India : Cash-flush Banks Need To Relook At Textiles Sector

Overburdened as they are, the cash-flush banks need to relook at the textiles sector, said Textiles Commissioner Subodh Kumar, reports Financial Express.

“Report on strengthening the sector indicates that the industry will require around Rs 90,000 crore to meet the target of $25,000 crore worth of exports by 2010,” he added. The extension of institutional funds would depend on the creditworthiness and the balance sheet of borrowers, Mr Subodh Kumar said.

Mr Subodh Kumar, while speaking to FE on how does the government expect the textiles industry to strengthen ahead of the quota-free world from January 1, 2005, said, “The government has changed the decades old policies that had favoured small units while preventing big composite mills from growing. Now, it is up to the private sector to take up the challenges through any of the processes including enlargement, consolidation and or mergers.

In this direction, several measures have already been taken. These include setting up of Technology Upgradation Fund Scheme (TUFS); Technology Mission on Cotton (TMC); Credit Guarantee Fund Trust for Small Industries (CGTSI); National Equity Fund Scheme(NEF); National Renewal Fund (NRF); Integrated Technology Upgradation and Management Programme UPTECH of SBI; Textile Workers Rehabilitaiton Fund Scheme (TWRFS); Apparel Park for Export; Textile Centres Infrastructure Development Scheme (TCIDS). “A few more new plans are also under consideration for the benefit of the textile industry,” he said.

Last month, in order to help the industry to turn cost-competitive, the textile ministry had even widened the network of its TUF to include wind electric generators (WEG’s) as Captive Power Plant (CPP). This will help textile industry to reduce its power cost by around Rs 1.50 per unit (KWh).

In the quota-free world, the global buyers of bulk garments will look towards those countries who could provide them with consistent quality and in reasonably short time including cost competitiveness.

The TUF has till date lent a total of around Rs 5,000 crore against the project cost of over Rs 15,000 crore from the various sector like spinning, powerlooms, weaving, etc.

Although, China’s exports have been growing, it does not mean that India cannot increase its exports. India does not need to grow at the cost of China whose strength is in processing, but it also imports its spinning requirements.

Speaking of the FDI in the textiles industry, Mr Subodh Kumar said it has just begun, though a trickle since the last few years. For example, during 2000, the FDI in garments sector was Rs 80.99 million, which touched Rs 234.73 million in 2002.

A part of this is through technical collaboration which shows that some of the overseas players do want to make investments in India’s textile sector. “It is also likely that the domestic partners will not want more FDI to come in from their technical partners, for they too will have to chip in equal or matching amount of funds.”

Meeting export quotas is not necessarily a benchmark for the growth of the industry, Mr Subodh Kumar said, adding, “In a free world there will be an ample of opportunities for exporting to any countries and not just the US and the EU.” Lastly, exports cannot grow in isolation, there has to be fallback on the domestic markets which too have to be strong.

The government does consider garments as the ‘growth engine’ for the industry for as the taste of the consumers change and with improvement in standard of living, the future belongs to the garment sector which is not just value-addition but also labour intensive and creates good demand for employment.