Indian economy may be showing signs of recovery in somesectors such as cement and steel, textile sector continues to be in thedoldrums with millions of workers jobless, and export orders not picking up asdemand 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 ASSOCHAMEco Pulse study titled 'India Textile Scenario.'
It contributes about 13 per cent in export earning and 4 percent in India's GDP is still suffering the heat of global slowdown as indicatedby declining exports and massive layoffs.
Releasing the Study, ASSOCHAM President, Sajjan Jindal saidthat 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 lossof about one million jobs during the last few months.
Textile exports during April-March 2008-09 registered adecline of 1.71 per cent from USD 22.13 billion in April-March 2007-08 to USD21.75 billion. Among the maximum hit segments, handicrafts registered maximumdecline of 48.35 per cent in 2008-09, from USD 3481.14 million in 2007-08 toUSD 1797.88 million.
Textile sector registered 50 per cent increase in investmentduring 2008-09 to Rs.49, 613 crore from Rs.31, 161 crore in 2007-08. But ascompared to the year 2006-07 the sector registered 48 per cent decline ininvestment. However, in 2006-07, Rs.90, 369 crore of investment was poured intextile sector.
According to the Chamber, an investment of Rupees one lakhin power loom sector creates about three jobs, hence the government shouldcreate an investment friendly environment and provide low interest rate loansto investors and should also provide export profits be made tax-free in slowdown period to encourage the export.
The ASSOCHAM has stated that despite marked improvement inthe financial position, the Indian textile continue to face serious issuesinvolving transaction cost and raw material. The government should focus oninfrastructure facility related to the supply chain and provide low costlogistics service to the sector.
The sector suffers from high power cost and lack of powersupply. Effective power management system has to be put in place. States shouldoffer power at low cost on the incentive based system for the new investmentmade in the textile industry for commercial production.
The sector requires higher technology upgradation and activeinvolvement of new technology. ASSOCHAM recommended that government shouldfurther increase funds under the Technology Upgradation Fund Scheme (TUFS) fortextile firms from Rs.3140 crore to Rs.4500 crore and release appropriate fundsto clear the existing backlog of subsidy payments and upgrade technology oftextile units.
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