In the last few days newspapers are carrying long reports about the likely reduction in number of centrally-sponsored schemes. It is a quiet coincidence that at the same time ,some adverse news is circulating about the proposed changes in the Technology Upgradation Fund Scheme [TUFS] which might weaken the support to the textile industry.
TUFS was launched by the Central Government in April 1999 to reduce the interest burden on term loans so as to stimulate large investments in the entire textile value chain. Till date, investments amounting to bout 3 lakh crore of rupees have been made.
Canvas of the industry
Impact of TUFS between 1998-99 and 2014-15, during the operation of TUFS till date, spun yarn production recorded the longest jump of nearly 100%, the respective figures being 2808M kg and 5485 M kg. the growth in cloth production fell short of the record made by yarn, cloth production increased from 35543 million kg meters in 1998-99 to 64221 million kg meters in 2014-15. Ie. Growth of 80%. The sad part of the cloth segment is the slow growth of the mill sector, after the decade of the composite mills towards the late 1990s & early 2000s. In the present world of discerning buyers, it is the composite mills which a better chance to score international made textiles. A net worthy development is the specular increase of more than 170% in the production of the hosiery cloth. This is as it should be with the increased purchases of casuals the world over, as a sequel be the augmented purchasing power. It seems the handloom sector has reached the climax of its capacity and the core seems to be likelihood of furthure growth in handloom fabrics.
By 2014-2015, what Indian has achieved a name for a self in the segment of spun yarn, home textiles and knitted garments. For ready reference check table 1, 2, 3 given alongside.
The investment in benchmarked machinery in TUFS has opened the international market in a significant way. From a level of USD 8730 in 2001-2002 exports were climbed at USD 30747 IN 2014-2015. Surely textile industry deserves full throated praise for its excellent performance in earning foreign exchange.
Table 4 compares export performance in 2001-2002 and 2014-2015.
The textile industry has allied more than 7 million workers as will be seen from table 5. The increase has taken place despite installation of high technology machines which require less number of workers.
The serious concern of the industry originates from the inadequate allocation of funds. In the Central Budget for the current year, Rs.1520 crore has been provided which would take care of the backlog of interest subsidy payable in the preceding financial year. To meet fresh investments, the industry has projected the fund requirement of Rs.3,000crore. The industry’s calculation further estimates that another Rs.2500 crore would be needed to take care of left-out and blackout cases. Thus the total fund requirement is about Rs.5500 crore.
Level of technology
All types of spun yarns whether common or man-made, home textiles and garments are its prize products which are the most sought after in the international market. The present TUFS has covered a long distance in the upgradation of technology. However, modernization is a never-ending process.
It will not be out of tune to refer to a misconception that the spinning sector is over modernized. The truth is that only 57% of spindles are modern and the balance is in the crying need of modernization.
The International Textile Manufacturer’s Federation has estimated that at the rate at which technology was progressing, the entire machinery in a textile mill was required to be changed every 7/10 years to remain in alignment with the most modern technology.
Naturally, the captains of the Indian Textile industry are worried if TUFS is abruptly discontinued, it will hurt the pace of modernization of a technology –driven industry. However, the present indications are that TUFS will not be altogether stopped, but it will be revamped.
Revamping of TUFS
Revamping does not mean mere readjustment of figures in the benefit matrix.
Revamping has a wiser connotation and sweep.
Revamping should start with the objective of the scheme. Any Government Scheme is meant for welfare of the society at large. TUFS is no exception.
The country should be able to draw tangible benefits like improvement in foreign exchange earnings, increase in productivity, reduction in wastages, reduction in the requirement of utilities, stability in the income of cotton growers ( cotton prices fetched by them less input costs and other expenses) proportionate increase in direct employment of workers, uplift of rural economy etc.
Dr. S.K.Panda, Secretary [Textiles] Government of India, while inaugurating the 61st National Garment Fair stated that certain changes were likely to be made in the TUFS scheme. However, he did not reveal the shape of things to come.
Four ministries overseeing textile chain
The textile value chain is too long, perhaps the largest in the manufacturing sector. The chain starts with the production of fibres, mainly cotton is in the administrative control of the Ministry of Agriculture, while natural fibres fall in the domain of the Ministry of Chemicals. Textile Machinery Manufacturing is administratively controlled by the Ministry of Heavy Industries and activities like spinning, weaving, processing and garmenting are the turf of the Ministry of Textiles.
Being under the control of four ministries, the industry has become a pawn of the chessboard of philosophies of different ministries.
If the development of the Textile industry is recognized as the prime driver for the growth of the national economy which is the case, a high-level co-ordinating committee of the four ministries should be formed for the stated purpose of overseeing the growth of the textile industry.
It may be noted here that one shortcoming of the Indian economy is the underdevelopment of the rural sector. Nearly 56% of the population in the country derive its subsistence from agriculture. The average per capita income is Rs. Thirty thousand which is abysmally low.
The recently published socio-economic and caste census 2011 is an eye opener in regard to pathetic condition of rural households. Merely half the rural households were under deprivation in 2011.
A way-out is to take industries to the rural sector. The best industry for this purpose is the cotton textile industry.
The Ministry of Agriculture should be responsible for making available infrastructure at cotton belts where cotton textile mills are going to spring up. It is also necessary to give special subsidy to allure investors to start mills in rural areas. Entrepreneurs committed to themselves to village uplift and are willing to identify themselves with the problems of local people and help them in all respects should be eligible for special subsidy. There are excellent examples although a few of how an industry set up in village can transform nearby sleepy villages having no perennial supply of water in area flushed with greenery with residents having regular jobs in a factory. Youth groups to school and colleges and women adding to family kitty through side occupation like handicrafts, animal husbandry, supply of milk etc. This will bring prosperity to rural areas.
The responsibility of the Ministry of Chemicals will be to make available man-made fibres and filament yarns at international prices to the domestic industry.
The Ministry of Heavy Industry should propose a subsidy scheme for the Textile Machinery Manufacturers which will encourage them to raise standards of machines to international levels. India is a thriving market for textile machinery particularly in weaving & processing segments, apart from south Asia, south east Asia, far east as African countries willing to lay foundation for the manufacture of textiles.
Since the profitability of the textile industry is wafer-thin, it should be the agenda of the Ministry of Textiles to address the funding problem of the textile industry. A recent international development is the likely slowdown in china and crash in the chinese stock market. This development is likely to cause a turmoil of gigantic magnitude in the international market for textile and clothing and brighten the chances of india to capture major textile importing countries in a big way.
All this points out to one conclusion tha is there should be proper revamping of TUFS which will improve the rural economy and capture major international markets.
The role of the four ministries is thus cut-out.
A harmonious approach would certainly benefit the national economy and large sections of the rural population.
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