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It is indeed a great pleasure to extend a cordial welcome to you all on behalf of the members of the Committee of Administration as well as on my behalf to this 8th Annual General Meeting [AGM] of the Powerloom Development & Export Promotion Council [PDEXCIL] organised for the year 2002-2003.
The economy of India has though lately turned the corner and shown a positive growth, it still lags far behind the economy of China, Japan and USA. As against the India's GDP of US $ 480 billion, the GDP of China is US $ 1159 billion, of Japan, it is US $ 4165 billion and of USA it is US $ 10,082 billion, which indicate a still long way to go. The powerloom textile industry, being the largest segment of the textile sector and meets bulk of the fabric requirements of the clothing and made-ups industry, could be instrumental in achieving sufficient growth in the economy. Although, it has the necessary requisites, it is currently bogged down by various constraints as well as shortcomings. The industry is though equipped with 17 lakh powerlooms, it has hardly 8000 shuttleless looms, which compares rather poorly with the 17,500 shuttleless looms of Pakistan or 82,900 shuttleless looms of China. The industry is thus placed in a disadvantageous position on account of the fact that it is equipped mostly with obsolete machinery, which needs to be replaced at the earliest opportunity. The industry also suffers on account of increased cost of production due to high incidence of taxes and duties on the inputs as well as on the finished products. The infrastructural facilities available are also not adequate which have affected the production considerably. The high cost of finance as well as non availability of capital for installation of modern looms has scuttled the performance of the industry. The power cost in India works out to 9.82% of the fabric cost which is quite high. Besides, the quality of power supply is also poor on account of frequent disruption of power supply in various production centres. The extent of exports in respect of cotton powerloom textiles though recorded a nominal growth of 3.80% at Rs. 47226.04 million (estimated) in the year 2002-2003, as compared to the previous year, it does not infuse sufficient optimism. The overall exports of cotton textiles including yarn, fabrics and made-ups manufactured in the handloom, powerloom and mill-made sectors indicate a likely shortfall of 32% during the year 2003-2004 against the target of US $ 4200 million set for the year. This is rather alarming. It also calls for adequate measures to reverse the downward trend in exports in respect of textiles, as a whole during the year 2003-2004. The main causes for the setback in exports in the current year are appreciation of rupee value vis-a-vis US $, increased cost of raw material such as yarn, non announcement of concessional rate of interest on pre and post shipment credit for the period beyond October, 2003, imposition of excise duty on unprocessed fabrics, lack of progress in the modernisation programme, continued high cost of power, disruption in production as well as export delivery schedule on account of strike in the wake of imposition of excise duty on unprocessed fabrics etc. Continued restrictions on imports of textiles into USA, Canada and European Union as well as anti dumping procedures initiated by the European Union on imports of bed linen have also affected the flow of exports. In order to overcome the current depressed conditions of the industry as well as to accelerate the level of exports, I suggest three pronged strategy, which are indicated below ;
The PDEXCIL has already taken initiative with regard to setting up of a Mega Hi-Tech Weaving Park at Palladam in Tamil Nadu. It is proposed to install modern shuttleless looms in this park to produce textiles of high quality standard to face the challenges of globalisation. A great deal of planning and preparations have gone into this project and it is bound to be a successful one. The PDEXCIL has plans to set up similar Textile Parks in other centres also to change the entire complexion of the textile industry. This park at Palladam is being set up under the Textile Centre Infrastructure Development Scheme [TCIDS], Group Workshed Scheme and Technology Upgradation Fund [TUF] Scheme of the Union Govt. of India. Besides, it will also be covered under the schemes of the State Governments concerned. The setting up of the parks by the PDEXCIL will encourage other agencies also to venture into such projects in the overall interest of the textile industry. As the project relating to weaving park comes under the ambit of 3 different schemes mentioned above, I feel it would facilitate very much, if a combined scheme is evolved covering the provisions of all the above schemes. I also request to extend the TUF scheme with adequate modifications and enlarge the scope of the scheme as envisaged in the powerloom textile package by incorporating 20% Capital Subsidy Scheme. These changes will definitely help in speeding up of the modernisation process. The textile industry is very much affected due to imposition of various taxes and duties. Excise duty to the extent of 9.2% is charged on cotton yarn. The other raw materials such as binder, lube, sico etc. are also charged with the same level of excise duty. Consumable items like polyvinyl, alcohol is charged at 16%. Fabrics including unprocessed is charged at 10%. Apart from excise duty, sales tax on yarn and other raw materials including packing materials are charged at 4% or 2% depending on the items. Textiles Committee Cess is charged at 0.05%. Octroi is charged at various entry points which in some cases are not refunded on exportation. There is also duty on power supplied to the textile unit. Service tax is charged on the various services availed by the manufacturers and exporters. Besides, customs duty is also applicable on imports of raw materials. These plethora of taxes, duties and levies applicable on the textile industry have increased the cost of production considerably. This needs to be brought down to reasonable levels, so that the overall incidence of these levies to the cost of fabrics would be minimum. High cost of finance made available to the textile industry for modernisation as well as to meet the working capital requirements has also affected the performance of the industry. The reluctance of the financial institutions to extend funds to the small scale sector units is rather very discouraging. It is suggested that small scale sector needs to be recognised as a priority sector and if necessary, a separate institution on the lines of NABARD needs to be set up for meeting the financial requirements of the textile sector alone whether it is for modernisation, working capital requirements or export purposes. The investment made towards modernisation could be extended income tax benefit to encourage investment for modernisation purpose. The procedural aspect particularly with regard to excise, needs to be simplified to a great extent to enable the small scale powerloom textile units to comply with the procedures evolved particularly for excise purpose adequately. It is suggested that instead of manufacturers maintaining several registers, they need to be asked to furnish annual returns giving the details of excise duty paid at various stages supported with documentary evidence. Simplification of excise procedure will go a long way in removing difficulties currently faced by the powerloom textile manufacturers.
I am of the view that it would contribute to the development of the industry, if production of textiles is oriented towards exports as well as to meet the requirements of the clothing and made-ups industry. There is a need for product diversification which the powerloom textile units should carry out in the larger interest of the industry. In short, the industry. should be geared to produce textiles to meet the requirements, as indicated above. This may require adequate changes in the structure of the units which need to be carried out to derive rich dividends.
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