The Government's new textile policy is out and that's good news for the textile industry which has been   looking forward to a thrust in exports. indiamarkets spoke to D G Prasad, Deputy General Manager, Exim Bank, Bangalore, to discuss the impact of the new policy on the future of the textile industry.
  Excerpts from the interview:

indiamarkets: What is the scenario in the textile industry scene in the country? Where do exports figure?
 
Prasad: We have to sustain the export growth in textiles in the interest of the country. That is one of the major reasons why the Textile Upgradation Fund [TUF] has been introduced. Of course, there has been an overwhelming response from the industry at present. [According to the Ministry of Textiles, the TUF has collected sums up to Rs 103 billion]. That is quite encouraging.

This apart, almost every company, say more than 10 years old, is undergoing modernisation. And then, the Indian textile industry has a major advantage. For instance, take the case of cotton production. If there is a crop failure in one part of the country, it is compensated by an increase in production from other areas.

indiamarkets: - The new textile policy sets a target of $50 billion exports within this decade. Do you think the textile sector is fully prepared to face the competition after the end of the quota era?

Prasad: The figure has been arrived at, taking an incremental growth of 20 per cent per annum. It is an ambitious target all right, but not totally unachievable. We may even cross the $50-billion target if productivity goes up and wastage comes down. We had a temporary setback for the last three years because of the South East Asian crisis. When the currency value depreciated in other Asian countries, the cost of their products remained low. Now they are recovering/appreciating and we will be able to regain the competitive advantage.

indiamarkets: - The policy has laid out a growth rate of 16% for the year 2000-2001. Considering the existing trends, which segments in textile could  give a thrust to exports?

Prasad: Almost all  the major textile companies have shown a turnaround. Exports of textile products have shown a reasonable growth rate. I think that way, 16% is an easy target. In my view, Readymade Garments and the Handloom sector will record high growth rates this year.

indiamarkets: The Exim Bank is closely associated with facilitation of exports. Tell us which countries are less risky for Indian exporters.

Prasad: There is a mechanism of exporting to different countries. We can’t advise exporters to trade with a country whose foreign exchange reserves are not satisfactory. Exports to USA , EU and Japan are relatively less risky. South East Asia, Latin America and certain African countries are also `reliable'. But exports to Russian countries need a thorough verification of buyers before delivery.  There are two-three strategic reasons behind our suggestions. One, payments are assured if quality and delivery schedules are met. Two, volumes are very large in USA and EU markets.

indiamarkets: The Recent Exim Bank study shows that Indian handloom exports can carve a niche for themselves in international markets. How can we do that?

Prasad: Meet any foreign visitor/tourist to India and he/she will tell you that their interest lies in handicrafts. Handloom products in India vary with region, with each state having its own specialties, reflecting the diverse ethnic traditions as well as craftsmanship. As a result, each State produces a variety of exclusive handloom products, which cannot be easily replicated elsewhere.

A number of factors constrain our handloom exports which include lack of marketing infrastructure, lack of branding, low access to large customers, constant mushrooming and exit of small exporters, and non-exploration of end-users needs, etc. At the same time, Indian exporters face acute competition from other countries like China and Pakistan in marketing their products in major importing countries such as USA, EU and Japan. We can overcome the difficulties by organising the sector more efficiently. There is a vast scope for the handloom sector.

indiamarkets: What will be the approximate export target for Indian handloom products?
Prasad: The short-term target could be about Rs 2500 crores.

indiamarkets: What are the major reasons, you think, that Export Processing Zones /Free Trade Zones did not contribute much to Indian exports unlike in the case of Mauritius /Bangladesh? For instance, EPZs in Mauritius accounted for 62 per cent of the countries total exports, while in Bangladesh EPZs contributed 12.3 per cent of the country's total exports as against 3.8 per cent of exports contributed by Indian Export Processing Zones?

Prasad: You are taking the case of small countries. Have a look at the diversity of products in our export basket. I think many of the countries you mentioned do not have that. Our Government is opening many more Export Processing Zones for many products separately, like Technology parks. I think the situation will improve.

indiamarkets: The Government is allowing import of second hand machinery under the EPCG scheme. Do you think this is a right move? Especially when the textile machinery industry is in doldrums?

Prasad: Once we start improving the export performance with the help of modernisation, we need to import machinery. I don’t think it will affect the domestic industry. On the other side it will provide greater scope for developing more ancillary industries.

indiamarkets: Exim Bank has also announced that it would finance the R&D of export-oriented units. Is there any progress in the scheme?