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Wednesday, Feb 09, 2005

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Textiles: New challenges in quota-free era

G. Gurumurthy

`While capital per se may not be an issue, the process of building the production capacity in terms of convincing the bankers and moulding the labour pool are going to be issues.'

Coimbatore , Feb. 8

TEXTILE producers of the South are bugged not as much on capital investments as the production infrastructure constraints they may face in harnessing the potential demand likely from new business opportunities in the textile quota-free era.

Overcoming the mental block or shedding the mind-set is another issue haunting the southern textile entrepreneurs.

`Various studies and market assessments made in recent times have suggested that India's textile sector to rise its share in world market from the present 3 per cent to 15 per cent by 2010. Are we ready for this volume swing infrastructurally?', asks Mr Mohan, Managing Director of the Erode-based textile processing company, Arun Processors Ltd.

While capital per se may not be an issue at this, the process of building the production capacity in terms of convincing the bankers and getting the labour pool moulded to the evolving business situation are certainly going to be issues, he said.

What will happen if a textile enterprise failed to get orders for a few months, especially in a season/fashion-oriented industries like garment exporting, in the absence of flexible labour laws, wondered Mr Mohan. Size would certainly be a matter especially when dealing with handling bulk orders and China does hold a sway on this over India, feels Mr S. Dinakaran, Joint Managing Director of the Salem-based Sambandam Spinning Mills Ltd (SSM).

He is of the view that it would be an ideal choice for spinners in India — especially the small and medium enterprises — to join hands so as to combine their production strength to meet the volume demand as well as forward integrating their production process to achieve value addition.

A common marketing arrangement by the mills in conglomeration will be mutually beneficial, he says.

The Rs 180-crore hopes to do better this year, as, according to Mr Dinakaran, prospects of textile trade has brightened with the quota oblition.

SSM has also chalked up plans to get into garmenting for finished products.

Besides the expansion and modernisation of its spinning lines, SSM has proposed to get into knitted garment production using its in-house manufacturing strength greatly.

While the Centre's textile technology upgradation fund scheme (TUFS) has benefited the industry's spend on modernisation programme, a few more proactive measures from the Government will further encourage more investment, according to Mr Dinakaran.

As for attracting fresh investments either through joint ventures or overseas funds, the southern textile industries would prefer to wait and watch for the forthcoming Union Budget, especially in the light of the recent comments from the Union Finance Minister on encouraging higher foreign investment in textile sector.

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