The 60 th Annual General Meeting of The Southern India Mills’ Association (SIMA) was held on 9 th September, 2019 at The Residency, Coimbatore. Immediately after the 60 th AGM, the new members of Committee at its first meeting unanimously elected Mr.Ashwin Chandran, Chairman & Managing Director, Precot Meridien Limited, Coimbatore as the Chairman of SIMA for the year 2019-20. The Coimbatore based Precot Meridien Group is having textile units in Tamil Nadu, Kerala, Andhra Pradesh and Karnataka. Mr.Ashwin Chandran, a B.Sc., (Hons) Graduate in Textile Technology, UMIST, UK and Post-Graduate (MBA) from University of Illinois, USA, is a member of Cotton Textiles Export Promotion Council, Mumbai and Confederation of Indian Textile Industry, New Delhi. Mr.Ravi Sam, Managing Director, Adwaith Textiles Private Limited, Coimbatore, has been unanimously elected as the Deputy Chairman for the year 2019-20. Mr Ravi Sam is a commerce graduate and holds Post-graduate Diploma in Textile Technology from The University of Manchester Institute of Science & Technology. He is a founder Trustee of Siruthuli, the movement of preservation of water bodies in Coimbatore. He is involved in various social welfare activities. He was the Chairman of CII Tamil Nadu and at present Chairman of CII SR Sub Committee on Sustainability, CSR & Affirmative Action to bring inclusiveness to the marginalized sectors of the society covering all the six Southern States. Dr S K Sundararaman, Managing Director, Shiva Texyarn Limited, Dindigul, has been unanimously elected as the Vice-Chairman for the year 2019-20. He holds an MBBS Degree and Masters in Business Management from Cambridge University, U.K. Dr Sundararaman is a well known personality in the field of Technical Textiles in India and also in the field of Technical Education. He is the Managing Trustee of the FIREBIRD INSTITUTE OF RESEARCH IN MANAGEMENT. He has been a member in various business forums at a national level. He was the past Chairman of CII, Coimbatore, Educational Convenor CII, Tamilnadu. Currently, he is the Chairman of Indian Technical Textile Association.
Chairman – 60th AGM Speech – Final – September 9, 2019
I have great pleasure in welcoming you all for the 60 th Annual General Meeting of
the Association. The Annual Report, Balance Sheet and Income and Expenditure Statement of the Association for the year 2018-19 have already been circulated to all the members. With your permission, I presume that they have been read. Since all the details pertaining to the Industry and Association's activities have already been given in the Annual Report, I shall confine my address to the important aspects.
General Economy According to the World Economic Situation and Prospects Report 2019, the global economy is facing a confluence of risks, which could severely disrupt economic activity and inflict significant damage on longer-term development prospects. These risks include escalation of trade disputes, abrupt tightening of global financial conditions and intensifying climate risks. For the year 2020, the world GDP is estimated at 3% and the same has been estimated at 7.4% for India. Even under the grim situation, India has been projected as the fastest growing economy in the world.
The impact of two major reforms, viz., demonetization and GST affected the performance of manufacturing industries and Indian economy during the last two years. Before it could fully recover, the worldwide recession particularly the US-China trade war again has affected the national economic growth.
The Indian textiles and clothing industry particularly the capital intensive spinning
sector is facing yet another major crisis due to volatility in cotton prices and currency
values, steep fall in exports, piling-up of stocks, production cut, severe liquidity crunch, significant increase in cheaper imports of MMF spun yarns, synthetic fabrics and ready-made garments huge arrears of government dues such as TUF subsidies, MEIS, RoSCTL, GST refund, etc. We have requested the Government to take appropriate remedial policy measures, clear all the Government dues on a fast track and extend the RoSCTL benefits for all manufactured textile goods across the value chain to enable the industry to revive from the recession. The Government is actively considering all our pleas and I hope all the issues will be addressed soon.
Budgetary Supports
Honarable Finance Minister Smt. Nirmala Sitharaman announced a series of supporting measures to fuel the growth of the industry in 2019-20 budget. It lays down the blueprint to boost India to a USD 5 Trillion economy by 2024. It specially focuses on
strengthening the country’s infrastructure, supporting MSMEs and revival of NBFC and the banking sector, bringing yet another reform in the power sector with the objective of implementing "One Nation, One Grid" and addressing the problems of cross subsidy surcharge, taxes and levies on open access, self-generation power, etc. The Honarable Finance Minister has recently announced a slew of measures like rolling back thehigher surcharge on FDIs and domestic investors and angel tax for start-ups, infusing
Rs.70,000 crores to PSBs, set of measures for auto sector, etc., to revive the economy
from the crisis. Policy Initiatives During the last one year, the Central Government has taken several policy initiatives benefitting the textile industry. Among them, reduction of Hank Yarn Obligation from 40% to 30% was a major initiative that has given substantial relief to the spinning mills in the country. The Hank Yarn Obligation transfer premium that prevailed over Rs.2.5 per kg dropped to less than 30 paise. The Association is still pursuing the matter with the Honarable Minister of Textiles and the Government for further reduction in the obligation.
The relaxation of Cabotage Rule by the Government for cotton transport allowing
foreign flag vessels to transport domestic cotton is yet another historical achievement. Now, the spinning mills have the option of choosing both the Indian and foreign flag vessels to transport cotton between Gujarat and Tamil Nadu at a competitive rate. At the initiative of the Association, the Ministry of Shipping already facilitated the coastal movement of cotton in a cost effective manner by exempting the fuel from Central Excise Duty, extending 40% discount in port handling charges and resolving various issues in all the ports. This facility is already helping the spinning mills in Tamil Nadu to bring cotton from Gujarat at 65% to 70% of the lorry transport cost. Similarly, the cotton transshipment facility (yet another new initiative) extended at Tuticorin and Cochin ports is greatly benefiting the MSME spinning mills to source imported cotton on a regular basis.
Tamil Nadu Government announced the Tamil Nadu Integrated Textile Policy 2019
during March 2019. The unique policy encourages value addition, strengthening of downstream sectors, encouraging modernization in spinning, etc. The Government is in the process of framing the policy guidelines. Banking facility is a boon for the wind energy generators. However, the TANGEDCO
had proposed to discontinue the facility. Consequent to the representations made by
the Association and other industry Associations before TNERC, the TNERC in its Wind Tariff Order extended the banking facility for wind power in the existing format till
31 st March 2020. Performance of the Industry All yarn production during 2018-19 stood at 5,862 million kgs, 3.2% higher than previous year production of 5,680 million kgs. Production during 2019-20 (April -June) stood at 1,591 million kgs, 9.6% higher than previous year same time production of 1,452 million kgs.
Cloth production during the year increased to 70,046 million square metres, 4.7% higher than previous year production of 66,845 million square metres; production by decentralized sector increased by 5.1%, whereas, production by mill sector decreased by 6.7% during the period. All cloth production during the first quarter of 2019-20 stood at 19,302 million square metres, 11.4% higher than previous year, production by decentralized sector increased by 12.1%, however, production by mill sector decreased by 10.1% during the period when compared to previous year same time production levels.
The overall export of textiles and clothing during the year 2018-19 stood at USD 38.71
billion as against USD 37.87 billion that prevailed during previous year. The cotton
textile export during the period was USD 12.40 billion and RMG of clothing
was USD 16.13 billion. Out of these, the raw cotton export stood at USD 2.10 billion;
cotton yarn export at USD 3.89 billion, cotton fabric & made-ups export was USD 5.94 billion.
The cotton yarn export has declined by over 35% during the first quarter of the current
financial year compared to last year same quarter. The yarn export was the lowest
in the month of June 2019 in the last five years recording only 57 million kgs. This
has also affected the domestic market.
The steep increase in the import of manmade fibre spun yarn and garment has affected
the domestic market. The delay in disbursing RoSCTL, MEIS and TUF subsidy has
seriously affected the financial condition of the textile industry. The volatility in cotton
price has forced the cotton spinning mills to incur huge losses especially the mills
carrying high cost cotton. The International cotton price continues to decline while the domestic prices are firm. Anticipating heavy MSP operations, the Union Budget has provided around Rs.2,000 crores for MSP operation to CCI.
The levy of Anti-Dumping Duty on PTA would make the Indian polyester staple fibre
and filament prices uncompetitive and affect the growth of the polyester textile value
chain. On the GST front, the industry suffers with huge accumulation of refund that affects the working capital. In addition, the accumulation of input tax credit on capital goods and services are also affecting the industry badly. The Association has been insisting the Central Government through the GST Council and the Commissioner of SGST, Tamil Nadu to recast the formula for calculation of refund in relation to the inverted tax structure.
The sudden announcement of suspension of MEIS benefit with effect from 1st August
2019 has created a panic situation. We have represented to the government to
extend the benefit till 31 st March 2020.
Power
The power position is comfortable in all the five Southern States. The wind power
banking facility in Tamil Nadu has been extended upto 31 st March 2020 by the Tamil
Nadu Electricity Regulatory Commission. The wind evacuation during the year
2018-19 was reasonable though it was less compared to 2017-18 because of low
wind and back down to a certain extent. The Hon'ble Commission has removed the
banking facilities for the new wind mills installed after 1 st April, 2018. Though the
Government of Tamil Nadu announced Solar Policy 2019, the Hon'ble Commission
has allowed roof top solar panel only for the LT industries. The HT industries are
awaiting clearance from TANGEDCO and TNERC for installation of roof top solar
panels. The industries continue to source power either through group captive mode
and / or power exchange to reduce the power cost.
Labour
The Association has brought out the improved Version of "Code/Guidelines for
employment in Textile Industry" that was released by the Chairperson of the Tamil
Nadu State Women Commission, Dr.Kannagi Packianathan, IAS (Retd) on
28 th December 2018. For implementing this new code, SIMA, has entered into an
MOU with British Standards Institute (BSI) for auditing and providing star rate certificates depending upon the level of the social compliance. The certificate would
help the mill to impress upon the brands and the international customers. I suggest all
the exporting mills to avail this service.
The Central Government has accelerated the initiatives to bundle all the 44 labour
laws and replace the same with 4 labour codes viz.,
The Wages Code
The Industrial Relations Code
Occupational Safety, Health and Working Conditions Code and
The Social Security & Welfare Code.
Now, the Ministry of Law and Justice, Government of India has enacted the first code,
" THE CODE ON WAGES, 2019", consolidating four labour laws. Rest of the Codes are expected soon.
Pending Issues
While acknowledging and appreciating several bold and proactive initiatives taken by
the Central Government, I appeal to the Central Government to address the following
issues to enable Indian textiles and clothing industry to achieve its potential growth
rate and increase the textile business size from the current level of around US$ 150
billion to US$ 300 billion by 2025, create new jobs for several millions of people
especially the rural masses and women folks and ensure inclusive growth as
envisaged by the Government:
Announce the new National Textile Policy.
Expedite the release of around Rs.9,000 crores of TUFS subsidy of committed
liabilities under MTFUS, RTUFS & RRTUFS and around Rs.2,300 crores under
ATUFS.
Release of RoSL/RoSCTL benefits, IGST, MEIS, etc., on time.
Extend RoSCTL and IES benefits for all manufactured goods including yarns and
fabrics across the textile value chain.
Devise a mechanism for auctioning the MSP cotton procured by the Cotton
Corporation of India in smaller lots on a daily basis only to the actual users
(spinning mills) on par with the international cotton price in the coming cotton
season.
Implement Direct Benefit Transfer System to compensate the farmers under
MSP operations and allow the market forces to decide the prices.
Implement the proposal of "One Nation – One Grid" policy and enable the
manufacturing sector to remain globally competitive in terms of power cost; evacuate the wind power to the maximum extent possible and continue the wind power banking facility in the existing format. Continue the facility of less than 1 MW group captive purchase in the existing format to enable the ailing textile industry to mitigate the various other challenges and promote healthy survival.
Announce the Technology Mission on Cotton in a revised format with the objective
of doubling the cotton farmers income by increasing the yield and improving fibre
quality parameters by adopting the global best practices as already recommended
by the Cotton Advisory Board.
Remove the Anti-Dumping Duties levied on PTA and viscose staple fibre.
Bring adequate safeguard measures to prevent cheaper imports of man-made
staple fibre spun yarns and ready-made garments by increasing the Customs Duty;
and in the case of FTA, countries like Bangladesh, Indonesia, Sri Lanka, etc., impose Rule of Origin, Yarn and Fabric Forward Rules; also renegotiate and remove all the duty free items that affect the domestic manufacturers. Special Events and Programmes
I am glad to inform you that the Association supported the Government of Tamil Nadu
to successfully conduct Tamil Nadu Textile Exhibition known as TEXTN 2019 during
January 27-29, 2019 at CODISSIA Trade Fair Complex, Coimbatore and Hon'ble
Union Textile Minister, Smt Smriti Zubin Irani inaugurated the event in the presence
of Honarable Minister of Handlooms & Textiles Thiru O S Manian, Hon'ble Minister for Local Administration Thiru S P Velumani and other dignitaries of the Government of Tamil Nadu. I thank the Government for assigning the event management task to the
Association.
Friends, you are aware that Texfair, the international textile machinery, spares,
accessories exhibition and Farm to Finish Expo a unique fair for Indian Textile &
Clothing products and Texpin, the annual CEO Conference organized by the
Association have established their brands and become popular due to the continuous
patronage given by the Member Mills, Exhibitors and Experts. The Association has
been conducting textile machinery, accessories & spares exhibition viz., Texfair event from 2001 onwards. Texfair 2019, the 12 th edition in its series and Farm to Finish Expo 4 th in its series, conducted by the Association during August 9-12, 2019, attracted around 250 exhibitors and around one lakh visitors. Todays event TEXPIN 2019, concentrating on the main theme "Facing the Future" also had an overwhelming response. I thank one and all, especially the members, sponsors and speakers, who have been the backbone for the success of the Conference.
Acknowledgements
At the outset, I thank the Union Government headed by the Hon'ble Prime Minister
Shri Narendra Modiji, Hon'ble Finance Minister Smt Nirmala Sitharaman, former
Hon'ble Finance Minister, Late Shri Arun Jaitley, Hon'ble Minister of Commerce &
Industry and Railways, Shri Piyush Goyal and Hon'ble Minister for Textiles, Smt
Smriti Zubin Irani for considering all our pleas and constantly addressing the challenges and threats posed to the textile industry, taking various proactive initiatives and giving a major thrust for the textiles and clothing industry.
I express my sincere gratitude and thank all the Member Mills and the Committee Members of the Association for providing me the guidance and excellent support in addressing various issues confronting the industry from time to time. I thank our Deputy Chairman Mr K Vinayakam and Vice Chairman, Mr Ashwin Chandran for teaming up in resolving various issues. Guidance from all our former Chairmen helped us in devising and formulating various strategies to overcome the issues and I thank all of them sincerely on behalf of myself and my fellow Office-bearers. I thank the office-bearers and the council members of various Associations relating to textile industry for standing united, extending their valuable cooperation and support for mitigating various challenges posed to the industry. I thank M/s. Lakshmi Machine Works Limited particularly Mr Sanjay Jayavarthanavelu for his continuous support to all the major activities of the Association with generous contributions which made all our events successful. We would like to thank all other machinery manufacturers, suppliers of textile machinery & spares and various other organisations for their participation in the Expos and their support to the activities of the Association. I thank PMO, NITI Aayog, all political leaders, all the organisations and individuals who directly and indirectly extended their valuable cooperation and support in
redressing various issues affecting the textile industry. I thank the former and the present Textile Secretary and Textile Commissioner, Trade Advisor, Joint Secretaries and all the officials in the Ministry of Textiles, and all other officials from various ministries for taking up the issues confronting the industry and helping in resolving them from time to time. I thank the CITI Office-bearers and Committee Members and Secretary General, Dr S Sunanda for their efforts and support in redressing various issues confronting the
industry. I thank Texprocil Office-bearers, Council Members and Executive Director, Dr
Siddhartha Rajagopal for their continuous supports and concerted efforts to address
the issues related to textile exports. I thank SRTEPC Office-bearers, Council Members and Executive Director Mr S Balaraju for their support and efforts to address the various issues relating to synthetic exports.
I thank SITRA Chairman, Dr K V Srinivasan, Vice-Chairman, Mr Sanjay Jayavarthanavelu, Council Members, Director Dr Prakash Vasudevan and Officers & Executives of SITRA for their valuable contribution and research activities to constantly
upgrade the technology, providing technical services, reducing cost of production, etc. thereby enhancing the global competitiveness of the textile industry in South India. I also thank the Office-bearers, Former Chairmen, Committee Members and Secretariat of PDEXCIL, HEPC and ICF for their efforts and support in redressing various issues confronting the industry. I sincerely thank Honarable Chief Minister of Tamil Nadu, Thiru Edappadi K Palanisamy, Honarable Deputy Chief Minister, Thiru O Panneerselvam, Honarable Ministers, Thiru S P Velumani, Thiru P Thangamani, Thiru O S Manian and all other Honarable Ministers for taking proactive measures to support the industry from time to time. I thank all the officials of Government of Tamil Nadu, especially the former and the present Principal Secretary, Director and all other officials of the Department of Handlooms and Textiles and all other departments of Government of Tamil Nadu for the contributions made by them for addressing various State and Central issues and the growth of the textile industry in Tamil Nadu. I thank the Honarable Chief Minister and the officials of Government of Karnataka, Government of Andhra Pradesh, Government of Telangana, Government of Kerala and Union Territory of Puducherry for their support and initiatives in developing the textile industry in South India. My special thanks to our statutory auditor, M/s P N Raghavendra Rao & Co., particularly Mr P R Vittal and our internal auditor, M/s Lakshmi Narayanan Associates especially Mr L Rajesh for their suggestions in streamlining the accounts and financial transactions of the Association.
I thank the Press and Media for giving wide publicity to the problems of the industry, Associations press releases and briefings at short notice and request them to extend
their support in future.
I wish to place on record the strenuous and tireless work and support extended by
SIMA Secretariat under the leadership of Dr K Selvaraju, Secretary General for the
successful completion of all the tasks and appreciate the Secretariat in handling
various issues very effectively.
I once again thank all member mills for their valuable support and cooperation and
request them to be more active and extend cooperation for the well being of the
industry. Friends, I would like to conclude my address with a positive note. The textiles and clothing industry being the oldest industry and backbone of Indian economy, has
been facing numerous challenges and threats. But our inherent strengths have been
helping us to mitigate the challenges successfully and achieve a sustained growth rate during the last several decades. Our current suffering as a Nation is not a suffering in isolation, but a result of global recession. Reasonable and timely support from Government coupled with change in the market scenario, both National and International, will help us tide over the current crisis.
Thank you!
