Textile ministry told to prepare post-quota map

Prime Minister Manmohan Singh has directed the textiles ministry to prepare a strategy paper outlining the measures needed to attract investments, generate employment and boost exports in the sector once textile quotas are lifted.

The directive, from the Prime Minister, was issued after the ministry today made a presentation on its preparedness for the post-MFA (Multi-Fibre Agreement) regime from January 1, 2005.

The meeting, convened by the Prime Minister, was attended by Commerce and Industry Minister Kamal Nath, Planning Commission Deputy Chairman Montek Singh Ahluwalia, besides Textiles Minister Shankarsinh Vaghela.

The paper, to be prepared soon, would be examined by the committee of secretaries for necessary action, senior government officials told Business Standard.

The ministry, while detailing the current state of play, highlighted a series of measures that needed to be taken to prepare the textiles sector for the post-quota regime.

It proposed that India should adopt a proactive role in reducing peak tariffs on textiles at the ongoing World Trade Organisation (WTO) negotiations.

The officials said India should play a proactive role under the ongoing NAMA (non-agricultural market access) negotiations at the WTO in reducing its peak tariff (of around 20 per cent) on textiles and help reduce global textile prices.

"Since countries like the US and the European Union have already announced their commitment to reduce their tariffs on industrial goods to zero over the next few years we need to be proactive rather than defensive," they said.

The ministry also pitched for liberal contract labour norms for only textiles and garment. "If there is a bulk order, a unit should have the liberty to hire contract labour for a few months rather than the compulsion of having to absorb them permanently," they said.

The ministry said the industry had also sought radical changes in the Trade Union Act, under which office bearers of labour unions in textile and garment units would have to compulsorily be employees of the unit concerned. In order words, general trade union office bearers cannot represent the trade unions of such units.

The ministry also said power sector reforms would have to be undertaken to ensure that bulk consumers are given price preference over retail consumers. The long-term measures suggested by the ministry include improvement in port and air cargo handling and speeding up the internal road transport system through a multi-modal transport network.

Policy proposals

• India should play a proactive role under the ongoing non-agricultural market access negotiations at the WTO in reducing its peak tariff on textiles and help reduce global prices
• Contract labour norms should be liberalised for textiles and garments, so that units can hire labourers for a few months without the compulsion of having to absorb them permanently
• Radical changes should be made in the Trade Union Act to prevent general trade union office bearers from representing workers of individual textile units
• Power sector reforms would have to be undertaken to ensure that bulk consumers are given a price preference over retail consumers