The Hindu Business Line : `Textile mills plagued by inefficiency, stagnation'

The Indian textile sector still relies heavily on relatively inefficient loom and hosiery sectors to feed the upper end of the value chain, which in turn results in loss of overall efficiency of the sector.

New Delhi , Aug. 23

EVEN as the Indian textile sector is gearing up to the challenge of competing in the global market, both the Government and the industry would have to grapple with an alarming statistic pointing at stagnation in overall efficiency standards.

In 1951, the country had 276 composite mills, the most efficient production units in the textile industry. Fast-forward 52 years to 2003 and there are still just 276 composite mills operating in the country.

While the stagnation in the number of mills has been largely because of the Government's restrictive policies preventing new mills being set up, another alarming factor facing the sector is the closure of existing mills and the resulting job loss.

In all, till March 2003, an estimated 483 mills had shut shop, resulting in 3.90 lakh workers losing their source of livelihood, according to the latest data complied by Ministry of Textiles.

"The Indian textile sector still relies heavily on relatively inefficient loom and hosiery sectors to feed the upper end of the value chain, which in turn results in loss of overall efficiency of the sector. This is even as countries such as China, Taiwan and Brazil, among other major textile producing nations, have shifted to the mills sector to achieve economies of scale," an industry player said.

According to industry experts, the weaving capacity of the organised mill sector stagnated for much of the last 50 years because the Government's policy permitted only a marginal expansion in the weaving capacity of the mills sector. Even after the removal of the restriction on the creation of capacities through the Textile Policy of June 1985, the weaving capacity has been declining consistently since 1988.

In fact, between 1993 and 2003, the weaving capacity has been decreasing annually at the rate of around three per cent, according to the Compendium of Textile Statistics 2003.

"The chronic problem of closure of mills has also continued to plague the industry," an Indian Cotton Mills Federation representative said. He said that of the total closures, spinning mills had a major share and constituted 72 per cent of the total mills closed for far.