Prime Minister of India - Dr. Manmohan Singh

PM's valedictory address at the Texsummit 2007

"I am delighted to have this opportunity to listen to some of the problems at the Textiles Industry faces and this Valedictory Session of the Textiles Summit 2007 has served that purpose very well. I listen with great interest to the findings of the all working groups and I will ask the Ministry of Finance the Ministry of Commerce and Ministry of Textiles with the Manufacturing Competitive Council to sit together and to find durable productive pragmatic solutions to the various problems that the textiles industry faces in our country. I therefore, compliment Shri ShankersinhJi and the Ministry of Textiles for organizing this two-day summit to discuss the problems and prospects of the textile sector. You have organized this conference at an opportune time when global opportunities for textiles are opening up rapidly and there is a need to exploit these to the fullest.

There are great opportunities with the dismantling the Multi-Fiber Agreement, there are immense opportunities the quota regime everywhere are going to end or have ended but there are also immense challenges that we have countries in East Asia, South-Asia and country like China which are aggressively planning to take full advantage of these New opportunities. We don't have to be afraid of this competition. I don't believe, I think that the people of India want to hear that we can't compete with the China. We have to meet the challenge of the competition, our standard of performance can't be Chalta hai attitude but we must aspire to meet the challenge of competition head on weather it is from China of any other quarters in the worlds Govt. and industries must be active partners in making this future happen. That's the destiny of India to be a great power and nothing can stop us from realizing that ambition.

As I have said, I have heard with great interest the outcome of your deliberations. The textiles sector is goes without saying is one of the great pillars of our industrial economy and therefore everything should be done to sustain and enhance its growth potential. The Textile Sector has been a major pillar of our industrial economy for more than one reason, but importantly because of its employment potential and because it has contributed to the modernization of our economy. Its continued growth and global competitiveness is a matter of utmost national importance for our Government. I assure you that our Government will pay the closest attention to the recommendations of the four Working Groups presented here. These will help us devise appropriate strategies to further promote the growth and competitiveness of this vital national industry.

The importance of the textiles sector for our economy cannot be overemphasized. Apart from being the largest employer outside of agriculture, it accounts for one seventh of our industrial production and contributes about a fifth of our merchandise exports. In this sixtieth year of our independence, we must remember that it was the charm and allure of our magnificent textiles that drew traders from Europe to India. With such a rich tradition in textiles, the desire to become a great global leader in textiles is a legitimate ambition which all of us you must have. We have to make for lost time, but look at the world economic scene in 1948, India was a major textile power a major exporter of textile and this side of the Suez canal there was no textile industry other than in India. But some how we did not pay adequate attention to the modernization to the expansion of our capabilities and therefore rival centres in East-Asia and South-East Asia emerged and they challenge our supremacy. We have now the opportunity with the dismantling of the Multy-Fibre Agreement to make up for the lost time. We must take full advantage of the opportunities that are now on the horizon.

I sincerely believe the textiles sector has a strategic role in our industrial economy for at least two reasons. First, given its wide spread dispersal across the country, it can be a vehicle for nationwide industrial modernization and revitalization of traditional skills and designs. Secondly, given its high labour-intensity, it can generate large scale employment, especially close to rural areas. The fact that this industry employs a large female workforce, in semi urban and rural areas, enables it to provide employment to both men and women.

The textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this industry has a direct bearing on our ability to make our growth process more socially inclusive. Our Government is willing to step in and help the industry, especially if it can address the challenge of generating more employment.

Given the historical roots of textiles in our country, it should be possible for us to leverage the inherent potential of this sector. We have a long tradition of manufacturing across the entire textile value chain. India is one of the few countries which produces everything from fibre to fabric to garments. There is a rapidly growing fashion industry as well. It is for the Ministry of Textiles therefore to work with industry to take advantage of the core competencies that already exist to ensure that the sector grows atleast 15% p.a. in the next decade.

I believe that this is possible for a variety of reasons. The termination of the Multi-Fiber Agreement has marked the beginning of a new era in global textile trade. If we can properly make use of the new opportunities provided by this liberalization of our trade, our textile sector can indeed hope to enter a brave new world. Given our traditional strengths, we can emerge as a major manufacturing hub for the global market. To harness the opportunities and the potential, appropriate interventions are needed and the government is willing to sit together with captains of industry to make this happen.

To take full advantage of the emerging global opportunities, we need a long-term vision. I am afraid we have not yet done enough to benefit from the new opportunities. I am concerned that even after quota restrictions have been removed, our textile exports have not gathered full momentum. I am aware that our textile industry has been facing some difficulties. Our Government will certainly address these to the best extent possible. However, industry must also examine what it can do to step up its growth momentum.

I am aware that the domestic market is so attractive that many of you do not as yet feel under pressure to go in search of global markets. However, this would be a short-sighted view. In an increasingly globalised world economy, our industry will benefit by taking advantage of external opportunities, even while meeting local needs. This will not only enable you to benefit from the economies of scale and scope, but also learn from competitive pressures.

I am aware that while the potential is clearly visible, there are problems as well. I know that availability of high quality infrastructure is a major bottleneck. One working group has pointed out the high cost of power as a major cost disadvantage. The hardening of the Indian Rupee has also led to a reduction in rupee margin. There are constraints also on account of shortage of manpower.

I am also aware of the fact that the growth of exports has been some what disheartening this year. The negative growth rate in the clothing segment, which is the most labour and value intensive segment in the textile chain, is a matter of concern. The appreciation of the rupee may be a contributory factor and certainly puts our major competitors in an advantageous position. Textiles being a low import intensity sector, the entire burden of appreciation is therefore on the bottom line.

Our government has taken steps to provide some relief. The DEPB and drawback rates have been revised and concessional pre-shipment and post-shipment credit is being extended. I would like to assure you that we are alive to the evolving situation and will take all possible measures to ensure that the real, productive portion of our economy is not hurt by the appreciation of the rupee.

While these measures may be useful in the short term, we need to look at the long term as well. Sops and subsidies will work if currency appreciation is a transient phenomenon. However, in the long run, the industry must adjust itself to the new dynamic of the situation. You have to invest in operations which have the scale and scope to generate desired efficiencies. You will have to engage in ruthless cutting of cost so that you are competitive, come what may. The automotive industry and other sectors of our economy have demonstrated the same ability to become more productive and more efficient. The textile sector too needs to do the same thing.

Our government is committed to facilitating the long term growth of the Textile sector. We have reformed the domestic taxation system to encourage growth and value addition within the country. The fiscal duty structure has been rationalized and excise and customs duty rates have been reduced. Except for the mandatory excise duty on man-made fibres, the entire value addition chain has been given an option of excise exemption. We have de-reserved the garments, hosiery and knitwear sectors from SSI restrictions.

To address infrastructure issues, our Government launched the Integrated Textile Parks Scheme. This scheme, based on a Public Private Partnership model, has been widely appreciated. We will continue the Scheme in the 11th five year Plan. The TUFS scheme has been a major success and has helped expand investment capacity rapidly in this sector. We have expanded the coverage under the scheme and will continue it in the future.

Technical Exports is an emerging area. We have to take some policy initiatives here to encourage new investment. Towards this, we propose to set up a Technology Mission on Technical Textiles to direct the growth of such products in desired measure in a time bound manner.

In addition, I am told that the Ministry of textiles plans to create Investment Regions for the Textile Sector. The phenomenon of agglomeration is quite visible in textiles. Such investment regions can reduce transaction costs and enhance competitiveness. Concentrated, contiguous regions with high quality infrastructure and covering the entire value chain can help obviate, to an extent, the burden imposed by multiple levies, high power costs, bottlenecks in shipment and delays in legal clearances. They can become textile hubs with billions of dollars of investment - both domestic and foreign. Developing such regions in a Public Private Partnership mode will enable leveraging of government investments in these regions. The Ministry should finalise this proposal at the earliest.

On the manpower front, I am told that the Ministry of Textiles is working on a scheme for training a million persons in 5 years on specific, textile related trades. This too should be operationalised at the earliest. The National Skill Development Mission which is being launched will also supplement the availability of skilled manpower.

On the export front, while there have been some success stories in the recent past, a comparison with China shows where we stand. We may be the second biggest gainer of the post-MFA order, but we are a poor second to China. I believe that our Export Promotion Councils and the Ministry of textiles have an obligation to facilitate better market access and greater value realization for our products. There should be a focused strategy for market expansion. You must have the ambition to be the second to none in any market!

In our anxiety to focus on large industry, we tend to ignore the handloom sector. This is part of our heritage and is an asset which we must preserve, not only for its heritage value but for its employment value as well. Our government has launched the Handloom Mark and the Silk Mark to create additional value for genuine products. The Ministry of Textiles is working out a programme for revitalizing Handloom Cooperatives on the pattern of agricultural cooperatives.

It is a misnomer that handlooms have a bleak future. In fact, as incomes rise, handlooms can carve out a niche space for themselves, generating better returns for our weavers. The challenge is to improve them technologically, to provide greater design inputs and to have improved marketing channels. Private industry can be a major partner in enabling this transition of handlooms from low value to high value products. The Ministry can work out appropriate Public Private Partnership models for enabling this transition.

While concluding your summit, I will once again say that the industry must look far into the future and invest for the coming two decades, not for the next season. You must show aggressive and enterprising sprits like your counterparts in other sectors such as automobiles, steel and pharmaceuticals. You must graduate from being low cost, low value suppliers to high volume, high value suppliers. You must develop internationally known brands and labels. You must have a global footprint and global ambitions. This requires operations to be planned on a truly global scale. Government and industry must work hand in hand in a true sprit of partnership to make this happen.

The world out there is for you to conquer. It is for you to demonstrate the necessary enterprise, innovation and creativity. I am confident that you can rise to meet the challenge. We, in Government, will walk hand-in-hand with you to make this sector a world leader."