– Sanjay K Jain
I remember a presentation I made in China last June, where I proudly claimed that Indian textile industry would be well off even with less purchase of cotton and yarn by China. We all were buzz with optimism and were ranting the Indian consumption story.
Just 15 months down the line, the whole industry is crying and complaining. You keep reading articles and press notes of strikes, shut downs, sell offs, etc. The only silver lining has been the optimism in the stock market about the future of the industry, where most stocks have seen considerable rise ? its said they see much ahead of others! The last two decades have heard India to be on the threshold to break into the global textile industry as a superpower, however we continue to grow at the Hindu rate of growth. China, Bangladesh, Vietnam, etc. have come from behind and left us far behind in the race. Once again, we are being talked as having a golden chance to break free and run ahead as China due to its development getting more expensive and vacating space for others.
The question today is, will India again miss the bus? Are we aware of this chance and preparing ourselves or not?
Lets see what has happened or happening in the various key segments of the industry.
Some key facts:
- Draft textile policy circulated a year back still no sign of final policy
- Export incentives reduced for yarn and fabric
- TUF incentives getting delayed fund allocation reduced in Budget
- TUF scheme is officially on, but for last six months no new projects are getting passed
- Here say is that TUF scheme is going to be modified however no one knows what will be the fate of projects which are ongoing and who have not got TUF sanction
- Incremental export incentives denied by Government, despite being announced
- Retrospective amendments made in Incremental Export Incentive Policy to restrict benefit to industry
- Imports of textiles of manmade fibre base increasing from China, Indonesia, etc
- Anti-dumping duties continue for certain fibres
- Consumer demand is very weak the complete textile industry claiming domestic demand to be
- the weakest in last many years (surprisingly despite inflation moderating)
- Aggressive state incentives leading to expansions
- in segments where India is already surplus another story of lopsided development due to ill conceived policies
- Banks are wary to fund textile projects and are burdened with NPAs from the industry
- Textile industry has been identified as one of the stress sectors by banks and Government
- China, Taiwanese fabrics have found a duty-free route through garments made in Bangladesh (duty free access has been granted to it)
- FTAs have hardly helped us, the European one could be a game changer but certain other industry lobbies are not letting it see the light of the day. On the other hand, our competitors like Bangladesh, Vietnam, Pakistan, Sri Lanka, Myanmar, Cambodia, and African nations are getting access through various treaties with Europe/USA/China
- FDI is negligible, as Vietnam, Bangladesh, Cambodia and Myanmar are preferred destinations now even African countries like Ethiopia, Nigeria, Kenya are pitching hard
Its looks like a long list of negatives, however there are positives also:
- The government is very focussed on skill development and work is going on in full flow for skilling our workforce
- Labour laws are being reviewed and positive amendments are expected to make them relevant to today (however need to see how much the government succeeds in this)
- Valuations of textile companies have increased, but fund raising hasn´t happened yet
It is importan