The Hindu Business Line : `Time ripe for increasing FDI in textile sector'

Coimbatore June 18 With systemic changes in the form of policies and structural changes within the industry having taken a shape, the Government perceives that the time is ripe for India's textile sector to attract higher FDI.

Sensing the mood in the industry and the factors that would be supportive to promoting greater FDI, the Centre has initiated `one-to-one' effort with some foreign companies for starting their ventures in India, especially in the textile machinery industry, according to Mr J.N. Singh, Textile Commissioner.

Speaking to newspersons, Mr Singh said that a few overseas firms including Ahlstrom, a Finnish company, have been showing interest in investing in Indian textile ventures, though their interests are largely in textile manufacture.

The Government is of the opinion that once a few big overseas players enter the Indian market, it would trigger the momentum for more players to come and set up shop, he added.

Unlike China where the bulk of its investment in textiles came from Chinese entrepreneurs settled in other countries, immigrant Indians are mostly professionals.

Further, unlike the overseas investments that came into India's automotive sector, which were largely in projects aimed at re-export to their own countries/markets, new investment proposals for the textile sector are essentially focused on India's market.

These are the main reasons for the relative slow pace of FDI seen in the textile sector.

However, Mr Singh added, of late things appear to be changing favourably because of the realisation of India's vast consumer market with growing purchasing power and stable polices like the continuity in industry-supportive measures like TUFS.

The huge domestic textile demand would keep pressure on the industry for continuous modernisation of plants.

Mr Singh said that after a huge investment terrain seen in textiles during 2006-07, when the total sanctioned investment into the sector stood at Rs 35,000 crore (Rs 15,400 crore), there might be a slowdown in investment this year.

But with the resumption of TUFS, it would pick up soon because the overcapacity built up in the system too would be a temporary phenomenon, considering the future demands.

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