Bleeding textile units bank on budget for a bailout
The country’s second largest employment generating sector — textiles and garments — is in dire need of help and if the voices emanating from those in power is anything to go by, it might as well get it in the upcoming budget.business Updated: Jun 14, 2009 22:55 IST
The country’s second largest employment generating sector — textiles and garments — is in dire need of help and if the voices emanating from those in power is anything to go by, it might as well get it in the upcoming budget.
Having already lost more than 1 million jobs in the last one year, the sector, especially those firms dependent on exports, is ever closer to breaking point. The industry today employs 33 million.
“The current global scenario is not good,” said Rakesh Vaid, chairman, Apparel Export Promotion Council. “US imports of apparel tumbled 10.5 per cent in January to March this year while Canada imported 1.7 per cent less garments in February. The estimated global apparel trade totalled $373 billion (about Rs 18 lakh crore) last year while India’s share was only 2.6 per cent (about Rs 47,000 crore).”
According to him, by 2015, global apparel trade is expected to rise to $692 billion and India must achieve $18 billion (about Rs 86,000 crore) to retain its 2.6 per cent share.
To get that, an investment of Rs 143,000 crore in installation of 18.44 lakh additional sewing machinery (spindles) and 27 lakh new jobs are required. At present about 450 lakh spindles are installed, and the expansion would be about 4.1 per cent of the present capacity.
And while there seems to be an upturn or signs of it in every other sector, the worst may still be in the offing for textiles.
“We have not seen any improvement in the scenario and 2009 will definitely be a tougher year for us than 2008,” said Rajendra J Hinduja, managing director, Gokaldas Exports, the biggest exporter.
“Broadly we want duty drawback rates to be increased from 9 per cent to 14 per cent, interest subvention for the sector doubled from 2 per cent and income tax be exempted for exporters.”