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Volume 3 Issue 2 (December, 2010)

ISSN 0972-0901

Indian Textile Industry: Growth & Current Scenario


Mr. Tanange K. R. Assistant Professor, Department of Economics , Omkars Arts, Commerce & Science College, Gadhinglaj. Maharashtra ktanange@rediffmail.com

Introduction The Indian textile industry contributes a very important role in Indian economy. It is one of the leading textile industries in the world. Through it was predominately industry even a few year back but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much needed thrust to the Indian textile industry. This is now successfully become one of the largest industries in the world. Indian textile and clothing industry contributes about 4% of GDP and 14% of Industrial output and it is the second largest employer after agriculture, it is estimated that industry provides direct employment to 35 million people including substantial segments of weaker sections of society with a very low important intensity of about 1.5% only, it is the largest net foreign exchange earner in India, earning almost 35% of foreign exchange. Objectives: This paper is mainly focuses on the following objectives. i) To know Indias position in world textile economy. ii) To analyze the percentage growth rate in textile industry. iii) To examine the cotton and manmade spinning mills. iv) To compare the textile export with overall exports in India. v) To understand the supportive government policies of the textile economy in India. vi) To study problems of textile industry.
Facts of Indian Textile Industry

India is the second largest producer of cotton yarn. 4% contribution to GDP 2nd largest producer of cotton 14% contribution to industrial production 17% contribution to export earning Direct employment to more than 35 million people India is the largest in loomage Concluding handloom in the world and contributes about 61 percent to the world loomage. 8. Strong and Diverse raw material base 9. Second largest exporter of yarn 10. Globally competitive spinning industries. 11. Strong presence in entire textile value chain. Structure of Textile Industry: The industry is made up of two sectors namely well organized (i.e. textile mills) and unorganized or decentralized sector.

1. 2. 3. 4. 5. 6. 7.

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a) The textile industry consists of two categories in the organized sector. These are a) Spinning mills : Producing yarn only b) Composite mills : Engaged in the both spinning & weaving
Activities These mills can be again classified as

i) Course and Medium Composite mills and ii) Fine and superfine composite mills
The Textile Manufacturing Process

Statement of the Problem The Indian Textile Industry, Next only to agriculture in terms of production, export and employment. About one of Indias populations depends on it for their livelihood. The study of Indian textile Industry is necessary in the present area. So I have focused on Indias position in world textile economy, the performance growth rate in textile, development of spinning mills, trends in textile export etc. Data and Methodology The necessary data collected from secondary sources website like textile world, ministry of textile, world trade organization and other related websites, textile journals, books etc. In order to process the data various statistical tools such as percentage, trend analysis, mean, standard deviation are used. The period of present study analysis

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begins from 2002-03 to 2009-10. This period shows various changes in Indian textile industry. Indias Position in World Textile Economy The Indian textile sector is also well placed globally as indicated by the statistical figures mentioned in table-1. In terms of installed capacity of spinning machinery it ranks second after china while in weaving its ranks first in plain handlooms and fourth in the shuttle looms.
Table 1: Indias Position in world Textile Economy
Unit World India India as % of World Indias Rank in the world Country with first Rank

Installed Capacity A) Spining 2006 Spindles (Cotton System) Spindles (Wool) Spindles (Coon & Wool) Roters B) Weaving 2006 Shuttle Looms Shuttle Looms Handlooms Mn.No. Mn.No. Mn.No. Mn.No. 202.45 14.98 217.43 8.67 39.29 1.04 40.33 0.60 19.41 6.94 18.55 6.92 2 3 2 5 4 11 1 China China China Russia China China India

Mn.No. 4.44 2.01 45.27 Mn.No. 1.0 0.05 5.00 Mn.No. 4.6 3.90 84.78 Source : Ministry of Textile Website

Performance of the Textile Industry: The Indian textile industry is in a stronger position than it was in the last six decades. The industry which was growing at 3-4 percent during the last six decades has now accelerated to annual growth rate of 9-10 percent but various factors have effecting annual growth rate of Textile Industry, Global recession is one of them. The impact of the global and domestic economic slowdown directly affect the performance of the industry. While cost of raw materials and inputs remain in competitive in comparison with competing countries, the output and profitability of the industry have taken a nose dive in recent months. Index of industrial production (IIP) data has been released by the central statistical organization (CSO) shows a dismal picture of textile production as can be seen for the Products Table 2: Percentage Growth in Textiles 2005-06 2006-07 2007-08 8.5 14.8 4.3 0.0 16.3 0.5 6.7 7.8 11.5 -15.8 7.0 4.8 3.7 33.1 7.5 2008-09 -1.9 0.0 5.8 -10.0 0.2 2009-10 5.5 8.2 8.5 -24.4 3.7

1. Cotton Textiles

2. Wool, Silk & MMF Textiles 3. Textile Products (Including Garment) 4. Vegetable Fiber Textiles (Expect Cotten) Total Textile Section (1 + 2 + 3 + 4)

Table - 2 The fact, the decline in IIP for textile started from June of 2008 year onwards, after a reasonable growth of 6.1% in may 2008, the growth in the index declined to 4.5 in June, -1.8 in
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Jul-4.5 in August -4.9 in September -7.1 in October 2008 by now the cumulative position has become positive trend.

The cotton and manmade fiber mills in India The first Indian modernized successful mill was established in 1854 at Bombay by KGN Daber. Truly speaking this mill only laid the foundation stone of modern cotton industry in India. Since 1854 the number of cotton mill has been rapidly increasing. Indias five year plans proved a boom to cotton Industry. During the planning period this industry not only made remarkable development but also established mile stone in international markets Table No. 2 shows the cotton and manmade fiber mill in India from the period 2002 to 2010. There in an increasing trend of No. of spinning mill at the end of Nov. 2010, there were 1,947 mills in the country (1763 spining mills and 184 composite mills) There were 552 closed mills by the end of Nov. 2010.
Table 3: Cotton and Man Made fiber mills and closure position (Non SS1)
Year No. of Mills Spinning 31/03/02 31/03/03 31/03/04 31/03/05 31/03/06 31/03/07 31/03/08 31/03/09 31/03/10 31/11/10 Composite Total No. of Mills Closed Spinning Composite Total

1579 281 1860 295 126 421 (84.89) (15.11) (100.00) (70.07) (29.93) (100) 1599 276 1875 349 134 483 (85.28) (14.72) (100.00) (72.28) (27.74) (100) 1564 223 1787 374 94 468 (85.28) (12.48) (100.00) 79.91 (20.09) (100) 1564 223 1789 376 99 475 (87.52) (12.47) (100.00) (79.16) (20.84) (100) 1566 210 1780 387 96 483 (87.53) (11.80) (100.00) (80.12) (19.88) (100) 1570 200 1808 380 87 467 (88.20) (11.06) (100.00) (81.37) (18.63) (100) 1608 176 177 318 63 481 (88.94) (9.93) (100.00) (83.47) (16.53) (100) 1597 177 1830 340 65 405 (90.07) (9.67) (100.00) (83.95) (16.05) (100) 1653 180 1853 365 68 333 (90.33) (9.71) (100.00) (84.30) (15.70) (100) 1673 184 1947 471 81 552 ()90.29 (9.45) (100.00) (85.33) (14.67) (100) Source Ministry of Textile report 2010-11 Figures in bracket indicates percentage

Export of Textile Industry The Indian Textiles Industry is an export intensive industry and about one third of its total production is exported in some form or the other, through export friendly government policies and positive effort by the exporting community. The 50 percent
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exports of the entire textile are the readymade garments, most of which is cotton, readymade garments and accessories. This is followed by handicrafts, Silk Products, Woolen Textile, Jute and Coir. The exports of textiles and clothing till 2004-05 have grown at a moderate pace. However there was registered sharp growth in 2005-06. Till 31st December 2004, export were regulated by a Quota an agreement a foreign country would give a quota saying that they would by a particular amount of textile from India On 1st January, 2005 (Post Multi Fiber Agreement) provision of free trade was made. Now all doors are open, opportunities are numerous and the product should be sent to any country that is willing to trade. The volumes went up in the financial year 2005-06 and from the next financial year the volume of India rupee was devalued. Due to this amount of foreign exchange has been reduced in India. There was further loss of 15% to 20% due to recession that struck the world in the year 2008. After recession period, textile export increased from in US$ 153018.22 million in 2008-09 to US$ 178751.43 million 2009-10.
Table 4: Textile Exports Statistics Textile Export US$ Total Exports US$ Millions Millions 14026.72 83535.95 17520.07 103090.53 19146.04 19558.53 18519.96 22418.00 126262.68 143567.86 153018.22 178751.43

Financial Year 2004-05 2005-06 2006-07 2007-08 2008-03 2009-10

Percentage of Textile Exports 16.79% 16.99% 15.16% 13.62% 12.10% 12.54%

Source : Department of Commerce NIC & DGCI & S, Kolkata.

Supportive Government Policies of the Textile Economy in India The Government has taken several positive steps detailed below.

i) Integrated Textile Parks Scheme : In order to a world class infrastructure for textile units as well as facilitate the needs for them to meet international social and environmental standards. This scheme envisages the creation of textile parks in the public and private partnership mode currently 30 parts are in various stages of implementation and 50 more are planned for the next five year.

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ii) Technology Upgrading fund Scheme : To facilitate technological upgrading in the sector, the Government launched Tufs with effects from 1st April, 1999 for the five year initially and which has now been extended up to 2011-12. The scheme provides for reimbursement of 5 percentage interest paid on term loans for technological upgrading of textile machinery. iii) Technology Mission on Cotton : In February 2000, the government launched the Technology mission on cotton with the objective of addressing the issue of rising productivity, improving quality and reduction of contamination in cotton. iv) Fiscal Rationalization : Budget of 2006 shows that the excise duty on all manmade fibers and yarns was reduced from 16 percentages to 8 percentages. 2007s budget carried it forward by reducing the custom duties on polyester fibers and yarns from 10 percent to 7.5 percent. Problem of Textile Industry in India The cotton textile industry is reeling ender manifold problems; the major problems are the following 1. Highest incidence of sickness 2. The plant and machinery and technology by a number of units are absolute. 3. Government regulations like the obligation to produce controlled cloth are against the interest of the industry. 4. The cotton yield per hectare of land is very low in India. 5. Competition from the man made fabrics and synthetics. 6. India has been facing severe competition from other countries like Taiwan, South Koria, China and Japan. 7. The cotton textile industry is frequently plagued by labour problems. 8. The industry faces number of other problems like power cuts, infrastructural problems, lack of finance, exobitant rise in raw material prices and production costs etc.
Conclusions:

1.

2.

3.

4.

After the study, we arrive at the following conclusions The textile industry of India contributes nearly 14% of the total industrial production and also contributes around 3% to the GDP and currently generates employment for more than 35 million people of the country. The Indian Textile Industry is also globally well placed, in teams of installed capacity of spinning machinery, if ranks second after china, while weaving it ranks first in plain handlooms and fourth in the shuttle looms. Index of Industrial production shows the dismal picture of textile production the decline in IIP for textiles started from June 2008 year onwards by now the cumulative position has became positive trend. There is an increasing trend of number of spinning mills. At end of Nov. 2010 there were 1,947 mills in the country there were 552 closed mills by the end of Nov. 2010.

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5. The comparison of overall export to textile export to textile export, the period of 2005-06 there is downward trend for textile export. 6. The Government has taken several positive steps of the textile economy in Indian as like Integrated Textile Parks Shames, Tufs, Technology mission on cotton, fiscal rationalization etc.
Refinances

1. Ruddar Datt, KPM Sundharam, Indian Economy P:558, S. Chand & Company Ltd, New Delhi, 2006. 2. S. K. Misra & V. K. Puri, Indian Economy P.450, Himalaya Publishing House, Delhi, 2006. 3. Francis Cherunilam, Industral Economies, Indian Perspective p.457, Himalaya Publishing House, 1994. 4. Dr. Anupam Agrawal, Pratiyogita Darpan, Indian Economy P.110, Upkar Prakashan, Agra 2008. 5. Economic Survey, 2009-10 6. Textile Review Nov., 2009, April 2010, Oct. 2010. 7. www.indianbusiness.nic.in 8. www.textilecommittee.com 9. www.business.mapsofindia.com 10. www.toxmin.nic.in 11. www.texprocil.com 12. www.economywatch.com 13. www.textilereview.com

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