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G Gurumurthy

Coimbatore , Oct.14

THE decentralised powerloom sector is apprehensive that the exports from the powerloom sector may decelerate during the current year due to the prevailing adverse factors including the hardening rupee which the sector says would render powerloom textiles export unremunerative.

The introduction of the Cenvat chain at fabric stage at the beginning of the current fiscal has also hit the working of the powerloom industry thereby impacting on the export production as well, the apex powerloom body, the Powerloom Development and Export Promotion Council (Pdexcil) has said.

The apex body in a recent memo to the Union Textile Ministry in the form of a pre-Budget demands has also cited the rising cost of inputs such as cotton yarn price surge and power cost on one side and the denial of the benefit of low interest regime to the decentralised powerloom weavers as the factors inhibiting the export performance of the sector this year.

The Pdexcil Chairman, Mr M Senthil Kumar, has stated in the memo that the Cenvat duty levy on powerloom since April this year had not gone well with the sector's performance and had driven many to switch to job-work to escape from the stringent excise procedure. The rising yarn prices in major weaving centres had affected the cost structure for the powerloom sector as the trader-dominated yarn market presented sharp vagaries in the sale of yarn to the weavers.

The extension of export credit at concessional rate at PLR minus 2.5 per cent not being spelt out yet for periods beyond October 2003, the exporters are exposed to uncertainties once again on the cost of funds. The thinking on the part of the RBI freeing the export credit thereby enabling the banks to fix their own rates is worrisome. If concessional rate is not offered, it will overburden the powerloom exporters, according to Mr Kumar.

Since the powerloom textile industry accounts for 60 per cent of the fabrics produced in the entire textile industry, emphasis needs to be laid on modernisation of this industry on a much wider scale. To achieve this, it is necessary to modify the TUF schemes by increasing the interest reimbursement benefit from the current level of five per cent to eight per cent. As the TUF scheme expires on March 31, 2004, it needs to be extended for a further period of five years with necessary changes.

The 20 per cent capital subsidy scheme for the powerloom sector aimed at encouraging investment under the TUFS currently being considered for speeding up of modernisation programme, should be announced early, so that the industry could take full advantage of it and improve the quality of the products to enlarge the export performance, the memorandum has urged.

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