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Cover Story | October 2016

Industry standing at crucial juncture

- Sanjay K Jain, Managing Director, T T Ltd

Indian textile industry is at a very important threshold from where it can move to a higher orbit of growth. It is well poised to create a much stronger footprint across the globe and more importantly meet the country’s inclusive growth objective by providing employment to the rural women. China—which controls 35 per cent of the global textile trade—is in the process of vacating space due to its high cost structure and no one is better placed than India to capture the opportunity we missed in the past.

Indian textile industry is a story of misses and promises. Since the last two decades, India has been threatening all to become a textile super power however China, Bangladesh and Vietnam overtook us and occupied the space vacated by the developed world.

We [no doubt] have 12 per cent export share, 4 per cent GDP share and employ 45 million people, but still much below our potential.

There was a lot of hope from within and outside India after we liberalised in the early 90s and industry learned to live without protection. However we continued to grow at the Hindu rate of growth and saw the rest of Asia overtake us. We unfortunately despite having all the ingredients could never get the correct recipe.

We had it all – most of the raw materials (BT cotton revolution, PSF/VSF capacities), competitive labour, domestic market, MFA phase out, reasonable financing (due to TUF policy) however still could not build a robust industry to capture a substantial share of the global textile market except for cotton yarn segment in the last two decades.

The saga continues and unless we realise our folly and take some decisive steps, we shall miss the bus forever. It’s well known that textile industry thrives at a range in the development curve where the economy moves from being a under developed nation to a developing one. The decline starts once the journey to being a developed nation starts. The USA, Europe, Japan are examples and now China is in the same position. China has 35 per cent of the global textile market and has slowly started vacating that space—this has again given India a chance to pick up the loose threads and web a strong textile industry. India is best poised to take advantage of the situation hence we are at a very important threshold – its now or never.

Luckily, the Government and industry both realise it, and more pragmatic policies are being made to create the platform for industry to grow on. The recent garment policy announced was one of the best designed policies, and we hope that the most-awaited textile policy will be comprehensive and lay the base for the next decade of 8-10 per cent real growth. The appointment of a Cabinet Rank Minister also reflects the seriousness of the Government.

We also need to understand and leverage our competitive advantages – the availability of fibre (most importantly cotton but have to stop ignoring other fibres), huge labour force, reasonable rate of finance due to capital/interest subsidies and the growing domestic purchasing power. The key areas to be addressed are: balanced fibre policy, skilling of labour, adoption of best practices by the large unorganised segment of the industry, pragmatic and relevant labour policies to create a win win situation for both, and signing of strategic FTAs on an urgent basis (as competition enjoys huge advantage on this count). These few and not difficult steps could create a launch pad for increasing our global market share to 10 per cent and by 2030 making us a $600 billion industry from a $120 billion today. It will also provide additional employment to 50 million (70 per cent women). The industry would also see major changes in fibre usage (non cotton fibre share would increase), technology (functional specific textiles would grow in a big way) and technical textiles importance (share of non apparel usage would grow). One last word, I personally feel that the industry should be part of any Policy Making Body as who knows the industry better than those practicing it. Further policy needs to be based on realities and needs rather than lobbying. The industry needs a stable framework to work within with checks and balances built upfront for different scenarios leaving little room for abrupt changes which harms the general interest.

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