The textile ministry is soon planning to seek the cabinet approval for the National Fibre Policy, which aims at ending tax disparity between cotton and man-made fibre.

In the draft policy, the textile ministry has expressed concern over the "historical discrimination" between man-made fibres (MMF) and cotton in terms of taxation.

"We will go to the cabinet as quickly as possible,” textiles secretary Rita Menon said.

While cotton is exempted from excise duty, MMF attracts eight per cent levy. The differential treatment is also visible further in the value-chain.

MMF textiles attract an excise of eight per cent, but cotton textiles have an optional duty of four per cent.

"Any reduction in excise duties on MMF and MMF textiles will have a highly positive impact on the growth of MMF consumption," the draft policy, which has been put in the public domain, said.

With a view to strengthen the fibre economy of the country and make Indian textiles and garments sector competitive in the medium as well as long-term, the ministry had last year constituted a Working Group to formulate a the policy for the textiles and garments sector of the country.

Within the Working Group, eight sub groups were formed including cotton, man-made fibres, jute, silk, wool, other natural fibres, speciality fibres (technical textiles), and speciality (suvin and organic) cotton.

The constitution of each sub-group comprised of a convener from the government’s side and a co-convener from the industry side along with other members, representing officials from the concerned ministries, boards, associations and majority representatives of the industry. The ministry has also been holding various rounds of consultations with stakeholders to design the policy to do away with the conflicting interests in the textile value.

It would soon circulate the draft cabinet note for inter-ministerial in the next few days and the process is expected to be completed by the end of this month.

The ministries of agriculture, chemicals and commerce would be involved in the consultation process.

The policy would focus on improving quality of the fibre produced in the country and correcting fiscal anomalies that are currently present in the fibre eco-system in order to ensure balanced growth of the textile industry.

The policy aims at augmenting investment and providing support on both fiscal and non-fiscal front to increase fibre availability in the country and facilitate high growth and competitiveness of the textile sector.

“It will also provide assistance for building capacity in both industry segment and human capital required for processing the expected surge in the fibre production,” the draft said. In the $63-billion Indian textiles industry, man-made fibre accounts for 41 per cent of fibre consumption, while cotton accounts for 51 per cent. In comparison, the ratio of man-made fibres to cotton consumption globally is 60:40. The global fibre consumption trend is likely to further tilt in favour of man-made fibres on account of limitations in the growth of cotton production worldwide due to limited availability of land for cultivation, according to the draft paper.

"Given that the future demand is expected to be largely in favour of man-made, fibre-based textiles, special attention is required to boost the consumption and production of man-made fibres in India," it said.

The policy would also focus on significant institutional strengthening mechanisms like establishment of an inter- ministerial committee of secretaries headed by the Textiles secretary to calibrate cotton exports aimed at ensuring improved supply chain management for domestic consumption.

It also aims at setting up of a Yarn Advisory Board for formulation of a yarn balance sheet to ensure adequate yarn availability for handlooms and garment sector.

THE NATIONAL FIBRE POLICY HAS THE FOLLOWING OBJECTIVES:

1) Augmenting investment and providing support on both fiscal and non-fiscal front to increase fibre availability in the country and facilitate high growth and competitiveness of the textile sector,

2) Focusing on improving quality of the fibre produced in India,

3) Devising means to augmenting remuneration of all the stakeholders within the fibre eco-system,

4) Correcting fiscal anomalies and policy limitations that are currently present in the fibre eco-system in order to ensure balanced growth of the textile industry,

5) Providing assistance for building capacity in both industry segment and human capital required for processing the expected surge in the fibre production,

6) Supporting modernisation and technological up-gradation of various segments of the industry, to increase its competitiveness,

7) Addressing the problem of infrastructure bottlenecks.