India : Govt to encourage Private Equity in textiles, ASSOCHAM

Recognizing the need of fresh investment in capacity expansion, modern technology and machine installation in Indian textile sector, The Associated Chambers of Commerce and Industry of India has strongly recommended encouraging the global manufacturers and private equity funds to invest in partnership with the small-scale textile units based in India to boost investment in the sector.
Textile sector, victimized by strong Rupee, is suffering from rigid labour laws, technology obsolescence, fragmented structure, infrastructure constraints and lack of iconic brand which has disabled its growth potential and competitiveness in international market, an ASSOCHAM report on `Indian Textiles Sector' has stated.
"Government should provide appropriate fiscal incentives to the parties interested in investing in textile and clothing to enhance the attractiveness of the sector", said Mr. Venugopal N Dhoot, President, ASSOCHAM.
The ASSOCHAM Research Bureau has prepared an extensive Report on "Indian Textiles- weaving a global spin" which has been submitted to the government. The report has recommended the government to draft a five-year agenda and work jointly with industry and labour unions to refine these laws in a phased approach towards the integrated development of industry and workforce.
Government has recently announced that the textile exports have declined by 22 per cent since April this year and around 20 lakh jobs were cut by the textile enterprises unable to bear the Rupee brunt.

As the textile sector is struggling with declining exports due to strong domestic currency, the report stated that Indian textile and garments exports are highly concentrated in the regions of America and European Union. Huge opportunities lie for the strategic expansion of the export market in the regions of Middle East & North Africa and Sub-Saharan Africa but the high risk nature, massive investments and unstable economic conditions at the short term period calls for special fiscal and monetary incentives to be given for the new ventures for a specified time period.
The Chamber said that the organized textile industry is facing serious crunch of textile professionals equipped with the technical knowledge as well as trade aspects of the sector. It has urged the Government to build national level textile education and training institutes imparting technical education following the model of National Institute of fashion Technology (NIFT).
The report has revealed that the textile sector suffers from high transaction cost for the lack of adequate air and maritime transport, power, logistics facility. It also warns against the removal of export restriction on China's textile exports by 2008 which would further intensify the competition in international market.