VISION, STRATEGY VISION, STRATEGY

AND ACTION PLAN AND ACTION PLAN

FOR FOR

INDIAN TEXTILE INDIAN TEXTILE

AND AND

APPAREL SECTOR APPAREL SECTOR

VISION, STRATEGY

AND ACTION PLAN

FOR

INDIAN TEXTILE

AND

APPAREL SECTOR

Submitted by the Expert Committee

to Ministry of Textiles

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Contents1. Vision202425................................................................................................................................32. Strategy...........................................................................................................................................43. ActionPlan......................................................................................................................................8

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1. Vision202425Overthe last10years,Indiastextileandapparelexportshavegrownattherateof11%.Afterthephasing 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 exportgrowthrateof30%whileBangladeshcouldachieveagrowthrateof18%.There isnoreasonwhy India,provided ittakesthenecessarysteps,cannotachieve20%growth inexportsoverthenextdecade.Inthedomesticmarket,sustaininganannualgrowthrateof12%shouldnotbedifficult.Thisimpliesthatwitha12%CAGRindomesticsalestheindustryshouldreachaproductionlevelofUS$350billionby202425fromthecurrentlevelofaboutUS$100billionforthedomesticmarket.Witha20%CAGRinexportsIndiawouldbeexportingaboutUS$300billionoftextileandapparelby202425.Indiashouldbythenhaveamarketshareof20%oftheglobaltextileandappareltradefromthepresentlevelof5%.DuringthisperiodIndiashouldattemptastructuraltransformationwherebyitexportsonlyfinishedproducts.Thiswouldimplythatgrowthratesinexportsoffibreandyarnstartdecliningandgrowthratesofapparel,homesfurnishing,technicaltextilesandotherfinishedproductsshouldgrowveryrapidly.Thiswouldmaximiseemploymentgenerationandvaluecreationwithinthecountry.Intheprocess,investmentofaboutUS$120billionwouldtakeplaceandabout35millionadditionaljobswouldgetcreated.

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2. StrategyAchievingtheambitiousVisionofexportsofUS$300billionand20%shareofglobaltradeby202425isnotgoingtobeeasy.Itisunlikelywithbusinessasusualapproach.AclearStrategywhichcanbeimplementedandwouldenablesuccesswouldbeanessentialprerequisite.Accordingly,thefollowing10pointStrategyissuggestedforadoption.2.1 AchievingScaleacrosstheValueChainIntheIndiantextileandapparelsector,thesubsectorsofweaving,processingandgarmentingarefragmentedandlackingintherequisitescaleforsuccessinglobalmarkets.Mostofthemanufacturingunitshavesmallcapacitiesandlowmanufacturingefficiencieswhichareadisadvantageintheglobalarena.Tobringthematparwithglobalcounterpartsthereisaneedtofacilitaterapidgrowthandmodernizationofexistingfirmswithpotentialforsuccess.In addition, it would be necessary to attract large scale investment to establish world classmanufacturingsetupsateach levelofthevaluechain.Theadventof largemanufacturingsetupswhichwillbeabletorealizeeconomiesofscalewillhelpIndiainachievingglobalcompetency.Largescale capacity additionswill enable India to achieve the targetsofhigher global trade share andgeneratesignificantemploymentopportunitiesinthesector.2.2 AttractInvestmentintotheSectorThe sector needs to be made attractive enough for investors. Its needs to get US$ 120 billioninvestmentforachievingthesizeofUS$650billionby202425.Thisisaformidablechallenge.Thekeytogettinginvestmentsonthisscaleisforreturnsoninvestmentstoappearattractiveenough.Investmentsneedtobeadequatelyincentivised.Theessentialprerequisitesforgettinginvestmentsonthescalerequiredwouldbereadyavailabilityofdeveloped landwithadequate infrastructure,skilledmanpowerandeasyconnectivity toports.Creatingnewmegatextileparkswouldbethewayforward.Loweringthecostofproductionaswellasthecostoflogisticswouldbeofparamountimportanceandshouldbegivenhighestpriority.Attractingnewentry,boththroughstartupsandFDIisessentialandwouldneedtobegivenfocussedattention.2.3 Skill,QualityandProductivityForachievingthesizeofUS$650billionby202425weneedadditionalskilledmanpowerof35million.Thisisgoingtobedifficult.Productiveandskilledmanpoweristheonlywaytoachieveglobalcompetitivenessandtoachievethefullpotentialofthedemographicandwageadvantagethat Indiawouldclearlyhaveoverthenextdecade.Investmentinimprovingtheskillsandproductivityoftheworkforce,bybothprivateindustryaswellastheGovernmentingenuinepartnership,hasbeenaweakness.

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Therecentinitiativesonskilldevelopmentthroughthetextileskillsectorcouncilinpartnershipwiththeindustryneedtobescaledupvigorously.Abundantavailabilityoftrainedandcertifiedmanpowershouldbecomethenorminthreeyears.Theobjectiveshouldbetoachieveaveragepermanhour,permachineoutputintermsofqualityandquantityofthelevelsprevailinginChinaoverthenextthreetofiveyears.TheMinistryofTextilesneedstoevolveacrediblemechanismfortrackingimprovementsinqualityandproductivityacrossthevaluechainaswellasacrossindividualenterprises.Aprogramforassistingindividualfirmsinimprovingonbothparametersneedstobeimplemented.2.4 ReformingLabourLawsThecurrentlabourlawsarecitedasthemajorreasonsfortheinabilityofthesectortoexpandandacquireglobalscale.Thisisspecificallyvalidforcutandsewoperationswherethelabourinvolvementismaximumcomparedtootherstepsofthemanufacturingvaluechain.Inordertoattractlargescaleinvestments,acquireglobalscaleandbringtheIndiansectoratparwithother competing countries, there isan immediateneed to review the labour laws tomake theminvestorand labour friendly.The regulatory framework for labour shouldbe fully implemented incompliancewithIndiasILOobligations.Thisshouldbeseenasaprerequisiteforsustainedgrowthasapartoftheglobalsupplychains.Ideallythe44labourlaws,mostofwhichweredraftedintheearlierpartofthelastcentury,needtoberepealedandreplacedbyone,oratbestafew,userfriendlylaw(s)suitedtotheconditionsofthe21stcentury.2.5 StructuralShiftwithincreasingValueAdditioninIndiaIndiahasashareofapproximately5%oftheglobaltextileandappareltrade.Thebreakupofourcurrentexportsareasfollows:

i. CottonFibre: 9%ii. CottonYarn,FabricsandMadeups: 23%iii. ManmadeTextiles: 14%iv. Garments: 37%v. Handlooms&Handicrafts: 11%vi. Others: 6%

Thestructuraltransformationthatneedstobepursuedistowardsenhancementofdomesticvalueaddition and gradually increasing the shareof value added and finishedproducts inour exports.Gradually,IndiashouldstopexportingfirstCottonfibreandthenyarnandfabrics.By202425,Indiashouldendeavourtobecomeanetexporteroffinishedproductsonly.

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2.6 DiversificationofExportsintermsofProductsandMarketsIndianexportsoftextileandapparelproductshaveshownhighgrowthinlastdecadeorso;buttheyhavebeenlimitedtoonlyafewmarkets.Intheyear2002,outofthetotaltextileandapparelexportsfrom India,63%wasexportedtotheEUandUSmarkets.ThemarketmixhasnotbeendiversifiedsignificantlytillnowwithEUandUSmarketsconstituting50%ofthetotaltextileandapparelexportsfromIndiaintheyear2012.ThehighershareofglobaltradethatisenvisagedcanbeattainedonlyifIndianexportersalsostartlookingbeyondtraditionalproductsandmarkets.SpecificstrategiesforachievingasignificantmarketpenetrationwithamarketshareandproductmixtargetwouldneedtobeevolvedforindividualcountriessuchasJapan,China,Brazil,Russia,etc.Thiswouldneed tobeworkedoutby theMinistryofTextiles inpartnershipwith the Indian industry.Country specificmarket studiesby institutions in that countrywouldneed tobe financedby theMinistryforthispurpose.Thestudywouldformthebasisforimplementationofthecountryspecificmarketingstrategy.2.7 PromotingInnovationandR&DTheIndiantextileandapparelsectorisknownforitstraditionalproducts.Indiaisyettomakeitspresencefeltontheglobalstagewithbrands,chains,productsandprocesses.Without innovation and R&D thiswould not happen.Government and industry need towork inpartnership for this transformation.Businessprocess innovation, in termsof,buildingbrandsandcreatingdesignsshouldbetheimmediatepriority.EnvironmentalconcernswouldkeeprisinginthiscenturyandIndiashouldtryandpositionitselfintheglobalfrontierasanecofriendlyhubintheentirevaluechainofthetextileandapparelsector.ThiscombinedwithbeingseenaslabourfriendlycouldbecomeIndiasUSPasittriestoachievea20%shareoftheglobaltradeoverthenext10years.2.8 NewApproachtowardsHandloomandHandicraftsHandloomandHandicraftsectorsemploy15millionpeopleandprovide livelihood tosomeof theweakestsectionsofthesociety.TheyembodytherichculturalheritageandtraditionsofIndia.Withdevelopment,increasingpercapitaincomesandchangeinpopulartastes,thescaleandshareofproductioninthissectorisexperiencingadecline.Thisisapartofahistoricalprocess.AccordingtothehandloomsurveyconductedbyNCAERonbehalfofMinistryofTextilesthenumberofworkinghandloomshavedecreasedfrom3.61millionintheyear1987to2.15millionintheyear2010.ItisnecessarytoensurethattheweakersectionswhoaredependantfortheirlivelihoodonHandloomandHandicraftdonotexperiencedistress.Measuresforsupportingthesectorneedtobeaugmentedforattainmentofthisobjective.It isalsonecessarytoensurethattheserichcraftsandtraditionssurvivewithhigherwagesaspercapitaincomeinthecountryrise.Thiswouldbefirstpossibleonlyifthedemandfortheseproducts

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athigherpricesreflectinghigherwagesisnurtured,bothinthedomesticaswellastheinternationalmarket.Thiswouldneedimaginativeandsustainedpromotionalefforts.2.9 PartnershipwithStateGovernmentRealizing the employment and value addition potential of the textile and apparelmanufacturingsector,severalStateGovernmentshavecomeoutwiththeirownTextilepoliciestailoredtoattractinvestmentinspecificsubsegmentsandspecificareaswithintheState.Thisisapositivedevelopmentforthesector.Fortheattainmentoftheobjectiveof20%growthinexportsandattractinginvestmentofUS$120billion,agenuineandconstructivepartnershipwiththeStateGovernmentsisabsolutelyessential.To achieve full potential the schemes and programmes of the Ministry of Textiles need thecooperation and support of the State Governments. The initiatives of the Central and StateGovernmentsneedtocomplementeachotherfortheattainmentofthesharednationalobjective.2.10 ReengineeringofExistingSchemesandPoliciesMinistryofTextileshasalargenumberofschemesandprogrammesforthetextileandapparelsector.Some of the flagship schemes are Technology Upgradation fund Scheme (TUFS), Scheme forIntegratedTextileParks(SITP),MegaCluster,IntegratedSkillDevelopmentScheme(ISDS),etc.Thesehavebeenusefulandhavebeencontributingtotheincreasinggrowthanddevelopmentofthesector.Forthescaleandgrowthmomentumthatisenvisaged,theseschemesneedtobescaledupsubstantially. They also need reengineering and recalibration to suit the ambitious goals beingadopted.

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3. ActionPlan3.1 AchievingScaleacrosstheValueChain,and

AttractInvestmentintotheSector3.1.1 Maintenanceofacompetitiveexchangerateisanessentialprerequisiteinlabourintensive

manufacturinginmatureindustries.Textilesissuchanindustry.Withtherecentdepreciationoftherupeewhichhasmitigatedthesevererealexchangerateappreciationovertheearlieryears, textile exports have grown by 13% in 201314 over 6% in 201213 (dollar terms).GovernmentneedstoworkwithRBItoensurethatIndiamaintainsacompetitiveexchangerateoverthenext10yearsaswasdonebyJapan,SouthKoreaandChina intheirphaseofrapidgrowthinmanufacturingandexports.

3.1.2 LackofeconomiesofscaleisamajorissueinIndiantextileandapparelmanufacturingsector.CountrieslikeChinaandBangladeshhavedevelopedlargeproductionsetupswhereasIndiansector isdominatedbysmallerunitswhich lackeconomiesofscaleandhavea low leveloftechnology.DuetolackoflargemanufacturingcapacitiesIndianmanufacturersareunabletocatertolargeordersandbecomegloballycompetitive.Forstimulating investments inthesector, it isrecommended investmentallowanceof15%fornext10yearsshouldbeprovidedacrossentiretextileandapparelmanufacturingvaluechain,includinggarmentaccessoriesandtextilemachinerymanufacturing.

3.1.3 Inorder toachieve large scale technologyupgradation inPowerloomandKnitting sector,scheme for HirePurchase is necessary. Cluster specific SPVs should be promoted inpartnershipwiththeStateGovernments.TheSPVsforthispurposeshouldbenotforprofitinstitutionswhichmay get seedmoney from theMinistryof Textiles.The SPV could alsochoosetooperateinthePPPmode.SPVswillpurchase latest technologymachinesand lease them toweaversorknitters.TheSPVsthroughbulkpurchasesshouldbeabletogetreasonablediscountsfromthemachinemanufacturers.BeingpromotedbytheMinistryofTextileandtheStateGovernment,theSPVsshouldbeabletoraisedebtatattractiveratesfortheiroperations. Ifnecessarytheirdebtcouldbe guaranteed jointlyby theCentral and StateGovernments in the initialphaseofoperationstillthetrackrecordwouldwarrantthewithdrawaltheGovernmentguarantees.Totheextentfeasible,newworkshedsmayalsobecreatedforwhichlandwouldneedtobearrangedfortheSPVsbytheStateGovernment.TherealincomeoftheweaverafterpayingfortheEMItotheSPVshouldincreaseadequatelyfortheSchemetobearealsuccess.4to5pilotprojectsofthisnatureshouldbetakenupinitially.Accordinglythe interestsubsidysubventionwouldneedtobecalibrated.Afterthelearningoffewpilotprojects,arobustdeliverymechanismshouldbeinplaceoverthenext2years.Thereafter,theprogrammeshouldbescaleduptoensurecompletereplacementofoldloomswithmodernshuttlelessloomsoverthenext5to7years.

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3.1.4 The value chain in textile and apparel sector has differential tax treatment. The levy ofdifferent rates has created distortions. This concern would be addressed by theimplementationofGSTwhichwouldcreatealevelplayingfieldfortheentirevaluechain.It isrecommendedthatGSTshouldbe implementedattheearliest.Beingan itemofmassconsumption,textileneedstobeputinthelowestslabofGST.

3.1.5 Inordertogivestrongimpetustotextileandapparelsector,itisrecommendedallactivitiesacrosstheentiresectorincludingskilldevelopmentmaybeexemptedfromServiceTax.

3.1.6 Thegrowthandexpansionofthesmallerunitsintheindustryhasbeenconstrainedbylackofeasyavailabilityofequityforrapidexpansion.SimilarlyVentureCapitalfundingforstartupsinthissector isnotavailable.Marketforcesontheirownareunlikelytomeetthisneedasveryhighratesofreturnscannotbereasonablyexpectedinthishighlycompetitivesectorwithlowmargins.Itis,therefore,recommendedthatinitiallyaprivatelymanagedGovernmentseededEquityFundforprovidingequityforstartupsandexpansionshouldbesetup.TheFundshouldseekathresholdmodestrateofreturns,say12%,andrapidofftake.Theequityshouldbeprovidedwithout seekingmanagement control.There shouldbe reasonable contractualagreementregardingvaluationandexitinlinewithinternationalpractices.Private money from retail investors could be raised for such dedicated Equity Funds byprovidingincometaxexemption.

3.1.7 MinistryofTextilesshouldplaninpartnershipwithStateGovernmentcreationofMegaTextileParkssoastobeabletoabsorbaboutUS$5bn.peryearoffreshinvestmentattheoutset.Thiswouldenabletheachievementofexportgrowthof20%perannuminadditiontocateringtoincreasingdomesticdemand. ItisrecommendedthatMegaTextileParksshouldbedevelopedintheplannedIndustrial

Corridors. FromthenewMegaTextileParksthereshouldbeexpresswayconnectivitytothenearest

seaportandairport. Textile parks should be provided direct supply of power through NTPC and other

generatingcompaniesthroughtheopenaccessdispensationundertheElectricityActtoprovidecheaperandreliablepowersupply.

3.1.8 Toachievethescaleandcompetitivenessrequiredforachievingtheambitiousgrowthtargets,

specialeffortsshouldbemadetoattractFDIintothesector.Specialattentionshouldbegiventohighprioritysubsegmentsof fabrics,processing,garments, technical textileand textilemachinerymanufacturing.IndividualcountriesandfirmsshouldbetargetedforattractingFDI.TailormadeSEZs/Textileparksmaybecreatedwithrequisitefacilitiestosuitrequirementsofinternationalinvestors.

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3.2 Skill,QualityandProductivity

3.2.1 Inordertoachievethesectorgrowthtargets,35millionskilledmanpowerwillberequiredby202425. Initially trainingneeds tobe increased togenerate thesupplyofabout1milliontrainedworkersannually.Itisnecessarytoensurethatinthenext3years,theentirenewworkforceenteringthesectoris formally trained and certified. It is recommended that the existing skill developmentinitiativesthroughtheSectorSkillCouncilshouldbeappropriatelyscaledup inpartnershipwiththeindustry.

3.2.2 Inordertopromoteskilldevelopment initiativesatcompany level, it isrecommendedthatfee paid by textile and apparel sector companies to professional agencies for skilldevelopmentshouldbeeligiblefortaxrelief.

3.2.3 Quality and productivity improvement in the sector are of utmost importance for globalcompetitiveness.At present there is a lack of crediblemechanism for assessing levels ofqualityandproductivityinsegmentsofthesupplychainaswellasinindividualenterprises.Itis,therefore,recommendedthatMinistryofTextilesshoulddevelopacrediblemechanismforassessingandtrackingimprovementsinqualityandproductivitylevelsinthesector.

3.2.4 In order to help individual enterprises to achieve zero defect production and improveproductivity levels, textile sector shouldbe coveredbyaMinistryofTextiles runNationalManufacturing Competitiveness Programme. The key elements of NMCP are LeanManufacturing, ICT, Technology & Quality Upgradation, Entrepreneurial and ManagerialDevelopment,DesignPromotion,QualityManagement,IPR,MarketingAssistance,etc.GiventhesizeandimportanceofthetextileindustryitwouldbebetteriftheMinistryofTextilesranthisprogrammeandMinistryofMSMEcouldcoverrestofthemanufacturingsectors.Thisprogrammeshouldtargettocoveralltheclustersinnext5yearssothatIndiansectorcomesatparwithitsglobalcompetitorsincludingChinesesectorattheearliest.

3.2.5 ToensureinternationalstandardsofproductivityitisessentialthattheworkersintheindustryinthenewMegaTextileParks,etc.shouldhavedecentaccommodationandthattoowithinreasonable proximity of the work place. Workers accommodation has not received theattentionitdeserves.Itis,therefore,recommendedthatworkerhousing/dormitoriesshouldbeanintrinsicpartofdevelopmentofTextileParkswithaccommodationbeingeitherinsidetheParkoratareasonabledistancewithappropriatetransportarrangements.

3.2.6 Inordertoprovideheathcovertotheworkforceofthesector,itisrecommendedthatthereshouldbeuniversalcoverageofall textileworkersandhandicraftartisansunderRashtriyaSwasthyaBeemaYojana(RSBY)withinnext5years.

3.2.7 Domesticmanufacturingandconsequentavailabilityataffordablepricesofstateofthearttextilemachineryisanessentialrequirementforcostandqualitycompetitiveness.Thiswould

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

recommendedthat incentivesunderSchemeofHirePurchaseandTUFS inspecificsegmentsshouldbemadeavailableonlyonindigenousmachineryafterperiodof3years.ThiswillgivesufficienttimeforinternationalandIndianinvestorstojoinhandsormakeindependentinvestmentsformanufacturingmachinerywithinIndia.

3.2.7.2 AtpresentTUFSbenefitsarenotavailableforsecondhandmachineryexceptspecific

shuttleless looms. Inordertopromoteusageof latesttechnologymachineriesandpromotemachinerymanufacturing investments it is recommended that importofsecondhandmachineryshouldnotbeencouragedexceptincaseofselecttechnicaltextileandnonwovenmachinery.

3.2.7.3 Severalmachineriesandcomponentsrequiredfortechnologyupgradationneedtobeimported as they are not made indigenously. Higher cost of such importedmachinery/components is one of the major deterrent factor for large scalemodernization of the sector. It is recommended thatmachinery/components notmanufactured in India likecertain shuttleless looms,knittingmachines,nonwovenmachines,etc.shouldbeidentifiedandtheirimportshouldbepermittedatzeroornominal rateofduty foraperiodof3years.After this timeframe,dutyshouldberaisedto15%.Thiswill facilitate Indiansector toacquirenew, technicallysuperiormachineryatreasonablecostsandalsosignal foreignmachinerymanufacturers toinvestinIndia.

3.2.7.4 ExistingcustomstariffonTextilemachineryandcomponentsareinvertedinnatureimportofcompletemachineryattracts5%basiccustomsduty ingeneralwhilerawmaterialsandnumberofcomponentsattractanaveragedutyrateof7.5%andabove.Forpromoting indigenizationofmachinerymanufacturing,basicdutyof completemachinery shouldbeat least5%higher thaton inputs. It is recommended thatadetailedexerciseshouldbecarriedouttoassesswhethertheimportdutyontherawmaterialneedstobedecreasedorimportdutyoncompletetextilemachineryneedtobeincreasedtomaintainthisdifferential.

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3.3 ReformingLabourLaws3.3.1 Thepresentlabourlawsareoneofthemajorreasonsforthemodestsuccessinthelabour

intensivepartofthetextilevaluechain inthecountryespecially incomparisontoVietnamandBangladeshaintherecentyears.Inordertoattractlargescaleinvestments,acquireglobalscaleandbringtheIndiansectoratparwithothercompetingcountries,thereisanimmediateneedtoreviewthelabourlawstomaketheminvestorandlabourfriendly.TheregulatoryframeworkforlabourshouldbefullyincompliancewithIndiasILOobligations.Thisshouldbeseenasaprerequisiteforsustainedgrowthasapartoftheglobalsupplychains.Ideallythe44labourlaws,mostofwhichweredraftedintheearlierpartofthelastcentury,needtoberepealedandreplacedbyone,oratbestafew,userfriendlylaw(s)suitedtotheconditionsofthe21stcentury.Tillthishappens,thefollowingmeasurescouldbetakenimmediately:

3.3.1.1 Restriction on women from working in night shifts creates a lot of problems to

garmentmanufacturersaswomenconstitutemajorityofthegarmentworkforce.Thisrestriction on women to not work in night shifts should be removed subject tosatisfactorysafetyandsecurityarrangements.

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 asmanufacturers inorganisedsectorbecomereluctant to takeburdenofpermanentworkforceduringleanseason.Thisforcesworkerstoworkinunorganisedsectorinsubstandard working condition. It is therefore recommended that fixed termemploymentshouldbeallowedinthesector.

3.3.1.3 Asperthecurrentlabourlaws,workersarenotallowedtoworkovertimeformore

than50hours inacalendarquarter,and totalnumberofhoursofworkperweekincluding overtime should also not exceed 60. Due to this, manufacturers faceproblemsincaseofbusinessemergencies/peakseason.Itisrecommendedthatsuchcappingonovertimeworkingshouldberevised.

3.3.1.4 Unitsemployingover100peoplecurrently fallunderthepurviewof the Industrial

Disputes Act, 1947. The act stipulates that employers must obtain necessaryapprovals for layoffs. This proves to be a hindrance especially formedium sizedenterprises.ThereisneedtorelaxthenormsoftheIndustrialDisputesActbykeepingunitsemployingupto500peopleoutsideitspurview.

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 orderuncertainty ishigh, can lead to financialdifficulties.Hence,ExportOrientedUnitsshould be given blanket exemption to allow contractual labour without anyrestriction.

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3.4 StructuralShiftwithincreasingValueAdditioninIndia3.4.1 Indian garment sector is highly fragmented with low capacities and manufacturing

efficiencies.To increasegarmentexportsbyUS$1billion,approximately45,000additionalsewingmachinesandamanufacturing setupofapproximately4million square feetareawouldberequired.InordertoacceleratetheemergenceofnewstartupsitisrecommendedthatconceptofPlug&Play (flatted factories) shouldbe implemented inpartnershipwith StateGovernments.InitiallyfourtofivepilotprojectsshouldbedevelopedandoperatedbySPVs.Basedontheexperience,theSchemeshouldbefinetuned.Thereafter, itshouldberapidlyscaleduptofullycatertoemergingandanticipateddemand.TheSPVs for thispurposeshouldbenotforprofit institutionswhichmaygetseedmoneyfromtheMinistryofTextilesaswasdoneearlierforDevelopmentAuthorities.Thesemaybeprovidedlongtermdebtatfixedinterestratesasapplicableforthehousingsector.TheSPVshould,withefficientmanagement,beabletogrowandcatertofulldemandashasbeenthecasewithsuccessfulDevelopmentAuthorities.TheSPVcouldalsochoosetooperateinthePPPmodewhereprivatepartner(s)managethedevelopmentandrental/hirepurchase/saleofthePlug&Playfacilities.

3.4.2 To increasecompetitivenessandacceleratethegrowthofexports, it isrecommendedthatexportfinanceshouldbeprovidedat7%perannum.

3.4.3 TechnicalTextiles3.4.3.1 Technicaltextilesisaknowledgebased,researchorientedsectorwhichissteadily

gainingground in India.Topromotethissector it isrecommendedthatsegmentspecific approach may be adopted wherein a strategy is developed andimplementedtoincreaseproductionofhighprioritytechnicaltextileproducts.

3.4.3.2 It is recommended thatMinistryofTextilesshouldcoordinatewithGovernmentorganizations /bodies topromote their indigenous sourcingof technical textileproducts.Examplesofsuchorganizations includeArmedForces,ONGC,Railways,etc.whicharelargepotentialendusersoftechnicaltextileproductslikeprotectivewear,geotextiles,etc.Itshouldbeendeavouredthatsuitableproductspecificationsshouldbe includedintheirtendersandfromaprospectivedatetheyshouldonlysourceindigenoustechnicaltextileproducts.

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3.5 DiversificationofExportsintermsofProductsandMarkets3.5.1 Thereareseveralfinishedgoodscategoriessuchassuits,womenswesternwear, intimate

wear,swimwear,outerwear,etc.whichhavemultibilliondollartradegloballybutIndiasshareinthemisquitenominal.AlsothereareseverallargemarketslikeJapan,Russia,SouthKorea,Switzerland, etc. inwhich Indias trade share is very low. To increase Indias share, it isrecommendedthatcountryspecificexportstrategiesshouldbedevelopedandimplemented.Initially 4 5majormarkets should be identified inwhich share of Indian exports can beincreased.Foreachmarket,professionalagenciesshouldbehiredfromthetargetcountrytoadviceon themarket specific strategy.While thismayappearexpensive, there isno realalternativeforsuccessofthekindenvisaged.Implementationofrecommendationsforeachmarket shouldbe fully supportedbyMinistryofTextiles inpartnershipwith industry.Theinitiativeshouldsubsequentlybeextendedtocoverallmajormarketsby2020.

3.5.2 Topromoteexportsinnontraditionalproducts,5yeartaxholidayforcompaniesonexportsofspecificfinishedgooditems(apparel,madeupsandtechnicaltextiles),designatedbytheMinistryofTextiles,iftheirexportgrowthisover25%annually.

3.5.3 Presently,anumberofTradeExhibitions,BuyerSellerMeets,etc.areorganizedbyvarioussector bodies and associations. But the scale of such events is limited by number ofparticipantsandsubsegmentsbeingaddressed.Itisrecommendedtoorganizeamegatradepromotion event for the entire industry including manufacturers of textiles, apparel,accessories, technical textiles,ancillarysectorand textilemachinery.Thateventshouldbedeveloped intoa singlemost importantevent for internationalbuyers toattendwhoarelookingtosourcefromIndia.

3.5.4 IndiantextileandapparelsectorneedstobeshowcasedinternationallybypromotingBrandIndia.

3.5.5 Allexportpromotionschemesshouldbe implementedbyMinistryofTextileswhichcouldthenbeheldaccountableforresults.

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3.6 PromotingInnovationandR&D3.6.1 BusinessProcessInnovations

3.6.1.1 Togainglobalrecognition,itisrecommendedthatcreationofglobalbrandsshould

be supported by Ministry of Textiles financially. The Turkish model for helpingcountrysbrandstoventureoverseasisagoodtemplate,whichcanbeadoptedwithsuitableadjustmentsandmodificationsonapilotbasistobeginwith.

3.6.1.2 Internationallyecommercehasemergedasaviableandefficientsystemofbusinesstransactions.ItisrecommendedthatactivecoordinationshouldbedonewithvariouslargeinternationalonlinemarketingplatformssuchaseBay,Amazon,etc.topromoteexportsofIndianproductsthroughthem.

3.6.1.3 ForeignDirectInvestmentpolicydoesnotallowanyFDIinIndianbrandsorretail.Itonly allows FDI in a foreign brand/retail, which is owned and operated by aninternational company. Building brands and expanding retail footprint is capitalintensive.ItisfeltthatpromotionofIndianbrandsinthedomesticmarketneedstobesupportedwithsuccess indedicated retailstores forsingleandmultiple Indianbrands.Thesebrandswouldthengettheconfidencetomoveoverseasaggressively.An IndianZaraneedstoemerge in internationalmarketsoverthenext5years.Tofacilitatethis it isrecommendedthatFDI insingleandmultibrandretailfor Indianapparelbrandsonlymaybepermittedintheautomaticroute.

3.6.2 InordertopromoteR&Datcompanylevel,itisrecommendedthatexpensesmadebytextile

andapparelsectorcompaniesforcontractR&DshouldgetthesametaxbenefitsasisavailableforinhouseR&D.

3.6.3 There isaneedtopromoteuseoftechnologiesandprocesses intextileandapparelsectorwhichreduceconsumptionofwater,chemicalsandenergy.For this largescaleawarenesscreationattheuserlevelaboutsuchtechnologies,chemicals,systems,etc.isrecommendedalongwith technical and financial support to adopt them. Use of such sustainable, ecofriendly,biotechnologicaltoolsshouldbedevelopedasaUSPofIndianmanufacturingsectorsincebeinggreenaddstocompetitiveadvantage.ItisrecommendedthatIndiancompaniesshouldbesupportedtoacquirerelevantnationalandinternationalcertifications/normsforconformitytoenvironmentalstandards.

3.6.4 Despitebeingoneofthelargestconsumerbasesintheworld,thereisnostandardapparelsizingsysteminthecountryspecifictoIndianconsumers.ApparelavailableinIndianmarkettodaymarketareeitherEuropeanorAmericansizewhichdonotfitbodysizeoftypicalIndianperson.Providingrightsizeandfittothemarketwillpromotedomesticdemandandsectorgrowth.Hence,itisrecommendedthatascientific,systematicanthropometricstudyofIndianpopulationshouldbeundertakenfordevelopingastandardIndiansizingsystem.

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3.6.5 Cotton3.6.5.1 To improve cotton farm yield, adoption of improved irrigation and agriculture

practices shouldbepromoted. Internationalbestpractices to improve yieldswithreductionintheinputsshouldbereviewedandadoptedinIndiancontext.Anotherimportant step to be taken in this direction is the adoption of technique of highdensityplantation.

3.6.5.2 Presently,about1,0001,500varietiesofcottonseedsarebeingsoldinmarket.Eachtypeofcottonseedhasitsownpropertieswhichresultsindifficultiesinfibregradingandtestingandqualityinconsistenciesatmilllevel.Toimprovefibrehomogeneity,itisrecommendedthatrestrictionbeplacedonnumberofcottonseedvarieties.Anynewdevelopmentsinseedtechnologyshouldbeadoptedbyprocessofreplacementandnotbyaddition.

3.6.5.3 AnydevelopmentinfieldofproductionofnichecottonvarietiesforexampleOrganicCottonorColouredCottonshouldbepromotedtotaptheirfullmarketpotential.

3.6.5.4 A system of third party cotton certification system at ginning level should beimplemented to standardize and benchmark cotton so that units following goodpracticesandpackingstandardqualitygetbetterprices.Widespreadrecognitionofsuchsystemwillcreateaneedatpickingandginningleveltomodernizebyinvestinginmechanizedpicking,warehousing,etc.

3.6.6 Jute3.6.6.1 Juteyieldhashardlychangedovertheyears.Inordertoprovidecompetitivereturns

to the farmers it is imperative to increase productivity in raw jute. Due to nonavailabilityofadequatequantityofcertifiedseeds,largequantitiesofspuriousseedsareinuse.Hence,thereshouldbeadirectgovernmentinterventioninproductionanddistributionofcertifiedjuteseedstoensure100%utilisationofcertifiedseeds.

3.6.6.2 QualityofJutefibreisdependentlargelyonthecaregivenduringrettingprocess.In

absenceofcleanflowingwater,rettingisdoneinstagnantwaterinditchesandpondswherewaterisusedforrepeatedretting.Thisresultsinfibreofinferiorstrengthanddarker colour. Alternative retting methods which are developed by various juteresearchinstitutesareyettobecommercializedandgainacceptancebyfarmers.Itisrecommended thatpilotprojects shouldbe setup in juteproducing areas inCFCmodedeployingasuitablerettingtechnologytoshowcasebenefitstolargenumberofjutegrowers.

3.6.6.3 Jutemillsarenotveryforthcominginmakinginvestmentstoreplaceoldequipmentwithmodernenergysavingequipmentbecauseofriskofnonrealizationofenergysavingsandalsobecauseoflimitedfundavailability.Toovercomethischallenge,itisrecommended thatEnergyServicesCompany (ESCO)conceptshouldbepromotedandimplementedinJutemills.

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3.6.6.4 NewproductdesignanddevelopmentisanurgentrequirementfortheJutesectorinordertoreduceitsdependenceonlowvalueaddedproductsofsackingandhessian.For this it is recommended thatdesign institutes suchasNIDandNIFT shouldbeengagedforjuteproductanddesigndevelopmentprojects.

3.6.6.5 InabsenceofLifeCycleAnalysisandDisposalProtocolsforJute,itsmarketentryinseveral international markets has been hindered. It is recommended that aninternationallyrecognisedresearchagencyshouldbeappointedtoconductLifeCycleAnalysisofJuteanddevelopDisposalProtocolsinlinewithrequirementsofvariousmarkets.

3.6.6.6 EcolabellingofJuteproductsisnecessarytopositionthemasenvironmentfriendlyproductswhichareacceptableindevelopedcountries.ItisrecommendedtoprovidesubsidyforgettingecolabelcertificationforJuteproducts.

3.6.7 TechnicalTextiles

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

framework to implement/enforce technical textileusage incertainareasaretwoissueswhichhas restrictedconsumptionof technical textileproducts in India. It istherefore recommended that regulatorymechanism including standardizationandcertification of technical textile products at par with global standards should beimplementedandenforcedinclosecoordinationwiththecompetentauthorities.

3.6.7.2 Developmentofinnovativetechnologies,products,processesandapplicationsholdsthekeyforgrowthoftechnicaltextilessector.R&Deffortssupportedbyindustrywillencourageinnovationcapabilitiesandbringhighriskinnovationstothemarket.ItisrecommendedtopromoteindustrycollaborationwithvariousinstituteslikeCSIR,IITs,etc.forundertakingR&Dinthesector.

3.6.8 Textilemachinery sector is dependent on research and development for its survival and

prosperity.InIndiaatpresentthereareselectfewcentresundertakingtextilemachineryR&Dactivity.Inordertopromoteindigenizationoftechnology,itisrecommendedtoincentivizeR&Dactivityfordevelopmentofnew/upgradedmachinery.

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3.6.9 UseofITTools3.6.9.1 For benefit of farmers, mobile applications providing information related to

agricultureandirrigationtechniques,seedinformation,supportschemes,prevailingweatherandsoilconditions,market information,etc.shouldbedeveloped in locallanguages inassociationwithMinistryofAgricultureandStateGovernments.Eachtype of fibre in a State should be covered by a different application tomaintainsimplicityandeaseofoperations.

3.6.9.2 It is recommended thatMinistryofTextilesand its relatedoffices/bodies shoulddevelopmobile applications in local languages forproviding extension services toMSMEsacrossthevaluechainfarmers,weavers,artisans,garmentmanufacturers,knitters,etc.Each sector shouldbecoveredbyadifferentapplication tomaintainsimplicityandeaseofoperations.Thisshouldbesupportedbyacallcentrewhichshouldbeoperatedinlocallanguages.

3.7 NewApproachtowardsHandloomandHandicraftsTobesubmittedlater

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3.8 PartnershipwithStateGovernment,andReengineeringofExistingSchemesandPolicies

3.8.1 SchemeforIntegratedTextileParks(SITP)

3.8.1.1 For the success of SITP, involvement of the State Government is required forfacilitatingassemblyoflandandotherclearances.Further,theexistingmodeldoesnotprovidefordevelopmentandavailabilityofworkspacefornewentrantsaftertheformationoftheSPV.Workspacesshouldbeavailableofftheshelfondemand.Thisis essential for achieving the high growth rates targeted. It is, therefore,recommendedthattheSchemebemodifiedandimplementedinthefollowingthreemodes:a. SPVformedbytheentrepreneursorindustryassociations(asallowedcurrently

intheScheme)b. A notforprofit SPV formed by the State Government through any of its

institutionsfordevelopmentoftheTextilePark.c. Anotforprofit SPV formedby StateGovernmentwhichoperates inaPPP

mode.The last twoSPVoptionswillbe themajorones to implementPlug&PlayandWorkersHousingprogrammes.

3.8.1.2 Todevelop large,worldclassmanufacturing infrastructure,developmentofMegaParkswithlargeareas,ideally1,000acresormoreisrecommended.SITPshouldbemodified toalsopromotedevelopmentofMegaTextileParksof1,000acresandabove.Forthisthereshouldbenofinancialceilingonassistancewhichshouldbelinkedtotheareadeveloped.

3.8.1.3 InNPVterms,anycapitalsubsidycanbemadeequivalenttoaninterestsubsidy.Inorder topermit limitedbudgetaryoutlays to supportmuch largerprogrammeofdevelopmentoftextileparksincludingmegatextileparks,itisrecommendthattheschememay bemodified to convert the existing capital subsidy provision to aninterestsubsidyprovisionwithsameNPVeffect.TheMinistryofTextilesshouldalsoworkwithDepartmentofFinancialServicestoprovideLongtermfixedinterestratefinancingfortheseSPVs.Thelongerthetenureoftheloan,lowerwillbetheoutgooninterestsubsidyannuallyandhencewiththesamebudgetaryprovisionanevenlargerprogrammecanbesupported.

3.8.1.4 Indianmanufacturingcapacitiesacrosstextilevaluechainarenotproportionate.Tostimulateinvestmentsacrossthechain,themebasedintegratedtextileparksshouldbeencouragede.g.DenimPark,IntimateWearPark,NonwovensPark,HomeDcorPark, etc. Such parks should be selfsufficient to manufacture all the keyrequirementswhiletheoutputshouldbefinishedgoodsonly i.e.garments,hometextilesortechnicaltextiles.

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3.8.2 TechnologyUpgradationFundScheme(TUFS)

3.8.2.1 TUFSwasdesignedtoincentivizeinvestmentsbyloweringtheeffectiveinterestratesthroughinterestsubsidy.However,delayinreimbursementcausescompaniestopayhigherinterestratesfortheperiodduringwhichreimbursementisbeingprocessed.This need not be the case. The implementation mechanism of TUFS should bereengineeredwithFIs,sothattheborrowergetstheeffectiveratefromtheoutsetandtheFIstakereimbursementfromtheMinistryfortheinterestsubsidyinvolved.

3.8.2.2 Credit available to the sector through banks usually has a repayment periodconsistingof2yearsofmoratoriumand5yearsofrepayment.However,thelifeofplantandmachineryextendsmuchbeyond this term sometimesmore than20yearseven.Shorterrepaymentperiodputsconsiderablepressureonthebusinessinformofhigherannualrepaymentcosts.Inordertoreducerepaymentpressureonbusinesses,itisrecommendedthatloanrepaymentperiodshouldbeextendedto2years ofmoratorium and 7 years of repayment. TheMinistry of Textiles shouldcoordinatewithDepartmentofFinancialServicestogetthebankingsystemtoagreetothischange.

3.8.2.3 Alargenumberoflowend,plainpowerloomunitsdonotfinditfeasibletoupgrade

straightawaytoautolooms,whichisminimumbenchmarkunderTUFS.Tosupportsuchunits,GovernmentprovidesfinancialassistanceforupgradationunderInSituUpgradationofPlainPowerloomscheme.Itisrecommendedthatthereshouldalsobeaprovisionfor RapierDriveKitforconvertingexistingplain looms/semiautoloomsintorapiershuttlelessloomforwhichassistanceshouldbeincreasedtoRs.35,000perloomi.e.,50%oftheestimatedcostofUpgradation.

3.8.2.4 Governmenthasextendedadditionalbenefit for installationofhightechweaving

machines. It is recommended that weaving preparatory and knitting machinesshouldalsobebenchmarked forsimilarbenefitsunderTUFSasavailable fornewshuttlelesslooms.

3.8.2.5 For installationofhightechmachinery formanufacturing silkandwoollen items,

additional financial assistance in form of 10% capital subsidy (in addition to 5%interest reimbursement)shouldbeprovidedunderTUFSon importedmachinerywhicharenotmanufacturedinIndia.

3.8.2.6 GroupWorkshed Schemeprovides support toweavers for constructionofwork

sheds for installation of shuttles looms in existing or new clusters. Support forestablishing large scale worksheds is now also made available under the newschemeofHirePurchaseschemeunderTUFSwhichwaslaunchedon4.10.2013.ItisrecommendedthatGroupWorkshedSchemeshouldbemergedwithHirepurchaseschemeunderTUFS.

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3.8.2.7 ModernizationofGinningandPressingunitswasearliercoveredunderTechnologyMissiononCotton(TMC)whereinfinancialassistancewasmadeavailabletothem.Inordertosupportmodernizationatginningandpressing levelbeyondTMC, it isrecommended thatginningandpressingunits shouldbebroughtunderambitofTUFS.

3.8.3 IntegratedProcessingDevelopmentScheme(IPDS)

3.8.3.1 TheprocessingsectorinIndiahascomplexchallenges.Itisrecommendedthat3or

4pilotprojectsshouldbeattemptedinpartnershipwiththeStateGovernmentsinidentifiedclusterstoevolveaworkablemodel.Provisionof longterm loanfor30yearswithfixedinterestrateof7%withinterestsubsidywouldhelpingeneratingasustainable businessmodel. A suitable PPPmodelwould need to be evolved inpartnershipwiththeStateGovernment.

3.8.3.2 Newlargescaleprocessingunitscomingupshouldbeencouragedtobeestablished

closertocoastlinehavingETPswithMarineOutfall.

3.8.4 ToenhancetheattractivenessofSEZpolicyitisrecommendedthat:3.8.4.1 Units in SEZs should be permitted to disposeoff seconds and rejects by paying

nominalduty.TherateofdutycanbefixedtoapercentagebasedonthestudydonebyorganizationslikeTextileCommittee,TRAs,EPCs,etc.

3.8.4.2 UnitsinSEZsshouldbepermittedtoutilizetheirsurpluscapacitiestodojobworkforDTAunits.

3.8.4.3 UseofunderutilizedcommonfacilitiescreatedinSEZsbasedtextileparksshouldbeallowedbytheunitslocated inDTA.Thiswillaugmentfiscalbenefitsaccruingfromutilizationofcreatedassets.

3.8.5 MinimumSupportPrice(MSP)Operations:

3.8.5.1 CurrentsystemofdeclaringMSP for twocotton typesneeds toberevisedtohelp

cottonproducersrealisefairpricefortheirhighqualityproduce.MinistryofTextileshouldtakeupwiththeMinistryofAgriculturetodeclareMSPforall5typesofcottonvarietiesviz.shortstaple,medium,mediumlong,longandextralongstaplelength.

3.8.5.2 Tussarsilkhasagoodmarketpotentialwhichneedstobetappedthroughincreased

production.Theproductioncanbeincreased,especiallyinNorthEasternregionandtribal regions in Central India through a price support mechanism. It is hencerecommendedthatMinimumSupportPrice(MSP)mustbedeclaredforTussarsilk.

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3.8.6 Alargepartofsectorworkforceisofmigratorynature.WorkersfromvariousstatessuchasBihar, Orissa, West Bengal, Chhattisgarh, Uttar Pradesh etc. migrate to work in textile/garmentclustersacross India. It isrecommendedthatapparelparksbepromoted inthesestatesinpartnershipwiththestategovernments.

3.8.7 To promote fabric production not only modern weaving factories but modern knittingfactoriesshouldalsobeencouragedasknittingsectorplaysanequallyimportantrole.Hence,itisrecommendedthatknittingsectorshouldbeconsideredatparwithweaving/powerloomsectorforfinancialassistanceunderallavailableschemesoftheMinistryofTextiles.

3.8.8 Indianmanufacturingofgarmentaccessoriesatpresentislimitedbothintermsofvarietyandquantum.AsaresultsignificantquantityofgarmentaccessorieslikeVelcro,zips,interlinings,etc. is imported into the country, specificallyby garment exporters. Inorder topromoteindigenousmanufacturingofgarmentaccessories for import substitutionand topromotegarment exports from the country, it is recommended that garment accessoriesmanufacturing should be considered at parwith garment sector for assistance under allschemesincludingTUFS.

3.8.9 ThereareseveraltextileandgarmentinputswhicharenotmadeinIndiae.g.specialtyfibres,chemicals,specialty fabrics, trims,accessories,etc.Theseproductscanbe importedunderadvancelicensingmechanism(forexportorders)whereinaspecifiedamountofinputscanbeimportedduty freebasedon established Input/outputnorms.Butwith changing fashion,functionalapplication,andotherbuyerrequirements,needofsuchinputmaterialschangesfrequentlyforsamelevelofoutput.Forexampleagarmentmayneedextratrimsasperdesignorafabricmayneedextrachemicaltomeetmorestringentfinishqualityrequirement.Hence,itisrecommendedthatcurrentinput/outputnormsshouldbereviewedandshouldbemademoreflexiblewhereindeviationfromstandardnormsshouldbeapprovedonbycompetentauthority.

3.8.10 ForpromotionofSilkand itsproducts indomesticand internationalmarkets, the currentschemesinplaceforitsbrandingshouldbescaledup.

3.8.11 PresentlygarmentsaresubjecttoprovisionsofStandardWeightsandMeasurementActaswellasthePackagedCommodityRules.UndertheAct,apackagedcommodityisdefinedasonewhichissecurelypackedandcannotberemovedfromthepackageevenatthetimeofsale.Garmentsontheotherhandarefrequentlyremovedfromtheirpackagebypotentialcustomerstotryandfeeltheproductbeforemakingapurchasedecision.Inseveralstores,garmentsarealsodisplayedinopenformtoattractcustomersandhelpthemchooseeasily.ProvisionsoflabelmarkingundertheActlikeLengthofgarment;Count,etc.alsodonothavemuchrelevance.Tosimplifythetradeandsalesystems,itisrecommendedthatMinistryofTextilesshouldtakeupthematterwithMinistryofConsumerAffairstoremoveGarmentsfromambitofPackagedCommodityAct.

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3.8.12 CottonAdvisoryBoards (CAB)main role is to finalizebalance sheetofcottonproduction,consumptionandstocks.Some industrysegmentshaveraised issueofauthenticityofdatawhich isbeingcollectedandpublishedsincesomestatestakesinglecropwhilesometakedouble/triplecropduetobetterirrigationfacilities,whichmakesitdifficulttoarriveoncorrectproductionstatistics. It is recommended thatprocess forgathering/ finalizingproduction,consumption,export,importandstockdataofcottonshouldbereviewedandfinetunedincoordinationwithallsectorstakeholderstoaddresssuchissues.Also,roleofCABshouldbeexpandedandempoweredsothat itmayactasanadvisorybodyforuseofseed,farmingpractices,R&Dapartfromfinalizingthecottonbalancesheet.Maximumnumbersofmembersmaybekeptupto20(twenty),whichshouldbefromrelateddepartmentsofCentral/StateGovernmentsandindustryrepresentatives/experts.

3.8.13 CottonCorporationof India (CCI)shouldbeempowered toplayaproactive role incottonsector,besidesdoingMSPoperations.ItisrecommendedthatroleofCCImayberedefinedtofunctionasbusinesstradinghouse/bodyforprocurementofcottonandsaletoindustryoncommerciallinesoperatingatarmslengthpolicy.However,suchroleshouldnotbeatthecostofaffectingpricestabilityinmarket.CCIinassociationwiththeIndustryassociationsmaycarryoutR&D/trialsonpilotbasisfor increasingtheproduction, improvementofquality,demonstrationofbestpracticesforreducingthecontaminationofcotton,developingnewvarietiesofcotton,etc.

3.8.14 National InstituteofFashionTechnology came intobeing in1986,withavision to fulfilagrowingneedforprofessionalsspecialisedinthefieldoffashion.SinceitsinceptionNIFThasemergedasaprominentleaderinthefieldofprofessionaleducation,deftlycombiningdesignwithmanagementandtechnology.Inordertosupportyoungdesigners/entrepreneursfromthisinstitute,itisrecommendedthateachNIFTshouldhaveaPlug&Playincubatorcentreforassistancetostartupswith100%equitysupport.

3.8.15 Cotton

3.8.15.1 CottonarrivalinIndiastartsfromthemonthofOctober.About75%ofthetotal

croparrivesinthemarketduring5monthsi.e.NovembertoMarch.Thismakesitnecessary forspinningmills tobuyandstockcottonduring thepeakarrivalseasonorfacepricefluctuationandqualityinconsistencyduringlateron.Buyingatstartoftheseasonalsoenablesspinnerstobooklargerorderswithalongerhorizonas theyhave firm fibre costandquality.Presentlybankingnorms forcottonworkingcapitalloanisamaximumof4months,thattooinselectivecases.Inordertosupportspinningunitstomanageintrayearpricevolatility,workingcapitalcreditperiodbanknormsforcottonshouldrevisedto9months.Jutefibrearrivalisalsoinlinessimilartocotton.ForJute,itisrecommendedthatworkingcapitalcreditperiodbanknormsshouldbemade3months.ThemattershouldbetakenupwithRBIforissuanceofanadvisorytotheallcommercialbanksinthisdirection.

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3.8.15.2 InFY201011,restrictionswereplacedoncottonexportsforabriefperiodoftimeonpremiseofincreasingfibreavailabilityforIndianspinners.SinceIndiaisthesecondlargestproduceraswellasexporterofcotton,thedecisionresultedinglobaldemandsupplygap increasingfibreandyarnprices inanunbalancedmanner.IncreaseincottonpricesatgloballevelgotreflectedinIndianpricesaswell,albeittoalesserextent.Duringthesametime,capwasalsoplacedonyarnexportonpremiseofincreasingyarnavailabilityforIndianfabricsector.Inthisscenario, evenwhen international yarn priceswere high, spinners could notincreasetheirproductionforexports.Theexportorders insteadwenttoothercompeting countries. In order to be a world player with predictable policyframework,liberaltradingregimeforcottonfibreaswellascottonyarnwithnorestrictiononexportsorimportsneedstobecontinued.

3.8.16 Jute

3.8.16.1 Jute PackagingMaterial (CompulsoryUse in Packaging Commodities)Actwas

enacted in1987.ThisActhasbeendilutedtoa largeextent inrecenttime.ECrecommendsthatthereshouldbeasunsetclauseforthisActwhereinitshouldbephasedoutinaperiodof5yearsassustenanceofasectorshouldnotdependonanActforlong.However,itisimportanttoacknowledgethefactthatlakhsoffarmersandindustrialworkersareemployedinJutesector.Henceitsdilutionandfinal withdrawal should be linked to modernization of the sector anddevelopment of market for alternative products. It is recommended thatGovernment should liberally fund initiatives in this direction. Some of suchinitiativescouldbe:a) Higherexportpromotionincentivesforjuteproducts.b) MarketdevelopmentinitiativesforpromisingJuteDiversifiedProductssuchas

JuteGeotextiles,shoppingbags,etc.bothinIndiaandinternationallyatlargescale.

c) Product, process and design development to create new products or newapplications.

d) CapitalsubsidytoJutemillsfortechnologyupgradatione) FinancialsupporttoJutemillsfortechnologyupgradationandworkingcapital

requirementbymeansoffacilitatingcreditavailabilityatviablerates.f) Financialassistanceforindigenousjutemachinerymanufacturingg) Exportpromotionactivitiesincludingremovaloftariffandnontariffbarriers

inmajorinternationalmarkets,etc.

3.8.16.2 Traditionalproductslikesackingandhessianwhicharelowvalueaddedproductsconstitutebulkofthesectorproduction,whereasproductionbaseofvalueadded,JuteDiversifiedProducts (JDP) isnot very strong. To support growthof valueaddedmanufacturinginJutesegment,itisrecommendedthatJDPmanufacturingshouldbeconsideredatparwithgarmentsectorforassistanceunderallcentralschemesincludingHirepurchaseschemeunderTUFS.

coverVision, Strategy and Action Plan