Indian economy may be showing signs of recovery in some sectors such as cement and steel, textile sector continues to be in the doldrums with millions of workers jobless, and export orders not picking up as demand continues to be low from US and developed markets.

Textiles industry is the second major employer in India after agriculture, providing employment to 91 million people according to an ASSOCHAM Eco Pulse study titled 'India Textile Scenario.'

It contributes about 13 per cent in export earning and 4 per cent in India's GDP is still suffering the heat of global slowdown as indicated by declining exports and massive layoffs.

Releasing the Study, ASSOCHAM President, Sajjan Jindal said that the economic meltdown in the major export markets of Europe and the US has led to a substantial fall in foreign orders that has resulted in an estimated loss of about one million jobs during the last few months.

Textile exports during April-March 2008-09 registered a decline of 1.71 per cent from USD 22.13 billion in April-March 2007-08 to USD 21.75 billion. Among the maximum hit segments, handicrafts registered maximum decline of 48.35 per cent in 2008-09, from USD 3481.14 million in 2007-08 to USD 1797.88 million.

Textile sector registered 50 per cent increase in investment during 2008-09 to Rs.49, 613 crore from Rs.31, 161 crore in 2007-08. But as compared to the year 2006-07 the sector registered 48 per cent decline in investment. However, in 2006-07, Rs.90, 369 crore of investment was poured in textile sector.

According to the Chamber, an investment of Rupees one lakh in power loom sector creates about three jobs, hence the government should create an investment friendly environment and provide low interest rate loans to investors and should also provide export profits be made tax-free in slow down period to encourage the export.

The ASSOCHAM has stated that despite marked improvement in the financial position, the Indian textile continue to face serious issues involving transaction cost and raw material. The government should focus on infrastructure facility related to the supply chain and provide low cost logistics service to the sector.

The sector suffers from high power cost and lack of power supply. Effective power management system has to be put in place. States should offer power at low cost on the incentive based system for the new investment made in the textile industry for commercial production.

The sector requires higher technology upgradation and active involvement of new technology. ASSOCHAM recommended that government should further increase funds under the Technology Upgradation Fund Scheme (TUFS) for textile firms from Rs.3140 crore to Rs.4500 crore and release appropriate funds to clear the existing backlog of subsidy payments and upgrade technology of textile units.

Source: Commodity Online