Interview with Mr Dayanidhi Maran

I hail the Budget Proposals-2010-11 as growth spurring initiatives for the textiles sector, in particular; which dovetail with economic revival, infrastructure development, agriculture development, inclusive growth and restoring export growth, in general. The creation of National Security Fund will take care of 65 lakh handlooms weavers; while the capitalization of Regional Rural banks likely to help primary cooperative societies lending to Handlooms sector and doubling of corpus of Micro Finance Development Equity Fund from Rs.200 crore to Rs.400 crore will help the artisans and weavers. These measures recognize the role of handlooms and handicrafts in providing employment as well as an instrument to preserve the magnificent and ancient textiles traditions of our country. The interest subvention of 2% on pre-shipment credit for export of handlooms, carpets, small & medium enterprise of textiles sector products has been extended by a year till March 31, 2011. The shortage of skilled manpower is a major constraint faced by the textile industry. To meet the impending requirements, we propose to launch an Integrated Skill Development Scheme to impart employable skills along with job guarantee to 30 lakh persons over a period of five years. Whereas, the initiative will cost Rs.2,214 crore, the Planning Commission has approved Rs.229 crore for the remaining period of the Eleventh Five Year Plan. The proposed Scheme shall have two components – one, to leverage existing resources within the ambit of the Ministry of Textiles and second, private sector will play a major role in this initiative. I am happy that this initiative has been included in the Budget Speech, which will not only help to address the skill deficit but will also ensure that the textiles sector takes a quantum leap forward so as to reach US $115 billion by 2015.

I also hail the initiative of Finance Minister to provide one time grant of Rs.200 crore to 20 Common Effluent Treatment Plant (CETP) installed by dyeing units in Tirupur, Tamil Nadu. This measure will supplement the efforts of Government of Tamil Nadu which had already provided support of Rs.120 crore. Tirupur is a leading export centre mainly for hosiery and provide employment to approximately 5 lakh workforce and this measure will ensure protection of employment and smooth production and export of knitwear from this region. Our recent initiatives for attracting FDI in textiles sector have been lauded in the Economic Survey 2009-10 and Foreign Investment will help us to modernize textiles and clothing industry and aid its integration into the global textiles market.

I also thank the Railway Minister for announcing in her Railway Budget Speech that “Railways will explore the possibility of using Jute Geo Textiles wherever the soil formation of the railway tract is unsuitable and weak”. We had earlier recommended to the Minister of Railways to use Jute Geo Textiles for track repair and for laying of new tracks, which could save the maintenance cost by about 50%. The projected use of Jute Geo Textiles in one year alone would be about 35 thousand MT valued at Rs.132 crores per annum and will benefit not only the Jute industry and farmers but will also save the railways, to a large extent, in terms of maintenance cost.

So far, Indian textile manufacturers and exporters had been focusing only on traditional markets like the USA, European Union (select few countries), Japan, France, Germany etc. But certain markets like Latin America, Japan and South East Asia, North and South Africa, Scandinavian Countries, BRIC Countries etc. have not been explored thoroughly. Even among the traditional markets, we never explored the idea of product mix and mass customization. In case of unexplored markets, geographical distances apart, marketing channels were yet to be established on Government to Government (G2G), Association-Association (A2A) and Institution to Institution (I2I) basis along with individual companies with whom we had deeper interactions. Companies in Japan, EU and also the USA have shown keen interest in partnering with their Indian counterparts that will help attract inflow of FDI besides generating employment opportunities which are all logical offshoot of such visits.

When I realized that 60% of our exports are to the countries in the European Union and the United States, both hit by the economic slowdown, I shifted focus to the ‘Look East’ Policy. Nevertheless, we continue to concentrate on the United States and Europe, our traditional markets. We are seeing some signs of recovery in the US. But, in Europe, recovery may take a little longer than anticipated. In addition to the US and Europe, we will focus on the East. I led a delegation of exporters to Tokyo, USA and some European countries recently.

I apprised them of various advantages of investing in India, particularly, in textiles sector, which has a highly skilled workforce, high capital-employment ratio and immense potential to promote employment, and a strong and diverse raw material base. India is the largest producer of Jute, second largest producer of Cotton and Man-made fibre and yarn, and third largest producer of Silk. India has a vertical and horizontal integrated textiles value chain, and represents a strong presence in the entire value chain from raw material to finished goods.

We went at the right time and got a very good response from there. I am also trying to promote our textiles products in other untapped markets. With its consistent growth performance and abundant cheap skilled manpower, there are enormous opportunities both for domestic and foreign investors to make investments in textile sector in India. I would say that there is a need for further enhancement of business cooperation to expand our market share, while leveraging the common potential.

Indian textile products are really competitive but the drive and inertia on the part of the exporters seems to miss out on the essentials – offering the right product mix, quality, and marketing and promotion. The Government and the Ministry of Textiles has extended a long hand for capitalizing on all such efforts and will continue to do so. We are seeing some definitive changes here, but more is yet to come from the industry side that will ideally boost our prospects in the global marketplace.

Whatever competitive advantage during the WTO era that was there is non existent now and countries like Vietnam and Bangladesh have shown the way for others to follow.

In our case, I can confidently state that we are much better placed than our competitors having the entire value chain, literally at our disposal and given a huge domestic market to deal in, at this economic juncture.

Here, we are talking of differing sizes and scales which make up for the numbers. We do acknowledge the sheer scale of operations that China operates about, today. But having said that, India needs to ramp up its textile business given the resilience of its home bred indigenous industries backed by traditional and modern skills, and technology that we possess. The Government has allowed 100% FDI in textiles sector and launched trend setting initiatives, such as the Technology Upgradation Fund Scheme (TUFS), Scheme for Integrated Textiles Parks (SITP), etc. TUFS ensures the availability of bank finance at rates comparable to global rates. Under this Scheme, the Government reimburses 4% to 5% of the interest charged by banks and financial institutions, thereby ensuring credit availability for units planning to upgrade technology. The Scheme spans almost all the segments of the textiles industry. We have currently on hand 40 textile parks, which are at different stages of execution; while proposals are under way for additional parks under the Scheme for Integrated Textile Parks. Besides, infrastructure and production is being scaled up by taking up existing centres for development as mega clusters under the Comprehensive Cluster Development for Handloom, Powerloom and Handicrafts segments. Cluster Development Schemes besides those for traditional industries like handlooms and handicrafts need special helping hand in these difficult but opportune times. I would reiterate that the various incentives given by the Government of India will go a long way in making India as a most favourable destination for textiles products.

Handloom and Handicrafts sectors are part of our heritage and are assets, which must be preserved, not only for their heritage value but from the point of view of rendering employment across the rural hubs of the country. Though I realize the underlying challenges to improve handloom and handicrafts sectors technologically, to provide greater design inputs and to have improved marketing channels; yet, we are now taking right initiatives to surmount the prevailing challenges gradually. Private industry can be a major partner in enabling this transition of handlooms and handicrafts from low value to high value products. Enabling this transition is high on my Ministry’s agenda.

We have taken certain measures which have short term as well as long term gains in the offing. Government has notified development of six centres as mega clusters, viz. Varanasi and Sibsagar for handlooms, Bhiwandi and Erode for powerlooms and Narsapur and Moradabad for handicrafts as a Central Sector Plan Scheme. Additionally, scheme of mega clusters at carpet producing areas of Mirzapur, Bhadohi and Srinagar have already been announced which will all add up to boost the prospect of the marginal, small and medium businesses from these two vital employment generating sectors.

Having social relevance, we have also embarked on the ambitious health insurance scheme for weavers and their families which will go a long way in ameliorating their overall quality of life and general welfare.

Authenticity of handloom products is taken care of by tagging handloom mark labels on handloom products. This also goes for Silk Mark where an industry which has shown erosion of traditional crafts and legacy is getting a big helping hand from government as well as buyers from across the globe.

We are working on the sectoral value chain by ensuring that raw materials are available to the weavers. In our cluster approach, we are setting up common facility centres that will offer all the solutions like designing, dyeing, printing, processing and packing. Government thorough schemes like Market Development Assistance helps and encourages small exporters to participate at national and international level trade fairs where they can meet global and local buyers and sell their products directly to the buyers and retailers eliminating the middle men. Thus, we see tremendous growth in the ensuing years in so far as preservation and promotion of our ancient crafts and designs are concerned.

Government has always been supporting all constituents of the textiles sectors in an unbiased manner. During the economic downturn, it was very evident that certain export sectors required sops and after due representation, Honourable Prime Minister and the Finance Minister readily agreed to release TUFS and other reliefs for our industries.

Today, we have come out of recession rather unscathed and it is time that exporters stand up and be counted to earn valuable foreign exchange for our country. Global markets are opening and they should venture out to explore in a big way. Here too, Government assistance has already been extended since some time now. I would rather say that we need to work hard and put sincere efforts to remove the shackles of seeking some or the other relief and focus at grabbing larger market share. Let them be generous and allow Government to extend more and definitive support to other lagging sectors within the industry, which can get equal opportunity to grow.

This is one area where India needs to work hard. Campaigns like Incredible India have attracted attention of foreigners and NRIs too. India has following advantages, which is attracting the foreign investors:

•Integrated supply chain, skilled labour and quality consciousness

•Designing skills – vast pool of skilled labour and managers

•Technology adaptation

•Diversity – textile heritage and design variety

•Focus on environment protection

I strongly believe that to be reckoned as an emerging textiles hub internationally requires clear strategies and concerted efforts on the part of both the Government and the industry. Unless both are complementary to each other, the task becomes little difficult. Harmony is one of the key ingredients. We need massive investments to bring the wide range of infrastructure facilities in the country to international standards. I need not reiterate the environment that the Government has created over a period of time to support and lift the sector during the crucial times. We have created the environs that are essential for growth of the industry in so far as policy initiatives are concerned. In addition, we are endeavouring to –

•Provide raw material support – so that there will not be problems of out of stock;

•Expand and develop testing and training centres – this will help establish standards and quality to the products;

•Attract FDI, which will bring the required technology and know-how;

•Promote usage of Technical textiles – by increasing end-consumer awareness, bridging the gap between consumer and manufacturer.

As I have already said, having realized that 60% of our exports are to the countries in the European Union and the United States, both hit by the economic slowdown, I shifted focus to the ‘Look East’ Policy. Nevertheless, we continue to concentrate on the United States and Europe, our traditional markets. We are seeing some signs of recovery in the US. But, in Europe, recovery may take a little longer than anticipated. In addition to the US and Europe, we will focus on the East. I led a delegation of exporters to Tokyo, USA and some European countries recently. We went at the right time and got a very good response from there. I am also trying to promote our textiles products in other untapped markets. We have to balance between the two. Besides, we are also focussing on conducting road shows in major and emerging markets abroad. Keeping this in view, we have planned Road Shows in seven European countries in coming months. The move is on and we shall make every endeavour to make this happen.

With its consistent growth performance and abundant cheap skilled manpower, there are enormous opportunities both for domestic and foreign investors to make investments in textile sector in India. India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. 100% FDI is allowed in the textile sector under the automatic route. FDI in sectors to the extent permitted under automatic route does not require any prior approval either by the Government of India or Reserve Bank of India (RBI). The investors are only required to notify the Regional Office concerned of RBI within 30 days of receipt of inward remittance. Ministry of Textiles has set up FDI Cell to attract FDI in the textile sector, which is meant to provide assistance and advisory support to foreign companies in their endeavour.

If Indian exports have to be competitive, there is an urgent need to ensure availability of well-developed, quality infrastructure which is imperative for the overall economic development of a country. Infrastructure services are intermediate inputs to production and any reduction in these input costs raises the profitability of production; thus, permitting higher levels of output, income and employment. Bringing wide range of infrastructure facilities in the country to international standards will require massive investments and endeavours. The SITP provides the industry an opportunity to set up world class infrastructure facilities for textiles units. It is based on Public Private Partnership (PPP) model and is implemented through a Special Purpose Vehicles (SPV), where Industry, Associations/Group of Entrepreneurs are the main promoters. The Government of India’s support by way of Grant or Equity is limited to 40% of the project cost for infrastructure components subject to a ceiling of Rs. 40 crore.

The initiatives taken by the Government has already set in the pace of development and is bound to produce desired results in the times to come.

In order for India to have double digit growth, attributes such as job creation, inclusive economic growth, infrastructure development and health care improvement are minimum requirements. To meet the skilled manpower shortage, the Ministry has devised an Integrated Skill Development Scheme, which envisages meeting the sectoral target of training 100 lakh persons by the year 2022, as laid down by the National Skill Development Policy. Possessing diverse raw material base and having a growing economy, the Indian market is an attractive destination for foreign capital. To tap the opportunity, we are taking steps to diversify Indian exports to new and emerging markets. In the Foreign Trade Policy 2009, twenty nine countries in Latin America, Africa and Oceania have been given special thrust under the Focus Marketing Scheme and Focus Market Scheme.

Contrary to global trends, Indian textiles industry is predominantly cotton based and the ratio of cotton to manmade fibre is 60:40, while it is reverse in developed countries. The issue has been engaging the attention of the Government and stakeholders, and on assuming charge I had announced the framing up of a National Fibre Policy in a time bound manner. We have set up a Working Group under the Chairmanship of Secretary (Textiles) to formulate the National Fibre Policy. The Group is examining ways & means to promote use of fibres equitably as to ensure balanced growth of the entire textiles chain keeping in view the future trends and the present consumption pattern both for domestic and export markets.

Technology Upgradation Fund Scheme (TUFS) of this Ministry is a vital instrument for sustaining and improving the competitiveness and overall long term viability of the needy textile units. This year, we released subsidy of Rs.2,546 crore under the Scheme in August, 2009. Normally, the beneficiaries have to run around Banks and Government Departments to get the money, due to them. This is for the first time that such a large amount of subsidy has been released in a single tranche and the amount was credited to the bank accounts of beneficiaries in the record time of 72 hours. I am sure, this money, made available, will boost the growth of the sector in a big way. This is one of the remarkable achievements made possible after I took over the Ministry.

It is high time that we create a global identity through cutting edge “India designs”. Thus, the need is to open National Institute of Fashion Technology (NIFT) centres to cater to the specific needs of traditional and emerging textiles clusters. There is a sustained demand for NIFT intervention from the textiles clusters across the country. NIFT has developed a vibrant relationship with leading international institutes and bodies in the field of fashion and these relationships foster cross fertilization of ideas and provide a tremendous net value addition to both the NIFT and as well as to the foreign institutions.

All these endeavours along with the ongoing and ensuing schemes of the Ministry of Textiles will open up tremendous opportunities for employment generation across the country. The skill development initiative will contribute significantly in rendering job placement for trained workforce. The stage is set and we are ready to take a quantum leap forward in the ensuing years to make Indian textiles a sunrise industry.