Home > Edit > Story

DEPB issue

The recent reduction in DEPB rate is going to further squeeze the margins of exporters who are already hard pressed to compete the global trade challenge. Even as the effort is just an effort to move towards entering the post-MFA regime, the exporters, in absence of some supplementary benefits, are finding it difficult to absorb the fallout in the existing system. The appreciating rupee against the dollar has already taken its toll on the realisation in the recent months. The reduction in DEPB rate could have been avoided for at least few months as at this particular moment, the exporting community is trying to come out of the sluggishness. On the flip side, the industry will have to be ready to face such challenges that are going to emerge more in number in future. It has always been witnessed that our industry waits till the very end in stead of keeping itself ready in advance. This sort of approach in the changing trade may cost dear. The industry if at all wants to face the future challenges effectively, it has to come up with a long term strategy which should not only focus on efficient production but also chart a action plan to face the trade related contingencies.

A study commissioned by the commerce ministry has once again rightly emphasised the need to upgrade the quality of our textile output. The study which analysed the competitiveness of the Indian textile industry vis-a-vis countries like South Korea, Taiwan, Malaysia, Indonesia and China has pointed out that the preferential treatment meted out to small units over the years, has encouraged inefficient capacities in the decentralised sector which has been producing low quality products. It is high time that all sort of vested interests be kept in the back burner and a comprehensive medium to long term policy formulated towards developing a truely competitive production base for textiles which is the single largest forex earner for the country. One thing that needs to be kept in mind that any remedial measure should not be viewed at a short-term perspective. There is no shortcut solution to the whole problem and it will certainly require some time before the entire system is revamped to a satisfactory level. Over the years, successive governments have encouraged proliferation of small inefficient units through lopsided policies. Moreover any corrective measure will call for joint efforts on the part of the government and the industry. This is something which is not still happening and ultimately taking toll on the industry’s health. The industry cannot wait for things to happen, simply banking on government’s initiatives. However, the government must play an active role towards providing a conducive atmosphere. The infrastructure development scheme along with other initiatives should take off at the earliest. Lack of infrastructure is the biggest hitch which is discouraging fresh investments. This is evident from the fact that despite the dereservation of garment sector as also approval of 100 per cent FDI, hardly any investment has taken place in textile projects, which is quite contrary to countries like China, Bangladesh, Indonesia and Malaysia.