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Textile industry to achieve $55 bn of investments by 2010

26 May '08

4 min read

Domestic textile industry, which currently is braving various odds, could achieve US$ 55 billion of investments, create job opportunities for 65.4 million workforce and its CAGR could go up at 22% by 2010 provided reforms are initiated into it at quicker speed, according to findings of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

In a Study brought out by ASSOCHAM on `Indian Textile: Weaving a Global Spin', it has been stated that with continuing bottlenecks in place, the projected investment for 2010 could fall at US$ 16 billion from projected US$ 55 billion and job prospects stay for a meager lot of 19 million workforce as against projections for 65.4 million.

The predictions for CAGR of 22% by 2010 would slip at 6% until vigorous efforts are made for reform introduction to the textile sector, says the ASSOCHAM President, Mr. Venugopal N. Dhoot while releasing the findings of the Study.

The industry attracted investment of Rs.33,000 crore during fiscal 2006-07, up by 51% from Rs.21850 crore in the previous year.

The total size of the textile sector is $ 47 billion with domestic market at $ 30 billion and export market at $ 17 billion.

Mr. Dhoot says that hardening of rupee has already effected the competence of textile sector as its margins have lowered and international competition has become stiffer. The textile sector would lose its glare for good provided reforms are further delayed.

The ASSOCHAM Chief said that excise duty imposed on finished man-made fabric is 8% while that on its raw material is 16%. The duty paid on the inputs are credited under the Cenvat system of taxation and inverted duty structure leads to the problem of accumulation of credit.

The Government, therefore should align the duty rates so that textile manufacturers can utilise the unused funds. Custom duty of 7.5% charged on import of PTA (Purified Terephthalic Acid) should be scrapped as there is no import element involved in it and additional 4% customs duty levied on textiles and clothing should be refunded to exporters.

The study recommends changes in existing schemes such as TUFS suggesting that the amount sanctioned under it fall short of re-imbursement liability of the government.

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