India Needs to Push for Value-Added Products over Raw Material, Intermediary Products

India is notorious for missing the bus be it Quotas or the COVID-19 aftermath. Efforts are made, mostly piecemeal. What was your thought as you took over the mantle of chairperson at the AEPC?
Sudhir Sekhri: I would not say that India is notorious for missing the bus, rather I would say using your analogy that we are little bit late in attracting investment and making right policy adjustments. This is primarily because the waves of COVID-19 were far more serious in India in comparison to some of the competing countries and given our large population and large geographical area it was tough to handle situation in a short span of time.

Yes, we have some challenges with regard to manufacturing, attracting investment, export and improving competitiveness. It is also true that we still have vast opportunities for attracting investment in India as global companies seeks to diversify their supply chain.

Some of the key challenges in attracting investment include: administrative/regulatory hurdles, costly credit, labour and land related challenges, and inadequate infrastructural facilities.

When I took over as Chairman of the AEPC, I knew my focus would be on two main areas:

1. attracting foreign investment in Indian textile sector; the recently concluded Bharat Tex event helped us in showcasing our strength to a global audience including top buyers and brands;
2. generating awareness among industry on issues related to sustainability, traceability and circularity. This will help MSME segment of textile value chain to get more access in global markets in rapidly changing regulations.

My immediate priority is of course to arrest the decline of RMG exports, and for this we will take necessary steps for product and market diversification and ESG compliance.

We are in challenging times where the supply chain is realigning itself and alternatives for better sourcing destinations are continuously being explored. We can definitely capture some of the space left vacant by our competing countries. My vision is to see that every RMG manufacturing unit in India become ESG compliant and industry, government, and council work together to strengthen Made-in-India RMG products which are valued as quality products globally. The Bharat Tex Expo 2024 was a great step in this direction wherein we could showcase our strength across the entire textile value chain.

Why do you think India has not been able to forge the right FTAs to be able to work out the exports in larger numbers? What is your take on the RCEP from which India pulled out? Do you think that decision helped the Indian textiles-apparel industry in any way? Could you please elaborate?
Sudhir Sekhri: With regard to FTAs, we have not been able to get the intended benefits due to two major reasons:

1. we are not producing products which are in high demand in those FTA markets, for example in Japan;
2. we concluded FTA with those countries who were our main competitors such as East Asian or South Asian countries.

With regard to RCEP, we had apprehensions that some of the countries could have been used as backdoor entry gate for Chinese products. But now, this scenario is changing. We have recently concluded FTAs with Australia and the UAE and we expect a significant positive impact on Indian apparel exports. For example, our apparel exports to Australia increased by 21% in January 2024 ($22.2 million) over its January 2021 ($18.2 million) level.

The new income tax, PLI, labour issues, urgent need for upskilling — which are the pain points and what needs to be worked out better? Do elaborate on each. 
Sudhir Sekhri: It is true that all of these are relevant issues for the Indian apparel export industry. We need tax reforms; the tax rates in India are still very high. There is the issue of inverted GST in textile value chain. The import duty on raw material particularly on many items of trimmings and embellishments is too high; recently the government imposed a minimum import price on synthetic knitted fabric. Skilled labour unavailability, high wages in comparison to many of the competing countries and outdated labour laws are another challenge.

The current PLI scheme for MMF is given with very high investment criteria and we have been demanding to launch a new version of PLI with low investment criteria. Apart from it, we are also demanding to reduce value addition criteria and to include cotton apparel in newer version of PLI. All of these will lead to building more capacity in the industry to achieve the target of $40 billion apparel exports by 2030.

Do you think there is an urgent need for the various trade organisations at the regional and national level to unite under an over-arching umbrella body to put forward a unified face of the Indian textile-apparel-fashion industry? Look at how Bangladesh has done that, emerging as one of the key pillars of its country’s economy?
Sudhir Sekhri: Yes, I totally agree with this. We have been advocating for very long that India needs to push for export of value-added products rather than raw material or intermediary products. If you look at the history of some of the economically successful countries also, you will find that the countries which are producing and exporting high value added have been able to sustain their economic growth in comparison to raw material exporting countries. These not only generate huge revenue but also create huge employment as it has the potential to trickle down the benefits. Apart from it, collaboration among various organisations is necessary. At the recently concluded Bharat Tex, we successfully did that where 11 export promotion councils (EPCs) worked together and held this mega event without any glitch.

If you were given complete freedom and just five steps to turn around the India textile-fashion export story to be able to beat China, Bangladesh and the newer ones threatening to upturn India’s apple cart, what would they be and how would you go about implementing them with that ‘magic freedom’?
Sudhir Sekhri: It is not right to talk about utopian things. Instead, we should focus on real issues and real policies which can be implemented given the strengths and drawbacks of our country. But if I have to list down five priority areas to boost Indian apparel exports, those will be:

• labour reforms;
• skilling of labour;
• investment in the entire value chain of textiles including in fabric, trimmings and embellishments and textiles machineries;
• removing infrastructural roadblocks, and
• ease in procedures and compliances.

We have a very high cost-to-logistics ratio due to a heavy reliance on road transport and poor port infrastructure; there is the presence of multiple stakeholders. Unavailability of skilled labour is another very big challenge. Most of the workers migrate time to time to their home states, and all of this leads to increase in costs and delay in production.

But I am proud that the Indian government under the visionary leadership of Prime Minister Narendra Modi is doing great work in this direction. If you look at the logistics performance index, our ranking has moved from 54 in 2013 to 38 in 2023. The PM MITRA scheme is also another positive move where the entire textile value chain will come at one single place to be vertically integrated so that overall production costs can go down. We are also highly thankful to Minister of Commerce and Industry, Textiles and Food and Public Distribution, Piyush Goyal, for taking such industry-friendly initiatives.

What do you think will be the long-term gains that can be expected from the just-concluded Bharat Tex 2024? From MoU/deal to production is often quite a distance. How do you see things to be materialising?
Sudhir Sekhri: The Bharat Tex event was not only meant to showcase India’s textile strength to global brands and buyers, but also to forge ties between foreign investors and Indian companies, to attract latest technologies in Indian textiles value chain and to project India as a true global leader in apparel manufacturing and exports. A number of MoUs were signed during the event and we will soon see an inflow of investment and latest technology coming to our country in the next few years. To translate these MoUs into real action, we need to focus on more activities in external markets and work in close collaboration with the Ministry of Textiles and the Ministry of Commerce and Industry.

Exporters are more cued in to global trends be it sustainability, transparency, SDGs et al. Why do you think not many have looked at the potential of the domestic market to launch a successful global brand?
Sudhir Sekhri: Making a global brand is not easy. It not only requires huge budgets for promotional activities and advertisements in the external markets, but also huge investment and use of latest technology in production. Unfortunately, over the past few decades Indian policies were more inward looking and to cater to the demand of domestic consumers. But now slowly things are changing. The current dispensation is committed to promote some of the prominent Indian brands to make them global. AEPC is also working to collaborate with such brands to promote ‘Made in India’ brands in external markets particularly through our exhibitions, roadshows and buyer seller meets. You will surely see a number of Indian stores in top cities such as London or Paris in the next few years.

How are you, as an organisation, gearing up to meet the changes that the proposed laws and regulations in the EU/US plan to bring about? Brands and retailers in EU/US are already working overtime to put things in place? What are Indian apparel exporters doing for their part?
Sudhir Sekhri: The AEPC is working to create awareness among Indian manufacturers in the textile value chain to make sustainability transitions. For this we are working and collaborating with a number of non-profit organisations such as Fashion for Good, Centre for Responsible Business, Good Business Lab, Only Good, Reverse Resources and many more. We are facilitating industry dialogue on fostering a sustainable textile supply chain in India and attempting to bring together innovators, changemakers by creating forums for knowledge exchange. The idea is to build credibility in the Indian textile value chain, mobilising companies and citizens, brands and policymakers through research, policy advocacy, capacity building and awareness generation.