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 value. Last week, the Directorate General of Foreign Trade announced inclusion of cotton fabrics into MEIS for export to Bangladesh and Sri Lanka, which would mean a two% export incentive. About 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 the US. 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.
Bangladesh and Lanka form 28% of India’s cotton fabric shipments. Their export to Bangladesh rose 11.2% to $440 million in 2014 (calendar year), while those to Sri Lanka grew only 0.2% to $245 mn the same year. India’s total export of cotton fabric, however, surged 16.3% to $2,467 mn in calendar year 2014.
Fabric exports to Bangladesh and Lanka were hit between January and April because of unavailability of incentive schemes. Shipments to Bangladesh grew a marginal two% to $156.4 mn in those months; those to Lanka fell 3.7% to $77 mn, from the same period a year before.
“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.
