Govt's reformist role in textile industry

The small enterprises' prevalency in textile industry is second-highest after agriculture. It has generated huge employment for both skilled and unskilled labor. The industry does not only holds importance in terms of employment generation, but also hold weightage in terms of output, investment. Industry's vital role in the nation's economy can easily be judged with its contribution margins as it accounts for nearly 14 per cent contribution to industrial production, 4 per cent to country's GDP and 16.63 percent to total export earnings, 9 per cent of excise collections, 18 per cent of employment in the industrial sector and more importantly it employs around 35 million people.

 

Going with reports, it has been estimated that one of every six households in the country depends on textile sector, either directly or indirectly, for its livelihood.

 

 

 

Earlier, the textile industry was highly unorganised industry, SME-dominated and had limited scope for growth due to the conservative government policies. But a drastic transformation has been observed in the industry dynamics after dismantlement of the Agreement on Textile and Clothing (ATC) in January, 2005. ATC was aimed to secure the removal of restrictions applied by some developed countries to imports of textiles and clothing.

 

 

 

The break down of ATC had opened tremendous growth opportunities for India and cleared the deck for the global players to enter India.

 

 

 

Investment Scenario

 

The Indian government allows up to 100 per cent foreign direct investment (FDI) in the textiles sector through the automatic route. In order to attract investment in the sector, the Ministry of Textiles has also instituted a FDI cell at the Economic Division.

 

 

 

Besides, investments in various schemes namely Technology Upgradation Fund Scheme (TUFS), The Scheme for Integrated Textile Park (SITP) and Integrated Skill Development Scheme also speak a lot about government's considerations towards the growth of the sector.

 

 

 

Technology Upgradation Fund Scheme (TUFS) - The TUFS provides plan support for modernization of textiles industry in the form of interest reimbursement and capital subsidy. It has been one of the popular schemes among the sectors like spinning, weaving, processing, technical textiles, jute, silk, garmenting, cotton ginning, wool and powerlooms. Under the scheme, the government offers subsidies to the industry for modernisation by installing new machinery, among other things.

 

 

 

Scheme for Integrated Textile Parks (SITP) – With an aim to provide world-class infrastructure for textile industries, the Indian government has envisaged the Scheme of Integrated Textile Park (SITP). SITP, which was formed with the merger of two schemes namely Scheme for Apparel Parks for Exports (APE), and the Textile Center Infrastructure Development Scheme (TCIDS), aimed to provide infrastructure facilities for setting up textile units in potential growth areas matching with the international social and environmental standards.

 

 

 

Integrated Skill Development Scheme (ISDS) - The Textile Ministry has launched ISDS in 2010 as a pilot scheme for two years with an objective to cater to skilled manpower needs of textile and related segments through skill development training programmes. The scheme envisages participation of training institutes within the Ministry and private sector as implementing agencies. The scheme has two Components– Component-I for training Institutes within the Ministry and Component II for private sector. The average cost per trainee to be borne by the government is limited to Rs 7,300 for Component-I and Rs 7,500 for Component-II. The implementing agencies directly receive funds under the scheme. The scheme has covered 24 states in all the sub-sectors of Textiles and clothing.

 

 

 

So far, the governments has sanctioned Rs 594.84 crore for 30 projects targeting 5.87 lakh trainees. As on October this year, 74094 persons have been trained under the scheme. Moreover, in the 12th Five Year Plan (2012-17), the ISDS has an allocation of Rs 1,900 crore and seeks to train 15 lakhs textiles workers.

 

 

 

Textile SMEs & Challenges

 

Indian textile SMEs are presently inundated with various problems like obsolescence in technological terms, low labour productivity and insufficient raw material. In today's scenario, technological upgradation is important anyway, but the entry of international players in the textile sector makes its a mandatory choice for SMEs in order to achieve global competence.

 

 

 

Besides, the small enterprises in textile industry has the lowest investment to labour ratio and are capable to provide employment to the poorer sections of society. Some practical solutions from SMEs-end are highly required in order achieve global competence. The industry is highly affected by variables like policy, technology, operations and the market.

 

 

 

Although, the government is serious towards the upliftment of the sector, but should put some extra effort in the promotion of textile SMEs, like:

 

 

 

(i) Policy initiatives in the sector are the need of the hour. The government should device long-term policies for refunding taxes and should provide tax exemptions on imported goods and machinery to help both SMEs and large players.

 

 

 

(ii) Deregulation of the garment sector is also of vital importance as it also help small units to grew and increase benefits in terms of high-margins, thus making investments in technology and marketing more feasible.

 

 

 

(iii) FDI in the Indian garment retailing market should also be increased which will provide the much-needed boost to the Indian fashion garment market along with stimulating competition among domestic and international players.

 

 

 

(iv) The government should provide low interest loans and financing schemes to the SMEs.

 

 

 

(v) Last but not least, the government should come up with a indigenous infrastructure so as to increase the competitiveness of textile SMEs.