The inclusion of a variety of knitted fabrics in an export incentive scheme has boosted knit production in India. Cotton fabric exports went up by about 10 per cent, this year because of the inclusion of the fabric when it was sold to Bangladesh and Sri Lanka. This was noted in the introduction of a new list on the Merchandise Exports from India Scheme (MEIS), which rewards producers with a financial incentive equivalent to two per cent of the total amount of exports.

As R K Dalmia, Chairman, The Cotton Textiles Export Promotion Council (Texprocil) and senior president, Century Textiles points out that Bangladesh and Sri Lanka were two main destinations for India’s cotton fabrics, which get converted into garments and are then exported to Europe and the US. Due to the lack of the conversion value, cotton fabrics are not exported from India directly to Europe and the US. Thus, inclusion of cotton fabric into MEIS would increase India’s competitiveness in Bangladesh and Sri Lanka, in comparison to other countries, which also includes China, he added.

Bangladesh and Sri Lanka, according to latest figure, hold 28 per cent of India’s cotton fabric shipments. Exports to Bangladesh rose by 11.2 per cent to $440 million last year, while those to Sri Lanka increased by 0.2 per cent to $245 million for the same period. However, India’s total exports of cotton fabric, soared by 16.3 per cent to reach $2.46 billion in 2014.