T&A Industry Steps Up Demand To Revoke QCOs On MMF & Yarn

The domestic textile industry has stepped up its demand to review the continuing imposition of Quality Control Orders (QCOs) on man-made fibre and yarn, the key raw material for the downstream MMF segment. Raising alarm on the issue, the Confederation of Indian Textile Industry (CITI) has stated that contrary to ensuring quality supply of these raw materials, the QCO regulation is adversely impacting the domestic industry.

The apex industry body has emphasized that the QCOs, which block the import and sale of materials lacking a Bureau of Indian Standards (BIS) mark, is diminishing the competitiveness of the downstream MMF industry. It is also creating a significant barrier to accessing essential raw materials at a time when the industry is closely watching the impending tariff barriers from the US.

The industry is of the view that the BIS certification process is particularly challenging for micro, small and medium enterprises (MSMEs), which are crucial players in the textile industry. The complex and time-consuming process is discouraging these smaller businesses from obtaining the certification, leaving them unable to import essential materials.

The apex textile body points out that countries like Bangladesh and Vietnam do not face such restrictions, allowing their industries to freely access raw materials without any non-tariff barriers. In contrast, India’s imposition of the QCOs on man-made fibres and yarn has created an artificial trade barrier, hindering the free flow of these critical inputs. This has resulted in shortages of specialized fibre and yarn varieties, which, in turn, has driven up domestic prices, putting additional strain on the industry.

“The expensive raw material is severely affecting the cost competitiveness of the downstream textile products. Since the downstream segment has the highest employment elasticity in the entire value chain, it is endangering the livelihoods of the millions of people employed in the sector,” says Rakesh Mehra, Chairman, CITI.

“As India aims to achieve its ambitious target of a $350-billion textile market by 2030, including $100 billion in exports, it is crucial for the government to ensure the ample availability of all raw materials at globally competitive prices. To support this, the government may consider liberalizing import policies and reducing the basic customs duty (BCD) on all MMF fibres, filaments and essential chemicals like PTA and MEG, which are critical in the production of these raw materials,” adds Mehra.

“It is high time that the Union government reviews its decision and revoke QCOs on man-made fibres and yarn. In the last couple of years, it has severely impacted the competitiveness of the downstream industry which is already faced with multiple challenges. Instead of ensuring quality, QCOs are creating a barrier to accessing raw materials. The whole process of BIS certification is very cumbersome,” states Gurudas Aras, Strategic Advisor to ITA GmbH, Rabatex Industries, and Yamuna Machine Works, and Independent Director at Rossari Group of Companies.

“Raw material is a crucial input and any hindrance on that part can adversely impact the business. QCOs have so far been counterproductive and need to be relooked. On the one hand, it seems we are trying to promote MMF industry, on the other, we are creating restrictions on the raw material supply at competitive pricing. In the last few years, our exports have stagnated as we are unable to compete in the global market,” says Sanjay Jain, MD, TT Ltd.

Meanwhile, the Economic Survey 2024-25 has recently also highlighted the rising costs of textile exports. It says that Indian apparel exports do not get a level playing field compared to their competition. While the textile and apparel industry contributes 2.3 per cent to India’s GDP, 13 per cent to industrial production and 12 per cent to exports, a lack of localisation and the complexity of the value chain results in higher costs relative to global competitors.

The Economic Survey views that while Indian T&A exporters are faced with multiple headwinds, vertically integrated ‘fibre-to-fashion’ firms in competitor nations such as China and Vietnam export low-cost products, maintain consistent quality and are nimble enough to adjust to the fast-changing nature of the industry. Simple and liberal customs procedures further reduce regulatory costs and lend a competitive edge to the exports of global textile competitors such as China and Vietnam.

“Indian textile exporters are constrained by complex procedures, which require exporters to meticulously account for every square centimetre of fabric, buttons and zippers used. Similarly, pre-shipment inspection certificates are required for textile imports, which slows down logistics and raises costs for the textile business,” states the survey.

However, the survey is of the view that India has a great opportunity to align with the evolving global shifts in apparel demand. While India’s comparative advantage lies in cotton and cotton-based products, the global demand has shifted to products made from man-made fibre. “MMF-based products range from yoga pants and athleisure wear to technical textiles in aviation, aerospace and automobiles. By tapping into the MMF value chain, India will benefit from the steady rise in global MMF demand. India’s share of global MMF production is currently 9.2 per cent, and the potential to catch up with the production levels of global leaders like Vietnam, China and Taiwan is high,” says the survey

The survey suggests that the MMF sector must move towards vertical integration and significantly invest in research and development and sustainable production techniques to match the quality of competition and reap value gains from MMF production. Highlighting how India’s textile sector has several tailwinds working in its favour, the survey said that such tailwinds cannot be fully exploited without lowering the costs of the textile basket and deepening our market share in the MMF sector.