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Message from Chairman

Dear Member,

The current Man-made fibre textiles export scenario is moderate. As per Directorate General of Commercial Intelligence and Statistics (DGCI&S) provisional data, exports of MMF textiles during April – July 2018 were US$ 1820. 49 mn. against US$ 1738.26 mn. achieved during the corresponding period of the previous year, witnessing a growth of 4.73%. Exports of yarn, fabrics and made-ups together witnessed 5.57% growth whereas export of Man-made staple fibre declined by 1.51% during April – July 2018 compared to the observed period of the previous year.

The overall textile and apparel exports have been reported at about US$ 3 bn. (Rs 19,636 crore) in July, data showing a growth 11% compared to July 2017 year-on-year (y-o-y). While textile exports grew by a 15% y-o-y to US$ 1.6 bn. (Rs 10,879 crore) during the month, apparel exports reported to have witnessed a modest 6% y-o-y to US$ 1.4 bn. (Rs 8,757 crore). On the similar line of my forecasting on depreciating rupee last month, now industry experts also said that the sharp depreciation of the rupee against the dollar during the last few months pushed exports higher.

Exporters should be cautious as rupee is likely to remain weak amid higher dollar demand and slow recovery in emerging markets. Furthermore, worsening trade relations between the US and China is likely to keep causing currency swings. The fall in rupee is in sync with some emerging market currencies, which remained volatile owing to concerns of tariffs issues and the US Federal Bank’s stance on continuing to hike rates further. Following the tussle between Turkey and the US, the Turkish currency Lira took a special battering. Currency situations in the major economies of the LAC region have been one of the worst in recent history. Relative to the major textile producing countries, India has been one of the major
depreciating currencies since 2012. Only the Sri Lankan Rupee has underperformed the Indian Rupee. The Bangladesh Taka has remained strong, as has been the Korean Won. The Vietnam Dong has seen intermediate strength and weakness. However, the depreciating rupee would help us only if all other competing countries currencies remain stronger. If all the competing countries currencies also depreciate in the same proportion then the prospective gains from rupee depreciation will be neutralised. We are given to understand that informed on depreciating Indian rupee, the overseas buyers & importers have already started negotiating for commissions and discounts from the Indian textile exporters. Therefore, the positive impact of rupee depreciation is being diluted and profitability is likely to be very thin. Exporters
need to take into account these factors while finalising their export orders. They also need to be cautioned in fixation of price factoring in the current rupee depreciation and its likely volatility. It may be mentioned that since some of the essential textile raw materials are being imported by the Indian MMF textile segment, the adverse impact of rupee volatility may be controlled by exploring the hedging mechanism. Hedging will help in lessening the quantum of risks and uncovered transactions.

I have taken the opportunity to meet the new Secretary (Textiles), Ministry of Textiles on 4th September, 2018 to call on him after he has taken charge as Textile Secretary. In the Meeting with the new Secretary (Textiles) I have appraised him on the challenges being faced by the Indian MMF Textile Segment. During the meeting with the Secretary (Textiles)
a representation was given on the issues related to Export Promotion and GST pertaining to MMF textile segment such as immediate refund of accumulated Input Tax credit, refund of IGST on capital goods, inclusion of MMF textile products falling under equal or lower rate of GST, removal of Double Taxation on ocean freight, Merchandise Exports from India Scheme (MEIS) to be extended to all the MMF textile products @ 5%, Interest Equalisation Scheme (IES) benefits to be extended for MMF yarns and Merchant exporters, increase DBK rates on MMF textile items, extension of the Rebate of State Levies (ROSL) Scheme benefits to Yarns and Fabrics, etc. The points were clearly explained to the new Secretary (Textiles) for his approval and recommendation to the respective departments in the Government for their favourable orders.

I informed in the previous issue that we had made a presentation before the Drawback Committee Meeting held on 9th August 2018 in Mumbai for suitable revision of the DBK rates on the MMF textile products. I am glad to inform that now the Drawback Committee leading by Shri G.K. Pillai, as its Chairman is working on the revision of the rates. The Council
is providing the information desired by the Drawback Committee from time to time. We are expecting that the revised rates will be reasonably fair rates.

I am happy to express my gratitude to the Members of the Council who have confirmed their participation in the “SOURCE INDIA 2018” being held in Surat from 21st – 23rd September 2018 with their encouraging response and cooperation in successfully organising the event. This time we are having overseas buyers almost double the size than that we had in 2016. I am confident that accordingly our business booked will also be substantial this time. For motivating us to organise this Mega MMF textile RBSM with all cooperation and help, I would like to thank the Ministry of Commerce & Industry and Ministry of Textiles, government of India in advance and ensure than the event brings desired results.

Yours sincerely,

Shri Sri Narain Aggarwal
Chairman, SRTEPC
September, 2018

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