A new thread...

Reshma Krishnan

THE Indian textiles industry needs to take a harsh look at actual capacities and global competitiveness.

Research has revealed that another 10 million spindles need to be scrapped to balance demand and supply. Dismantling 10 million spindles would also allow fewer players a larger share of the pie.

The industry needs to look at raising the yield of raw cotton, thereby making its prices more viable. If the quality of ginning remains poor, Indian cotton yarn be becomes costly in the international market considering its quality. Thus, policies need to favour integration and economies of scale. Different policies for different sectors will only fragment the industry further. Thus, the organised sector needs to be revived through capital investments and technological upgradation.

Investment outlook: High raw cotton prices and increased power and wage costs portend a mediocre performance for 2000-01. This could mean a decline in share prices of the major companies. Nevertheless, this is an industry with a high degree of permanence. According to NITMA (Northern India Textile Mills Association): ``It is their fundamental proposition that a share of 5 per cent in the world textile market by 2005 (exports: $25 billion) is a national imperative.''

Provided the wheels are set in motion, this is an achievable target. Fresh exposures in stocks in this sector may be contemplated if there are major policy changes favourable to the industry.