The industry has welcomed the move by the government led by Narendra Modi to extend support to the made-ups export industry and said it would help the sector break out of its current slump.
The cabinet had yesterday included the made-ups sector in the Rs 6,000-cr apparel package unveiled in June this year.
Made-ups include bed linen, kitchen linen, table linen and toilet linen categories and are considered neither textiles nor finished garments. The global made-ups market size currently is around US $ 40 billion and India accounts around 13% (around US $ 7 billion). India’s total goods exports is about $300 bln.
The move is expected to boost employment generation and exports in the made-ups sector that has been facing challenges in the international market due to high costs of production, non-refund of state levies, and high tariff barrier when compared to the competing nations such as Pakistan, Vietnam, etc.
Though there was an element of value addition and high levels of employment generation from this sector, it was often excluded from the sops and support given to the fabrics segment.
The aim of the government is to create direct and indirect employment of upto 11 lakh persons over the next three years in the made-ups sector.
According to the Southern India Mills’ Association, made-ups sector generates the largest employment for a given investment at over 120 jobs per Rs 1 one crore investment, especially to the rural women. Such mills are mostly located in rural areas of Karnataka and Tamil Nadu.
However, of late, the segment has been stagnating due to various reasons including discriminatory tariffs against Indian goods in countries such as China.
In the European Union, for example, Indian made-ups attract 9.6% duty while those from Pakistan, Bangladesh, Vietnam and Cambodia enjoy zero duty due to trade agreements.
In China, the duty is 14% for Indian made-ups while Pakistan, Vietnam and Cambodia have zero duty.
In Canada, India has 17.5% while Bangladesh and Cambodia have zero duty.
“Therefore, there was marginal growth in the made-ups segment that consumes woven fabric and therefore the handloom, Powerloom and spinning segment had a stagnated growth in the domestic market,” said SIMA.
Other key reasons include non-refund of state levies and increased costs of production
About 45% of India’s made-ups exports are destined for the US, followed by UAE with 9%, UK with 5.5% and Germany 5.1% share.
Senthilkumar, Chairman, The Southern India Mills’ Association said the latest policy intervention would greatly help the made-ups segment to improve its global competitiveness in the global market.
As a knock-on effect, it would also create more demand for fabrics, yarns and fibres in the domestic market and thereby help the down sectors that have been suffering due to excess production capacity to a certain extent.
In June 2016, the Union Cabinet Committee announced a Special Apparel Export package including enhanced duty drawback rates to refund state levies, duty drawback for garments produced out of fabric imported under special advance license authorisation scheme, 10% additional Technology Upgradation capital subsidy benefit, 3.67% EPF benefit, optional PF benefit, permitting over time upto 100 hours, flexible labour employment provision, etc.
“But the made-ups segment that has similar manufacturing activities with mostly indigenous raw materials /inputs especially waste cotton, create much higher value addition and employment generation, etc., was left out,” SIMA said.