Indian Textile and Leather Industries Seek Government Support to Sustain Growth Momentum
India’s textile and leather industries, vital contributors to the nation’s economy and employment, are urging the government for continued policy support to navigate evolving global challenges and maintain their competitive edge. Recent appeals from industry bodies highlight the need for fiscal adjustments, technological upgrades, and streamlined import regulations to bolster domestic manufacturing and sustain growth over the next five years. https://economictimes.indiatimes.com/industry/indus-try-verticals/textiles/textile-industry-seeks-gst-cut-on-machinery-tech-upgrade-scheme-for-micro-units/articleshow/105115637.cms
The Textile Industry’s Plea: Lowering Costs and Embracing technology
The Apparel Export Promotion Council (AEPC),representing a meaningful portion of India’s apparel exporters,has specifically requested a reduction in Goods and Services Tax (GST) rates levied on textile machinery. This request stems from the understanding that high GST rates increase the capital expenditure for textile manufacturers, particularly impacting smaller units striving for modernization. Currently, GST on textile machinery varies depending on the type, but generally falls within the 12-18% bracket. https://www.gst.gov.in/
A lower GST rate would directly translate to reduced production costs, enabling Indian textile companies to offer more competitive pricing in the international market. This is particularly crucial as India aims to capitalize on the growing global demand for textiles and apparel, fueled by factors like supply chain diversification away from China and rising consumer spending in key markets.
Beyond GST reduction,the AEPC has also proposed a new technology upgradation scheme specifically tailored for micro-units within the textile sector.These smaller enterprises often lack the financial resources to invest in advanced technologies that enhance productivity, improve quality, and reduce environmental impact. A dedicated scheme, perhaps offering subsidies or low-interest loans, would empower these units to adopt modern machinery and processes, fostering a more inclusive and sustainable growth trajectory for the industry. The Textile Committee of India already runs schemes like the Technology Upgradation Fund Scheme (TUFS), but industry representatives argue a focused program for micro-units is essential.https://www.textilecommittee.nic.in/
Leather Industry Concerns: Restoring Import Duty Exemptions
The council for Leather Exports (CLE) has voiced concerns regarding the import of raw materials, specifically bovine crust and finished leathers. Thay are advocating for the reinstatement of basic customs duty (BCD) exemption on these imports. Bovine crust, a semi-finished leather derived from cattle hides, is a critical input for the Indian leather industry, used in the production of shoes, garments, and leather goods. Finished leathers, representing a more processed stage, are also imported to meet specific quality and design requirements.
The removal of the BCD exemption, implemented previously, has increased the cost of raw material procurement for Indian leather manufacturers. This has put them at a disadvantage compared to competitors in countries where access to duty-free raw materials remains available. India’s leather industry is a significant exporter, contributing substantially to the country’s foreign exchange earnings. Maintaining its competitiveness requires ensuring a stable and affordable supply of high-quality raw materials.
The CLE argues that reinstating the BCD exemption will not only lower production costs but also encourage greater value addition within India. By having access to competitively priced raw materials, Indian manufacturers can focus on producing higher-end leather products for both domestic and international markets, thereby boosting exports and creating employment opportunities. The Indian leather industry is particularly focused on sustainable practices and traceability, aiming to meet the growing demand for ethically sourced products. https://www.cleindia.net/
The broader Context: Government Initiatives and Global Trends
These requests from the textile and leather industries align with the Indian government’s broader ‘Make in India’ initiative, aimed at fostering domestic manufacturing and reducing reliance on imports. The government has already implemented several measures to support these sectors, including production-linked incentive (PLI) schemes for textiles and leather products. https://piib.gov.in/
However, industry representatives emphasize that continued and targeted support is crucial to navigate the evolving global landscape. Factors such as rising raw material prices, geopolitical uncertainties, and increasing competition from other manufacturing hubs pose significant challenges. Furthermore,the growing emphasis on sustainability and ethical sourcing requires Indian manufacturers to invest in eco-friendly technologies and responsible production practices.
The global textile and leather industries are undergoing a period of significant transformation