative (MAI):

-  Financial assistance for carrying out marketing projects abroad
-  Assistance  for  building  capacity  for  exporters,  export  promotion  organizations, etc.
-  Assistance on reimbursement basis to individual exporters for charges/fees paid by them for fulfilling the statutory requirements in the buyer country
-  Assistance for conducting studies
-  Assistance  in  developing  projects  leading  to  substantial  improvement  in  market access

## v. Market Development Assistance (MDA):

-  Financial support to exporters registered with Export Promotion Councils
-  For participation in Trade Fairs/Exhibitions, assistance would be permissible on travel expenses by air in economy class and/or charges of the built up furnished stall, subject to an upper ceiling as given below:
- o Focus Latin American Countries (LAC) - Rs. 250,000
- o Focus Africa, Focus CIS, Focus ASEAN - Rs. 200,000
- o General areas - Rs. 150,000
-  For each region, the exporter can claim benefit once a year
-  Maximum number of permissible participations shall be 5 in an FY.