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Rita Menon | We are losing our advantage as a low-cost supplier

Rita Menon | We are losing our advantage as a low-cost supplier
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First Published: Wed, Feb 02 2011. 08 38 PM IST
Updated: Wed, Feb 02 2011. 08 38 PM IST
New Delhi: As the Indian textile industry struggles to cope with the slump in the West, the government is trying to drum up demand by organising Tex-Trends on 2-4 February in Delhi to showcase the variety of its products to buyers from 159 countries. Textile secretary Rita Menon talks about the need for market diversification, competition from Bangladesh and the court order that may lead to a shut-down of the Tirupur textile hub on the eve of the event. Edited excerpts:
How are textile exports doing so far this year?
We have a target of $25 billion spread over all our sectors. We are at $22.5 billion. We are somewhat disappointed by the turnout of the apparel sector due to the high input costs and the fact that we are very slowly losing our advantage as a low-cost supplier. But the apparel industry is booking more orders for spring and autumn, hence we are somewhat enthused. I may say that the carpet and handicrafts industries have done well. The export of yarn and yarn products have been more than what we expected.
Are we noticing any kind of revival in the US and EU markets?
There are some good signs in the US towards the last quarter that is reported to us. The EU has been somewhat strong throughout the calendar year 2010. The fact that they are so important, with 60% of our offtake, at least in the apparel sector as well as carpet sector... we will be very anxious these two blocs revive and therefore we have some better results for 2011-12. The commerce ministry has taken measures to diversify exports. One of the problem areas is our overdependence on the EU and US markets as you pointed out.
How are the export diversification measures working for the textile industry?
We are looking at new markets in Africa and South America. We are nurturing the Japanese market. We have been nurturing the South African market for three years in succession. We have been looking at the Australian market though it has not been very promising. With that the Middle Eastern market and high focus on hitherto less focused items like home textiles and handlooms. It is a constant process. But you cannot not do the main work relating to nurturing of the important markets that are over 50% of your basket. But at the same time you try and we have seen some enthusiasm. We see the Germans, the Turkish buyers are coming in a big manner. Obviously our results are working to an extent.
In 2010, Bangladesh overtook India in apparel exports. How do you see competition from Bangladesh and why this has happened?
It is basically input cost—we have minimum wages, we have very high power and electricity charges; there is a fundamental difference. The (Indian) government is not providing anything that is out of the ordinary for the apparel sector whereas Bangladesh is nurturing its apparel sector. I think that is where the answer lies.
So what do you think government should do here that they are not doing?
Well, the government has recognised apparel as a major source of employment. Some of our skill development outlay is going to be allocated to garmenting excellence to be improved so that the skill gaps are plugged. But as a member and secretary of the government, we know that we cannot get an out-of-the-way favour for the apparel industry in a manner the Bangladesh government could perhaps give.
So we are within the confines of the normal finance ministry subvention schemes for various markets, the focus product scheme, for the kind of credits that are available and yes we did look for a greater rate of drawback for this fiscal. But we have not got such a high rate of drawback so as to compensate us and make us more competitive vis a vis Vietnam, Bangladesh etc.
What is the ministry’s view on the Madras high court seeking a shut-down of the garment industry in Tirupur in Tamil Nadu over pollution concerns?
The ministry has already supported the Tirupur industry to the extent of Rs200 crore through the finance ministry, which is not a line item in the current budget. We are waiting for the high court deliberations and we are waiting for the industry’s response.
And then we will see what needs to be done and whether the industry needs to be helped out, in which case we will take it up with the finance ministry. Else, I expect the Tamil Nadu government itself to take it up. But at this stage, I am not in a position to give you a gameplan of what the textile ministry wishes to do with an industry which is located in Tamil Nadu and which is governed by the Madras high court and the state level laws on pollution.
The budget is coming. What is your expectation from the finance ministry?
We have been able to portray exactly what we would like in each of the sectors, notably apparel, synthetics and of course the small enterprise sector including silk, handlooms and handicrafts. We have a wish list and we hope that the finance minister will be kind to the textiles ministry because we want the sector to grow and provide employment potential.
The commerce ministry at the same time is also contemplating to give some kind of incentive to employment intensive sectors such as textiles...The foreign trade policy imbibes a lot of what our representations are and what we would like. We are happy many of them have been incorporated. But you know the policy is for a five-year period and the amendment to this has just come out last year. So I do not think there can be very much tweaking at this juncture. We are looking at the general budget.
asit.m@livemint.com
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First Published: Wed, Feb 02 2011. 08 38 PM IST