Textiles start weaving major recovery

New Delhi, Feb 25 | Updated: Feb 26 2005, 06:02am hrs
Notwithstanding a major revamp of the fiscal structure undertaken in the last two Budgets, the textile industry, at a crossroads with the removal of export quotas under the Agreement of Textiles & Clothing (ATC), has shown little evidence of a substantial improvement as yet, according to the Economic Survey.

However, there have been some positive signs of late, such as a huge 26% growth in production of clothing items including wearing apparel in October-November 2004. Significantly, the growth rate in this category was negative last year.

In the first eight-month of the current fiscal, there was a marginal increase in the share of the powerloom sector (including knitwear) in total fabric production to 82.8% compared to 82% during the year ago period. This shows that powerloom sector have not been hit, by the new excise duty structure, that allows the entire cotton textile chain, including the mill sector, to opt for duty exemption.

The signs of resurgence in textiles were borne out by a 14.1% increase in textile exports to $6,543 million in April-September. Cotton textiles logged in a better growth figures compared with the blended textiles segment, indicating that the new fiscal regime that considerably reduced the duty tax burden on the sector, actually drove growth.

Spreading Fibre
26% growth in wearing apparel in October-November
Powerloom share in fabric output increased
Cotton textiles show higher growth
Benign duty set-up for man-made fibres likely in Budget
Cotton textiles grew by 8% in the first eight-month of 2004-05, which was quite higher than the average growth in the previous years.

Finance minister P Chidambaram had said that the man-made textiles sector would also have benign tax structure in the Budget. The government is also planning to further decontrol the industry, by removing cotton and wool from the Essential Commodities Act. Dereservation of the knitwear sector is also under consideration.