India needs to overhaul its textile policy, from cotton to garments


Citing adverse global circumstances, the textile industry has sought restructuring of its loans, with a two-year moratorium on repayment of loans that were sound at the beginning of the fiscal. It is for the banks to take a call on this demand on commercial considerations.

But it is not just economic problems in the US and the EU, which absorb around two-thirds of garment exports, that trouble India’s textile industry. Government policy itself is one of the sector’s biggest enemies. Policy sets different segments of the value chain against one another. Cotton farmers are pitted against the yarn and weaving industry, the garment industry sees the makers of fabric to be an obstacle in its growth.

In the sector that employs millions of workers, labour laws have become a major stumbling block in the path of modernisation. While the import duty on man-made fibres has been lowered over the years, anti-dumping duties weigh down virtually all man-made fibre imports into India, making India a high-cost producer of blended fabrics and converting India’s garment industry into the role of a mournful observer, not even allowed the role of a bit player, in the biggest segment of world garment trade.

This must come to an end. Attempts, motivated by shortterm political considerations, to shower benefits on one segment of this value chain that starts with cotton and ends at garment sales, whether in markets abroad or at home have come at the expense of other segments. Export ban on cotton to favour yarn/textile makers hurts farmers.

Export incentives on cotton hurt our garment industry, as these make cotton available to India’s competitors cheaper than it is available to Indian converters of cotton. It is time the government came out with a holistic vision of, and policy for, our textile industry.

India is one of the biggest producers of cotton and yarn and is a major player in garments. But when it comes to weaving fabrics, India is nowhere. The organised mill industry died, for the most part, in the eighties. Sensible labour laws will allow a vibrant garment and fabric industry to come up. India needs to regain the position it once had in woven fabrics: the world’s best.