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Post-MFA world: Are we ready for it?

Arbind Gupta & Reena Mital

There’s a lot of activity happening in the Indian textile industry, pre-2005. While the government has amended a number of policies, initiated schemes for setting up world class capacities, begun work on infrastructure development, the industry is also taking advantage of all this, to achieve better competitiveness.

The government has tried to strengthen the weak links of weaving and processing in the textile chain, through the workshed schemes, and has received very good response to the same. Investments in shuttleless machines is increasing, and it is estimated that over the next one to two years, shuttleless machines would more than double to 50,000-60,000 machines, as against 20,000 currently.

Similarly, the processing sector is witnessing a lot of activity, new capacities are coming up, existing units are expanding. It is estimated that processing capacity in the country will also double over the next one to two years. A number of units are coming up with capacities ranging from 30,000-150,000 metres per day. Besides, the ministry has almost finalised a scheme, encouraging setting up of processing capacities of as much as 10 lakh metres per day.

A similar scheme is being worked out for the garmenting sector too. That apart, the garment sector is also expanding capacities very fast, moving towards specialisation, design development, reducing lead times, reducing costs, etc. The textile dyes and chemicals sector is working closely with the textile and clothing industry, to help it achieve higher value-additions, innovative finishes, environment-friendly production processes.

However, the picture is not all rosy. A number of age-old obstacles continue to remain - labour laws, port infrastructure, power, etc. While labour laws have not been amended, the government has relaxed the same in the textile parks, special economic zones, etc. However, not all such zones are viable for the textile industry. Port infrastructure continues to remain dismal, jeopardising delivery schedules and increasing delivery charges for exporters, while putting Indian exporters at a major disadvantage to its counterparts in Sri Lanka, Bangladesh, China, Vietnam, Taiwan, etc. Quality, quantity, cost of power only work towards making the industry uncompetitive, and energy conservation on a large scale is still not being undertaken by textile manufacturers. Indigenous textile technology is another area which remains weak. The textile industry necessarily depends on foreign suppliers.

However, the industry has begun to feel that these are certain factors that it will have to learn to live with, and is doing the best it can in the given circumstances.