Good times ahead for textile sector

55 IEms filed by companies during the first seven months of the current financial year

With markets opening up from January 1, 2005, the fortunes of Gujarat textile sector is brightening again with nearly 55 industrial entrepreneurs memorandums (IEMs) filed by corporates during the first seven months of this year.

While these 55 IEMs filed till July 31, 2004, promises new investment of Rs 2,530 crore in textile sector alone, the year also has been witnessing 35 projects under implementation thus bringing in Rs 2,094 crore of new investments, highest since 1999.

According to sources in the Industries Commissionerate of Gujarat, while in the first seven months 19 smaller projects have been commissioned worth Rs 50 crore, in 2003 only 23 projects were commissioned in the entire year.

"With the advent of open market next year, 47 per cent of the restricted markets will open up for free trade and so demand for textile products will increase significantly. Major textile players along with medium sized and smaller players are making new investments for expansion. While major names such as Arvind Mills, Welspun India are setting up new facilities to cater to the overseas markets post WTO, smaller ones such as Alok Industries, Bell Textiles is entering into specialised textile products as opportunities for new textile products are increasing with many sectors such as automobile providing new opportunities," said a senior official of state industries department.

According to him, with more and more car manufacturers setting up manufacturing base in India, demand for specialised textile products will be increasing. Welspun India is at present working on hiking its towel and terry towel manufacturing capacity to 21,000 tonnes from the existing 10,300 tonnes per year. It has also set up a new bed linen capacity at Rs 400 crore of investment.

In the case of GHCL which has so far been known as a major name in chemical manufacturing industry with specialisation in soda ash production, it is now diversifying into textile sector. The company has already decided to invest around Rs 200 crore for a fabric manufacturing unit in Gujarat.

According to data compiled by industries commissionerate, while in 2002, 77 IEMs were filed for textile projects worth of Rs 304 crore, in 2003, 77 IEMs were filed committing investment of Rs 1,154 crore.

Investment in the sector has been rising steadily. In 2002, 25 textile projects were under implementation bringing in Rs 55 crore of investment, next year, 50 projects were under implementation worth Rs 360 crore which has rose upto 35 projects under implementation at the cost of Rs 2,094 crore in 2004.

"Surat is now trying to regain its position in the textile world. The city contributes 65 per cent of country's yarn and manmade fabric production. Surat was facing stiff competition from southern Indian cities which offer lower-priced electricity apart from infrastructural advantages and now with state government coming up with sops for textile industry and Centre emphasising on utilisation of TUF , textile sector is reemerging here," said one of the leading manufacturers.