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  Technical progress & structural changes in textile industry
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The textile industry in India has been a pioneer industry. India’s industrialisation in other fields has mainly been achieved on the back of the resources generated by this industry. However, from the early seventies to the introduction of liberalisation in 1992, the industry was neglected, as measures taken by the Government with the apparent objective of protecting the cotton growers and the large labour force have continuously eroded its profitability.


The recent liberalisation measures have presented the industry with a golden opportunity to regain its last glory. The process has begun but a lot of work remains to be done. With the active help and encouragement from the Government, it will not be long before India can recover the ground it has lost in an area it has traditionally been good at as a world supplier of high quality textiles.


Indian textile industry is the second largest in the world. It has the largest cotton acreage of 9 million hectares and is the third largest producer of this fibre. It ranks fourth in terms of staple fibre production and sixth among filament yarn production. The country accounts for about one fourth of global trade in cotton yarn.

For the Indian economy, the textile industry accounts for 20% of its industrial production employing over 15 million people. About 30% of India’s export basket consists of textiles and garments making it the largest contributors. In spite of high capital and power cost, Indian textile and garment sectors strength lies in availability of cotton, lower labour costs, well educated supervisory staff and abundant technical and managerial skills. A very few countries are endowed with such resources.

Today, globalisation has brought opportunities for Indian textile industry. At the same time it is also exposed to threats, particularly from cheap imported fabrics. Thus, the industry has to fight for its share in international textile trade. Even if it is assumed that WTO will mean better distribution of the world trade, in no way will it be free for all and only the fittest will survive. The WTO benefits for India will not be any different from that of the other developing countries. Indian textile industry should not only rely on its strengths, but should also endeavour to remove its weakness.

The industry has the right potential and a great challenge ahead. It is worth noting that China, Hong Kong, South Korea and Taiwan have registered their presence significantly in the world textile market through conscious efforts while they continued to globalise their textile economy. The Indian textile industry has witnessed significant growth during the last decade in terms of installed spindleage, production of yarn (both spun - filament), output of cloth and its per capita availability as also exports. Thus, the number of cotton/man-made fibre textile mills (which comprise the cotton yarn, blended yarn and other spun yarn manufacturing units and the composite units) rose from 1,142 in 1993 to 1,875 by the end of March 2003. The growth has been entirely due to increase in spinning mills which rose from 874 in 1993 to 1,599 units by March, 2003, with the spinning capacity increasing from 28 million spindles to 36 million spindles during the same period, registering an addition of 8 lakh spindles per annum.

After the announcement of the liberalised industrial policy in July 1991 and the issuance of the 'Textile (Development and Regulation) Order, 1993 the pace of setting up of textile spinning mills has increased. The growth of the spinning sector has been characterised by the installation of more rotors in this decade (which now number about 3.79 lakh) and coming up of Export Oriented units (EOUs), mainly for the production of cotton yarn, and such units now stood at 93.

The growth in the composite mill sector has been stagnating almost since Independence. The total number of composite mills, which was 276 in 1951 rose marginally to 291 in the year 1971 and declined to 266 in 1994. Since then it has again marginally increased to reach 276 in 2003. The weaving capacity of the organised mill sector stagnated for a number of years, largely because the Government’s policy permitted only a marginal expansion in the weaving capacity of the organised mill sector. Even after the removal of the restrictions on the creation of capacities the Textile Policy of June, 1985, the Weaving Capacity has consistently been declining since 1988. Between 1993 and 2003, the weaving capacity has decreased annually at 3 per cent. This is compensated by emergence of the decentralised powerloom and hosiery sectors in a big way.



The Indian textile industry has natural advantages of strong multi-fibre base traditional skills and cheap labour, these strengths get diluted due to high contamination of cotton, lack of technology, upgradation, low productivity, an absence of focused and co-ordinated development strategy, inadequate product diversification and value addition and an inability to meet the quality and market compliance. As a result, its global market share continues to stagnate at around 4%, although there has been an increase in absolute numbers.

The SSIs/SMEs form the backbone of Indian textile industry (except in spinning) and any strategy of strengthening the Indian textile industry should invariably focus on the capacity building of these SMEs.

Another feature of the Indian textile industry is in terms of location of the SMEs in defined clusters. Various clusters, across the country, have emerged for identifiable activities over a period of time. For example, the powerloom activity is concentrated in clusters like Surat, Bhiwandi, Ichalkaranji, Malegaon, Erode, Salem and Burhanpur; the knitwear activity has clustered in and around Ludhiana and Tirupur; Kannur, Karur and Panipat have emerged as home furnishing clusters; Bangalore, Chennai and Delhi are emerging as apparel manufacturing clusters; Guntar and Indore are the known clusters for cotton ginning and pressing activity; Coimbatore and Madhurai are known for cotton spinning clusters; and there are numerous handloom clusters in every part of the country. The SMEs located in these clusters share common threats and opportunities.

The onset of globalisation of trade and economic liberalisation within the country has posed new challenges and opportunities for the Indian textile industry. As part of Agreement on Textiles and clothing (ATC) under the WTO framework, all the quantitative restrictions (quotas) on imports and exports have ceased to exist from January 1, 2005. Such integration of markets will provide several opportunities as well as threats to Indian textile industry. It is an opportunity since the market access is unlimited and unrestricted. It is a threat since minimum assured quantities, hitherto available for exports under quotas are not available. In such a highly competitive environment, only those companies with strong fundamentals and conscious of several market compliances and price alone can survive. Apart from integration of markets without any quotas the WTO framework demands the gradual phasing out of non-compatible (to the WTO agreement) protections, currently available to the industry, in the form of subsidies and other incentives. The Indian industry will also have to guard its domestic market share, in addition to consolidating and enlarging the export market share.




Therefore, the Indian textile industry will have to look for competing and surviving purely on its strength and competitive edge. A comprehensive strategy, involving the Government and industry partnership is the need of the hour to convert the threats into opportunities and, sustain and enlarge our domestic and international market shares.
Challenges for Indian textile industry

The first challenge is the scalability of operations while the total size of the industry is around Rs 1,40,000 crore comprising of Rs 52,000 crore of exports there are hardly 2 or 3 companies clocking a turnover of Rs 2,000 crore. This shows the fragmented nature of the industry and compared to international standards our capacities are small. For example in the spinning sector, a capacity of 1,00,000 Spindles is considered large in India. But compared to international standards this capacity is small to average. In China for example, a capacity of 3 lakh spindles is quite common, where there are units, which are large with one million (10 lakh) spindles. Similarly, in the weaving processing and garment sectors our capacities are miniscule compared to international standards. In China and Sri Lanka the average machine per garment factories is 500 compared to 50 in India.

The second biggest challenge facing the industry is the supply chain management. It is estimated that by 2010, more than 25% of the world's textile trade will be controlled by retail giants. In such a scenario an efficient supply chain management cannot be overemphasised. The retail giants will determine the export prices and only an efficient supply chain will be able to compete effectively. In fact it will be competition between supply chain and not between companies. There are hardly any companies in India having a presence in the entire textile chain from yarn to garments.

The third challenge facing the industry is the effective integration of the various sectors of the textile industry. For more than 25 years the various wings of the industry like the powerloom, handloom, mill sector, knitted garments, woven garments have been competing with each other for fiscal incentives and duty concessions. Now that a level playing field has been brought about the role of each sector has to be clearly defined while the powerloom sector can cater to the mass market in the domestic sector for the lower and mid sections of the society, with of course the exception of some modernised units at the apparel parks, etc. The mill sector could be allowed to take over garments units and cater to the export sector and upper-end of the market in the domestic market.

The fourth challenge facing the industry relates to moving up the value chain. There are two dimensions when it comes to moving up the value chain and one relates to what China did. China consciously decided that they will export value-added products instead of exporting yarn, the highest value being in garments China's share in global textile trade is 13.5% and in global clothing trading is 20.6% amounting to US$ 20.56 billion and US$ 41.30 billion respectively. While this may hurt some of the sectors adversely in the short run over an extended period of time, this will be beneficial to the entire industry. This could also give a fillip to the developments of weaving and processing sectors, which at present are the weak links in the textile value chain. The other dimension of moving up the value chain relates to the higher end of the market. A majority of exports of garments cater to the lower end of the value chain. The industry needs to move up to the middle and higher end, where the value realisations are much higher.

The next challenge facing the industry is improvement in the crop yield of cotton: while we boast of availability of all the varieties of cotton, our yields are one of the lowest in the world and inconsistent in quality. Enough attention had not been paid to the modernisation of the ginning sector in the past.

Yet another challenge facing the industry relates to the management structure. Most of the textile units are family managed. In order to overcome the various challenges outlined here and as a measure of good corporate governance, ownership needs to be diverted and distinguished from management control. We have seen this trend taking roots in other industries but textiles is an industry having presence in both the organised as well as the unorganised sectors. There are good owner-managers of spinning sectors but to accelerate growth and vertically integrate to value addition, economics of scale professionalism is the need of the hour.

Let us take a quick look at the SWOT analysis of the Indian textile industry.

SWOT analysis of Indian textile industry

Strengths

  • Existence of more than sufficient productive capacity.

  • Easy availability of skilled labour.

  • Managements with business background.

  • Presence of qualified technical personnel.

  • Comfortable availability of raw materials.

  • Large domestic market.

  • Material and machinery available for many of the products.

  • Ability to run short batches.

  • Availability of testing facilities.


Weaknesses
  • Low level of modernisation and upgradation of technology.

  • Low level of productivity due to inadequate formal training.

  • Horizontal growth of powerlooms (SME's).

  • No exposure to export markets.

  • Difficulties in accessing of testing designing and technical services.

  • Cost based market set up.

  • Not ready for diversification of products.

  • No willingness to change existing work practices.

  • No access to market information/inadequate market information.


Opportunities
  • Growing domestic and international markets.

  • Untapped markets in Latin America and other countries also.

  • Product mix and product diversification.

  • Becoming sub-contractor to large units.

  • Catering to bulk orders by distributing the work over the cluster units to form networks.

  • Abundant scope to supply to multinationals shops setting up in India.

  • Forming of raw material consortium/raw material bank.


Threats
  • Entry of multinational in domestic markets.

  • Stiff competition from other countries (The performance of global competitor's in fabrics and garments indicates that there are at least 4 countries ie, China, Indonesia, Thailand and Pakistan).

  • Slow improvement in quality to international standards and adoption to fast changing fashion demands.


The India's textile industry should aim at becoming the most preferred and competitive textile hub for global sourcing. This can be achieved through a strategy called out from leveraging the strengths and opportunities and combating the weaknesses and challenges. The textile industry in India is one of the few industries, which has the potential to emerge as a true global player. A well-devised action plan coupled with effective delivery mechanism can see India is emerging as a winner in the quota free market.

Improvement of cotton

Considering the high stakes that our textile industry and economy have on cotton, there has been a lot of activity during the last 3 - 4 years for improving the availability and quality of cotton. Government launched a Technology Mission on Cotton in 2000, aiming at improving seed research, extension activities, market yards and ginning & picking. The Mission has achieved some progress in reducing contamination of cotton. In the areas of improving the quality parametr of seeds, it has helped in reducing the number of seeds, curtailing the distribution of spurious seeds and pesticides and adoption of improved farming practices. However, there are activities currently underway in these areas and positive results could be expected in the coming years.

Spinning sector

Spinning has been India's most successful sector in textiles, domestically and internationally. The tenth plan has projected a growth rate of 5.5% for production of yarn in which cotton yarn production is expected to grow by 5% and man made fibre yarn by 6.3%. Internationally, as the Table 1 indicates, India is among the top three in terms of installed capacity and investment in machines. According to the international machinery shipment statistics, shipments of spindles have increased by 30% in the last three years. With schemes like TUFS and credit restructuring being mooted by the Government, further investment in machinery can be expected. Faster modernisation and better utilisation of existing capacities should further strengthen this sector.

Table 1
Installed capacity In Mn. No. India's % share in world India's rank in the world
Spindles(cotton system) 37.63 23.60 1
Spindles (wool) 1.02 6.18 3
Rotors 0.45 5.09 4
(Tecoya Trade Special Issue On INDIA-ITME Society 2004)

Production of spun yarn in 2002 - 03 stood at 3,080 mn kg. The composition of the spun yarn supply shows that more than 70% of the total production comprises cotton yarn. However, there has been a trend of decline in the share of cotton yarn production and shift towards non-cotton yarn. Non-cotton yarn presently constitutes 10% of the total spun yarn production. Another trend is of a shift from organised sector to SSI sector. Mill closures on one hand and the rise in SSI units on the other due to difference in policy support to these sectors have been responsible for this trend. Since these anomalies in policy inputs have now been rectified, there are reasons to believe that the organised spinning units will have an increasing role to play in the coming years.
Weaving sector

The growth of the weaving industry in the last few decades has been in the decentralised sector. From over 50% in 1960s, the organised sector's presence in this sector has shrunk to less than 5%. This has affected the investment and production levels in this sector. Thus in spite of a strong position in yarn segment, India is not a key player in fabric production and exports. The ratio of shuttles looms to total loomage is around 1.5% lower than that of even Pakistan. However, there has been an increase in investment in shuttleless looms in the current year and the situation is expected to improve in the coming years with the Government providing incentives for installation of shuttleless looms in the decentralised sectors.

In spite of policy technological constraints, the weaving sector has done reasonably well. As the Table 2 shows, in terms of installed capacity and shipments, India has been one of the frontrunners.

Table 2
Installed capacity In Mn. No. India's % share in world India's rank in the world
Shuttle Looms 1.78 43.63 1
Shuttleless loom 0.02 2.78 -
Handlooms 3.9 84.78 1
Total 5.7 60.64 1
(Tecoya Trade Special Issue On INDIA-ITME Society 2004)

The production of fabrics increased by 508 million square metres (1.23% increase) in 2002 - 03. The increase was mostly in the powerloom and hosiery sectors. Production of 2002 - 03 stood at 41,898 mn sq mtrs. Production in powerloom increased by 1,178 million square metres (4.68 % increased) and hosiery and knitted sector saw an increase of 887 million square metres (12.55% increase). Sector-wise production patterns show that the share of powerloom sector increased to 62.94% while that of hosiery/knitted segment increased from 17.07% to 18.98%. The share of handloom sector declined significantly.

As in the case of yarn, there has been a shift from cotton and blended to non-cotton in fabrics also. The tenth plan document envisages a growth rate of 5.80 % for fabric production. Production of cotton fabric is expected to increase by 3.85%, blended by 9.73% and non-cotton by 6.5%.

Processing sector

About 70% of India's woven processed fabric is produced by decentralised sector, which faces investment constraints. According to a report by Ghersi International, low investment in processing technology has restricted India's capacity to export value-added textiles. About 95% of the processing units are still using conventional technologies.

Since most of the weaving and knitting take place in the decentralised segments, small and independent processors also handle their processing. The decentralised processing sector is highly fragmented with hand processors, semi-power processors and power processors together sharing major portion of our textile processing activities. This has led to low quality and high cost of processing since the decentralised processing units lack the advantages of scale of economies and are unable to access or absorb modern technology.

Garmenting

India has a 3.28% share in world clothing trade. Over 40% of the India's textile exports consist of apparel. Globalisation and increasing purchasing power within the country have seen the fashion industry's growth at 35% per annum. Among the various segments, women's wear has witnessed the fastest growth, reflecting the changing consumer base. More than a stand-alone sourcing opportunity, India is emerging as a regional sourcing hub. India is an important supplier of readymade garments and other suppliers like Sri Lanka and Bangladesh have helped in the emergence of South Asia as the most preferred sourcing hub for apparels of all types.

The fragmented processing facilities and the reservation within the garmenting industry had led to a highly fragmented garmenting industry in India. So far the Indian garment industry had successfully leveraged the flexibility offered by the small production units. But fragmentation has also led to lower productivity, lesser investment in technology, non-integrated supply chain and few industry leaders for reference points. A survey conducted in 1999 showed that investment in power machines by India was 12% - 20% of that in other Asian centres like China, Korea or Taiwan. These had adverse implications on cost, consistency, deliverability, etc. Recent changes in government policies like dereservation and removal of restrictions on foreign investment in this sector should improve the supply chain management and consistency in different product lines.

Exports

Textiles are the largest product group in the country's export basket. As per DGCI&S figures, India's exports of textiles and clothing in 2002-03 were to the tune of US$ 10 billion, 22% of the total exports. Cotton products, especially garments dominate our exports. Export of blended textiles and silk and wool products have also increased, inputs for the latter being sourced substantially from abroad. After a lacklustre performance in 2001-02, following recession in major importing countries, India's exports have picked up well in 2002-03. Cotton garments and man-made textiles have done especially well in 2002-03. An important aspect of the export performance has been the marginal import linkages, exports being largely self-sustaining in nature.

Imports of textiles also witnessed significant growth in 2002-03, but the growth was mainly in yarn and fabrics. In fact imports of readymade garments reached one of the all-time lows with a 37% decline. The changing composition of the import basket disproves the apprehensions of import threat in post-quota regime. With increasing consumer base in the domestic market and consistent export performance, India's textile industry would logically move to global scales of operation at various stages and integration of the different production lines in the coming years. This optimism is already being reflected in company results and performance in the capital markets with textile scrips on a rally.

Import of used machinery

Indian textile engineering industry has been passing through a difficult demand recession. Consequently the capacity utilisation had dropped to around 30-35%. The major factor that had contributed to the shrinkage in demand was the import of used textile machinery, which has surged during the last few years. The import of such machinery can harm the long-term interests of the textile industry as a junkyard will build up. It would be in the interest of both the indigenous textile industry and the textile engineering industry to get together and meet this challenge so that the interests of the local textile engineering industry and textile industry are taken care of.

TUFS for textile machinery

If the TUF Scheme for textile industry is revamped and back-up measures to strengthen the textile engineering industry are invigorated, there will be a huge potential demand for textile machinery in the future. To cope with such a situation the textile machinery industry has to modernise its plant and machinery. The working Group on Textile and Jute Industry for the Tenth Five Year Plan has observed:

''Technological obsolescence in textile machinery industry has inhibited its capacity to produce high-tech machines. The programme initiated by the Government as per the textile package for upgradation of technology in weaving and processing segments coupled with launch of TUFS, the demand for hi-tech textile machinery is expected to increase. In order to meet the demand from the textile for latest generation machines and accessories, a number of units in the textile engineering sector would require rapid upgradation and modernisation''.

The textile machinery industry has to be encouraged to invest in technology and modernise itself to meet the demand for state-of-the-art machines. It is, therefore, essential that a Technology Upgradation Fund for this sector be set up.

No where in the world the machinery manufacturers produce all components of machinery because of the cost factor. The cost effectiveness could be achieved only if the machinery manufacturers get components manufactured by smaller units whose overhead is comparatively less, and who ensure lower cost of production, and high quality of production. It would be pertinent to know here that by comparison the average labour cost is low in India.

Furthermore, we are confident that India will be seen as a top outsourcing destination for textile machinery parts and accessories by leading textile machinery manufacturers and textile industry all over the globe in the near future, as is the case of Information Technology and auto industries. This can be attributed mainly to the engineering capabilities of Indian manufacturers.

The future vision of the textile machinery parts and accessories manufacturers is to match world standards. In this context, as already pointed out more attention has already been given to total quality management, a number of parts and accessories manufacturers have acquired ISO accreditation. With the existing installed capacity and the plans for progressive expansion and diversification, the textile engineering industry in general and manufacturers of parts and accessories in particular will be able to meet fully the growing domestic and international demand for parts and accessories in the years to come.

Advanced technology for textile industry

Production

These changes from cotton to man-made fibre and from microfibre to nanofibre necessitate the changes accordingly from traditional production machinery to latest machinery of production in spinning the fibre and yarn. A vision is defined expanding its production by micro & nanofibre technology.

Spinning

Ring spinning system is oldest technology to spin any count of yarn with small changes in it. About 25 years back open end spinning technology was much in demand specially for producing coarse count cotton yarn, because of reduction in cost. It has different structure than ring spun yarn. Air jet spun yarn is playing a similar important role but increasing the rate of production.

Weaving

Powerlooms from Asian countries still are serving to large segment of market where income per head is minimum. Even automatic looms are not much able to sustain today's demands from super textile market. They are satisfying the middle level of textile market demands. In fact for large available international market of technical textile is not much exploited by many entrepreneurs. This is high time that they must enter into shuttleless weaving technology. The fashion is changing quite fast; therefore to adjust with it, rapier weaving technology with multi-colour and dobby adopting quick style change will lead the market.

Processing

Continuous technological developments are indispensable in textile processing to meet the demands of hyper-conscious consumers need and to project ourselves as competitor in global market. Innovative technologies such as electro-chemical technology, plasma technology, nano technology and sono chemical technology are anticipated for better prospectus with due regards to their eco-friendly nature, energy efficiency and best quality performance.

Information Technology

A latest technology and state-of-the-art machine with old type of other information system in the organisation has no future. But computer application in every way for design, manufacturing and each branch of management is the tomorrow's requirement of best organisation.

Recently, it has been reported that USA-based companies are doubling up their profitability by using computer at every stage. India has also best future if it adopts in its textile and allied industry the above technological changes as per the international demands of market environment.

The potential major products line in Indian textile market are hoardings and signages, scaffolding nets, awnings and canopies, soft luggage material, fire resistance apparels, speciality fire resistance apparel for defence, fire resistance upholstery/furnishing (general public), tarpaulins & taffeta. To satisfy the need of this potential textile product markets Indian textile industry has to adopt recent advanced technology.

Acknowledgement

The authors are thankful to the Management of DKTE Society's Textile & Engineering Institute, Ichalkaranji and the Executive Director Prof (Dr) C D Kane, Incharge Principal, Prof (Dr) A I Wasif, HOD-Textiles, Prof P V Kadole, Textile & Engineering Institute, Ichalkaranji for their encouragement and valuable support.

References<

  1. Indian Textiles, An Intersectoral Perspective, edited by S S Mehta and Vinod Shanbhag, Published by Oxford & IBH Publishing Co Pvt Ltd, New Delhi.

  2. Industrial Sickness, The Challenge in Indian Textiles, Edited by V Padaki & V Shanbhag, Published by R C Vora for ATIRA, PO Polytechnic, Ahmedabad 380015.

  3. Compendium of Textile Statistics, 2003.

  4. World Bank Publication: "The Uruguay Round Textile Trade and the Developing Countries: Eliminating the MFA in the 1990s", Ed by Carl B Hamilton, 1992.

  5. Exports/Imports Data – Source: DGCI and S, Kolkata.

  6. Tecoya Trade Special Issue on INDIA-ITME Society 2004.

Note: For detailed version of this article please refer the print version of The Indian Textile Journal May 2008 issue.

P R Wadje
Faculty member,
DKTE Society's Textile & Engineering Institute,
Ichalkaranji,
Kolhapur Dist,
Maharashtra.
Email: prwadje@yahoo.com; doshimjdiploma@rediff.com.

M J Doshi.
Faculty member,
DKTE Society's Textile & Engineering Institute,
Ichalkaranji,
Kolhapur Dist,
Maharashtra.
Email: doshimjdiploma@rediff.com.

published May , 2008
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