Interview with Manikam Ramaswami

The domestic market is very bad, as there is no disposable income in the hands of people. Exports cannot increase rapidly unless we reduce raw material prices which are being kept artificially high, through uncalled-for protection and with relatively higher tariff walls. The commerce ministry has to start acting. It has allowed crony capitalism to continue for too long. Jobs need to be created. More exports need to happen before domestic sector can pick up. People need better-paying jobs and lower inflation to have disposable income to create domestic demand.

During the last decade, several mistakes were made - like allotment of natural resources including spectrum; several lakhs of motivated loans through PSU banks to unworthy borrowers; most importantly, uncalled-for protection to monopolistic producers of essential materials including raw materials; implementation of a foreign trade policy that was exactly opposite to the stated policy; and lack of progress in signing free trade agreements (FTAs) with consuming nations, besides (not taking) aggressive steps to narrow the trade gap with China. The honourable courts have set aside resource allocations. Reverse auction of coal will result in lower power tariffs. States will get several thousand crores, and can improve the infrastructure without affecting taxes. PSU banks, hopefully, will not further lend to unworthy borrowers, and will take aggressive steps to recover from willing defaulters. This will reduce the need to have high spreads between borrowing and lending costs, and bring down interest rates. If the commerce ministry studies the various uncalled-for protections and removes various antidumping duties and Bureau of Indian Standards (BIS) certification requirements, then the prices of viscose, polyester, plastics, cement, metals, and tyres will drop by 15-50 per cent. If the ministry strictly implements foreign trade policy (FTP) as per the stated policy of incentivising, then labour-intense exports and net Forex-earning exports, will get 7 per cent incentives, which is a must for us until we sign FTAs with the European Union, Canada and Australia. If our commerce ministry insists on getting a favourable reduction in import duty for our fabrics and home textiles, just like Pakistan, Bangladesh and Vietnam, given our US$ 34 billion deficit, we will get it. The China National Textile and Apparel Council (CNTAC) will not oppose the move. If our government gets us our raw materials at international prices by removing the uncalled-for antidumping duty and gives us incentives until we get a level-playing field through FTAs and negotiated tariff reductions as per the stated FTP, we can easily exceed exports of Vietnam and Bangladesh put together.

The commerce ministry needs to cancel all antidumping duties and BIS certification requirements for all products produced by less than 10 manufacturers (since, near-monopoly situation with protection leads to exploitation). It needs to implement the FTP policy as is stated officially, and quickly create level-playing fields by signing FTAs with developed nations.

Rs 500 crore overall, with garments accounting for Rs 90 crore.

The same, except for increasing the garment turnover to Rs 150 crore. We are not adding capacity, as the commerce ministry needs to act before investments in textiles can become profitable again.

We may launch soon our own branded corporate and safetywear garments.

R&D plays an important role in increasing our garmenting turnover and overall profit. Our R&D is mainly in the area of technical textiles and safety garments.

The organic textiles percentage is small and stays at the same level. The Better Cotton Initiative (BCI) percentage, however, is rapidly increasing and technical textiles will get doubled next year.