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Invest in backward integration to be competitive – experts

29
May '10
On pressure from the value-added textile sector, the government of India had imposed a ban on raw cotton exports from the country in April, which was withdrawn subsequently on May 21, at a time when farmers start cotton sowing activities.

Among many other measures suggested by the textile industry is a proposal to create a cotton buffer stock by the government to help check the volatility in cotton prices, which upsets the productions costs of textile companies.

The government, as and when it takes a decision to protect the interests of one of the segments of the textile value-chain, obviously upsets the other segments. The imposition and later withdrawing the ban on cotton exports is a classic example.

India's cotton output has nearly doubled in a period of just seven years, by means of adopting the latest technologies. Cotton production which stood at 17 million bales in 2002 has now touched 30 million bales in the previous year.

The biggest drawback that has impacted all-round and holistic growth is the matter of backward integration. Other than a few firms like, Reliance Industries, which started off with fabric manufacturing and is now at the last stage of backward integration; oil exploration or for that matter, Arvind Ltd, which has forayed in to contact organic cotton farming, there are not many others of their ilk.

The Chinese textile and apparel sector for example is also cowed down by increasing labour and raw material costs. But it has been able to retain its competitiveness by investing in technology and increasing scale, which has helped it climb up quickly the path of recovery and is now reporting growth in exports since the last few months.

The Indian textile industry has always been clamoring for government control on the raw materials it consumes, but at the same time derides those controls, when it relates to the finished products that they produce.

It is high time, companies across the value-chain invested in backward integration stage by stage as a measure to retain global competitiveness, aver experts.

Fibre2fashion News Desk - India


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