Experience of India in promoting Textile Industry

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Experience of India in promoting Textile Industry
recommendations for Uzbekistan
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Indian Textiles- Over View

• The Indian Textile Industry is growing at 20 and
  accounts for 4 of Indias GDP.
• It contributes 14 to the Industrial Production
• Employs about 38 million people. Expected to
  generate 12 million new jobs by 2010.
• 18 employment of industrial sector is in
  textiles
• It accounts for 30 of India Gross Export
  Earning.

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Indian Textiles- Over View

• India contributes 20 to world spindlage
  capacity, the second highest spindlage in the
  world after China. It contributes 6 to the
  world rotor and 62 to the world loomage.
• 12 of the world production of textile fibres
  and yarns is from India. India is the largest
  producer of Jute, second largest producer of silk
  and cellulose fibre / yarn, second largest
  producer of cotton and fifth largest producer of
  synthetic fibres / yarns.

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Indian Textiles- Over View

• Textile exports are targeted to reach 50 billion
  by 2010.
• Many worlds' leading brands like Wal-Mart, Marks
  Spencer, Carrefour, Banana Republic, Tommy
  Hilfiger, Gap, Liz Claibome, Polo etc, are
  sourcing products from India.

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Experience of India

• Government policies of liberalization and the
  innovative supports over the past couple of years
  have shown tremendous growth
• Government has adopted simplification of
  procedures and formalities for the exporters

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Experience of India

• Concept of EOU No VAT, No excise Duty, 75
  Export and 25 Domestic Sale allowed
• Concept of SEZ/ EPZ Relaxed Labor Laws, Prompt
  custom clearance. A Special Economic Zone (SEZ)
  is defined as a specially delineated duty free
  enclave for trade operations. This area is
  reckoned as a foreign territory for the purpose
  of duties and tariffs.

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Experience of India

• Cash Incentives on Exports ranging from 4 to 20
• Payment Terms Payment realization allowed till
  180 days. Further Extension of 180 days based on
  genuine reasons also allowed. Shipments on CAD
  (Cash Against Document) basis also allowed

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Experience of India

• Abolishing of Inspectors rule. Everything
  Voluntary.
• Customs clearance on priority Electronic Data
  Interchange (EDI) to fasten the operations
• Availability of working capital at LIBOR 1. Pre
  shipment credit up to 75 of the order value
  available from Bank.

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Experience of India

• Concept of Deemed Export
• Concept of Merchant Exports.
• Concept of Clusters Like Ludhiana, Tirupur,
  Coimbatore, Panipat, Noida, Erode, Salem
  propelled by strong associations.
• Concept of Apparel Parks The apparel parks
  operate as Special Purpose Vehicle and are run
  independently by entrepreneurs.
• With countries like Sri Lanka, Singapore, South
  Africa, Bangladesh, Thailand and China etc a
  series of special trade agreements have been
  signed which is resulting in rapid growth of
  Indian exports.

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Experience of India

• Technology Up gradation Fund Scheme (TUFS) The
  industry is being modernized via an exclusive
  scheme, which has set aside 5bn for investment
  in improvisation of machinery. Eligible firms can
  receive loans for upgrading their technology at
  interest rates that are 5 percentage points lower
  than the normal lending rates of specified
  financial institutions in India. This interest
  rate incentive is intended to bring the cost of
  capital in India closer to international costs.

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Experience of India

• GSP issuance by Chamber of Commerce
• No Tax on Property. Only personal property is
  Taxed
• Cotton price is fixed for the quantity booked.

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Recommendations for Uzbekistan
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Recommendations for Uzbekistan

• Customs clearance needs to be swift. On line
  systems to speed up the things
• Cumbersome export documentation needs to be
  simplified. Contract registration in banks
  customs should not be there to start with.

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Recommendations for Uzbekistan

• Property Tax needs to be abolished 3.5 tax
  discourages Investments for modernization
  capacity enhancements
• Turnover Tax needs to be abolished 3.2 tax act
  as a dampener for Exports promotion
• Deemed Exports should be considered as exports
  all export benefits like no turnover tax should
  be levied

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Recommendations for Uzbekistan

• Merchant export should be allowed. It means
  abolishing the levying of VAT and other taxes on
  the export of goods and services by intermediary
  companies and provide them with the same
  privileges that producer-exporters enjoy.
• GSP should be issued by Independent, Non
  Government organizations.

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Recommendations for Uzbekistan

• Cotton price should be fixed for the booked
  quantity on the day of 15 pre payment.
• Working capital Pre Shipment Credit should be
  available for exporters

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Recommendations for Uzbekistan

• More incentives needs to be given as logistic
  costs are very high and present incentives are
  not sufficient to cover high logistic cost
• For inputs, VAT on cotton should not be charged
  as procedure for refund is too long. Working
  capital requirement goes up by 20.

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Recommendations for Uzbekistan

• Uzbek producers have to compete with countries
  that enjoy favorable trade agreements with
  duty-free or low-duty export of their goods to
  the largest markets of Europe and USA.
• For Uzbekistans exports to such markets, duties
  constitute 14-18 of the amount of contracts.
  Cotton yarn, fabrics, ready-made garments and
  knit-wear exported by Uzbekistan to the EU, for
  example, suffer from customs duty at 4.2, 8.4,
  9.6 of the total cost, respectively. On the
  other hand, imports from some countries, such as
  Turkey, Syria, Egypt and Nigeria are free of duty.

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Recommendations for Uzbekistan

• The banking system needs to be more friendly.
• The rule of 100 prepayment L/C at sight should
  be re looked. This payment method prohibits
  prospective importers since it requires them to
  tap into their liquid funds for a certain period
  of time.
• Furthermore, this instrument of monetary control,
  entail delays and additional costs to exports.

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Recommendations for Uzbekistan

• Payment realization limit should be raised to 180
  days. It should be extendable on the basis of
  genuine reasons for further 180 days.
• This restrictive financial environment is also
  one of the reasons for slowing FDI into
  Uzbekistan

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Recommendations for Uzbekistan

• In order to enhance the involvement of the
  private sector in export operations, an
  Export-Import Bank for Uzbekistan may be created
  which can act as a catalyst to banking services
  which could provide export crediting and
  insurance of export loans

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THANK YOU