Conferences & Events

Conferences & Events

ICAHT 06

RECOMMENDATIONS

In the quota free market India faces a huge uphill task. We should not take our market for granted. Our competitors are inching to take us over and if drastic improvements are not brought into our textile industry immediately then India may be a loser in the long run . Most important challenges are increase in productivity, improve quality, improvement in supply chain and above all improve in manpower capabilities and skill all over by better trainings in all fields.

Till recent past the most common solution to problem was just hire more employees, buy more machines or spend more money.We cannot afford this approach anymore. Instead of throwing more physical resources at problems, organizations need to try and identify bottlenecks and remove them by scientific analysis and professional enforcement

We knew what is coming, we now know challenges, we know what future expectations are and at least now we need to adapt & meet this head on.

It is under such circumstances that India needs to plan her strategy and make India an alternative to China as a sourcing hub.

The International Conference on Apparel & Home Textiles organized by Okhla Garment and Textiles Cluster on October 7 and 8,2006 resulted in valuable exposure of the cluster units and the garment industry professionals to the latest trends in technology, fashion and good manufacturing practices adopted in various parts of the world. The conference also resulted in networking of all the stake holders the Industry, academics and the policy makers.The recommended Best practices that have been adopted globally and need to be taken up by the Textiles & Apparel Industry are:

Cluster centric approach in the development of the industry. The policies in the post quota regime that can make the industry more competitive need to be looked into and modified accordingly Infrastructure upgradation on priority basis Ways to reduce Trasanction costs Automation In garment industry in designing, sampling, manufacturing and finishing Besides Apparel, Home Textiles, Industrial and technical textiles have a lot of potential and need to be exploited fully Create an organisation which can support scale, have multi product factories, help in removal of infrastructure deffeciencies and can create a niche for themselves. Rationalize state and central taxes so that taxes are not exported Role of training in Indian textile industry has to be given due importance India has to work on its strengths and get competitive. Emphasis on the focus on the end Customer Adding to innovation and product development in the field of textiles by using traditional Indian textiles and promoting Brand India Quality of a product and overall business experience is of great importance to a garment exporter

ISSUES AND RECOMMENDATIONS

Cluster centric approach

SME’s constraints are limited size and scale; outdated technology and the poor infrastructure.

The cluster based approach will help the economies of scale, cheaper access to intervention, greater access to consumer, cheaper access to input and raw materials as the typical cluster before intervention basically lacks sustainable partnership whereas PPP model will address most of the issues.

Fresh look at policies in the post quota regime

State Initiatives

  1. Further investments must continued to be encouraged- TUFS should be continued (may be with some modification)
  2. Continuance of textile infrastructure schemes SITP ( Scheme for Integrated Textile Parks) has had a huge success : 26 parks approved. GOI contribution to be 866 crores with another 1250 crores to come from private sector. Estimated investment of Rs.13445Cr. Need to continue such schemes on the PPP model.
  3. Aggressive wooing of FDI for the following reasons Against investment of US$ 5.8 Billion in China, investment in India was US$ 50 Million only Indian textile companies are small and fragmented. (Top 32 companies = 11% of capital employed) Financial strength of individual companies to invest is weak, in relation to the overall investment requirement of $ 36 bn. Between 1991-2006, only 1.31% of total FDI was in textiles (14% of industrial production is textiles).
  4. FDI will help
    • Build large scale capacities
    • Bring in best practices and technology in textiles manufacturing
    • Introduce newer products / markets Specific areas needing FDI are:
    • Weaving & processing (large garment exporters imports upwards of 40% of their fabric requirements)
    • Home textiles (large export potential)
    • Logistics & supply chain
    • Technical Textiles
    • Machinery in Manufacuring activity
  5. Fiscal Duties
    • Import duty reduction for MMF
    • Correct fiscal duty imbalance between MMF Vs Cotton Reduction in CENVAT on MMF to 4% on optional basis
  6. High Transaction Costs
    • Issues:
    • According to EXIM Bank Study (2002), transaction cost is very high in Textile & Garments Sector ranging from 3-10%
    • Ownership of exports – less support from State Governments
  7. Rationalize state and central taxes so that taxes are not exported
    • Non-refundable incidence of State Taxes
    • VAT, Entry Tax, Luxury Tax,
    • Mandi Tax, Electricity Duty, Octroi, etc.
  8. Proposal:
    To consider refund of State / Local levies through appropriate refund mechanism
  9. High Power Cost Proposal:
    • Export oriented textile units be exempted from cross subsidy
    • Duty free import of furnace oil to units for captive power generation
    • Uninterrupted power supply for export oriented textile clusters

Automation in Garment and Home Textiles Industry in Designing ,Sampling ,manufacturing and Finishing Judiciously Channelise Investments in the value chain

In order to achieve the potential, an investments of over US$ 39 Bn. will be required, not only to modernise existing capacities but also to create fresh capacity. Major portion of this investment will be required in downstream sectors of Weaving,Knitting,Processing and Garmenting.

Role of training in Indian textile industry has to be given due importance Build Human Capital

Invest in building human capital though training upgradation and creation of institutes of textile specific learnings.

Governments in PPP mode with the industries must invest heavily in training in the textile sector especialy garmenting which has the potentiality to provide 4 million jobs by 2010.

China’s policy makers had formulated a law according to which, if you indulge in any industrial activity in china, 5% of the total capital employed should be marked for training.Country needs a separate budget for training where India is lagging behind. The greatest asset India has is high ratio between younger and older people.

India has to work on its strengths and get competitive.

Key Strengths

India’s distinct strengths accrue from the strong and large multi-fibre base.

Availability of abundant, low cost and skilled work force, and its presence across the entire value chain of the textiles and apparel industry.

India has all the key ingredients required to take advantage of the emerging opportunity, but needs to have a well defined strategy to achieve the potential.

Growth of upstream segment

The focus on value addition will also automatically ensure development and growth of upstream segment of the textile value chain. Processing is among the weakest link in the entire textile value chain, though it is a critical segment that determines the quality of the fabric/ apparel. Significant investment will be needed in this segment to facilitate the shift of focus of the industry to value added products.

Value Addition-The key driver

The greatest value addition in the textile value chain is generated in the apparel segment. Apparel will, therefore, need to be the main thrust segment for enabling achievement of the vision.

Emphasis on the focus on the end Customer Niche areas

Having gained a niche for small, low-to-medium orders in the world market, these industries now need to diversify into the growing market for higher quality as well as mass consumption products.

Quality

Quality of a product and overall business experience is of great importance to a garment exporter.

Critical Constraints

The following steps will remove the critical constraints for the industry in setting up global- scale capacities in the apparel segment of the textile value chain:

  • Adoption of scale neutral labour policies
  • Adoption of scale neutral tax policies
  • Up-gradation of port infrastructure
  • Rationalisation of port infrastructure