Finally Indian textile companies are waking up to the reality of new-found opportunities in the post quota regime, which began exactly a year ago. The Indian textile industry is now on an expansion spree. These were blamed for being slow in achieving economies of scales vis-ŕ-vis its Chinese counterpart. According to the latest data available with the Textile Commissioner, textile units have picked up nearly Rs 12,758 crore over the last three years under the Government of India’s Technology Upgradation Fund Scheme (TUF) which would see an addition of six million spindles and 30,000 shuttle looms this year. Though this industry has grown in the post-quota regime, Indian manufacturers still could not utilise the full potential of this changing scenario mainly because of inadequate manufacturing capacities. Mr. Sanjay Kumar Tayal, Chairman of Krishna Knitwear Tech Ltd (KKTL) said, “Most Indian manufacturers have not been able to attain economies of scale. Now, many of them are going on an expansion drive and the TUFS is facilitating their move”. Overseas buyers see India as a preferred supplier next to China. Mr. Siddhartha Rajagopal, Executive Director, TEXPROCIL adds, “But global buyers are keen to do business with suppliers who provide one-stop solutions and are able to provide the volumes that they need. Indian manufacturers are realising this”. Analysts tracking the sector also said that the US-China textile pact which restricts exports of 34 clothing and textile categories from China till 2008 would
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| work in the favour of the Indian textile industry. Mr. Vikram Suryawanshi, analyst with Karvy Stock Broking said, “The US-China pact will also allow India to strengthen its foothold in the export market. The TUF scheme has greatly helped Indian textile companies in increasing their production capabilities”. The problem is that not all firms see the rosy picture. Textiles companies which largely depend on exports are facing price pressure and that is hitting margins. “This can be countered only by cutting costs or increasing production. Our exports have come down by 25-30 per cent. We are concentrating on the domestic market,” says Mr. Vinod Arora, CMD, Aarvee Denims. Clearly, some see the TUFs, with a corpus of Rs 25,000 crore, a scheme floated by the government to help textile companies upgrade technology. The scheme provides a reimbursement of 5 % on the interest charged by the lending agency on a project of technology upgradation or on investments in common infrastructure. Under the scheme, the government has sanctioned 4,047 applications worth Rs 12,758 crore for expansion projects worth Rs 28,628 crore. The largest number of applications for funding has come from Gujarat (1,214). Tamil Nadu got around 1,174 applications and Maharashtra 317. Rajagopal said TUFS would help Indian textile players to strengthen their global operation as it would allow them to attain economies of scale. “Thanks to TUF, the annual turnover of Indian textile companies will increase by 36 per cent, our net profits by 8 per cent, and would help in increasing productivity by 40 per cent". 
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