The Hindu Business Line : Textile industry on campaign mode to highlight grievances

Standing up
Industry seeks refund of six per cent f.o.b value collected as duties by State Governments on exports.
Textile exports in April declined by 18.23 per cent compared with the figures in April 2006.
“If the trend continues, by the end of the fiscal, 4-5 lakh jobs will be lost.”

M.R. Subramani

Chennai, Nov. 5 A decline in exports, oversupply in domestic market, lack of yarn movement and closing down of garment units have forced various bodies in the textiles industry to come together and air their grievances in public.

“The textiles sector is in a terrible mess and we have gone public to draw everyone’s attention to our problems,” said sources in the spinning sector.

Representative bodies such as the Apparel Export Promotion Council; the Cotton Textiles Export Promotion Council; the Synthetic and Rayon Textiles Export Promotion Council; the Confederation of Indian Textiles Industries; Powerloom Development and Export Promotion Council; Rajasthan Textiles Mills Association; the Mill Owners Association; Tirupur Exporters Association; and the Northern Indian Textiles Mills’ Association on Monday came out with a huge advertisements in various dailies highlighting their plight. The advertisement also pointed, how in contrast, the Chinese textiles sector was enjoying an advantage in the global market.

Sector’s woes

The advertisement showed the Chinese enjoying from a favourable yuan-dollar ratio, low cost and high quality power supply, lower transaction costs and world class infrastructure. In contrast, the Indian sector was seen suffering from high capital costs, non-funded State levies, infrastructure disability costs, cross-subsidisation of power, delay in technology upgradation fund, and the rising rupee.

“Basically, we want the Centre to fulfil four of our demands. At least, three of the demands can be met immediately,” the sources said. “The Centre can take immediate steps to refund six per cent f.o.b value collected as duties by State Governments on exports. This is an obligation under the World Trade Organisation because it is like taxing our buyers abroad for purchasing our goods,” the sources said.

“Again, the Centre will have to stop asking the industries to pay for the power supplied to farmers and domestic consumers by charging us higher rates. We are having to pay for the transmission and distribution losses arising out of theft and inefficient supply,” they pointed out.

Stabilising rupee

“Packaging credit must be lowered to at least six per cent. The basic prime lending credit for packaging is 14 per cent in our country.

The Centre has ordered a 4.5 per cent cut. Some get credit at 9.5 per cent and some still less. But even if the credit is lowered to six per cent, our rate will be the highest,” the sources said.

“The last demand is stabilisation of the rupee-dollar parity. That will take time and the Government can do nothing about it. Therefore, we are willing to wait on that count,” they said.

According to the sources, textile exports in April declined by 18.23 per cent compared with the figures in April 2006. “That will mean a loss of Rs 1,031 crore. A study by the Research and Information System for Developing Countries said 35 jobs are created for every Rs 1 crore-worth goods export. That means, 35,000 jobs would have been lost in April alone,” they said, adding: “If the trend continues, by the end of the fiscal, 4-5 lakh jobs will be lost.”

Lack of urgency

The primary reason for the representative bodies to publish the advertisement was because they felt that they “do not find the sense of urgency required in the Government”.

“The Centre is not alert to the situation. We need to administer medicine to the sick and not the dead,” they added.

The textile sector provides employment to 3.5 crore people, while 4.7 crore farmers also depend on its fortunes.

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