Government to frame policy for textile sector in Gujarat

State plans to set up separate ministry for the textile and apparel industry

The Gujarat government is planning to come up with a policy to boost the textile and apparel industry in the state and help it remain competitive in the post-quota regime of the World Trade Organisation.

The government has assigned an international firm, KSA Technopack, to conduct a study on the textile and apparel industry of the state and suggest measures for the development of the sector.

The agency has submitted the first part of its report in April, 'A plan for textile and apparel industry, resurgence in Gujarat.'

The final report is expected to be with the government by this July. The government also plans to set up a separate ministry for the textile and apparel sector with a special principal secretary as in Maharashtra and Tamil Nadu.

"With dismantling of the quota regime by the end of this year, there would be a thrust on textile exports. Gujarat has its core competence in the textile sector and needs a special policy for the sector," a state industries department official said.

"The state will face new challenges from 2005 when the rules and regulations of the WTO will become effective and competition will increase in the international textile market," the official said.

Indian textile exports are at present pegged at around Rs 25,000 crore annually. It is all set to witness over three-fold growth to over Rs 75,000 crore annually after the post quota regime. Gujarat accounts for over 40 per cent of the textile exports, and is the largest producer of cotton. The new policy is expected to focus on cotton spinning, which has a huge potential since over 80 per cent of the cotton produced in the state goes to other states for value addition.

The policy is also expected to address the issue of high electricity rates, which adversely affect the industry.

There is a need for reintroducing the exemption limit of Rs one crore in excise duty to the ready-made garments industry.

The issues of Cenvat, technology upgradation schemes and interest subsidy are the other issues expected to be addressed.

The textile industry in Gujarat is facing numerous problems. Traders and weavers in the state's textile hub, Surat, have lost crores of rupees after many firms closed down after defaulting on payments. Representatives of the Federation Of Gujarat Weavers' Associations had recently decided to meet Union finance minister P Chidambaram and Union textiles minister Shankarsinh Vaghela demanding abolition of Cenvat (central value-added tax).

This decision was taken at a meeting of the steering committee of the federation at the Sachin Industrial Association.

The committee also discussed means to curb the menace of vanishing textile firms and decided to form a core committee to hold talks with the government regarding Cenvat.

The issue of vanishing textile firms was also discussed in the meeting.

Patel said, "A major reason behind the increasing instances of firms going defunct and defaulting on their payments is overproduction. There is no demand for grey in the market, so weavers supply grey to just about anyone, even if it means taking a lot of risk. The cheats are taking maximum advantage of this situation."

"In the interest of the powerloom industry, we have appealed weavers to observe a voluntary bandh. This will help reduce production and hopefully prevent more weavers from falling prey to the cheats," Patel said.

The committee "blacklisted" five textile markets.

Bipin Ramani, a member of the steering committee, said, "Fifty textile firms have vanished in the past six to seven months. A majority of them were operating from Millennium Textile Market, Silk City Market, Hariom Market, Shivshakti Textile Market and Kohinoor Market."

"We have asked weavers to be careful in dealing with new traders who open shops in these markets. We have also asked associations of these five textile markets to check the antecedents of new traders before renting shops to them," Ramani said.

The police department was once again the target of attack during the meeting.

Manu Patel said, "It is a known fact that the police department has not initiated any steps against owners of vanishing firms. This has given a free hand to the cheats and has in a way encouraged them. To protest inaction of police, we have decided to organise a rally and a public meeting."

The date of the protest rally has not been decided yet.

"Another meeting of the federation steering committee will be held by the end of this week, which will decide the date," Patel said.

Over 50 textile firms have vanished from Surat since Diwali. Weavers alone are estimated to have lost about Rs 75 crore to Rs 80 crore because of this.