Tex Talk

Vaghela keeps the textile interest alive

Within fortnight of the global textile industry moving on to a different era of trading in a quota-less regime, the Union textile minister, Mr Shankarsinh Vaghela, visited the hardcore textile belts in Tamil Nadu — Coimbatore, Tirupur and Erode, and gave the industrialists the much-needed boost to retain their confidence to survive in the open competitive global arena.

He told them that India’s textile exports which hovered around Rs 57,000 crore would double in the next two years and generate in the process additional employment to about two lakh people. The industrialists were visibly impressed by this result of operating in a free regime, but they wondered what strategies the government had in mind to help them achieve this. They had been hearing such rhetoric for over a year now, but many of them have not actually come across to any earth-shaking entries in their order books. Some even told this columnist that everything purely depends upon their skill to launch aggressive marketing which itself is a specialised function requiring the support of marketing professionals. In other words, the industry has to strengthen a new function called marketing to survive in the new regime.

However, the textile minister has some interesting message to please the industrialists. The most important of them is that he is in agreement with them that the government should come out with a standard and long-term policy so that surprises and short-term decisions could be avoided. He pleased them when he showed his disappointment on the recent change in the Duty Entitlement Pass Book (DEPB) rates. On one hand, the finance ministry could have waited till the Budget and on the other, the government needs to bring out a stable long-term policy, he opined. He told them that he has expressed these views to both the finance minister, Mr P Chidambaram and the prime minister, Dr Manmohan Singh.

A stable and predictable policy is the need of the hour as it would help the industrialists frame their policy for investment, production and marketing. Mr Shankarsinh Vaghela sees an investment of over Rs 60,000 crore in the textile industry in the next two years. That is also ringing a bell of caution amidst the industrialists. A few years ago, when the government relaxed the licensing norms for the textile industry, investments flowed in and that led to several absentee mill owners creeping in to make quick profits. The result was a disproportionate increase in the spindleage leading to excess production, glut-induced price crash, mismanagement lay-off and closures and industrial sickness. So enormous investments by itself is not the real answer to facing the competition, but huge investments are certainly required to create a volume in the global scenario.

In the absence of investment-induced volume expansion, the chances are that importers could turn to China or Bangladesh, which is prepared to fulfill their order requirements. In effect, what’s needed is a carefully analysed investment that results in the voluminous production of quality products.