Faced with labour law inflexibilities and constraints such as high power tariffs and infrastructure bottlenecks, Indian textile players are looking to shift production base. They are looking at alternative locations such as Uzbekistan and Kazakhstan, in a bid to gain cost competitiveness in the global export markets.

Both countries, which are major cotton producers, are heavily marketing a bounty of fiscal sops to Indian textile firms, including heavy price discounts on cotton, power at nominal rates, 10-year tax holidays and superior infrastructure. Indian firms are evaluating investment opportunities in the light of the sops being offered, as well as the added advantage of proximity to key EU markets, industry players said.

Early movers

Spentex Industries Ltd is among the early movers in the Uzbek market, with several other players, including the Vardhaman Group, which is said to be evaluating investment options through both the greenfield and acquisition route. "Several textile units are evaluating options to shift their production base to new locations like Kazakhstan and Uzbekistan, where cotton is available at a 15-20 per cent discount, power at a low rate of around three cents (Rs 1.20) per unit as against nearly Rs 4 per unit in India, besides cheap gas and 10-year tax holidays," an industry representative said.

Uzbekistan has already announced plans to attract investments to the tune of $300 million from Indian textile companies over the next three years.

Contd. on page 2 .........