Govt steps make hardly a dent for textiles
The government extended the 2 per cent interest subvention on pre- and post-shipment credit for the sector along with leather, marine products, gems and jewellery and handicrafts till September 30, writes Sumant Banerji.Updated: Feb 16, 2009 22:55 IST
While the interim budget disappointed the sectoral aspirations of most, textiles and garments got a look in. The government extended the 2 per cent interest subvention on pre- and post-shipment credit for the sector along with leather, marine products, gems and jewellery and handicrafts till September 30.
This generosity, though, is unlikely to revive the sector, which is one of the worst affected by the global recession. While rupee appreciation in 2007-08 impacted profitability, the downturn threatens to take away the market itself. Already exports are in the negative and are likely to see a further contraction. Future investments have also slowed down, while almost Rs 1 lakh crore in investments of the past may become NPAs.
An estimated 7 lakh jobs are already lost and the figure is expected to go up to 1 million by March.
One of those is the gutsy Ashutosh Singh, whose life has come a full circle. The 32-year-old left his village, Gajner, to work in a fabrication unit in Kanpur. But he is now back home, working in the fields. And for the seven years in the big city, he just has Rs 2,000 as savings. Such stories are a dime a dozen in the small towns that once supported the textile industry.
In the recent past, the textile story has always been a story on exports. When the UPA came to power, the sector was preparing for a quantum leap. The government tried its best setting up Technology Upgradation Fund Scheme and the Scheme for Integrated Textile Parks.
Initially, it worked like a dream. Exports went up from $14.02 billion in 2004-05 to $21.46 billion in 2007-08. But the industry remained non-competitive due to lack of infrastructure, higher power and transaction costs, high taxes and rigid labour laws.
First Published: Feb 16, 2009 22:53 IST