New Delhi: India needs to cut duties and speed up reforms for the textiles sector to grow by 22% in the next three years and overcome the adverse impact of a firm rupee, an industry body said.
The Associated Chambers of Commerce and Industry of India (Assocham) said the sector could attract $55 billion in investments and create job opportunities for 65.4 million, helping it expand by an average 22% by 2010 with reforms.
“Hardening of rupee has already effected the competence of textile sector as its margins have lowered and international competition has become stiff. The textile sector would lose its glare for good provided reforms are further delayed,” it said.
The rupee appreciated more than 12% this year and squeezed margins of textile exporters, who have cut output and jobs.
Assocham said the government has to realign duties as it differs for various segments of industry and cut customs duties on textile machinery.
The excise duty on finished man-made fabric is 8%, while that on raw material is 16%.
The chamber also recommended further cut in interest rates on export credits.
The industry is governed by stringent labour laws that hamper its competitiveness and delay induction of reforms, it added.
Domestic companies invested Rs33,000 crore ($8.4 billon) in expanding capacities during the fiscal 2006-07, compared with Rs21850 crore in 2005/06, it said in a report on Sunday.
Total output of the sector is estimated at $47 billion — domestic market at $30 billion and export market at $17 billion.