Our Bureau

New Delhi , Feb. 25

THERE is a need to rationalise excise duty structure in the textile sector and remove the "policy bias" against the synthetic fibre sector, according to the Economic Survey.

The Survey has also called for aggressive labour reforms and easing of entry and exit barriers to enable India compete with countries such as China and Taiwan in the new free global textile trade regime.

"Easing of entry-exit barriers will be critical in determining the success of the textiles sector to reap the enormous potential benefits of the post-quota regime," the Survey has said. For India to maintain its dominance in the post multi-fibre agreement regime, it has suggested various policy measures, including the de-reservation of textile products that are earmarked for the small-scale sector. The step, according to the report, would help the industry compete with flawless fabric from modern facilities in neighbouring countries.

"As more than 60 per cent of India's fabric production is in the unorganised sector due to reservation, they cannot compete with cheaper and flawless fabric from advanced plants in China and Taiwan. Policy measures will be necessary to reduce disincentives for factory mode of production," the survey said.

Reiterating the industry demand for a more flexible labour policy and the removal of policy bias against synthetic fibres, the survey has called for modernisation and technological upgradation of the sector and easing of other trade and investment constraints. The Survey said a number of infrastructure constraints threatened the competitiveness of the textiles sector.

In preparation of the phasing out of textile quotas from January 1, many changes were made in the taxation system and these regulations have started showing results, the Survey noted. Production of fabrics in April-November 2004 increased 4.8 per cent as compared to the previous year.

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