Emerging Governance Imperatives for the Textile Sector

The textile and clothing industry with a total market size of $94 billion today is one of the important sectors of the economy, with a weight of 8.9 per cent in overall IIP, contributing 13 per cent to industrial production and 12.5 per cent to the countries export earnings. About 60 per cent of this, i.e., $62 billion caters to the domestic consumption; it provides indirect employment to 45 million people and contributes directly and indirectly to the incomes of an estimated 110 million people.

The textile sector as a whole is a complex system starting with the cotton farmers and a long value chain of yarn, greige fabric, processing, printing and other embellishments, apparel and made ups. The entire chain requires up-to-date knowledge, and constant adaptation and innovation in keeping with changing technology, fashion and design trends. There are also a large number of individual entrepreneurs, companies, cooperatives, industry associations, Export Promotion Councils, R&D institutions, academic institutions, etc. in this ecosystem that require interaction with clients and customers and among themselves on the one hand and interaction with the government on the other. Further the sector is composed of several important sub-sectors other than cotton like silk, jute, wool and technical textiles. Quite often, various stakeholders in the chain may have conflicting interests and objectives and it is a major challenge for the government to resolve such conflicts and adopt policies which are conducive to the overall growth of the sector. Even though we have adopted a liberalised economic regime, the government continues to play a major role in the development of the textile sector as a facilitator, in view of its enormous importance in the national economy as a major contributor to industrial production, export earnings and employment generation.

Fiscal interventions in the shape of import/export duty are made from time to time. Due emphasis is also given for assisting R&D activity, design, development and marketing of handlooms and handicrafts to maintain their competitive edge

Another challenge thrown up by this sector includes issues related to technological obsolescence, unorganised nature of weaving and processing sectors, lukewarm response of financial institutions to the credit needs of the unorganised part of the sector and less than favourable labour laws, all of which adversely affect its competitiveness. The range of activities including research and development are diverse and are spread across farming and animal husbandry to handloom and handicrafts as well as high-tech mechanised production and nano-technology. This diversity also poses its own governance challenges.

The government is fully aware of the problems facing the sector and has been making earnest efforts to address them in consultation with members of the industry. It has provided assistance on an increasing scale to the textile industry through the Five Year Plan schemes, mainly aimed at modernisation and technology upgradation, scaling up of production infrastructure, skill development, improvement of raw material quality and promotion of handloom, sericulture and handicrafts sub-sectors. The main instruments have been the Techology Upgradatation Fund Scheme (TUFS), Integrated Textile Parks for provision of infrastructure, the Integrated Skill Development Scheme for developing human resource needs; and, the Technology Missions for Cotton & Jute to improve the quality and availability of the natural fibres. The Scheme for Integrated Textile Park wherein the government of India provides assistance Rs 400 million per park for setting up integrated infrastructure facilities has prove to be a very succesful model for public-private -partnership. Some of the success stories are Brandex in Vishakaptnam, Palladam near Coimbatore for powerloom weavers and the Pochampalli Park in Andhra Pradesh. An amount of approximately Rs 2.5 trillion has been invested since the 9th Plan by the industry in pursuance of these objectives. The TUFS scheme is being continued in the 12th Plan.

The government has also put in place a network of institutions to provide support to the textile industry in respect of R&D, Marketing Support and Export Assistance. The Textile Commissioner’s Office, Mumbai and its Regional Offices; the Jute Commissioner’s Office, Kolkata; the Textile Committee, Mumbai; the Powerloom Service Center; the Weaver’s Service Centres; the NIFT Centres at various locations; Sardar Patel Institute of Textile Management; the Handloom and Handicrafts Export Promotion Council; the Cottage Industries Corporation; and, the Apparel Export Promotion Council are some of the major institutions which provide support to the industry. Even though, these institutions are functioning efficiently, there is further scope for improvement in their performance and greater engagement with the industry.

The latest budget announcing credit at 6 per cent for the handloom sector is a landmark decision bringing this sector at par with village industries

Apart from institutional support other steps taken by the government include credit support and interest subvention under various schemes. The latest budget has announced credit at 6 per cent for the handloom sector, a landmark decision bringing this sector at par with village industries. Fiscal interventions in the shape of import/export duty are made from time to time. Due emphasis is also given for assisting R&D activity, design, development and marketing of handlooms and handicrafts to maintain their competitive edge. An important aspect of governance in the global economy is execution of free trade agreements and bilateral agreements with countries where trade opportunities are available.

In addition to the above interventions, other imperatives which contribute to good governance in the sector are the development of policy frameworks based on consultation with stakeholders. Information sharing, awareness building and procedures for facilitating access to schemes and smooth delivery of services are also a key factors. Coordination between different service institutions, the ministries and various stakeholders to enable holistic development of the sector needs to be ensured through effective monitoring systems and IT solutions. The monitoring system must also have an element of feedback from the client/beneficiary and an effective response system and response time to address issues that arise. Quality control and compliance to standards coupled with capacity building and training to provide requisite skilled manpower so as to position the textile industry to face global competition will determine the future of this industry. The creation of management systems which are not person centric but sustainable and effective enough to survive on their own strength will also be crucial.