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‘Garmenting will be the key driving factor’

In the next few months, the textile industry is entering into a new regime wherein the trade will not only be governed by product and its quality but other related contingencies. In an exclusive interview with Arbind Gupta, Mr R K Dalmia, chairman, Mill Owner’s Association and president, Century Textiles, discusses the critical trade issues. Excerpts.

What is your comment on the recent moves by some of the US and EU trade bodies to extend the date of quota phase-out?

All the countries who are now trying to extend the quota phase-out deadline to March 31, 2007 from the March 31, 2004, had decided upon this date after a pretty long deliberation. But now if they don’t want to stick to their own decision, it is not fair trade practice. I don’t find any justification behind such a move. This will only give wrong signals to member countries. We being a rightful member of WTO, will certainly oppose this move. All these years, our industry has made all necessary preparations to face the challenges that are going to arise in the post-MFA regime. In fact, the industry is quite optimistic of exploring the opportunities.

Recently, there have been lot of talk about the ‘India Shining’ campaign. Is there any indication that the textile industry is coming back to its good old days?

I don’t want to indulge myself in any discussion regarding the recent campaign - ‘India Shining’. But I do believe that the domestic textile industry is today much better placed than it was 6-8 months back. Most of the indicators are in the favourable zone. Our margins/realisations have improved significantly with the improvement in textile prices both globally and on the domestic front. Textile stocks in capital markets have made a very good recovery. However, things are still to recover fully.

However, if one goes by the progress of the Technology Upgradation Fund Scheme (TUFS), the overall scenario doesn’t seem to be very encouraging in terms of investment?

The scheme has not lived up to the expected level. But no doubt, it has tried to create a situation wherein units feel the need for upgradation. There are many players who are still waiting for the actual setting. I am very much sure that once the quotas are phased out, these units will be forced to go in for adopting adequate technologies.

What will be key driving factor in the changing trade order?

Gradually, there has been an attempt by the industry to move up in the value chain since low-end products are unable to provide the viable margin. In my view, garmenting will be the key driving factor for future industry growth. Most of the players who so far had restricted themselves to fabric production, are now planing forward integration into garment manufacturing. Most of our fabric production will now cater to the domestic requirement of the garment industry.

Recently ‘outsourcing’ has become a buzzword in the global trade. Where do you place India in this context?

India is emerging as a very major destination for outsourcing textile requirements. Large global retail chains are eyeing Asia, particularly India for meeting their needs. India is being favoured the most due to its quality and reliability. The domestic industry will immensely benefit out of the recent development.

Our relationship with Pakistan has recently improved to a large extent. How will this help boost the bilateral trade between both these countries which contribute significantly to the global textile market?

Due to political reasons, the trade between both the countries has been almost negligible in the past. But now with relations improving, we can benefit from each other’s strength. Free import of cotton from across the border will have a sobering impact on the domestic cotton business.

Imports of textiles from China have been growing unabated in the last couple of years?

No doubt, Chinese imports have shown a very constant growth in recent times. But I don’t see any ill effect on our industry which is quite capable of facing these contingencies. In case of free trade, these things are bound to happen and I don’t see any reason to be upset. So far as quality is concerned, Indian products and quite well accepted in international market.

What kind of strategy are you adopting at Century Textiles in order to face future challenges?

We have been taking measures as and when needed, considering the developments that have been taking place in the global market. Currently, we are closely looking at the quota issue. As part of our strategy, we have moved into garmenting and in future we will consolidate our position in the garment segment.

Your message to the industry?

The industry will have to make all necessary preparations to produce quality products at competitive prices. Consistency and reliability will also be a key issue.