Interview with Mr. M. K. Panthaki

"The Indian textile industry deals with yarns, fibres and made-ups (like bed-covers, pillowcases, tarpaulins towels, etc.). Even sarees and dhotis come under their purview since basically these are fabrics with edges stitched. On the other hand, the garment industry deals with apparel for human wear and includes accessories that normally go with a garment like shawls, scarves, odhanis, socks, stockings, gloves, handkerchiefs, etc. This also includes all types of ethnic garments (commonly called "" India Items"") like salwar-khameez, ghagra-choli, Nehru jacket, bundgala etc. Garment industry is the end product of the supply chain and hence contributes maximum value-added."

"The Indian clothing industry is set to reap large benefits with the quota phase-out. It is set to expand by around 15% per year. For one, it has attracted large investments, partly from internal resources and partly from financing institutions. Secondly, satellite companies set up to take advantage of quota allocation have now merged with the parent companies to increase capacities, achieve economies of scale, and cut units costs to stay internationally competitive. Further, the vanishing of quota premium with the quota phase-out has enabled companies to slash prices without necessarily affecting adversely their bottom lines. Thirdly, amalgamations and mergers are taking place in the industry amongst itself and/or joint ventures with overseas entrepreneurs. Even participation in equity stake of companies has enabled continuity in the supply chain, and to take advantage of each other's strengths. Fourthly, backward and forward integration, especially in the case of spinning units and knitted garment companies is taking place with two objectives: (i) assured supply of raw materials on a long-term basis; and (ii) adding value to the end product. This has also had the effect of cutting time for raw material supply and thereby keep to the delivery schedules, which are getting shorter by the day, internationally. Fifthly, banking finance is being made more readily available to small and medium enterprises for technology improvement through 'Technology Upgradation Fund' under which, interest rates are subsidized by Government, and further by allowing in addition, a capital subsidy of 10% for the processing sector, (which is the weakest link in the textile chain), calculated on the basis of purchase price of machinery (and not on 75% of the capital which is considered for grant of bank finance). Sixthly, garment units have been undertaking massive doses of investments, partly from own resources and partly from the public in the shape of IPO and/or foreign debt. Seventhly, second shift working is being increasingly resorted to step up production without the need for additional investment."

"The size of the global clothing industry is difficult to estimate for two reasons: The value units adopted by each country are different and which cannot be reduced to a common volume unit. In terms of value, each country has its own currency in terms of which they estimate their production. In order to get round (a) & (b), the general system preferred is index of production; though this does give an idea of increase/decrease, it is of no use unless the figure for the base year is known which again is subject to (a) & (b) above. Suffice it to say, that the Indian garment industry is worth Rs.1.7 trillion and manufactures about 7,200 million pieces in over 100 varieties of Western-style garments of which 1,800 million pieces are exported and the balance available for domestic consumption. Production of ethnic garments is estimated at 2000 million pieces. The Indian garment industry produces sufficient clothing not only to clothe its own population but also partly, the world at large. "

"CMAI is contributing in several ways to promote the interest of the Indian Garment Industry: It organizes Garment Fairs, both on an All-India and on a Regional basis to promote business of the participants. The All-India Fair entitled National Garment Fair has attained the status of being the most important and popular fair, which is attended widely by not only local traders but also overseas buyers/agents. Regional Fairs are also held in North, South and West India to promote the interests of participants & traders in those parts of the country. CMAI is a co-sponsor of India International Garment Fair (IIGF), which caters exclusively to exports and which is open only to overseas buyers/agents who are invited to attend and for whom boarding/lodging arrangements made. In order to acquaint CMAI members of the types and qualities of fabrics and accessories manufactured by garment entrepreneurs in the world, CMAI organizes a Fair for fabrics & accessories at which global countries take space to exhibit their wares. This makes it an eye-opener for local manufacturers to emulate. With a view to enable CMAI members to judge the performance of garment machinery manufactured globally, the CMAI will organize a fair in January 2006 called Apparel Machinery Exposition (AME'06). This will enable Indian manufacturers to purchase machinery suitable to their needs and finance. CMAI maintains a directory of garments manufactured by its members and routes overseas enquiries to them. CMAI conciliates in disputes on quality/payment between members and traders with a fair degree of success. CMAI maintains a Laboratory for testing of various parameters for fabrics and garments; these include count, strength, and fastness to washing/sunlight/perspiration. The Laboratory is open for both members & non-members of CMAI. CMAI has, over the years, earned the eyes and ears of Government. It is consulted on all matters dealing with the Garment Industry for the domestic or export sectors. It submits every year, a Pre-Budget Memorandum to Government highlighting the areas that need to be covered. CMAI has earned the respect of Government in that its recommendations are largely accepted. CMAI further briefs Government on the tempering of import/excise duties and advises Government on negotiations to improve market access for Indian garments in overseas markets."

"Indian garments currently reach over 100 markets. In the quota regime, the concentration was on EU, USA and Canada. Through CMAI's intervention, markets were diversified to the extent that 25% of garment exports from India are to markets other than the above. India is currently negotiating for free trade/preferential trade agreements with blocs of countries like ASEAN, SAARC and MERCOSUR. It is also negotiating for a zero-for-zero tariff in respect of EU & USA on the basis of reciprocity. While such agreements are being inked, the clause on rules of origin to ensure that third countries do not take unfair advantage of the trade agreements has been a stumbling bloc but is being accepted over time. Apart from EU & USA, some of the other major markets for Indian garments include Saudi Arabia, UAE, Switzerland, Australia, Russia, Canary Islands and Chile."

"While setting up Apparel Parks and Special Economic Zones (SEZ), units set up there should be given maximum freedom to import raw material/intermediates. Both should be principally for exports. It is essential that units set up there should NOT be trading units. The units must be involved in major manufacture involving a change in the Harmonised System Code (HS Code). However, to account for a slow-down in exports, they may be permitted to divert upto 25% of their export performance (not production) to the domestic market without the need for such diversion to bear the burden of local taxes. This would strengthen their competitive capacity. Each unit should be permitted to have 100% overseas accounts which could be utilized by them for purchase of raw materials / intermediates / machinery without exchange risk. Such Parks/SEZ should be mini-villages with full-fledged markets, school, college; technological institutions well equipped hospitals, shops, stores, groceries, etc. including even residences for workers, supervisory staff etc. so as to promote maximum attendance and worry-free production. Training institutes should also be part of the complex as also areas set aside for baby crèche attended by qualified nurses, lunch and recreation rooms, wash rooms, ambulance room, well-equipped fire brigade station, etc. Wives of workers would thus be encouraged to join the work force helping to augment family income. Such Parks/SEZ should be treated as Essential Services, prohibiting strikes/lock-outs and the freedom to remove those workers who do not attain minimum level of performance even after re-training. Sale within the Park./SEZ should be permitted to employees/workers on a reasonable basis. Each Park/SEZ should accommodate a minimum of 50 units each with a minimum capacity of 500 sewing machines. Units in Parks/SEZ should be entitled to a Special MDA grant for canvassing export orders."

"Government must finally make up its mind on FDI in retail. Notwithstanding inroads made by Malls set up in various parts of India or big retailers like WALMART, we have yet not come across a single case of a local shopowner being displaced. On the other hand, setting up of Malls has increased employment in the country besides making available goods to consumers at low prices due to technology. On the present thinking of Government, FDI in retail will be permitted for only large-sized Malls (50,000 sq. mtrs.) restricting it to metros, and ensuring minimum space for food products. On this thinking, there should be hardly any chance of displacement of labour. On the other hand, if FDI is brought into agriculture, the income of farmers will rise due to technology being brought in for end-use of farm products like canning of products/soups/syrups etc. An increase in rural income will spell boom conditions for the economy bringing with it demand for consumer goods and in turn, raising production of these goods as well as employment."