Interview of Mr. V. S. Chalke
The Chairman of SASMA

Synthetic & Art Silk Mills' Association Ltd. (SASMA) is considered to be the oldest organisation in the country representing Man-Made Textile Industry. Established in the year 1939-40 under the Companies Act, SASMA has been providing unprecedented service to the Man-Made Textile Industry for more than six and half decades. The parent organisation in the Man-Made Textile Industry, SASMA is also responsible in forming SASMIRA, SRTEPC, RMCC, RAYEX and Federation of Indian Art Silk Weaving Industry (FIASWI). Mr. Vishwanath Shankar Chalke is presently the chairman of SASMA. With more than 55 years of practical experience in Weaving, Processing, Texturising, Technical Textiles, and installation of Textile Units, he is responsible for making SASMA a worlwide reputed organization. Let us now more about Indian textile industry through one of Mr. V. S. Chalke's interview.

Synthetic textiles (including raw materials, fibres, yarns and fabrics) has been facing tough time this year. Could you explain how and what is the reason for this?

The Synthetic Textiles of India has come to a turning point. The quota system came to an end in December 2004 and the Indian market was thrown open to the world. As a result, cheap fabrics in large quantities, especially from China and other South East Asian countries is coming to the country. Fabric imports under Advance Licence, import of worn out clothes and large scale import of ready-made garments has also taken away a large chunk of our fabric market. The customs duty on our raw materials i.e. filament yarns and man-made fibres such as viscose, nylon and polyester is 15%. It is pertinent to note that the customs duty on import of fabric is also the same as that of raw materials. In fact, the duty on raw materials should have been lower than the finished products. Anti-Dumping duty is levied on import of POY from several South East Asian countries and investigations are on for levying Anti-duping duty on polyester filament yarn, viscose filament yarn and nylon filament yarn. In the Budget for the year 2004-05, optional duty was imposed on textiles and with a result, large units are made on par with small powerloom units. Free Trade Agreements are entered with Thailand, Singapore, Sri Lanka, etc. The synthetic raw material cost is high compared to China and other countries. The cost of production in India is also high and under these conditions, we are unable to compete in the internal market as well as in the external markets. While 65% of the fabric in the country is manufactured by the decentralized powerloom sector, about 92% of the synthetic fabric is manufactured by the powerloom sector alone. This decentralized nature of the industry makes the synthetic textile industry more vulnerable.

The production of synthetic filament yarns for the last three years is as under:
Production Of Man-Made Fibre/ Yarn - Financial Year (Oty. in Tonnes)

Item	2001-2002	2002-2003	% growth	2003-2004	% growth	2004-2005	% growth
Polyester filament yarn/POY/Tex. Yarn	866160	993480	14.70	1014997	2.17	1004263	- 1.06
Viscose filament yarn	48350	50795	5.06	52900	4.14	53714	1.54
Nylon filament yarn - Mono/Multi/Crimp	27820	29730	6.78	30130	1.35	37900	5.79

Source : ASFI Newsletter - August 2005

The production of synthetic filament yarns during the last few years will prove that while the production of VFY and NFY remained almost the same, in case of PFY, during the year 2004-05, the production was less by about 10734 M.T. when compared to the year 2003-2004. Thus, there is a negative growth as far as PFY is concerned. In case of PFY, during the year 2002-03, the percentage growth was 14.70% when compared to 2001-02, in 2003-04, it was 2.17% compared to 2002-03 and it was - 1.06 in 2004-05 when compared to 2003-04. PFY being the main raw material compared to VFY and NFY, the negative growth will affect the textile industry as a whole i.e. right from POY upto the garment sector.

What are your expectations from the Government and how can the situation be turned to advantage the manmade textiles industry as a whole?

We expect the Government to rationalize the duty structure and make the indigenous industry competitive enough by giving a level playing field. The customs duty on filament yarns and other man-made fibres should be brought down to 5%. The customs duty on man-made fabrics should not be reduced and the specific duty on import of fabrics should continue without any change. The indigenous industry should be given protection against Central Sales Tax, Service Tax and State taxes such as Sales tax, luxury tax, excise duties on electricity, fuel, local charges such as Octroi/ Entry taxes, etc. by levying a special Countervailing Duty on import of fabrics. Anti-dumping duty on POY should be removed and there should be no Anti-dumping duty on other main raw materials of the decentralized powerloom sector, which is employing more than 60 lakh people directly. Excise duty on man-made fibres and filament yarns are high. Textiles being one of the necessities of life, Synthetic Textiles was always treated on par with motor cars, Air-conditioners, etc. In the last Budget, the Basic Excise Duty on PFY was brought down from 24% to 16%. Even 16% is also very high and this should be brought down to 8% i.e. on par with excise duty on fabrics. We also expect that the Textiles Committee Cess on textiles should be removed, Service Tax should be collected from the person providing the taxable service i.e. from the transporters for the services rendered to the textile industry. The TUF Scheme should be extended upto 2010 and should be modified so that the investment limit to the powerloom sector is increased to Rs.5 crore under the 20% Capital Subsidy Scheme. The 10% Capital Subsidy to Processing units under TUFS should be extended upto 2010. All textile machineries should bear a maximum of 8% excise duty only.

Can you delve in to the highs and lows of India's performance on the manmade fibres and synthetic exports, so far?

Preliminary Report of the Exports of synthetic textiles shows a decline, which is given here under

Details of Exports of Synthetic Fabrics: -

DECLINE IN EXPORTS OF SYNTHETIC AND DECLINE IN POLYESTER FILAMENT FABRICS (APR. - AUG. 2005)
Exports in Year 2005			April 2005 (%)	May 2005 (%)	June 2005 (%)	July 2005 (%)	August 2005 (%)
Details of decline in total synthetic Export performances compared to the month in the previous year.			22.69	19.92	30.94	42.16	17.90
Details of decline in exports of Polyester Filament Fabrics compared to the month in the previous year.			46	55	62	70	40

Exports of Synthetic & Rayon textiles had reached a new high valued at Rs.9819.92 crores during 2004-05, i.e. a growth of about 8.78%. Polyester filament fabric exports increased by 12.04%, i.e. from Rs.2505.05 crores to Rs.2806.55 crores in 2004-05 and Polyester spun fabrics grew by 51.57% to Rs.152.87 crores.

The Report of the DGCI & S for the month of April 2005 shows an increase of 13.29% in rupee terms when compared with the same period last year. However, here again, the export of Polyester filament yarn fabrics as well as Nylon filament yarn fabrics shows a decline of 29.27% and 44.10% respectively in rupee terms, when compared to the last year. This is of great concern. One of the main reasons why the exports have declined is that our raw material cost is high and taxes are not refunded fully. A comparison of prices in Korea and India will prove that our raw material cost is high by about 20%.

Korean Price of POY: -

1.	124D/36F Semi-Dull POY	-	1.50 US$ per Kg.
	less: Insurance and Freight	-	0.14 US$
	Total	-	1.36 US$
			========
			i.e. Rs.60.93 per Kg.

2.	248D/48F Semi-Dull POY	-	1.40 US$ per Kg.
	less: Insurance and Freight	-	0.14 US$
	Total	-	1.26 US$
			========
			i.e. Rs.56.45 per Kg.

Conversion rate: 1 US$ = 44.80 Rs. - as on 7th October, 2005.

COMPARISON IN PRICE OF POLYESTER YARN (PER KG.) IN INDIAN RUPEES (OF KOREA AND INDIA)

Item			Korean Price (in Indian Rs.)	Indian Price (in Indian Rs.)		Difference
						Price (Rs.)	Price %
POY 124D/36F Semi-Dull			60.93	73.26		12.33	20.24%
POY 248D/48F Semi-Dull			56.45	67.70		12.33	19.93%

Another reason for decline in exports is because of the frequent changing policies of the Government. The Government had withdrawn the benefits of 80 HHC of the Income Tax Act and the exporters were in quandary. Therefore, this problem needs to be resolved. Besides, the recommendations of the Committee on DEPB should be implemented and new Scheme should be introduced so that exporters get full refund of all local and state taxes, etc. If raw materials are made available at international prices and duties on textiles are refunded fully and if policies are not changed frequently, it may not be difficult for us to reach the target of exports.

Do you think India has the technical prowess to adopt and match the latest technology available in the world?

India is capable of and has the technology prowess to adopt and match the latest technology available in the world. Our spinning capacity especially in the Polyester Filament yarn are upto the mark, except in certain cases. However, Viscose filament yarn and Nylon filament yarn are not upto the mark and have not adopted the latest technology and hence their cost of production is high, which the weaving industry has to bear. As far as the weaving sector is concerned, the Government has introduced the TUF Scheme. However, modernisation is not fast enough to pick up as China is already ahead of us in modernisation and there is a dearth in availability of Shuttleless, Waterjet, Airjet, High speed Rapiers, Projectile looms and other machineries. Besides, the most important factor is the non-availability of quality, clean, continuous power at economical rate to the level of other textile manufacturing countries. It is very pertinent to note that M/s. KSA Technopak, in its Report on Specific Rate of Duty mentioned, which I quote, - "there are constraints relating to fragmented industry, constraints of processing, quality of cotton, concerns over power cost, labour reforms and other infrastructural constraints and bottlenecks. E.g., cost of power was Rs. 8 per garment in India whereas in China it was only Rs. 2 per garment."

Could you brief us on SASMA and its activities?

Synthetic & Art Silk Mills' Association Ltd. (SASMA) is the oldest organisation in the country representing Man-Made Textile Industry. SASMA was established in 1939-40 under the Companies Act. It has been providing yeoman service to the Man-Made Textile Industry for six and half decades. SASMA is the parent organisation in the Man-Made Textile Industry and is instrumental in establishing SASMIRA, SRTEPC, RMCC, RAYEX and Federation of Indian Art Silk Weaving Industry (FIASWI).

SASMA is represented on various Advisory Committees of the Government including the Regional Advisory Committees of various Commissionerates of Central Excise in Mumbai, Bureau of Indian Standards and is affiliated to FIASWI, IMC and FICCI.

It provides secretarial services to FIASWI and is recognized by the Government and consults us on various Policy matters regarding Excise, Customs, Import, Export and other subjects on the textile industry.

It collects information on various subjects and disseminates the same through the Newsletter. It also undertakes to represent the industry on various Forums including the Directorate General of Anti-dumping & Allied Duties (DGAD). The difficulties pertaining to the industry are taken up with the authorities and advising members on various issues, etc.

With global cotton output forecast for record levels, next year, how do you foresee its impact of the manmade fibres industry?

Cotton was always treated differently while synthetic industry was bearing the heavy burden of tariff. As on today, there is no duty on cotton whereas synthetic yarn is bearing 16.32% excise duty. The duty on synthetic fabrics is 8% while that of cotton is 4%. This disparity has retarded the progress of synthetic textile industry.

As per the comparative study of the cost of production conducted by ITMF, as far as raw materials cost is concerned, India has an advantage of 9% in case of cotton whereas in case of synthetic, we are at a disadvantage of 8% compared to China. The details are given here below: -

TOTAL COSTS OF WOVEN TEXTURED YARN FABRIC - YEAR 2003
Cost Element			China	India			Advantage to China
Raw Material			20%	28%			8%

TOTAL COSTS OF WOVEN RING-YARN FABRIC - YEAR 2003
Cost Element			China	India			Advantage to China
Raw Material			42%	33%			9%

The use of synthetics will increase in the years to come, as the production of cotton cannot be increased beyond a limit. In the developed countries more synthetic fabric is used and India has also to increase the production of synthetic fabrics in the years to come.

We give hereunder production of Cloth for the last 6 years (in Mn. Sq. Mtrs.): -

		1998-99	1999-00	2000-01	2001-02	2002-03	2003-04
		Qty. & (% of total production)	Qty. & (% of total production)	Qty. & (% of total production)	Qty. & (% of total production)	Qty. & (% of total production)	Qty. & (% of total production)
Cotton		17948 (50.50)	18989 (49.16)	19718 (49.70)	19769 (47.76)	19300 (46.72)	18040 (43.24)
Blended		5700 (16.04)	5913 (15.31)	6351 (16.01)	6287 (15.19)	5876 (14.22)	6068 (14.54)
100% Non Cotton		11895 (33.47)	13725 (35.53)	13606 (34.29)	15334 (37.05)	16135 (39.06)	17613 (42.22)
Total		35543 (100.00)	38627 (100.00)	39675 (100.00)	41390 (100.00)	41311 (100.00)	41721 (100.00)

Source: Compendium of Textile Statistics, 2004.

The percentage of production of 100% non-cotton in the year 1998-99 was 33.47% which went upto 35.53% in 1999-00. The next year, it was 34.29, in 2001-02, it was 37.05 and in the year 2002-03, it was 39.06% and in 2003-04, it increased to 42.22%. This proves that the production of synthetic fabric is increasing but the growth is not fast enough when compared with China and other South East Asian Countries.

What are the Indian prospects in the field of agricultural textiles?

There are tremendous prospects for use of Agricultural Textiles as India is pre-dominantly an agricultural country. However, the use of Agricultural fabrics will have to increase to achieve better results in farming. This will also help the Agricultural Textile Sector. Government had appointed an Expert Committee on Technical Textiles and the Committee had submitted its Report in July 2004. But the implementation is delayed. The Committee had recommended that there is scope for development of Technical Textiles in the Agrotech Sector such as Fishing Nets & Fishline, Shade fabrics, Mulch Mat, Woven & Non-Woven cover for crops, etc.

One of the difficulties in developing this fabric is that certain raw materials, i.e. speciality yarns, which are not manufactured in India, has to be imported with high rate of duty. While these fabrics are being imported, there is difficulty in importing these yarns because of high rate of duty and hence Agricultural textiles are unable to develop and compete with other countries where it has developed.