Textile Industry Calls For Removal Of QCOs Amidst Supply Chain Struggles

New Delhi, Jul 12 (KNN) The Indian textile sector is grappling with significant challenges as downstream synthetic textile manufacturers urge the government to revoke Quality Control Orders (QCOs) on man-made fibres (MMF).

These QCOs, implemented to ensure product quality, have reportedly impacted the competitiveness of the MMF supply chain by restricting access to affordable and specialised raw materials, reported The Indian Express.

Industry representatives claim that the textile sector, already struggling with weak domestic demand and declining exports, has been further affected by QCOs on polyester and viscose inputs.

This has resulted in substantial idle production capacity and financial strain for many companies.

Rakesh Mehra, Chairman, Confederation of Indian Textile Industry (CITI), stated, "The basic raw materials are at least 20 per cent more expensive in India than elsewhere in the world. This is severely impacting our competitiveness."

The implementation of QCOs on polyester staple fibre (PSF) and viscose staple fibre (VSF) in early FY24 has led to increased market prices for these inputs.

The Bureau of Indian Standards (BIS) certification process, required under the QCOs, has been described as highly selective by industry players.

This has resulted in a significant drop in imports of both PSF and VSF in FY24 compared to the previous year.

Export data compiled by CITI shows a downturn in the MMF textile sector for FY24. MMF apparel exports decreased by 22 per cent, while overall exports in the MMF sector fell by 11 per cent compared to FY23.

In response to these challenges, industry bodies have called for the suspension of PSF and VSF QCOs for several years to allow domestic upstream manufacturers to become more competitive.

They argue that temporary removal of these QCOs would help revitalise the sector by improving access to cheaper raw materials and enhancing sourcing flexibility.

The government has provided partial relief by exempting VSF and PSF imports fr0m QCOs under the advance authorisation scheme.

However, industry representatives argue that this exemption is insufficient and advocate for the complete removal of QCOs on textile inputs.

The decline in exports persists despite the government's Production Linked Incentive (PLI) scheme for the MMF sector, which has a financial outlay of Rs 10,683 crore.

Industry experts cite multiple factors for the export contraction, including raw material availability issues arising fr0m QCOs, global demand slowdown, an inverted duty regime, and the labour-intensive nature of India's textile production affecting its competitiveness.

As the situation unfolds, the textile industry awaits further government action to address these challenges and improve the sector's global competitiveness.

(KNN Bureau)