Sops for textile units likely

The government is considering a package of measures including loans carrying 3-4 per cent interest for large textiles processing industries.

Senior government officials said that in a proposal to the Union Cabinet, the textiles ministry has asked for an additional interest subsidy of 5-8 per cent for units processing one lakh metre a day fabrics using the continuous dyeing process under the textiles upgradation fund (Tufs).

The continuous dyeing process generates high quality cloth with uniform colour shades by using specialised machinery that costs upwards of Rs 70 crore.

At present, Bombay Dyeing, Vardhaman and Alok Industries, are among the few using this technology in India.

Officials said that the benefits of lower interest rates under Tufs, where loans are available at 10-12 per cent, would also be made available to those companies which have already availed the loan facility for the requisite machinery.

Speaking at a seminar on textiles exports organised by DHL as part of the Lakme India Fashion Week, textiles secretary SB Mohapatra said a package of measures for the processing sector was on the anvil.

Though fragmentation of the industry and infrastructure bottlenecks were faced by the Indian textiles sector, he said that the industry was poised to take advantage of the dismantling of export quotas from January next year.

The same view was echoed in the DHL-McKinsey survey, but Arvind Singhal of KSA Technopak was of the opinion that India had been slow to reform and will take some time to catch up with companies from other markets once quotas were dismantled.

He said that by 2010, the world's top 10 retailers would control 25-30 per cent of the textiles and apparel market adding up to $ 130 billion.

Many of these top retailers, he said, had come to India but after looking at the fragmented industry, with a majority of the units in the small- scale sector, they had decided against sourcing from India, except in certain segments like home clothing.

"Most exporters will have to shut out because they do not have adequate capacity," he said.

Besides, Singhal said that prices would be increasingly under pressure once quotas were phased out, putting additional pressure on manufacturers.

According to him, the value of exports would dip in 2005 before stabilising in the next year.