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Tex Talk
Challenges before Mr Hussain

Compared to the other new ministers, Mr Shahnawaz Hussain was rather late in assuming charge as the new textile minister. However, immediately on resuming the office, he sat through a powerpoint presentation by the export promotion councils to understand the various key elements of the ministry as well as the industry. This is in addition to the usual briefing by the top officials of the ministry. Based on this background, Mr Hussain has identified modernisation of the textile industry as his priority. His goal is to modernise this oldest industry to face the emerging challenges in the post-quota regime from January 2005. He has not made it clear as to what he intends to do in this regard although he is clear that unless the industry is equipped adequately, there would be a little scope for its survival beyond 2004. To begin with, Mr Hussain has assumed the task to ensure that the export earnings are raised to $ 50 billion in 2010 as laid out in the Textile Policy. But, Mr Hussain has to prove that the reaching this target is not through the protection conferred by way of the quotas but by the ability of the industry to survive competitions. In other words, new markets should be explored and the existing ones should continue to be within the fold of the Indian textile industry even after the quota regime is over. That is the only way the industry can gain confidence.

Perhaps, that is why Mr Hussain has identified modernisation as the key area. He obviously believes that modernisation would help the industry withstand challenges in the new regime and hence face the competition from the modernised global industries. But, modernisation is an on-going process. What is modern today becomes obsolete tomorrow. Although in the textile industry, the process of obsolescence is not as fast as it is in the information technology, the reluctance of the textile industry and the government to modernise over the years has caused building up of an outdated industry. That is why, for some years now, the government has been focussing on modernising the industry. A whopping Rs 25,000 crore fund has been earmarked for the technology upgradation. The process of modernisation is such that even those units which have utilised these funds and gone for upgradation should constantly keep a watch on the latest technologies in production, processing and marketing. Unless the industry is able to implement all such measures, it can never claim to have modernised. The only difference would be as to how obsolete the industry is in its machinery and infrastructural back-up.

Facing the competition will require an action plan. The government certainly has a very important role to play in this regard. Today, there are instances of even the Indian exporters establishing a base in a competing country like Bangladesh and doing business. Is it a business against India or is it a business prudence to utilise the more competitive advantages they enjoy in Bangladesh vis-à-vis India? The government should examine as to how it should proceed to bring in the real confidence amidst the industrialists to make them stand and fight the competition. Mr Hussain has taken over the charge of the ministry when the industry is passing through an unrest. The workers in different sectors of the textile industry across the country are demanding more wages, short-term revival of the wage packets and better working conditions. The managements are keen to introduce long-term stability in wage structure and productivity-linked wages so that the industry could have a meaningful manpower support to fight the new challenges. There is difference of opinion amidst these two sides of the textile coin as to how to stand straight once the quotas are removed. The powerloom weavers are on the roads and courting arrests to tell Mr Hussain and all those in textile, ministry that they cannot survive if the sector is brought under the excise net for whatever be the purpose — be it completion of CENVAT or otherwise. They are also opposing the introduction of VAT whenever that comes into being. Hence, Mr Hussain should have enough reasons to address the issues raised by the weavers and knitwear manufacturers. On the other hand, there is windfall gains in the immediate term because of the EU and the US skipping the Chinese products on fears of SARS. Although the circumstances are rather unfortunate, given the fact that these were not the mischievous making of the Indian textile industry but something which had happened just like that. It is just part of the global business.

That the textile industry should survive is not just for the industrialists who have invested money, but for the country as a whole. Accounting for some 8 per cent of the GDP, 17 per cent of the country’s total manufacturing capacity, 27 per cent of the total export earnings besides a large employment provider, the textile industry is too important to be ignored.

- PS Sundar