The Indian textile industryoccupies a unique position in the economy of the country in terms ofproduction, exports, and employment. It is duly supported by state of the arttechnology and structural glitch in the industry. Despite its strength inproduction base, availability of raw material, and labor, the industry suffersfrom lack of economies of scale and technological obsolescence. The overallpotential of the industry and the backlog of technological up gradation incontext of industrial liberalization and globalization are emphasized byindustry analysts to enhance its competitiveness and long term viability toupgrade itself. It was therefore felt essential to make an operational andprofitable Technology Upgradation Fund (TUF) scheme to provide modernizationand technology upgradation in the industry.

 

Textile industry consists ofmajor sectors such as Cotton/Manmade Fibre Textile Mill Industry, Handloomindustry, Jute Textile Industry, Wool, and Woolen Industry, Handicrafts, andTextile exports industry. TUFS was initially launched on 1999 for a 5 yearperiod, and was extended by the Ministry of Textiles for the 11thFive Year Plan (2007-2011) to boost the industry. Under this scheme, certainidentified sectors of textile industry are eligible for concessional loansregarding technology up gradation requirements. Technology levels arebenchmarked in specific terms for each sector of the industry. Machinery andtechnology levels that are lesser than the specified benchmark are notqualified for funding under the TUF scheme. The extended scheme will revive themodernization that has been carried out during the last few years.

 

While the Government hasformulated the TUF scheme with the intention of aiding modernization in thetextile industry, availability of cheap finance has led to expansion of theindustrial capacity of the existing mills on a large scale, and has invited theentry of new players. Analysts predict that 2009 will not be a profitable yearas much focus is required on aspects like global economy, and power cuts. Pricesof raw cotton and yarn are also expected to be crucial.

 

Any industry should be marketbased, and must have the ability to generate revenues so as to repay theinvestment. With TUF, low cost capital has become the sole motivator forexisting businesses to expand, and new businesses to enter in the arena. Atextile unit needs maximum working capital right from spinning to garmentmaking. Spinning mills depend on the availability of raw cotton at the rightprice. TUF only takes care of financing regarding the fixed assets. The issuesof arranging for finance to meet the working capital requirements are stillleft in the company's own accord.

 

Indian textile industry has anoverwhelming presence in the country's economic perspective. With TUF manyentrepreneurs saw the option for cheap availability of finance but they tend toforget the vagaries of the market, and tinge of cotton purchasing. Revival ofthe global economy from the financial crisis, alternatives for crippling power cutsand an improvement in the yarn and cotton prices will bring about a positivechange in the performance of the industry. But with all these constraints, theindustry is foreseeing a slightly gloomy year ahead.

 

References:

 

  1. &sec=article&uinfo=<%=server.URLEncode(1883)%>" target="_blank">http://www.txcindia.com
  2. &sec=article&uinfo=<%=server.URLEncode(1883)%>" target="_blank">http://www.nmcc-vikas.gov.in
  3. &sec=article&uinfo=<%=server.URLEncode(1883)%>" target="_blank">http://www.thehindubusinessline.com