Under the new textiles policy announced Thursday, the government deregulated the garments sector from the shackles of the small scale sector and hopes to achieve textile exports target of $50 billion by 2010, up from the current level of $11 billion. Of this the garments exports are expected to touch $25 annually. In order to achieve these targets, the government has removed the 50 per cent mandatory export obligation for garments.

However, unless the spinning sector is deregulated and opened for players from the organised sector the intended targets are unlikely to be met, industry sources say. According to textiles commissioner BC Khatua, India has the potential to meet the export targets, but without the deregulation of the spinning sector and removing some of the other financial anomalies, the New Textile Policy is sort of a "cart before the horse". The anomalies will have to be rectified soon so as to give a level playing field to the players in the organised sector as well.

"Just one day before the announcement of the policy, the textiles minister and his officials have agreed that the spinning sector too will be deregulated soon, while other issues like differential duty will be clear before the announcement of the 2001-2002 budget announcement", said Mr Khatua. "We will pursue the matter and hope the spinning sector too is deregulated by end-December so as to begin the process of strengthening the entire textiles sector over the next one year or so."

Said former chairman Indian Cotton Mills Federation Mr Sudhir Thakersey:"The government has missed some of the vital, bold points suggested by the Sathyam Committee which will hamper the efforts in achieving the targeted exports". According to Mr Thakersey, even when the hank yarn obligations continue to remain the textiles industry would require an amount of over Rs 8,000 cr to Rs 10,000 crore for upgradation. "Nowhere in the world there are such shackles, and therefore, unless the government removes them and makes the industry profitable for composite mill players in the organised sector, it would be difficult for the new monies to flow in the sector, which in turn will hamper the efforts to meet the targeted exports".

Said Mr Khatua: "The industry will require some two years to strengthen itself and can hope to take the plunge only by 2002-3, But before this we need to put all the necessary changes in place by February next". The Clothing Manufacturers' Association of India (ICMAI) president Premal Udani in a statement said: we fail to understand the government's reluctance to continue the reservation of the knitting industry which has been expanding very rapidly.

Ajitkumar in Coimbatore adds :

According Indian Cotton Mills Federation's (ICMF) chairman BK Patodia, and Southern India Mills Association's (Sima) chairman M Ramaswami, some of the key features would need to be translated quickly into action.

Welcoming the textile policy, the ICMF and Sima chiefs maintained that the policy has been delayed and any further delay in implementing measures for action would be detrimental while reiterating the focus required to put the industry on the fast track.

Though there is no move to dereserve the knitting segment, Mr Patodia felt a step forward has been taken while dereserving the garment industry.

According to Mr Ramaswami, the government should first do away with policies providing exemptions and cross-subsidising. "Duties should be levied uniformly and level-playing field enforced. The weaker segments like handloom industry can be supported by way of some scheme similar to market development assistance," he added. However, the industry voiced its displeasure over non-reduction of the controversial hank yarn obligation.