Tardy policy approach towards cotton fibre and man-made fibre, stringent labour laws and delay in disbursement of Technology Upgradation Fund Scheme (TUFS) refunds are major factors impacting the growth of domestic textile and clothing industry which contributes around 12% to Indian foreign exchange earnings, says a study report, ?Impact of Economic Slowdown on Textiles and Clothing Industry,? conducted by ICRA Management Consulting Serviced Ltd (IMaCS).
The study released here on Friday is jointly commissioned by Confederation of Indian Textiles Industry (CITI), Cotton Textiles Export Promotion Council (TEXPROCIL), Apparel Export Promotion Council (AEPC) ans Synthetic and Rayon Textiles Export Promotion Council (SRTEPC)
The textile and clothing exports which registered a jump of 25% in 2005-06, post quota regime have shown a flat growth during the period April 2008 to February 2009, on account of economic slowdown in major T&C export markets. This has also impacted the capacity expansion plans of the textiles industry, the reports says.
To achieve the higher growth, the domestic industry should be made more competitive through through removal of infrastructure bottlenecks, Rationalization of taxes and flexibility in labour laws, the sturdy recommends.
Besides, above interventions, the Study recommends that the government should negotiate better trade terms with major imparting countries; streamline EXIM procedures to reduce transaction cost; take immediate steps to clear the backlog of TUFS; formulate a comprehensive fibre policy and reduce interest rates to provide working capital to the industry.
The Study goads the industry to take immediate steps to explore new markets and reduce dependence on European Union and USA as well as take measures for skill up gradation of workforce to ensure availability of skilled manpower to the industry.