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QCO for cotton bales to boost exports

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January 31, 2023 NEW DELHI : The government is looking at bringing a new Quality Control Order (QCO) on items such as cotton bales and viscose yarn to boost exports and curb imports of sub-standard products, textile secretary Rachna Shah said. Amid signs of a sharp slowdown in textile exports, Shah said export orders have picked up in the fourth quarter and easing cotton prices will boost manufacturing. Edited excerpts:

The most important reason why QCOs are brought in is because there is more focus on quality. We have to compete with international quality. There are instances of substandard items coming in from other countries and it would seek to address that as well. For any QCO there are discussions with the industry and stakeholders are always there right from the stage of preparing for the QCO. And if there are genuine problems we are always open to accommodate as much as we can. We are in the process of bringing in a number of QCOs especially in technical textiles. For the QCOs, we are looking at cotton bales and viscose yarn. It’s a dynamic process and we will continually assess it.

While there is a push for duty concessions in the free trade pacts that we are signing, the EU, Canada and UK are competitive markets with established players. What is the government’s strategy?

One big disadvantage in these countries —UK, Australia, EU—is that the import duty on our products cuts into our competitiveness. But major competitors like Bangladesh and Vietnam—because of their ‘least developed country’ status—have better access. With the FTAs we will be able to get back that advantage. In terms of our cost becoming competitive, ultimately it is going to be the scale and size that will have a big impact. So the majority of our intervention such as PM MITRA, PLI scheme, all of that is targeting creation of size and economy of scale across all segments, so that we cut down logistics costs. With duty reduction along with building our scale and size, we will be able to complete very well in these markets.

Apart from the EU and UK, India is also negotiating an FTA with Canada. The duty in the UK and EU is 8 to 10%. In Canada the duty is actually 14 to 18%. So there will be significant advantages— the EU especially will be huge.

The IMF and World Bank have warned about a trade slowdown by the next financial year. What is the government’s strategy to battle this slowdown?

As compared to last year, the first three quarters have not been that optimistic. However, we expect that in the last quarter of the current financial year there would be picking up of momentum especially in ready-made and man-made fibre. Global recession has impacted our major markets—both EU and US. The order position in the fourth quarter has improved. High prices of cotton have eased and in the next couple of months there could be green shoots for manufacturing. And the FTAs, PLI scheme on man-made fiber and technical textile we can expect to have a much larger presence in the global trade.

The PM MITRA scheme is a major intervention that the textile ministry is shepherding. It will seek to bring in that kind of scale and size that we are looking at in the textile sector. Because of that necessary due diligence in terms of ensuring as and when the parks are announced and they can take off in the right way. We are in the process of evaluating the proposals from the states. And we have sort additional information from the states and we are in the process of putting it together. Creating the park is one part but you have to be able to attract the right investment. So all of that work is presently on. MITRA park is also a scheme where the states and the centre would work very closely together as there would be a special purpose vehicle (SPV) with participation of the union government and the state government. PM Gati Shakti is also being used to access the locations feasible for a textile park.

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