The Indian Textile Industry has an overwhelming presence in the economic life of the country.  Apart from providing one of the basic necessities of life, the textile industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country.  Currently, it contributes about 14 per cent  to industrial production, 4 per cent  to the GDP, and 16 per cent  to the country’s export earnings.  It provides direct employment to about 35 million people, which includes a substantial number of SC/STs and women.  The Textile sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on the improvement of the economy of the nation.

           

The achievement in the Textile Sector during the initial two years of the UPA Government has been impressive and path breaking.  The Government has reaffirmed its resolve to restructure and add competitiveness to Indian Textiles.  The commitment of the Government is further confirmed as a result of the increase in the Plan Allocation to the Ministry of Textiles, from Rs.878 crore in 2004-05 to Rs. 1349 crore in 2006-07.  The UPA Government will continue its efforts to make the Indian Textile Industry occupy a place of pride in the World.

 

Budget -2006-07

In the Budget 2006-07, the Excise Duty on Man-made Fibre and Filament yarn has been reduced from 16 per cent  to 8 per cent  and Import duty on Man made Fibre and Filament yarn reduced from 15 per cent  to 10 per cent.  The allocation for the Technology Upgradation Fund Scheme (TUFS) has been enhanced from Rs. 435 crore to Rs. 535 crore, and an allocation of Rs. 189 crore has been made for the Scheme for Integrated Textiles Parks (SITP).  There is a proposal to launch a Jute Technology Mission and establish a National Jute Board.

 

In Handlooms, there would be continuation of the Cluster Development approach, and during the year additional 100 clusters, at a cost of Rs. 50 crore, would be covered and 230 yarn depots would be established to ensure an uninterrupted supply of yarn to weavers.  To improve the quality of handloom products, there is a provision to launch the ‘Handloom Mark’, on the lines of the ‘Wool Mark’, and a scheme on the lines of TUFS for technology upgradation.

 

Impact of Budget Proposals

The decentralised sectors, particularly Handlooms have been given a fillip through an increase in budgetary allocation, as well as removing bottlenecks in supply of material to weavers.  The Industry’s demand for rationalisation of fiscal duties has been acceded to and this will result in reducing the cost of production.  The thrust by the Government in the budget has been towards augmentation of infrastructure facilities, as well as technology upgradation, keeping in view the post Multi Fibre Arrangement Scenario.

 

Technology upgradation

The Indian Textile Industry has suffered from severe technology obsolescence and lack of economies of scale, which in turn diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base and skilled human resources.

 

While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology upgradation has been the high cost of capital, especially for an industry that is squeezed for margins.  Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology upgradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textile industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology.

 

The Technology Upgradation Fund Scheme (TUFS) is designed to ensure the availability of bank finance at rates comparable to global rates.  Under this, the Government reimburses 5 per cent  of the interest charged by Banks and Financial Institutions, thereby ensuring credit availability for the upgradation of technology at global rates.  The UPA Government has strengthened and augmented the Technology Upgradation Fund Scheme (TUFS).  The allocation for the subsidy component of TUFS was enhanced from Rs.249 crore to Rs. 435 crore in 2005-06, registering an increase of 75 per cent.  This has been increased further in 2006-07, to Rs.535 crore, which is approximately 23 per cent  over the allocation of the previous year.

 

The Scheme has attracted 5,031 applications till 31.03.2006, involving an investment of Rs 43,293 crore.  During the two year tenure of UPA Government, 2072 applications involving an investment of Rs. 24,135 crore have been received, of these, 2064 involving a project cost of Rs. 22,381 crore have been sanctioned.

 

Exports

            The Indian textile and garment industry enjoys a very significant place in the national economy, and contributes substantially to the country’s export earnings.  The National Common Minimum Programme pledges that the Textile Industry will be enabled to meet new challenges under the post quota regime.

 

Textiles exports form 16.24 per cent  of the country’s total export earnings and India’s share in the global textile market and apparel market is 4 per cent  and 2.8 per cent  respectively.  The Textile exports basket consists of Ready-made garments, Cotton textiles, textiles made from man-made fibre, Wool and Woolen goods, Silk, Handicrafts, Coir, and Jute. 

 

In 2004-05, the textile exports were US $ 13 billion and increased to US $ 17 billion in 2005-06, registering an increase of 31 per cent.  Post MFA (01.01.2005), the exports to USA have grown by 26 per cent, and to European Union by 20 per cent.  These markets account for 38 per cent  and 36 per cent  of textile exports, respectively.

 

The Government has launched the Scheme for Integrated Textiles Parks (SITP) in August 2005 to strengthen infrastructural facilities in potential growth areas. Under the scheme, twenty-five Integrated Textile Parks are proposed to be set-up by 2007, with an additional investment of Rs 18,500 crore, and these would create half a million new jobs.  In Budget 2006-07, Rs. 189 crore have been provided for SITP and, till 30.04.2006, nine parks have been sanctioned at an estimated cost of Rs. 873 crore.  Of this, the share of the Government  of India will be Rs. 304.32 crore.  These parks will be located at Surat and Mundra, Special Economic Zone (SEZ), in Gujarat; Kolhapur, Ichalkaranji and Thane in Maharashtra; Cuddalore, Perundurai and Palladam in Tamil Nadu; and Kishangarh in Rajasthan. The work has commenced on all Textile Parks, except at Kishangarh, and Rs. 26.55 crore has been released as the first installment.

 

JUTE SECTOR

 

The Jute industry occupies an important place in the national economy.  It is one of the major industries in the eastern region, particularly in West Bengal.  Jute, the golden fibre, meets all the standards for ‘safe’ packing in view of its inherent advantages of being a natural, renewable, biodegradable and eco-friendly product.

 

India is the largest producer and second largest exporter of jute goods in the world and also provides employment to 40 lakh farm families, as well as direct and indirect employment to 4 lakh workers.  The export of Jute Products amounts to Rs. 1200 crore, annually.

 

The  Government announced the first ever National Jute Policy on April 15, 2005, with the objective of           increasing production to achieve a Compounded Annual Growth Rate (CAGR) of 15 per cent  per annum; improve the quality of jute fibre, and ensure value addition through diversified jute products; ensure remunerative prices to jute farmers; and enhance the yield per hectare.           

 

As envisaged in the National Jute Policy, 2005, the proposals to implement a Jute Technology Mission at an estimated cost of Rs. 355.55 crore, and establish a National Jute Board are on the anvil.  Steps have been initiated to set up a National Institute of Natural Fibres and a National Jute and Jute Geo-Textiles Museum.

 

The  Government increased the Minimum Support Price (MSP) for raw jute to Rs. 910 (2005-06), from Rs. 840 (2004-05), with a view to protecting the jute farmers from seasonal uncertainties, and this measure has helped to prevent distress sales by poor farmers.

 

COTTON SECTOR

Cotton is one of the principal crops of the country and is the major raw material for the domestic textile industry.  It provides sustenance to millions of farmers and contributes significantly to the country’s export earnings.

 

The ratio of the use of Cotton to Man-made fibres and filament yarns by the domestic textile industry is 56:44.  India is the third largest producer of cotton (4.13 mn. metric tonnes), accounting for 15.76  per cent  of global production, and the cultivated area in the country is the largest in the world (between 88-90 lakh hectares).  The states of Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Karnataka and Tamil Nadu accounts for 99 per cent  of cotton cultivation.

 

Due to focused support to Cotton growers by the UPA Government, cotton production reached a record high of 243 lakh bales (170 kg. each) in 2004-05, and productivity increased from 399 kg./hectare in (2003-04) to 463 kg./hectare (in 2004-05).  It  is expected to reach 468 kg./ hectare in 2005-06. 

 

Due to bumper cotton production, domestically and globally, there was pressure on prices throughout the cotton season (2004-05).  The Cotton Corporation of India (CCI) successfully carried out massive a Minimum Support Price (MSP) operation, by procuring a record quantity of 140.24 lakh quintals, equivalent to 27.51 lakh bales.

 

The Ministry is implementing Mini-Missions III and IV of the Technology Mission on Cotton, which involve the development of market infrastructure, and the modernisation / upgradation of ginning and pressing factories.  Till date, an amount of Rs.1,200 crore has been invested. 

 

The Cotton Corporation of India, a PSE under the administrative control of the Ministry, has taken-up contract farming on 20,436 hectares to increase productivity, under which it provides input support, training and extension services to farmers and monitors the crop, and purchases the entire produce from farmers at prevailing marketing prices.

 

HANDLOOMS

 

Handlooms represent the rich and diverse cultural heritage of the country.  Their cultural importance pertains to ensuring the preservation of heritage, traditional skills and talent.  Their economic importance lies in their high employment potential, low capital investment, high value addition, and potential for export/ foreign exchange earnings. In addition to ongoing schemes, during 2005-06, the following schemes were introduced:

 

Integrated Handloom Cluster Development Scheme 

In the first phase, 20 handloom clusters had been set up at an estimated cost of Rs. 50 crore at Chirala and Madhavaram (Andhra Pradesh), Bijoinagar (Assam), Bhagalpur (Bihar), Surendernagar (Gujarat), Kullu (Himachal Pradesh), Gadag (Karnataka), Thiruvananthapuram (Kerala), Gwalior/Chanderi (Madhya Pradesh), Imphal (Manipur), Bargarh and Sonepur (Orissa), Kurinjipadi, Trichy and Tiruvannamalai (Tamilnadu), Mubarakpur, Varanasi and Barabanki (Uttar Pradesh), Burdwan and Nadia (West Bengal).

 

Health Insurance Scheme for handloom weavers  

The objective of the scheme is to financially enable the weaver community to access the best healthcare facilities in the country.  During 2005-06, 2.41lakhs weavers were covered under the Health Insurance Scheme.

 

The Mahatama Gandhi Bunkar Bima Yojana: The objective of the scheme is to provide enhanced insurance coverage to handloom weavers in case of death, both natural and by accident.  During 2005-06,   2.05 lakh weavers were covered under the Scheme.

 

The commitment of the Government to the development of the handlooms sector is reflected in the announcements made in budget 2006-07.  These include the expansion of the Integrated Handloom Development Scheme to include an additional 100 clusters; the introduction of the Handloom Mark to create a brand image for handloom products;  the opening of more yarn depots to supply yarn.  A scheme on the same lines as the Technology Upgradation Fund Scheme (TUFS) is proposed to be introduced in the Handloom Sector to provide interest subsidy on term loans.

 

HANDICRAFTS

Handicrafts represent the rich and diverse cultural heritage of the country.  Their cultural importance pertains to ensuring the preservation of heritage, traditional skills and talent.  Their economic importance lies in their high employment potential, low capital investment, high value addition, and potential for export/ foreign exchange earnings.  The Sector provides employment to an estimated 63.81 lakh artisans, of which 47.40 per cent  are female; 24.73 per cent  belong to Scheduled Castes, and 12.38 per cent  to Scheduled Tribes.  Handicrafts contributed Rs. 15,256 crore to the country’s export earnings in 2004-05.     In addition to the ongoing schemes, the following initiatives have been taken – the  launching of the Credit Guarantee Scheme; the setting up of Facility Centres; and Electronic- Kiosks; and a round the year scheme for Gandhi Shilp Haats.

 

During 2005-06, 12 exporters/entrepreneurs were issued sanctions to set up Facilitation Centres.  Upgrade Technology.  The Office of the Development Commissioner (Handicrafts) is negotiating with the ICICI Bank and National Association of Software and Service Companies (NASSCOM) to establish Electronic-Kiosks at handicraft clusters to provide information about various developmental schemes, marketing events, marketing trends and intelligence to individual artisans, as well as establish inter-connectivity between clusters for exchange of data.  Besides, during the year, the Indian Exposition Mart has been set up in Greater Noida(UP), which was inaugurated by Dr. Manmohan Singh, Hon’ble Prime Minister,  The Rajiv Gandhi Handicrafts Bhawan, in Delhi was inaugurated by Smt. Sonia Gandhi on June 4, 2005 at New Delhi.  These will provide marketing outlets to artisans as well as State agencies.

 

Sericulture and  Silk Textiles Industry

Sericulture is an agro-based industry and is suitable for countries like India, which have a large an agriculture base.  Being a rural and labour intensive industry, it offers relatively high returns on modest investments.  Sericulture activities are generally environment-friendly.  The National Common Minimum Programme pledges new programmes for the development of the Sericulture sector.   India is endowed with all four varieties of silk: Mulberry, Eri, Tasar, and Muga.  The silk sector is spread almost all over the country, including remote areas of the North East.  India is the Second largest producer of Silk in the world and during 2004-05, the production of raw silk was 16,500 mt., and in April to December, 2005, production of raw silk stood at 11,877 mt.  The sector employs about 6 million people, mainly in rural areas.  Silk accounted for the export earnings for sericulture was Rs. 2879.56 crore, in 2004-05 and the export basket consisted of Natural Silk Yarn, Fabrics, Made-ups, Readymade Garments, Silk Carpets and Silk waste.

 

The  Government, realising its export potential as well as its importance in rural development,  has launched Silk Mark Scheme for the brand promotion of Silk.  The Central Silk Board (Amendment) Bill, 2005 for regulating the quality of Silk-worm seeds had been introduced in Parliament in August 2005.

 

National Institute of Fashion Technology (NIFT)

NIFT was set up as an Institute of Excellence to impart Fashion education with international benchmarking.  Over the years, it has assumed a leadership role in sensitising the industry to the concept of value addition through design upgradation.  The Government proposes to grant it the status of a “Centre of Excellence”, enabling it to confer degrees on its students.  A Bill to this intent was introduced in the Rajya Sabha in December, 2005.

 

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