There is no time for a farewell party for Rita Menon, as she superannuates as secretary to the ministry of textiles by December 31. Always a taskmaster, Menon is busy laying the roadmap for her successor in order to elevate Indian textile industry to the next level. In an interaction with Nayanima Basu, she elaborates on the government’s focus on textiles sector under the 12th five-year plan. Edited excerpts:
The restructured TUFS (technology upgradation fund scheme) that came into effect from this April 1 has failed to encourage the industry, which is still clamoring for more stability. Your view?
I think its popularity has not waned. Only that the time from April has been somewhat an extraordinarily difficult year for the industry. Cotton prices went through the roof; then, all of a sudden, prices literally crashed. There has been a complete dry up of international demand. So, with the yarn inventories that happened till September, high cost of cotton inventories that continued till today and the corresponding problems for the balance sheet, I would imagine that the take-off would be somewhat sluggish to begin with. Having said that, there are movements.... we are monitoring them closely. With the target of Rs 1,972 crore of actual planned subsidy outgo for this year, we may not get there. It will, though, slowly catch momentum.
You recently held a meeting with the banks on restructuring all the loans taken by the textile sector. How soon can we expect a movement on this?
That exercise is going on. We are planning to take it up within the next few days with the RBI (Reserve Bank of India) to have their formal approval on the re-classification so that the debt still remain standard assets — and not non-performing assets. It is, indeed, a troubled time for the industry. We are looking at a moratorium of a year or two. In the meantime, they will keep servicing the interest; and the principal gets shifted. We are also going to take the precaution that there will be no ballooning of government outgo. We will restrict the assistance under TUFS or other schemes. So, it is not that the industry would get a greater payout. It is going to be a zero cash outgo.
Can you throw some light on the National Fibre Policy, now that you said that it would finally see the light of day with the roll-out of the 12th FYP (Five-Year Plan)?
The policy is, basically, an outline on the way to go as far as the rates of growth are concerned within the industry across the board. We are also trying to achieve fibre neutrality in the long run; so there is this question of taxes, duties and indirect taxes which any department would hope for and place as an enabling condition. The ministry has put those forward and, formally speaking, these interventions are on a year-on-year basis when the finance bill is being discussed. All other plans will be placed with the 12th FYP. The policy framework is ready, and now it is only on the budgetary allocation to this ministry we will be able to realise certain goals of fresh investments, projects and programmes. It has both a short-term and long-term plan that we have aligned with the five-year plan. We have surpassed some of the targets really in terms of growth rates.
What is the size of allocation that you are looking at?
We are looking at a big-ticket intervention on skill development, promotion of handlooms sector and the ongoing benefits that we plan to give to the weavers in terms of subsidy and interest subvention. We are also looking at a big way at the development of the textile parks that has a great demand. There is a big movement on technical textiles. We have big interventions planned for the jute and silk industry. Then there is huge focus on the revival of Tirupur. So, our total allocation that we requested in the 12th FYP is about Rs 50,000 crore.
What is the status on the high-level committee chaired by you on reviving the Tirupur cluster?
We are now in the process of having the endorsement of the Tamil Nadu government on the technology and the way forward. We would persuade them on creating a common platform for the 20 CETPs (common effluent treatment plants) so that they do not get shut again. We also need the state government to make submission before Madras High Court. The centre is committed to invest money in bringing the CETPs to life, but there is a lot of work required from the state government. So, there is going to be some allocation for Tirupur as well to the tune of around Rs 780-800 crore; add to it another Rs 15-20 crore for us to have a common contractor to help them. So it is an entirely new line.
As the cotton prices crashed like never before this year, would you be considering doling out incentive for the exporters?
No, we are not offering any export incentive. We believe that putting it out in open general license is an incentive enough. The cotton prices today are respectable, they have not come down to the minimum support price and what happened in terms of a price crash were aberrations. It was a never-before scenario, which I, unfortunately, had to witness.
This was really an opportunity for them. And there was this scramble for exports and even for yarn there was a time till April this year when yarn was going out, but there is a complete slump in demand. We are actually very keenly watching China. Because, by now they should have come out with their purchase plan despite the fact that Indian cotton is the cheapest in the world. So all these have brought uncertainty in the industry. Thus we are thinking of restructuring the debts.