Policy delay hits textile sector

NEW DELHI, DEC. 24. Despite the contribution made by the textile sector to India's exports the delay by the Government in announcing a new textile policy this year has left the sector ill-prepared to take on competition in the post quota regime.

The sector which has a major share in exports and which grew at the rate of 13.1 per cent during the period April-August this fiscal, is today faced with frequent changes in policy and rampant anomalies in the taxation structure.

While the government has announced grand plans to set up set up a venture capital fund and up to ten garment parks, the industry is not much enthused as the measure has come at a time when the competition from neighbouring countries such as Sri Lanka and Bangladesh has already made it hot under the collar.

Despite frequent warnings by the industry and less than three years to go before all existing barriers in the textile sector are lifted in 2004, inter-ministerial differences claimed yet another victim in the textiles sector with its policy announcement kept on hold for want of de-reservation of ready- made garments from the list of items earmarked for SSI.

While the textiles ministry was seeking de-reservation of hosiery and garments from the reserved list the SSI ministry was opposing the move on the grounds of employment.

Thus, despite repeated announcements by the textiles minister Mr. Kanshiram Rana that the new textile policy would be unveiled in the budget session it was not until the end of October that the new textile policy was announced.

The new textile policy set an ambitious target of achieving exports worth $50 billion by 2010 as against $11 billion at present. It also sought to increase the number of power looms to 50,000 within the next few years from the present level of 10,000.

The only major announcement made in the textile policy was the de-reservation of garments from the SSI list and more importantly allowing 100 per cent foreign direct investment in the sector.

On the whole the industry welcomed the policy but said it was too little and too late as more important issues such as uniform taxation for the different segments of the sector still remained un addressed.

The textile ministry on its part has assured the sector that it will seek to remove the taxation anomalies as well as impose Zero import duty on second hand imported textile machinery.

The textile industry has also been sore with the government for effecting changes in the textile policy mid-year. The changes in the quota for garment exporters or the withdrawal of the DEPB benefits to the silk embroidered garments mid-way has affected export consignments of the exporters.

The lack of clarity in the government's thinking on policy matters was also visible when on the one hand garments was de- reserved from the SSI on the ground of infusing better technology, on the other it was decided to continue with the hank yarn obligation and the handloom reservation act on the ground of employment.

- PTI

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