| 'Government action
is essential in some crucial areas'
M P Gajaria, advisor, GTN Textiles
 The
industry is making the most of what it has, and investments are picking
up. But there are some areas where government intervention is crucial.
These are power, labour, transaction costs, export-import policies, fiscal
levies. At the same time, investments in the industry would not have picked
up if there was no TUFS, which again is a government initiative. Coming
to power tariffs, India's power costs are very high. According to studies,
these would be higher than those in China and Pakistan in the years to
come, if this issue is not addressed. Labour, as is known, is a burning
issue, but political compulsions force the government to keep things as
they are. I feel at least in the garment sector, the government should
take some initiative to introduce some kind of flexibility. The industry
is not asking for a complete overhaul of labour laws. The special economic
zones and free trade zones were expected to have industry-friendly labour
laws, but that too is not forthcoming, the government is holding back
on this to some extent. Transaction costs are very high, infrastructure
is poor, restraining the industry and its profitability. Also the excise
duty on domestic textile machinery is as high as 16 per cent, this needs
to be brought down. The fiscal duties on manmade fibre textiles need to
be corrected.
The Planning Commission,
in its mid-term review has recommended withdrawing of the TUFS by March
31, 2007. So, while the industry is very happy with the current interest
rates of 2-3 per cent, because of the TUFS, these could go away. Or probably,
this is a way of pressurising the industry to be ready by 2008, when China
will be completely free. And if all the other factors are taken care of,
and there is no TUFS, investments will again not take place in the industry.
|
'Motivational environment
can come only through government intervention'
Mr R R Gosai, consultant
 Favourable
government policies can help push up investments in the industry. The
rest will be handled by the industry. The government needs to create a
business environment which will motivate the industry to invest - this
can be done by providing certain facilities such as infrastructure, common
effluent treatment plants, etc; putting in place the right policies; removing
unnecessary controls. Labour laws is one issue that has to be tackled,
for the industry's growth, and for the industry to achieve economies of
scale. The industry on its part will have to spruce up its entrepreneurial
skills, marketing strategies, create value for the 'Made in India' label.
However, despite all the
problems, the industry is registering good growth, and investments are
flowing in. The TUFS has helped a lot in this, almost every project that
has come up in the country is because of the TUFS. This should make the
government realise that a good scheme or policy will find takers in the
industry, and lead to growth of the industry and the economy, while also
creating employment. The industry has welcomed the last two budgets which
had a lot of favourable policies for textiles.
Coming back to the labour
issue, while the industry is managing with the inflexible labour laws,
reforming the laws will help it grow faster. This is especially true for
companies that face a higher risk factor. These companies will hesitate
to invest as more labour would mean more financial burden in case things
do not move smoothly, and the companies will be stuck with the extra hands
they took on. In case of companies that are more sure of their businesses,
the current labour laws will not be so much of a hindrance. So, basically,
there are just a few areas where the government needs to chip in, the
remaining the industry will manage very efficiently.
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