M. Duraisamy, Chairman, Pdexcil

The powerloom sector in India accounts for about 11% of industrial output, 12% of India’s export and employs over 7 million people. The Dollar Business caught up with M. Duraisamy, Chairman, Powerloom Development & Export Promotion Council (PDEXCIL), to understand the council’s role in furthering exports.

Interview by Aadhira Anandh M | November 2015 Issue | The Dollar Business

TDB: What is the role of Powerloom Development and Export Promotion Council (PDEXCIL) in supporting exporters?

M. Duraisamy (MD): PDEXCIL was set up to promote, develop and support powerlooms and the export of powerloom products. It is constantly carrying out activities to boost exports by participating in international textile exhibitions, capacity building programmes, seminars, organising buyer-seller meets, trade delegation visits, gathering market information, surveys, dissemination of trade enquiries, etc. The council also takes up the cause of the sector with relevant authorities. It is constantly helping the industry and its members overcome hurdles, and provides a platform to exporters.

TDB: What export promotion measures does PDEXCIL take to ensure visibility for its members?

MD: Exporters participate in trade fairs, buyer-seller meets and exhibitions to widen their market reach. Considering their business focus, PDEXCIL organises and participates in fairs and buyer-seller meets abroad which are important to our members’ marketing initiatives, giving them exposure amongst international buyers.  PDEXCIL, with financial assistance from the government, also organises Reverse Buyer-Seller Meet (RBSM), where prominent buyers from different parts of the world are invited to India, one-on-one interaction sessions are held with members of the council and potential buyers. Also, manufacturers in this sector produce quality export products with the support provided by this council for modernising powerlooms.

TDB: What are the primary challenges that hinder growth of the Indian powerloom sector?

MD: Powerloom is a decentralised and an unorganised sector, consisting of small powerloom fabric manufacturers. The weavers cannot explore emerging markets due to insufficient finance and export promotion activities. The textile SMEs face several problems like slow upgradation of technology, inadequate capacity to source raw materials, product marketing, inability to avail institutional credit, and diversification of products and inadequacies in infrastructure.

TDB: Are you satisfied with the export incentives provided to the sector? If not, what needs to be changed?

MD: Various export incentives that were available for textiles have been withdrawn, and the new Foreign Trade Policy hardly provides any relief. Under MEIS, the benefit available for cotton fabrics, etc., is just 2% and only for Group A countries, covering Europe and USA. Recent events like fluctuation in the dollar value and devaluation of the yuan have helped some countries to offer textile items at lower prices. These countries also offer indirect incentives for exports, increasing competition for Indian products.

MEIS currently covers exports of cotton fabrics to Bangladesh and Sri Lanka. Similarly, countries like Malaysia, Thailand, Singapore, Myanmar, and South Africa should also be covered under it. I would also suggest a provision of reward rate of 5% for powerloom products in A, B and C group of countries under MEIS. Interest subvention, as available under previous policy, should also be reintroduced as finance continues to be a major constraint for Indian exporters.

TDB: What is the difference between garments manufactured here and in China? What steps should the government take to ensure that our industry can compete with that of China’s?

MD: China’s garment manufacturing units are equipped with modern infrastructure and technologies, so it can easily meet global demand. The Indian government needs to focus on the same, and provide more incentives and schemes if it wants India’s industry to compete with China’s in the global market. At present, it’s not a match of equals.

TDB: What are the challenges in terms of technology and marketing?

MD: This is a field of innovation with a great scope for both traditional textile products and high-tech textiles which are designed to meet specific needs, involving different technologies. The development of such products is a challenge for the textile and clothing industry – it has to develop products based not only on design and comfort, but also in terms of functionality.

TDB: Are there any grey areas in terms of government policies and support which are affecting the earnings, performance and productivity of the industry? Do you have any suggestion?

MD: There are some grey areas in the textile sector, like import of second-hand shuttle-less machinery. The government should focus on this, and it should be allowed at 0% basic duty like new shuttles looms. This is because both are equal in terms of making export quality products, but the second-hand shuttle-less machinery has less production cost, as the capital investment is low.

TDB: Has the Technology Upgradation Fund Scheme (TUFS) helped the domestic textile industry? Do you think its allocation should be increased to boost ‘Make in India’?

MD: The technology level of this sector varies from obsolete plain loom to high-tech shuttle-less looms. There are approximately 1,25,000 shuttle-less looms in this sector. It is estimated that more than 75% of the shuttle looms are outdated, and have no process or quality control devices. To fulfill ‘Make in India’, the TUFS’ fund allocation should be increased as the domestic market is expanding, and new incentives should be provided to Indian-made machines. Of course, the Integrated Skill Development Scheme is a positive move from the government to converts unskilled labour to skilled labour, playing an important role in improving production quality and contributing to the growth of textiles.

TDB: One of ‘Make in India’ initiative’s pitches to foreign investors is that India has the highest loom capacity. Is there anything else which is unique about India’s powerloom sector?

MD: After agriculture, this is the only sector generating huge employment opportunities for people, irrespective of literacy levels, since it uses both skilled and unskilled labour. The availability of labour and raw material at reasonable costs, along with giant strides in technology, has certainly turned it into a very promising sector. China and Bangladesh, the two significant players in the market, face structural challenges to the extent that their export capabilities are affected, providing a chance for India’s success in the global market. India’s increasing efficiency in the sector, along with a 100% FDI limit, is helping textile firms consolidate their positions. Being one of the largest exporters, we are looking for ways to take China’s vacant spot in the market.

TDB: Do you see growth for the Indian powerloom players in the near future?

MD: There are positive indications for future growth opportunities – plenty of cotton with potential for higher yields, a chance to produce yarn instead of exporting cotton, and a growing export and domestic market demand. Though the current growth of the powerloom sector has been restricted by technological backwardness, low productivity and low-end quality products; in the future, technology will play the lead role in this sector, improving quality and productivity. The Indian textile industry should also invest in technology to realise the benefits of economies of scale and quality. To obtain the benefits of these developments, the Indian powerloom industry has to prepare, with focus on areas like modernisation of powerlooms and testing facilities.