The last few months have been very eventful for the Ministry of Textiles, which has been in the news for all the right reasons. The industry is very positive that change is around the corner with announcement of huge schemes like MITRA and PLI to create a global champion, appointment of a new team at MoT of Minister Piyush Goyal (also Commerce Minister) and Textile Minister; Textile Secretary Upendra Prasad Singh; as also long pending favourable policies like an extension of RoSCTL till 1st March, 2024; rate announcement for RoDETP; removal of duties on specific products, specially dumping duties on viscose and more recently the setting of a target of US $ 44 billion for current fiscal, while motivating industry to increase export to US $ 100 billion and domestic production to US $ 250 billion at the earliest.
However, this is only part of the story, and there still exists challenges that have yet to be fully addressed. Among the most urgent are the sky-rocketing price of cotton yarn, unprecedented container shortage and high freight rates all of which are market-driven issues that need Government intervention to regularise. So, what does the Textiles Secretary Upendra Prasad Singh, a1985-batch IAS officer have to say on these issues. Apparel Resources caught up with the Textile Secretary for his take on how the MoT is preparing to support the industry at the ground level.
Upendra Prasad Singh has been in charge of the textile portfolio since January this year, and in the last 8 months, he has won the confidence of the industry for his proactive approach. Singh has held important assignments in both the Central and State Governments across different sectors like water resources, finance, steel and transport, all of which are very critical industries. Experts of the textile industry feel that after a long time, the Ministry has a Secretary who is ready to listen, understand their situation and address challenges of the textile industry.
In a candid interaction with Apparel Resources, the Textile Secretary, shared his frank opinion on various issues. An excerpt from the interaction…
The Cabinet has just approved the Rs 10,683 crore PLI scheme for the Textile Industry. Do you feel the scheme could be a gamechanger for the Indian Textile value chain?
There is a well thought-out strategy behind selecting MMF and Technical textiles as the two beneficiaries of the scheme. Over the years, India has lost its competitive edge in the traditional segments of textile and now with China vacating space in the textile sector, there is a real opportunity to regain lost ground. But the thrust cannot be only in the already existing core areas; we need to think of the next 2 decades and beyond. No one can deny that MMF constitutes 70 per cent of the global trade in textiles today and technical textiles is the future. The whole idea of the scheme is to produce global champions, while strengthening backward and forward integration aligned to future needs. This scheme along with the Mega Textile Park scheme (MITRA) will certainly be a gamechanger for the industry that needs a fresh direction for growth.
A major pain-point for the textile industry for many years has been the issue of perennial fluctuation of cotton yarn price, which disrupts the functioning of the supply chain. Why can’t the industry get a permanent solution to this problem?
Actually, since the issue is supply chain related, the impact depends on where you are in the value chain. If you are someone growing cotton, then the higher cotton rate will be good, but if prices plunge, growers will suffer, hence the Government introduced the Minimum Support Price (MSP), so that the farmers should get a good price for their hard work. However, having said that, we cannot ignore that the prices need to be determined by free market and we generally don’t want to interfere because these prices are not only decided by factors inside India, but also by international cotton prices. This can be disrupting, but the situation is same for everyone, hence the play is fair.
Cotton is an important product for India; so how are we positioned as against our competitors and why the turmoil?
Cotton is a widely traded commodity around the world and any variation in any part of the world impacts the price. Currently, India is seeing higher demand of cotton, as China’s cotton is banned by the US, as of now and requirements of cotton have to be met by countries like India. Also, India is the largest producer of cotton, so it is a natural choice for cotton fulfilment, and this has a direct relation to the increase in price and if cotton price is increasing, it will lead to higher cotton yarn prices and the value chain will continue to see increased price at all levels. We keep discussing with various players on the issue, and though there is no conflict of interest, the interests are not properly aligned. We keep discussing with the supply chain so that the spinning industry doesn’t’ take undue advantage of this kind of situation and the prices are brought within the normal range. But the reality is that prices are governed by market forces as well as international prices, and beyond a point, even we can’t do much.
What is your take on rumours of hoarding of cotton to push up prices, as alleged by many players upstream?
Frankly, at one point of time, it was felt that maybe traders are buying most of the cotton, that they are storing and hiking the prices. So, we also experimented with a different type of auction from Cotton Corporation of India (CCI), having different auction platforms. One auction was held for the traders, and a separate auction was for the mills which consume directly and one was held even for the MSME sector. But we didn’t find any irregularities. We found that the off-take by the mills and MSME sector was not large, and I feel that this is the reason that people say that only a few buyers or traders monopolise cotton purchase, but this is not true. In fact, we have a very large number of people participating in CCI’s online process, which is a very transparent process.
Textile and apparel industry is also facing major challenges like shortage of containers and issues related to banks etc. Can we expect some solutions?
We are not blind to these issues. Shortage of containers is a problem in many countries and we are looking into this matter. Also, we understand that there are some concerns regarding the banks, hence soon MoT will have meeting with shipping line companies as well as the banks to get into the depth of the problem and henceforth find workable solutions.
Often the MSME sector complains that they can’t take advantage of most of the policies announced by the Government…your take on this and probable solutions?
Yes, most of our players are actually MSMEs and hence their voice is loud, but it is not like only big players are taking advantage. Of course, some policies are better utilised and designed for investments by the big companies like the PLI and MITRA scheme, but if we study the loop in impact, it will also help MSMEs across the supply chain.
Now, let’s take the case of RoSCTLs. Its benefit does not go only to big players as it has gone to 35,000 companies. Naturally, something which is in terms of percentage and depends on export turnover, will reflect bigger for the larger turnover companies, as they will get more benefit, proportionately to smaller companies. So, saying that MSMEs are left out is not right. Most of our schemes are meant for everyone including larger players as well as MSMEs.
The MSMEs need to be more aware and keep track of how to avail various benefits. Not being updated and aware is not an excuse.
Various states are doing their best to attract investment in the textiles sector but sometimes we see clashes between states in this regard, which seems unwanted if there is a common policy… what is your opinion on this?
India is a federal country and every state is free to compete with each other to attract investment. Also, investment in the textile sector is different than the other sectors because of the kind of employment generation which we see in apparel manufacturing. No other sector perhaps will have so much to offer to the states, by an investment. That is why we are seeing a slew of textile and apparel policies by different states, some of them are giving benefits directly under their industrial policy itself. Each state is making offers as per their strengths and weaknesses. It is for the companies making the investment to decide what they are looking for or what works for them. So, I really feel that states should be free to have their own policies and healthy competition between them only works in favour of the investor – the textile and apparel sector.
Indian Industry is focusing a lot on sustainable initiatives but not getting much advantage in terms of orders or more business? Is it that India is not branding its strength in sustainability and is the MoT planning something to promote sustainability, as a core strength of the industry?
It’s good that people are now talking so much about sustainability in the textile value chain. Sustainability, otherwise, is also a buzzword and rightly so. Sustainability is very important and it is good to see that our industry is focusing a lot on the same. The use of PET bottles for fabric manufacturing is a very good example of sustainability. India has an advantage because our industry is cotton-based and India is the largest producer of cotton as well as organic cotton also. All these are our strengths. What is needed is proper branding of sustainable textiles. We have recently started branding efforts with India’s cotton brand Kasturi Cotton. Similarly, we need to brand our sustainable textiles also.
Some of our programs are already focused on giving the sustainable efforts a fresh thrust, like the textile processing industry always has issues regarding pollution, so the MoT has a scheme called IPDS (The Integrated Processing Development Scheme). Under this, we try to set up CETP in various hubs so that our industry can become fully complaint, as well as major environmental issues are addressed. Being environmentally compliant is a selling point, similarly, our labour laws are certainly much better than some of our competitor countries and we don’t have any kind of unfair labour practices. These must be promoted, as they have never really been highlighted. The reality is that sustainability is our strength and we should highlight that. I hope with time and collective effort, the industry’s overall sustainable efforts will help to get more business into India.