The Hindu : Business : Address political issues, U.S. tells textile sector

Online edition of India's National Newspaper
Wednesday, Aug 25, 2004

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Business

Address political issues, U.S. tells textile sector

By Our Special Correspondent

CHENNAI, AUG. 24. The U.S. Consul-General in Chennai, Richard Haynes, today advised the Indian textile industry to address political issues which could thwart India's attempt to realise its full potential in the global market in the post-quota regime starting from January 1, 2005. The Indian industry cannot afford to ignore `political power' in the U.S., which is one of the largest and most open markets for textiles with the lowest tariffs on imports but which is facing pressures from its own textile and other interests, Dr. Haynes said.

Addressing the inaugural session of a seminar on `Indian Textiles and Garments — the Road Ahead', Dr. Haynes referred to the "surprising results" of the last parliamentary elections in India, which showed the importance of the rural economy. The Indian textile industry should impress upon the policy-makers of India the huge dent on rural unemployment that the textile industry could make, if it was able to expand and face global competition especially from China.

The Indian textile industry should spread an awareness that unless Indian tariff barriers to imported fabrics and machinery were brought down further, it would be difficult to access the U.S. market or obtain the much-needed foreign investment to establish large-capacity plants needed to compete with China.

Referring to seizures of `pirated T-shirts', the Consul-General said piracy of intellectual property was another big issue for successful cooperation in R and D and technology. Dr. Haynes said the U.S. had reservations about the concept of `deemed exports' prevalent in India (under which suppliers to exporters are extended many of the incentives that exporters are entitled to). There was a fear in the U.S. that the Special Economic Zones (SEZs) could be used as centres for `leakage' of products into the Indian domestic market. The Consul-General also questioned the legitimacy of taxes that some States in India were levying on imports from outside the country as also from other States.

R. C. M. Reddy, Secretary of the Textiles Committee, which has co-sponsored the seminar along with the Indo-American Chamber of Commerce (IACC), Chennai, and the Apparel Export Promotion Council (AEPC), said the Union Government had already taken some initiatives for `rationalisation' of tariffs and taxes and introduction of value added tax (VAT).

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