'We are looking at diversifying our mkt to other countries'

The government recently announced a Rs 6,000 crore package for three years to revive India’s textile sector and make an aggressive entry in the international market to occupy the space vacated by China.

Along with it, the government also came out with labour law reforms in the sector, tax benefits to exporters and income tax relief to domestic garment industry that is reeling under seasonal employment syndrome. To understand the nitty grittiest of the policy, Deccan Herald’s Annapurna Singh caught up with Textile Secretary Rashmi Verma. Excerpts:

Fixed-term employment seems to be a revolutionary idea. How will it help the textile sector?

Indian garment manufacturers cater to international market basically for two seasons only – summer and spring. In winter, there is requirement of wollen garments, so we are not catering to that season.

Therefore, the garmenting industry here is very seasonal in nature and workers get employment for 6-7 months maximum. In absence of the provision of fixed-term employment, the garment manufacturers hire workers only as casual workers.

These workers do not get all benefits enjoyed by the permanent workers. Through the provision of fixed-term employment, the workers even if employed on a casual basis, will get all the benefits of a regular employee.

Are logistics and labour costs impacting the textile industry?

 Very much. Garmenting is one industry where shipments have to reach on time. The orders are issued based on festivals and special occasions. Say, if the consignment has to be delivered 15 days in advance for Father’s Day, and it gets delayed, then it is of no use. The consignment is returned.

Then, the products value gets depleted and the industry has to do distress selling, say one-tenth of the price of the product. That creates a lot of problem for the garmenting industry. So, along with the ‘ease of doing business’, we are also trying to ensure that the logistics are corrected for timely delivery to any part of the world.

But there is very little that the textile ministry can do for correcting the logistics?

We are taking it up with the transport ministry, ministry of shipping and all other infrastructure related ministries for reduction in time taken for shipments.

We have also spoken to the revenue department to expedite customs clearances. We are getting good response.

There is a lot of focus on exports but what is there in the policy for domestic textile industry?

We have announced Rs 6,000 crore worth of incentives. There are lot of tax corrections and tax subsidies. The labour law reforms, income tax rebate under 80JJAA.

The reforms announced under employee provident fund – all of these is going to enhace the working condition of people employed in the textile sector.

With India’s traditional trading partners like United States and European Union still in a slowdown mode, what are the alternative markets are you looking at?

We are looking at diversifying our market to other countries than these two. We are currently engaged with South America and getting good response from there. West Asian, Middle East and CIS countries are also on our radar. A lot of space was occupied by China as far as Russian exports were concerned. Now, with China vacating that space, we are aiming to capture that.

How about India’s as high as 9% export duty vis-a-vis textile trade?

That duty is only for US and EU countries. The EU is our largest trading destination. Once Free Trade Agreement (FTA) is signed with EU, there will be no tariff. But that will take time. That is another handicap with which our exporters are working, so we have announced some concessions like duty drawback at state-level. We want to expedite the FTA with EU, and are in talks with the Commerce Ministry.

Brexit will impact our textile trade?

UK is not a very significant market for textiles, so not much difference will be there because of Brexit.

What are the PF incentives for the garmet sector?

Two things in PF. In EPFO (employees’ provident fund organisation), there are two types of contributions. One from employee and the other from employer. This is 12% each. What textile ministry has done for the garmenting industry is that it has agreed to give entire 12% contribution for the new employees in the garment sector.

This is to incentivise the employees and also to encourage more people to join the garment sector. Another thing is that we have made it optional for employees to contribute in the PF. Most of them with a salary of Rs 10,000 per month, do not get spare money to contribute.