Looming crisis

The crisis-ridden textile sector, being labour-intensive, should have been an ideal candidate for a push as part of the Prime Minister’s pet ‘Make in India’ initiative, but as the issues it is mired in remain unresolved, and with losses mounting, the situation is grim. Nearly half of India’s power looms are at a standstill: the spinning industry in the northern and southern regions has pressed in shutdowns of as much as 15 to 20 per cent of production capacity. The textile industry as a whole is reeling under high input and transaction costs. The products find it hard to compete in export markets, where India-made yarn, fabrics and garments attract duties respectively at rates of 3.5, 8.5 and 14 per cent. Yet, Pakistan, Vietnam and Cambodia enjoy zero-duty access in some categories in the U.S., EU and China. India’s trade negotiators need to seek expedited results. China is not picking up much from India this year.

Cotton was cheaper in India this year initially. But the Cotton Corporation of India for several months sold the good-quality produce procured in Andhra Pradesh, Telangana and parts of Maharashtra at prices higher than international levels, making Indian cotton uncompetitive. This added to the problems of the industry, especially the spinning segment, before an intervention by the Union Textile Ministry ensured resumption of smooth supplies. Tinkering with the cotton market through Minimum Support Price operations must be avoided. Instead, direct cash subsidy benefit to farmers could help reform the sector. China has also decided to go in for direct subsidies to cotton growers, with its textile industry free to source cotton at international prices. The Technology Upgradation Fund Scheme that was originally brought in by the Atal Bihari Vajpayee government and launched in 1999, is a ready framework available to the Centre to address the needs of the textile sector. The scheme, that is estimated to have so far resulted in investments of over Rs.3,00,000 crore in the whole textile value chain, will expire in March 2017. It should be extended. A comprehensive National Textile Policy must be announced at the earliest to create a level playing field with regard to tariff rates, raw material costs, cost of funding and transaction costs. Each power loom provides work to about 2.5 workers. Closures all across the country could endanger livelihoods on a large scale. Conversely, a healthy textile sector could potentially create millions of jobs. That should be the target.

Source: The Hindu

Advertisements

#2015, #august