The New Year has started on an optimistic note with various segments of our industry managing to consolidate the gains that became apparent in the closing months of 2009. However, increasing raw material prices remain a constraint across the textile value chain. Speculative measures by traders, especially by multinational traders who have access to cheap funds from international sources and a significant presence in futures trading in New York, have been distorting our cotton economy, despite a comfortable crop this year. I have written to Chairman, Forward Markets Commission to look into the existing forward market mechanism in the country for cotton and to make necessary changes in order to make it effective for Indian cotton traders and textile mills to participate.
 
Finance Minister Pranab Mukherjee kicked off his budget exercise with industry consultations where the captains of Indian industry from various sectors were invited. The consultations come in the backdrop of reports that the government was contemplating discontinuation of fiscal stimulus package and at a time when it is facing the problem of rising inflation and high liquidity. The representatives of the industry urged the Finance Minister to continue with the fiscal stimulus at east for the next six months as withdrawing it could harm the pace of the fragile economic recovery. They also demanded tax reforms through early introduction of a Goods and Services Tax and also a reduction in the fiscal deficit. On behalf of the textile industry, I attended the meeting and presented the proposals included in the Pre Budget Memorandum of CITI.
 
We have requested the Finance Minister to allow the import of all fibres and yarn for production of technical textiles, including spandex/lycra against zero duty, in view of the potential for a substantial growth in this sub-sector. We have also requested the government to refund the current accumulated cenvat credit of all textile and clothing units in cash as a one-time measure. On the issue of TUFS allocation, we have requested for an amount of Rs.2000 crore for meeting the backlog up to 31st December 2009 and a provision of Rs.3000 crore for meeting the requirements during January-December 2010. I also presented the details of the pre budget proposals to the Union Textile Minister in a separate meeting organized on 7th January 2010.
 
On 6th January 2010, FICCI organized a seminar on textile issues with the support of CITI and our major Export Promotion Councils. The seminar was well attended and was addressed by Minister of Textiles, Secretary (Textiles) and Finance Secretary. I used the occasion to bring to their notice some of the fiscal and monetary measures required by the textile and clothing industry. The incidence of high excise and customs duties on man made fibres and the need to reduce them for aligning our fibre consumption with global consumption pattern were among them. The need for liberalizing the norms and improving the availability of export credit and working capital for our industry was also stressed. For cotton, I specifically requested that working capital may be made available for 9 months, against 10 percent margin money and 7 percent interest. For export credit, I suggested a uniform interest rate of 5 percent in stead of the current subvention of 2 percent. Another important requirement I took up was for providing at least Rs.4500 crore for TUFS in the ensuing Central Budget in order to avoid continuance of the current delays in disbursement of TUFS assistance. In his response to my suggestions and the discussions during the seminar, the Finance Secretary was by and large positive. But he made a general remark that too much of stimulus was not good for the health of the industry.
 
CITI is in the process of preparing a Detailed Project Report on the technical skills for operatives in the different sectors across various parts of the country. We propose to submit a proposal for initiating a national skill development programme for the textile and clothing industry to National Skill Development Corporation. Skill upgradation of textile operatives has become even more important now in view of the intensified competition in global markets. Various studies have pointed out that our labour productivity is significantly lower compared to other textile producing countries. Besides, reduction of waste is becoming an important imperative for textile units and skill upgradation can address this issue to a great extent.
 
CITI is planning to organize a ‘North-South Textile Summit’ in May 2010 in Mumbai. The Summit will be a unique initiative to bring together the entire value chain of the textile and clothing industry focusing on suppliers from Asia and consumers from the West. The Summit has the potential to become a landmark annual event and will help to improve North-South cooperation in textile and clothing business. In addition to being major consumers, Western countries also have rich experience in production technologies in this sector and our industry should be able to use this event for accessing them.