CHAPTER - II ORIGIN, HISTORY AND GROWTH OF TEXTILE INDUSTRY IN INDIA AND KARNATAKA

Transcription

1 49 CHAPTER - II ORIGIN, HISTORY AND GROWTH OF TEXTILE INDUSTRY IN INDIA AND KARNATAKA An analysis of the historical trends in the growth of India s textile industry is the main thrust in this chapter of the research work. The whole exercise is aimed at providing the predominant position that the textile industry held during the pre-independence and postindependence period of India s economic scene. Detailed statistical description about the growth trends of textile industry has been provided in all dimensions. The industry s contribution to the economy in terms of production, employment, exports and to the overall growth of development process in the country has been made by using time series data particularly during the last 50 years in the post-independence period. The discussion has been a macro analysis at the national level of the textile industry. However, with a view to provide a comprehensive picture of the industry s growth in the state an attempt is made to trace the development of textile units in Karnataka both during the pre and post-independence period. The discussion has been extended further to provide a comprehensive explanations of the problems confronting this major

2 50 industry in the country and the policies followed by the government during the last 50 years with critical comments. Origin and History of Textile Industry : The term textile derived from the Latin texere (to weave) was originally applied to only woven fabrics. Now, it is a general term for fibres, yarns and other material that can be made into fabrics or fabrics produced by interlacing or any other construction method. Thus, textiles include threads, cords, ropes, braids, lace, embroidery, nets and fabrics made by weaving, knitting, bonding, felting or tufting, etc. Cotton silk, wool and flax fibres were used as textile materials in ancient Egypt. Cotton was used in India by 30 B.C. The silk production is mentioned in Chinese chronicles dating about the same period. Yarn and cloth were dyed and printed from very early times. Specimen of dyed fabrics have been found in Romanians of the 2nd century B.C. There is an evidence of production of printed textiles in India during 4th century B.C. By the early middle ages certain Turkish tribes were skilled in the manufacture of carpets, felted cloths, towels and rugs. In Mughal India (16th and 18th century) and perhaps earlier the fine muslins produced at Dacca (Bangladesh) were some times painted or printed. In Sicily in 827 A.D. beautificial fabrics were produced in palace

3 51 workshops at Paleromo. In 1266 after the conquest of Sicily by the French the weavers fled to Italy. French manufacture of woven silks began in 1480 and in Francis-I brought Italian Flenish weavers to Fountainbleau to produce tapestry under the direction of king s weaver. English textiles of 13th and 14th centuries were mainly linen and wool. Silk was being woven in London and Norwich inl455 and Queen Elizabeth-I granted a Charter to Dutch and Flenish settlers in Norwich for production of damasks and flowered silk. English settlers established a cloth mill in Massachusetts in 1638 in USA. There Yorkshire weavers produced heavy cotton fustians, cotton with Jeans, etc. Effects of Industrial Revolution : The textile industry remained essentially a cottage industry until 18th century. A co-operative groups of workers operated a mill in 1568 in Zurich and another in Derby, England, in Factory organization became most advanced in the north of England and the Industrial Revolution at its highest between 1760 and 1815 greatly accelerated the growth of mill sector.

4 52 Growth of Textile Industry in India : Textile industry in India is as old as the Indian civilisation itself. The finding of spinning wheel and spindles while conducting excavations in the Sindhu valley is proof enough of the existence and popularity of textile industry in the country in those days. The textile was an important industry during the Mauryan dynasty as mentioned by Koutilya in his magnumopus Arthashastra. It is mentioned in this book that heavy punishment was imposed on those who were producing clothes for the enemies and on those stealing of yarn. Indian textiles were in much demand in foreign countries like, Greek and Roman empires and the royal families. They were very eager to wear Indian clothes. The artisan who spun the yarn and wove the fabrics - there from possessed extraordinary skills in creating intricate designs and patterns unknown to their counterparts in other nations. So dexterous was the yarn turned out by them for the famous Dacca Muslin that it was called the web of the woven wind.1 Centres like Surat, Cambay, Beharanpur, Benaras and Dhaka were important for textile manufacturing in the pre-mughal period. The Mughal kings developed Lahore, Agra, Fatepur and Ahmedabad as centres of textile manufacturing. i Mohanlal Pirmal, Growth of Indian Textile Industry, ICMF Journal, Mumbai, Aug-Oct 1990, p. 16.

5 53 During 17th and 18th centuries, India was the major supplier of textiles not just fine clothes, but every day wear of the masses - to the whole of South East Asia, Iran, the Arab countries and East Africa. The European companies trade opened up fresh markets for the same commodity in Europe, West Africa, the new world, Philippines and Japan... Cotton textiles constituted the overwhelming bulk of major items of exports.... The Industrial Revolution in Europe and the advent of British rule gave a severe blow to the traditional textile industry in the preindependence period in India. However, the freedom movement under the leadership of Mahatma Gandhi gave a new lease of life to textile industry both in handloom and orgnised sector. The swadeshi movement gained momentum and charakha or spinning wheel became a symbol of national honour and dignity. The freedom movement instilled confidence in the minds of traditional manufacturers of yarn and clothing and a new wave of social awakening was aroused by this symbol of charakha. The cotton textile industry was mainly sustained by the indigenous enterprise during the 19th century. The first cotton textile mill in India was established in Calcutta (now Kolkota) in It was in 1854 again that a first cotton mill was established in Bombay (now Mumbai) by a local Parsi merchant engaged in overseas and 2 T. Raychaudhuri, A Re-interpretation of Nineteenth Century - Indian Economic History, The Indian Economic and Social History Review, Vol. 1, Mar

6 54 international trade. The vast majority of the early cotton mills were the handiwork of Parsi merchants engaged in yarn and cloth trade at home and in Chinese and African markets. The Indian entrepreneurs focussed on cotton textiles and played a very important role in their development for the following reasons. 1. Cotton textile was the one single prominent industry in which Indian entrepreneurs could rely completely on the domestic market. 2. The domestic market consisted of private Indian consumers so that purchase policy of the British Government could not be used discriminately against them. 3. There was a competitive advantage in the local manufacture of coarser varieties of textiles and hence, no protection had to be sought from colonial government which was interested in British manufacturers. 4. Necessary technology could be purchased from abroad with comparative ease. 5. Skilled labour requirement was limited in textile units and there was abundant supply of unskilled labour. The above factors were quite favourable for the Indian entrepreneurship to dominate textiles during the nineteenth century. Bhagavati and Desai observe, this unique constellation of favourable

7 55 circumstances apparently did not arise in any other industry during the nineteenth century... 3 The contribution of Gujaratis and Marwaris to the growth of cotton textile industry in India has also been substantial though Parsis were the initiators in this field. Gujaratis and Marwaris participated in the expansion and financing of this industry from the very beginning. Thus, the textile industry spread to Ahmedabad and other areas in Gujarat which became rival centres to Bombay. The protectionist policy in the post-world war and swadeshi movement gave a great stimuli to the development of cotton textiles and other industries in the country. The growth of textile industry has been phenomenal in the post-second world war and the postindependence period. According to the first census of Manufacturing Industries (1946) cotton textiles accounted for 46 per cent of value added and 44 per cent of the employment. Components of Textile industry : The textile industry in India comprises of three sectors - Mill sector, Powerloom sector and Handloom sector. The latter two sectors are considered as decentralised sectors. The decentralised sector has been given many concessions and incentives over the years by the government with the result that the share of this sector in total fabric Jagadish N. Bhagavati and Padma Desai, Planning for Industrialisation, Oxford University Press, London, 1972, p. 14.

8 56 production has been increased considerably. The share of mill sector which was 76 per cent in came down to 38 per cent in and further to 6.7 per cent in There has been a further decline to 5.02 per cent in and to 4.44 per cent in The share of decentralised sector correspondingly rose from 24 per cent in to 93.3 per cent in and further to per cent in and per cent in Growth of Textiles in the Post-Independence Period : Some parameters of textile industry s growth trends clearly indicate its substantial contribution to Indian economy during the postindependence period. 1. The number of textile mills rose from 370 in to 1,850 in The installed spinning capacity has advanced from 10 million spindles in to million spindles in There are about 750 small scale spinning mills in The number of small scale spinning mills rose to 921 in The weaving capacity in organised mills, however, has shrunk from 1.95 lakh in to 1.33 lakh on March 1997 and further to 1.23 lakh in 20. However, there has been exponential growth of powerlooms in the decentralised sector accounting for over 14 lakh looms in Cotton consumption by the mill industry which was just 42 lakh bales in , rose to lakh bales in 1997 and to lakh bales in

9 57 6. Spun yarn production has gone up phenomenally from 622 million kg in to 2,794 million kg in (350 per cent increase) and further to 3,046 million kg in Total cloth production has increased considerably from 5,1 million sq. metres in to 34,265 million sq. metres in (rise of 570 per cent) and further to 39,202 in Exports of textiles/clothing have surged from less than half a billion US dollars in to around 10 billion US dollars in and further to Rs.48,322 crore in Per capita availability of cloth in the country has doubled from 13.8 sq. metres in to sq. metres in and further to sq. metres in Country-wise exports data up to 1995 compiled by GATT/WTO show that between 1990 and 1995 world trade in textile/clothing picked up per cent. During the same period China registered a growth of 125 per cent, Indonesia 107 per cent and India stood at third place with 84 per cent. 11. The spinning and composite mills together were employing about one million workers directly and providing employment to nearly 10 crore indirectly. Growth Trends of Textile Industry in India During Five Year Plan Period : The following statistical analysis reveals some significant trends about the various aspects of textile industry and its growth during the Five Year Plan period between 1951 and 20.

10 58 The entire period of 50 years from the beginning of the First Five Year Plan to the end of Ninth Five Year Plan has been covered in the trend analysis of growth of textile industry in India. The data for the first 30 years of planning from 1951 to 1981 are available for the beginning of every decade, i.e., 1951, 1961, 1971 and However, from 1981 onwards figures for every individual year up to the year 20 are available from the sources mentioned therein. Hence, the analysis of the growth trend of textile for first 3 decades of Five Year Plans is based on the figures for the beginning of each decade up to 1981 and for each individual year thereafter. Table 2.1 provides the details of the number of cotton/man-made fibre textile mills (non-ssi) during the above period. It is clear from Table 2.1 that there has been a phenomenal growth of textile mills both spinning and composite during the period between 1951 and 20. The number of spinning mills which was only 107 in 1951 went up to 196 in 1961, 379 in 1971, 415 in 1981, 777 in 1991 and further to 1,565 in 20. Thus, increase in the number of spinning mills in India registered times growth during the period. Similarly, the number of composite mills went up from 276 in 1951 to 285 in 1961, 291 in 1971, but came down to 278 in There has been rise in the number of composite mills to 285 in From then onwards there has been a declining trend for a few years in the composite mills. From 1995, however, an increasing trend is

11 59 March end TABLE Growth of Cotton/man-made Fibre Textile Mills (Non-SSI) Number of mills Spinning Composite Total Spindles installed (million) Rotors installed (thousand) Looms installed (thousand) Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p.31. Note : Does not include data on woollen mills and exclusive weaving mills observed with some fluctuations in the subsequent period. The total number of composite mills was 285 in 20. The total number of textile mills, however, has gone up continuously from 1951 to 20 as could be observed from Table 2.1. The total number of textile mills has gone up from just 383 in 1951 to 1,850 in 0 registering 4.83 times increase during the period.

12 59a Graph 2.1 GROWTH OF COTTON/MAN-MADE FIBRE TEXTILE MILLS(NON SSI) YEARS Composite 0 Spinning Total stiiiai do aaaiairin

13 60 The number of spindles installed has gone up continuously from million in 1951 to million in 20. The number of rotors installed too has gone up from 40 thousand in 1989 to 392 thousand in 20. However, the trend in looms installed is a fluctuating one during the period from 1951 to 20. It can be seen from Table 2.1 that there is a continuous increase in the number of looms between 1951 and The number of looms in 1951 was 196 thousand and rose to 199 thousand in 1961, 206 thousand in 1971, 208 thousand in 1981 and further rose to 210 thousand in However, the trend in number of looms from 1986 to 20 is one of continuous decline. The number went down to 208 thousand in 1986, to 178 thousand in 1991, to 139 thousand in 1995 and to 123 thousand in 20. The closure of good number of textile mills has led to decline in the number of composite mils and the number of looms installed during the period from 1951 to 20. State-wise, Category-wise and Management-wise Number of Cotton/ man-made Fibre Textile Mills (Non-SSI) as on : Table 2.2 provides a detailed picture of the number of textile mills (Non-SSI) in India State-wise, category-wise and management- wise for the year 20.

14 61 TABLE State-wise, Category-wise and Management-wise Number of Cotton/man-made Fibre Textile Mills (Non-SSI) as on States/Union Territories Number of textile mills Spinning Public Co-op Private Total Central State STATES Andhra Pradesh Assam Bihar Delhi Goa Gujarat Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Manipur Orissa Punjab Rajasthan Tamil Nadu Uttar Pradesh West Bengal UNION TERRIROTY Dadra Nagar Haveli Daman and Diu Pondicherry GRAND TOTAL Ahmedabad Mumbai Coimbatore (continued)

15 (Table 2.2 continued) Total Co-op. Pvt. Total ! oo40 Public Central State oo i o Total Pvt. i Composite Public 1 Co-op. Central 1 State o o * * o o o VO im o o <N o Z6 VO o o 02 10! o 61 A States/Union Territories o I 10 STATES Andhra Pradesh Assam Bihar Delhi <9 o I j J - a <a 3 o o o! i oo j! i J oo i Ov fs J 12 o o 07 [ r 10 1 oo 1 oo i J O o o O j o ! oo - 10 VO CN ! 03! ; I oo I 1 oo o 03 f 02 j o V) oe 05 COST ' 16 1 oo 1 oo I 1 oo o 0 08! o O Haryana Himachal Pradesh Jammu and Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Manipur Orissa eo E a, G a X <0 3 pi Tamil Nadu Uttar Pradesh cti Of) o CQ W o UNION TERRIROTY * «! oo 1 > ac u ed on <a & CO <0 Q! oo oe N CS 99! CN Daman and Diu Pondicherry GRAND TOTAL Ahmedabad Mumbai Coimbatore Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, pp

16 62 It is clear from Table 2.2 that Tamil Nadu leads the other states in terms of total number of spinning mills in India with 834 spinning mills and Gujarat in terms of composite mills with 64 composite mills followed by Maharashtra 128 and 40 mills respectively. The other leading states in textile industry are Andhra Pradesh, Gujarat, Haryana, Punjab, Uttar Pradesh, Rajasthan and Karnataka. Sector-wise Maharashtra leads the other states with a maximum number of 66 co-operative spinning mills while Tamil Nadu leads the other states with a maximum number of 805 private spinning mills. Tamil Nadu again leads the other states with a maximum of 10 public sector spinning mills under central government, while Uttar Pradesh has the highest number of 13 public sector mills under the state government. In the composite textile mills category there are only 2 mills in the co-operative sector with Assam and Gujarat with one mill each. Maharashtra leads the other states with 29 public sector composite mills under central government and Gujarat leads the other states with 16 public sector mills under the state government. Gujarat leads the other states with 64 private sector composite mills. Gujarat has the maximum number of 92 composite textile mills. Raw Cotton Growth Trends : Cotton is grown in 33 million hectares in 80 countries. The annual average production is 19 million tonnes. The share of cotton in

17 63 world textile production is 45 per cent and its production, processing and marketing sustains more than 250 million persons. In India cotton is cultivated in 9 million hectares in varied agroclimatic conditions across nine major states. Cotton employs directly and indirectly more than 60 million persons in its production, processing and marketing. Table 2.3 highlights the importance of cotton in India s economy. TABLE 2.3 Cotton in Indian Economy Cotton area 9 m.h. Percentage to total area 5 Production (bales) 16.8 m. No. of textile mills 1,569 Consumption (bales) 14.0 m. Contribution to export income 35,872 (Rs. in crore) Percentage share in total 38 export income Sustained population 60 m. Employment per 2 hectare (mandays) Textile industry in employment (lakh) Powerlooms and handlooms 10. employment (lakh) Source : Kairon, M.S., Ramasundaram, P., and Venugopalan, M.V., Cotton - Agenda for New Millennium, The Hindu Survey of Indian Agriculture, 20, p Note : m.h. = million hectares. m = million Production of Spun Yarn : The details of the production of spun yarn during the period from to are provided in Table 2.4. Here the analysis covers

18 64 TABLE 2.4 Production of Spun Yarn (in Million kg) Year Cotton Blended/ mixed 1% noncotton Total Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p.42. Note : From the data include production of spun yarn by SSI units. the entire period of Five Year Plan from 1951 onwards up to the year 20. Table 2.4 provides some significant trends about the production trends of spun yarn during the plan period from to

19 64a YEARS (oh Nonniw)

20 65 The production of cotton spun yarn has gone up from 591 million kg in to 862 million kg in , 881 million kg in and further to 1,067 million kg in During the first three decades from to production of cotton spun yarn has registered almost a hundred per cent increase. However, during the subsequent period the production of cotton spun yarn indicates good deal of fluctuations. The cotton spun yarn has reached the staggering figure of 2,204 million kg in the year The production of blended/mixed yarn rose from 34 million kg in to 144 million kg in and further rose to a very high level of 621 million kg in the year However, the production of this variety of yarn has fluctuated much during the intervening periods between and The production of hundred per cent non-cotton yarn rose from 11 million kg in to 22 million kg in , 64 million kg in , 87 million kg in and ultimately rose to 221 million kg in The output of this type of yarn too has fluctuated severely during the period from to The total production of spun yarn rose from 602 million kg in to 884 million kg in , 979 million kg in , 1,298 million kg in and increased to 1,824 million kg in This reached 3,046 million kg in

21 66 Installed Capacity and Utilisation of Capacity (Cotton/man-made Fibre Textile Mills) : Capacity utilisation has a bearing on production and profitability of manufacturing units. The utilisation of capacity has not reached the maximum level both in the utilisation of spindles and looms as could be observed from Table 2.5. Year TABLE 2.5 Capacity Utilisation in Mill Sector From 1951 to 1976 Installed spindles (in million) Percentage utilisation Installed looms Percentage utilisation It is clear from Table 2.5 that there has been a continual growth of instilled capacity in terms of spindles in spinning mills from 1951 up to but the utilisation of the installed capacity during the same period shows fluctuation as could be seen from Table 2.5. Similarly the number of installed looms in the textile mills has gone up from 196 in 1951 to 207 in though with small variations during the period. The utilisation loom capacity has also gone up from 64 per cent in 1951 to 69 per cent in but there is some variation in the rate of utilisation during the period. -t -G3 33 X.5

22 67 The first quarter century of planning has experienced a substantial growth in the both capacity creation and capacity utilisation in textile mill sector in India though small amount of fluctuations are observed in capacity growth and utilisation rate. Table 2.6 shows details of capacity utilisation in the mill sector (cotton/man-made fibre textile mills). Year TABLE 2.6 Capacity Utilisation in Mill Sector From to (Cotton/man-made Fibre Textile Mills) Installed spindles (in million) Percentage utilisation Installed looms Nos. (in thousands) Percentage utilisation (P) Source : Compendium of Textile Statistics Office of the Textile Commissioner, Government of India, Mumbai, p.84. P = Provisional.

23 67a Graph 2.3 INSTALLED CAPACITY-SPINDLES (In Million)

24 68 It is clear from Table 2.6 that : (1) Tthe growth of installed capacity in terms of number of spindles has gone up continuously during the last two decades from to The number of installed spindles rose from million in to million in , million in , million in and further to million in However, the rate of utilisation has fluctuated between 62 per cent in and 86 per cent in (and also and ). During the first decade between and the capacity utilisation stagnated between 62 per cent in and 73 per cent in However, the utilisation rate has reached higher level during the next decade. It ranged between 76 per cent in and 86 per cent in (and and ). (2) The installed capacity in terms of looms in the mill sector has come down continuously between and The installed capacity in this sector was 208 thousand looms in but came down to 178 thousand looms in and further to 132 thousand looms in and ultimately reached record low of 123 thousand looms in The percentage utilisation of loom capacity has also gone down during the period from to The utilisation of loom capacity was 78 per cent in and came down to 62 per cent in

25 , 58 per cent in and further to 52 per cent in and ultimately reached a low of 51 per cent in Employment Trends : (Non-SSI). Table 2.7 shows employment trends of workers in textile mills TABLE 2.7 Employment of Workers in Textile Mills as on Public sector Central States Co-operative sector Private sector Total 1,02,438 83,422 1,06,039 7,51,110 10,43,9 Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, pp Table 2.7 shows the employment trends of workers in the textile mills (Non-SSI) as on in different sectors of the industry. Maximum number of 7,51,110 workers were employed in the private sector textile mills in India followed by 1,06,039 in co-operative sector, 1,02,438 in central government units under the public sector and 83,422 in state governments public sector. The total number of workers in the textile mills in India was 10,43,9. In addition to the above there were 30,202 workers in small scale spinning mills in India.

26 70 Capacity Utilisation of Looms (Major States) (Cotton/man-made Fibre Textile Mills) : The capacity utilisation of looms in 7 major textile manufacturing states is indicated in Table 2.8 from to TABLE 2.8 Capacity Utilisation of Looms (in percentage) State Gujarat Karnataka Kerala Madhya Pradesh Maharashtra Tamil Nadu Uttar Pradesh All India Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p. 86. It is clear from Table 2.8 that the capacity utilisation is below the all India average for all the five years from to in the states of Gujarat, Karnataka, Madhya Pradesh and Uttar Pradesh. The capacity utilisation in the textile mills in Maharashtra and Tamil Nadu is above the All India average for all the 5 years between and The capacity utilisation of textile mills in Kerala is above the All India average for two years, i.e., and only while it is below the All India average for the other three years, i.e., , and

27 70a Graph CAPACITY UTILISATION OF LOOMS (Major States) 450 yu*:; >:V V V V *1 V :':«N V r/ / A / j w / S A Year All India UP. Tamil Nadu Maharashtra M.P Kerala 0 Karnataka Gujarath i ! ! ! r o o o w> IA o U) o n o CM CM T abejuaojad in Ajpedeo

28 71 Per Capita Availability of Cloth : The per capita availability of cloth is an indicator of the growth of textile production in the country. The details of per capita availability of cloth for the last two decades from to are provided in Table 2.9. TABLE 2.9 Per Capita Availability of Cloth Year Cotton Blended/ mixed fabrics (Sq. mtrs) 1% non-cotton fabrics Total (P) Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p.87. P Provisional

29 71a b 10 2 or» C 8 Graph PER CAPITA AVAIBILITY OF CLOTH YEAR Belended B 1% Non Cotton Cotton

30 72 Table 2.9 indicates some significant trends about the per capita availability of cloth in India. 1. Over the period of 20 years the per capita availability of cloth has gone up from sq mtrs in to sq mtrs in There has been a fluctuating trend in the per capita availability of cloth during the entire period of two decades. 3. Individual components of cloth also shows a fluctuating trend in terms of their availability, i.e., cotton, blended/mixed fabrics and non-cotton fabrics. 4. Cotton cloth accounts for highest amount of per capita cloth availability compared to the other two varieties of cloths during the entire period of 20 years from to Per capita availability of 1 per cent non-cotton fabrics is more than the per capita availability of blended/mixed fabrics during the period from to The per capita availability of 1 per cent non-cotton fabrics is more pronounced during the nineties compared to the earlier decade, i.e., eighties. Export of Textiles vis-a-vis Total Exports : India is a major exporter of textiles. Exports of textile have grown phenomenally over the years. It is one of the top foreign exchange earners till today. Table 2.10 provides details of the export earnings from textiles during nineties and also its share in the overall exports from India during the same period.

31 73 TABLE 2.10 Export of Textiles vis-a-vis Total Exports (including Jute, Coir and Handicrafts) Year Textile exports Overall exports Textile Rs. US $ Rs. US $ exports as (crore) (million) (crore) (million) percentage of total export , , , , , , , , , , , , , , , , ,06, , , , ,17, , , , ,20, , , ,41, , , , ,62, , Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p.182. The following trends are observed from Table India s export of textiles has increased by more than four times during to in rupee value. 2. The increase in textile export has been continuous without any downward trend during the period. 3. The increase in textile exports is more steep between and India's textile exports rose from Rs.14,409.5 crore in to Rs.35,526.1 crore in and further to a peak of Rs. 57,736.9 crore in Compared to the overall exports from India s textile exports has shown a moderate rise during the period from to

32 73a Exports of Textile Exports O f All Commodites Graph SHARE OF TEXTILE EXPORTS IN EXPORTS OF ALL COMMODITIES QC09m > Q3SZ14 CS9901- ZPOPP S'60m I 6 4 j i ejojo saadny ut anjea

33 74 6. Textile exports rose from per cent of overall exports in to per cent in and further to per cent in Sector-wise Exports of Textiles : textiles. Table 2.11 provides the details about sector-wise exports of TABLE 2.11 Sector-wise Exports (Rs. in million) Export items Rs. Readymade garments 2,39,834.5 Cotton textiles 1,76,973.8 Man-made textiles 47,327.6 Silk 12,745.3 Wool and woollens 1 1,236.0 Handicrafts 80,596.3 Coir 2,940.0 Jute 5,715.3 Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, p Table 2.11 reveals that sector-wise exports of textile indicate that readymade garments account for the largest amount of export earning during The second largest export earnings came from cotton textiles followed by handicrafts, man-made textiles, silk, wool and woollens, jute and coir textiles.

34 75 Export of Cotton and Non-cotton Yarn : India is the largest exporter of yarn in the world. Table 2.12 provides details of yarn exports during and The following generalisations emerge from Table The quantity of cotton yarn exported rose from 260 million kg in to 466 million kg in , 489 million kg in , but slumped to 486 million kg in However, it rose to 555 million kg in The value of cotton yarn export rose from Rs.33,402 million in to Rs.53,682 million in , Rs.59,121 million in , Rs.59,537 million in and further to Rs.66,792 million in The export of non-cotton yarn rose from 69.2 million kg in to 76.4 million kg in , million kg in , million kg in and further to million kg in The value of non-cotton yarn exports rose from Rs.7,571.8 million in to Rs.8,015.6 million in , Rs.12, million in , but slumped down to Rs.12, in The value of exports ultimately rose to Rs.16, million in

35 lue I cr3 > 1 Rs 1, ,057 9, CN O 1,528 53, , , rr o r- 'O»rj e (continued) 76 TABLE Export of Cotton and Non-cotton Yarn I I Item 1 Qty Value j Rs. a4-» 1I COTTON YARN ,149 8, rr a) ls-40s b) 41s and above 9*1 33, Sub-total II. NON-COTTON YARN I , , , , o> 69.2 a) Blended spun yarn b) Non-cotton spun yarn c) Filament yarn Sub-total

36 Mn kg Mn Rs. Mn US $ Qty. Value Note P = Provisional ti 3 /A \ -> 4 * '-t s» 1, , s O r (P) Value Rs 55,871 10,921 66,792 7, ,680 4, o*9 S *-4 >> & S* S 0S wt 1, , ,94 o <N Value Rs. 48,244 11,293 59,537 5, " SO <s «*< 77 (Table 2.12 continued) Qty Value Rs. 1 Item O' I COTTON YARN cn m to rr 486 1, ,579 47,816 11,305 59,121 r'i r- m 489 a) ls-40s b) 41s and above Sub-total II. NON-COTTON YARN , , , V *A * * 4 t> 9 fa O w-4 sn os «f) <* *> * < : 56.76SO a) Blended spun yarn b) Non-cotton spun yarn c) Filament yarn Sub-total Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, pp Source

37 78 Profitability Ratios in Cotton/Man-made Fibre Textile Industry Table 2.13 shows the profitability ratios in cotton/man-made fibre textile industry. Year TABLE 2.13 Profitability Ratios in Cotton/Man-made Fibre Textile Industry Gross profit as percentage of sales Cotton textile industry All industry Profits after tax as percentage of net worth Cotton textile industry All industry (*) (*) (*) (#) (x) Source : Reserve Bank of India, as quoted in Compendium of Textile Statistics- 20, Office of the Textile Commissioner, Government of India, Mumbai, p.91. (*) Numerator Negative (#) 162 cotton blended textile companies are included in study of 1948 public limited companies. (x) 49 cotton blended textile companies are included in the study of 820 large public Ltd., companies (having PUC Rs. 1 crore and above) only. The following generalisastions emerge from Table 2.13.

38 79 1. The gross profit as percentage of sales of cotton textiles has declined from 8.3 per cent in to 5.1 per cent in It recovered to 7.3 per cent in , again slumped to 5.9 per cent in with a revival to 9.7 per cent in and reached a high of 13.7 per cent in , the highest gross profit as a per cent of sales in the two decades between and A further decline during the subsequent period shows poor performance of cotton textile industry in terms of profitability ratios. Compared to cotton textile industry the performance of all industry during the period of two decades from to is much better. The gross profit as per cent of sales for all industry has experienced an upward trend during the first decade from to There is, however, some fluctuating trend during the next decade from to but it is much better compared to the position of cotton textiles. 2. The performance of cotton textiles in terms of profit after tax as percentage of net worth has been very discouraging compared to all industry position during the two decades from to The best performance of cotton textiles in its profits after tax was only during (17.3 per cent), (15.6 per cent) and (13.9 percent). During the rest of the period of performance is poor.

39 80 Problem Areas of Textile Industry in India : Expansion in production capacity has led to good amount of production increase over the last few decades in the textile industry in India. However, the industry suffers from bouts of market recession leading to fluctuating profitability. A large number of units have suffered losses. Credit Crunch : Textile mills have faced the problem of severe credit crunch and high interest cost. This is in spite of credit liberalisation measures announced by Reserve Bank of India leading to whopping increase of Rs. 17,850 crore in loanable funds of the commercial banks. The RBI has announced that the lending methods prescribing margins, inventory norms and current ratio were no longer valid. But the banks are still halting in their approach in advancing loans. The lending rates in our country are higher than in our competing countries and the interest cost in the industry is eroding the profitability of mills. Infrastructure : Another problem area is the infrastructural bottlenecks, high incidence of central and state and local levies, unfair competition from small scale sectors. In addition to these are the uncalled for regulations and wages unrelated to productivity. The industry is also

40 81 facing problems of inadequacies of power, transport and telecommunication sectors. High Power Tariffs : The power tariffs are higher in India compared to those in competing countries like Indonesia wherein the average power cost works out to around Rs.2 per KWH which is 40 per cent lower than the power cost in India. Similarly, water charges in Indonesia are around Rs.45 per 10,0 litres as against Rs.330 per 10,0 litres in (Mumbai) India. Tax Imposts : Apart from central excise textile units are burdened with a plethora of fiscal imposts in the form of state sales tax, local levies and other cesses the incidence of which works out to 10 per cent of cost of production. Such oppressive incidence blunts the competitive edge of manufacturing units. Regulations on Textiles : It is necessary to remove statutory controls in the form of hank yarn obligation, markings on cloth and yarn and restrictions on production of specified items of yarn and fabrics. They have outlived their utility. It should be remembered that the basic objective of economic liberalisation has been to deregulate and decontrol superfluous restrictions on production and distribution of commodities.

41 82 Closure of Mills : It is a disheartening fact that 34 spinning mills and 3 composite mills were closed during This is in addition to 349 mills which were lying closed and majority of them has remained closed for more than three years now. The major causes for sickness of textile mills is identified by the State Bank of India Study Group as under:4 1) Excess capacity creation and low capacity utilisation. 2) Growing technological obsolescence. 3) Declining productivity standards. 4) Lack of vigorous marketing strategies. 5) Ineffective management. 6) Lack of financial discipline. 7) Absence of price stabilisation in cotton leading to upward price trend. 8) Competition from powerlooms in cost effectiveness. 9) Absence of timely modernisation and poor upkeep of machinery. 10) Liquidity crunch arising out of cash losses. 11) Frequent power cuts in some states. Deshpande, S.D. and Kazi N.S., Size, Structure and Growth of Indian Textile Industry, Textile Industry and Trade Journal, Anual Number, 1998, p. 17.

42 83 The TUFS : The Government of India has launched Technology Upgradation Fund Scheme (TUFS) for modernisation of various segments of textile industry. However, the stiff and stringent norms under the scheme render many of the spinning mills ineligible to avail assistance from the fund to modernise their plants. High Cost of Economy : The cost structure in the textile industry reveals some disconcerting trends. Spinning costs in India are much higher compared to competing countries like, Brazil, Korea, Thailand, USA and Italy. No doubt, waste generation in India is the lowest at 9 per cent of the total cost of production which in other countries it ranges between 11 and 23 per cent. Labour cost in India is also the lowest at 3 per cent, but in other countries it ranges between 5 per cent and 38 per cent. The highest being in Japan and Italy at 29 per cent and 38 per cent respectively. Power cost in India is very high at 12 per cent of total manufacturing cost. In competing countries like, Brazil (7 per cent), Italy (9 per cent) and USA (7 per cent), the power cost is lower. The financial cost including depreciation and interest in India amounts to a staggering 71 per cent of total spinning cost. In Italy and Japan, it is 38 per cent and in USA it is 53 per cent. The capital

43 84 interest rates in India are also the highest at 18 per cent, whereas it is 7.5 per cent in USA, 5.5 per cent in Japan and 10 per cent in Brazil, Taiwan and Korea. Weaving costs too are high in India compared to weaving costs in Korea and Thailand. The weaving costs in Korea and Thailand are below 80 per cent of weaving costs in India. Here, the cost of power and the financial costs account for 74 per cent of the total weaving cost in India. The labour cost is the lowest at 6 per cent. Textile Industry in Karnataka : Karnataka has an industrial history as a pioneer of modern manufacturing. It dates back to pre-independence period. In the annals of industrial development of the country, Karnataka enjoys distinction of being pioneer largely due to the foresight and dynamism of the princely rulers of the states. In fact some factories were set up as early as the last century itself. 5 Cotton Textile Industry - The Pre-independence Scenario : The first attempt to start a cotton textile mill was in the year 1884 when the Mahaboob Sahi Kalburga Mills (MSK) was started with the active support of the Government of Nizam of Hyderabad.6 The 6 Upendranath, C., Vijaybhasker, M and Vyasulu, Industrial Growth and Structure - Analysis of Manufacturing Sector in Karnataka, Economic and Political Weekly, Vol. 29, No. 48, Nov. 26, 1944, p.157. Karnataka State Gazetteer - Part-I, Government of Karnataka Publication, Bangalore, 1982, p. 781.

44 85 MSK Mills Co. Ltd., was registered under the Indian Companies Act The mill ran into financial difficulties and was taken over by the Government of Karnataka in 1963 and subsequently by the National Textile Corporation (NTC) in A British owned textile mill was started in Gokak Falls in 1885 and another mill owned by British entrepreneurs was started in Later two large scale textile mills came up in Bangalore by name, The Bangalore Woollen, Cotton and Silk Mills Ltd./ and The Mysore Spinning and Manufacturing Co. Ltd., (1894).8 In 1919 The Minerva Mills was established in Bangalore. The Government sponsored and supported textile mill Sri Krishnarajendra Mills Ltd., in Mysore came up in These two mills were producing cotton yarn of 10s and 40s counts, cotton cloth, towels, dhoties, chaddhars and shirtings. The Davangere Cotton Mills was established in The Post-independence Period : The textile industry received the much needed stimulus from the state in the post-independence period. As a result, 3 new textile mills were started in Karnataka between 1945 and They are - (1) Shree Shankar Textile Mills, (2) Shree Ganeshwar Textile Mills in 7 Karnataka State Gazetteer - Part-I, Government of Karnataka Publication, Bangalore, 1982, p Karnataka State Gazetteer - Part-I, Government of Karnataka Publication, Bangalore, 1982, p Karnataka State Gazetteer - Part-I, Government of Karnataka Publication, Bangalore, 1982, op Karnataka State Gazetteer - Part-1, Government of Karnataka Publication, Bangalore, 1982, p. 788.

45 86 Davangere and (3) The Kapila Textile Mills in Nanjangud near Mysore city.11 Table 2.14 provides the details of the growth of textile industry in Karnataka from 1951 to TABLE 2.14 Number of Mills and Installed Capacity in Karnataka From 1951 tol995 Year No. of Mills Installed capacity Spindles Looms ,64,192 4, ,84,518 5, ,15,474 5, ,30,152 5, NA NA NA NA NA NA ,59,0 6, ,,322 6,350 Source : : Quarterly Economic Review of Karnataka, Bureau of Economics and Statistics, Government of Karnataka, various issues : Compiled from Indian Textile Annual and Directory, Eastland Publications, Calcutta, and Edition. It is clear from Table 2.14 that there were 16 mills in Karnataka with an installed capacity of 3,64,192 spindles and 4,3 looms in The number rose to 21 mills with installed capacity of 5,15,474 spindles and 5,470 looms in By the beginning of eighties there has been more than 1 per cent increase in the number of mills. By 1992 the number of mills rose to 53 and the installed capacity rose to Baldwin George, B., Industrial Growth in South India: Case Studies in Economic Development, The Free Press Gian coe Illinois, 1959, p. 177.

46 87 10,59,0 spindles and 6,174 looms. There was a further increase in the number of mills to 57 with the installed capacity of 14,,322 spindles and 6,350 looms. Further, expansion of textile mills and installed capacity has been thwarted considerably by the government policy of encouraging handlooms and powerlooms. By the total number of textile mills in the organised sector stood at 59 and the installed capacity has actually gone down considerably due to closure of some mills in recent years. The total number of textile mills and the installed capacity in the last 5 years up to 20 in Karnataka are provided in Table It is clear from Table 2.15 that : 1) The number of spinning mills in Karnataka rose from 42 in 1996 to 49 in 20. During the same period, however, the number of composite mills came down from 12 to 10. 2) During the nineties the installed capacity in the textile units in Karnataka shows an expansion in the number of spindles and rotors but decline in the number of looms. 3) Management-wise textile mills as on shows that there was one spinning mill each under the central and state government control in the public sector, while there were 12 spinning units co-operative sector and 35 spinning units in the private sector. Thus, there were a total number of 49 spinning mills in Karnataka

47 88 TABLE Growth of Textile Industries in Karnataka Mills Unit (P) No Cotten (Man-made) Fibre Textile Mills Spinning mills (Non-SSI) No Composite mills (Non-SSI) No Spinning mills (SSI) No Exclusive weaving mills (Non-SSI) No Export oriented units(eous) No Powerloom units No. 19,798 20,153 20,153 20,951 23,503 Man-made fibre unit3 No Man-made filament yarn units No No. of power processing units No NA Capacity Installed Spindles (Non-SSI + SSI) Thousand Nos. 1,204 1,181 1,167 1,149 1,149 Rotors (Non-SSI + SSI) No. 8,616 10,560 13,024 47,512 47,5 12 Looms (Composite A Exclusive No. 4,323 3,250 2,998 2,981 2,981 weaving units) i No. of powerlooms No. 57,112 58,611 58,611 63,209 75,512 Man-made fibre (TPA) Thousand kg -- Man-made filament (TPA) Thousand kg Workers on Roll Spinning mills A composite mills (Non-SSI) No ,676 34,750 36,946 36,946 Spinning mills (SSI) No Exclusive weaning mills (Non-SSI) No ,460 3, EOUs No , Production of Fibres Raw cotton Lakh bales Man-Made fibre Thousand kg Cotton Consumption by Mills Non-SSI Thousand kg 80,166 82, ,167 73,093 SSI Thousand kg ,325 1,273 2,332 Production of Yarn Cotton yarn Thousand kg 75,429 77,672 74,3 64,814 65,492 Blended yarn Thousand kg 7,522 11,640 13,732 11,055 8,930 1% Non-cotton yarn Thousand kg 3,418 3,343 4,020 3,973 2,323 Total spun yarn Thousand kg 86,369 92,655 92,052 79,842 76,745 Fabric Production (Mill sector) Cotton Thousand kg 26,863 23,510 21,166 11,922 8,524 Blended Thousand kg 15,213 11, , % Non-cotton Thousand kg 193 4,374 4, T otal Thensaad kg 42,269 39,247 33,334 17,493 9,516 Closure position (Non-SSI) Spinning No Composite No T otal No Afrected dao to closure Spindles Thousand No Rotors No. 3,456 1, , Looms No. 2,568 1,068 1,068 1,432 1,563 Workers on roll No. 11,341 8,707 7,927 11, ,693 BIFR (Calendar year) Registered with BIFR No ** (Year end position) TUFS No. of applications received No Total cost of project Rs. crore No. of application sanctioned No Amount sanction Rs. crore I No. of applications disbursed No Amount disbursed Rs. crore Source : Compendium of Textile Statistics - 20, Office of the Textile Commissioner, Government of India, Mumbai, pp ** As on 9.9,99. * Cotton yarn. P = Provisional.