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