The Indian economy has been growing by about 8 per cent to 9 per cent and if this momentum continues then we will see a very bright future for India. The textile industry has been a major contributor to India's growth and it is one of the largest employers in India.
The appreciating rupee is already impacting the industry. The government should consider the case of the textile industry with topmost priority and should encapsulate incentives for the industry in the forthcoming budget to provide a fillip to dwindling exports.
The appreciation in the value of the rupee against the major currencies is the biggest challenge for the sector as exports have almost lost the comparative advantage on the pricing front.
The situation has further worsened because while the Indian rupee has appreciated by 12 per cent to 15 per cent, the currency of Pakistan, Bangladesh and China has appreciated marginally thereby making their industries significantly more competitive than ours at least on the commodity side.
The government should extend incentives for boosting exports. If there is any kind of sops for the textile industry that the finance minister can do, it will help industry tide over this problem. Service tax levied on the exporters should be removed.
Duty on Capital Goods: If the duty on capital goods reduced significantly or abolished at least for the short term it will help fuel investments, expansion of capacities and implementation of new advanced technology.
Protection against irregular imports: A significant part of imports come to India with wrong declarations, which is creating tremendous pressure on our domestic market. Thus, there is a need for some protective measures against the irregular/illegal imports.
Labour law: On the macro side, the government needs to take a call on the labor law sooner than later. If we just address this one issue of labour, we can weed-out inefficiency out of the system that will enable us to take our competitiveness to the next level.
For managing large orders of exports during the peak seasons, labour law should be flexible for seasonal employment of labour in the textile and garments sector. During the slack season this labour traditionally goes back to agricultural activities.
Infrastructure Development: Robust infrastructure is the need of the hour for next level of growth. Some focused efforts are urgently needed in developing the infrastructure. Infrastructure development will not only provide the basic needs for growth but also help in creating jobs. The poor state of infrastructure in India throws substantial opportunities for betterment and it should be seen as tremendous growth driver for the economy.
India is poised for the robust growth and we hope that the budget will push the economy further on a high growth trajectory.