Future of Indian Textile Industry (2)

8/4/2019 Future of Indian Textile Industry (2)

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Indian Textile Industry

The textile industry is the largest industry of modern

India. It accounts for over 20 percent of industrial

production and is closely linked with the agricultural and rural economy. It is the single largest employer in

the industrial sector employing about38 millionpeople. If employment in allied sectors like ginning, agriculture, pressing, cotton trade, jute, etc. are added

then the total employment is estimated at 93 million. The net foreign exchange earnings in this sector are

one of the highest and, together with carpet and handicrafts, account for over 37 percent of total export earnings at over US $ 10 billion. Textiles,1 alone, account for about 25 percent of India‟s total forex

earnings.

India‟s textile industry since its beginning continues to

be predominantly cotton based with about 65 percent of fabric consumption in the country being accounted

for by cotton. The industry is highly localised in

Ahmedabad and Bombay in the western part of the

country though other centres exist including Kanpur, Calcutta, Indore, Coimbatore, and Sholapur.

The structure of the textile industry is extremely

complex with the modern, sophisticated and highly mechanised mill sector on the one hand and the

handspinning and handweaving (handloom) sector on

the other. Between the two falls the small-scale

1 Yarn, cloth, fabrics, and other products not made

into garments.



powerloom sector. The latter two are together known

as the decentralised sector. Over the years, the

government has granted a whole range of

concessions to the non-mill sector as a result of which the share of the decentralised sector has increased

considerably in the total production. Of the two sub- sectors of the decentralised sector, the powerloom

sector has shown the faster rate of growth. In the

production of fabrics the decentralised sector accounts for roughly 94 percent while the mill sector has a share of only 6 percent.

Being an agro-based industry the production of raw material varies from year to year depending

on weather and rainfall conditions. Accordingly

the price fluctuates too.India's trade in textiles and its share in world trade can be

categorized as follows:

India‟s Trade in Textiles

(1998)

Type India's Share inWorld Trade

Yarn 22%Fabrics 3.2%

Apparel 2%

Made-ups 9%

Over-all 2.8%

Global Scenario

Compound Annual Growth Rate

(CAGR) of different segments

Type CAGR (1993-98)

Yarn 31.79%Fabric 9.04%Made-ups 15.18%

Garment 6.795%



The textile and clothing trade is governed by the

Multi-Fibre Agreement (MFA) which came into force

on January 1, 1974 replacing short-term and long-

term arrangements of the 1960‟s which protected US textile producers from booming Japanese textiles

exports. Later, it was extended to other developing

countries like India, Korea, Hong Kong, etc. which

had acquired a comparative advantage in textiles. Currently, India has bilateral arrangements under MFA with USA, Canada, Australia, countries of the

European Commission, etc. Under MFA, foreign

trade is subject to relatively high tariffs and export quotas restricting India‟s penetration into these

markets. India was interested in the early phasing

out of these quotas in the Uruguay Round of Negotiations but this did not happen due to the

reluctance of the developed countries like the US and

EC to open up their textile markets to Third World

imports because of high labour costs. With the removal of quotas, exports of textiles have now to

cope with new challenges in the form of growing non-tariff / non-trade barriers such as growingregionalisation of trade between blocks of nations, child labour, anti-dumping duties, etc.

Nevertheless, it must be realised that the picture is

not all rosy. It is now being admitted universally and

even officially that the year2005 AD is likely topresent more of a challenge than opportunity. If the

industry does not pay attention to the very vital needs

of modernisation, quality control, technology

upgradation, etc. it is likely to be left behind. Already,



its comparative advantage of cheap labour is being

nullified by the use of outmoded machinery.

With the dismantling of the MFA, it becomes imperative for the textile industry to take on

competitors like China, Pakistan, etc., which enjoy

lower labour costs. In fact the seriousness of the

situation becomes even more apparent when it is

realised that the non-quota exports have not really

risen dramatically over the past few years. The

continued dominance of yarn in exports of cotton,

synthetics, and blends, is another cause for worry

while exports of fabrics is not growing. The lack of value added products in textile exports do not augur well for India in a non-MFA world.

Textile exports alone earn almost 25 percent offoreign exchange for India yet its share in global trade

is dismal, having declined from 10.9 percent in 1955 to 3.23 percent in 1996. More significantly, the share

of China in world trade in textiles, in 1994, was 13.24

percent, up from 4.36 percent in 1980. Hong Kong, too, improved its share from 7.06 percent to 12.65

percent over the same period. Growth rate, in US$

terms, of exports of textiles, including apparel, was

over 17 percent between 1993-94 to 1995-96. It declined to 10.5 percent in 1996-97 and to 5 percent in1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the

last two years. Imports grew by 12 percent in dollar terms in 1997-98, against an average of 5.8 percent



for all imports into India. Imports from China went up

by 50 percent while those from Hong Kong jumped by23 percent.

Global factors influencing textile industry

The history of the textile and clothing industry has

been replete with the use of various bilateral quotas, protectionist policies, discriminatory tariffs, etc. by the

developed world against the developing countries. The result was a highly distorted structure, which

imposed hidden costs on the export sectors of the Third World. Despite the fact that GATT was

established way back in 1947, the textile industry, till 1994, remained largely out of its liberalisation

agreements. In fact, trade in this sector, until the

Uruguay Round, evolved in the opposite direction. Consequently, since 1974 global trade in the textiles

and clothing sector had been governed by the Multi- fibre agreement, which was the sequel to an

increasingly pervasive quota regime that began with

the Short-term arrangement on cotton products in

1962 and followed by the Long-Term arrangement. After the successful conclusion of the Uruguay Round

in 1994, the MFA was replaced by the Agreement on

Textiles and Clothing(ATC), which had the sameMFA framework in the context of an agreed, ten year phasing out of all quotas by the year 2005. The

section that follows takes a brief look at the history of these protectionist regimes as also a more detailed

look at the MFA and the ATC.Multi-FibreAgreement (MFA)On January 1st, 1974, the



Arrangement Regarding the International Trade in

Textiles, otherwise known as the MFA came into

force. It superseded all existing arrangements that

had been governing trade in cotton textiles since 1961. The MFA sought to achieve the expansion of trade, the reduction of barriers to trade and the

progressive liberalisation of world trade in textile

products, while at the same time ensuring the orderly

and equitable development of this trade and

avoidance of disruptive effects in individual markets

and on individual lines of production in both importing

and exporting countries. Though it was supposed to

be a short-term arrangement to enable the adjustment of the industry to a free trade regime, the MFA wasextended in 1974, 1982, 1986, 1991, and 1992.Because of the quotas allotted, the MFA resulted in a

regular shift of production from quota restricted

countries to less restricted ones as soon as the

quotas began to cause problems for the traders in importing countries. The first three extensions of the

MFA, instead of liberalising the trade in textiles and

clothing, further intensified restrictions on imports, specifically affecting the developing country exporters

of the textile and clothing products. Increased usage

of several MFA measures tended to further erode the

trust which developing countries had originally placed in the MFA.



The MFA set the terms and conditions for governing

quantitative restrictions on textile and clothing

exports of developing countries either through

negotiations or bilateral agreements or on a unilateral basis.The bilateral agreementsnegotiated between importing and exporting

country‟s contained provisions relating to the

products traded but they differed in the details. The restraints under the MFA were often

negotiated, or unilaterally imposed at relatively

short intervals, practically annually. The quotas

could be either by function or fibre

Under the MFA, product coverage was extended to

include textiles and clothing made of wool and

man-made fibres (MMF), as well as cotton and

blends thereof. With regard to applications of safeguard measures, import restrictions could be

imposed unilaterally in a situation of actual market disruption in the absence of a mutually

agreed situation. However, in situations involving

a real risk of market disruption only bilateral restraint agreements were possible. The Textile

Surveillance Body (TSB) was set up to monitor disputes regarding actions taken in response to

market disruptions.



The MFA permitted certain flexibility in quota

restrictions for the exporters so that they could

adjust to changing market conditions, export

demands and their own capabilities. The MFA also provided for higher quotas and liberal growth

for developing countries whose exports were

already restrained. The MFA asked the

participants to refrain from restraining the trade of small suppliers under normal circumstances. In

general, developed countries, under MFA, chose

not to impose restrictions on imports from other developed countries

The TSB ensured compliance by all parties to the

obligations of bilateral agreements or unilateral agreements. It called for notification of all restrictive measures. A Textiles Committee-established as a management body consisting of

all member countries - was the final arbiter under the MFA and worked as a court of appeal for

disputes that could not be resolved under TSB.

Unsatisfactory experience with several extension

protocols of the MFA, retention clauses, such as

“good will”, “exceptional cases”, and “anti-surge” and

other trade related factors led the developing

countries to press for the inclusion of the textile issue

in the agenda of the GATT Ministerial meeting.

The eventual outcome of prolonged negotiations was

the Agreement on Textiles and Clothing.



Agreement on Textiles and Clothing (ATC)

The ATC calls for a progressive phasing out of all the

MFA restrictions and other discriminatory measures in a period of 10 years. In contrast to

the MFA, the ATC is applicable to all members of the WTO.

Four Steps over 10 Year



Steps Percentage of How fast remaining products to be quota should brought under open up, if GATT 1994 rate was(including 6%removal of quotas)

Step 1 16 percent (minimum 6.96 percent annuallytaking 1990

1st Jan 1995 - 31st Dec 1997 imports as base)

Step 2 17 percent 8.70 percent annually

1st Jan 1998 - 31st Dec 2002

Step 3 18 percent 11.05 percentannually

1st Jan 2002 - 31st Dec 2004

Step 4

1st Jan 2005

Full integration into GATT and final elimination of quotas, ATC terminates

49 percent (maximum) No quotas left



Top 10 Exporters (Textile)

Country 1990 1997

Billion US$ % share Billion US$ % shareHong Kong 7.99 7.68 14.6 9.42

China 7.10 6.82 13.83 8.92

South Korea 6.04 5.81 13.35 8.61

Germany 14.00 13.46 13.05 8.42

Italy 9.80 9.43 12.9 8.32

Taiwan 6.13 5.90 12.73 8.21

USA 5.03 4.83 9.19 5.93

France 7.21 4.65 5.86 5.64

Belgium-

Luxembourg 6.54 6.29 7.01 4.52

Japan 5.88 5.65 6.75 4.35

Total (Top 10) 74.36 71.5 110.62 71.37

World 104.00 100.00 155.00 100.00



Top 10 Exporters (Apparel)

Country 1990 1997

Billion US$ % share Billion US$ % shareChina 9.41 9.14 31.8 21.06

Hong Kong 15.37 14.92 23.11 15.30

Italy 12.07 11.72 14.85 9.83

USA 2.57 2.49 8.68 5.75

Germany 7.82 7.59 7.29 4.83

Turkey 3.44 3.34 6.7 4.44

France 4.65 4.51 5.34 3.54

UK 3.08 2.99 5.28 3.50

South Korea 8.11 7.87 4.19 2.77

Thailand 2.86 2.78 3.77 2.50

Total (top 10) 69.38 67.36 111.01 73.52

World 103.00 100.00 151.00 100.00



EU Top Ten Suppliers of MFA Clothing: Rank Price (AGR 1994-96)

1995 1996 RankPrice

Ranks and Average Price Ranks and Average PriceCAGR

1994-96

Country Rank in Rank in Avg. Rank in Rank in Avg. Price,

Value Volume Price, Value Volume Ecu/KgEcu/Kg

China 2 1 9 1 1 8 3

Turkey 1 2 2 2 2 6 7

Hong Kong 3 3 6 3 3 5 9

Tunisia 4 7 3 4 6 3 4

Morocco 5 6 5 5 7 4 2

Poland 6 8 2 6 8 1 8

India 7 5 7 7 5 9 10

Bangladesh 8 4 10 8 4 10 5

Romania 9 10 4 9 10 2 1

Indonesia 10 9 8 10 9 7 6



Post-MFA / ATC Scenario

It is generally believed that quota phase-out can only

be beneficial for the industry. In 1993, a study of seven countries found that the price of cotton yarn per kilo, was cheapest in India at US$ 2.79, compared to

US$ 3.30 in Brazil, US$ 4.19 in Japan, and US$ 3.10

in Thailand. This was because overall labour and raw

material costs are cheaper in India.

However, it should be realised that the opposite can also happen. Removal of quotas may open new

frontiers but will also close captive markets. The EU

and the US will no longer be restrained in buying as

much as they want from the cheapest possible

sources. Some argue that the ending of quotas will result in cut-throat competition between developing

countries. Coupled with this is erosion in the growth ofmarkets in industrial countries. Apparentconsumption of textile products, in real terms, remained stagnant during the decade1985-95.Purchases become discretionary and fashion-driven. As a result, fashion cycles got shorter and order- cycles compressed. Retailers order requirements on

short-order cycle term and demand rapid responses

to in-season ordering. Hence, they are compelled to secure their supplies of top-up orders from those in

close vicinity.

There is, therefore, a propensity towards sourcing from low-cost countries in the neighbourhood as



also a growth of offshore processing by

manufacturers in developed countries. Regional integration reinforces this.

Further exporters in India fear that freer imports could

lead to dumping of low-cost fabrics from China and

other Southeast Asian countries. Thus, the industry

needs restructuring on all fronts. Although the policy

framework can be blamed partially for its ills, internal factors are equally important.

Recent studies indicate that India is beginning to lose out to its rivals. In one survey of US textile and

apparel imports, China and Hong Kong had higher market shares than India. In certain categories, other Asian low cost producers like Pakistan and Indonesia

had higher market shares and had emerged as close

competitors to India.Because many of these

countries depend on imports, however, India can take advantage of home production.

Further, formation of NAFTA means direct competition from the Latin American countries. The

United States has farmed-out offshore processing

work to enterprises in Mexico and the Caribbean

Base Initiative countries. Similar relocation has taken

place in Europe with manufacturers shifting base to

Eastern Europe, which provides similar advantages of cheap labour and proximity.

According to projections by TECS, EU imports of ready-made fabrics will double between 1994 and



2004, as a result of the elimination of quotas. US

imports are expected to treble over the same period.

According to another prediction, apparel output could more than double (i.e. expand by 241%) between

1995 and 2005, compared to an increase of only 114%, without the agreement on textiles and clothing.

By increasing market access, the ATC will generate

multiplier effects in the Indian economy, eventually

feeding back into the textile industry itself. The rise in

demand for exports could increase output and employment in the textile industry. This in turn will stimulate the agricultural sector to meet the rising

demand for cotton. As profits rise, so will wages, which will act as further stimulus. The export boom in

the textile and clothing industry will also generate

considerable foreign exchange.

Given India‟s high quota growth rates during the

phase-out period, its competitive product niches and

established links with retailers and importers in

developed countries, it should experience vigorous

growth in the future. The World Bank predicts a

growth rate of 16% per annum in the coming decade.

Ultimately, the extent that India will benefit from trade liberalisationdepends on its current cost competitiveness, its ability to increase productivity and upgrade quality.



Implications on Indian Exports (Optimistic Scenario)

Yarn+ Garment exports of Bangladesh increase leading to increase in consumption

of Indian fabric and yarn+ Exports of Far-East & ASEAN increase further + Rationalization in duties of MMF leading to increase in processing of fibres in

India

Fabric/Made-ups

+ Garmenting dereserved leading to entry of large textile players ensuring

efficient sourcing and increase in the margins + Increase in investment for processing + Improvement in SAPTA trade

Garments

+ Garmenting and Knitting de-reserved to allow the units to grow bigger to be

able to service large orders and large clients + Labor laws in India become industry friendly + Garment parks come up in key regions giving a boost to exports+ Successful Quota Phase-out without exports

getting restricted by QRs



Fig in US$ Mn

1994 1998 2002 2005* 2010*

Yarn 590 1780 2333 2701 3131

Made-ups 851 1498 2620 4527 11266

Fabric 1214 1716 2512 3530 7100

Garments 3713 4829 6510 10794 21711

Total 6368 9823 14035 21552 43208

* Projections

Implications on Indian Exports (Pessimistic Scenario)

Yarn

- Change works to the advantage for S. Korea/ASEAN/Far-East- Demand for packages increases- EEC other garment supply countries invest in back-end processes

Fabric/Made-ups- Environmental Clause impacts- Investment in processing does not happen- Blends and synthetic fabrics dominate reducingadvantage of Indian cotton

Garments- Social clause impact leading to ban on some categories, etc.



- SSA is a reality impacting exports of garments from India to USA and EU- FTA becomes a reality- Other projectionist measures come up

As opposed to the optimistic scenario, the pessimistic scenario shows a shortfall of nearly US $4000 mn of exports in year 2005 and the exports are not likely to be much higher than the present figures. It would also lead to development of textile and clothing industry in the other nations and India would lose out as a significant player in the industry. This would also stifle the domestic textile industry which would be in a very weak position to compete with imports. (These

are expected to become cheaper with import duty rationalization as per international treaties and cost competitiveness of overseas players). Some of the subsidies currently extended by the Indian government to promote exports which are sector specific(TUF, 80 HHC) or region specific (EPZS, EOUS) may also need to be withdrawn.

Fig in US $ Mn

1994 1998 2002 2005* 2010*

Yarn 590 1780 2003 2126 2022

Made-ups 851 1498 2038 2427 3098

Fabric 1214 1716 1931 2050 2154

Garments 3713 4829 5435 5939 6885

Total 6368 9823 1140 1254 1415 8 2 9

* Projections



Conclusions

To effectively tackle the situation India needs to invest in research and development to develop new

products, reduce transaction costs, reduce per unit costs, and finally, improve its raw material base. India

needs to move from the lower-end markets to middle

level value-for-money markets and export high value- added products of international standard. Thus the

industry should diversify in design to ensure quality output and technological advancement.

The weakest links in the entire chain are the

powerlooms and the processing houses. The latter especially are very important because they are

responsible for the highest value addition in the

manufacturing line.A powerloom co-operative

structure could be evolved for pooling of common services and functions such as quality testing, marketing, short-term financing, etc.Further,because of the geographical proximity enjoyed, a

cluster approach can be adopted.

The government also needs to make policy changes

like dereserving the small-scale sector so that it can achieve economies of scale and adopt a synergistic

approach.

Handlooms by their very nature can adopt a strategyof "niche” marketing. In this respect, exportpromotion, common credit and marketing facilities and



more significantly publicity are important areas for co- operation. Here too, a co-operative structure would

be useful though government agencies should be

involved because of their outreach. Newer and more innovative forms of involvement are required where

decentralisation should be a key element.

India has made little attempt to forge partnerships - in

equity, technology and distribution in overseas

markets. The newer nuances of global apparel trade

demand joint control of brand positioning, distributing

and quality assurance systems.

The Indian textile industry has recognised the need

for a cradle-to-grave approach when tackling

environmental issues i.e. eco prescription should be

applied right from the stage of cultivation to spinning

to weaving to chemical processing to packaging.

Here especially there is great scope for private -public partnerships.

A great deal of work has been done by Indian trade

and industry to comply with ecological and

environmental regulations, and so Indian garments

can adopt an appropriate label signifying a distinct quality.

Efficiency and output of handloom and powerloom

sectors also needs to be increased. The clothing

sector needs the support of high quality and cost- effective cloth processing facilities. Modernisation of mills is a must.



Human resource is another area of focus. The

workforce must be trained and oriented towards high

productivity.

The business environment of the future will be

intensely competitive. Countries will want their own

interests to be safeguarded. As tariffs tumble, non- tariff barriers will be adopted.New consumerdemands and expectations coupled with new

techniques in the market will add a new dimension.

E-commerce will unleash new possibilities. This will demand a new mindset to eliminate wastes, delays,and avoidable transaction costs. Effectiveentrepreneur-friendly institutional support will need to

be extended by the Government, business and

umbrella organisations.

Areas where German development co-operation can help are enumerated below.

Input Areas

Policy framework is complex with inputs from

many ministries. The following chart is not meant

to be exhaustive but only to indicate areas where German development co-operation can have an

impact.



NATIONAL ECONOMIC POLICY

Industrial Policy / Textile Policy

Planni Financ Invest Export Manpo R&D Infrastr ng ing ment wer ucture

Competitive Credits Promotion Bilateral Education Quality control Portspositioning agreements

Evaluating Aid through Information Export Training Productivity Containers

domestic and multi-lateral technology promotionforeign needs agencies

Export strategy Sector specific Development of Skills and Standardisation Airportssupport development

industries

Export Machinery / Welfare ISO 9000 Roadsfinancing spares

Synthetic raw Literacy Packaging Railmaterials

Language R&D Telecom

Entrepreneur Ecologydevelopment standards

Power

Water

Gas

Possible Indo-German Co-operation in Textiles



Areas of Co-operation

Provision of co-operative structures for quality testing,

marketing, brand-building

Technological upgradation (egs. Effluent treatment plants,energy saving devices, and other machinery related directly to the production process like spreading, cutting, finishing, etc.)

Adoption of environment-friendly technology to pre-empt the

adverse impact of non-tariff barriers. This includes environmental monitoring/ testing equipment and services,combating air pollution (package scrubber, special air pollutant treatment for H 2 S, CS2 ), solid waste removal, wastewater disposal

Development of textile-specific software for India, Computer- Aided Textile Designing, aiding IT integration

Working out alternative techniques / frame conditions such that sanitary and phyto-sanitary measures are not a problem

Managerial training to encourage adoption of techniques like JIT, Quick Response Systems

Usage of EPS (Electronic Point of Sale) software

Promoting labels like RUGMARK (carpets) in textiles so that consumers are satisfied that child labour has not been employed, to counter negative publicity generated by the "Clean



Clothes" movement, etc.

Promoting hand-made articles by improving quality of raw

materials and introducing machinery where possible in the process so as to maintain standards of quality and design

Development of new products

Adoption and adaptation of state-of-the-art information technology in enterprise resource planning so as to pre-empt

non-tariff barriers which curtail markets for the Indian textile industry

Helping firms build close relationships with customers

Training centres

Short-term credit

Improvement of synthetic fibre-base to reap economies of scale, use of genetic engineering, bio-technology, and cellular biology in both natural and synthetic fibre-base

ENVORONMENTAL ASPECTS IN THE TEXTILE TRADE



There is always an environmental impact the textile

production.The impact starts with the use of pesticides during the cultivation of plants for the

natural fibres, the erosion caused by the sheep farming or the emissions during the production of synthetic fibre. So there is the environmental effect in

the process of production, where thousands of different chemicals are used to reach the final stage

of textile products.

Awareness of environmental problems has increased

considerably during recent years and the environment has become a major issue in the

international textile trade.This is due to theenvironmental and health legistation and the

environmental policies that is being executed through

market demands. The end users in developed

countries are highly sensitive about the issues like

azo dyes and child labour in the textile production. The action by the developed countries in this matter was put as Non-Tariff Barriers for the exports from the

developing countries like India.

ENVIRONMENTAL LEGIILLATION

Developed countries are reviewing the regulation of

harmful substances in the textile products. The major issues are.

a) Ban on azo dyes

b) Regulation of formaldehyde



c) Regulation of Pentachlorophenol (PCP)

d) Limit values for residues of pesticides

e) Ban on allergic disperse dyesf) Regulation of the content of chromium.

Most of the operative legislation is applicable to the

importer who places the product on the developed

country markets. The importer requires mostly legally

binding guarantees. The requirements are often

included in the LC.

The environmental developments in connection to the textile trade may be classified as:

(i) Product oriented policy

(ii) Process oriented policy

(iii) Waste management policy.

PRODUCT ORIENTED POLICY

Under this policy, the product is considered directly or indirectly responsible for any adverse environmental

effects that occur in the entire industrial chain. So the product is thought to be the starting point for the

reduction in the impact on environment. Under this, the Life Cycle Assessment (LCA) is the major criteria

to evaluate the product‟s impact on environment. In

other ward, the environmental impact of a product is



based on the pollution caused by the extraction of its

raw material, by itsprimary & secondarymanufacturing, by its consumption and maintenance

and in its waste.

The product oriented policy focuses on there

measures.

1) Regulating measures, which puts the legislation

concerning the composition of products.

2) Facilitating measures, which by using the market mechanism reduces the environmental impact of a

particular product.

3) Stimulating measures, which works through more

awareness to the consumers.

PROCESS ORIENTED POLICY

This environmental policy aims at a particular industry

(company). The policy has the sole purpose of reducing the environmental problems of production

process in a specific company.

WASTE MANAGEMENT POLICY

The waste management policy aims at reducing the

environmental problems caused by discarded

products and packaging material, which have reached

the waste phase.



Legislation on packaging has been implemented in

Germany on the obligation for producers and

importers to take back used packaging materials. In

1997, the European Directive concerning packaging and packaging waste has been implemented in the

national legislation of its member states.

OTHER ENVIRONMENTAL ISSUES

1) Ban on Azo dyes.

Now the developed countries are more concusses on the use of Azo dyes in the textiles production. Azo

dyes are the colouring agents in the textile industry. In contact with the skin, Azo dyes may form

carcinogenic substances(amines). Germany andNetherlands have banned all Azo dyes, which can

split off any of the 22 listed carcinogenic amines.

The Netherlands, Austria and Germany are the only

Member states that have already adopted national legislation banning the use of carcinogenic

azocolourants.

The Netherlands adopted a Regulation banning the

import and sale of products containing azo dyes, which entered into force in 1997. The ban covers

bed linen, clothing and shoes. The regulation

forms part of the Dutch “Commodity Act”.



Germany banned the import and sale of textile

dyed/printed with certain azo dyes, effective

from April 1,1996.

Austria adopted legislation banning the marketing

and use of products containing azo dyes (trade and

use of azo dyes as such is not prohibited in any EU

country). The law entered into force in 1997. The

Austrian legislation relies on the same analytical

method to measure the content of azo dyes in

products as the German and the Dutch provisions.

2. ECO Labels

Eco labels ensures a company that produces a

product is eco- friendly and so it gets a friendly

response from the importers. Eco labels for textiles

are widely recognized and is gaining much

importance in the developed countries like EU and

USA. The following Eco labels are important in the

textile products.

a) Health Eco Labels

b) Environmental Eco-labels

c) Organic Eco labels



d) Social labels

The world wide recoginised Eco-label for textiles is

OKO-TEX 100, which guarantees the consumer that

the product will not harm the health during wearing.

OKO-TEX 100 requires unit values/concentrations on

PH, carcinogenic, azo dyes, formaldehyde,

chlorinated phenols, pesticides, heavy metals and

allergic dyes.

3. Environmental Management System

The introduction of policies like environmental management system by the developed countries is

important to the exporters in the developing countries like India. The ISO14001 standard is the onlystandard for the environmental management system

accepted worldwide. This system involves.

(i) A complete overview of the environmental impact

of the company can be obtained.

(ii) The environmental impact of the company can be controlled.

(iii) Whenever possible, the environmental impact of the company can be diminished.



4. Waste water Management

The biggest enviromental problem associated with the

textile industry is the water pollution caused by the discharge of untreated effluents. Waste water arising

from the washing and dyeing sections of production

contains a substantial amount of organic and

suspended pollution, such as dyes and caustic soda, which have a negative impact on environment. The

growing concern on this issue by the developed

countries requires an immediate action to manage it properly.

The trade of textile products is very much sensitive in

respect of the environmental issues and so the

importers may demand certain guarantees for product, for example some of the leading importers at EU market demand that all textile purchased have

been tested according to OKO-TEX 100. So the growing concern regarding the environmental impact of the textile production should be taken care of much

in advance, otherwise the exports of textile products

to the traditional markets and developed countries will be hindered with more and more Non-Tariff barriers

(NTBs).



GLOBAL TRADE IN TEXTILES AND CLOTHING

TEXTILE TRADITION OF INDIA

India has a diverse and rich textile tradition. The origin of

Indian textiles can be traced to the Indus valley civilization.

The people of this civilization used homespun cotton for

weaving their garments. Excavations at Hardpan and

Mohan - jo-Daro, have unearthed household items like

needles made of bone and spindles made of wood, amply

suggesting that homespun cotton was used to makegarments. Fragments of woven cotton have also been found

from these sites.

The first literary information about textiles in India can be

found in the Rigveda, which refers to weaving. The ancient

Indian epics-Ramayana and Mahabharat, also speak of a

variety of fabrics of those times. The Ramayana refers to

the rich styles worn by the aristocracy on one hand and thesimple clothes worn by the commoners.

Ample evidence on the ancient textiles of India can also be

obtained from the various sculptures belonging to Mauryan

and Gupta age as well as from ancient Buddhist scripts and

murals (Ajanta caves). Legend has it that when Amrapali, a

courtesan from the kingdom of Vaishali met Gautam

Buddha, she wore a richly woven semi transparent sari,

which speaks volumes of the technical achievement of the

ancient Indian weaver.

India had numerous trade links with the outside world and

Indian textiles were popular in the ancient world. Indian

silk was popular in Rome in the early centuries of the



Christian era. Hoards of fragments of cotton material

originating from Gujarat belonging to 5th century A.D.

have been found in the Egyptian tombs at Fostat. Cotton

textiles were also exported to China during the heydays of the silk route.

Silk fabrics from south India were exported to Indonesia

during the 13th century. India also exported printed cotton

fabrics or chintz, to European countries and the Far East

before the coming of the Europeans to India. The British

East India Company also traded in Indian cotton and silk

fabrics, which included the famous Dacca muslins. Muslinsfrom Bengal, Bihar and Orissa were also popular abroad.

The past traditions of the textile and handlooms can still be

seen amongst the motifs, patterns, designs, and the old

techniques of weaving, still employed by the weavers.

THE INDIAN SIGNATURE COLLECTION

The Indian signature collection consists of exotic textiles

such as Madras checks from Tamil Nadu, ikats from

Andhra and Orissa, tie and dye from Gujarat and Rajasthan;

brocades from Banaras, jacquards form Uttar Pradesh.

Daccai from West Bengal, and phulkari from Punjab.

Despite this regional distinction there has been a great deal

of technical and stylistic exchange. The famed Coimbatore

saris have developed while imitating the Chanderi pattern

of Madhya Pradesh. Daccai saris are now woven in Bengal,

not in Dhaka. The Surat tanchoi based on a technique of

satin weaving with the extra weft floats that are absorbed in

the fabric itself has been reproduced in Varanasi. The

Baluchar technique of plain woven fabric brocaded with

untwisted silk thread, which began in Murshidabad district



of West Bengal, has taken root in Varanasi. Their

craftsmen have also borrowed the jamdani technique.

Woolen weaves are no less subtle. The Kashmiri weaver is

known the world over for his Pashmina and Shahtooshshawls. The shawls are unbelievably light and warm.

The states of Kashmir and Karnataka are known for their

mulberry silk. India is the only country in the world

producing all four commercially known silks - mulberry,

tasser (tussore), eri and muga. Tasser is found in the remote

forests of Bihar, Madhya Pradesh, Orissa, West Bengal,

Andhra Pradesh and Uttar Pradesh. Eri is soft, dull and haswool like finish. Assam is the home of eri and muga silk.

Muga is durable and its natural tones of golden yellow and

rare sheen become more lustrous with every wash. The

designs used in Assam, Tripura and Manipur are mostly

stylized symbols, cross borders and the galaxy of stars.

In the ikat tie and dye process, the designs in various colors

are formed on the fabric either by the warp threads or theweft threads or by both. The threads forming the design are

tied and dyed separately to bring in the desired color and

the simple interlacement of the threads produces the most

intricate designs that appear only in the finished weaving. It

is believed that ikat was an innovative technique, first

created in India, which was later carried to Indonesia, the

only other place in the world with a strong ikat tradition.

INDIGENOUS DYING AND PRINTING

The process of resist-dyeing, tie-dyeing and yarns tie-dyed

to a pattern before weaving were the basic techniques of

indigenous dyeing of village cloth. Shellac was used for

reds, iron shavings and vinegar for blacks, turmeric for



yellow and pomegranate rinds for green. Before the

artificial synthesis of indigo and alizarin as dye stuffs, blues

and reds were traditionally extracted from the plants

indigofera, anil and rubia tintorum (madder-root). Thesewere the main sources for traditional Indian dyes. Even

today, the Kalmkari cloth of Andhra Pradesh is printed with

local vegetable dyes. The colors being shades of ochre,

deep blue and a soft rose derived from local earths, indigo

and madder roots.

Andhra Pradesh has made a significant contribution to the

history of hand-printed textiles in India. Printing is nativeto the land, its pigments being obtained from the flowers,

leaves and barks of local trees and chemicals obtained from

clay, dung and river sands. A new technique has been

developed in the northern sectors where warp threads are

lined, measured and tied to the loom and then printed. The

warp-printed material is a specialty of Haryana and Uttar

Pradesh.

The ideal seasons for block printing are the dry months.

Excellence is achieved only if the block is freshly and

perfectly chiseled. The designs are produced by artists and

the designing is kept within the discipline imposed, the type

of yarn, the dyes used and the weaving techniques, by the

nakshabandhas (graph-paper designers).

Given the wide and exciting range of handloom it is notsurprising that the rich and beautiful products of the

weavers of India have been called “exquisite poetry in

colorful fabrics.”

GLOBAL TEXTILE AND CLOTHING TRADE



As per the international trade statistics for 2000,brought out by the World Trade Organization [WTO], global exports of textiles and clothing amounted to US

$ 356.44 billion in which clothing accounted for 55.8% (USD 198.94 billion) and textile accounted for 44.2%

(USD 157.5 billion). India‟s share in global textile and

clothing trade has been 2.87% valued at US$ 10.24

billion during the year 2000.

TEXTILE & APPAREL INDUSTRY AT A GLANCE

The Textile and Clothing industry in India accounts for14 % of the manufacturing sector output, about 35.5

% of export earnings and employs about 26 million

people. Its net foreign exchange earning is also one

of the highest, 75% of the exports. The Indian Textile

and Apparel industry represents a mosaic of widely

diversified sectors with the organized and integrated mill sector, medium and small scale Powerloom

sector, handloom sector, hosiery sector, apparel manufacturers in SSI and Spinning mill sector spread

all over India. The exports in this sector comprise

yarn, fabrics, made-ups, garments, handicrafts, jute

and coir.

APPAREL/CLOTHING SECTOR

The share of Ready-made garment (RMG) in Textile

and Apparel exports is 40-45%. It accounts for over1.6% share in GDP and 7% of the industrialproduction in India. India‟s apparel exports basket



consists of T-shirts, Ladies blouses, Gents shirts, Skirts, Shorts, Trousers, Nightshirts and Nightwear chiefly made from cotton fabrics. The major markets

for RMG are European Union, USA, Australia and Canada.

The apparel sector basically consists of knitted and

the woven garment segments. By and large, the

industry has doubled its production levels over the

last 8 years, which means it has grown at an average

growth rate of 12% overall. However, this growth has

not been uniform for both the segments. The knitted

segment has grown faster than its woven sibling, having grown almost three times; whereas the woven

segment grew slowly at the rate of 1.5 times.

TEXTILE SECTOR

The textile industry occupies a unique position in the Indian economy. Its predominant presence in the

Indian economy is manifested in terms of its

significant contribution to the industrial production, employment generation and foreign exchange

earnings. It has immense potential for employment generation, particularly in the rural and remote areas

of the country on account of its close linkage with agriculture.

Indian textile industry has a significant presence in the

world textile economy by virtue of its production of textile fibres/yarns. It accounts for about 21 per cent (35 million spindles) of the world spindleage of 166.36



million spindles, the second largest after China and

three per cent of the world rotorage of 7.81 million. With almost 5.7 million looms (including handlooms),

the industry has the highest loomage about 64 per cent of the world loomage of 8.9 millions. It is the

largest producer of jute and the second largest producer of silk and the third largest producer of cotton, cotton yarn and cellulosic fibre/yarn in the

world. It is also the fifth largest global producer of synthetic fibre/yarn.

The Indian textile industry is predominantly cotton based which accounts for65 percent of fibreconsumption. Taking a cue from global consumption

pattern, it is obvious that India needs to produce more

synthetic fibre based products to meet the

international demand.

MMF Textile Sector

Man-made fibres today account for more than 60% of the world production in textiles and its share is

growing at a steady pace. In keeping with the world

trend the MMF industry in India also grew rapidly

during the 90's. Exports of Indian MMF textiles have

increased significantly in tune with the world trade

during last 10 years. MMF exports, which were USD

303 million in 1990-91, have grown by 316% to reach

USD 1260 million in 2000-2001. The exports are

directed to163 countries. The highly sophisticated

and quality conscious EU is the largest importer followed by the Middle East, Gulf and the Asian



region. UAE continues to be the leading market for Indian synthetic textiles, followed by the United

Kingdom. The other main markets are Italy, Spain,

Turkey, USA, Germany, Belgium, Saudi Arabia and France.

Cotton Textile Sector

Exports of cotton textiles (yarn/fabrics/madeups)increased to US$ 3643.23 million during the financial 1999-2000, as against US$ 3423.28 million in the

year 1998-99, marking a growth of around 6.42%.Exports of cotton yarn have shown a phenomenal growth in recent years, rising from US$ 403 million in

1992-93 to US$ 1.54 billion in 1999-2000, marking an

increase of about 282% during this period. India has a

share of27% in the world trade in cotton yarn. Exports of cotton fabrics have also shown a steady

growth during the last five years from US$ 613.33 million in1992-93 to US$ 1.1 billion in 1999-2000. Exports of cotton made-ups have also shown a

steady growth over the years, rising from US$305.67

million in1992-93 to US$ 1005.3 million in 1999- 2000, representing an increase of 229% during this

period.

Wool And Woollen Sector

India‟s production of wool and woollen textiles, though

a tiny percentage of the world production, has some

inherent strengths with a capacity to give the

consumers exclusive/niche products based on



traditional designs and colours. Indian shawls,especially, hand-embroidered ones and Pashmina

shawls are finding a very good market in the world.

Indian woollen knitwear is valued for the handwork done on it. New blends like wool/lycra, Australian

sports wool and optim fibre are the major thrust blends which will find emerging goods markets for knitwears and shawls.

Silk Sector

India has the distinction of being the only country in the world to produce all the commercially known

varieties of silk - Mulberry, Tasar, Eri and Muga. The

production of Mulberry raw silk during 2001 has been

14000 tons. The main items being produced in India

are mixed/blended silk fabrics, dress material, saris, scarves, stoles, cushion covers, bedspreads, carpets

and silk garments. The total export of silk items is USD 400 million. The USA and the EU import about two-thirds of the silk textiles exported from India. The

other markets are the Middle East(for traditionalsarees), Singapore, Hong Kong, Japan, Australia and

South Africa.

TEXTILES TRADE STRENGHTS

Contrary to the global trends towards integration and

economies of scale, the Indian textile Industry is a

unique case of disintegration. There are 2290 players

in the organized spinning sector; only 278 composite

mills and thousands of weaving units,14500



independent processing units and innumerable

garment manufacturers and countless retailers. India

has the largest cotton acreage in the world, and

cotton is the dominant fibre in the Indian industry. Almost all cotton used in India is grown locally.

1. Large Production Base

India is a producer and exporter of quality textiles and apparels. India has a large production base with

integrated mill sector, State of the art Apparel manufacturers, Powerlooms, Handlooms, Knitters and

spinners.

2. Wide Product Range

India produces almost all types of fibers and yarns

and has achieved near self sufficiency in some

sectors such as those producing polyester fiber and

filament yarn. India offers a trendiest range of apparels, alluring range of made-ups and exotic range

of fabrics to discerning international buyers.

3. Modern Technology

The textile and apparel industry in India employs

modern technology in production. This is especially

visible in the case of the raw material, i.e. yarn and

fiber, producing sectors, which in turn is reflected in



the high quality of products comparable to reputed

international brands.

4. Competitiveness

The industry enjoys cost advantages due to creation

of huge production capacities. Indian items are

competing with products of such textile giants like

Japan, Korea and Taiwan and have come out on top. The secret of India's success lies in the unmistakable

quality of its textiles, competitive prices and reliable

supply.

5. Unique Advantages to Importers

Textiles and Apparel Industry in India has certain

unique advantages which are beneficial to overseas

buyers.

a) With centuries old tradition, industry has

perfected the art and science to produce

exquisite goods.b) Industry is self sufficient and vertically integrated.c) Diversified small lot production system which can

cope better with the changes in fashion

demands, short response time and smaller lots

offered.d) Also capable of catering to volume orders.e) Wide range of production including sophisticated

high qualities as well as those required for middle

and low end consumers.



6. Made-up Articles - specialty items

Exports of made-ups have been increasing at a

steady pace. India offers an alluring range of made-up items like scarves/stoles/pupates and ordains in

exotic shades, intricate patterns and magical finishes. Dyed, printed and embroidered dupattas/odhanies in

metallic stripes, sequins and pearl/bead works which

are in great demand in the Arab world is a specialty of India.

QUOTAS & QUOTA RELATED PROBLEMS

Nearly 80% of Indian clothing exports go to the US

and EU where they face quota restrictions. A lesser percentage of total textile exports are subject to

quotas. During the course of the first two Multifiber

Arrangements in the 1970s, Indian exporting firms

enjoyed a relatively unrestricted growth, since their export quantities had not reached the limits set by the

quotas. However, during the third phase, some

quotas started to bite. By 1987, apparel exports were

curtailed by quota ceilings for most categories.

The Uruguay round of multilateral negotiations

brought the Multi-fiber Arrangement to an end and the

WTO members agreed to enter into reciprocal and

mutually advantageous arrangements directed to the

substantial reduction of tariffs and other barriers to

trade and to the elimination of discriminatory

treatment in international trade relations.



Although the integration schedule and quota phase- out under ATC was originally intended to be a gradual affair, it has actually been followed in letter only and

not in spirit. The developed countries have not integrated items of “commercial significance” into the

world trading system even after 70% of the period of integration schedule is over. Consequently, the most intensive items like shirts and women‟s outerwear, in

which India has an advantage, will not have their

quotas removed until 2005 leading to a problem of uncompetitive prices, pushed higher by the cost of paying for quotas.

The two largest restraining Members USA and EU

have not taken any specific measures to facilitate

increased competition in their markets. On the

contrary, at the very beginning of integration process, the US administration announced its policy to

postpone integration of the large bulk of restrained products until the end of the transitional period of the

ATC. The EU, on its part, has insisted on additional reciprocal market opening commitments by

developing countries before it could consider any

meaningful liberalization of its restrictions. India

signed bilateral agreements with the EU and US to

secure reciprocal market access for textiles and opened its markets to foreign goods by removing

import restrictions on textiles such as fibers, yarns

and industrial fabrics, as well as reducing its tariffs.



IMPACT OF FREE TRADE, PREFERENTIAL

TRADE AGREEMENTS & RULES OF ORIGIN

The agreements under the World Trade Organization will have their deepest impact on the Indian textile

and clothing industry. The reason is obvious: It is one

of the biggest sectors of the economy. It is the only

industry that is self-reliant and complete in the value

chain - from raw material to the highest value added

products. Consequently, the growth of this industry

has a significant bearing on the overall development

of the economy. The impact of liberalization through

WTO on Indian Textile market is yet to be

experienced in a big way since most of the

liberalization under ATC is „back loaded‟ and will take

place in the last year i.e. 1.1.2005. As it stands out India has already lowered duties substantially below

committed levels and opened its market while the EU

and US has so far integrated insignificant products and the most important products would be integrated

in the year2005. Textile companies are already

complaining of the „Chinese‟ onslaught in this sector.

A major offshoot of the free trade regime is the

frequent use of the anti dumping and anti subsidy

action by the developed countries. The European

Commission (EC) has been particularly active in this

regard. In the last decade, the EC has initiated

proceedings on PTY, PSF, Polyester Spun Yarn and

Polyester Staple fiber fabrics originating from

developing countries including India.



The repeated recourse to such investigations and back to

back investigation has resulted in losses for business and

caused considerable damage to trade and competition. In

fact anti-dumping levies are far more lethal than quotarestraints especially as they have the potential to restrict

sales and erode competitive edge in view of the direct

impact on the price of the product. There has been sharp

decline in imports from countries whose companies had

been targeted for alleged dumping. Besides, an anti-

dumping/anti-subsidy investigation entails significant

financial burden on the targeted companies.

PREFERENTIAL TRADE AGREEMENTS

The General System of Preferences (GSP) is anagreed exception to the MFN principle under which

the Donor Country grants preferential duty on goods

originating in beneficiary country which is lower than

the normal MFN duty. Each donor country is free to decide the level of concessions, the choice of goods

and the rules of origin in respect of GSP. Consequently, most GSP schemes are different from

each other in terms of the goods covered, the level of duty concession, the procedure to be used and the

rules of origin that apply.

The EU GSP scheme extends duty benefit to the

developing countries and provides special incentives

to promote core labor and environmental standards. The textile sector in India is not eligible for EU GSP

benefits while the same benefits are extended to

China, Indonesia, Malaysia, Sri Lanka and Thailand.



However, the apparel sector in India benefits from EU

GSP scheme. But the concessions of duty free

access granted to Pakistan recently on account of

drug policy would increase the unhealthy competition and push the prices down in apparel sector.

The expansion of regional trade arrangements like

NAFTA, growing preferential arrangements with

targeted regions and countries under Arrangements

like Trade Development Act 2000 of the USA, EU's

enlargement programme to include Central & Eastern

Europe & Mediterranean rim countries etc., would act as insurmountable barriers to global free trade

resulting in adverse effect on Indian exports.

In fact data relating to imports of textiles and clothing

into USA shows that the share of imports from

countries covered by preferential trade arrangements

have increased from 19.5% in 1994 to 31.7% in the year 2000.

RULES OF ORIGIN

Rules of Origin are unilaterally altered by the

developed countries to the detriment of developing

exporting countries. Unilateral changes in Rules of Origin by USA have affected the trade of textiles and

clothing badly. As part of its legislation implementing

the results of Uruguay Round, the US substantially

altered its rules for determining the origin of textiles

and clothing products. The modified rules, put into



effect from July 1996, resulted in major changesdisadvantageous to developing countries. Since the

process of harmonization of Rules of Origin of various

countries is being undertaken in the Committee on Rules of Origin, no member country should be

allowed to make any further changes in their Rules of Origin till the harmonization process is completed.

FUTURE PERSPECTIVES

In the midst of liberalization under WTO framework,

the future perspective of Indian Textile & Apparel Industry in post GATT era can be summarized as

under:

Exports of textile and apparel products will be

quota-free and will only be based on market considerations namely product attributes, pricing,

promotion such as advertising, brand building and other sales promotion techniques, physical distribution - its cost and logistics decisions. The

quota restriction removal will increase both national and international competition; this being at a

possible higher level than the demand may mean

lower volumes and values.

The complete elimination of the Multi-Fiber Arrangement (MFA) quota regime with effect from

January 1, 2005, as per the ATC, may create a

`shock-wave' which could end up disrupting the

entire world textile and garment trade. Since the

quota phase-out schedule, as drawn up by



industrialized countries, is heavily back-loaded with

most sensitive textile items not being freed from

quantitative restrictions (QRs) till the very end of the

transition period, there would be a sudden release of`pent-up supply pressure' which could lead to

intensified price competition and declining global prices. A taste of things to come has already been

experienced in the wake of the 1997 Asian financialcrisis, as devaluation greatly enhancedcompetitiveness and prices crashed across Asia, as producers in the region over-supplied the world.

It may be unlikely that the developed countries will completely open their trade doors after the MFA

phase out. The restrictions on import into those

countries may come in the form of non-tariff barriers

/ measures such as based on environmental issues, child labor, and health and so on. While the

importing countries continue to set high standards, Indian exporters are making the necessary

adjustments to meet these new standards.

The challenges that the Indian exporters face is not only from trade barriers in developed countries. The

removal of quotas which have been restricting

imports from specific sources means freer competition among exporters. The EU and US will buy from the lowest cost suppliers, and India may

often, but not always, be among them. However, the industry has made considerable adjustments in

order to maintain its international competitiveness.



The GATT is aimed to reduce the levels of subsidies. The present export incentives and

subsidies will be reduced, resulting in an escalation

of the cost of production. The impact would be felt across different sectors, especially textiles and

clothing. Export of handloom fabrics may suffer a

setback due to lower or no subsidies and hence its

competitive advantage will lie in its unique design

capabilities.

Due to the reduction in import duties of synthetics, the power loom sector can strengthen its

competence on the cost front. The organized mill sector will have to restructure and emerge, inter- alias, as a major supplier of fabrics to the garment industry.



Foreign Involvement

1) Foreign investment in

production and export exist but in a very limited way.

2) Government is relaxing rulesfor FDI (Foreign Direct Investment) and

making it more conducive and liberal.

3) Our present policies are also infavor of FDI and encoring by making the

policies less cumbersome.

4) At present Foreign

investment are there in finish fabrics and garment sectors and also in textile

machinery sector.

5) The EOU (Export OrientedUnits) are giving benefit to attract

foreign investment.



History during the industrial revolution

Textile manufacture during the Industrial Revolution

The key British industry at the beginning of the

18th century was the production of textiles made with wool from the large sheep-farming

areas in the Midlands and across the country

(created as a result of land-clearance and

enclosure). Handlooms and spinning wheels

were the tools of the trade of the weavers in

their cottages, and this was a labour-intensive

activity providing employment throughout Britain, with major centers being the West Country; Norwich and environs; and the West Riding of Yorkshire. The export trade in woolen

goods accounted for more than a quarter of British exports during most of the 18th

century, doubling between 1701 and 1770 [1].

Exports of the cotton industry - centered in Lancashire - had grown tenfold during this

time, but still accounted for only a tenth of the

value of the woolen trade.

The textile industry grew out of the industrial revolution in the 18th Century as mass

production of clothing became a mainstream industry. Starting with the flying shuttle in

1733 inventions were made to speed up the

textile manufacturing process. In 1738 Lewis

Paul and John Wyatt patented the Roller

Spinning machine and the flyer-and-bobbin



system. Lewis Paul invented a carding machine

in 1748, and by 1764 the spinning jenny had

also been invented. In 1771, Richard Arkwright

used waterwheels to power looms for the production of cotton cloth, his invention

becoming known as the water frame. In 1784, Edmund Cartwright invented the power loom. With the spinning and weaving process now

mechanized, cotton mills cropped up all over

the North West of England, most notably in

Manchester and its surrounding towns of Ashton-Under-Lyne, Stalybridge and

Dukinfield.

Textile mills originally got their power from

water wheels, and thus had to be situated

along a river. With the invention of the steam

engine, in the 1760s to 1800s, mills no longer

needed to be along rivers.

Post industrial revolution

Many of the cotton mills, like the one in Lowell MA, in the US originally started with the

intention of hiring local farm girls for a few

years. The mill job was designed to give them

a bit more money before they went back to the

farm life. With the inflow of cheap labor from

Ireland during the potato famine, the setup

changed, as the girls became easily

replaceable. Cotton mills were full of the loud

clanking of the looms, as well as lint and



cotton fiber. When the mills were first built, a

worker would work anywhere from one to four

looms. As the design for the loom improved so

that it stopped itself whenever a thread broke, and automatically refilled the shuttle, the

number of machines a worker could work

increased to up to 50.

Originally, power looms were shuttle-operated

but in the early part of the 20th century the

faster and more efficient shuttle less loom

came into use. Today, advances in technology

have produced a variety of looms designed to

maximize production for specific types of material. The most common of these are air-

jet looms and water-jet looms. Industrial looms can weave at speeds of six rows per

second and faster.

By the later 20th Century, the industry in the

developed world had developed a bad

reputation, often involving immigrants in illegal "sweat shops" full of people working on textile

manufacturing and sewing machines being paid

less than minimum wages. This trend has

resulted due to attempts to protect existing industries which are being challenged by

developing countries in South East Asia, the

Indian subcontinent and more recently, Central America. Whilst globalization has seen the

manufacturing outsourced to overseas labor



markets, there has been a trend for the areas

historically associated with the trade to shift

focus to the more white collar associated

industries of fashion design, fashion modeling and retail.

Areas historically involved heavily in the "rag

trade" include London and Milan in Europe, So

district in New York City, the Flinders Lane and

Richmond.



Example of textile industries in India.

Indogulf Company

NIRMA STAINLESS STEEL Balaji Overseas

Keshavlal Mangubhai &

Co(Woodking24-india)

EURO BRIDGE

HYDRODRIVE SYSTEMS AND

CONTROLS PVT LTD

Manhar specialties

Linden Exports

Faizan international

One By One Cotton

Linden Exports

Charbhuja Derivatives

DANUBE FASHIONS LTD

Deep Incorporation

CSM EXPORTS

Spot Globo

Amco Industries Ltd.



Distribution of textile sectors in Indian market:

Problems faced by Indian textile industriesaccording to “TIMES OF INDIA REPORT” on

July 05, 2007:



THE TIMES OF INDIAJuly 05, 2007

aemployees

Sidhartha I tnnm

New Delhi: It isn't just IT engineers who are

in short supply. Sample this: garment units in

HI;::;./«Thirupurr,Tamil Nadu, are short of 30,000

.-.-■ •;-• '

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hands. Deather units near Chennai are esti¬mated to be short of 10,000-15,000 trained work¬ers. In Ludhiana, the story is not much dif¬ferent with close to 50,000 skilled employeesneeded by the hosiery sector.

**r The numbers which local industry associ¬ations shared with the National Manufactur¬

ing Competitiveness Council (NMCC) — taskedwith finding long-term solutions to step up in¬dustrial activity for job creation — are just in¬dicative of the problem that is now facing al¬most all sectors.

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There is a skill scarcity at every level — from a farmer moving to basic industrial sec¬tor to students graduating from ITIs and poly¬technics to engineering colleges and then toeven managers and leaders.

Even the numbers are not in sync with glob--al norms. In India, the annual intake in ITIsand polytechnics is estimated at around 700,000

— which is roughly the same as the numberof students who join engineering colleges.

"The number of diploma holders and the en¬gineering graduates (every year) is roughly thesame while the global norm is 1:20," says NMCCchairman V Krishnamurfhy No doubt, you findplumbers and electricians to fix the pipes andthe wiring at home but have you ever wonderedhow many are trained in a classroom setting.

"We need to step up the pace since main-"t^ining 12-14% manufacturing growth is not just

GARMENT UNITS FACING CRUNCH

about setting up factories. It takes much longerto build human capital," said Krishnamurfhy

Taking a cue from NMCC, Planning Com¬mission has swung into action with the intentof announcing the National Skill DevelopmentMission next month. But unlike most gov:ernment initiatives, the plan panel has askedindustry to chip in with inputs to train 10 mil¬lion people, who join the work force annually

Industry has been asked to assess the num¬ber of skilled employees who would be need¬ed in nearly a dozen sectors which range fromnot just the sunrise areas like pharmaceuti¬cals and retailing but also include the job cre¬ating segments of industry like leather. Theindustry has been asked to come up with spe¬cific skill sets that are required.



Textile Composition In World Market:



Productivity indices for textile industries

in India:



CONCLUSION

The textile and apparel industry is one of the leadingsegments of the Indian economy and the largest source of foreign exchange earnings for India. This industry accounts4 % of the gross domestic product (GDP), 20 % of industriaoutput, and slightly more than 30 % of export earnings. Thtextile and apparel industry employs about 38 million peoplmaking it the largest source of industrial employment in Ind

India has the second-largest yarn-spinning capacity in theworld (after China),accounting for roughly 20 percent of theworld’s spindle capacity. India’s spinning segment is fairlymodernized; approximately 35 to 40 percent of India’sspindles are less than 10 years old. During 1989-98, Indiawas the leading buyer of spinning machinery, accounting fo28 percent of world shipments. India’s production of spunyarn is accounted for almost entirely by the “organized millsector,” which includes 285 large vertically-integrated

“composite mills” and nearly 2,500 spinning mills.

India has the largest number of looms in place toweavefabrics, accounting for 64 percent of the world’s installedlooms. However, 98 percent of the looms are accounted for India’s powerloom and handloom sectors, which use mostlyoutdated equipment and produce mostly low-value unfinishfabrics. Composite mills account for 2 percent of India’s

installed looms and 4 percent of India’s fabric output.

The handloomand powerloom sectorswere established withgovernment support, mainly to provide rural employment.These sectors benefit from various tax exemptions and othefavorable government policies, which ensure that fabricsproduced in these sectors are price competitive against thoof composite mills.



• The fabric processing (dyeing and finishing) sector, theweakest link in India’s textile supply chain, consists of alarge number of small units located in and around thepowerloom and handloom centers. The proliferation of small processing units is due to India’s fiscal policies,

which favor small independent hand- and power-processing units over composite mills with modernprocessing facilities.

• The production of apparel in Indiawas, until recently,reserved for the small-scale industry (SSI) sector, whichwas defined as a unit having an investment in plant and

machinery equivalent to less than $230,000. Apparelunits with larger investments were allowed to operateonly as export-oriented units (EOUs). As a result, India’sapparel sector is highly fragmented and is characterizedby low levels of technology use.

Future of Indian Textile Industry (2)

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