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Report | October 2016

Textile centres in North: Strength Vs Weakness

Competition, rising wage & power costs, and the low profile status of SSI are stifling the potentials of major textile centres in the northern India, find Manish Mittal and Dr Rajeev Johari, in a selective survey of three such centres of Amritsar, Ludhiana and Panipat.

Indian textile industry contributes about 11 per cent to industrial production, 14 per cent to the manufacturing sector, 4 per cent to the GDP and 12 per cent to the country’s total export earnings. It provides direct employment to over 35 million people, the second largest provider of employment after agriculture. Besides, another 54.85 million people are engaged in its allied activities. The fundamental strength of this industry flows from its strong production base of wide range of fibres / yarns from natural fibres like cotton, jute, silk and wool to synthetic / man-made fibres like polyester, viscose, nylon and acrylic. We can just track the strong multi-fibre base by highlighting the following important positions reckon by this industry across globe are:

• Cotton: Second largest cotton and cellulosic fibres producing country in the world.
• Silk: India is the second largest producer of silk and contributes about 18 per cent to the total world raw silk production.
• Wool: India has the 3rd largest sheep population in the world, having 6.15 crores sheep, producing 45 million kg of raw wool, and accounting for 3.1 per cent of total world wool production. India ranks 6th amongst clean wool producer countries and 9th amongst greasy wool producers.
• Man-made fibres: The fourth largest in synthetic fibres/yarns globally.
• Jute: India is the largest producer and second largest exporter of jute goods.

The Indian textile industry is pre-dominantly cotton-based with 70 per cent of the raw material consumed being cotton. It is composed of four major sectors, namely: The mill made, also called the organised sector; the handloom and power loom sector both being classified as decentralised sectors; the hosiery; and the garment sector.

Amritsar Textile Centre

The business in Amritsar started around 300 years later when Maharaja Ranjit Singh established some weavers here in Amritsar. Before the partition of Pakistan, the cloth was sold in Kabul, Iraq, etc. After the partition, trade with this region became difficult. Industry started growing in Surat (Gujarat) as well as Amritsar (after the partition) because cotton is mainly available in Ahmedabad. Looms get shifted to Surat and continued in Amritsar also. Firstly, dyeing started and later on printing developed in Amritsar. The business is going on in Amritsar because cotton is available from Bhatinda Region and Yarn Plants are also there at Bhatinda.

Ludhiana Textile Centre

Ludhiana was a very small town after partition.

People started migrating from Pakistan and started this knitting industry by using flat machines. It cost Rs 1,000 (approximately) in those times and was sufficient for managing their livelihood. Within a short time, more and more people chose this business. Now Ludhiana is expanding to a point where only the sky is the limit.

Today more than 80 per cent of hosiery units existing Ludhiana and it is the major town for small scale industrial units in Punjab and the largest town of Punjab for industrial activities; it is called the Manchester of Punjab.

It has full-fledged infrastructure for successful industry. About four or five lakh labour has migrated themselves from provisions outside the Punjab particularly from Bihar and Uttar Pradesh. The future of hosiery industry in Ludhiana is very bright. A lot of small-scale units exist in Ludhiana.

Panipat Textile Centre

Panipat was a handloom centre when small weavers used to stay here. With the passage of time the business started developing. As Panipat is located very near the capital of the country, New Delhi, the market for selling the products manufactured in Panipat was available. Also, as Panipat is near Punjab and is in Haryana (a producer of cotton) there was no problem of raw material availability. As a result of these factors the business in Panipat started and Panipat became the central place for cotton fabric production.

The research

Amritsar, Ludhiana and Panipat—the three major textile centres in the Northern part of India—are strongholds in their respective areas of knitting, hosiery and carpets and industrial yarns. But they share common problems like high cost of power, lack of modernisation and marketing drive, stifling SSI environment and inconsistent policies of the State Governments.

The Indian textile industry, which is specialised in the manufacture of various types of cloth, is scattered almost throughout the country. There is an imperative need to reviewand understand the main elements of textile industry and problems faced by select textile centres of northern India. The authors who visited these select textile centres saw the challenges faced by them, which include the need for technology upgradation, marketing of products, housing accommodation for labourers, power tariff, inconsistent sales tax policies, low standard raw material, etc. The textile centres seek assistance from the Union Government for the problems faced by the textile industry as a whole. The textile industry in India produces a wide range of fabrics. The textile business, which is spread throughout the country, meets the local fabric and export requirements. Different textile centres are specialise in different types of fabrics. A particular centre specialises in a particular type of fabrics because of different environmental conditions, type of raw materials available, skills available, culture of the region, etc.

Three textile centres, i.e., Amritsar, Ludhiana and Panipat, were selected on a random basis from a total of seven textile centres in North India to review marketing environment. The visit was organised to select textile centres to get the information using the survey method by adopting interview and questionnaire techniques. Conclusions are drawn on the basis of information collected, and problems faced by manufacturers are highlighted and a few recommendations are given on the basis of inferences drawn.

The textile industry of India is scattered all over the country and is one of the major sources of foreign exchange. There is a need: to understand the marketing environment of textile industry so that traders, stakeholders, investors, have a fair idea about the marketing environment of the textile industry of Northern India; to know the problems faced by the textile industry of Northern India.

Objectives of the study

1. To find out the types of products manufactured in the textile industry of Northern India.
2. To find out the suppliers of raw materials for the industry.
3. To know the major manufacturers in North Indian textile industry.
4. To find out the competitors in the Northern India textile industry.
5. To explore the channels of distribution for different products manufactured in the North Indian textile industry. 6. To find out the end users of products manufactured in the North Indian textile industry.
7. To explore the problems faced by the North Indian textile industry.

Research Questions

1. What types of products are manufactured in the North Indian textile industry?
2. Who are the suppliers of raw materials for the North Indian textile industry?
3. Who are the major manufacturers in the North Indian textile industry?
4. Who are the competitors to the North Indian textile industry?
5. Which channel is used by manufacturers to reach the end users in the North Indian textile industry?
6. Who are the end users/consumers of the products manufactured in the Northern India textile industry?
7. What types of problems are faced by the North Indian textile industry

Methodology

Primary data collection: The survey method was adopted to meet the requirements of the study. The survey was conducted at three textile centres. Scheduling technique was used to collect the required data. A schedule comprising ten questions was designed. Population includes the candidates who have done business in a particular textile centre for at least ten years and have been in regular touch with business for the same period.

Non-probability sampling method was adopted to select the members from the population. Purposive sampling was used to get the required data. List of population members was prepared for each textile centre. Members were selected from the list of population.

One candidate/member was interviewed from the population in each textile centre.

Members were contacted personally by the researchers. Primary data were collected by conducting personal interviews and follow-up telephone interviews of members selected. Secondary data was collected from the Fabric Source of India and the Ministry of Textiles.

The instrumentation used in the study was adopted from Marketing Management by Philip Kotler (Kotler, 1991) i.e., main actors and forces in modern marketing systems.

The main actors and forces as shown in Figure 2.1 are suppliers of raw materials, marketers (manufacturers and sellers of finished goods), competitors (other towns, cities are areas competing with particular textile centre in this case), marketing intermediaries (channels used by manufacturers and sellers to make the finished goods available to end users) and end user markets for the items/products manufactured in the textile centres.

Findings: Amritsar Textile Centre

Types of clothes manufactured in Amrtisar are woollen worsted and blended fabrics – suitings, tweeds, surgies, blazers, etc; blankets shawls; and corduroys, shirtings, etc. Knitted cloth is manufactured in Amritsar. The word ‘knit’ means to make a garment from yarn formed into interlocking loops.

Suppliers of raw materials: Wools are mostly imported from Australia, New Zealand, Argentina, Russia, etc. Yarn – synthetic and woollen yarn is mostly available from Indian manufacturers like JCT, Modicorn, Century Enpa, to name a few.

List of major manufacturers in Amritsar are Birla VXL. Unit – OCM Woollen Mills; Simplex Woollen Mills; Esmma Woollen Mills, Putligarh; and Gaurav Woollen Mills.

Competitors for Amritsar centre are Ludhiana, Panipat, Surat, Ahmedabad, Hyderabad textile centres, etc. Marketing intermediaries include wholesalers, brokers, and retailers.

End-user market: Woollen worsted fabrics are mostly sold in northern India; synthetic & blended fabrics are sold almost all over India; export is done to the USA, UAE, Canada, Russia, France, etc.

Industrial findings: Most of the machines in Amritsar are warp knitting machines.

The textile market of Amritsar is going through a downward phase for many reasons such as location disadvantage, heavy effect of competition among local manufacture, blanket manufacturing is largely shifted to Panipat and labour is costly at Amritsar so business is shifting to Uttar Pradesh.

The export market is highly competitive, particularly with regards to the quality of the product, rise in prices and time-bound deliveries. However, both the organised and unorganised sectors are quiet competent to meet export competition.

Problems faced: Major part of small scale units need upgradation of technology and adoption of latest technique of R&D without which it is not possible for others to meet the above criteria.

Findings: Ludhiana Textile Centre

Ludhiana is one of the major producers of hosiery goods in India. It has the biggest market for hosiery products. Types of cloths manufactured in Ludhiana Textile Centre are knitwear hosiery, cardigans, pullovers and sweaters. The textile industry of Ludhiana mainly produces hosiery items. Ready-made garments are manufactured from hosiery cloth. RIB cloth is also manufactured from hosiery cloth. RIB is used for manufacturing other items as t-shirts, casual wear, shorts, undergarments etc.

Suppliers of Raw Materials: Australian Wool, Korean Wool and Switzerland Wool are used to manufacture woollen yarn. Wool is also purchased from local manufacturers. Cotton yarn as well as wool top is imported to manufacture woollen yarn. Major manufacturers are Oswall Woollen Mills Ltd, R & Oswall Hosiery Mills, Vardhman Spinning & General Mills Limited, Oriental Dying & Finishing Mills Limited, Punjab Wool Combers Limited, Malwa Cotton Spinning Mills, Vardhman Polytex, manufacturers of Cashmillon & Hosiery Yarn, Duke Fashions Private, Bhandari Hosiery and Duke Hosiery Mills.

End user market: Market for hosiery products manufactured in Ludhiana is spread throughout India. Ludhiana is the major exporter of woollen hosiery to Russia. The Russian Government has empaneled 20 exporters in Ludhiana for supply of woollen products. Ludhiana is also the major exporter to European Countries, USA and UK. Industrial findings: Hosiery cloth is manufactured on interlocking machines. Circular knitting machines (run on power) and flat machines (run manually) are used for manufacturing hosiery cloth. Hosiery is successful in Ludhiana because: raw material is produced here, labour is available, international buyer is at Ludhiana, sufficient infrastructure for the unit is available, finance is available, and the future of hosiery industry in Ludhiana is very bright.

Problems faced: Marketing of products manufactured is a big problem for the hosiery industry of Ludhiana.

Findings: Panipat Textile Centre

Types of products manufactured in Panipat are Dari, Throu, Bathmat, carpet, curtain cloth, sofa cover cloth, Khes, bed sheets and blankets.

Raw material suppliers: About 90 per cent yarn is purchased from local manufacturers and 10 per cent is purchased from outside sources. Used cloths imported from western countries are used for manufacturing blankets. Major manufacturers include Bharat Overseas, ESS ESS Exports, Reena Handloom Industries, Shant Handloom Industries Private Ltd and Mahalakshmi Spinners Limited.

Panipat is the major manufacturer of the items mentioned above. These items are also manufactured in some areas of Uttar Pradesh as Sitapur, Ghaziabad, Moradnagar, Meerut, etc. Amritsar is competitor for blankets. Marketing intermediaries are different for different firms. Agents help in dealing with buyers (mostly) in New Delhi. Export parties are there to help in exporting the products. End-user market: End-user market for the products manufactured in Panipat is mainly located at Germany, USA and South Africa. South India is the main buyer of sofa cloth and curtain cloth.

Industrial findings: Power loom as well as handloom sector is working in Panipat. These items are manufactured using Warp as well as Warf knitting. Popular Sofa Cloth is known as DCM. Popular curtain cloth is known as USA. The quality check of Sofa as well as curtain cloth is on the basis of weight of the cloth. For example: 230 gm quality, 280 gm quality, etc. The heavier the weight; better shall be its quality. Sofa and curtain cloth can be: polyester plus silk or polyester plus polyester, etc. Shining of the former will erode in a short period where as the shining of the latter remains the same for a longer period. The future of textile business of Panipat is not very bright due to competition posed by Pakistan and China.

Problems faced: Government policies are very inconsistent, for example, power tariff in India is Rs 4.5 as it is Rs 3.00 only in China. Also 10 years earlier, central excise applicable was at the flat rate of Rs.0.50 paise per kg. But now the Government has introduced advolarem duty of 9.2 per cent. Industry is also facing the problem of power failure and low voltage whereas Chinese industry is getting continuous uninterrupted power supply. Sales tax policies are inconsistent.

Conclusion

The business in the three textile centres i.e. Amritsar, Ludhiana and Panipat, is of different style and nature.

• In case of Amritsar, it is mainly knitting industry where warp knitting is popular. Amritsar is specialised in suiting, shirting, blankets, dyeing, and printing.
• In case of Ludhiana, mainly hosiery items are manufactured and circular knitting is popular. Ludhiana specialises in hosiery and Cashmillon products. Synthetic and woollen yarn is used. Ludhiana is popular for ready-made garments.
• In Panipat, curtain cloth, sofa cloth, bed sheets, bath mats, carpets are popular. Mainly industrial fabric and cotton fabric items are manufactured in Panipat. Panipat is specialised in products manufactured from industrial yarn and cotton yarn.

Problems faced by North Indian textile industry

• Small scale industries need up- gradation of technology and adoption of latest techniques of R&D.
• Marketing of products manufactured is a big problem for the hosiery industry of Ludhiana.
• The Government policies are very inconsistent, for example, power tariff in India is Rs 4.5 as it is Rs 3 only in China. Also ten years earlier, central excise applicable was at the flat rate of Rs 0.50 paise per kg. But now Government has introduced advolarem duty of 9.2%.
• Industry is also facing the problem of power failure and low voltage whereas Chinese industry is getting continuous uninterrupted power supply.
• Quality of raw material available to the industry is not of proper standards as compared to that available to Chinese industry.

Exports

The textile industry occupies a position of prime national importance accounting for over one third of India’s total merchandise export making Indian textiles the largest single net foreign exchange earner for the country. Indian textiles known for captivating designs and colours are exported throughout the world. However, main destinations for Indian textile-based items have traditionally been USA, UK, Germany, UAE, Italy, Hong Kong, South Africa, Bangladesh, Japan, Belgium, etc.

References

1. Confederation of Indian Textile Industry. (2012). Retrieved October 19, 2015, from http://www.citiindia.com/: http://www.citiindia.com/textile-industry/indian-textiles-overview.html
2. Kotler, P. (1991). Marketing Mangement - Analysis, Planning, Implementation and Control (7 ed.). India, India: Prentice Hall.
3. Tan Tiong, C., Kotler, P., & Leong Meng Siew, A. H. (1996). Marketing Management - An Asian Perspective. Singapore: Prentice Hall.
4. Tull, D. S., & Hawkins, D. I. (1987). Marketing Research - Measurement & Method (4 ed.). New York: Macmillian Publishing Company.
5. Zikmund, W. G., Babin, B. J., Carr, J. C., & Griffin, M. (2010). Business Research Methods, Eighth Edition (Eight ed.). (J. W. Calhoun, Ed.) Canada: South-Western Cengage Learning.

Manish Mittal is a Lecturer - Department of Management, Academic City College, PO Box AD 421, Adabraka, Accra, Ghana (West Africa). Email: manish77mittal@yahoo.co.in
Dr Rajeev Johari is a Professor – Management, Sharda University, New Delhi.

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