The Hindu Business Line : Tripartite meet to discuss textile industry woes

The agenda
To ensure growth of the textile industry from $37 billion to $85 billion and exports from $13 billion to $40 billion by 2010.
To raise the country's share in world trade from the current level of 3 per cent to 6 per cent by 2010.

New Delhi , July 18

A committee of ministers comprising textiles, commerce and industry, agriculture and labour would meet here on July 25 to take stock of the problems plaguing the textile industry, particularly the inflexible labour laws and the high cost of power and its erratic supply, which hobble the industry from running efficiently and effectively.

Sources in the Government told Business Line here that following the first quarter (April-June 2005) dismal show of Indian textile exports soon after the dismantling of the quota regime from January 1, 2005, the Government set up a Group of Ministers (GoM) with textiles, finance, commerce and industry, agriculture, science and technology and the Deputy Chairman of the Planning Commission, to study the textile industry problems and ensure a level playing field for the domestic industry vis-a-vis low-cost competitors such as China, Bangladesh and Pakistan.

Key issues

The GoM met a couple of months ago and zeroed in on three important issues such as inflexible labour laws, high cost of power and high transaction cost for the inability of Indian industry to compete with other exporters enjoying similar endowments.

In response to the suggestions put forward by the GoM, it was decided to hold a tripartite meeting with industry representatives, labour unions and State governments by a Committee of Ministers comprising the Union Textile Minister, Mr Shankersinh Vaghela, the Union Commerce and Industry Minister, Mr Kamal Nath, the Union Agriculture Minister, Mr Sharad Pawar, and the Labour Minister, Mr K. Chandrasekhara Rao.

The sources said that, for the first time, representatives of the leading textile-producing States such as Maharashtra, Gujarat, Tamil Nadu, West Bengal, Orissa, Uttar Pradesh and a host of others would take part in the deliberations of the day-long meeting along with export promotion councils of textiles comprising apparel, silk, wool, handicrafts and handlooms.

Sources said that in the post-quota regime, India has unveiled an agenda for the industry to ensure the growth of the textile industry from the extant $37 billion to $85 billion and exports from $13 billion to $40 billion by 2010. It is also proposed to create 12 million new jobs in the textile industry and also raise the country's share in world trade from the current level of 3 per cent to 6 per cent by 2010.

More FDI needed

As the industry's investment requirements run into Rs 1,40,000 crore to modernise and consolidate it to become globally competitive, the current rate of foreign direct investment needs to be stepped up.

India could not garner FDI of more than $500 million in a year, while China attracts FDI of more than $5 billion per annum in the textile sector, they said adding that FDI will have a critical role in getting world-class modern manufacturing capability, besides providing employment opportunities to people in India in different capacities in the textile industry.

Industry associations such as the Apparel Export Promotion Council have pleaded with the Government to allow flexible labour policy to cope with the export demand and also by retail chains abroad for bulk supply of textile goods.

High power cost

Power cost for the industry was relatively high in comparison with China and the Committee of Ministers would weigh several options to ensure that power cost to the industry is reasonable and supply assured, they added.

Sources said that as textile exports fetched $15.2 billion during 2005-06 against $12.9 billion in 2004-05, showing a growth rate of close to 18 per cent with the first quarter export trends during the current fiscal being salutary, every effort would be made to meet the industry's expectations for a level playing field and to compete on even terms abroad.