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Textile Industry

Cotton Textiles India


Export Promotion Schemes:
Target Plus: A new scheme to accelerate growth of exports called “Target Plus” has been introduced. Exporters who have achieved a quantum growth in exports would be entitled to duty free credit based on incremental exports substantially higher than the general actual export target fixed.(Since the target fixed for 2004-05 is 16%, the lower limit of performance for qualifying for rewards is pegged at 20% for the current year). Rewards will be granted based on a tiered approach. For incremental growth of over 20%, 25% and 100%, the duty free credits would be 5%, 10% and 15% of FOB value of incremental exports


a) Additional flexibility for fulfillment of export obligation under EPCG scheme in order to reduce difficulties of exporters of goods and services.
b) Technological upgradation under EPCG scheme has been facilitated and incentivised.
c) Transfer of capital goods to group companies and managed hotels now permitted under EPCG.
d) In case of movable capital goods in the service sector, the requirement of installation certificate from Central Excise has been done away with.
e) Export obligation for specified projects shall be calculated based on concessional duty permitted to them. This would improve the viability of such projects.An EPCG licence can also be issued for import of capital goods for supply to projects notified by the Central Board of Excise and Customs under S.No.441 of Customs Exemption Notification No.21/2002 dated 01-03-2002 wherein the basic customs duty on imports is 10% with a CVD of 16%.The export obligation for such EPCG licences would be eight times the duty saved. The duty saved would be the difference between the effective duty under the aforesaid Customs Notification and the concessional duty under the EPCG Scheme. (Details can be seen at Paragraph 5.1B of the Policy).

Export Obligations:
When Capital Goods are imported for pre/post – production or license is taken for import of spares, the license holder shall fulfill the export obligation by export of products manufactured from the plant/project to which the pre/post-production capital goods/spares are related.
(Details can be seen at Paragraph 5.4 of the Policy).
The licencee can also opt for the re-fixation of the balance export obligation based on 8 times of the duty saved amount for the CIF value in proportion to the balance Export obligation under the scheme. The guidelines for the re-fixation of export obligation is given in para 5.19 of the Handbook (Vol 1).
(Details can be seen at Paragraph 5.4 of the Policy).
The aforesaid facilities shall only be available to manufacturer/exporters/service provider on all the licences where export obligation period including extended export obligation period is valid on the date of application. In this regard, exports made only on or after submission of application for alternate item and/or re-fixation of the export obligation based on duty saved amount will be taken into account for fulfillment of export obligation.
(Details can be seen at Paragraph 5.4 of the Policy).
As per the provisions of para 5.4(i), the EPCG licence holder would have to maintain the average level of exports equivalent to the average of the exports in the preceding three licencing years for the same and similar products except for exempted categories given in Handbook (Vol. 1) during the entire period of export obligation.
Notwithstanding the above, the licence holder shall maintain at least 75% of the average exports in any particular year (s) provided the same is offset by excess exports to fulfill the average in other year (s). (Details can be seen at Paragraph 5.9 of the Policy).
The agro units in the agri export zones would also have the facility of moving the capital good(s) imported under the EPCG within the agri export zone. (Details can be seen at Paragraph 5.5.2 of the Policy). Service provider in Agri export zone shall have the facility to move or shift the capital goods within the zone provided he maintains accurate record of such movements. However, such equipments shall not be sold or leased by the licence holder. (Details can be seen at Paragraph 5.8 of the Policy).

Import of fuel under DFRC entitlement shall be allowed to be transferred to marketing agencies authorized by the Ministry of Petroleum and Natural Gas.

The DEPB scheme would be continued until replaced by a new scheme to be drawn up in consultation with exporters.

New Status holder Categorization:
The Scheme of status holders continues but the categorization of status holders from Export House, Trading House, Star Trading House and Super Star Trading House has been changed to one Star Export House, two Star Export House, three Star Export House, four Star Export House and five Star Export House. Star Export Houses shall be eligible for a number of privileges including fast-track clearance procedures, exemption from furnishing of Bank Guarantee, eligibility for consideration under Target Plus Scheme etc. The revised threshold limit for the recognition has also been lowered as can be seen from the table below:



over three


One Star Export House

15 crores


Two Star Export House

100 crores


Three Star Export House

500 crores


Four Star Export House

1500 crores


Five Star Export House

5000 crores


Units in Small Scale Industry/Tiny Sector/Cottage Sector, Units registered with KVICs/KVIBs, Units located in North Eastern States, Sikkim and J & K. , units exporting handloom/handicrafts/hand knotted or silk carpets, exporters exporting to Countries in Latin America/CIS/sub-Saharan Africa as listed in Appendix – 17C, units having ISO 9000 (series)/ISO 14000 (series)/WHOGMP/HACCP/SEICMM level-II and above status granted by agencies listed in Appendix – 28A, exports of services and exports of agro products shall be entitled for double weightage of export made for grant of Star Export House status. (Details can be seen at Paragraph 3.5.2 of the Policy).

1. EOUs shall be exempted from Service Tax in proportion to their exported goods and services.
2. EOUs shall be permitted to retain 100% of export earnings in EEFC accounts.
3. Income Tax benefits on plant and machinery shall be extended to DTA units which convert to EOUs.
4. Import of capital goods shall be on self-certification basis for EOUs.
5. For EOUs engaged in Textiles & Garments manufacture leftover materials and fabrics upto 2% of CIF value of quantity of import shall be allowed to be disposed of on payment of duty on transaction value only.
6. Minimum investment criteria shall not apply to Brass Hardware and Hand-made jewellery EOUs (this facility already exists for Handicrafts, Agriculture, Floriculture, Aquaculture, Animal Husbandry, IT and Services).

Free Trade and Warehousing Zone:
1. A new scheme to establish Free Trade and Warehousing Zone has been introduced to create trade – related infrastructure to facilitate the import and export of goods and services with freedom to carry out trade transactions in free currency. This is aimed at making India into a global trading-hub.
2. FDI would be permitted up to 100% in the development and establishment of the zones and their infrastructural facilities.
3. Each zone would have minimum outlay of Rs.100 crores and five lakh sq.mts. built up area.
4. Units in the FTWZs would qualify for all other benefits as applicable for SEZ units.

Import of Second hand Capital Goods:
1. Import of second-hand capital goods shall be permitted without any age restrictions.
2. Minimum depreciated value for plant and machinery to be re-located into India has been reduced from Rs.50 crores to Rs. 25 crores.

Common Facilities Centre:
Government shall promote the establishment of Common Facility Centres for use by home-based service providers, particularly in areas like Engineering & Architectural design, Multi-media operations, software developers etc., in State and District-level towns, to draw in a vast multitude of home-based professionals into the services export arena.

Procedural Simplifaction & Rationalisation Measures:
1. All exporters with minimum turnover ofRs. 5 crores and good track record shall be exempt from furnishing Bank Guarantee in any of the schemes, so as to reduce their transactional costs.
2. All goods and services exported, including those from DTA units shall be exempt from Service Tax.
3. Validity of all licences/entitlements issued under various schemes has been increased to a uniform 24 months.
4. Number of returns and forms to be filed have been reduced. This process shall be continued in consultation with Customs & Excise.
5. Enhanced delegation of powers to Zonal and Regional Offices of DGFT for speedy and less cumbersome disposal of matters.
6. Time bound introduction of Electronic Data Interface (EDI) for export transactions. 75% of all export transactions to be on EDI within six months.

Pragati Maidan:
In order to showcase our industrial and trade prowess to its best advantage and leverage existing facilities, Pragati Maidan will be transformed into a world-class complex. There shall be state-of-the-art, environmentally-controlled, visitor friendly exhibition areas and marts. A huge Convention Centre to accommodate 10,000 delegates with flexible hall spaces, auditoria and meeting rooms with high-tech equipment, as well as multi-level car parking for 9,000 vehicles will be developed within the envelope of Pragati Maidan.

Legal Aid:
Financial assistance would be provided to deserving exporters, on the recommendation of Export Promotion Councils, for meeting the costs of legal expenses connected with trade – related matters.

Grievance Redressal:
A new mechanism for grievance redressal has been formulated and put into place by a Government Resolution to facilitate speedy redressal of grievances of trade and industry

Quality Policy:
1. DGFT shall be a business-driven, transparent, corporate oriented organization.
2. Exporters can file digitally signed applications and use Electronic Fund Transfer Mechanism for paying application fees.
3. All DGFT Offices shall be connected via a central server making application processing faster. DGFT Head Quarters has obtained ISO 9000 certification by standardizing and automating procedures.

Bio Technology Parks:
Biotechnology Parks to be set up which would be granted all facilities of 100% EOUs.

Co-acceptance/Avalisation is introduced as equivalent to irrevocable letter of credit to provide wider flexibility in financial instrument for export transaction.

Board of Trade:
The Board of Trade shall be revamped and given a clear and dynamic role. An eminent person or expert on trade policy shall be nominated as President of the Board of Trade, which shall have a Secretariat and separate Budget Head, and will be serviced by the Department of Commerce.




Highlights of the Foreign Trade Policy

The Hon’ble Union Minister of Commerce & Industry, Government of India, had announced the Foreign Trade Policy on 8th April’05. Some of the Salient Features / Highlights of the proposals pertaining to Textile Industry in general and Handlooms in particular are. >> More

Salient features / Highlights of the Foreign Trade policy


Modern Processing Houses

The Indian Home Textile Industry has access to excellent infrastructure facilities and uses the latest technology and machinery.

Many manufacturers have set up state-of-the-art modern processing houses to roll out large volumes of high quality products to meet the international market demands and expectations. Needless to say that India’s Textile Exports have grown exponentially over the last decade.

Eco- Friendly Dyes: Use of Azo-Free Colours

The manufacturers in India are well aware that AZO free colours and dyes should be used. India has discarded the usage of banned materials in the dyeing process with safe substitutes, to ensure eco-friendliness of the products manufactured by the industry.