R. Vimal Kumar

Textile products from India to become costly

Tirupur: Entrepreneurs in the textile cluster here are fretful as domestic prices of raw cotton, one of the essential raw materials, have started moving upward following the recent decision of Central Government to offer incentives for its export.

D.K. Nair, secretary general, Confederation of Indian Textile Industry, told The Hindu that the prices of raw cotton had already increased by about five percent over the last fortnight subsequent to the amendments made in the Handbook of Procedures (HoP) under the Foreign trade Policy.

The modifications made by the Director General of Foreign Trade in Appendix 37 A of the HoP on February 17 entitle the exporters of raw cotton, which is classified as VKGUY (vishesh krishi and gram udyog yojana) product, for ‘duty credit scrip’ equivalent to 5 per cent of FOB (free on board) value of exports.

Retrospective effect

“Compounding our woes, the amendment has been put into effect retrospectively from April 1, 2008, and it is indeed an act of punishing the domestic textile industry by subsidising the exports of raw cotton,” M. Senthil Kumar, chairman, Palladam Hi-Tech Weaving Park, said.

Thus the amendment, according to industrialists here, will do more harm than good for the domestic textile sector.

“Resultant increase of raw cotton prices owing to its export in huge volumes will make the textile products from here dearer,” A. Sakthivel, president of Tirupur Exporters Association, and K. Swaminathan, president, South India Hosiery Manufacturers Association, said.

A.P.Appukutty, president, Tamil Nadu Spinning Mills Association, feels the need for immediate revoking of the decision as the export incentive announced is not going to be beneficial to cotton farmer either.

“Only a handful of middlemen involved in export of raw cotton will be benefited by the amendment,” Mr. Appukutty said.

With the election dates announced, the industrialists are in a somber mood as their hopes of government reversing the decision to give export incentive looks extremely bleak.