NEW DELHI: Although the Indian economy has begun to come out of slowdown and major industrial sectors such as cement and steel are now showing signs of recovery, the country’s second largest employment provider, i.e., textile sector, has not yet showed any sign of recovery, according to an Assocham Eco Pulse (AEP) study.
The AEP study titled ‘India Textile Scenario’ shows that the textile sector, which provides employment to about 91 million people, contributing about 13 per cent to export earnings and 4 per cent to India’s GDP, is still suffering from the global slowdown as indicated by declining exports and massive layoffs.
Releasing the study, Assocham president Sajjan Jindal said the economic meltdown in the major export markets of Europe and the US has led to a substantial fall in foreign orders that has resulted in an estimated loss of about one million jobs during the last few months.
Textile exports during April-March 2008-09 registered a decline of 1.71 per cent from $22.13 billion in April-March 2007-08 to $21.75 billion. Among the maximum hit segments, handicrafts registered the maximum decline of 48.35 per cent in 2008-09, from $3481.14 million in 2007-08 to $1797.88 million.
The textile sector registered 50 per cent increase in investment during 2008-09 to Rs 49,613 crore from Rs 31,161 crore in 2007-08. But as compared to 2006-07, the sector registered 48 per cent decline in investment. However, in 2006-07, Rs 90,369 crore of investment was made in the textile sector.
According to the chamber, an investment of Rs 1 lakh in the powerloom sector creates about three jobs. Hence, the government should create an investment-friendly environment and provide low-interest rate loans to investors. Besides, export profits should be made tax-free during the slowdown period to encourage exports.
Assocham says that despite marked improvement in the financial position, the Indian textile sector continues to face serious issues involving transaction cost and raw material. “The government should, therefore, focus on infrastructure facility related to the supply chain and provide low cost logistics service to the sector,” it says.
The sector also requires higher technology upgradation and active involvement of new technology.
Source : The Economic Times