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Wednesday, Mar 12, 2003

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`Textiles need credit on easier terms'

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MUMBAI, March 11

IT is time for the textile industry to buck up and prepare for a quota-less regime in 2005. This was the general consensus among Indian and foreign textile industrialists and other experts at the two-day Afro-Asian Textile and Apparel Congress held here.

Many local players were in agreement that the Budget had gone some way in addressing anomalies in the textile industry. Also a number of players said that the slow mechanism of clearances and archaic labour laws were hindering the development of the industry.

Among the many concerns of domestic producers was that lack of long-term credit on easy terms and renegotiating NPAs so that loans could be paid back on easier terms. Some speakers like Mr Ashok Mahendru of TCNS Ltd, said that companies had to prioritise cost-effectiveness on economies of scale. If this did not happen, a greater share of the global textile trade would go to China and Africa. Labour laws also needed to undergo a change.

The revival of the textile industry was imperative, more so where downstream operations were concerned, according to Mr B. K. Patodia, Vice-Chairman and Managing Director, GTN Group. Because of various exemptions and excise structure there was no incentive for the industry to consolidate. This was the time to restructure, invest in training and develop skills and leverage information technology. Potential, he said, lay in raw cotton, considering that India had the largest acreage devoted to cotton. However, the country's yield was one of the lowest at 300 kg per hectare and this had to be 600 kg per hectare.

Mr Patodia added that the weaving and processing sectors needed to be strengthened by specialisation and concentrating on core activities.

Funding issues also came to the fore. According to Mr S. Sridhar, Executive Director, Exim Bank, lenders sough those entities that had stable operations and cash flows, and businesses that did not suffer too many booms or busts. Those seeking funds needed to have a good marketing strategy and an effective CEO to carry it through.

Mr Sridhar said the latest budget had provided a tremendous package to the textile industry. However, there was a nagging doubt about how the industry would use these concessions. It was a high-risk industry which also needed long-term capital and low cost funds.

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