Small and Medium Enterprises (SMEs) who were hit adversely in the aftermath of the global crisis are performing better at present, said Rita Menon, Secretary, Ministry of Textiles in an exclusive interview to SME Times. Excerpts of the interview...

How is the textile industry performing in terms of growth as of now?

Rita Menon: Not so well in terms of ready-made garments, but the carpet sector has still registered a growth of 27 percent increase year-on-year. I am waiting for the figures on handicrafts which is also positive. It has been a positive exports in man-made fibers as well. It is true that in the last quarters exports have come down. The garments exports have come down by 15 percent. I'm told that the carpet sector's growth will be about 50 percent at USD 650 million by the end this fiscal. They are already at USD 220 million a month and a half back. The first quarters are always slow.

What kind of textile export target have you set up for the year 2010-11?
Rita Menon:  We have set up a target of about USD 25 billion exports for the entire fiscal as compared to the corresponding year which was at USD 20 billion. By the end of September we will be able to know. But it has been approximately around USD 18.9 to 19.4 billion.

We have set up the target which all councils have agreed upon and they are striving for that. The demand in the international arena which is something that is very focused. We cannot hang the councils if we cannot achieve USD 25 billion. We would wish if it do happen for the growth of Indian trade and in general. But we will be watching how it will be moving.

How is the demand picking up in the textile industry from the alternative markets?

Rita Menon: Not bad at all. Recently, I had a very detailed briefing from the carpet sector. The new areas are Turkey, Japan, Iran, China, Latin American countries, and the Middle east. They are very happy with the kind of demand flow that has come. There is a problem with the US and Europe as they have no money power. But, we are hoping that these new markets that we are trying to nurture will also fill the gap. We are also taking up few initiatives such as we want to have some dedicated websites, advance planning with the embassies for our visits to such places.

In fact, for the first time there might be a large participation in a fair at China because China has moved from man-made to machine-made. But they still have a taste and appetite for hand-made because they have the large infrastructure. We believe that we can get a good market in China. The Indian hand-knotted carpets have been going to China and there is an increase in the demand as well.

Will the country's textile industry, which comprises mainly SMEs be able to cope up with the worst impact of the global slowdown?

Rita Menon: They are performing very well. In fact, all the new investments in the technical textiles are in the small and medium sector. SMEs are bulk in the powerloom sector, handloom sector and our policies are very focused on the growth of SMEs. As far as textile is concerned, it is SMEs that have considerable amount of pain in the consequence of the global slowdown especially in the readymade garments. But, the SMEs those are in the powerloom and the yarn sector, if you can call a yarn unit a SME then very small number of spindle are performing very well because there is a great market for both yarn and fabric that powerloom produce.

The industry is expressing disappointment at the reduction in Drawback rates and non-restoration of Drawback rate on export of Cotton Yarn, cotton fabrics and others. Any initiative have you taken on this issue or any kind of recommendations have you sent to the Finance Ministry?

Rita Menon: Well, I have represented to the revenue secretary about the industry\'s concerns and the Finance Minister has also been apprised about the issue because the duty drawback is determined by an independent committee within the planning commission. We have to take a greater call on the numbers and bring out on the table the pain that the exporters are feeling. Thereupon, we could take it up further.

The Finance Ministry is not quite involved with the calculations of the duty draw back committee so they would not be able to take a call on the matter instantly. We will have to demonstrate back to the committee on how much discomfort it is causing our industry and then we will see if we can obtain a review.

I do not expect much success in increasing the rates, but certainly we will see what action our ministry needs to take to represent to the committee/finance ministry.

The textile industry is seeking a ban on cotton exports. The government has taken few initiatives recently of extending quota of 55 lakh bales of cotton exports every year as well. In fact, there has been a recent meeting also between Textiles, Agriculture and the Finance Ministry. What is the result of the meeting?
Rita Menon: The garment industry seeks a ban on cotton exports i.e the export of cotton will be zero. No, there is no such intention. Our industry needs cotton, therefore, we need it to be defined well in advance. The government has told us to define it. All the three ministries (Commerce, Agriculture and Textiles) have jointly given an export quota of 55 lakh bales per year on cotton.

There is no talk of a ban. There is a talk of considering the export of 55 lakh bales because the industry needs between 22.5 lakh bales-23 lakh bales per month for its own consumption. And, the garment exporters obviously they are the last in the value chain so they not only want the yarn to be in full supply but also the clothes. If the industry in India have upgraded itself on the capital front to the extend it has and thanks to the various schemes and also their own initiatives, they would want adequate raw materials.

There is no ban at the moment. There is an agreement within department that 55 lakhs bales of cotton are to be exported. It is the agreement and if the crops be better we will jack up the 55 lakhs bales. We will take a call in the month of January.

What is the status of the National Fiber Policy?
Rita Menon: Yes, we are moving for the cabinet and the pushing it as well so that the policy comes into place at the earliest. It is being considered by all the stakeholders who will be coming to the cabinet to consider the fiber policy. It is already under consideration. Certainly, we are trying to push that in the cabinet as soon as possible for consideration.

Is the textile Ministry formulating a policy for the technical textiles as well​? Could you highlight on this?

Rita Menon: Yes, we are formulating a policy on the technical textiles. Under the policy we are focusing on enhanced funding with specific relevance to medical textiles, security based textiles, agri-based textiles and lots of research as well as assistance on the new units.

Are you making state specific withdrawal of sanctions under the TUF scheme? In fact, the government has also withdrawn new sanctions under the TUFS at present and the industry is showing disappointment on this move. What is your Ministry's plan on this?
Rita Menon: There is no state specific withdrawal. But there has been a pause in the TUF flows because we have to go to the cabinet for some modifications and also for new investments. Well, it is done to give assistance to some sectors. We may also increase the percentage for some sectors and in a few we may keep it on the same level. In some, we are giving incentives to come further and perform better such as in the Powerloom and Handloom. We are also going for a higher investment.

Till the cabinet goes through the consideration of the paper and our proposal, we are not disbursing new cases for assistance. We are just helping out the old ones which are a part of our deal.