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Tuesday, Aug 03, 2004

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Indian textile cos feel the pinch of high power costs

Anil Sasi

New Delhi , Aug 2

PROHIBITIVE power costs are clearly eating into the global competitiveness of the Indian textile industry. Domestic fabric producers end up paying more on power as a proportion of their fabric production cost, in comparison to their counterparts worldwide.

With the average expenditure on power pegged at around 15 per cent of the fabric cost, Indian manufacturers end up paying much higher on overheads as compared to fabric manufacturers in countries such as China, South Korea and Brazil — the main competitors to Indian textile producers in the international market. According to the data released by the International Textile Manufacturers Federation, even in absolute terms, Indian textile producers shell out among the highest cost on power per yard of fabric. For instance, in case of woven ring-yarn fabric, Indian producers pay around 17 per cent of the total fabric cost on power. In comparison, Chinese and Brazilian manufacturers pay comparatively lower at 13 per cent and 7 per cent respectively of fabric costs on power bills. In absolute terms, the Chinese and Brazilian manufacturers pay just 4 US cents and 8 US cents per yard of fabric respectively, as against over 11 US cents paid by Indian manufactures as power costs for every yard of fabric produced.

"The relative loss of competitiveness in case of power costs is because nearly all Indian manufacturers use captive projects for their manufacturing facilities due to unreliable supply quality from the State electricity boards. The captive power units do prove to be less cost-efficient due to lack of economies of scale," an analyst said.

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