Economy

Budget should jump-start manufacturing, jobs

Manikam Ramaswami | Updated on June 23, 2014

MANIKAM RAMASWAMI



The most important thing that the new Government looking to jump-start manufacturing and promote inclusive growth should do is realise the social importance of the textile industry. It is capable of employing the unskilled and unlettered, both men and women, and impart training with little help from the Government.

The industry is unique in many respects: its raw material is available at less than or equal to international prices; freight on board price levels are internationally competitive. Return on investment, as a parameter, is not significant compared to other industries but a majority of the companies plough back revenue into the business towards modernising and expanding capacities.

We are a globally competitive industry, contributing to four per cent of the country’s GDP and employing 45 million people. Despite all this, there is a lot of distance to cover.

A policy push will encourage garment manufacturers to set up units in many tier III and tier IV towns; many units have already come up in such centres. Textile parks are welcome, but the Centre should do more to bolster our processes, considering the long value chain India hopes to create in the sector. While the Government should look at improving our manufacturing and technology utilisation from a long-term perspective, there are some short-term actions worth considering:

-- All Technology Upgradation Fund rebates withheld for technical reasons — blackouts and delays — should be given back. This will help create new investments of ₹4,000 crore and one lakh jobs.

-- Cotton prices have to be kept on par with, or lower than, international prices. China is unwinding its cotton reserves, causing an impact on global cotton prices. The Cotton Commission of India should take stock of this development and ensure Indian cotton prices remain below international prices at all times. It should not be forgotten that India is a cotton-surplus country.

-- India should seek reciprocal concessions in import duty from China for fabrics and home textiles. India has allowed $12 billion worth imports at concessional duty from China without seeking reciprocal benefits and has a $32-billion trade deficit. An additional $7 billion of exports is possible within two years which will create 50 lakh jobs. Why should we not press for this duty concession from China?

(The writer is Chairman and Managing Director, Loyal Textile Mills)

Published on June 23, 2014

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