Textile industry demands fibre
Collaborations, stable policies, productivity and skills development key to a globally competitive textile sector : Kiran Dhingra, Secy Textiles
Thesynergyonline Economics Bureau
NEW DELHI, JULY 05 :
“The small companies isolated in different parts should collaborate as clusters to achieve economies of scale, raise volumes, efficiency levels, technology enhancement and best designing techniques”, she added while releasing the CII – Wazir Advisors Report on “New Paradigms for Textiles”.
Mr Jayant Davar, Deputy Chairman, CII Northern Region shared some of the important issues which need immediate policy reforms for the textile sector like bringing MSP back to reflect the international price levels, rationalization of power tariffs in India , additional Duty Draw Back and DEPB rates to ensure all state levies are rebated, CENVAT accumulation to be refunded in cash and promoting FDI in the textiles and Apparels sector to make quick technological advancements.
“It is disheartening that, despite India being a large raw materials base for textile industry with huge manpower availability and large industry base as well, yet only 5 percent of our industry is globally competitive because the rest is in un- organized and decentralized sector. This large unorganized sector has poor capability to raise its productivity, volumes and quality standards owing to poor access to latest technologies and finances”, shared Mr S P Oswal, past chairman, CII National Committee on Textiles and Chairman, Vardhman Textiles .
Mr Prashant Agarwal, Joint Managing Director, Wazir Advisors shared that “India has a great potential globally in the textiles scenario. Currently, the global trade in the textiles and apparels sector stands at $ 700 billion of which India’s exports account for a meagre $ 34 billion, hence leaving a huge gap. Domestically though at $ 57 billion, Indian textile industry is still underplayed and not growing because of various constraints like small scales of production, low finance availability, lack of skilled labour, poor designs and low productivity”.
Mr Mukund Choudhary, vice chairman, CITI and Managing Director, Spentex Industries called for a fibre policy to be in place at the earliest as promised by the Prime Minister at an earlier Textile Summit in 2008. Without this policy in place there is no clarity on what to export, when to export, how much to export and what benefits would accrue since there are a whole lot of fabrics.
Mr Sanjay Jain, Managing Director, T T Limited offered the government on behalf of the textile industry to come out with a model which would pay the industry 20 – 25 percent of the amount the government is paying under the NREGA scheme and the industry would guarantee 365 days of employment even at its own cost. The need to integrate government policies, strategies and NREGA with industry scenario was also highlighted.
Mr Arun Maira, Member - Planning Commission, GoI said that, “The Indian textile sector which employs 90 million people directly or indirectly today desperately needs huge investments in latest machinery, R & D, innovation, skills development, FDI, joint ventures (JVs), design and stable government policies if it has to grow to its true potential”.
Mr D L Sharma, Conference Chairman and Director, Vardhman Textiles, shared that “Even countries like Bangladesh, Turkey, Vietnam have created their Unique Selling Points (USPs) and have managed to come out with a very well organized textile sector. It’s high time India also created its USP which could be “Scales with flexible order size and focus on skills and design”
Mr Sachit Jain, co-chairman, CII National Textile Committee and Executive Director, Vardhman Textiles ,said that “60 percent of what is bought today is non - cotton, synthetic and man - made fabric. Hence both Indian textile industry and the government should also change focus from cotton yarns to synthetic fabrics to be globally competitive”.
Mr Pikender Pal Singh, Regional Director, CII Northern Region shared that it is CII’s continous endeavour to create awareness about recent global and domestic trends in the textile sector, sharing information about recent advancements in textile manufacturing technology, advocate policy initiatives with the government on all fronts to help foster industry and to intergrate government policies with industry’s strategies. Texcon 2012 was also one such initiative for the benefit of the industry.
Call for urgent measures
Thesynergyonline Economics Bureau
NEW DELHI, MAY 27 :
Out of the 58 economists and CEOs covered under the quick poll in the last one week, as many as 53 said India’s macro economic situation has suddenly worsened.
It was a combination of flip-flop on domestic policies and the global uncertainties arising mainly from the troubled Euro-zone which played a spoilsport for the Indian economy. Breaking out of scams, one after the other, resorting to taxation policies which are perceived to be unfriendly to the global investors, political compulsions of the government in not pursuing the economic reforms are the major factors which have led to a worrying state of economy, which was booming till two years ago, the survey respondents pointed out.
“The worst disaster is coming from a huge uncertainty on the rupee value and its free fall. Everybody out there in the business world is feeling shaky, “said the survey conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).
A whole lot of sectors be it automobile, tourism, steel, oil, gems and jewellery, real estate are feeling the heat of rising dollar and weakening rupee. While cost of raw material imports has gone up significantly with rupee weakening by over 13 per cent in the last few months, inflation raising its ugly head is adding to the nervousness among the industry, bankers, and policy makers, the survey indicated.
Though April inflation numbers of 7.23 per cent have mostly the food components, one sees a clamour among a section of the analysts and commentators asking the RBI to stay course with the tight monetary policy. The inflation, based on the Wholesale Price Index was 6.89 per cent in March. The Consumer Price Index has also crossed the 10 per cent mark. This will hit the pricing power of the manufacturers who will have to absorb the increasing costs with their balance sheets taking a toll.
“This will be catastrophic and depress the demand in the manufacturing sector, largest employment source after agriculture and the services ”, said Mr Rajkumar Dhoot, president, ASSOCHAM.
“We noted that increase in WPI has been on account of food inflation. The core inflation has remained below 5 per cent. So in our next mid-quarterly review, we will take into account the numbers which have come after our mid-April statement”, The RBI chief said in Mussoorie on May 24.
Exports, both merchandise and services, have to be pushed up along with confidence building measures to improve the financial inflows. The foreign institutional investors, who remained bullish on India till March 16 have certainly turned negative on the country.
“The trouble is that the negatives are feeding on themselves. One thing leads to the other. While the country’s foreign exchange reserves can take care of imports for six-seven months, we cannot afford any complacency on this count. We certainly do not want to be in a position where some of the European nations find themselves in,” the ASSOCHAM President said.
The respondents also suggested faster clearance of the big projects in the steel, coal, cement, road, ports and shipping sectors. The private sector will chip and the global funding will return to India in case the government announces clearances to the projects worth hundreds of billions in these sectors, in the next three month, the CEOs pointed out.
Otherwise, when negatives feed on themselves, company after company would face difficulties as they would mark to market losses leaving bruising impact on their balance sheets. Those who have borrowed money from overseas sources would find it difficult to redeem their debt as the dollar cost is becoming prohibitive.
Also, there would not be much benefit to the exporters as well, as high amount of volatility has to be hedged for a cost, the ASSOCHAM said. “Net, net, it helps no-one,” it said.
The chamber said it was time the nation rose up to the economic challenge. “Each of the stakeholders - industry included - must chip in sending signals among the global community that the India story is alive,” said Mr. Dhoot.
LARR Bill 2011 : Policy Barometer
Provisions could lead to sharp
Thesynergyonline Economics Bureau
THE Confederation of Indian Industry (CII ) believes that India has enough land and water for all its needs including agriculture, industry, domestic and other uses. It is possible to define laws/ acts/ policies/ norms that enable optimal management of these resources so as to satisfy all requirements. CII therefore welcomes the LA RR Bill 2011 as a first attempt of its kind to provide guidance on all aspects of land acquisition, resettlement of project affected people and their rehabilitation. In particular, CII appreciates the continued role to be played by the Government in land acquisition for industrial development, as proposed in the Bill.
CII believes that compensation to project affected families should be adequate, so as to make their quality of life better and their earnings higher, post land acquisition. At the same time, the norms should not increase project cost to such an extent as to make the project unviable.
Such a policy would run the risk of slowing down the process of industrialisation, ultimately affecting growth, employment and overall socio-economic development. Planned industrialisation is essential for the Government to fulfill its responsibility for economic development and employment generation.
CII’s Position on Land Acquisition Currently, land is acquired in India under the framework of the Land Acquisition (LA) Act 1894, which has several deficiencies relating to the method of valuation of land, definition of ‘Public Purpose’ and other issues related to land acquisition.
CII is of the view that while these issues need to be addressed, however any amendment to the Act must not limit industrial growth in the country, which is essential for its overall economic development. Keeping this in mind, CII’s recommendations on different provisions of the Bill are :
The Bill stipulates that 'provision of land in the public interest for private companies for the production of goods for public or provision of public services' is subject to consent of at least 80 percent of project affected people.
CII is of the view that in a democratic, liberalised economy where the private sector is playing an increasing role in the nation’s economic growth, the provision of 'consent of 80 percent affected families' imposed only on land acquisition for private sector, appears to be discriminatory in nature.
In fact, consent of the project affected people is sought to be introduced from the point of view of removing coercion.
In the current form of the Bill, it appears that the Bill is stipulating that ‘coercion’ of people is acceptable for use of the land by the Government and by public sector but it is not acceptable when the land is acquired for use by the private sector. As a matter of fact, the land loser is indifferent to the subsequent use of the land.
CII has recomended that, if at all the provision of 'Consent' is to be accommodated it should be reduced to 60 percent of project affected families, uniformly and equally applicable to all cases, irrespect ive of the end use.
Also, the provisions of LARR Bill have already defined the entitlements of the project affected people including the landless and other project affected people.
Thus, to make the process of obtaining consent ‘definitive‘, CII proposes that consent should be obtained only from the ‘land owners‘ instead of all the project affected people.
As per the provisions in the Bill, for determining the land compensation, a multiplier of 2 needs to be applied to the land value; in addition, 100 percent Solatium for rural areas has been proposed. CII is of the view that the proposed provisions will result in land cost to increase by 3-3.5 times, which will severely affect the viability of industrial projects across the board. This will severely erode competitiveness of the Indian manufacturing sector.
The principle of Solatium as per LA Act of 1894 was primarily to address the concern of undervaluation of land, done to avoid stamp duty. In essence, the 'Solatium' is equivalent to the 'multiplier'. In the proposed Bill, the concept of the multiplier takes care of this aspect of undervaluation. Therefore a Solatium is not required over and above the multiplier.
In case the Solatium is to be retained as a continuity of the LA Act of 1894, then it may be retained, at 30% and the multiplier be reduced to 1.5 instead of .
CII is deeply concerned that the provisions of the Bill will lead to spiral increase of land prices.
To exercise restraint it should be specifically mentioned in the Bill that compensation amount, as described in The First Schedule, should not be treated as market price of the land for subsequent acquisition in adjoining areas.
This will also ensure that the land losers from the project would not lose their ability to buy land in the vicinity with the enhanced compensation received.
The Bill also stipulates that rehabilitation and resettlement (R&R) provisions are to be made applicable for procurement of land (more than 100 acres in rural areas and more than 50 acres in urban areas), in cases where private parties directly buy the land from owners.
CII is of the view that since land is procured through negotiations between land owners and private companies, the former would already have protected their interest through the quoted price.
Application of rehabilitation and resettlement provisions would only push the land prices further upward.
Instead, provision of rehabilitation and resettlement should not be applicable to land owners in such cases as sellers would have received the premium on land value. However, a suitable rehabilitation and resettlement entitlement could be laid down for affected families who lose their livelihood as a result of such land acquisition.
There are different categories of people / families that are involved in a piece of land that is proposed to be acquired and they would be affected in different ways.
Typically, when land is acquired, the affected families could lose their land, house, assets
CII has recommended that instead of using the broad term 'affected families', the category of families need to be clearly defined and according to their losses, suitable compensation package should be laid down.
Rehabilitation and resettlement provisions need to justifiably differentiate each category, depending on what they lose as a result of land acquisition, keeping in mind that families need to be much better off than they were prior to the acquisition.
Also, the Bill stipulates numerous rehabilitation and resettlement entitlements for Scheduled Castes (SC) & Scheduled Tribes (ST). These entitlements would also be applicable in Non-Schedule Areas.
CII feels that the stipulated provisions are too complex to be implemented.Rather than numerous provisions, SC/ST families should get 25 percent higher benefits as compared to others. In addition, these special provisions should only be made applicable to Notified Scheduled Areas.
In case of land acquisition in Non Schedule Area, the rehabilitation and resettlement (R&R) Commissioner should be empowered to settle land in favour of the SC/ST families on a case to case basis.
The Bill stipulates that the Collector should take possession of the acquired land only after the entire compensation and rehabilitation and resettlement (R&R) entitlements are disbursed. CII is concerned that the whole process of land acquisition can be stalled even if a very small segment of people refuse to accept the compensation.
Instead, CII suggests that the Collectorshould be empowered to take possession of the land after 80 percent of the affected families have accepted and received the compensation.
The Bill proposes certain restrictions on acquisition of irrigated multi-cropped land with reference to special provisions to safeguard food security. Such provision may hamper the industrial development of States which predominantly have multi-cropped land. Industries based on nature would also be severely affected as minerals occur naturally and hence their locations cannot be chosen. Against this backdrop, CII suggests that this provision should not be applicable in case of mineral extraction projects.
The Bill envisages return of the land if not utilised for a period of 10 years. While this clause safeguards against indiscriminate land acquisition, the delay in the project may be due to reasons beyond the control of Industry. In addition, land for future expansion plans would need to be acquired and may not be utilised in the initial years.
CII suggest that, the industry must submit a 'land use plan' and adhere to the plan. Also,a Committee under the Chairmanship of the Chief Secretary of the State should be empowered to take decisions on a case to case basis.
The Bill stipulates that in cases of land acquisition where award under Section 11 of LA Act 1894 has not been made, the process would lapse upon enactment of the new Bill and the process of land acquisition would have to start afresh.
CII is concerned that the applicability of the proposed provision would affect on-going industry projects; re-starting the process of acquisition would mean delays and cost escalation, ultimately affecting the viability.
In cases of land acquisition where the notification under Section 11 of LA Act 1894 has already been issued and the process of award commenced, such cases should be continued as per the LA Act of 1894.
A comprehensive definition of 'Public Purpose' has been laid down in the Act.
Despite the definition being comprehensive, which includes infrastructure verticals, it does not include large infrastructure projects such as Delhi Mumbai Industrial Corridor (DMIC) or National Manufacturing and Investment Zones (NMIZ). Large projects of national interest should be explicitly included in the definition of 'Public Purpose' in order to facilitate sp eedy progress of these projects.
According to the Bill, stamp duty and other fee payable for registration of land or house allotted to the affected families shall be borne by the Requiring Body. However, imposition of such a provision will result in increase in cost.
CII is of the view that stamp duty and other fee for registration of Land / House allotted
The Bill stipulates public hearings for social impact assessment (SIA) and Environment clearances. CII feels that such a provision would be a time consuming exercise. Instead, public hearings for SIA and Environment clearances should be combined, as this would help reduce the overall project implementation schedule.
According to the LARR Bill, all new villages established for resettlement of the displaced persons shall be provided with suitable transport facilities which must include public transport facilities through local bus services with nearby growth centres and urban localities. CII feels that establishing transport facility on a continuous basis would lead to huge cost which might not be feasible.
Instead, local Governments should take the responsibility to provide public transport facilities to new villages established for resettlement of displaced persons.
The proposed provisions in the Bill say that the Collector shall make an award within a period of 2 years from the date of publication of the declaration and if no award is made within that period the entire proceedings for the acquisition of land shall lapse.
CII infers that in such situations, time and energy spent on the process could get completely wasted and lead to delay in project implementation. Instead, in such cases, Government should offer an alternative location identified by the requiring body.
LARR Bill: A step forward, yet
B Muthuraman ,immediate past president, CII and vice chairman,
Adi B Godrej, CII president and Chairman, Godrej Group
India has and can have enough
land and water for all its needs
Against this backdrop, Confederation of Indian Industry (CII) has welcomec the Land Acquisition and Rehabilitation & Resettlement (LARR) Bill 2011 as positive, forward looking and comprehensive, which is the first ever attempt to combine all three aspects - land acquisition, resettlement of project affected people and their rehabilitation. It would be a guiding Act for States to further strengthen Land Acquisition Process and Rehabilitation and Resettlement (R&R) provisions.
However, there are certain apprehensions amongst the Industry, especially those pertaining to compensation package and rehabilitation and resettlement (R&R) entitlements; consent of 80 percent of affected families; acquisition of irrigated multi- cropped land; return of unutilised land and retrospective applicability of the Bill. These would need to be addressed to help create a fair and equitable land acquisition mechanism.
CII believes that compensation to project affected families should be fair and comprehensive. It should enable the dispossessed to continue to lead their lives without any negative impact. Rather, it should improve the quality of their lives. At the same time, the compensation to be paid should be fair to the land acquirer. It should be 'affordable' from an industry perspective, as too high a cost of LARR will make the total cost prohibitive and could result in a slower rate of industrialisation, ultimately affecting growth, employment and overall socioeconomic development.
Similarly, clearances, especially environmental clearances, should not hamper the progress of projects.
Indian Industry is of the view that land acquisition should be facilitated by the Government to fulfill its responsibility for economic development and allow Industry to play its role in the development of the nation. A broader view that balances social imperatives with economic imperatives would go a long way in helping India achieve its goal of inclusive growth.
Chandrajit Banerjee Director General Confederation of Indian Industry
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