India’s textile and apparel industry, a vital component of the country’s economy, is poised to receive a much-needed boost through anticipated fiscal incentives. The government is considering announcing these incentives by the end of the year to counteract the adverse effects of declining overseas orders. The textile industry has been grappling with challenges, particularly a fall in exports, as European and U.S. consumers tighten their spending due to inflationary pressures.
The potential incentives are likely to be introduced under the Production Linked Incentive (PLI) scheme, which was initiated in 2020 as part of the government’s larger plan to bolster manufacturing across various sectors, ranging from electronics to pharmaceuticals. The PLI scheme, which promises billions of dollars in cash incentives, has garnered attention as a mechanism to invigorate industries and create an environment conducive to increased domestic production.
T. Rajkumar, Chairman of the Confederation of Indian Textile Industry (CITI), has indicated that government officials met with industry representatives earlier this month to discuss the proposed fiscal incentives. Rajkumar mentioned that the government could unveil these incentives by December, signaling potential relief for an industry that plays a pivotal role in India’s economy.
The textile and apparel industry is a significant source of employment, providing jobs for over 45 million individuals. However, the sector has faced the brunt of the global economic uncertainty caused by the pandemic. Textile and apparel exports from India plummeted nearly 14% to $11.25 billion during the first four months of the current fiscal year (April-July), highlighting the urgency for intervention to revitalize the industry.
Industry stakeholders have presented a set of recommendations to the government in order to address the challenges faced by smaller manufacturers under the PLI scheme. They have also appealed for the withdrawal of the 11% import duty on specific varieties of cotton imported from Egypt and the United States. The removal of this duty would enable the industry to fulfill specific orders and navigate the complex global trade landscape.
Rakesh Mehra, President of the Indian Spinners Association, emphasized the need for government support to aid the industry’s recovery. He also stressed the significance of the proposed free trade agreements with the European Union and Britain, which could potentially provide a much-needed boost to exports.
Moreover, concerns about job losses have prompted calls for immediate action. A substantial number of spinning units have reduced their production levels, raising alarms about employment stability in the sector. Given that the industry employs millions of workers, the government’s support holds great significance, especially as India approaches an election year.
In the backdrop of the ongoing economic challenges and the industry’s potential to generate employment, the government’s planned fiscal incentives and supportive measures are eagerly anticipated. As the country navigates these trying times, the revival of the textile and apparel industry could prove to be a vital step in India’s journey toward economic recovery and growth.