Indian weaving industry – An overview

India is at the brink of a revolution. From emerging as the sourcing hub for technology led service, it is looking at a transition into becoming the world’s production center for value added products.

India has always been known for the high quality of its textile products. Strong raw material base such as cotton and polyester and with its core competencies in producing woven fabric, knitwear and value added textiles; the future potential to market these products at the global level looks promising.

The textile industry holds significant status in the country. The industry provides one of the most fundamental necessities of the people. It is an independent industry, from the basic requirement of raw materials to the final products, with huge value-addition at every stage of processing.

Today textile sector accounts for nearly 14 per cent of the total industrial output.

Indian fabric is in demand with itsxethnic, earthly colored and many textures. The textile sector accounts about 30 per cent in the total export.

This conveys that it holds potential if one is ready to innovate.

The textile industry is the largest industry in terms of employment economy, expected to generate 12 million new jobs by 2010. It generates massive potential for employment in the sectors from agricultural to industrial.

Employment opportunities are created when cotton is cultivated. It does not need any exclusive Government support even at present to go further. Only thing needed is to give some directions to organize people to get enough share of the profit to spearhead development.

Cotton textiles, i.e., yarn, fabrics and made-ups (mill-made / powerloom / handloom) constitute more than 2/3rd of our exports of all fibres / yarns / made-ups. During 2007-08, the cotton textiles exports have amounted to US$6.85 billion, recording a healthy increase of 23.14 per cent over the exports during previous year. During April-December 2008, the cotton textiles including handlooms exports have amounted to US$3,765 billion, recording a decline of 11.39 per cent over the exports during the corresponding period of 2007. During 2007-08, the man-made textiles exports have amounted to US$3,176 billion, recording an increase of 32.38 per cent over 2006-07. During April-December 2008, the man-made textiles exports have amounted to US$2.58 billion, recording a growth of about 12.07 per cent over the exports during the corresponding period of 2007.

Indian weaving industry has conventionally been one of the most promising sectors of huge employment. In fact, after agriculture, this industry is the largest provider of work force. The abundance in the raw materials, the continuous supply of cheap work force is the contributing factors behind the success of the weaving industry of India. However, the liberalization of the international trade coupled with change in the reforms of domestic economy, affected the weaving industry of India negatively.

Though weaving is one of the important sector for Indian textile industry, it has not been given due attention like spinning sector. Moreover structure of the industry plays a major role in making it competitive. Nature of this sector is mainly unorganized. The sector consists of fragmented, small and often, un-registered units that invest low amount in technology and practices especially in the power loom, processing, handloom and knits. India has world’s largest installed base for looms. There are approximately 5mn looms in the country. India has 1.8mn shuttle looms which is 45 per cent of world capacity, and 3.90mn handlooms which is 85 per cent of world capacity.

The manufacturing of the weaving products makes a remarkable contribution to the national GDP and even in the exports revenue. As per studies, it has been found out that the weaving industry provides employment to approximately 12.5 million people, thereby, making this industry the largest provider of rural work force. It is preceded by the agriculture sector.

Over 38,00,000 weaving industries have been built throughout the country, and more than 15,00,000 domestic weaving industries have been set up in the North and Eastern parts of the country. On the other hand, the southern States also have their huge share of weaving industries, for example, Andhra Pradesh houses some 3,20,000 weaving industries. Most of these industries are situated in Chirala, Pedana, Polavaram, Mangalagiri, Pochamapali, Ponduru, Dharamvaram, Narayanpet, Puttapaka, Madhavaram, Emmiganur and Gadwal. Along with these centers, the coastal areas of Andhra Pradesh also have numerous centers for weaving.

Estimates over the years have found out that the weaving industry are supporting some 32 other sectors that include marketing, financial, transportation, hotels and even maintenance services.

The power loom sector produces more than 60 per cent of cloth and the Textile Ministry’s estimation says that more than 60 per cent of the country’s cloth exports originated from that sector. With its employment of 4.86mn workers, the power loom sector comprised approximately 60 per cent of total textile industry employment. As per the Textile Ministry of India up till March 31, 2006, the sector which produces various cloth products, including greige and processed fabrics consisted of 430,000 units with 1.94mn power looms. The Ministry projected the number of power looms to rise to 1.95mn in 2006-07. But modernization in looms is less and Indian industry still lags significantly behind the US, China, Europe, Taiwan, etc. (Texmin, 2005). Most of the looms we have currently in the country are shuttleless. There are less than 15,000 modern looms, whereas traditional looms are in large numbers. Value addition and the manufacturing of fabrics according to customer’s compliances, is not possible due to obsolete technology of looms.

Shuttleless weaving looms are up to three times more efficient than shuttle looms, but the penetration of modern shuttleless loom is very less. In 2001, there were some 27,000 shuttleless cotton looms in Indonesia, 21,000 in Thailand and 10,000 in India. In world share of shuttleless looms, India ranked 9th. The accompanying chart shows comparison of shuttleless loom proportion of India with other countries.

As described in the chart, India has lowest number of shutteless looms among all competing countries. While competitors like China and Indonesia are far ahead in this modernization. The US and Russia has highest proportion of modern shuttleless looms.

It is estimated that the weaving industry in India will grow by 25 per cent to over 35 million tons by the year 2010. The industry will maintain its growth throughout 2010. Apparel being the mostly used woven products is expected to expand its market in the international arena as well.

• India enjoys benefit of having plentiful resources of raw materials. It is one of the largest producers of cotton yarn around the globe, and also there are good resources of fibres like polyester, silk, viscose, etc.

• There is wide range of cotton fibre available, and has a rapidly developing synthetic fibre industry.

• India has great competitiveness in spinning sector and has presence in almost all processes of the value chain.

• Availability of highly trained manpower in both, management and technical. The country has a huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down to very reasonable rates.

• The installed capacity of spindles in India contributes for 24 per cent share of the world, and it is one of the biggest exporters of yarns in the global market. Having modern functions and favorable fiscal policies, it accounts about 25 per cent of the world trade in cotton yarn.

• The apparel industry is largest foreign exchange earning sector, contributing 12 per cent of the country’s total exports.

• The garment industry is very diverse in size, manufacturing facility, type of apparel produced, quantity and quality of output, cost, requirement for fabric, etc. It comprises suppliers of ready-made garments for both, domestic or export markets.

Massive fragmentation: A major loop-hole in Indian textile industry is its huge fragmentation in industry structure, which is led by small scale companies. Despite the government policies, which made this deformation, have been gradually removed now, but their impact will be seen for some time more. Since most of the companies are small in size, the examples of industry leadership are very few, which can be inspirational model for the rest of the industry. The skilled labor is cheap in absolute terms; however, most of this benefit is lost by small companies.

Political and Government diversity: The reservation of production for very small companies that was imposed with an intention to help out small scale companies across the country, led substantial fragmentation that distorted the competitiveness of industry. However, most of the sectors now have been de-reserved, and major entrepreneurs and corporate are putting-in huge amount of money in establishing big facilities or in expansion of their existing plants. Secondly, the foreign investment was kept out of textile and apparel production. Despite some motivating step taken by the government, other problems still sustains like various taxes and excise imbalances due to diversified into 35 states and Union Territories. However, an outline of VAT is being implemented in place of all other tax diversifications, which will clear these imbalances once it is imposed fully.

Labour laws: In India, labour laws are still found to be relatively unfavorable to the trades, with companies having not more than ideal model to follow a ‘hire and fire’ policy. Even the companies have often broken their business down into small units to avoid any trouble created by labour unionization. In past few years, there has been movement gradually towards reforming labour laws, and it is anticipated that this movement will uphold the environment more favorable.

Distant geographic location: There are some high-level disadvantages for India due to its geographic location. For the foreign companies, it has a global logistics disadvantage due the shipping cost is higher and also takes much more time comparing to some other manufacturing countries like Mexico, Turkey, China, etc. The inbound freight traffic has been also low, which affects cost of shipping – though, movement of containers are not at reasonable costs.

Lack of trade memberships: India is serious lacking in trade pact memberships, which leads to restricted access to the other major markets. This issue made others to impose quota and duty, which put scissors on the sourcing quantities from India.

The industry has the potential of attaining $34bn export earnings by the year 2010. The regulatory polices is helping out to enhance infrastructures of apparel parks, Specialized textile parks, EPZs and EOUs. The Government support has ensured fast consumption of clothing as well as of fibre. A single rate will now be prevalent throughout the country. The Indian manufacturers and suppliers are improving design skills, which include different fabrics according to different markets. The country’s fashion industry and fashion designers are marking their name at international platform. Indian silk industry that is known for its fine and exclusive brocades, is also adding massive strength to the textile industry.

The Scheme for Integrated Textile Parks is a collective initiative of the Government of India, a vision that aims to create cluster models to aggregate the capacities and harness the collective potential of small and medium textile companies.

The scheme has identified 34 such parks across the country with a capital investment of US$4 billion. The parks facilitate existing textile entrepreneurs with potential to upscale production capabilities, benefit from a common infrastructure resource with a minimum contribution from entrepreneurs, match global production standards, and cater to a ready worldwide market potential

The Indian loom industry is small scale unlike industry of China and Taiwan and therefore incurs high coordination cost. Higher power tariff is also one of the biggest challenges this industry is facing. Unlike spinning industry weaving loom sector is mostly concentrated in small areas of nations, where power fluctuation is a matter of routine. Productivity also gets affected time to time by fluctuation in power in such areas. Through Technology Upgradation Scheme (TUFS), Government is trying to modernize these sector and make import of latest technology looms easier and affordable. Still India lags behind in productivity due to outdated technology and low penetration of shuttleless looms. Advance technology installation demand skilled labor to understand and install such facilities, shortage of skill labor is also a roadblock in adaptation of new technology in weaving loom industry.