Textile sector once upon a time was one of the key industrial sectors in India, currently contributing 5 percent to India’s GDP and 14 percent to overall index of Industrial production. According to a study conducted by Wazir Advisors and PCI Xylenes & Polyester, the sector has potential to grow 5 times to around $ 500 billion market.

However off late textile companies from India have been feeling the heat, and many smaller countries have surpassed India in terms of the share of exports in the global supply chain in textile sector.

What was once the advantage for India (lower energy, labour costs, compliance costs, etc) is now becoming the advantage of other countries. Sector faces many challenges. Energy and environment management costs are hurting the sector the most.

Unlike many of the other neighboring countries, the requirements to manage obligations on energy and environment are pretty stringent in India, and to be fair we are expecting it go sort of increase further going forward. Productivity in India also lags other producing countries. Thus, new technology is required and so is the up skilling of staff to use the new technology.

But all is not lost for the sector; there is an opportunity to turn things around. Emergence of Big Data Analytics and Industrial Internet of Things (IIoT) provides an amazing tool for the sector to explore and invest in process changes, resource optimisation and technology upgrades to double the energy/resource productivity.

So essentially the sector needs to be moving in a direction to use more or less the same amount of resource (energy, water, chemicals) but produce double the amount of output they are producing now. India has the financial capacity and business acumen to change the game by embracing technology.

Some of the recommendations for the Finance Minister for considerations under this budget are:

Financial packages that are provided to the industry have to be output based, reviewed on multiple key indicators, one of them being improvement of energy/resource productivity. Fund made available via technology up gradation scheme have reduced to around 40 percent of what it was in 2006.

Allocate fund for R&D on standardisation of operational indicators across the sector, establish a central resource productivity management repository, provide data driven benchmarking to industries to help them consistently check their performance and improvise upon.

Provide rebates, financial assistance for companies that are investing in deployment energy/resource productivity management tools.

Set aside an innovation fund that can encourage entrepreneurs to develop tools/solutions that can help the smaller units manage resources better, helping them stay relevant and competitive in the entire supply value chain.

Indian textile industry (with support from Government of India) should focus on technology upgrades and doubling resource/energy productivity – extracting maximum value out of its resources (considering that we have our presence in the entire value chain from fibre to garments). Once we do it all other disadvantages would be sort mitigated.

To sum up the budget provisions will have to care of other business fundamentals but all benefits should help the industry move towards adaptation of new technologies and the utilisation of funds made available to the industry have to reflect progress on these key aspects.

(By Abhishek Rungta and Umesh Bhutoria who are the co-founders of Energy Tech Ventures)

Source: Business Standard