Textile Industry
The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture.
Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country's economy.
Its vast potential for creation of employment opportunities in the agricultural, industrial, organised and decentralised sectors & rural and urban areas, particularly for women and the disadvantaged is noteworthy.
Although the development of textile sector was earlier taking place in terms of general policies, in recognition of the importance of this sector, for the first time a separate Policy Statement was made in 1985 in regard to development of textile sector. The textile policy of 2000 aims at achieving the target of textile and apparel exports of US $ 50 billion by 2010 of which the share of garments will be US $ 25 billion. The main markets for Indian textiles and apparels are USA, UAE, UK, Germany, France, Italy, Russia, Canada, Bangladesh and Japan.
The main objective of the textile policy 2000 is to provide cloth of acceptable quality at reasonable prices for the vast majority of the population of the country, to increasingly contribute to the provision of sustainable employment and the economic growth of the nation; and to compete with confidence for an increasing share of the global market.
Current scenerio
Developing countries with both textile and clothing capacity may be able to prosper in the new competitive environment |
|
after the textile quota regime of quantitative import restrictions under the multi-fibre arrangement (MFA) came to an end on 1st January, 2005
under the World Trade Organisation (WTO) Agreement on Textiles and Clothing.
As a result, the textile industry in developed countries will face intensified competition in both their export and domestic markets. However, the migration of textile capacity will be influenced by objective competitive factors and will be hampered by the presence of distorting domestic measures and weak domestic infrastructure in several developing and least developed countries.
The OECD paper says that while low wages can still give developing countries a competitive edge in world markets, time factors now play a far more crucial role in determining international competitiveness. Countries that aspire to maintain an export-led strategy in textiles and clothing need to complement their cluster of expertise in manufacturing by developing their expertise in the higher value-added service segments of the supply chain such as design, sourcing or retail distribution. To pursue these avenues, national suppliers need to place greater emphasis on education and training of services-related skills and to encourage the establishment of joint structures where domestic suppliers can share market knowledge and offer more integrated solutions to prospective buyers.
The textile industry is undergoing a major reorientation towards non-clothing applications of textiles, known as technical textiles, which are growing roughly at twice rate of textiles for clothing applications and now account for more than half of total textile production. The processes involved in producing technical textiles require expensive equipments and skilled workers and are, for the moment, concentrated in developed countries. Technical textiles have many applications including bed sheets; filtration and abrasive materials; furniture and healthcare upholstery; thermal protection and blood-absorbing materials; seatbelts; adhesive tape, and multiple other specialized products and applications. India must take adequate measures for capturing its market by promoting research and development in this sector.
The mood in the Indian textile industry given the phase-out of the quota regime of the multi-fibre arrangement (MFA) is upbeat with new investment flowing in and increased orders for the industry as a result of which capacities are fully booked up to April 2005. As a result of various initiatives taken by the government, there has been new investment of Rs.50,000 crore in the textile industry in the last five years. Nine textile majors invested Rs.2,600 crore and plan to invest another Rs.6,400 crore. Further, India's cotton production increased by 57% over the last five years; and 3 million additional spindles and 30,000 shuttle-less looms were installed.
The industry expects investment of Rs.1,40,000 crore in this sector in the post-MFA phase. A Vision 2010 for textiles formulated by the government after intensive interaction with the industry and Export Promotion Councils to capitalise on the upbeat mood aims to increase India's share in world's textile trade from the current 4% to 8% by 2010 and to achieve export value of US $ 50 billion by 2010 Vision 2010 for textiles envisages growth in Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010; creation of 12 million new jobs in the textile sector; and modernisation and consolidation for creating a globally competitive textile industry.
There will be opportunities as well as challenges for the Indian textile industry in the post-MFA era. But India has natural advantages which can be capitalised on strong raw material base - cotton, man-made fibres, jute, silk; large production capacity (spinning - 21% of world capacity and weaving - 33% of world capacity but of low technology);
|
vast pool of skilled manpower; entrepreneurship; flexibility in production process; and long experience with US/EU (European Union).
At the same time, there are constraints relating to fragmented industry, constraints of processing, quality of cotton, concerns over power cost, labour reforms and other infrastructural constraints and bottlenecks. E.g., cost of power was Rs. 8 per garment in India whereas in China it was only Rs. 2 per garment.
Further, for the benefit of exporters, there should be a state-owned cargo shipping mechanism. Several initiatives have already been taken by the government to overcome some of these concerns including rationalisation of fiscal duties; technology upgradation through the Technology Upgradation Fund Scheme (TUFS); setting up of Apparel Parks; and liberalisation of restrictive regulatory practices.
Shri Kamal Nath, Union Minister of Commerce & Industry, has said that India will take up the issue of non-tariff barriers (NTBs) in the World Trade Organisation (WTO) Doha round of multilateral trade negotiations, which are expected to gather steam from March 2005 onwards
On the eve of republic day president Kalam said that. "India is presently exporting six billion U.S. Dollars worth of garments, whereas with the WTO regime in place, we can increase the production and export of garments to 18 to 20 billion U.S. Dollars within the next five years. This will enable generation of employment in general and in rural areas in particular. By tripling the export of apparels, we can add more than 5 million direct jobs and 7 million indirect jobs in the allied sector, primarily in the cultivation of cotton. Concerted efforts are needed in cotton research, technology generation, transfer of technology, modernisation and upgrading of ginning and pressing factories and an aggressive marketing strategy."
Latest news in textile sector
- Ministry of finance has added 165 new textile products under duty drawback schedule. The new products included wool tops, cotton yarn, acrylic yarn, viscose yarn, various blended yarn/fabrics, fishing nets etc. Further, the existing entries in the drawback schedule relating to garments have been expanded to create separate entries of garments made up of (1) cotton; (2) man made fibre blend and (3) MMF. Separate rates have been prescribed for these categories of garments on the basis of composition of textiles.
- After the phasing out of quota regime under the multi-fibre pact, India can envisage its textile sector becoming $100b industry by 2010. This will include exports of $50b. The proposed targets would be achieved provided reforms are initiated in textile sector and local manufacturers adopt measures to improve their competitiveness. A 5-pronged strategy aiming to attract FDI by making reforms in local market, replacement of existing indirect taxes with a single nationwide VAT, liberalization of contract norms for textile and garments units, elimination of restrictions that cause poor operational and organizational performance of manufacturers, was suggested.
- The Union Minister Shankarsinh Vaghela said that the Board for Industrial and Financial Reconstruction (BIFR) had approved rehabilitation schemes for sick NTC mills at a cost of Rs 3,900 crore. Of the 66 mills, 65 unviable mills have been closed after implementing voluntary retirement scheme (VRS) to all employees.
According to him, the government has already constituted assets sale committees comprising representatives of Central and state governments, operative agency, BIFR, NTC and the concerned NTC subsidiary to effect sale of assets through open tender system.
- Proposals for modernization of NTC mills have been made to the consultative committee members, including formation of a committee of experts to improve management of these mills. Even the present status of jute industry was under the scanner of the consultative committee.
- The Government had announced change from the value-based drawback rate hitherto followed to a weight-based structure for textile exports that will discourage raw material exports and also curtail the scope for misusing the drawback claims by boosting invoice value of exports.
- NCDEX launched its silk contract (raw silk and cocoon) on Thursday, January 20,2005.. With this launch, the total number of products offered by NCDEX goes up to 27.The launch of the silk contract will offer the entire suite of fibres to the entire value chain ranging from farmers to textile mills. With the objective of protecting the interests of the those affected but WTO agreements and globalisation process, Government of India jointly with NCDEX has adopted a policy of encouraging future contracts of silk. The Ministry of Textiles and the Central Silk Board (CSB) had decided to introduce futures trading in mulberry cocoons and raw silk on NCDEX. The basic purpose is to mitigate the risk associated with the changing prices through an efficient price discovery mechanism. Futures trading on the NCDEX will provide an alternative trading avenue for farmers, weavers and traders and help them make a better price discovery for their produce. It will also help them to reduce risks associated with price volatility through hedging CDEX. The basic purpose is to mitigate the risk associated with the changing prices through an efficient price discovery mechanism. Futures trading on the NCDEX will provide an alternative trading avenue for farmers, weavers and traders and help them make a better price discovery for their produce. It will also help them to reduce risks associated with price volatility through hedging
|