India is second only to China in textiles and apparel industry. But most of the textiles produced in the country is channeled towards garmenting and only 10 per cent is for other applications including home textile. To boost the industry further, India has to improve applications of different fibers. In an exclusive interview, R D Udeshi, President, Polyester Value Chain, Reliance Industries, speaks to Fashionatingworld about the issues confronting the textile sector today and what is the way ahead.

Do you think India’s textile production targets are feasible?

The total textile production is $110 billion. The government’s target is to touch $650 billion by 2025. However, 10 years is too long a period. Let’s look at a realistic target. We don’t know what will happen in 10 years. Maybe it’s better to aim for $300 billion in five or seven years. Out of this, domestic should be $200 to $210 billion and exports $100 or $110 billion. To achieve this target, we should spend on R&D, develop product application centers, create skill development programs, build new design institutes which will provide innovative fabrics, improve automation, improve the weaving capacity, have better technology looms, improve processing capabilities, have a center of excellence for knowledge sharing.  The industry should think big and create an efficient cost structure.

Exporters should participate in trade fairs, have buyer seller meets. We need a fiber neutrality policy. Textile parks should be encouraged. Buyers should have all products under one roof. Infrastructure facilities should be created. Finance should be made available at international interest cost.

What are the thrust areas?

In India, 90 per cent textiles are for garmenting and 10 per cent for other applications including home textiles. Globally, it is divided half and half, 50 per cent for apparels and 50 per cent home textiles. Since India has to reach this level overall fabric production is likely to be better than what it is today. India has to improve applications of different fibers. This includes geo textiles, currency note applications, wallpaper applications. Once this happens there, will be a spurt in fiber consumption, non woven applications, non apparel applications.
 
Our per capita consumption is very low. So there is scope. The lower income group is entering the middle income. The median age is 26, purchasing power is improving. Clothing needs have grown. This incremental consumption will drive the domestic market. India’s annual fabric imports are almost $850 million assuming they are under invoiced. The real value is about two to three times more. So that’s a huge number. That comes to $2.5 billion. Cheap imports of fabrics should be prevented. Also fabrics are cleared at lower customs duties. This should be stopped. In India manmade fiber has always been treated as a rich man’s fiber and cotton a poor man’s fiber. Manmade fiber is seen as a revenue earner.

Is China a formidable competitor?

India used to compete with China. Now India is competing with Sri Lanka, China, Bangladesh, Vietnam. China is the biggest competitor. But labor cost in China is three times that of India’s and power cost is ten cents a unit in China. So, India is competitive in power and labor. The market is evolved. India has skills, a strong legal structure, financial capability, technical expertise, raw materials like cotton and manmade fiber.

China imported a lot of cotton yarn because they created a floor price for raw cotton.  Raw cotton was more expensive than cotton yarn. That gave opportunities to Indian manufacturers and the spinning industry to export cotton yarn. They thought there was a big market. For the Chinese, it was a make or buy decision. Buy was cheaper than make. But then the floor price was removed. In future, I don’t think they will buy as they Chinese have enough spinning capacity.  If they get cotton at international prices, without an artificial floor price, they would be quite efficient at production. Cotton prices in India are lower than international cotton prices. I feel that with the new cost structure in China, India has the chance to take a big portion of Chinese exports. People don’t see much stability in Vietnam or Bangladesh. We have a language advantage. But we should meet quality standards, meet the supply chain capability.

Will GST streamline procedures?

Once GST comes in, all fibers may be treated equally. The duty will be the same, whether cotton, viscose or filament based. Customers can select the appropriate fiber. GST will place fabrics on an equal footing.  There is no bias in terms of duty. We have excise on polyester raw material and on polyester. We have exemption on spun yarn and on fabric. So the chain is broken. With GST, exemptions will be withdrawn. So you keep paying tax on the value you add.

What significant changes will FDI bring in?

I think 100 percent FDI will also help. It’s not so much about money. Someone will bring in innovative fabrics, marketing expertise.    Once you have a financial commitment through FDI, the rest of the things will follow. In India most of us sell products through a trader. I don’t think we understand the market. Once you interact with the customer you know about design and pattern changes.  So the production cycle changes based on that. Today everything is based on hearsay.    India should first become a manufacturing hub of a commodity product. The next stage is to improve through innovation. The third stage is to brand your product. The fourth step is to go global.