PREPAREDNESS OF INDIAN TEXTILE INDUSTRY FOR THE POST-MFA REGIME
Date : 15 Dec 2004
Location : New Delhi
The mood in the Indian textile industry in anticipation of the phase-out of the quota regime of the multi-fibre arrangement (MFA) is upbeat with new investment flowing in and increased orders for the industry as a result of which capacities are fully booked up to April 2005. As a result of various initiatives taken by the government, there has been new investment of Rs.50,000 crore in the textile industry in the last five years. Nine textile majors invested Rs.2,600 crore and plan to invest another Rs.6,400 crore. Further, India’s cotton production increased by 57% over the last five years; and 3 million additional spindles and 30,000 shuttle-less looms were installed. The industry expects investment of Rs.1,40,000 crore in this sector in the post-MFA phase. A Vision 2010 for textiles formulated by the government after intensive interaction with the industry and Export Promotion Councils to capitalise on the upbeat mood aims to increase India’s share in world’s textile trade from the current 4% to 8% by 2010 and to achieve export value of US $ 50 billion by 2010. This has been indicated in the presentation made to the Prime Minister last evening, which was attended by Shri Kamal Nath, Union Minister of Commerce & Industry and Shri Shanker Sinh Vaghela, Union Minister of Textiles.
Vision 2010 for textiles envisages growth in Indian textile economy from the current US $ 37 billion to $ 85 billion by 2010; creation of 12 million new jobs in the textile sector; and modernisation and consolidation for creating a globally competitive textile industry.
There will be opportunities as well as challenges for the Indian textile industry in the post-MFA era. But India has natural advantages which can be capitalised on viz., strong raw material base – cotton, man-made fibres, jute, silk; large production capacity (spinning – 21% of world capacity and weaving – 33% of world capacity but of low technology); vast pool of skilled manpower; entrepreneurship; flexibility in production process; and long experience with US/EU (European Union). At the same time, there are constraints relating to fragmented industry, constraints of processing, quality of cotton, concerns over power cost, labour reforms and other infrastructural constraints and bottlenecks. Several initiatives have already been taken by the government to overcome some of these concerns including rationalisation of fiscal duties; technology upgradation through the Technology Upgradation Fund Scheme (TUFS); setting up of Apparel Parks; and liberalisation of restrictive regulatory practices.