The temperature is rising in the propaganda war about the discriminatory treatment meted out to large and integrated textile mills in India. Due to discriminatory taxation, large and composite mills find it difficult to compete with small mills, and have to increasingly rely on exports, where there is no tariff discrimination and quality and price competitiveness are valued. See story /news_detail.asp?art=10270

The Indian Cotton Mills Federation (ICMF), the umbrella organisation that represents the composite textile mills, has launched a high voltage press campaign warning against the negative impact of discriminatory taxation in the spinning sector.

In half page advertisements, it has argued how small mills, despite uneconomic and obsolete working practices, are able to outsell the products of composite mills. The advertisements claim that the small units have 60-70 per cent of the productivity, employ 0.4 man-hours per kg of 40s yarn versus 0.2 of the composite spinners, and manufacture lower quality products, yet make bumper profits on the back of a 20 per cent tax advantage on turnover.

The advertisements play on public fears of a Chinese trade invasion, saying that China's yarn industry could wipe India's out once the composite mills are forced to wind up, thus wiping off both sectors of Indian yarn production and severely affecting the textile sector, one India's major trades.

Lobbying of this sort has successfully influenced policy changes and taxation 'rationalisations' and the timing of this publicity blitz is especially fortuitous as the annual budget is just around the corner.

By Navroz Havewala