VISION, STRATEGY

AND ACTION PLAN

FOR
INDIAN TEXTILE
AND
APPAREL SECTOR
Submitted by the Expert Committee
to Ministry of Textiles

Contents
1.

Vision202425................................................................................................................................3

2.

Strategy...........................................................................................................................................4

3.

ActionPlan......................................................................................................................................8

1. Vision202425
Overthelast10years,Indiastextileandapparelexportshavegrownattherateof11%.Afterthe
phasing out of export quotas in 2005 Indias export performance has been below expectations.
Vietnam and Bangladesh have shown remarkable success. Vietnam could achieve a peak export
growthrateof30%whileBangladeshcouldachieveagrowthrateof18%.
ThereisnoreasonwhyIndia,providedittakesthenecessarysteps,cannotachieve20%growthin
exportsoverthenextdecade.Inthedomesticmarket,sustaininganannualgrowthrateof12%should
notbedifficult.
Thisimpliesthatwitha12%CAGRindomesticsalestheindustryshouldreachaproductionlevelof
US$350billionby202425fromthecurrentlevelofaboutUS$100billionforthedomesticmarket.
Witha20%CAGRinexportsIndiawouldbeexportingaboutUS$300billionoftextileandapparelby
202425.Indiashouldbythenhaveamarketshareof20%oftheglobaltextileandappareltradefrom
thepresentlevelof5%.
DuringthisperiodIndiashouldattemptastructuraltransformationwherebyitexportsonlyfinished
products.Thiswouldimplythatgrowthratesinexportsoffibreandyarnstartdecliningandgrowth
ratesofapparel,homesfurnishing,technicaltextilesandotherfinishedproductsshouldgrowvery
rapidly.Thiswouldmaximiseemploymentgenerationandvaluecreationwithinthecountry.Inthe
process,investmentofaboutUS$120billionwouldtakeplaceandabout35millionadditionaljobs
wouldgetcreated.

2. Strategy
AchievingtheambitiousVisionofexportsofUS$300billionand20%shareofglobaltradeby202425
isnotgoingtobeeasy.Itisunlikelywithbusinessasusualapproach.AclearStrategywhichcanbe
implementedandwouldenablesuccesswouldbeanessentialprerequisite.Accordingly,thefollowing
10pointStrategyissuggestedforadoption.
2.1

AchievingScaleacrosstheValueChain

IntheIndiantextileandapparelsector,thesubsectorsofweaving,processingandgarmentingare
fragmentedandlackingintherequisitescaleforsuccessinglobalmarkets.
Mostofthemanufacturingunitshavesmallcapacitiesandlowmanufacturingefficiencieswhichare
adisadvantageintheglobalarena.Tobringthematparwithglobalcounterpartsthereisaneedto
facilitaterapidgrowthandmodernizationofexistingfirmswithpotentialforsuccess.
In addition, it would be necessary to attract large scale investment to establish world class
manufacturingsetupsateachlevelofthevaluechain.Theadventoflargemanufacturingsetups
whichwillbeabletorealizeeconomiesofscalewillhelpIndiainachievingglobalcompetency.Large
scale capacity additions will enable India to achieve the targets of higher global trade share and
generatesignificantemploymentopportunitiesinthesector.
2.2

AttractInvestmentintotheSector

The sector needs to be made attractive enough for investors. Its needs to get US$ 120 billion
investmentforachievingthesizeofUS$650billionby202425.Thisisaformidablechallenge.
Thekeytogettinginvestmentsonthisscaleisforreturnsoninvestmentstoappearattractiveenough.
Investmentsneedtobeadequatelyincentivised.
Theessentialprerequisitesforgettinginvestmentsonthescalerequiredwouldbereadyavailability
of developed land with adequate infrastructure, skilled manpower and easy connectivity to ports.
Creatingnewmegatextileparkswouldbethewayforward.
Loweringthecostofproductionaswellasthecostoflogisticswouldbeofparamountimportanceand
shouldbegivenhighestpriority.
Attractingnewentry,boththroughstartupsandFDIisessentialandwouldneedtobegivenfocussed
attention.
2.3

Skill,QualityandProductivity

ForachievingthesizeofUS$650billionby202425weneedadditionalskilledmanpowerof35million.
Thisisgoingtobedifficult.
Productiveandskilledmanpoweristheonlywaytoachieveglobalcompetitivenessandtoachievethe
fullpotentialofthedemographicandwageadvantagethatIndiawouldclearlyhaveoverthenext
decade.Investmentinimprovingtheskillsandproductivityoftheworkforce,bybothprivateindustry
aswellastheGovernmentingenuinepartnership,hasbeenaweakness.

Therecentinitiativesonskilldevelopmentthroughthetextileskillsectorcouncilinpartnershipwith
theindustryneedtobescaledupvigorously.Abundantavailabilityoftrainedandcertifiedmanpower
shouldbecomethenorminthreeyears.
Theobjectiveshouldbetoachieveaveragepermanhour,permachineoutputintermsofqualityand
quantityofthelevelsprevailinginChinaoverthenextthreetofiveyears.
TheMinistryofTextilesneedstoevolveacrediblemechanismfortrackingimprovementsinquality
andproductivityacrossthevaluechainaswellasacrossindividualenterprises.Aprogramforassisting
individualfirmsinimprovingonbothparametersneedstobeimplemented.
2.4

ReformingLabourLaws

Thecurrentlabourlawsarecitedasthemajorreasonsfortheinabilityofthesectortoexpandand
acquireglobalscale.Thisisspecificallyvalidforcutandsewoperationswherethelabourinvolvement
ismaximumcomparedtootherstepsofthemanufacturingvaluechain.
Inordertoattractlargescaleinvestments,acquireglobalscaleandbringtheIndiansectoratparwith
other competing countries, there is an immediate need to review the labour laws to make them
investor and labour friendly. The regulatory framework for labour should be fully implemented in
compliancewithIndiasILOobligations.Thisshouldbeseenasaprerequisiteforsustainedgrowthas
apartoftheglobalsupplychains.
Ideallythe44labourlaws,mostofwhichweredraftedintheearlierpartofthelastcentury,needto
berepealedandreplacedbyone,oratbestafew,userfriendlylaw(s)suitedtotheconditionsofthe
21stcentury.
2.5

StructuralShiftwithincreasingValueAdditioninIndia

Indiahasashareofapproximately5%oftheglobaltextileandappareltrade.Thebreakupofour
currentexportsareasfollows:
i.
ii.
iii.
iv.
v.
vi.

CottonFibre:

CottonYarn,FabricsandMadeups:
ManmadeTextiles:

Garments:

Handlooms&Handicrafts:

Others:

9%
23%
14%
37%
11%
6%

Thestructuraltransformationthatneedstobepursuedistowardsenhancementofdomesticvalue
addition and gradually increasing the share of value added and finished products in our exports.
Gradually,IndiashouldstopexportingfirstCottonfibreandthenyarnandfabrics.By202425,India
shouldendeavourtobecomeanetexporteroffinishedproductsonly.

2.6

DiversificationofExportsintermsofProductsandMarkets

Indianexportsoftextileandapparelproductshaveshownhighgrowthinlastdecadeorso;butthey
havebeenlimitedtoonlyafewmarkets.Intheyear2002,outofthetotaltextileandapparelexports
fromIndia,63%wasexportedtotheEUandUSmarkets.Themarketmixhasnotbeendiversified
significantlytillnowwithEUandUSmarketsconstituting50%ofthetotaltextileandapparelexports
fromIndiaintheyear2012.
ThehighershareofglobaltradethatisenvisagedcanbeattainedonlyifIndianexportersalsostart
lookingbeyondtraditionalproductsandmarkets.
Specificstrategiesforachievingasignificantmarketpenetrationwithamarketshareandproductmix
targetwouldneedtobeevolvedforindividualcountriessuchasJapan,China,Brazil,Russia,etc.This
would need to be worked out by the Ministry of Textiles in partnership with the Indian industry.
Country specific market studies by institutions in that country would need to be financed by the
Ministryforthispurpose.Thestudywouldformthebasisforimplementationofthecountryspecific
marketingstrategy.
2.7

PromotingInnovationandR&D

TheIndiantextileandapparelsectorisknownforitstraditionalproducts.
Indiaisyettomakeitspresencefeltontheglobalstagewithbrands,chains,productsandprocesses.
Without innovation and R&D this would not happen. Government and industry need to work in
partnership for this transformation. Business process innovation, in terms of, building brands and
creatingdesignsshouldbetheimmediatepriority.
EnvironmentalconcernswouldkeeprisinginthiscenturyandIndiashouldtryandpositionitselfin
theglobalfrontierasanecofriendlyhubintheentirevaluechainofthetextileandapparelsector.
ThiscombinedwithbeingseenaslabourfriendlycouldbecomeIndiasUSPasittriestoachievea20%
shareoftheglobaltradeoverthenext10years.
2.8

NewApproachtowardsHandloomandHandicrafts

Handloom and Handicraft sectors employ 15 million people and provide livelihood to some of the
weakestsectionsofthesociety.TheyembodytherichculturalheritageandtraditionsofIndia.
Withdevelopment,increasingpercapitaincomesandchangeinpopulartastes,thescaleandshare
ofproductioninthissectorisexperiencingadecline.Thisisapartofahistoricalprocess.Accordingto
thehandloomsurveyconductedbyNCAERonbehalfofMinistryofTextilesthenumberofworking
handloomshavedecreasedfrom3.61millionintheyear1987to2.15millionintheyear2010.
ItisnecessarytoensurethattheweakersectionswhoaredependantfortheirlivelihoodonHandloom
andHandicraftdonotexperiencedistress.Measuresforsupportingthesectorneedtobeaugmented
forattainmentofthisobjective.
Itisalsonecessarytoensurethattheserichcraftsandtraditionssurvivewithhigherwagesasper
capitaincomeinthecountryrise.Thiswouldbefirstpossibleonlyifthedemandfortheseproducts

athigherpricesreflectinghigherwagesisnurtured,bothinthedomesticaswellastheinternational
market.Thiswouldneedimaginativeandsustainedpromotionalefforts.
2.9

PartnershipwithStateGovernment

Realizing the employment and value addition potential of the textile and apparel manufacturing
sector,severalStateGovernmentshavecomeoutwiththeirownTextilepoliciestailoredtoattract
investmentinspecificsubsegmentsandspecificareaswithintheState.Thisisapositivedevelopment
forthesector.
Fortheattainmentoftheobjectiveof20%growthinexportsandattractinginvestmentofUS$120
billion,agenuineandconstructivepartnershipwiththeStateGovernmentsisabsolutelyessential.
To achieve full potential the schemes and programmes of the Ministry of Textiles need the
cooperation and support of the State Governments. The initiatives of the Central and State
Governmentsneedtocomplementeachotherfortheattainmentofthesharednationalobjective.
2.10

ReengineeringofExistingSchemesandPolicies

MinistryofTextileshasalargenumberofschemesandprogrammesforthetextileandapparelsector.
Some of the flagship schemes are Technology Upgradation fund Scheme (TUFS), Scheme for
IntegratedTextileParks(SITP),MegaCluster,IntegratedSkillDevelopmentScheme(ISDS),etc.
Thesehavebeenusefulandhavebeencontributingtotheincreasinggrowthanddevelopmentofthe
sector.Forthescaleandgrowthmomentumthatisenvisaged,theseschemesneedtobescaledup
substantially. They also need reengineering and recalibration to suit the ambitious goals being
adopted.

3. ActionPlan
3.1 AchievingScaleacrosstheValueChain,and
AttractInvestmentintotheSector
3.1.1

3.1.2

3.1.3

Maintenanceofacompetitiveexchangerateisanessentialprerequisiteinlabourintensive
manufacturinginmatureindustries.Textilesissuchanindustry.Withtherecentdepreciation
oftherupeewhichhasmitigatedthesevererealexchangerateappreciationovertheearlier
years, textile exports have grown by 13% in 201314 over 6% in 201213 (dollar terms).
GovernmentneedstoworkwithRBItoensurethatIndiamaintainsacompetitiveexchange
rateoverthenext10yearsaswasdonebyJapan,SouthKoreaandChinaintheirphaseof
rapidgrowthinmanufacturingandexports.

LackofeconomiesofscaleisamajorissueinIndiantextileandapparelmanufacturingsector.
CountrieslikeChinaandBangladeshhavedevelopedlargeproductionsetupswhereasIndian
sectorisdominatedbysmallerunitswhichlackeconomiesofscaleandhavealowlevelof
technology.DuetolackoflargemanufacturingcapacitiesIndianmanufacturersareunableto
catertolargeordersandbecomegloballycompetitive.
Forstimulatinginvestmentsinthesector,itisrecommendedinvestmentallowanceof15%
fornext10yearsshouldbeprovidedacrossentiretextileandapparelmanufacturingvalue
chain,includinggarmentaccessoriesandtextilemachinerymanufacturing.

In order to achieve large scale technology upgradation in Powerloom and Knitting sector,
scheme for HirePurchase is necessary. Cluster specific SPVs should be promoted in
partnershipwiththeStateGovernments.TheSPVsforthispurposeshouldbenotforprofit
institutions which may get seed money from the Ministry of Textiles. The SPV could also
choosetooperateinthePPPmode.
SPVs will purchase latest technology machines and lease them to weavers or knitters. The
SPVsthroughbulkpurchasesshouldbeabletogetreasonablediscountsfromthemachine
manufacturers.BeingpromotedbytheMinistryofTextileandtheStateGovernment,theSPVs
shouldbeabletoraisedebtatattractiveratesfortheiroperations.Ifnecessarytheirdebt
could be guaranteed jointly by the Central and State Governments in the initial phase of
operationstillthetrackrecordwouldwarrantthewithdrawaltheGovernmentguarantees.
Totheextentfeasible,newworkshedsmayalsobecreatedforwhichlandwouldneedtobe
arrangedfortheSPVsbytheStateGovernment.
TherealincomeoftheweaverafterpayingfortheEMItotheSPVshouldincreaseadequately
fortheSchemetobearealsuccess.4to5pilotprojectsofthisnatureshouldbetakenup
initially.Accordinglytheinterestsubsidysubventionwouldneedtobecalibrated.Afterthe
learningoffewpilotprojects,arobustdeliverymechanismshouldbeinplaceoverthenext2
years.Thereafter,theprogrammeshouldbescaleduptoensurecompletereplacementofold
loomswithmodernshuttlelessloomsoverthenext5to7years.

3.1.4

3.1.5

3.1.6

3.1.7

3.1.8

The value chain in textile and apparel sector has differential tax treatment. The levy of
different rates has created distortions. This concern would be addressed by the
implementationofGSTwhichwouldcreatealevelplayingfieldfortheentirevaluechain.
ItisrecommendedthatGSTshouldbeimplementedattheearliest.Beinganitemofmass
consumption,textileneedstobeputinthelowestslabofGST.

Inordertogivestrongimpetustotextileandapparelsector,itisrecommendedallactivities
acrosstheentiresectorincludingskilldevelopmentmaybeexemptedfromServiceTax.

Thegrowthandexpansionofthesmallerunitsintheindustryhasbeenconstrainedbylackof
easyavailabilityofequityforrapidexpansion.SimilarlyVentureCapitalfundingforstartups
inthissectorisnotavailable.Marketforcesontheirownareunlikelytomeetthisneedas
veryhighratesofreturnscannotbereasonablyexpectedinthishighlycompetitivesectorwith
lowmargins.
Itis,therefore,recommendedthatinitiallyaprivatelymanagedGovernmentseededEquity
Fundforprovidingequityforstartupsandexpansionshouldbesetup.TheFundshouldseek
athresholdmodestrateofreturns,say12%,andrapidofftake.Theequityshouldbeprovided
without seeking management control. There should be reasonable contractual agreement
regardingvaluationandexitinlinewithinternationalpractices.
Private money from retail investors could be raised for such dedicated Equity Funds by
providingincometaxexemption.

MinistryofTextilesshouldplaninpartnershipwithStateGovernmentcreationofMegaTextile
ParkssoastobeabletoabsorbaboutUS$5bn.peryearoffreshinvestmentattheoutset.
Thiswouldenabletheachievementofexportgrowthof20%perannuminadditiontocatering
toincreasingdomesticdemand.

ItisrecommendedthatMegaTextileParksshouldbedevelopedintheplannedIndustrial
Corridors.
FromthenewMegaTextileParksthereshouldbeexpresswayconnectivitytothenearest
seaportandairport.
Textile parks should be provided direct supply of power through NTPC and other
generatingcompaniesthroughtheopenaccessdispensationundertheElectricityActto
providecheaperandreliablepowersupply.

Toachievethescaleandcompetitivenessrequiredforachievingtheambitiousgrowthtargets,
specialeffortsshouldbemadetoattractFDIintothesector.Specialattentionshouldbegiven
to high priority subsegments of fabrics, processing, garments, technical textile and textile
machinerymanufacturing.IndividualcountriesandfirmsshouldbetargetedforattractingFDI.
TailormadeSEZs/Textileparksmaybecreatedwithrequisitefacilitiestosuitrequirements
ofinternationalinvestors.

3.2 Skill,QualityandProductivity
3.2.1

3.2.2

3.2.3

3.2.4

3.2.5

3.2.6

3.2.7

Inordertoachievethesectorgrowthtargets,35millionskilledmanpowerwillberequiredby
202425. Initially training needs to be increased to generate the supply of about 1 million
trainedworkersannually.
Itisnecessarytoensurethatinthenext3years,theentirenewworkforceenteringthesector
is formally trained and certified. It is recommended that the existing skill development
initiativesthroughtheSectorSkillCouncilshouldbeappropriatelyscaledupinpartnership
withtheindustry.

Inordertopromoteskilldevelopmentinitiativesatcompanylevel,itisrecommendedthat
fee paid by textile and apparel sector companies to professional agencies for skill
developmentshouldbeeligiblefortaxrelief.

Quality and productivity improvement in the sector are of utmost importance for global
competitiveness. At present there is a lack of credible mechanism for assessing levels of
qualityandproductivityinsegmentsofthesupplychainaswellasinindividualenterprises.It
is,therefore,recommendedthatMinistryofTextilesshoulddevelopacrediblemechanismfor
assessingandtrackingimprovementsinqualityandproductivitylevelsinthesector.

In order to help individual enterprises to achieve zero defect production and improve
productivity levels, textile sector should be covered by a Ministry of Textiles run National
Manufacturing Competitiveness Programme. The key elements of NMCP are Lean
Manufacturing, ICT, Technology & Quality Upgradation, Entrepreneurial and Managerial
Development,DesignPromotion,QualityManagement,IPR,MarketingAssistance,etc.Given
thesizeandimportanceofthetextileindustryitwouldbebetteriftheMinistryofTextilesran
thisprogrammeandMinistryofMSMEcouldcoverrestofthemanufacturingsectors.This
programmeshouldtargettocoveralltheclustersinnext5yearssothatIndiansectorcomes
atparwithitsglobalcompetitorsincludingChinesesectorattheearliest.

Toensureinternationalstandardsofproductivityitisessentialthattheworkersintheindustry
inthenewMegaTextileParks,etc.shouldhavedecentaccommodationandthattoowithin
reasonable proximity of the work place. Workers accommodation has not received the
attentionitdeserves.Itis,therefore,recommendedthatworkerhousing/dormitoriesshould
beanintrinsicpartofdevelopmentofTextileParkswithaccommodationbeingeitherinside
theParkoratareasonabledistancewithappropriatetransportarrangements.

Inordertoprovideheathcovertotheworkforceofthesector,itisrecommendedthatthere
should be universal coverage of all textile workers and handicraft artisans under Rashtriya
SwasthyaBeemaYojana(RSBY)withinnext5years.

Domesticmanufacturingandconsequentavailabilityataffordablepricesofstateoftheart
textilemachineryisanessentialrequirementforcostandqualitycompetitiveness.Thiswould

10

ensurethesuccessinexportsthathasbeenenvisaged.Accordinglyitisnecessarytoputin
placemeasurestopromotemanufacturingofstateoftheartmachineryinthecountry.

3.2.7.1 In order to promote investment in textile machinery manufacturing it is

recommendedthatincentivesunderSchemeofHirePurchaseandTUFSinspecific
segmentsshouldbemadeavailableonlyonindigenousmachineryafterperiodof3
years.ThiswillgivesufficienttimeforinternationalandIndianinvestorstojoinhands
ormakeindependentinvestmentsformanufacturingmachinerywithinIndia.

3.2.7.2 AtpresentTUFSbenefitsarenotavailableforsecondhandmachineryexceptspecific
shuttlelesslooms.Inordertopromoteusageoflatesttechnologymachineriesand
promote machinery manufacturing investments it is recommended that import of
secondhandmachineryshouldnotbeencouragedexceptincaseofselecttechnical
textileandnonwovenmachinery.

3.2.7.3 Severalmachineriesandcomponentsrequiredfortechnologyupgradationneedtobe
imported as they are not made indigenously. Higher cost of such imported
machinery/components is one of the major deterrent factor for large scale
modernization of the sector. It is recommended that machinery/components not
manufactured in India like certain shuttleless looms, knitting machines, nonwoven
machines,etc.shouldbeidentifiedandtheirimportshouldbepermittedatzeroor
nominal rate of duty for a period of 3 years. After this timeframe, duty should be
raisedto15%.ThiswillfacilitateIndiansector toacquirenew, technicallysuperior
machinery at reasonable costs and also signal foreign machinery manufacturers to
investinIndia.

3.2.7.4 ExistingcustomstariffonTextilemachineryandcomponentsareinvertedinnature
importofcompletemachineryattracts5%basiccustomsdutyingeneralwhileraw
materialsandnumberofcomponentsattractanaveragedutyrateof7.5%andabove.
For promoting indigenization of machinery manufacturing, basic duty of complete
machinery should be at least 5% higher that on inputs. It is recommended that a
detailedexerciseshouldbecarriedouttoassesswhethertheimportdutyontheraw
materialneedstobedecreasedorimportdutyoncompletetextilemachineryneed
tobeincreasedtomaintainthisdifferential.

11

3.3 ReformingLabourLaws
3.3.1

Thepresentlabourlawsareoneofthemajorreasonsforthemodestsuccessinthelabour
intensivepartofthetextilevaluechaininthecountryespeciallyincomparisontoVietnam
andBangladeshaintherecentyears.
Inordertoattractlargescaleinvestments,acquireglobalscaleandbringtheIndiansectorat
parwithothercompetingcountries,thereisanimmediateneedtoreviewthelabourlawsto
maketheminvestorandlabourfriendly.Theregulatoryframeworkforlabourshouldbefully
incompliancewithIndiasILOobligations.Thisshouldbeseenasaprerequisiteforsustained
growthasapartoftheglobalsupplychains.
Ideallythe44labourlaws,mostofwhichweredraftedintheearlierpartofthelastcentury,
needtoberepealedandreplacedbyone,oratbestafew,userfriendlylaw(s)suitedtothe
conditionsofthe21stcentury.
Tillthishappens,thefollowingmeasurescouldbetakenimmediately:

3.3.1.1 Restriction on women from working in night shifts creates a lot of problems to
garmentmanufacturersaswomenconstitutemajorityofthegarmentworkforce.This
restriction on women to not work in night shifts should be removed subject to
satisfactorysafetyandsecurityarrangements.

3.3.1.2 Present labour laws do not encourage engagement of workforce on fixed term
employment. This restriction limits employment creation in organised sector as
manufacturers in organised sector become reluctant to take burden of permanent
workforceduringleanseason.Thisforcesworkerstoworkinunorganisedsectorin
substandard working condition. It is therefore recommended that fixed term
employmentshouldbeallowedinthesector.

3.3.1.3 Asperthecurrentlabourlaws,workersarenotallowedtoworkovertimeformore
than 50 hours in a calendar quarter, and total number of hours of work per week
including overtime should also not exceed 60. Due to this, manufacturers face
problemsincaseofbusinessemergencies/peakseason.Itisrecommendedthatsuch
cappingonovertimeworkingshouldberevised.

3.3.1.4 Unitsemployingover100 peoplecurrentlyfall underthepurviewof theIndustrial

Disputes Act, 1947. The act stipulates that employers must obtain necessary
approvals for layoffs. This proves to be a hindrance especially for medium sized
enterprises.ThereisneedtorelaxthenormsoftheIndustrialDisputesActbykeeping
unitsemployingupto500peopleoutsideitspurview.

3.3.1.5 Exports business is seasonal and contractual in nature. Excess labour during lean
periods or during initial stages of developing an export market(s), when order
uncertainty is high, can lead to financial difficulties. Hence, Export Oriented Units
should be given blanket exemption to allow contractual labour without any
restriction.

12

3.4 StructuralShiftwithincreasingValueAdditioninIndia
3.4.1

3.4.2

3.4.3

Indian garment sector is highly fragmented with low capacities and manufacturing
efficiencies.ToincreasegarmentexportsbyUS$1billion,approximately45,000additional
sewing machines and a manufacturing setup of approximately 4 million square feet area
wouldberequired.
InordertoacceleratetheemergenceofnewstartupsitisrecommendedthatconceptofPlug
& Play (flatted factories) should be implemented in partnership with State Governments.
InitiallyfourtofivepilotprojectsshouldbedevelopedandoperatedbySPVs.Basedonthe
experience,theSchemeshouldbefinetuned.Thereafter,itshouldberapidlyscaledupto
fullycatertoemergingandanticipateddemand.
The SPVs for this purpose should be notforprofit institutions which may get seed money
fromtheMinistryofTextilesaswasdoneearlierforDevelopmentAuthorities.Thesemaybe
providedlongtermdebtatfixedinterestratesasapplicableforthehousingsector.
TheSPVshould,withefficientmanagement,beabletogrowandcatertofulldemandashas
beenthecasewithsuccessfulDevelopmentAuthorities.TheSPVcouldalsochoosetooperate
inthePPPmodewhereprivatepartner(s)managethedevelopmentandrental/hirepurchase
/saleofthePlug&Playfacilities.

Toincreasecompetitivenessandacceleratethegrowthofexports,itisrecommendedthat
exportfinanceshouldbeprovidedat7%perannum.

TechnicalTextiles

3.4.3.1 Technicaltextilesisaknowledgebased,researchorientedsectorwhichissteadily
gaining groundin India.Topromotethissectoritisrecommendedthatsegment
specific approach may be adopted wherein a strategy is developed and
implementedtoincreaseproductionofhighprioritytechnicaltextileproducts.

3.4.3.2 It is recommended that Ministry of Textiles should coordinate with Government

organizations / bodies to promote their indigenous sourcing of technical textile
products.ExamplesofsuchorganizationsincludeArmedForces,ONGC,Railways,
etc.whicharelargepotentialendusersoftechnicaltextileproductslikeprotective
wear,geotextiles,etc.Itshouldbeendeavouredthatsuitableproductspecifications
shouldbeincludedintheirtendersandfromaprospectivedatetheyshouldonly
sourceindigenoustechnicaltextileproducts.

13

3.5 DiversificationofExportsintermsofProductsandMarkets
3.5.1

3.5.2

3.5.3

3.5.4

3.5.5

Thereareseveralfinishedgoodscategoriessuchassuits,womenswesternwear,intimate
wear,swimwear,outerwear,etc.whichhavemultibilliondollartradegloballybutIndiasshare
inthemisquitenominal.AlsothereareseverallargemarketslikeJapan,Russia,SouthKorea,
Switzerland, etc. in which Indias trade share is very low. To increase Indias share, it is
recommendedthatcountryspecificexportstrategiesshouldbedevelopedandimplemented.
Initially 4 5 major markets should be identified in which share of Indian exports can be
increased.Foreachmarket,professionalagenciesshouldbehiredfromthetargetcountryto
advice on the market specific strategy. While this may appear expensive, there is no real
alternativeforsuccessofthekindenvisaged.Implementationofrecommendationsforeach
market should be fully supported by Ministry of Textiles in partnership with industry. The
initiativeshouldsubsequentlybeextendedtocoverallmajormarketsby2020.

Topromoteexportsinnontraditionalproducts,5yeartaxholidayforcompaniesonexports
ofspecificfinishedgooditems(apparel,madeupsandtechnicaltextiles),designatedbythe
MinistryofTextiles,iftheirexportgrowthisover25%annually.

Presently,anumberofTradeExhibitions,BuyerSellerMeets,etc.areorganizedbyvarious
sector bodies and associations. But the scale of such events is limited by number of
participantsandsubsegmentsbeingaddressed.Itisrecommendedtoorganizeamegatrade
promotion event for the entire industry including manufacturers of textiles, apparel,
accessories, technical textiles, ancillary sector and textile machinery. That event should be
developed into a single most important event for international buyers to attend who are
lookingtosourcefromIndia.

IndiantextileandapparelsectorneedstobeshowcasedinternationallybypromotingBrand
India.

All export promotion schemes should be implemented by Ministry of Textiles which could
thenbeheldaccountableforresults.

14

3.6 PromotingInnovationandR&D
3.6.1

3.6.2

3.6.3

3.6.4

BusinessProcessInnovations

3.6.1.1 Togainglobalrecognition,itisrecommendedthatcreationofglobalbrandsshould
be supported by Ministry of Textiles financially. The Turkish model for helping
countrysbrandstoventureoverseasisagoodtemplate,whichcanbeadoptedwith
suitableadjustmentsandmodificationsonapilotbasistobeginwith.

3.6.1.2 Internationallyecommercehasemergedasaviableandefficientsystemofbusiness
transactions.Itisrecommendedthatactivecoordinationshouldbedonewithvarious
largeinternationalonlinemarketingplatformssuchaseBay,Amazon,etc.topromote
exportsofIndianproductsthroughthem.

3.6.1.3 ForeignDirectInvestmentpolicydoesnotallowanyFDIinIndianbrandsorretail.It
only allows FDI in a foreign brand/retail, which is owned and operated by an
international company. Building brands and expanding retail footprint is capital
intensive.ItisfeltthatpromotionofIndianbrandsinthedomesticmarketneedsto
be supported with success in dedicated retail stores for single and multiple Indian
brands.Thesebrandswouldthengettheconfidencetomoveoverseasaggressively.
AnIndianZaraneedstoemergeininternationalmarketsoverthenext5years.To
facilitatethisitisrecommendedthatFDIinsingleandmultibrandretailforIndian
apparelbrandsonlymaybepermittedintheautomaticroute.

InordertopromoteR&Datcompanylevel,itisrecommendedthatexpensesmadebytextile
andapparelsectorcompaniesforcontractR&Dshouldgetthesametaxbenefitsasisavailable
forinhouseR&D.

Thereisaneedtopromoteuseoftechnologiesandprocessesintextileandapparelsector
which reduce consumption of water, chemicals and energy. For this large scale awareness
creationattheuserlevelaboutsuchtechnologies,chemicals,systems,etc.isrecommended
along with technical and financial support to adopt them. Use of such sustainable, eco
friendly,biotechnologicaltoolsshouldbedevelopedasaUSPofIndianmanufacturingsector
sincebeinggreenaddstocompetitiveadvantage.ItisrecommendedthatIndiancompanies
shouldbesupportedtoacquirerelevantnationalandinternationalcertifications/normsfor
conformitytoenvironmentalstandards.

Despitebeingoneofthelargestconsumerbasesintheworld,thereisnostandardapparel
sizingsysteminthecountryspecifictoIndianconsumers.ApparelavailableinIndianmarket
todaymarketareeitherEuropeanorAmericansizewhichdonotfitbodysizeoftypicalIndian
person.Providingrightsizeandfittothemarketwillpromotedomesticdemandandsector
growth.Hence,itisrecommendedthatascientific,systematicanthropometricstudyofIndian
populationshouldbeundertakenfordevelopingastandardIndiansizingsystem.

15

3.6.5

3.6.6

Cotton
3.6.5.1 To improve cotton farm yield, adoption of improved irrigation and agriculture
practices should be promoted. International best practices to improve yields with
reductionintheinputsshouldbereviewedandadoptedinIndiancontext.Another
important step to be taken in this direction is the adoption of technique of high
densityplantation.

3.6.5.2 Presently,about1,0001,500varietiesofcottonseedsarebeingsoldinmarket.Each
typeofcottonseedhasitsownpropertieswhichresultsindifficultiesinfibregrading
andtestingandqualityinconsistenciesatmilllevel.Toimprovefibrehomogeneity,it
isrecommendedthatrestrictionbeplacedonnumberofcottonseedvarieties.Any
newdevelopmentsinseedtechnologyshouldbeadoptedbyprocessofreplacement
andnotbyaddition.

3.6.5.3 AnydevelopmentinfieldofproductionofnichecottonvarietiesforexampleOrganic
CottonorColouredCottonshouldbepromotedtotaptheirfullmarketpotential.

3.6.5.4 A system of third party cotton certification system at ginning level should be
implemented to standardize and benchmark cotton so that units following good
practicesandpackingstandardqualitygetbetterprices.Widespreadrecognitionof
suchsystemwillcreateaneedatpickingandginningleveltomodernizebyinvesting
inmechanizedpicking,warehousing,etc.
Jute
3.6.6.1 Juteyieldhashardlychangedovertheyears.Inordertoprovidecompetitivereturns
to the farmers it is imperative to increase productivity in raw jute. Due to non
availabilityofadequatequantityofcertifiedseeds,largequantitiesofspuriousseeds
areinuse.Hence,thereshouldbeadirectgovernmentinterventioninproductionand
distributionofcertifiedjuteseedstoensure100%utilisationofcertifiedseeds.

3.6.6.2 QualityofJutefibreisdependentlargelyonthecaregivenduringrettingprocess.In
absenceofcleanflowingwater,rettingisdoneinstagnantwaterinditchesandponds
wherewaterisusedforrepeatedretting.Thisresultsinfibreofinferiorstrengthand
darker colour. Alternative retting methods which are developed by various jute
researchinstitutesareyettobecommercializedandgainacceptancebyfarmers.Itis
recommended that pilot projects should be setup in jute producing areas in CFC
modedeployingasuitablerettingtechnologytoshowcasebenefitstolargenumber
ofjutegrowers.

3.6.6.3 Jutemillsarenotveryforthcominginmakinginvestmentstoreplaceoldequipment
withmodernenergysavingequipmentbecauseofriskofnonrealizationofenergy
savingsandalsobecauseoflimitedfundavailability.Toovercomethischallenge,itis
recommended that Energy Services Company (ESCO) concept should be promoted
andimplementedinJutemills.

16

3.6.7

3.6.8

3.6.6.4 NewproductdesignanddevelopmentisanurgentrequirementfortheJutesectorin
ordertoreduceitsdependenceonlowvalueaddedproductsofsackingandhessian.
For this it is recommended that design institutes such as NID and NIFT should be
engagedforjuteproductanddesigndevelopmentprojects.

3.6.6.5 InabsenceofLifeCycleAnalysisandDisposalProtocolsforJute,itsmarketentryin
several international markets has been hindered. It is recommended that an
internationallyrecognisedresearchagencyshouldbeappointedtoconductLifeCycle
AnalysisofJuteanddevelopDisposalProtocolsinlinewithrequirementsofvarious
markets.

3.6.6.6 EcolabellingofJuteproductsisnecessarytopositionthemasenvironmentfriendly
productswhichareacceptableindevelopedcountries.Itisrecommendedtoprovide
subsidyforgettingecolabelcertificationforJuteproducts.

TechnicalTextiles

3.6.7.1 Absence of welldefined standards and certifications, and lack of regulatory

framework toimplement/enforce technical textileusageincertainareasaretwo
issues which has restricted consumption of technical textile products in India. It is
therefore recommended that regulatory mechanism including standardization and
certification of technical textile products at par with global standards should be
implementedandenforcedinclosecoordinationwiththecompetentauthorities.

3.6.7.2 Developmentofinnovativetechnologies,products,processesandapplicationsholds
thekeyforgrowthoftechnicaltextilessector.R&Deffortssupportedbyindustrywill
encourageinnovationcapabilitiesandbringhighriskinnovationstothemarket.Itis
recommendedtopromoteindustrycollaborationwithvariousinstituteslikeCSIR,IITs,
etc.forundertakingR&Dinthesector.

Textile machinery sector is dependent on research and development for its survival and
prosperity.InIndiaatpresentthereareselectfewcentresundertakingtextilemachineryR&D
activity.Inordertopromoteindigenizationoftechnology,itisrecommendedtoincentivize
R&Dactivityfordevelopmentofnew/upgradedmachinery.

17

3.6.9

UseofITTools

3.6.9.1 For benefit of farmers, mobile applications providing information related to

agricultureandirrigationtechniques,seedinformation,supportschemes,prevailing
weatherandsoilconditions,marketinformation,etc.shouldbedevelopedinlocal
languages in association with Ministry of Agriculture and State Governments. Each
type of fibre in a State should be covered by a different application to maintain
simplicityandeaseofoperations.

3.6.9.2 It is recommended that Ministry of Textiles and its related offices / bodies should
develop mobile applications in local languages for providing extension services to
MSMEsacrossthevaluechainfarmers,weavers,artisans,garmentmanufacturers,
knitters, etc. Each sector should be covered by a different application to maintain
simplicity and ease of operations. This should be supported by a call centre which
shouldbeoperatedinlocallanguages.

3.7 NewApproachtowardsHandloomandHandicrafts
Tobesubmittedlater

18

3.8 PartnershipwithStateGovernment,and
ReengineeringofExistingSchemesandPolicies
3.8.1

SchemeforIntegratedTextileParks(SITP)

3.8.1.1 For the success of SITP, involvement of the State Government is required for
facilitatingassemblyoflandandotherclearances.Further,theexistingmodeldoes
notprovidefordevelopmentandavailabilityofworkspacefornewentrantsafterthe
formationoftheSPV.Workspacesshouldbeavailableofftheshelfondemand.This
is essential for achieving the high growth rates targeted. It is, therefore,
recommendedthattheSchemebemodifiedandimplementedinthefollowingthree
modes:
a. SPVformedbytheentrepreneursorindustryassociations(asallowedcurrently
intheScheme)
b. A notforprofit SPV formed by the State Government through any of its
institutionsfordevelopmentoftheTextilePark.
c. A notforprofit SPV formed by State Government which operates in a PPP
mode.
The last two SPV options will be the major ones to implement Plug & Play and
WorkersHousingprogrammes.
3.8.1.2 Todeveloplarge,worldclassmanufacturing infrastructure,developmentofMega
Parkswithlargeareas,ideally1,000acresormoreisrecommended.SITPshouldbe
modified to also promote development of Mega Textile Parks of 1,000 acres and
above.Forthisthereshouldbenofinancialceilingonassistancewhichshouldbe
linkedtotheareadeveloped.

3.8.1.3 InNPVterms,anycapitalsubsidycanbemadeequivalenttoaninterestsubsidy.In
order to permit limited budgetary outlays to support much larger programme of
developmentoftextileparksincludingmegatextileparks,itisrecommendthatthe
scheme may be modified to convert the existing capital subsidy provision to an
interestsubsidyprovisionwithsameNPVeffect.TheMinistryofTextilesshouldalso
workwithDepartmentofFinancialServicestoprovideLongtermfixedinterestrate
financingfortheseSPVs.Thelongerthetenureoftheloan,lowerwillbetheoutgo
oninterestsubsidyannuallyandhencewiththesamebudgetaryprovisionaneven
largerprogrammecanbesupported.

3.8.1.4 Indianmanufacturingcapacitiesacrosstextilevaluechainarenotproportionate.To
stimulateinvestmentsacrossthechain,themebasedintegratedtextileparksshould
beencouragede.g.DenimPark,IntimateWearPark,NonwovensPark,HomeDcor
Park, etc. Such parks should be selfsufficient to manufacture all the key
requirementswhiletheoutputshouldbefinishedgoodsonlyi.e.garments,home
textilesortechnicaltextiles.

19

3.8.2

TechnologyUpgradationFundScheme(TUFS)

3.8.2.1 TUFSwasdesignedtoincentivizeinvestmentsbyloweringtheeffectiveinterestrates
throughinterestsubsidy.However,delayinreimbursementcausescompaniestopay
higherinterestratesfortheperiodduringwhichreimbursementisbeingprocessed.
This need not be the case. The implementation mechanism of TUFS should be
reengineeredwithFIs,sothattheborrowergetstheeffectiveratefromtheoutset
andtheFIstakereimbursementfromtheMinistryfortheinterestsubsidyinvolved.

3.8.2.2 Credit available to the sector through banks usually has a repayment period
consistingof2yearsofmoratoriumand5yearsofrepayment.However,thelifeof
plant and machinery extends much beyond this term sometimes more than 20
yearseven.Shorterrepaymentperiodputsconsiderablepressureonthebusinessin
formofhigherannualrepaymentcosts.Inordertoreducerepaymentpressureon
businesses,itisrecommendedthatloanrepaymentperiodshouldbeextendedto2
years of moratorium and 7 years of repayment. The Ministry of Textiles should
coordinatewithDepartmentofFinancialServicestogetthebankingsystemtoagree
tothischange.

3.8.2.3 Alargenumberoflowend,plainpowerloomunitsdonotfinditfeasibletoupgrade
straightawaytoautolooms,whichisminimumbenchmarkunderTUFS.Tosupport
suchunits,GovernmentprovidesfinancialassistanceforupgradationunderInSitu
UpgradationofPlainPowerloomscheme.Itisrecommendedthatthereshouldalso
beaprovisionforRapierDriveKitforconvertingexistingplainlooms/semiauto
loomsintorapiershuttlelessloomforwhichassistanceshouldbeincreasedtoRs.
35,000perloomi.e.,50%oftheestimatedcostofUpgradation.

3.8.2.4 Government has extended additional benefit for installation of hightech weaving
machines. It is recommended that weaving preparatory and knitting machines
should also be benchmarked for similar benefits under TUFS as available for new
shuttlelesslooms.

3.8.2.5 For installation of hightech machinery for manufacturing silk and woollen items,
additional financial assistance in form of 10% capital subsidy (in addition to 5%
interest reimbursement) should be provided under TUFS on imported machinery
whicharenotmanufacturedinIndia.

3.8.2.6 Group Workshed Scheme provides support to weavers for construction of work
sheds for installation of shuttles looms in existing or new clusters. Support for
establishing large scale worksheds is now also made available under the new
schemeofHirePurchaseschemeunderTUFSwhichwaslaunchedon4.10.2013.Itis
recommendedthatGroupWorkshedSchemeshouldbemergedwithHirepurchase
schemeunderTUFS.

20

3.8.2.7 ModernizationofGinningandPressingunitswasearliercoveredunderTechnology
MissiononCotton(TMC)whereinfinancialassistancewasmadeavailabletothem.
InordertosupportmodernizationatginningandpressinglevelbeyondTMC,itis
recommended that ginning and pressing units should be brought under ambit of
TUFS.

IntegratedProcessingDevelopmentScheme(IPDS)

3.8.3.1 TheprocessingsectorinIndiahascomplexchallenges.Itisrecommendedthat3or
4pilotprojectsshouldbeattemptedinpartnershipwiththeStateGovernmentsin
identifiedclusterstoevolveaworkablemodel.Provisionoflongtermloanfor30
yearswithfixedinterestrateof7%withinterestsubsidywouldhelpingeneratinga
sustainable business model. A suitable PPP model would need to be evolved in
partnershipwiththeStateGovernment.

3.8.3

3.8.4

3.8.5

3.8.3.2 Newlargescaleprocessingunitscomingupshouldbeencouragedtobeestablished
closertocoastlinehavingETPswithMarineOutfall.

ToenhancetheattractivenessofSEZpolicyitisrecommendedthat:

3.8.4.1 Units in SEZs should be permitted to disposeoff seconds and rejects by paying
nominalduty.Therateofdutycanbefixedtoapercentagebasedonthestudydone
byorganizationslikeTextileCommittee,TRAs,EPCs,etc.

3.8.4.2 UnitsinSEZsshouldbepermittedtoutilizetheirsurpluscapacitiestodojobworkfor
DTAunits.

3.8.4.3 UseofunderutilizedcommonfacilitiescreatedinSEZsbasedtextileparksshouldbe
allowedbytheunitslocatedinDTA.Thiswillaugmentfiscalbenefitsaccruingfrom
utilizationofcreatedassets.

MinimumSupportPrice(MSP)Operations:

3.8.5.1 Currentsystemofdeclaring MSPfor twocotton typesneeds to berevisedtohelp

cottonproducersrealisefairpricefortheirhighqualityproduce.MinistryofTextile
shouldtakeupwiththeMinistryofAgriculturetodeclareMSPforall5typesofcotton
varietiesviz.shortstaple,medium,mediumlong,longandextralongstaplelength.

3.8.5.2 Tussarsilkhasagoodmarketpotentialwhichneedstobetappedthroughincreased
production.Theproductioncanbeincreased,especiallyinNorthEasternregionand
tribal regions in Central India through a price support mechanism. It is hence
recommendedthatMinimumSupportPrice(MSP)mustbedeclaredforTussarsilk.

21

3.8.6

Alargepartofsectorworkforceisofmigratorynature.Workersfromvariousstatessuchas
Bihar, Orissa, West Bengal, Chhattisgarh, Uttar Pradesh etc. migrate to work in textile/
garmentclustersacrossIndia.Itisrecommendedthatapparelparksbepromotedinthese
statesinpartnershipwiththestategovernments.

3.8.7 To promote fabric production not only modern weaving factories but modern knitting
factoriesshouldalsobeencouragedasknittingsectorplaysanequallyimportantrole.Hence,
itisrecommendedthatknittingsectorshouldbeconsideredatparwithweaving/powerloom
sectorforfinancialassistanceunderallavailableschemesoftheMinistryofTextiles.

3.8.8 Indianmanufacturingofgarmentaccessoriesatpresentislimitedbothintermsofvarietyand
quantum.AsaresultsignificantquantityofgarmentaccessorieslikeVelcro,zips,interlinings,
etc. is imported into the country, specifically by garment exporters. In order to promote
indigenous manufacturing of garment accessories for import substitution and to promote
garment exports from the country, it is recommended that garment accessories
manufacturing should be considered at par with garment sector for assistance under all
schemesincludingTUFS.

3.8.9 ThereareseveraltextileandgarmentinputswhicharenotmadeinIndiae.g.specialtyfibres,
chemicals, specialty fabrics, trims, accessories, etc. These products can be imported under
advancelicensingmechanism(forexportorders)whereinaspecifiedamountofinputscanbe
imported duty free based on established Input/output norms. But with changing fashion,
functionalapplication,andotherbuyerrequirements,needofsuchinputmaterialschanges
frequentlyforsamelevelofoutput.Forexampleagarmentmayneedextratrimsasperdesign
orafabricmayneedextrachemicaltomeetmorestringentfinishqualityrequirement.Hence,
itisrecommendedthatcurrentinput/outputnormsshouldbereviewedandshouldbemade
moreflexiblewhereindeviationfromstandardnormsshouldbeapprovedonbycompetent
authority.

3.8.10 For promotion of Silk and its products in domestic and international markets, the current
schemesinplaceforitsbrandingshouldbescaledup.

3.8.11 PresentlygarmentsaresubjecttoprovisionsofStandardWeightsandMeasurementActas
wellasthePackagedCommodityRules.UndertheAct,apackagedcommodityisdefinedas
onewhichissecurelypackedandcannotberemovedfromthepackageevenatthetimeof
sale.Garmentsontheotherhandarefrequentlyremovedfromtheirpackagebypotential
customerstotryandfeeltheproductbeforemakingapurchasedecision.Inseveralstores,
garmentsarealsodisplayedinopenformtoattractcustomersandhelpthemchooseeasily.
ProvisionsoflabelmarkingundertheActlikeLengthofgarment;Count,etc.alsodonothave
muchrelevance.Tosimplifythetradeandsalesystems,itisrecommendedthatMinistryof
TextilesshouldtakeupthematterwithMinistryofConsumerAffairstoremoveGarments
fromambitofPackagedCommodityAct.

22

3.8.12 Cotton Advisory Boards (CAB) main role is to finalize balance sheet of cotton production,
consumptionandstocks.Someindustrysegmentshaveraisedissueofauthenticityofdata
whichisbeingcollectedandpublishedsincesomestatestakesinglecropwhilesometake
double/triplecropduetobetterirrigationfacilities,whichmakesitdifficulttoarriveoncorrect
production statistics. It is recommended that process for gathering / finalizing production,
consumption,export,importandstockdataofcottonshouldbereviewedandfinetunedin
coordinationwithallsectorstakeholderstoaddresssuchissues.Also,roleofCABshouldbe
expandedandempoweredsothatitmayactasanadvisorybodyforuseofseed,farming
practices,R&Dapartfromfinalizingthecottonbalancesheet.Maximumnumbersofmembers
maybekeptupto20(twenty),whichshouldbefromrelateddepartmentsofCentral/State
Governmentsandindustryrepresentatives/experts.

3.8.13 Cotton Corporation of India (CCI) should be empowered to play a proactive role in cotton
sector,besidesdoingMSPoperations.ItisrecommendedthatroleofCCImayberedefined
tofunctionasbusinesstradinghouse/bodyforprocurementofcottonandsaletoindustry
oncommerciallinesoperatingatarmslengthpolicy.However,suchroleshouldnotbeatthe
costofaffectingpricestabilityinmarket.CCIinassociationwiththeIndustryassociationsmay
carryoutR&D/trialsonpilotbasisforincreasingtheproduction,improvementofquality,
demonstrationofbestpracticesforreducingthecontaminationofcotton,developingnew
varietiesofcotton,etc.

3.8.14 National Institute of Fashion Technology came into being in 1986, with a vision to fulfil a
growingneedforprofessionalsspecialisedinthefieldoffashion.SinceitsinceptionNIFThas
emergedasaprominentleaderinthefieldofprofessionaleducation,deftlycombiningdesign
withmanagementandtechnology.Inordertosupportyoungdesigners/entrepreneursfrom
thisinstitute,itisrecommendedthateachNIFTshouldhaveaPlug&Playincubatorcentre
forassistancetostartupswith100%equitysupport.

3.8.15 Cotton

3.8.15.1 CottonarrivalinIndiastartsfromthemonthofOctober.About75%ofthetotal
croparrivesinthemarketduring5monthsi.e.NovembertoMarch.Thismakes
it necessary for spinning mills to buy and stock cotton during the peak arrival
seasonorfacepricefluctuationandqualityinconsistencyduringlateron.Buying
atstartoftheseasonalsoenablesspinnerstobooklargerorderswithalonger
horizon as they have firm fibre cost and quality. Presently banking norms for
cottonworkingcapitalloanisamaximumof4months,thattooinselectivecases.
Inordertosupportspinningunitstomanageintrayearpricevolatility,working
capitalcreditperiodbanknormsforcottonshouldrevisedto9months.Jutefibre
arrivalisalsoinlinessimilartocotton.ForJute,itisrecommendedthatworking
capitalcreditperiodbanknormsshouldbemade3months.Themattershould
betakenupwithRBIforissuanceofanadvisorytotheallcommercialbanksin
thisdirection.

23

3.8.15.2

InFY201011,restrictionswereplacedoncottonexportsforabriefperiodof
timeonpremiseofincreasingfibreavailabilityforIndianspinners.SinceIndiais
thesecondlargestproduceraswellasexporterofcotton,thedecisionresulted
inglobaldemandsupplygapincreasingfibreandyarnpricesinanunbalanced
manner.IncreaseincottonpricesatgloballevelgotreflectedinIndianpricesas
well,albeittoalesserextent.Duringthesametime,capwasalsoplacedonyarn
exportonpremiseofincreasingyarnavailabilityforIndianfabricsector.Inthis
scenario, even when international yarn prices were high, spinners could not
increasetheirproductionforexports.Theexportordersinsteadwenttoother
competing countries. In order to be a world player with predictable policy
framework,liberaltradingregimeforcottonfibreaswellascottonyarnwithno
restrictiononexportsorimportsneedstobecontinued.

3.8.16 Jute

3.8.16.1 Jute Packaging Material (Compulsory Use in Packaging Commodities) Act was
enactedin1987.ThisActhasbeendilutedtoalargeextentinrecenttime.EC
recommendsthatthereshouldbeasunsetclauseforthisActwhereinitshould
bephasedoutinaperiodof5yearsassustenanceofasectorshouldnotdepend
onanActforlong.However,itisimportanttoacknowledgethefactthatlakhsof
farmersandindustrialworkersareemployedinJutesector.Henceitsdilutionand
final withdrawal should be linked to modernization of the sector and
development of market for alternative products. It is recommended that
Government should liberally fund initiatives in this direction. Some of such
initiativescouldbe:
a) Higherexportpromotionincentivesforjuteproducts.
b) MarketdevelopmentinitiativesforpromisingJuteDiversifiedProductssuchas
JuteGeotextiles,shoppingbags,etc.bothinIndiaandinternationallyatlarge
scale.
c) Product, process and design development to create new products or new
applications.
d) CapitalsubsidytoJutemillsfortechnologyupgradation
e) FinancialsupporttoJutemillsfortechnologyupgradationandworkingcapital
requirementbymeansoffacilitatingcreditavailabilityatviablerates.
f) Financialassistanceforindigenousjutemachinerymanufacturing
g) Exportpromotionactivitiesincludingremovaloftariffandnontariffbarriers
inmajorinternationalmarkets,etc.

3.8.16.2 Traditionalproductslikesackingandhessianwhicharelowvalueaddedproducts
constitutebulkofthesectorproduction,whereasproductionbaseofvalueadded,
Jute Diversified Products (JDP) is not very strong. To support growth of value
addedmanufacturinginJutesegment,itisrecommendedthatJDPmanufacturing
shouldbeconsideredatparwithgarmentsectorforassistanceunderallcentral
schemesincludingHirepurchaseschemeunderTUFS.

24