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Foreign Direct Investments (FDI) in Clothing & Apparel Industries in India-2: Lawyers Advice

 > E Commerce  > Foreign Direct Investments (FDI) in Clothing & Apparel Industries in India-2: Lawyers Advice

Foreign Direct Investments (FDI) in Clothing & Apparel Industries in India-2: Lawyers Advice

Applicable Laws:
• Central Silk Board Act, 1948: Enacted with the purpose to develop and control the silk industry and to establish Central Silk Board.
• The Textile Committee Act, 1963: The Act was enacted to facilitate the establishment of a Committee that ensures the quality of textiles and textile machinery and for matters connected therewith in India.
• The Textile Undertakings (Taking Over Of Management) Act, 1983: The Act provides for the taking over the management of the textile undertakings of the companies specified in the First Schedule pending nationalization of such undertakings, in public interest.
• The Jute Companies (Nationalisation) Act, 1980: An Act to provide for the acquisition and transfer of the undertakings of the jute companies specified in the First Schedule with a view to securing the proper management of such undertakings so as to sub serve the interests of the general public by ensuring the continued manufacture, production and distribution of articles made of jute.

Documents and Agreements:
• Site Plan
• No objection Certificate from the Local Body
• Detailed layout plant of different processes and point sources of effluent discharge/emissions and position of stack.
• Information about Water /Air Pollution Control devices proposed to be provided in the set up.
• Details of treatment and disposal of hazardous and non-hazardous waste
• Under taking on Rs. 20 stamp paper or Chartered Accountant certificate about proposed Capital Investment
• List of Raw Material With monthly or annual consumption.
• List of manufacturing Products along with monthly or annual consumption.

Functioning & Management:
• Consciousness on Quality: Textile producer should ensure the highest quality of fabric used and the use of best dye and colours.
• Latest Technology: Textile producer shall use the latest technology to ensure the product of quality products to match international standard with low costs.
• Waste Treatment: It is important to carry out monthly maintenance, to ensure that all the outgoing effluent is treated well so that environment is not polluted.
• Training: Proper training of the workers to ensure the production is effective and cost effective.
Taxation Aspects:
• Goods and Services Tax (GST): According to Ministry of Textile, the new tax reform would have the ‘Fibre – Neutrality Effect’, which means that all man-made fibre and natural fibre would be treated as same from the tax point of view. This will promote diversification in the industry with the blending of synthetic fibre with cotton fibres.
• Basic Customs Duty has been reduced to 2.5% for raw materials used in the manufacture of technical textiles and specialty fibers and yarns.
• Textiles and all other sectors which currently enjoy incentives up to 2% over MEIS will transit into Remission of Duties RoDTEP from 1.1.2020. In effect, RoDTEP will more than adequately incentivise exporters than existing schemes put together

Export Potential:
• The export market of textile in India is expected to reach USD 62 billion by 2021 from the USD 38 billion in 2016.
• The categories that saw the highest growth were, wool & woolen textiles readymade garments, silk, carpets, and handicrafts.
• Traditionally, India’s key export has been to countries in Europe and America, but new markets have emerged like Russian, Iran and South America that are opening new possibilities of further growth.
Recent Developments:
• In the Union Budget of 2020-21, a Government has proposed a National Technical Textiles Mission for a period from 2020-21 to 2023-24 at an estimated outlay of Rs 1,480 crore.
• In September 2019, India witnessed an increase in textile export by 6.2% post GST and compared to pre-GST stage.
• The Government has announced a Special Package to boost exports by US$ 31 billion, creating 1 crore job opportunity in the country and attracting investments worth more than Rs 80,000 crore during the period 2018-2020. As of August 2018, the scheme has generated an additional investment of Rs 25,345 crore and exports worth Rs 57.28 billion.
• Government of India through The Cabinet Committee on Economic Affairs (CCEA) has approved a new scheme ‘Scheme for Capacity Building in Textile Sector’ with the aim of skill development with an estimated outlay of Rs. 1,300 Crores.

Authored By: Adv. Anant Sharma

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