“We would set up a state-of-the-art textile processing cluster near Surat”

B S Agrawal, President-Elect, Southern Gujarat Chamber Of Commerce & Industry,  spoke about the recent crisis in the textile indurty, the reasons behind it and other issues in an exclusive interview to Mahendra Rout. Excerpts:

1. What are the goals you would like to achieve for the various industries during your presidentship?

My prime agenda is to work for the rapid and comprehensive growth and development of all industries in Surat. We will set up a state-of-the-art textile processing cluster at the Pinjrat region near Surat in South Gujarat to boost the textile sector in the state. We would like  to bridge the prevailing ‘employability gap’ between industry’s requirements and skills possessed by students passing from various institutes. We will work in collaboration with the academic institutes and other stakeholders related to education sector for making Surat the ‘hub of education’ in the state. Real estate being one of the most important sectors of Surat, it needs to be addressed the issue of ‘ease of doing business’  due to the mammoth processes involved in this field.

1. What are your views on the recent crisis in the textile industry and what are the reasons behind it?

The domestic textile industry is passing through a critical time due to unabated imports of fabrics from China at cheap rates (i.e. at unit price of fabric imported from China is as low as Rs. 7 to Rs. 12 per Sq. Mtr.), which has resulted in severe drop in consumption of fabrics and yarns produced in our country. It is severely affecting domestic consumption as well as exports substantially. This can be derived from the enclosed data of imported fabric from various countries during the month of April 2016. It indicates that out of total value of Rs. 48.69 crore fabric imported, Rs. 31.81 crore was imported at a unit price of Rs. 7 to Rs. 11 per KG/MTR/SQM. Repercussions of these imports at cheap rates from countries like China have resulted into closure of 35 per cent of power looms in Surat, Bhiwandi, Malegaon and Ichalkarangee, affecting the employment of over 1,00,000 workers. Sixty per cent of fabrics in India is weaved in power looms. This issue is indirectly affecting our exports as well. The duty differential between cotton and synthetics is another limiting issue. Polyester today is the fabric of common man in India, but it is surprising that an excise duty of 12.5 per cent is levied on synthetics, whereas cotton is being extended duty concessions. We suggest a reduction in duty on synthetic cloth from 12.5 per cent to 6 per cent. This will reduce domestic cost of producing fabric and will help in arresting imports.

1. What are your expectations from the Central government to overcome the crisis faced by textile, diamond and real estate industries?

For the textile sector, we expectthe Central government to do away with the annoyance of cheap imports from countries like China; it is advisable to set the standards in terms of minimum price per unit for importing fabric, which should be around Rs. 50 per Sq. Mtr. Certification authority should be given to the institutes like Federation of Indian Art Silk Weaving Industry (FIASWI) to make the certification process more effective. Immediate steps are required to be taken up to increase custom duty on imports of fabrics from existing duty by 10 per cent and impose specific duty on all kinds of fabrics. There are some tariff lines in fabrics which does not have specific duty as mentioned above. There is a long standing demand of industry to reduce the excise duty on synthetic fabric produced in India from 12.5 per cent to 6 per cent, which  may kindly be considered. This  will reduce domestic cost of producing fabric and will help in  arresting imports. This loss to the exchequer will be compensated by the increase in consumption of yarn due to internal consumption and enhanced exports.

For the diamond sector, the Central government should address the issue of difficulties faced by the SMEs operating in diamond sector with respect to availing finance from the market. Presumptive tax in the diamond industry needs to be reduced from 6 per cent to 2 per cent. There is a need to allow the import of rough diamonds ‘On Consignment’ basis.

For real estate sector, the state government should be asked to simplify revenue laws and its implementation speedier. Some incentives should be given for construction of small flats like Section 80IIB.