'No more export-led growth strategy for garments'

By R. Gopalakrishnan

CHENNAI, OCT. 7. The Union government is shedding its approach of export-led growth to the garment industry and instead will strengthen the domestic textile industry and market as a guarantee of competitiveness in the global market, the Textiles Secretary, Mr. Anil Kumar, said here on Saturday.

Addressing the annual Textiles/Garments Conference organised by the Apparel and Handloom Exporters' Association (AHEA), Mr. Anil Kumar said priority would be given to attracting investment in the textile industry, to enable it to achieve economies of scale, and added that dereservation of the garments sector effected already was a step in this direction.

One of the prime instruments in revamping the textile industry would be restructuring of the excise duty on various segments like spinning, weaving, dyeing and knitting as also organised and unorganised sectors to provide a level-playing field and discourage fragmentation. Restructuring of duty was also a major recommendation of the Planning Commission's Working Group on Textiles and Jute for the Tenth Plan which had submitted its report recently, Mr. Anil Kumar said.

As for the smaller units, the government had sought to help them by increasing the excise exemption to Rs. 1 crore but even this had been criticised by some people as working against the flow of investment into the garments sector, Mr. Kumar said, pointing out the failure of dereservation to attract investment in big capacities and modern plants. In the case of China, India's biggest competitor, 60 per cent of all apparel exports came from joint ventures with foreign investors, he said.

The Secretary said the government was considering representations made by small units that they should be given the option of availing themselves of the 12 per cent upfront capital subsidy scheme of the Ministry of Small-Scale and Rural Industries as an alternative to accessing the Technology Upgradation Fund (TUF) for the textile industry.

The Secretary said it was due to the importance that the government attached to the textile industry for its employment potential that in the last budget reliefs had been given in the matter of depreciation and for modernisation of powerlooms. The subsequent levy of excise on branded garments was intended to ensure that there was no break in the Modvat chain. The removal of the value ceiling under the DEPB for several textile items and inclusion of shuttleless looms not older than ten years under the TUF were other initiative meant to help the industry, including the garments sector which used domestic fabric.

Referring to complaints by manufacturer-exporters of garments on high wage cost, low productivity and indiscipline on the part of labour in the industry in contrast to labour in China, Mr. Anil Kumar said labour law reform and productivity were two different issues. The government had already initiated several steps to reform laws governing trade unions to ensure that they did not prove a barrier to investment and creation of new employment. This exercise would continue. However, productivity was an issue that needed initiatives in the areas of training, technology and machinery.

Mr. Anil Kumar said some garment items had been included in the revised rates of duty drawback (DBK) announced this week. If the demand of the garments sector on DBK had not by and large been accepted, this meant that it had not ``lobbied effectively'' with the Finance Ministry about the reliability of its data. The Textiles Ministry had suggested that no reduction in DBK should be effected beyond what was commensurate with the abolition of surcharge ``and this has for the most part been implemented''.

Mr. Nariman F. Mogrelia, President of the AHEA, said the availability of Indian fabric at lower cost to garment makers in Bangladesh and Sri Lanka than was made available to Indian exporters, high labour productivity in China and entry of erstwhile socialist countries into the garments trade all posed a threat to the survival of Indian units. This was compounded by the terrorist attacks on the U.S. by way of uncertainty about future U.S. orders.

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Section  : Business
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