Textile industry modernisation gets off to slow start

IN FOCUS/ TEXTILES

The textile industry would have to improve its efficiency and productivity but the investment requirements for bringing the sector up to global standards have been estimated at Rs 1,40,000 crore across the value chain in the period 2002-10 by the Indian Cotton Mills Federation (ICMF) in its August 2004 vision statement.

The initiative has unfortunately got off to a bad start- the technology upgradation fund scheme has been extended for a further period of three years but it has not been able to attract sizeable investments so far.

This was a source of great worry for mills, according to A N Choudhury, president of the Eastern India Textile Mills Association.

In many states, like West Bengal, low labour productivity and higher per unit wage cost were problems. Efforts to increase workload and productivity levels have failed, Choudhury said at the association's annual general meeting recently.

Across the country, textile units were likely to face a rise in cost of electricity. As energy cost was the second highest cost component after raw materials in textile manufacturing, increased power tariff would reduce the competitiveness of the industry, he warned.

The government would have to allow rebates and deductions on grid power tariff as well as on the cost of captive generation through suitable amendments, he said.

For example, mills could be permitted to draw power directly from generators like NTPC to enable them to reduce power cost to international levels. Such decisions were needed on a war footing, he said.

Government efforts like the technology mission on cotton (TMC) for increasing raw material supply, and the technology upgradation fund scheme (TUFS) for mills' modernisation would help industry improve competitiveness, he pointed out to member mills.

But to add value to this increased raw material base, the textile sector would also need new infrastructure like dedicated textile zones to achieve projected growth figures, according to Choudhary.

Problem of mill closure continued to plague the industry. The trend of decreasing mill sector activity and increasing SSI sector production continued.

In the mills, installed capacity in weaving units declined significantly, he pointed out.

On the plus side, near self-sufficiency in raw material both cotton and man-made fibre was a source of strength for the industry.

Indian textiles and apparel industry accounts for one-fourth of India's exports. In the global textile scenario, the Indian textile and apparel industry was the third largest producer of cotton, cotton yarn and cellulosic fibre yarn, fifth largest producer of synthetic fibre and yarn, and had the second largest spindleage at 20 per cent of globally installed spindleage, besides highest installed number of looms in the world.

During 2001-02 the textile industry performed well, and the production of fabrics touched the peak of 42 billion square metres.

Textile production declined to 41.9 billion square metres in 2002-03.

In 2003-04, there was an initial sharp decline caused by a strike by powerloom units and truck operators, combined with rise in cotton prices and poor demand for textiles.

However, production picked up and touched 42.2 billion sq.m. by end of the year.

In spite of uncertainties regarding the monsoon, cotton production in the current year was expected to exceed the level of 167.5 lakh bales estimated by CAB in March, 2004.

In fact, cotton traders said 168 lakh bales had already arrived in the market and another 2-3 lakh bales could be expected.

In the man-made fibre and yarn sector also, domestic production was equal to demand except for some speciality products which had to be imported.

Exports of cotton textiles to quota countries in June 2004 increased to $87.95 million from $73.30 million in the same period of the previous fiscal.

Between January and June 2004, exports to quota countries rose to $822.96 million as against $679.23 million between January and June of 2003.

Provisional figures of exports of cotton textiles (including handlooms) according to data released by DGCIS and CMIE however incidate a decrease in exports to $2949.95 million during April-February 2003-2004 from $3035.25 million during April-February 2002-03.

Total textile exports including garments during 2003-04 increased to $11255 million as compared to $11039 million during 2002-2003.

DGCIS and CMIE data for April-February 2003-04 put import of raw cotton at $327.98 million, up from $233.95 million in April-February 2002-03.

Import of cotton yarn and fabrics jumped to $126.44 million in April-February 2003-04 from $79.36 million in April-February 2002-03.

Madeup textiles imports increased to $46.32 million in April-February 2003-04 from $35.93 million in April-February 2002-03.

ICMF in its August 2004 vision statement has projected the size of industry at $85 billion by 2010 from $36 billion now. Exports were expected to touch $40 billion from $11 billion now.