• OUTLOOK ARENA
  • VIEWS ON NEWS
  • MAY 10, 2000

New clothes for the textile industry

The de-reservation of the textile sector and the decontrol of the sugar industry are a few of the measures proposed by a special group comprising Ratan Tata and Nusli Wadia. The group was set up to suggest ways to revive traditional industries including textiles, sugar, oilseeds and tea.

The suggestions of the report if implemented, would go a long way in removing the distortions in the policy framework for these industries. For instance, many of the composite textile mills were rendered unviable in the early eighties with the restrictions imposed on the weaving sector coupled with the excise evasion done by the small scale powerlooms. Quite a few of the mills now want to sell of their land and relocate facilities.

The group has proposed simpler procedures for relocation, de-reservation of the knitting and processing segments of the industry (which would help India compete in post-WTO regime) and formulation of policies to encourage consolidation of the fragmented units. As far as the sugar industry is concerned it has proposed the decontrol of sugar.

So far 40% of the sugar produced by the mills has to be compulsorily sold at subsidised prices to the ration shops and the balance is allowed to be sold in the free market. However, the fact remains that if this practice is done away with the prices itself would settle down to lower levels since what is happening currently, is that levy sugar finds its way into the free market if the prices in the latter are higher. Meanwhile, no further investment is taking place in the sugar industry since such policy distortions are likely to hurt the viability of the proposed enterprises.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407