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Dithering on textiles

THE DITHERING AND the inaction on the long-awaited new textile policy continue even as the Textiles Minister, Mr. Kashiram Rana, has been talking of speeding up major policy initiatives to make the industry globally competiti ve. Latest reports indicate that sharp inter-ministerial difference may delay the announcement of the policy yet again. For instance, the SSI Ministry is opposed to the dereservation of textile garments that the Textile and Commerce Ministries have been demanding. There are also differences over the closure of sick NTC mills and the role of the handlooms sector.

The Committee set up by the Textile Ministry on July 24, 1998 under the Chairmanship of Mr. S. R. Satyam, former Textiles Secretary, submitted its report on October 20, 1999. The Government is yet to arrive at a decision on the recommendations, most of w hich appear pragmatic in the context of the challenges posed by the agreements of the World Trade Organisation (WTO). For instance, it has recommended privatisation of some NTC mills, and sale of surplus land for others to finance a voluntary retirement scheme (VRS); scrapping of the Handloom Reservation Act; dereservation of garments, hosiery and knitting; and removal of quantitative ceiling on cotton yarn exports. It also wants the Government to do away with the tax bias against synthetic fibres and t extiles so as to raise their domestic consumption. However, among the differences, dereservation of items in the SSI list and closure of NTC mills appear to be the major stumbling blocks for the formulation of a new textile policy. Even after six years o f debate, successive governments have not been able to decide on how to treat the chronically-sick mills under the NTC. Even the pragmatic suggestions about sale of surplus land with some Mumbai-based mills have not been adopted because of politicisation and lobby pressure. Meanwhile, the accumulated losses of the NTC zoomed to Rs. 7,350 crores by end March 2000 against its paid-up capital of Rs. 512 crores.

The health of the textile industry has deteriorated over the last few years with no segment, be they composite mills or powerlooms or handlooms, spared of the affliction. Apart from the sick and closed mills under the NTC, over 300 private units have dow ned shutters, while many others have been incurring cash losses. The time is clearly running out for the government to prepare the industry to face the formidable challenges of the WTO regime. Apart from the Satyam Committee, the Prime Minister's high-po wer panel on traditional industries, comprising Mr. Nusli Wadia and Mr. Ratan Tata, recently called for removal of structural anomalies in the textile sector. This panel agrees with the Satyam Committee that activities such as knitting, garments and text ile process houses should be exempt from SSI purview. Further, the panel wants procedures simplified for relocation or closure of unviable and non-operating textile units and formulation of policies to encourage consolidation of fragmented units. It is p ossible to implement most of Satyam Committee and PM panel recommendations, without harming the interests of the workers. In this context, the Government's recent thinking to implement the Gujarat pattern of VRS for textile industry with variations is wo rth a try.

The much-debated New Textile Policy should have been in place at least when India signed textile agreements with its two major trading partners, the US and the European Union at the beginning of 1995, soon after the establishment of the WTO. At the recen t EU-India summit in Lisbon, India succeeded in extracting additional garment quota of 3,500 tonnes. But given the fact that exporters have not been able to use their quotas in full in the past, it is doubtful if the Indian industry will be in a position to benefit from the latest concession. The more the delay on the new integrated textile policy, the greater will be the damage.