The Hindu Business Line : Crisil-CITI meet reviews first vision document progress

The Crisil s management consulting team, re-engaged by the Confederation of Indian Textile Industry (CITI) to prepare the organised textile industry's wish-list for the 11th Plan through a `second vision statement', had a sitting with the members of the South-based textile industry here on Tuesday. The issues that were discussed at the meeting, included a review on the progress of targets set under the first `vision statement' prepared by Crisil for the textile industry in 2004; its sectoral strengthens and weaknesses vis-à-vis the physical investments they could attract to meet the projected market demands in 2010 and an assessment of the targets fulfilled and opportunities lost so as to extend the industry's `vision' schemes into the 11th Plan's terminal year of 2012.

The CITI will hold similar interactive sessions with Crisil officials in Mumbai (next week) and later in Delhi to hear the textile industry representatives there. The CITI hopes to complete the exercise by the middle of next month and get the second `vision statement' draft from Crisil ready, so as to synchronise it with the Ministry of Textiles' (MoT) Eleventh Plan document for the textile sector expected to be readied around that time to be presented to the Planning Commission. A two-member Crisil team including Mr K. Raghuram, head, corporate advisory of Crisil Ltd, Mumbai, was present at Tuesday's meet.

Talking to reporters of The Hindu group, soon after the meeting held at the Southern India Mills Association (SIMA) premises, the CITI Secretary-General, Mr D.K Nair, said the current exercise was being undertaken as `reality testing' on all the vision statements of Crisil-CITI's first study which, according to him, was prepared in 2004 based on the 2002 data for the projected requirements of the industry in 2010.

While some of the vision statement suggestions such as the fiscal reforms/Cenvat duty chain were met, there were other issues such as the capacities or projected investments in organised fabric weaving, garmenting or processing sectors that were not happening as expected. Mr Nair felt that the pace of investment in textile sector was itself felt strongly only in the last two years, though the special investment promotion route of technology upgradation fund scheme (TUFS) was open since 1999. The momentum of TUFS investments picked up only after 2004 in the light of fiscal duty reforms, textile quota abolition and improved domestic economic growth.

The first `vision' document enunciated that investment in the scale of Rs 1.40 lakh crore might be achievable by the textile industry in 2010. But it may not be evenly distributed in each sectors, with weaving and textile processing still remaining weak-links in terms of technology and investment absorption.

Mr Raghuram of Crisil felt that the domestic textile sector kept growing at 8 per cent per cent and the future growth for the industry would be garment-driven for which the processing and weaving sectors need to be strengthened.

The average operating profit margin for the industry works out to 10-12 per cent, whereas the garment/ spinning sectors' profit margin appeared to be higher at 20 per cent. The size of the textile industry in the country is around $52 billion and it required a further investment of about 30 billion dollar by 2010.

Participating in the meet, Mr S.V. Arumugham, Chairman, SIMA, who sought for pragmatic environmental standards for the textile wet processing to attract higher investments also suggested for 100 per cent subsidy for installing the technology for achieving `0' discharge facility in processing because at present the investment cost for effluent treatment plant in textiles alone came to 35 per cent of the total investment needed for a processing plant project. A flexible labour legislation and higher duty drawback would also pep up investment, he added.

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