In order to tap mass production items which form 70% of the international market, the confederation recommended that the technology upgradation fund scheme (TUFS) be made more attractive for weaving and processing units, especially for large projects. An enhanced interest compensation could be considered. As there are very few large players in the market for weaving and processing, at present new investors have to be attracted to these sectors. For greenfield investments in weaving and processing which are essential for the kind of expansion required, credit avalability is an issue that needs to be addressed, said Citi.
The confederation suggested that heavy investments be made in textile data in order to assist both industry and the government in shaping growth strategies.
Citi recommends that contract labour be introduced as facilities of handling seasonal and peripheral activities through contract labour would help the garment industry to generate substantial productive employment.
For the entire textile sector, it recommended that a viable exit policy is essential as the current policy hinders investors from investing in this labour-intensive sector. Regarding raw material, the confederation suggested that undue protection to fibre producers by way of high import duties and anti-dumping duties should be avoided.
Among trade issues, Citi suggested that there is a need to have a set of preferential rules of origin for textile products, to be incorporated in all free trade agreements/preferential trade agreements. Preferential rules of origin should have reasonable value addition norms and implementable measures for enforcing such norms. Concessions for finished products can be linked with utilisation of raw material of Indian origin.
Also, consultations with industry regarding commitments made in the industry in principle to enter into an FTA/PTA should precede rather than follow the decision. As infrastructure continues to be a bottleneck, Citi suggested that captive generation of energy be freely allowed and assisted until electricity boards are in a position to supply proper electricity at reasonable costs.
In certain vital sectors of the textile industry like processing, establishment of a greenfield project requires clearances from a large number of government authorities, which take time and increase transaction costs. A single window clearance facility should be available for such projects. There should be transparent rules on environmental standards to be met by polluting industries.
The confederation also recommended the withdrawal of textile products under the Essential Commodities Act, hank yarn obligation, handloom reservation and SSI reservation for knitting and knitwear that continue to apply despite having outlived their utility.
