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GCSA QUESTION NO. 4

Q.4 Discuss the current status of competitiveness of textile sector in India. What steps have undertaken at the country level and individual company level to make India’s textile sector competitive post MFA regime.

Ans:  The textiles industry has an overwhelming presence in the Indian economy. Apart from providing one of the basic necessities of life, the textiles industry also plays a pivotal role through its contribution to industrial output, employment generation and export earnings of the country. The Textiles sector is the second largest provider of employment after agriculture. The major sub-sectors that comprise the textiles sector include the organized Cotton/ Man-Made Fibre Textiles Mill Industry, the Man-made Fibre/ Filament Yarn Industry, the Wool and Woollen Textiles Industry, the Sericulture and Silk Textiles Industry, Handlooms, Handicrafts, the Jute and Jute Textiles Industry, and Textiles Exports.

The close linkage of the Industry to agriculture and the ancient culture, and traditions of the country make the Indian textiles sector unique in comparison with the textiles industry of other countries. This also provides the industry with the capacity to produce a variety of products suitable to the different market segments, both within and outside the country. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation. With the growing awareness in the industry of its strengths and weakness and the need for exploiting the opportunities and averting threats, the government has initiated many policies/schemes measures.

Current Status of the Industry

The textile industry holds significant status in the India. Textile industry provides one of the most fundamental necessities of the people. It is an independent industry, from the basic requirement of raw materials to the final products, with huge value-addition at every stage of processing.

Today textile sector accounts for nearly 14% of the total industrial output. Indian fabric is in demand with its ethnic, earthly colored and many textures. The textile sector accounts about 30% in the total export. This conveys that it holds potential if one is ready to innovate.

The textile industry is the largest industry in terms of employment economy, expected to generate 12 million new jobs by 2010. It generates massive potential for employment in the sectors from agricultural to industrial. Employment opportunities are created when cotton is cultivated. It does not need any exclusive Government support even at present to go further.

Currently, because of the lifting up of the import restrictions of the multi-fibre arrangement (MFA) since 1st January, 2005 under the World Trade Organization (WTO) Agreement on Textiles and Clothing, the market has become competitive; on closer look however, it sounds an opportunity because better material will be possible with the traditional inputs so far available with the Indian market. At present, the textile industry is undergoing a substantial re-orientation towards other then clothing segments of textile sector, which is commonly called as technical textiles. It is moving vertically with an average growing rate of nearly two times of textiles for clothing applications and now account for more than half of the total textile output. The processes in making technical textiles require costly machinery and skilled workers.

Market Size

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. Abundant availability of raw materials such as cotton, wool, silk and jute and skilled workforce has made India a sourcing hub.The most significant change in the Indian textile industry has been the advent of man-made fibres (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. MMF production increased by 6 per cent during December 2013. Cotton yarn production increased by 6 per cent during December 2013 and by 10 per cent during April-December 2013. Blended and 100 per cent non-cotton yarn production increased by 5 per cent during December 2013 and increased by 8 per cent during the year April-December 2013.

Cloth production by mill sector increased by 4 per cent during December 2013 and by 6 per cent during April-December 2013. Cloth production by handloom, and hosiery increased by 3 per cent and 11 per cent respectively during December 2013. Production by handloom, and hosiery sectors increased by 4 per cent and 13 per cent during April-December 2013. The total cloth production grew by 2 per cent during April-December 2013.

The potential size of the Indian textile and apparel industry is expected to reach US$ 221 billion by 2021, according to Technopak’s Textile and Apparel Compendium 2012.

                    Initiatives taken by the country in the post MFA regime

  1. Technology Upgradation Fund Scheme

The Technology Upgradation Fund Scheme (TUFS) was launched on 01.04.1999 for 5 years. It was subsequently extended up to 31.3.2007. The Scheme has been restructured w.e.f. 28.4.2011 and approved upto 31.03.2012. The Technology Upgradation Fund Scheme (TUFS), which is the “flagship” Scheme of the Ministry of Textiles, is the scheme for modernisation and technology upgradation in the textile sector. This Scheme aims at making available funds to the domestic textile industry for technology upgradation of existing units as well as to set up new units with state-of-the-art technology so that its viability and competitiveness in the domestic as well as international markets may enhance. It aims at providing capital for modernization of Indian textile industry at international interest rate. Investments in common infrastructure or facilities by an industry association, trust or co-operative society and other investments specified are also eligible for funding under the scheme.

 

  1. Mega Cluster

The schemes for mega cluster support weavers/artisans, both in and outside the cooperative fold, including those in Self Help Groups (SHGs), Non- Governmental Organisations (NGOs) etc. The schemes provide for development of all the facets of selected clusters like raw material support, design inputs, up-gradation of technology, infrastructure development, marketing support, welfare of weavers etc. The schemes also raise living standards of the weavers/artisans by improving the infrastructure facilities, with better storage facilities, technology up-gradation in pre-loom/on-loom/postloom operations, weaving shed, skill up-gradation, design inputs, health facilities etc5.

The development of 6 Mega Clusters in Handloom, Handicrafts and Powerlooms were first announced by the Finance Minister in his Budget Speech 2008-09. Consequently, following three Central Sector Plan Schemes were approved by the Cabinet Committee on Economic Affairs (CCEA) in the meeting held on 20.11.2008:

  • Comprehensive Powerloom Cluster Development Scheme
  • Comprehensive Handloom Cluster Development Scheme
  • Comprehensive Handicrafts Cluster Development Scheme

 

  1. Scheme for Integrated Textile Parks (SITP)

Scheme for Integrated Textiles Parks was approved in the 10th Five Year Plan to provide the industry with world-class infrastructure facilities for setting up their textile units by merging the erstwhile ‘Apparel Parks for Exports Scheme (APES)’ and ‘Textile Centre Infrastructure Development Scheme (TCIDS)’.

 

  1. Setting up of Skilled Development Project for Textile Industry

Integrated Skill Development Scheme (ISDS) caters to skilled manpower needs of Textile and related segments through skill development training programmes. The scheme envisages participation of training institutes associated with the Ministry and the private sector as implementing agencies. The scheme has two Components – Component-I for training Institutes within the Ministry and Component II for private sector. The Government meets 75% of the total cost of the project with balance 25% to be met by the implementing agencies with a provision of enhanced level of government assistance in certain circumstances. The average cost per trainee to be borne by the Government is limited to Rs. 7300 for Component-I and Rs. 7500 for Component-II. So far, 30 projects with an outlay of Rs. 594.84 crore targeting 5.87 lakh trainees have been sanctioned.

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