Textiles sector set to get Rs 23,000 cr investment

The country's textiles sector is likely to witness investments worth nearly Rs 23,000 crore by 2007, with Rs 8,000 crore coming in during 2005, according to the Textile and Clothing Investment Confidence Index survey carried out by retail consultancy KSA Technopak.

But the report said this projected investment fell short by a long way in meeting the textile export target of $30 billion by 2010.

"To achieve this target, we need investments of Rs 65,000 crore to Rs 70,000 crore for the textiles and clothing sector," said Arvind Singhal, chairman of KSA Technopak.

Chief executives and senior managers from 75 leading textile firms and 64 clothing companies were contacted for the survey. KSA claimed that the respondents represented almost 35 per cent of the country's textiles and apparel industry.

According to the survey, current investment plans meet only about one-third of the total investment required, yet nearly 90 per cent of the respondents were confident of meeting the $30-40 billion exports target.

"This shows a significant mismatch between the industry confidence in exports, and actual investments being currently made," said the report.

Another concern voiced by the respondents was the lack of significant FDI in textiles and clothing manufacturing in India, with only a handful of international companies having come in.

Nearly 80 per cent of the respondents said they expected a 5-10 per cent drop in prices with the phasing out of quotas, making it a challenge to keep profitability intact.

The survey suggested that the textiles industry looked at special economic zones, and textile parks as a business-limiting factor rather than an advantage.

"Companies prefer independent locations because, being in a labour-intensive industry, they fear losing manpower to other companies that may be located in the same area," explained Harminder Sahni, principal, KSA Technopak.

Almost 60 per cent of the respondents said they would make new investments in their home state or in cities where they already had a manufacturing plant. Gujarat emerged as the most preferred state for textiles investments followed by Tamil Nadu, Maharashtra and Karnataka.