In an exclusive interview to SME Times, Amit Ruparelia, Chairman, The Cotton Textiles Export Promotion Council (TEXPROCIL) said Indian Textile and Clothing (T&C) can achieve ambitious growth as estimated only if the government extends unfettered support to the sector along with a stable policy regime.

Excerpts of the interview...

The government on June 9 notified exports of 1 million bales, in addition to the 5.5 million bales. What is your reaction on the decision taken by the government?
Amit Ruparelia: The textile sector, along with the attainment of raw material security on the domestic front, requires making timely and necessary changes in the export control regime in response to the ever changing dynamics of demand supply scenario of cotton as well as cotton yarn—both in the domestic and global market. The present situation requires the government to decide on whether to raise export cap on cotton taking the holistic picture of probable demand supply scenario of raw cotton as well as cotton yarn in both domestic and international market so that legitimate interests of both cotton growers as well as textile industry are taken care of.

How much growth will the textile industry witness in the current fiscal?
Amit Ruparelia: During the current fiscal 2011-12, growth in exports of Textiles and Clothing are expected to reach a level of US $ 32.35 billion at a CAGR of 9.94 per cent. The ambitious growth so planned can easily be achieved if the government extends unfettered support to the sector along with a stable policy regime.

The sector is undergoing tough times due to crash in prices of yarn, declining demand both in domestic and international markets, withdrawal of export incentives and constraint with repayment of loans and interest. Observing these kind of challenges, are you requesting the government to give some kind of relief package?
Amit Ruparelia: The present decline in demand both in domestic and international markets is an outcome of postponement of purchases by major global buyers with an expectation that raw material prices may decrease further. They are under the perception that India had a very huge inventory of cotton yarn and cotton, and thus believe that they may not require making immediate purchases to guard against a possible shortfall in availability of cotton.

The capital intensive segments, especially spinning and processing, are facing difficulties in servicing their debts and repayment of huge loans availed due to the declining demand both in domestic and international markets. The withdrawal of export incentives like drawback facility on cotton yarn and levy of 10.3% excise on garments have led to further pressures on the textile industry.

Our request to the government is that if not a special package atleast industry be allowed its legitimate benefits inclusive of an enabling policy environment for attracting higher investments and capacity building initiatives backed by adequate incentives and reimbursement of all taxes are required to be put in place. The government needs to provide adequate confidence to our exporters to substantially enhance their market presence in traditional markets and aggressively seek out new markets.

How is the textile industry mitigating the burden of rising input costs?
Amit Ruparelia: The manufacturers are seeking their way ahead through value engineering of products, price reduction and product innovation. Many Indian exporters are now trying to include value-added features at a lower cost to push sales. The conditions are tougher for Indian exporters because of growing competition from Bangladesh & China.

How are you tackling the crisis of labour shortages at the moment?
Amit Ruparelia: Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and new opportunities emerging from service sectors including realty sector has pushed large workers away from labour-intensive textile industry in the country. This was the key findings that emerged from a survey conducted by a leading industry chamber. Nearly 45 per cent of textile units have reported their units utilizing only 50 to 60 per cent of production capacity due to labour shortage.

In order to tackle labour shortage, the textile mills are tying up with the Industrial Training Institutes and other private institutions. To retain the workforce, the industries are in the process of providing and improving various facilities, bringing more area under shed, and carrying out programmes under corporate social responsibility and imparting training.

Is the recent rate hikes by Reserve Bank of India (RBI) hindering the growth of the textile sector? What is your appeal to the government?
Amit Ruparelia: The recent rate increases will negatively impact both the consumption and investment demand. The hikes by RBI have raised concerns raised that rising interest rates will now begin to have a dampening impact on investment sentiment. With the industry already reeling under the impact of rising raw material costs, an increase in interest costs will be an added burden. Rate hikes may lead to further increase in the operating cost of companies and will make businesses postpone their investment plans.

What is your reaction on modernization, technology-upgradating, R&D, etc? Do you think the textile industry has that enough?
Amit Ruparelia: Today globalization has made it imperative for the nations to support programmes for modernization and technology up-gradation for improving its market shares in global trade. Technology-related factors such as zero-defect product quality and international certification of firms’ quality assurance systems are determining the internationally accepted standards and are fast replacing factor-cost advantages of products manufactured in a country.