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A right move

The efforts towards formation of confederation of Indian textile and clothing industry by Mr Nikhil Meswani, president, Association of Synthetic Fibre Association should be fully supported by the textile trade and industry which is currently undergoing a transformation. In fact, in the changed trade order, there is definitely need for such a bigger platform that comprises all the components of the supply and production chain. This could play a very concerted role to take up various issues on the global front and represent the domestic industry in a much holistic manner. Today, if the industry has to face the global challenge in an effective manner, it has to do away with any fractional approach and endeavour towards consolidation of operations. The industry is currently, wasting more of its precious time dealing with intra industry competition than inter industry competition in the global market. More than any thing, it is adversely impacting our domestic edge. A much bigger body with representation from all the major sectors, can go a long way in dealing issues on a much holistic manner.

The confederation should take up the issue of growing cost of production on a priority basis since this is taking toll on our competitive edge. Growing cost has been a major concern for the domestic industry. A recent comparative cost study carried out by the International Textile Manufacturers’ Federation has pointed out that the high power and borrowing costs have taken their toll on the Indian textile industry, placing it at a competitive disadvantage as compared to its counterparts in other competing countries. According to the survey, the cost of power for the Indian textile industry has been found to be the highest among the competitors. In case of spinning, the electricity cost in India is 21 per cent of the total cost of production, while the same in Indonesia is only six per cent and in the US 10 per cent. The share of electricity cost to the total manufacturing cost for Brazil is 11 per cent, while Korea 13 per cent as also Italy and Turkey 16 per cent each. Apart from this, power cost in India varies from one state to another. This brings about unhealthy competition within the industry, resulting in lopsided development of production base without being truly driven by the economic factors. The survey also points out that in India, the interest incidence on capital as a percentage to cost of production for the spinning sector is as high as 29 per cent as against 14 per cent and 11 per cent in the US and Italy, respectively. The finance cost in India is the highest as compared to that in the competing countries. Even after, five per cent of interest subsidy given under the TUF scheme, the net interest rate comes to 9-11 per cent, which itself is quite high when compared to other countries. The confederation must take note of these issues and try to come out with a holistic solution.