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Increasing textile mill closures

M D Dewani

The number of closed textile mills in the country reached the peak of 475 at the end of 2004-05, with the closure of seven more textile units during the previous 12 months. Among these idle mills, as many as 376 are spinning units and 99 composite ones.

These closures have idled as many as 96.46 lakh spindles, 88,160 rotors and 53,844 looms. They have also thrown out of employment as many as 327,000 workers without payment or any compensation in many cases. Assuming that each mill worker may have an average family of just four persons including himself, these closures have hit as many as about 13 lakh persons in the country. Many of them were hoping that when the land belonging to such textile companies come to be disposed of the authorities may ensure that mill-workers who had already lost their jobs because of the closure of these textile units, might be provided residential accommodation there. However, the way in which the authorities concerned seem inclined to dispose of the lands belonging to such closed textile mills, these jobless workers seem uncertain whether they will be able to realise such dreams of having residential tenements of their own for their family members. The adverse social impact of this has been tremendous Many idle mill workers have been forced to withdraw their children from schools as they cannot afford the school fees as well as the cost of books, etc. Many of them may be doing some petty work here and there as the authorities do not think that they owe any responsibility to retrain these idle workers and get them fresh jobs.

It is often argued that the private sector is the most efficient employer. However, if one looks at the ownership of closed mills, most of them belonged to the private sector. Out of 475 closed textile mills, 332 belonged to the private sector, 70 to the co-operative sector and 63 to the public sector. In other words, 69.82 per cent of the closed mills were owned by the private sector. There can be two reasons for this predominance of the private sector in the closed mills. One reason may be that as the overall number of private sector units in this industry has been much larger, the number closures can also be higher there. Another reason given by some is that the cooperative and public sector managements may hesitate to take the decision of closure, particularly when it comes in conflict with any rules or regulations. On the other hand some private sector managements have reportedly found a way out. They allowed the electricity bills to remain unpaid for quite some time. This led to discontinuance of power supply.

The textile mill thus came to a grinding halt. Its gates are closed. Many mill hands continue to visit the mill for a few days, but return disappointed on finding the mill gates closed. After sometime they give up this futile exercise, blaming their own fate. Many of them may then try to pick up some temporary odd jobs here and there, meanwhile trying to curtail their family budgets, by withdrawing the children from schools and by reducing the intake of food, even if this may affect the health of the family. It is often argued that the major textile strike in Mumbai by the trade union led by Dr Datta Samant in the 1980s was the main reason for the closure of so many textile mills. No doubt that prolonged strike very badly hit the industry, but one cannot ignore the fact that despite that strike the number of closed textile mills stood at just around 121 at the end of 1989-90. Even at the end of 1995-96 the number of closed mills stood at 171, but it continued to rise rapidly thereafter. So the reasons for the subsequent large-scale closure of textile mills may have to sought elsewhere.

The government policy remained unfavourable for the industry for several years. All manufacturing units normally require some renovation and moderisation. However many Indian textile managements ignored the urgent need to scrap their antiquated equipment and install new machines to keep their units in line with the world standards. Perhaps they took a dim view of the industry’s future and continued doing so even when reports started pouring in that China was expanding and modernising its textile industry at breakneck pace by installing the latest equipment to double its share in global business for textiles and apparels which was already as high as around 20 per cent.

Though the government introduced about five years ago a technology upgaradation scheme for the textile industry, the approach of the authorities implementing the scheme remained rigid as can be seen from the fact that disbursals of funds under the scheme over a period of five years amounted to just about Rs 7000 crore, against the target of Rs 25,000 crore. Also the concept of technological upgradation was allowed to be diluted by permitting imports of second-hand equipment which was thrown out by overseas entrepreneurs to modernise their units by installing the latest available equipment. The Indian textile industry seems to have missed the bus. The results are there for all to see.