2007...Textile Industry

Textiles Sector has been identified as one of the priority sectors having high growth potential and higher multiplier effects for employment generation. Timely policy intervention can boost the competitiveness of this sector manifold, as the growth impetus prevailing in the sector is vibrant. Textile and Clothing industry plays a dominant role in the country’s economy and has a prominent position in the textile world. It has a total market size of US $52 billion and accounts for 26% of the manufacturing sector, 20% of industrial production and 18% of industrial employment. It contributes 15% to gross export earnings and 4% to national GDP. It provides direct employment to about 35 million persons. Besides, another 50 million people are engaged in allied activities. Market size potential for the industry is envisaged at USD 115 bn by FY 2012.

One of the major events that took place during the year under review, was the organization of the two-day Tex-Summit 2007 by the Ministry of Textiles, actively supported by industry associations, etc. The aim was to involve the stake holders in formulating the appropriate programmes and policies, consistent with the emerging global challenges.The Summit was held not only to highlight the critical issues the textile industries had been faced with but to suggest the ways and means to surmount the perilous industry situation as well as to gear up for the global competitive trade requisites. Setting agenda for the growth path, the Hon’ble Prime Minister, inter- alia, announced following new initiatives:

1.

To set up a Technology Mission on Technical Textiles to take policy initiatives and to encourage new investment.
2.

To launch Investment Regions for the Textile Sector to consolidate the phenomenon of agglomeration, visible in textiles to further reduce transaction costs and enhance competitiveness. Concentrated, contiguous investment and production regions with high quality infrastructure and covering the entire value chain can help obviate, to an extent, the burden imposed by multiple levies, high power costs, bottlenecks in shipment and delays in legal clearances.
3.

Finalization of the proposal of Ministry of Textiles for Manpower and Skill Development through the Scheme of Neighborhood Apparel and Textile Training Institutes for Job Assurances (NATIJA) for training 4 million workers.
4.

To develop a focused strategy for Market Expansion and Product Diversification to facilitate better market access and greater value realization for products.
5.

To revitalize Handloom Cooperatives on the pattern of agricultural cooperatives.

Necessary proposals have since been initiated to implement the above schemes in consultation with the concerned Ministries and stakeholders.

Fiscal Reforms

*

The fiscal duty structure has been generally rationalized to achieve growth and maximum value addition within the country.
*

Except for mandatory excise duty on man-made filament yarns and man-made staple fibres, the whole value addition chain has been given an option of excise exemption. For those opting to pay the duty and thereby avail of duty credit, the applicable rate of excise duty is 4% for cotton textile items (i.e. yarns, fabrics, garments and made-ups) and 8% in respect of all other textile goods.
*

The import of a number of textile machinery items of spinning, weaving, processing and readymade garment sectors has been allowed at concessional customs duty of 5% and 10% as against normal customs duty of 12.5%.
*

The Government has de-reserved the hosiery and knitwear from the SSI sector.

Flagship Schemes
Two flagship schemes of the Ministry of Textiles; namely, the Technology Upgradation Fund Scheme (TUFS) and the Scheme for Integrated Textile Parks (SITP) have been approved for continuation in the Eleventh Five Year Plan. These schemes not only provide environment conducive to the growth of this sector but also enable the industry to expand and modernize its capacity.

To tide over the crisis emanating from the steep upsurge in Rupee value, the Government announced a set of measures in July, 2007 to provide relief to exporters by way of accelerated reimbursement of dues to exporters, reduction in the interest rate on pre-shipment and post-shipment credit and revision in drawback rates and Duty Entitlement Pass Book (DEPB) rates. In addition, the Government has also notified refund of service tax to exporters for use of services not in the nature of "input services". A further set of measures was announced in October 2007, thereby, inter alia, extending Service Tax relief in respect of more services; period of interest subvention on pre-shipment and post-shipment credit was also extended in respect of more sectors.

In November, 2007, the Government has announced further a relief package which reduces basic Customs Duty on certain items relating to textiles sector as well as refund of service tax paid by exporters on taxable services linked to exports, has been further extended. A support package for providing relief to export sectors, like Textiles, which have low import intensity, was also announced through additional subvention of 2% in pre-shipment and post-shipment credit to the textiles including Ready Made Garments and carpets but excluding man-made fibre.

Various measures taken by the Government will surely enable this sector to take rapid strides forward and capture a sizable share of the global textile trade.

Higher Investments
In the past three years, the textiles sector, including the clothing industry, witnessed investments to the tune of Rs 64,478.00 crores. The level of investments is expected to reach Rs 1,50,600.00 crores in 2011-2012.

Exports
Exports of textiles and clothing for the period ended 31st March, 2007 recorded an all time high of USD 18.73 billion. This was around 7% higher than the exports of Textiles and Clothing recorded in 2005-06. India continued to be among the highest suppliers of garments and apparel to the USA and EU countries. Although, a slump in the growth of exports of textiles and clothing has been recorded since the beginning of 2007, due to appreciation of the Indian rupee vis-à-vis the US dollar according to the T&C Industry, the Government has taken proactive steps to arrest this decline by introducing several fiscal measures intended to shore up the confidence of the exporters so that the export target of US$ 25 billion for 2007-08 could be achieved.

Technology Upgradation Fund Scheme (TUFS)
The garmenting, technical textiles and processing segments of the textiles industry have great potential to add value and generate employment. The Working Group on Textiles and Jute Industry for the XI Five Year Plan, constituted by the Planning Commission, has set a growth rate of 16% for the sector, projecting an investment of Rs. 150,600 crore in the Plan period.

In this context, it was decided to extend the Technology Upgradation Fund Scheme during the Eleventh Plan period, and to reframe some of the financial and operational parameters of the Scheme in respect of new loans. The modified techno-financial parameters of the Scheme are expected to infuse capital investment into the textiles sector, and help it capitalize on the vibrant and expanding global and domestic markets, through technology upgradation, cost effectiveness, quality production, efficiency and global competitiveness. It is estimated that this will ensure a growth rate of 16% in the sector. The modified structure of TUFS focuses on additional capacity building, better adoption of technology, and provides for a higher level of assistance to segments that have a larger potential for growth, like garmenting, technical textiles, and processing.

Scheme For Integrated Textiles Parks (SITP)
With a view to provide the industry with world-class infrastructure facilities for setting up their textile units, the Scheme for Integrated Textile Park (SITP) was approved in July 2005, by merging the Apparel Park for Exports Scheme (APES) and the Textile Centres Infrastructure Development Scheme (TCIDS) to create new textiles parks of international standards at potential growth centres. Primary objective of the SITP is to facilitate setting up of textiles units with desired infrastructure facilities.

As per target of the Xth Five Year Plan, 30 projects have been sanctioned. Estimated project cost (for common infrastructure and common facilities) is Rs. 2,893.42 crores, of which Government of India assistance under the scheme would be Rs. 1,054.76 crores. So far, an amount of Rs. 205 crores has been released under the Scheme. 2,186 entrepreneurs are scheduled to put up their units in these parks covering an area of 3,206 Acres. The estimated investment in these parks would be Rs. 15,258 crores and estimated annual production would be Rs 24,024 crores. After these Textiles Parks become functional, there will be employment generation for 5.45 lakh persons.

Taking into consideration the response to the scheme and the opportunities for the growth of textile industry in the quota free regime, the Ministry of Textiles has proposed for continuation of the scheme in the XIth Five Year Plan to develop 50 more textiles parks.

Jute & Jute Textiles Industry
As envisaged in the National Jute Policy 2005, Government approved the Jute Technology Mission, to be implemented during 2006-07 to 2010-11 at an estimated cost of Rs.355.55 crores, and establish a National Jute Board at Kolkata by merging the Jute Manufactures Development Council (JMDC) and the National Centre for Jute Diversification (NCJD). Steps have also been initiated to set up a National Institute of Natural Fibres and a National Jute and Jute Geo-Textiles Museum.

The Minimum Support Price (MSP) for raw jute has been increased to Rs.1055.00 per quintal in 2007-08 up from Rs.1000.00 per quintal in 2006-07 with a view to protect the jute farmers from seasonal uncertainties, and help to prevent distress sales by farmers.

Cotton Production
Due to focused support to cotton growers by the Government, the cotton production reached a record high of 280 lakh bales (170 kgs. each) in the 2006-07 cotton season (October-September), and is expected to increase at 310 lakh bales during 2008-09 as per Cotton Advisory Board. The productivity has increased from 472.17 Kg./hectare in 2005-06) to 520 Kg./ hectare in 2006-07.

Handlooms
Handlooms provide employment to more than 6.5 million persons. The production of cloth by the handlooms sector during 2006-07 was 6536 mn. sq. mtrs., and in 2007-08, it is estimated at 7074 mn. sq. mtrs. Under the Integrated Handloom Cluster Development Scheme, 20 handloom clusters have been set up in the first phase at an estimated cost of Rs. 40.00 crores.

In 2006-07, the Government identified 100 additional clusters for their integrated and holistic development at an outlay of Rs.50.00 crore. These clusters will be developed in a time frame of about three years. Diagnostic study of these clusters has already been completed. These clusters along with other additional clusters will be taken up for development under the new "Integrated Handlooms Development Scheme".

Handicrafts
The exports of handicrafts, including hand knotted carpets, during the year 2006-07 were Rs 20,963 crores (US$ 4619.20 Million) registering an increase of 19.04 % in Rupee terms and 16.08 % in dollar terms. The main export items which exhibited increase during 2006-07 were carpets (19.23%), Zari and Zari goods (13.08%), Art metalware (12.89%), and Miscellaneous handcrafted goods (5.52%). The export target for 2007-08 has been fixed at Rs. 25,278 crores. During the period April-November 2007, provisional export of handmade carpets & other Floor coverings has shown a decrease in rupee terms by 17.12% and decrease by 6.59% in US $ term in comparison to the export during April-November 2006. However, the export of other handicrafts items has shown decrease during the period under report by 14.01% in rupee terms and decrease by 3.07% in US $ terms compared to April - November 2006. The total provisional export of handicrafts including hand knotted carpet during April - November 2007 is estimated at Rs. 9607.97crores (US $ 2,361.60 millions), whereas the export April - November 2006 was of Rs. 11250.12 crores (US $ 2,453.36 millions) thus showing n decrease of 14.60 % in rupee terms and decrease of 3.75 % in US $ terms.

The sub-group on handicrafts recommended six generic schemes for the development of handicrafts in the country to be implemented during the XIth Five Year Plan. The scheme recommended for implementation during the XIth Five Year Plan are as under :

*

Baba Saheb Ambedkar Hastshilp Yojana
*

Design & Technical Up gradation
*

Marketing Support and Services schemes
*

Human Resource Development Scheme
*

Research & Development
*

Handicrafts Artisans Welfare Scheme

Out of six generic schemes proposed for implementation during 11th Five Year Plan, four schemes i.e Design and Technical up-gradation Scheme, Research and Development Scheme, Welfare and Human Resource Development Scheme have been launched for implementation. The approval of the remaining two schemes i.e. Baba Saheb Ambedkar Hastshilp Vikas Yojana (AHVY) and Marketing Support & Services Scheme is awaited.

National Textiles Corporation (NTC)
NTC is modernizing 22 Mills with latest state-of the-Art technology on its own. As on 30.09.2007, there are 16,818 employees in 52 Textile Mills ( after closure of 67 mills), with 9.55 lakh spindles, 577 looms producing 400 lakh kgs of yarn and 185 lakh mtrs. of cloth annually. So far, 55,642 employees have opted voluntary retirement under the Modified Voluntary Retirement Scheme (MVRS) and Rs.1951.13 crores have been paid as VRS compensation to all the employees of closed unviable mills and surplus employees of viable mills.

As per approved Modified Revival Schemes, the total cost of modernization of 22 mills was estimated at Rs.530 crores. Out of these 22 mills, modernization scheme is being implemented in 15 mills. The balance 7 mills proposed to be modernized are as under:

1.

2 mills will be modernized on turn-key basis. Contract given to M/s L.M.W., M/s Technopack and M/s Gherzias.
2.

Consultants in respect of 4 mills have been appointed for setting up of 4 green field projects by re-locating them from city to sub-urban areas.
3.

The work was delayed in. Cannanore Spg.Wvg.Mills, Mahe due to strike by workers,. Now the matter has been resolved and MoU has been signed between workers union & mill management. The orders for new machineries would be placed for modernisation when 90% utilization is achieved.
4.

Besides the above, there are 16+2 mills to be revived through Joint Venture Route. Out of this, MOU has been signed with 3 JV partners initially for 5 mills situated in Maharashtra State.
5.

NTC has submitted a modified revival to BIFR through IDBI on 24.9.07 to expand the capacity in NTC mills when the space is available. 12 (10+2) mills to be closed further when most of the workers opt for MVRS and no production activity in the mills.