AN ANALYSIS OF TREND AND

GROWTH RATE OF TEXTILE

INDUSTRY IN INDIA
Introduction:
The textile industry is depending on agriculture
sector in getting raw materials and also called Agro-based
industry .India is the world’s second largest producer of
textiles after China. It is the world’s third largest producer of
cotton-after China and the USA-and the second largest cotton
consumer after China. The textile industry in India is one of the
oldest manufacturing sectors in the country and is currently
it’s largest. The Indian textile industry is one of the second
largest in the world with a massive raw material and textile-
manufacturing base. International trade in textiles and
clothing has played an important role in the development
process of many countries and has also facilitated their
integration in to the world economy. In the Developed
Countries, the process of industrialization and Subsequent
prosperity in a way commenced with the mechanization of
textile production in the early 19th Century. In the developing
countries, on the other hand, the sector has come to occupy
an important place in terms of its contribution to national
output, employment and exports. Developing countries as a
group account for more than one half of world exports of
textiles and clothing. The below chart indicates about the
structure of Indian textile industry
• Structure of Indian Textile Industry
The India textile industry is
comprised mostly of small-scale,
nonintegrated spinning, weaving,
finishing, and apparel-making
enterprises. This unique industry
structure is primarily a option of
government policies that have
promoted labor-intensive, small-
scale operations and discriminated
against larger scale firms in India,
however, these types of mills now
account for about only 3 percent of
output in the textile sector
• Role of Textile Industry in India is the 15th largest economy in the
world with a GDP of USD 3.319 trillion and a GDP per capita of USD 2,
900. In 2008, the textile sector contributed about 14% of industrial
production, 4% of the GDP and provided direct employment to over 33
million people. The textile sector is the second largest provider of
employment after agriculture. Cotton is one of the principal crops of
India and plays a vital role in the country’s economic growth by
providing substantial employment and making significant contributions
to export earnings. The cotton cultivation sector not only engages
around 6 million farmers, but also involved another about 40 to 50
million people relating to cotton cultivation, cotton trade and its
processing. One of the earliest to come into existence in India, it
accounts for 14 per cent of the total industrial production, contributes
to nearly 30 per cent of the total exports and is the second largest
employment generator after agriculture. Indian economy is largely
dependent on the textile manufacturing and trade in addition to other
major industries about 27 per cent of the exchange earning are on
account of export of textiles
and clothing alone. Around 35 million people are directly employed in the textile manufacturing
activities and 4 per cent to the GDP.
• It contributes to nearly 30 per cent of the total exports .
• It contributes about 27 per cent of the exchange earning .
• About 35 million people are directly employed in the textile manufacturing activities .
• It contributes 9 per cent of excise collections .
• Contributes 4% to the Gross Domestic Product (GDP) .
• Accounts for 17% of total Exports
India's Position in Global Textiles Industry
• India's position in the World Textiles Economy Second
largest producer of raw cotton.
• Third largest producer of cotton yarn.
• Third largest producer of cellulosic fiber/yarn.
• Second largest producer of silk.
• Fifth largest producer of synthetic fiber/yarn.
• Largest producer of jute
• The textile sector also has a direct link with the
rural economy and performance of major fibre crops
and crafts such as cotton, wool, silk, handicrafts and
handlooms, which employ millions of farmers and
crafts persons in rural and semi-urban areas. It has
been estimated that one out of every six households
in the country depends directly or indirectly on this
sector. The below chart 2 indicates that the average
percentage share of production of cotton of India in
2007/2009. India is playing an ever-important role in
the world’s cotton market. Set to bypass the United
States and become the world’s second largest
producer of cotton in 2007, India has seen its cotton
sector undergo critical changes in recent years. This
handbook explores the various facets of cotton
production in India — from the introduction of
biotechnologies and the subsequent increase in
production to the despair of small-scale cotton
farmers and analyses the domestic and international
forces at play. Cotton subsidies and agricultural
policy are closely examined.
Trend and Growth of Textile Industry :
India has several
advantages in the textile sector, including abundant
availability of raw material and labor. It is the second largest
player in the world cotton trade. It has the largest cotton
acreage, of about nine million hectares and is the third
largest producer of cotton fibre in the world. It ranks fourth
in terms of staple fibre production and fourth in polyester
yarn production. The textile industry is also labor intensive,
thus India has an advantage. Mills, power looms and
handlooms constitute three independent sectors of the
Indian textile industry. The mill sector is organized,
mechanized and modernized production of yarn whereas the
power loom and handloom sectors have remained
technologically backward and stagnant. Almost all the spun
yarn made in India come from
The organized sector, reflecting the highly capital intensive nature of yarn spinning. Weaving in the mill
sector has been gradually suffering due to the competition from the power loom and the trend may
continue. The power looms sector plays a pivotal role in meeting the clothing needs of the country.
India has already completed more than 60 years of its independence. The analysis of the growth pattern
of different segment of the industry during the last five decades of post-independence era reveals that
the growth of the industry during the first two decades after the independence had been gradual,
though lower and growth had been considerably slower during the third decade. The growth thereafter
picked up significantly during the fourth decade in each and every segment of the industry. The peak
level of its growth has however been reached during the fifth decade i.e., the last ten years and more
particularly in the 90s. The Textile Policy of 1985 and Economic Policy of 1991 focusing in the direction
of liberalization of economy and trade had in fact accelerated the growth in 1990s. The spinning
spearheaded the growth during this period and man-made fiber industry in the organized sector and
decentralized weaving sector.
Area
Chart 1:
Area Cultivated (in lakhs of Hectares) The
compound growth rate estimated for the
total of north Indian state, central Indian
state and south Indian state by area,
production and yield rate for the 2002-
2003 to 2005-2006, 2005- 2006 to 2009-
2010 and 2009- 2010 to 2011-2012
respectively. The analysis of growth rate so
that a negative (-3.03%) growth rate
registered during the period of 2005-2006
to 2009-2010 in the north Indian state. The
growth rate of the same has a registered
positive growth from central and south
Indian states.
Production
Chart 2:
Production Cultivated (in lakhs of
bales) The compound growth rate of
production is negative (-0.8239) in
2005-2006 to 2009-2010, as well as
(-38.77). In 2009-2010 to 2011-2012
Yield rate
India’s Textile Exports
Chart 3:
Yield Rates (in kgs per hectare) The
compound growth rate is negative
from 2005-2006 to 2009-2010 and
2009-2010 to 2011- 2012 (-0.447)
and(-3.432) in 2009- 1010 to 2011-
2012. India’s textile and clothing
industry is one of the main stays of
the national economy. It is also one
of the largest contributing sectors of
India’s exports worldwide.
The vision statement for the textile industry for the 11th five year plan (2007- 2012), inter-alia, envisages India securing 97% share
in the global textiles trade by2012. At current prices the Indian textiles industry is pegged at US$ 55 billon, 64% of which services
domestic demand. The textile exports basket consist of cotton, wool, silk, jute, handicraft, coir man-made fibre textiles etc.
Further, the export basket consists of variety of items: cotton yarn and fabrics, wool and silk fabrics, man-made yarn and fabrics,
etc., of which man-made textiles and silk showed the highest growth rate. The Textile Policy of 1985 heralded a new beginning for
the textile industry by focusing on the deep-rooted structural weaknesses. The reforms in 1990s further boosted the textile
industry. The textile industry was de-licensed and reforms on fiscal and export front were pursued. As a result, Exports of textiles
and clothing product from India have increased steadily over the last few years, particularly after 2004 when textile export quota
were discontinued. The textile exports recording a modest growth of 10.10% in the fiscal year 1999-2000. The year 2000-01 had,
however shown are mark able growth of 15% over the previous year exports. However, a declining trend has been noticed in the
textile exports since the beginning of the year 2001, which is mainly due to the slow-down in the economies of some of the major
importing countries such as US and increased competition from our neighboring countries like China, Bangladesh etc. Indian
textiles and clothing exports is facing various constraints of infrastructure, high power and transaction cost, incidence of state
level cess and duties, lack of state-often-art technology etc. Textile exports during the period of 2001 amounted to US$ 10381.8
million as against US$ 12037.6 million during these month in the previous year, recording a decline of around 11%. This indicates
the downtrend in textile exports has been reversed and they are back on path of export growth. The textile exports show the
upward trend after 2002. Textile exports during the period 2006, 2007, 2008 were 19146.04 US$ million, 22146.78 US$ million,
21226.34 US$ million recording a growth of 9.28%, 15.67%, 4.15% as compared to the corresponding period of previous year.
During the period April-September 2010 the textile exports were 11264.58 US$ million.
Problems of Textile:
Cotton textile industry is based many problems. The result is that
many cotton mills became inefficient and uneconomic-one-dirt of the cotton mills
became sick and was closed down. Following are some of the problems faced by the
industry
• Shortage of raw materials-Raw material determines 35 per cent of the total
production cost. The country is short of cotton, particularly long- staple cotton which is
9 per cent of the world output of cotton.
• Obsolete machinery-In India most of the cotton textile mills are working with old
and obsolete machinery.
• Power shortage-Textile mills are facing acute shortage of power. Supplies of coal
are difficult to obtain and frequent cuts in electricity and load shedding affect the
industry badly. This leads to loss of man hours, low production and loss in the mills.
• Low productivity of labour-Low productivity is another major problem of cotton
textile industry. And also industrial relations are not very good in the country. Strikes,
layoffs, retrenchments are the common features of many cotton mills in the country.
• Competition in foreign market-The Indian cotton textile goods are facing stiff
competition in foreign markets from Taiwan, South Korea and Japan whose goods are
cheaper and better in quality. It is really paradoxical that in a country where wages are
low and cotton is internally available, production costs should be so high.
Competition in foreign market-The Indian cotton textile goods are facing stiff
competition in foreign markets from Taiwan, South Korea and Japan whose goods are
cheaper and better in quality. It is really paradoxical that in a country where wages are
low and cotton is internally available, production costs should be so high.
While certain traditional buyers of Indian textile goods like Myanmar, Indonesia, Sri Lanka, Ethiopia,
Aden etc. are facing severe balance of trade problem some European countries like France, Germany,
U.K. and Austria etc. have imposed quota limitations over the Indian textile imports. Acute world
recession has badly affected the export prospects. The cotton textile industry of the country is thus
facing both short-term and longterm problems. Former includes problems of high prices, shortage of
raw materials, liquidity problems due to poor sales and accumulation of huge stocks due to poor
demand in the market. The long term problems of the industry include the slow pace of modernisation,
out dated technology resulting into low productivity, high cost of production, low profitability and
increasing sickness of mills.
• References 1. LM Prasad, “Organzational Behaviour”, Sultan Chand & Sons, ed 2003
• 2. Agarwal, S., and D. Dhruv, (2004), Textile and Clothing Industry in India, KhandwalaSecurities
Limited.
• 3. Annual Report 2009-10, Ministry of Textile,http://texmin.nic.in/annualrep/ar_09_10_english.pdf
viwed.
• 4. Balassa and Michalopoulos “Liberlizing World Trade”. Development Policy issues Series Report,
VPERS4 (Washington, DC: office of the Vice President, Economics and research, World Bank, 1985).
• 5. Economic Survey (2009-2010), “India’s External Sector”, Foreign Trade Review, JulySept. 2009, Vol.
XLIV No-2, pp. 121.
• 6. Gherzi report (2003), “Benchmarking of Costs of Production of Textile Products in India visà-vis
China, Pakistan, Indonesia, Bangladesh and Sri Lanka”, Swiss Textile Organization.
• 7. Nordas, H.K. (2004). The global textile and clothing industry post the Agreement on Textiles and
Clothing (WTO working paper ERSD). Geneva: World Trade.
• 8. Verma, Samar, (2002), 'Export Competitiveness of Indian Textile and Garment Industry', ICRIER,
November.