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Indian industry will face tough challenge in global market

G K Sundaram -

During the last week of October, BJP leaders, Mr Arun Jaitley and Mr Venkaiya Naidu were in Coimbatore to attend the state level conference. Mr Jaitley said that the manufacturing industry in India would have no hope after 2004 when imports will be opened up for all countries and their products would come into the country without any check. We have to compete with such imports. The industry has got hardly two years to equip themselves to produce quality products at competitive prices so that it could effectively compete with the imported goods. If not, we would not be able to sell our products either in the local market or in the Far East countries to which we are now exporting in a big way. In short, after 2004, the manufacturing industry will not be able to find market for them and that there is no future. This is the conclusion one can deduce from Mr Jaitley’s statement. At the same time, Mr Naidu had nothing to say. He, however said that there is no hope for the textile industry if it does not become competitive.

Recently, a south-based business daily brought out an editorial painting a grim picture for the textile exporters in the country as well as the whole of the industry. The editorial covered various issues as regards the shortage of raw material, difficulties and constraints in exports, problems for spinning, weaving and related industries on the domestic front and advantages the others in the Far East countries are enjoying. The editorial stated that the government should quickly resolve various problems in the industry, especially the hank yarn obligation, etc. The editorial rightly concluded that there is a stiff agenda for the government to implement and that it has to be implemented effectively, if India is to remain a textile exporter of significance.

When the situation is so grim and the textile Industry in general is struggling, it is ironical that our own organisations like SIMA and ICMF are coming out with statements stating that the industry is doing very well and it is planning ahead very well for the re-organisation and upgradation to meet the challenges of the post-MFA market after 2004. The fact remains that our exports during the year 2001 fell by 10 per cent. More than 10 million spindles are lying idle and large number of looms in the original sector have been closed. Only one third of the looms in the country are capable for producing defect-free cloth (This is an official version). Large number of mills are closed. For rehabilitating the existing units, there is no effective package from the banks or from the government. The hank yarn obligation is still hanging over the spinning industry. What came as hank yarn control order initially, was enhanced to 50 per cent of the production packed for domestic market as an obligation. There are no takers for hank yarn since the demand for the handloom in the form of hank yarn has never been assessed. Now hank yarn is produced more than their requirements and there is nobody to buy. This has been referred to the textile commissioner and now we find that the ICMF has suggested a third alternative proposal to pay 10 paise per kg to the National Handloom Development Corporation as premium. The issue is not the premium amount involved, but the need to produce hank yarn to the prescribed percentage.

Ironically, we hear reports that the handloom weavers have no work and that Kanchi Thotti have been started to feed the unemployed handloom weavers. How hank yarn can be sold under such circumstance. At the same time, the cloth merchants say that they are over burdened with the handloom cloth which is not being sold. We do not have statistics before any regulation are framed. Some years back, it was presumed that handloom alone consumes hank yarn. But, today powerlooms openly says that they are consuming hank yarn. There are lot of mis use of regulations and also the transfer of hank yarn obligation. In short, the entire hank yarn obligation scheme help none, but creates confusion for many.

When the industry is saddled with so much problems, it is ironical that the general health of the Industry is painted in a roisy manner. The overall situation in the country is confusing and there are no concrete steps to march forward. It will therefore be wise that any picture painting the health of the industry should reflect a holistic approach. Going by the performance of few sectors or regions and saying that the industry is doing well, is a travesty of facts.

(Author is chairman and managing director Lakshmi Mills Co)