Textile sector needs funds of Rs 1.94 lakh cr

A medium term Action Plan worked out by the ministry of textiles for achieving 11th Plan targets suggests that the textile sector needs an investment of Rs 1.94 lakh crore for the period 2007-12 to keep up to international standards

Vision 2015, the medium-term Action Plan drawn up by the MoT, envisages a growth rate of 16 per cent, which would increase the share of the Indian textile sector to 9 per cent in the international market, with an export basket of $64 billion.

The projected investments in the spheres of spinning, weaving, knitting, processing and garmenting would lead to the employment of 14 million people country-wide.

Other issues would be discussed threadbare at the upcoming two-day Textile Summit in Delhi organised by the MoT on August 31.

According to a report prepared by the MoT, the Indian textile and apparel sector has only a 3.9 per cent in the global textile exports trade.

Competitors such as China have a share of 20.2 per cent (excluding Chinese Taipei with 4.8 per cent), Republic of Korea 5.1 per cent, Pakistan 3.5 per cent, Turkey 3.5 per cent, Indonesia 1.7 per cent and Thailand 1.4 per cent.

Textile exports account for 16.63 per cent of the country's total export earnings. In the period of multi-fibre agreement (MFA) from January 2005, textile exports were up by 22 per cent in 2005-06. However, after an impressive growth of two years in quota-free markets, India's textile exports is currently waning with USA intakes declining by about 4 per cent in value terms.

Global competition, the report says, is likely to be severe with new players such as Sri Lanka, Cambodia, Pakistan and Bangladesh aiming for more market share and forming regional production alliances in new areas.

The MoT Action Plan has focused on the areas of apparel and garments, fibre availability, skill development, textile machinery and technical textiles.

This apart, special thrust has been placed on the Scheme for Integrated Textile Park (SITP) and Textile Upgradation Fund Scheme (TUFS). The corpus of both the schemes have been enhanced.

The Action Plan has also listed major constraints including fragmentation created by policies leading to different duty structure; obsolete technology and poor fabric quality; unwillingness of the banking sector to finance modernisation, and poor quality of cotton leading to high degree of contamination.

Other bottlenecks are obsolete processing technology, high cost of power, restrictive labour regulations and infrastructural constraints arising out of high turnaround at all major ports and poor quality of surface transport.

The Plan has also spelt out solutions to combat problems through fiscal duty rationalisation, reduction in excise duty on man-made fibres from 8 per cent to 4 per cent and coverage under the Central Value-added Tax (CENVAT) scheme, reduction of excise duty on capital goods from 16 per cent to 8 per cent.

There also has to be a reduction in customs duty on specified textile machinery from 7.5 to 5 per cent and abolition on specialised man-made fibre and yarns required for technical textiles. The Plan also includes new intiatives like brand development, textipolis, developing common compliance code, currently under the consideration of the Planning Commission.