NEW DELHI: Cotton fabric exports are likely to rise at least 10% this year because of inclusion of the fabric in the Merchandise Exports from India Scheme (MEIS).
Products notified under MEIS for any specific market are eligible for reward on the free-on-board (FOB) value.
Last week, the Directorate General of Foreign Trade (DGFT) announced inclusion of cotton fabrics into MEIS for exports to Bangladesh and Sri Lanka, a move which would offer export incentives of 2%. Currently, more than 4,000 items are included in MEIS.
“Bangladesh and Sri Lanka are two major destinations for India’s cotton fabrics, which get converted into garments and are then exported to Europe and the United States. Owing to the lack of conversion value, cotton fabrics are not exported from India directly to Europe and United States. So, inclusion of cotton fabric into MEIS would increase India’s competitiveness in Bangladesh and Sri Lanka with respect to other countries including China, which will ultimately help increase India’s fabric exports at least by 10%,” said R K Dalmia, Chairman, The Cotton Textiles Export Promotion Council (Texprocil) and senior president, Century Textiles.
The two export destinations – Bangladesh and Sri Lanka – form 28% of India’s cotton fabrics shipments and are significant.
While cotton fabric exports to Bangladesh recorded 11.18% jump to $439.89 million in 2014 (calendar year), exports to Sri Lanka witnessed a negligible growth of 0.24% to $244.91 million in the same year. India’s total exports of cotton fabrics, however, shot up by 16.29% to $2466.61 million in the calendar year 2014.
Surprisingly, cotton fabric exports to these two destinations took a hit between January and April this year because of unavailability of incentive schemes.
Shipments to Bangladesh grew by a marginal 2% to $156.39 million during January – April 2015. By contrast, cotton fabric exports to Sri Lanka slumped by 3.73% to $76.95 million in the first four months of the current calendar year as against $79.93 million in the same period last year.
“Inclusion of cotton fabrics under MEIS to Bangladesh and Sri Lanka will certainly help India’s exports,” said D K Nair, Secretary General of the Confederation of Indian Textile Industry (CITI).
