Home > Edit > Story

Structural shift in Indian textile industry

P Nayak

Cotton forms the major dominant sector of the textile industry. Cotton also plays a vital role in the Indian economy since it directly sustains the livelihood of about 60 million people. Currently, India is the third largest producer of cotton contributing about 15 per cent of world cotton production, accounting for 58 per cent of the total fibre consumption. India is recognised as the cradle of cotton industry since it has been the producer of the most beautiful cotton fabrics. There has been an impressive growth in the cotton cloth over the first decade. Cotton cloth production was at 8368 million square metres in 1981, which has increase to 13936 million square metres in 1990. Thus there is an increase of 66 per cent in over the first decade. In the second decade also production increased from 15431 million square metres to 18989 million square metres but at a decreasing rate.

The textile industry is considered as a demand determined industry. So consumption and production can be easily linked up. In the first decade, cotton fabric holds the major market share for consumption but in decreasing rate and in the second decade the market consumption has been taken over by man-made/blended textiles. But if we link production with consumption, we get some interesting picture. In spite of decreasing share of consumption in the market, the production increases in both the decades. The prime cause of this is the continuous rise in the demand for exports of cotton cloth in the international market. The cotton textile export has increased from Rs 284 crore in 1981 to Rs 16,011 crore in 2000. In case of man-made/blended textiles the picture is somewhat different. Over the two decades, production has increased at a higher rate. In the first decade, production increases from 2620 million square metres to 6662 million square metres and in case of second decade production has increased from 7497 million square metres to 19638 million square metres. So there is an impressive growth in production but the more significant growth occurs in the second decade. In case of consumption in both the decades it shows the increase in consumption. So production and consumption increase in the same direction. Demand determined nature of the industry has been again proved by this fact.

Sectoral shift in production

Mill sector

The mill sector production is considered as an organised mode of production and at the same time it gives quality products from raw material to finished products. Only composite units can produce quantities of fabrics of consistent quality to meet the fabric requirements. But throughout the two decades a large number of composite mills have closed down due to sickness and many have been taken over by the Central government or the state governments. The reasons for sickness are high wage cost, high competition from powerloom, high cost of machines, high overhead cost, lack of raw materials and poor quality of power supply. In 1981, there were 415 spinning mills and 278 composite mills, which increased to 1565 and 281, respectively in 2001. Over the two decades, 295 spinning and 126 composite mills were closed. Rate of growth of closure of spinning and composite mills are 5% and 3% respectively. Production of composite cotton was having 36 per cent share in 1980, which has declined to 135 in 1990.

Powerloom sector

The growth of powerloom sector is a major breakthrough in the development of the Indian textile sector. The powerloom sector is expanding its potential by its shrinking cost advantage. There has been tremendous growth in cloth production by this sector over the last two decades. The number of powerlooms has also been doubled in the last 12 to 13 years. This sector shows its large presence in the Indian textile sector by contributing 60% to the cloth production. Its market share in the total cloth production was 38.6 per cent in 1981, which has been increased to 55% in 1990 and in terms of quantity it was accounted for 4802 million square metres cloth production in 1981 and 11632 million square metres in 1990. The analysis of growth pattern shows that the rate of growth of powerloom cloth production is 3.62 per cent in the first decade of 1981 to 1990. There is huge demand for powerloom cloth. In response to this, there is a substantial rise in production because supply is price responsive.

Being a small unorganised units powerlooms are not able to supply at large volume at short notice and the quality of the powerloom fabrics are also not assured. For the production of readymade garments, mostly powerloom sector is used. The sector is at a very low level of technology. In the liberalised economy, quantity is the need of the hour. The sector needs to be upgraded to give adequate support to the textiles industry for its growth sustenance.

Handloom sector

The India’s handloom sector has a glorious tradition of excellence and craftsmanship dates back to our Vedic period, nourished by creative and innovative minds of craftsmen spread all over this vast country. The astonishing varieties of handloom products with its rich colour and design reflect the ethnic diversity of our vast cultural tradition.

The handloom industry has shown reasonable growth. This sector has a large presence in the textile industry. It contributes 25 per cent market share in cloth production in 1980, which has been declined to 18.75 in 1990. But the production of handloom sector increases from 3109 million square meters in 1981 to 3924 million square meters in 1990. So despite the rise in production by the handloom sector, its market share has declined from 25% in 1981 to 19% in 1990. It is because of a significant growth of powerloom sector in the whole textile industry. The rate of growth of handloom sector is 1.7% for the decade of 1981 to 1990. In the second decade, production has increased from 4295 million square metre in 1991 to 7352 million square metre in 2000 an average growth rate of - 1.6%.

Hosiery sector

The hosiery sector is increasingly becoming popular among the consumers. This sector makes us to feel its presence from 1990 onwards. That means it comes in a big way in the last decade. The knitwear and hosiery industry in India has made considerable progress in the past few years and has good potential in the future too due to its cost advantage and comfort. This sector is showing its large presence by contributing 17% to the total cloth production. It is another most prominent sector for catering to the needs of both domestic as well as export market. It has already made dents as an alternative technology for conversion of yarn to fabrics. This sector comes up in a big way after 1989. Some of the places like Tirupur, Bangalore, Chennai, Delhi and Ludhiana are names synonymous to the knitwear industry. The production of hosiery sector has increased from 2375 million square meters in 1990 to 6277 million square metres in 2000 with a market share of 16% in the total cloth production in 2000 as against 11% in 1990. It has got its place after handlooms in the textile industry.

With the advent of new technology in textiles, composite mills have become redundant. As new technology is size neutral, the big size of composite units is not necessary and as each process, namely, spinning, weaving and processing is able to survive independently. That is composite units should gradually get decentralised into small size production units. And as the powerloom and handloom sectors have the advantages of decentralisation and employment intensity respectively, these two sectors should be supported against sectors.

It can be said that an economy like ours should always encourage a sector that has labour intensive technology and decentralised character. From this point of view, both handlooms and powerlooms have got important place in the economy. There are provisions for handlooms and powerlooms in the textile policy of 1985. It suggested the preservation of the distinct and unique role of the handloom sector as also ensuring higher earnings for the handloom weavers and improvement in their working conditions. There is also equal treatment for powerlooms and composite mills to enable them to compete on the basis of their inherent strengths and capabilities. However, these sectors have not yet fulfilled the expectations of the planners so far. For example, powerlooms were encouraged by the Planning Commission with two objectives: (a) Upgradation of handloom weavers and decentralisation of the textile sector.

It is well known that the powerlooms have not fulfilled either of these objectives. Powerlooms are concentrated in few centres and they have not upgraded the skills of the handloom weavers in any significant way. In the same way the handloom sector has also not expected to generate large scale of employment and is not capable of ensuring fair levels of living to its workers. These sectors still have the basic advantages. What is needed is that these sectors should be controlled (powerlooms) and be helped by appropriate measures (handlooms).

Readymade garment preference and manufacturing

Growth of the garment sector is the mantra for development of the textile sector. Development of this sector must have some demand effect on the forward segments of weaving, knitting and processing also. India has completed more than 50 years of its independence. The analysis of the growth pattern of the different sectors of the industry during the last five decades of post-independence era reveals that the growth of the industry during the first two decades after the independence has been gradual, though lower and growth has been considerably slower during the third decade. The peak level of its growth, however, been reached during fifth decade i.e. in the last decade. In the era of globalisation when the Indian market has been opened, all the textile items have been placed under Open General License and tariff barriers are being reduced in line with the WTO obligations more opportunities are there for the garment sector. Liberalisation means restriction free world with a fare competition. The textile world will be opened to the Indian industry. The market will be more competitive because the world will be freed to the other countries also. The benefit to the Indian textile sector depends on as to how it will be able to capitalise the opportunities. The sector has shown an impressive growth over the years. RMG sector has the potential to act as an engine of growth for the development of the textiles sector.

(The author is director (marketing) Textiles Committee)