The power loom sector in India makes up 80 per cent of woven fabric production, 60 per cent of total fabric production and provides direct jobs to 63 lakh people especially people below the poverty line, rural masses and women. Power loom sector meets the clothing needs of entire population in the country apart from fetching sizable forex earnings. Hence, competitiveness across the value chain depends on the performance of the power loom sector.
In the last seven years, the power loom sector has been facing numerous challenges due to sluggish global and domestic market conditions. Though capacity has increased by 12 per cent in the last seven years, fabric production went up only 2.4 per cent. High production costs, labor shortages, transport costs, five state VAT, mass closure of dyeing units, exorbitant cost of machines and manmade fibers, hank yarn obligations are some of the major challenges.
Also the GST Plus agreement signed by Pakistan and EU in 2013-14 has had a huge impact on India’s power loom fabric exports with 9.6 per cent duty advantage given to Pakistan. Meanwhile, subsidy schemes have been devised for the sector including TUFS and subsidy for conversion of non-automatic looms, semi-automatic looms.