ASSOCHAM urges government to revive textile sector

21 Oct '08

5 min read

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has urged the government to undertake remedial measures such as labour laws flexibility, continuation of interest subvention scheme to textile exporters, fiscal incentives on fresh investments, provision of subsidized and uninterrupted power supply to textile mills in order to revive the textile and garments sector which is facing hard times.

The weakening of rupee against dollar should have pleased the textile exporters, but it has been offset by the surge in cotton prices, long power cuts, high credit, sluggish market and the global economic slowdown, further added by ASSOCHAM.

“From the sunrise sector, textile sector is at the verge of again slipping back to the stagnant phase. Government needs to provide maximize policy support to ensure India retains its competitiveness in the textile and garments sector so that employment is not hurt”, said Mr. Sajjan Jindal, President, ASSOCHAM.

While the Eleventh Five Year Plan, targets 22 per cent growth in Indian textile exports, the growth rate has decelerated from 16.6 per cent in 2005-06 to 13.50 per cent in 2007-08. The order for textile products from India has come down drastically from the largest importer, the US, concerning the financial crisis resulting in fewer export orders.

ASSOCHAM feels that India needs to change the direction of its export from the US and Europe to regions of Middle East and Africa. Only 12.5 per cent and nine per cent of textile exports are directed towards Africa and Middle East respectively.

Huge potential lies ahead for strategic expansion of the export market, but unstable economic conditions at the short term period in African regions calls for special fiscal and monetary incentives for the new venture for a specified time period.

The growth rate in the production of cloth by the mill sector decelerated from four per cent in 2006-07 (April-March) to one per cent in the same period of FY'08. The cloth production by the power loom sector also witness slowdown from seven per cent to five per cent for the same periods.

Similarly, growth of cloth production by handloom sector also witness marginal slip from seven per cent in 2006-07 (April-March) to six per cent in 2007-08 (April-March). The cascading effect is that the textile mills are likely to cut production further by 20-25 per cent, while some units have been closed down with millions getting unemployed.

The second largest employment generating sector next to agriculture that accounts for 21 per cent of the total employment generation in the economy is expected to generate 17.37 million new direct and indirect jobs during the 11th five year period. On the contrast, the sector is already trailing behind and the crisis in turn have added the pressure as almost 1.5 million people across the textile verticals have lost job since last year, few more millions are going to join the group.

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