Government should implement a fibre-neutral policy, says Prabhu Damodaran

India should do more to fill the vacuum caused by the trade tiff: Convenor, Indian Texpreneurs Federation

 

With trade tensions increasing between the US and China, the Indian textile manufacturing industry is eyeing a share of China’s lost business. Can Indian players make use of this big opportunity? BusinessLine caught up with Prabhu Damodaran, Convenor, Indian Texpreneurs Federation (ITF), a textile entrepreneurs association that works towards improving the competitiveness of the Tamil Nadu textile sector. Excerpts:

Following the US-China trade war, do you see Indian traders getting more orders from China for cotton? Will our quality grades — in terms of consistency in fibre and purity — match the requirement of China?

China always prefers contamination-free cotton, and its first preference will be Brazilian and Australian cotton. Moreover, with Indian cotton prices being high at the moment, India is in a disadvantaged position to export cotton. So, not much of a shift is happening. In terms of quality, Indian cotton matches with that from the rest of the world. But in the process of farming and ginning, man-made contamination introduced to cotton is high in India. For example, India offers cotton with 3 per cent trash; whereas Australia offers it with 1.5 per cent trash; even West Africa offers the same. Apart from less trash and contamination-free quality, these countries’ cotton also have better fibre maturity and uniformity. This leads to higher level of yarn realisation for yarn manufacturers. We need to catch up a lot, in terms of quality of cotton, to gain similar preference like that for Australian cotton in China.

US has slapped 25 per cent duty on cotton fabrics and yarn imported from China. So, will Vietnam and Brazil take it all or does India stand a chance to take a share of that business?

At present, of its total textile imports, the US buys 36 per cent from China and around 7 per cent from India. But we see an increase in Indian textile exports to the US in the coming months as the US buyers want to spread risk, and are looking for alternative destinations to buy textiles from. The government should also, at this point, encourage our textile industry. Support to the textile manufacturing sector will create jobs and address the job creation challenge our economy is facing. If, for instance, ₹500 crore is invested in the textile and apparel sector, it will create about 40,000 jobs. A similar investment in a heavy engineering factory would create only 1,000-1,500 jobs. So, the new government that will come (into power) has to take some proactive steps to engage with the US government and explore opportunities.

Do you think Indian textile manufacturers have some advantages over players from countries such as Bangladesh and Vietnam?

We had some advantages in the past, such as low-cost skilled workers, good raw material availability, etc. But over the years, other countries such as Bangladesh and Vietnam have not only built a strong manufacturing ecosystem, but have also improved their operational efficiency. Today, they also boast of better innovation, scale and a bouquet of products in different fibres. So, we need to work with new models suitable to the changing dynamics of the global market.

India lacks competitiveness in the global market. How do you think the textile industry can work around this and attract more buyers for its products?

Indian manufacturers need to make more blended products instead of focussing on cotton-based products. They also need to make more value-added products to earn higher value per garment, by focussing on design innovations. On the process front, there is a need to incentivise large-scale projects with flexible labour laws and see how manufacturing efficiency can be improved at the factory level.

To attract global buyers, India needs to highlight its brands and the sustainable manufacturing ecosystem it has in textile manufacturing. There are many buyers outside who are looking for environmental-friendly products. For example, the Tamil Nadu textile industry operates under the ZLD system (zero liquid discharge refers to a waste water management system that ensures there is no discharge of industrial waste water into the environment), and almost 70 per cent of the State’s textile industry runs 100 per cent on renewable energy.

What changes need to made in the textile industry, and what role should the government play in this?

For the long-term good, we need to address some fundamental issues. First, the government has to bring a fibre-neutral policy — bringing all raw materials under one tax rate is the best way to encourage blended textiles. Second, apart from continuing our efforts on the India-EU free-trade agreement, we need to quickly complete the India-Eurasia free-trade agreement to enter into the lucrative Russian market. Our current market share is just 1 per cent of Russia’s total import of textiles.

Further, there should also be efforts to diversify our markets. To do this, we need to use our embassies in trade promotion activities. South Korea is a great example on how to effectivey use of embassies for trade promotion. The government and the industry should also work together to design a new incentive scheme within the framework of the WTO (World Trade Organization) to encourage the textile sector.

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