The Hindu Business Line : `Budget gives a fillip to wool industry'

AS the Union Budget 2004-05 has abolished the excise duty on natural fibre and brought the customs duty on wool to 5 per cent from the high of 75 per cent only a few years ago, the focus of the industry would now be on "doing international business", besides catering to the unmet needs of the domestic market for wool-blended products, according to the Regional Director, The Woolmark Company, Dr. S.K. Chaudhuri.

Talking to Business Line here on the post-Budget scenario for the wool industry, Dr Chaudhuri remarked that the "guys in Ludhiana" are in celebratory moods, thanks to the "thrust and direction" in the current fiscal year Budget as the difference between domestic and international markets had disappeared with the industry being "geared up to the challenge" of quota-free global trade in textiles and clothing from January 1, 2005.

Stating that there would be a lot of pressure for Indian textile industry to do "bigger and better business with the rest of the world", Dr Chaudhuri said that "the most important criterion here is to provide our industry a level playing field, as otherwise countries like China with all the advantages of their scale, industry-friendly labour laws, much better infrastructure facilities and low cost finance" would edge India out of the global markets.

From this perspective, he said, the 2004-05 Budget has brought all raw wool under a uniform duty of 5 per cent as earlier the country had a differential duty of 5 per cent for coarse wool (for carpet making) and 20 per cent for apparel wool.

He said as the Government has also removed the internal duty by doing away with excise levy on natural fibre, this would help in bringing down the cost of 100 per cent wool products as also wool-blended ones. By importing raw wool, "our exporters would be creating value and wool-blended products and exporting them to bring foreign exchange to the country, besides generating employment," he said.

He said that India produces, particularly in the Rajasthan belt, coarse carpet-grade wool, as the climatic conditions here do not provide for producing finer variety of wool with the pasture available particularly the grass being copper-deficient.

As the country's climatic conditions do not permit use of 100 per cent wool, "we have a huge market for blended-wool such as men's wear like trouser fabrics - we have created another market for covering 35 to 50 per cent wool content in the last two years", he said adding that this segment of the market is facing competition from cotton.

He said cotton bottom sweat and wrinkle-free cotton trousers have not only become a fashionable wear but also it took the market share of wool-blended (30 per cent wool and 70 per cent polyester) products for men.

As a result, all the worsted companies are suffering and a big company like OCM had to close part of their production.

He said that big companies like Raymond, Reliance and OCM were only to be blamed for this market slide, as they did not do much publicity in popularising the wool-blended fabrics, "even as we used to do from International Wool Secretariat (IWS), now the Woolmark Company, when wool growers from Australia were funding us for promotional work".

Dr Chaudhuri contends that given the importance of wool in clothing the world, particularly the wool-blended products that have become a big hit in the developing world including India, with textile being a low technology business unsuited for industrial giants such as Germany and Italy, there is a tremendous opportunity.

The Budget has only facilitated the field for domestic companies to improve quality of wool through imports for upgradation and value addition so that the end-product would not only fetch foreign exchange through exports but also provide employment to local people involved in wool industry here, he added.