Monday, March 8, 2010

The Indian textile industry

The Indian textile industry
The Indian textile industry is one of the largest in the world with a massive raw material and textiles manufacturing base. Our economy is largely dependent on the textile manufacturing and trade in addition to other major industries. About 27% of the foreign exchange earnings are on account of export of textiles and clothing alone. The textiles and clothing sector contributes about 14% to the industrial production and 3% to the gross domestic product of the country. Around 8% of the total excise revenue collection is contributed by the textile industry. So much so, the textile industry accounts for as large as 21% of the total employment generated in the economy. Around 35 million people are directly employed in the textile manufacturing activities. Indirect employment including the manpower engaged in agricultural based raw-material production like cotton and related trade and handling could be stated to be around another 60 million.
Organization of the textile industry:

Unlike other major textile-producing countries, India’s textile industry is comprised mostly of small-scale, nonintegrated spinning, weaving, finishing, and apparel-making enterprises.
This unique industry structure is primarily a legacy of government policies that have promoted labor-intensive, small-scale operations and discriminated against larger scale firms.

 Overview of the structure of Indian textile industry

• Composite Mills. Relatively large-scale mills that integrate spinning, weaving and, sometimes, fabric finishing are common in other major textile-producing countries. In India, however, these types of mills now account for about only 3 percent of output in the textile sector. About 276 composite mills are now operating in India, most owned by the public sector and many deemed financially “sick.”
Spinning. Spinning is the process of converting cotton or manmade fiber into yarn to be used for weaving and knitting. Largely due to deregulation beginning in the mid-1980s, spinning is the most consolidated and technically efficient sector in India’s textile industry. Average plant size remains small, however, and technology outdated, relative to other major producers.
Weaving and Knitting. Weaving and knitting converts cotton, manmade, or blended yarns into woven or knitted fabrics. India’s weaving and knitting sector remains highly fragmented, small-scale, and labor intensive.
This sector consists of about 3.9 million handlooms, 380,000 “power loom” enterprises that operate about 1.7 million looms, and just 137,000 looms in the various composite mills. “Power looms” are small firms, with an average loom capacity of four to five owned by independent entrepreneurs or weavers. Modern shuttle less looms account for less than 1 percent of loom capacity.
Fabric Finishing. Fabric finishing (also referred to as processing), which includes dyeing, printing, and other cloth preparation prior to the manufacture of clothing, is also dominated by a large number of independent, small scale enterprises. Overall, about 2,300 processors are operating in India, including about 2,100 independent units and 200 units that are integrated with spinning, weaving, or knitting units.
• Clothing. Apparel is produced by about 77,000 small-scale units classified as domestic manufacturers, manufacturer exporters, and fabricators (subcontractors).

Public and Private sectors
Public Sector is an area where enterprises/ organization, investment and management of it are controlled entirely by Government. Majority of Board of Directors are Govt. Nominees/officials
Where as in private sector Manufacturing units or establishment has control entirely by private individuals. Their boards of directors do not include any govt officials, except one or two members from lending financial institutions.

Major Public and Private Sectors of textile industries

Cotton marketing (seed cotton and cotton lint) in India is predominantly handled by the private sector (traders and cooperatives). Although cotton trade is largely private, it is mostly regulated by the GOI and State governments. There are three groups in the marketing of cotton: private traders, state level cooperatives, and the Cotton Corporation of India (CCI).
The spinning sector is comprised of composite mills and independent mills. In 1994-95, production capacity in the spinning industry reached 30 million spindles, 70% of which was in the private sector.

Centralized and decentralized sectors
The Cotton/ Man-made fiber
The Cotton/ Man-made fiber textile industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on 31.03.2008, there were 1773 cotton/ man-made fiber textile mills (non-SSI) in the country with an installed capacity of 35.01 million spindles,
 4, 61,000 rotors and 56,000 looms.
One of the most important segments of the value chain of the textile production that needs immediate and focused attention to provide the ‘competitive edge’ to the value added textile products is the ‘weaving segment’. The Cloth production in 2008-09 is 54966 mn. sq. mtrs.
The weaving activity is predominantly concentrated in the decentralized sector and thus suffers from attendant disadvantages and handicaps in terms of low quality and technology, limited ability to absorb technology up gradation etc. normally suffered by any activity carried out in the decentralized sector.
The two reasons for concentration of weaving activity in the decentralized sector are: (a) govt. policies restricting the capacities of organized industry in the pre-liberalization era and fiscal policies prescribed by the Govt. and (b) somewhat inward looking policies of the organized industry. Due to the Govt.’s restrictive policy in the initial years after independence, the mill sector was not allowed to expand and its growth was stymied.
Power loom
The decentralized power loom sector plays an important role in Indian Textile and Clothing Industry. The power loom industry produces a wide variety of cloth, both greys as well as processed. Production of cloth as well as generation of employment has been rapidly increasing in the power loom sector. There are 21.55 lakh power looms in the country as on 31st December, 2008 distributed over approximately 4.82 lakh units. The power loom sector contributes about 62% of the total cloth production of the country, and provides employment to about 54.00 lakh persons. More than 60% of the cloth meant for export comes from the power loom sector. The estimated number of power looms in the decentralized sector in the country till December, 2008 was 21, 58,362.
There are 21.55 lakh power looms in the country as on 31st December, 2008 distributed over approximately 4.82 lakh units. The power loom sector contributes about 62% of the total cloth production of the country, and provides employment to about 54.00 lakh persons. More than 60% of the cloth meant for export comes from the power loom sector.

Growth in the Powerloom Sector

The industry will have to prepare itself to face the challenges on account of globalization of trade and consequent competition, in order to survive and expand its market share.
The working conditions in the decentralized power loom sector are appalling. Weavers have no job protection, and wage rates are, by and large, pretty low. The technology level of the sector is also low as it is catering primarily to the quality insensitive lower end of the domestic market. Most of the weavers operate on plain looms obviating the need for specialised training. Furthermore, in many places power loom weaving is a family tradition. From a very young age such weavers
become acquainted with the operation of the looms and weaving activity. Modernization by way of installing modern looms is the need of the hour. However, the existing premises of powerloom weavers are not adequate to accommodate modern automatic/shuttles looms and such lack of appropriate space has been one of the reasons for slow pace of modernization.
The co-operatives
The co-operatives have been found to be the best form of institutional mechanism to carry and convey the Govt. assistance to the targeted people. The cooperative structure as such has served reasonably well. It was working admirably as long as its role was limited to input supply and output marketing. Notwithstanding the several steps taken, the coverage of weavers by co-operatives has been stagnant at
around 25 percent. The co-operative sector too, over the years, is becoming increasingly sick. Along with the co-operatives, other forms of organizations of weavers need to be recognised to carry and receive the govt. assistance.
Cooperative spinning mills

With a total installed capacity of 3.5 mn. Spindles and 18 thousand rotors spread over 150 mills; co-operative spinning mills constitute a significant component of the spinning sector. With the exception of a few units, the performance of cooperative spinning mills is in general found to be poor. Due to the poor commercial and operational efficiency, most of the cooperative mills have been incurring huge losses year after year. Poor management is another major cause of their poor performance. The wage cost relative to sales turnover in such industries is very high-in excess of 20 percent – as against the industry average of 10 percent.
Co-operative weaving sector
Though the khadi and Handloom industry is very much dependent on cooperatives, but these cooperatives are mostly dormant.
The financing is done by KVIC and cooperatives in Government sector.
The turnover runs into crores of rupees in private sector, in the traditional brands which are popular, but limited to lakhs only in Government sector. Most of the visitors to Government Khadi and Handloom outlets were middleclass people to avail the rebate offers in festival season, where as private Khadi and handloom outlets attracted high income groups also, in higher number.

The  Handloom sector has a very characteristic supply chain which serves the low and the high ends of the value chain, as it produces and supplies both mass consumption products for use in countryside as well as niche products for urban & exports markets
·        Handloom sector produces, primarily, textiles with geographical depiction like sungudi cotton and artificial silk sarees in Chinnalapatti, Aruppukottai areas and original silk sarees in kanchipuram, Thiribuvanam areas in small batches.
·        More than 82 per cent of Handloom production is made by using cotton fiber through co-operatives. Handloom production is mostly pastoral employing about 10 million, mostly, household weavers and revolves around master-weavers who supply designs, stuff and often the loom.
·        The greatest advantage of this sector has been identified as the inheritance of skills and capacities to the young next generation weavers, which is beyond the realm and reach of any modern training and educational institution
·        One biggest advantage of this sector at this epoch is; Handlooms are Eco-friendly; without any energy consumption. A handloom is a self-governing technology.

There are over 3.6 million handlooms spread in various parts of the country. The majority of the handlooms are in the state of Tamil Nadu (600,000), Andhra Pradesh (550,000),Assam (500,000), Uttar Pradesh (500,000), West Bengal (300,000), and Haryana (150,000). It is estimated that this sector employs 6-7 million people. This sector caters to the fabric requirements of the rural population and in many areas also specializes in sarees (a woman's garment consisting of a long piece of lightweight material wrapped around the body and over the shoulder). Production in the handloom sector recorded a figure of 6947 million sq. meters in the year 2007-08, which is about 26.47% over the production figure of 5493 million sq. meters recorded in the year 2003-04. During 2008-09, production in the handloom sector is reported to be 6,677 million sq. meters.
The major reason for this decline is that the sector is unable to compete with the powerloom sector for mass consumption products such as sarees, shirts, suits, and dress materials. The GOI, through various schemes, has attempted to protect the handloom sector as it is labor intensive and also works as a supplementary wage mechanism in rural areas.
The Handloom industry mainly exports fabrics, bed linen, table linen, toilet and kitchen linen, towels, curtains, cushions and pads, tapestries and upholstery's, carpets and floor coverings, etc. The Handloom industry has adopted various measures and techniques to provide high quality and eco-friendly products to the world market.

In the world of handlooms, there are Madras checks from Tamil Nadu, ikats from Andhra and Orissa, tie and dye from Gujarat and Rajasthan; brocades from Banaras, jacquards form Uttar Pradesh. Daccai from West Bengal, and phulkari from Punjab.
The Surat tanchoi based on a technique of satin weaving with the extra weft floats that are absorbed in the fabric itself has been reproduced in Varanasi. Besides its own traditional weaves, there is hardly any style of weaving that Varanasi cannot reproduce. The Baluchar technique of plain woven fabric brocaded with untwisted silk thread, which began in Murshidabad district of West Bengal, has taken root in Varanasi. Their craftsmen have also borrowed the jamdani technique.
In the deportment of Woolen textiles, Woolen weaves are no less subtle. The Kashmiri weaver is known the world over for his Pashmina and Shahtoosh shawls. The shawls are unbelievably light and warm.
The states of Kashmir and Karnataka are known for their mulberry silk. India is the only country in the world producing all four commercially known silks - mulberry, tasser (tussore), eri and muga. Now gaining immense popularity in the U.S.A. and Europe  Assam is the home of eri and muga silk. Muga is durable and its natural tones of golden yellow and rare sheen become more lustrous with every wash. The ikat technique in India is commonly known as patola in Gujarat, bandha in Orissa, pagdu bandhu, buddavasi and chitki in Andhra Pradesh.

Textile exports play a crucial role in the overall exports from India. With the objective of increasing exports to US $ 50 billion by 2010 from the present level of US $ 11 billion.Clothing sector contributes significantly to employment generation and export earnings besides meeting the domestic demand for clothing. Clothing exports constitute 40 percent of the exports of textile products. Direct employment in the apparel industry was estimated by IIFT in 1992-93 to be about 2 mn. With an estimated 68.7 percent employed by fabricating units, 21.8 percent by domestic manufacturers and 9.5 percent by exporters. Readymade Garments accounts for almost 42% of the total textiles exports. Apparel and cotton textiles products together contribute nearly72% of the total textiles exports. India’s textiles products, including handlooms and handicrafts, are exported to more than a hundred countries. However, the USA and the EU, account for about two-third of India's textiles exports. The other major export destinations are Canada, U.A.E., Japan, Saudi Arabia, Republic of Korea, Bangladesh, Turkey, etc.


The import of fiber, yarn and fabrics, made ups , RMG and other textile decreased by 29%, 15% and 13% respectively in terms of US$ during. 2009-10. The overall
imports of textile decreased by 18% in terms of US$.
Total textiles imports were of the order of US$ 3.33 billion (Rs.13418 crore). 49% of this was on account of import of yarn and fabrics and 45% was on account of import of raw material and semi-raw-material. The imports have increased by 17.39% during 2007-08 in dollar terms. However, import of textiles as percentage of total imports has been going down steadily and comprised only 1.39% in 2007-08. During April-December, 2008, the textiles imports amounted to US$ 2.78 billion registering an increase of 12.64% over the corresponding period of previous

Generally Imported textile articles
·        Raw Jute
·        Raw Silk
·         Raw Wool
·        Raw Cotton
·         Synthetic & regenerated fibers
·        Silk yarn & fabrics
·         Woolen yarn & fabrics
·        Cotton yarn & fabrics
·        Man made filament/ spun yarn
·        Readymade garments (woven & knit.)
·         Woolen & cotton rags etc
·        Other textile yarn, fabrics, Made-up articles



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