Indian textile companies are finally waking up to the new-found opportunity in the post-quota regime, which began exactly a year ago. Blamed for being slow in achieving economies of scale vis-a-vis its Chinese counterpart, the Indian textile industry is now on an expansion overdrive.According to the latest data available with the Textile Commisioner, textile units have picked up nearly Rs 12,758 crore over the last three years under the government of India’s Technology Upgradation Fund Scheme (TUF) which would see an addition of six million spindles and 30,000 shuttle looms this year.Though this industry has grown in the post-quota regime, Indian manufacturers still could not utilise the full potential of this changing scenario mainly because of inadequate manufacturing capacities.‘‘Most Indian manufacturers have not been able to attain economies of scale. Now, many of them are going on an expansion drive and the TUF scheme is facilitating their move,’’ Krishna Knitwear Tech Ltd (KKTL) chairman Sanjay Kumar Tayal said.Overseas buyers see India as a preferred supplier next to China. ‘‘But global buyers are keen to do business with suppliers who provide one-stop solutions and are able to provide the volumes that they need. Indian manufacturers are realising this,’’ adds Texprocil executive director Siddhartha Rajagopal.Analysts tracking the sector also said that the US-China textile pact which restricts exports of 34 clothing and textile categories from China till 2008 would work in the favour of the Indian textile industry. ‘‘The US-China pact will also allow India to strengthen its foothold in the export market. The TUF scheme has greatly helped Indian textile companies in increasing their production capabilities,’’ said Vikram Suryawanshi, analyst with Karvy Stock Broking. The problem is that not all firms see the rosy picture. Textiles companies which largely depend on exports are facing price pressures that is hitting margins.‘‘This can be countered only by cutting costs or increasing production. Our exports have come down by 25-30 per cent. We are concentrating on the domestic market,’’ says Vinod Arora, CMD, Aarvee Denims.Clearly, some see the TUFs — with a corpus of Rs 25,000 crore, a scheme floated by the government to help textile companies upgrade technology — as a lifesaver.The scheme provides a reimbursement of 5 per cent on the interest charged by the lending agency on a project of technology upgradation or on investments in common infrastructure. Under the scheme, the government has sanctioned 4,047 applications worth Rs 12,758 crore for expansion projects worth Rs 28,628 crore.The largest number of applications for funding have come from Gujarat (1,214). Tamil Nadu got around 1,174 applications and Maharashtra 317.Rajagopal said TUF would help Indian textile players to strengthen their global operation as it would allow them to attain economies of scale. ‘‘Thanks to TUF, the annual turnover of Indian textile companies will increase by 36 per cent, our net profits by 8 per cent, and would help in increasing productivity by 40 per cent.’’Textile Inc will be hoping that his words ring true in 2006.
