Textile sector to make investment of Rs 1,94,000 cr by 2012

Our Bureau

New Delhi, Dec. 18

The Union Government is committed to create an enabling and conducive milieu for the Indian textile to modernise and expand capacities, as it constitutes the "backbone of our manufacturing sector", the Union Textile Minister, Mr Shankersinh Vagehla, said.

Releasing the revised Vision Statement for textile and clothing industry for the Confederation of Indian Textile Industry (CITI) here, the Minister expressed happiness about the industry's more ambitious Vision compared to the one it made in 2004 to make investment of Rs 1,94,000 crore by 2012. However, Mr Vaghela said the industry Vision to caputre a market size of $110 billion was slightly lower than the Government's objective of $115 billion by the terminal year of the Eleventh Plan.

He urged the industry to focus more on manufacturing value-added items since the higher growth in value would flow from manufacture of more valued products and a rise in use of diversified textile products such as technical textiles. He said after being subdued for long investments in the sector had picked in the last two years after several policy initiatives by the UPA Government.

Extension of TUFS

Referring to the plea of the industry that the Technology Upgradation Fund Scheme (TUFS) should be extended beyond 2007 as it had helped to enlarge production capacity across the broad spectrum of industry, the Minister urged the industry to intensify pressure on this score so that he would also plead with the right quarters to get this scheme extended.

He also said the implementation of 25 textile apparel parks scheme has been proceeding satisfactorily as the Government was providing a grant of Rs 866 crore. He said that it is proposed to expand the scope of the scheme in the 11th Plan.

Growth factors

In his remarks, the CITI Chairman, Mr Shekhar Agarwal said, "Proactive policy framework, calibrated fiscal interventions like rationalisation of excise duties and importantly TUFS were the key drivers of growth," both in production and in investment. Stating that the reports about TUFS likely discontinuance had come as a dampener, Mr Agarwal cautioned that any cessation of the scheme at this stage would negate the confident march of the industry to building competitiveness and globalising their operations.He said the interest reimbursement under TUFS has cut down the cost of production and the industry has gradually raised its market share on account of the marginal price competitiveness. "Continuation of TUFS is an important factor for leveraging technology advantage specially when the forward looking textile units are keen to install new generation modern technologies and manufacturing processes for man-made fibre based textiles," the Indian Spinners' Association President, Mr V.K. Ladi, said.

Investment

The Vision Document of CITI prepared by Crisil said the textile industry needs an investment of Rs 1,94,000 crore during the span 2007-12. The industry could create an additional employment of 14 million workers across the textile chain, while the industry has the potential to reach a size of $110 billion by 2012. The Vision document pleads for removing infrastructure constraints and whittle down transaction cost, besides ensuring adequate raw material availability and an end to antiquated laws such as hank yarn obligation, packaging obligation and textile committee cess. It also pitched for labour policy reform and more facilities for manpower training to reach the ambitious production level.

(This article was published in the Business Line print edition dated December 19, 2006)
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