30
CHAPTER II
GROWTH OF SPINNING MILLS IN INDIA
INTRODUCTION
The "deindustrialization" of the Indian economy and of India's textile
industries in particular, is the subject of a major historiographical debate.
While some scholars have claimed that colonial rule permanently
undermined indigenous production, others have argued that handloom
weavers were able to adjust to colonial conditions and therefore carved out
new niches for themselves. Hanretty (1991) examines handloom weavers in
one part of India, an area that is now Madhya Pradesh, between 1800 and
Indian independence in 1947. Eschewing a simplistic attachment to either of
the two main positions, Hanretty shows that while handloom weavers as a
group faced great competition in the mid-19th century from imported cloths,
some specialist producers were able to cope better than others, mainly
because of their production of specialized products and the security given by
them enhanced caste status. The real challenge came in the 20th century as
India's own mills subordinated weavers to middlemen as the former became
more dependent on mill-spun yarns.
When the British left India in 1947, the economy was only slightly
more industrialized than when they had taken formal control nearly one
hundred years earlier. Wolcott (1997) asks, were they responsible for the
lack of development? Two strains of argument suggest they were. The first,
primarily associated with Amiya Bagchi, faults the British for not giving
sufficient protection to domestic industries. The second, associated with
Morris Morris, faults them for not investing in infrastructure - specifically the
capital market and education. This article reexamines the development of
cotton textile production, the most important factory industry in colonial India.
There is no evidence that any of these factors contributed significantly to the
slow interwar growth of the industry. Thus, Wolcott concludes, there is no
basis for arguing that a national government could have speeded up
31
development. The problems were imbedded in the structure of the labor
market, beyond the control of any government.
By the end of the 19th century, domestic wool production in India was
experiencing a transformation that was largely attributable to colonial rule.
Arable land, which pastoralists needed for their sheep, was becoming less
available; hence, wool production tended to become concentrated in areas
where there were more opportunities for grazing. Railways were important in
helping to transform weaving from a small-scale household-centered activity
to larger factory production. Competition from imported wool led to greater
specialization in weaving and spinning, and encouraged the production of
finer cloth. These transformations, of which the most important seems to be
the loss of common grazing lands, have continued in postcolonial India.
Shah (2001) examines the growth of an industrial working class in
Ahmedabad, chief city of Gujarat. In textiles, the most important industry,
new recruits were chiefly lower-caste landless agricultural laborers and
handloom weavers - men, women, and children. Despite strikes against long
hours and low wages, caste identity remained strong, and stable; effective
trade unions were not achieved1.
GLOBAL TEXTILE TRADE IN INDIA
The share of India in global textile trade is more than 3 percent. It is
predominantly cotton based while world over the trend is shifting towards
Man Made Fibres and blends. In the total world exports of MMF textiles, the
share of India is 3.51 percent as compared to China with 8.35 percent,
Japan with 5.75 percent and Indonesia with 7.60 percent. Besides, the unit
price realisation of Indian exports is one of the lowest which is mainly due to
low value addition, as bulk of India’s exports is in the form of yarn, Grey
fabrics and low value garments. Though the majority of the Indian textile
machinery in weaving and processing is obsolete, the spinning sector has
been fairly modernised. Now, with the introduction of TUFS (Technology
Upgradation Fund Scheme), the weaving and processing sector has been
undergoing rapid changes, which encourages the production of more value
added items and processed fabrics.
32
The spinning industry is dominated by large units and it has been able
to undergo significant modernization since the 1990s. The main factors
behind the modernization include lowering of custom duties and other
restrictions on imports of machinery and equipment and lowering of
restrictions on imports and exports of raw cotton and yarn. The spinning
industry, which is dominated by medium and large units producing more than
90 percent of the output and total value added. During an early period of
policy reform (1983–1990), the demand increased due to spurt in exports,
which caused better utilization of existing spindles and led to reduction in idle
capacity. During later phase (1990–2005), the investment in new spindles
increased at a very rapid rate. This lead to rise in efficiency of the working
spindles and relative productivity of working spindles compared to the most
recent technology improved over time.
The units in spinning sector are relatively less as most of the units in
this segment belong to large sector. This becomes clear as units belonging
to cotton and synthetic spinning in terms of value added accounts for 22.4
percent in the total value added in textile and clothing sector. The high share
in value added compared to units is mainly because of dominance of
medium and large units in spinning sector. The share of large units in total
value addition in cotton and synthetic spinning sector accounts for 86.1
percent.
33
A few of the large spinning mills with their capacity are listed in table 2.1.1:
Table 2.1.1
TOP TEN SPINNING MILLS WITH THEIR CAPACITY
S. NO. MILL NAME SPINDLES
1 Vardhman Yarns 223264
2 Aarti International Limited 174048
3 Chenab Textile Mills 170616
4 Nahar Spinning Mills Limited 162336
5 Shri Ramalinga Mills Limited 152064
6 Krishna Knitwear Technologies Ltd 151200
7 Priyadarshini Sahakari Soot Girani Ltd 139632
8 Amaravathi Textiles Private Limited 126816
9 Tayal Energy Ltd 126000
10 Abhishek Industries Limited 125952
Source: txcindia.com
There are1834 cotton/man-made fiber textile mills (non-Small Scale)
in the country with 37.07 million spindles, 4, 89,718 rotors and 56,524 looms.
INDIAN SPINNING INDUSTRY
Indian Spinning Industry has gone from strength to strength since a
very long time now as it was the hub of cotton manufacturing. Cotton is not
only consumed to the highest extent in India but it has also become one of
the most profitable textiles in the export industry.
Spinning in India can be classified into 2 categories: medium and long
staple. But there was a shortfall in the 'extra-long' category that continued for
many years. There was a massive downfall in the cotton spinning in India
during 2004-2005. The production rate of cotton was about 4 lakh bales that
was less by 5 lakh bales from the required rate which was 9 lakh bales.
Mr.P.D.Patodia, the Chairman of the Standing Committee on Cotton, CITI-
34
CDRA said that the manufacturing of cotton will rise to 11-12 lakh bales in
2010.
The present downfall in the cotton production has witnessed a 50
percent increase in the price of Indian varieties of ELS, which is detrimental
for the spinning industry in India. Spinning mills require domestic
accessibility of ELS cotton in increased quantity and of better fiber qualities.
To survive this downfall in the cotton trade which is a highly profitable
textile in the Indian Spinning Industry, CITI-CDRA is conducting a
conference with various research organizations such as CICR (Nagpur),
JNKVV (Khandwa), UAS (Dharwad), and Regional Textile Mills' Association
in R&D activities. It conducted a discussion pertaining to the development of
new varieties of seeds and adopting the advanced procedure of cultivation
which will add to the profit in the cotton textile sector of the spinning industry.
The most important and efficient step towards the resurgence of cotton
manufacturing would be to develop the ELS varieties with lesser duration
crops and yield to cost-effectiveness and consistency in cultivation. This will
not only motivate the farmers but will also make them stick to the desired
sector of cotton crop.
The yarn spinning industry covers almost 25 percent of the total
industrial production of one of the world's 10 largest economies. Trends are
reviewed every year in accordance with the need and fashion. An elaborate
and detailed assessment is made on various sectors of the yarn spinning
such as production, consumption, and materials. The legislative and the
political consequences are also reviewed at the same time. In addition to it,
other areas that are being reviewed in the yarn spinning sector are exports,
imports, prices, advertising, and sales promotion patterns.
ROLE OF INDIAN SPINNING MILLS
Spinning mills across India would continue production cut till mid-June to
use up cotton yarn inventories of 500 million kg. A week after the `70,000
crore Spinning industry voluntarily cut its production by 33 percent, there has
35
been a marginal movement in the stocks that have remained unsold owing to
price volatility.
"The industry is in a hand-to-mouth situation. We have no option but to
extend our production cut till the unused stocks find takers," said chairperson
of Confederation of Indian Textile Industry (CITI) and MD of Ginni Filaments,
Shishir Jaipuria. Spinning contributes $10 billion to India's $62 billion textile
and clothing sector.
Price volatility of cotton that touched a record of 63 percent high of
`62,000 per candy in the 2010-11 crop season and then came crashing at
`44,000 per candy, destablised the prices of yarn that moved from `204 per
kg in October to `253 per kg in March and then fell `185 per kg in May. India
produced 3,500 million kg of cotton yarn and maintains a stock enough for
10-15 days2.
SHARE IN GROSS DOMESTIC PRODUCT (GDP)
Its importance is underlined by the fact that The Textile industry
accounts for around 4 percent of Gross Domestic Product, 14 percent of
industrial production, 9 percent of excise collections, 18 percent of
employment in the industrial sector, and 16 percent of the country’s total
exports earnings. The Spinning sector, which is integrated to the Textile
industry accounts to 22.4 percent of the total value of the Textile Industry3.
GDP has been quite beneficial in the economic life of the country. The
worldwide trade of textiles and clothing has boosted up the GDP of India to a
great extent as this sector has brought in a huge amount of revenue in the
country. In the past one year, there has been a massive upsurge in the
textile industry of India. The industry size has expanded from $37 billion in
2004-05 to $49 billion in 2006-07. During this era, the local market witnessed
a growth of $7 billion, that is, from $23 billion to $30 billion. The export
market increased from $14 billion to $19 billion in the same period.
36
ECONOMIC TRENDS
The Textile industry has been witnessing a massive upsurge in the
recent years. The industry size has expanded from $49 billion in 2006-07 to
$65 billion in 2009-10. During this era, the local market witnessed a growth
of $15 billion, that is, from $30 billion to $45 billion4.
SPINNING SECTOR – CURRENT SCENARIO
The textile industry turns out a wide range of products. The production
process includes four main activities: spinning, weaving and knitting, wet
processing and stitching (sewing). Production from fibers to spun yarn takes
place through the spinning process and constitutes the first stage. Spinning
involves opening, blending, carding, combing, drawing, drafting and
spinning. It uses four technologies: ring spinning, rotor spinning, air jet
spinning and friction spinning. Ring spinning is the most used in India, its
main advantage being its wide adaptability for spinning different types of
yarn. Rotor spinning technology is also widely used.
Textile spinning units in India can be categorised into three types, i.e.,
conventional, modern and semi-modern. Conventional units have
conventional machines where the production rate is low and the fluff or dust
liberation from the process is within tolerable limits. Modern units have high-
peed machines and higher production rates with increased fluff and dust
generation. Semi- modern units are those which fall between modern and
conventional. Spinning in India can also be classified into two categories
such as medium and long staple. But there was a shortfall in the ‘extra-long’
category during recent times. In the textile mill sector spinning is the most
important segment. During 2007-08, there were exist 2,992 spinning mills in
the country. Of these, 1,773 units belong to large spinning units and the
remaining to medium mills. In composite mills, spinning, weaving and dyeing
activities are integrated.
37
Area, production and productivity of cotton in India is given in table 2.1.2
Table 2.1.2
AREA, PRODUCTION AND PRODUCTIVITY OF COTTON IN INDIA
Year Area in lakh
hectares
Production in lakh bales of 170
kgs
Yield kgs per hectare
1996-97 91.66 177.90 330
1997-98 89.04 158.00 302
1998-99 92.87 165.00 302
1999-00 87.31 156.00 304
2000-01 85.76 140.00 278
2001-02 87.30 158.00 308
2002-03 76.67 136.00 302
2003-04 76.30 179.00 399
2004-05 87.86 243.00 470
2005-06 86.77 244.00 478
2006-07 91.44 280.00 521
2007-08 94.14 307.00 554
2008-09 94.06 290.00 524
2009-10 103.29 305.00 503
2010-11 111.42 325.00 496
2011-12 121.91 356.00 496
Source: Cotton Advisory Board
38
State-wise cotton consumption by the textile mills is given in table 2.1.3:
Table 2.1.3
STATE-WISE COTTON CONSUMPTION BY THE TEXTILE MILLS
in '000 kgs
States/Union Territories
2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Andhra Pradesh
124155 132035 143196 160189 167613 174245 193155 271034
Assam 116 97 104 86 14 -- -- --
Bihar -- -- -- -- -- -- -- --
Delhi -- -- -- -- -- -- -- --
Gujarat 198638 236196 244931 256017 204494 180483 196627 223820
Haryana 93727 95289 137386 116909 125704 112916 96329 129643
Himachal Pradesh
69322 72730 84880 117146 131532 129457 130998 129291
Jammu & Kashmir
23 2108 7763 7968 7794 11401 16314 14325
Jharkhand 1250 1404 1650 1674 1683 1378 1253 1078
Karnataka 70318 82498 86579 87273 85918 67473 67229 50598
Kerala 30621 32882 37783 38306 34137 28873 31857 33385
Madhya Pradesh
145819 148296 158809 176171 182813 202771 250491 278457
Maharashtra 271506 321338 303287 330967 338220 303179 312585 350798
Manipur -- -- -- -- -- -- -- --
Orissa 5525 2445 4709 3509 3486 2047 1952 2612
Punjab 265171 293549 350948 417345 468881 520173 559582 627548
Rajasthan 94694 96929 125517 134469 144008 139264 130589 150627
Tamil Nadu 1160891 1245826 1406506 1580694 1658525 1536573 1617522 1896204
Uttaranchal 27 -- 3227 19349 27318 38300 39495 50996
Uttar Pradesh 51782 54330 59782 58157 51654 42376 45378 45787
West Bengal 14966 16295 17641 19059 17644 14865 15029 15624
Union Territories
Dadra Nagar Haveli
36268 33332 30961 40790 43619 67759 80246 93931
Daman & Diu 104 75 62 150 223 136 247 382
Pondicherry 17081 17989 16215 13821 11912 9593 8787 7599
Total 2652004 2885643 3221936 3580049 3707192 3583262 3795665 4373739
Source: Office of the Textile Commissioner, Mumbai
39
FOREIGN EXPORTS
The textiles industry accounts for 14 percent of industrial production
and accounts for nearly 12 percent share of the country's total exports
basket. The Government fixed the target for 2008-09 at $26.55 billion an
increase of 20 percent over the actual performance of $22.14 billion in
2007-08, for export of textiles. However, no targets were fixed for 2009-10.
At present, Indian textile industry holds 3.5 to 4 percent share in the
total textile production across the globe and 3 percent share in the export
production of clothing. USA is known to be the largest purchaser of Indian
textiles.
Nearly half of Indian export was accounted by nine countries namely
Bangladesh, Egypt, China, Portugal, Italy, Turkey, Iran, South Korea and
other countries. Export of major destinations is given in table 2.1.4:
Table 2.1.4
EXPORT TO MAJOR DESTINATIONS
S.NO. COUNTRY NAME EXPORT %
1 Bangladesh 13
2 Egypt 07
3 China 06
4 Portugal 05
5 Italy 08
6 Turkey 05
7 Iran 04
8 South Korea 04
9 Others 48
TOTAL 100
Source: ynfx.com
COTTON-EXPORTING MARKETS
Naturally certain cities in the cotton-producing countries have become
important as cotton-exporting centers. In the United States, Galveston ranks
highest in number of bales received and shipped, the amount running
40
considerably over 2,000,000 bales per year. New Orleans and Savannah
come next. New Orleans usually holds second place with a total yearly
average of nearly 2,000,000 bales, but in 1910 the amount ran down to
1,315,000 bales and Savannah came into second place with 1,365,000
bales. The other important cities receiving and shipping cotton in the
southern United States are: Norfolk, Virginia; Wilmington, North Carolina;
Mobile, Alabama; Brunswick and Charleston, South Carolina. Considerable
cotton is received overland at Baltimore, New York, Philadelphia, and even
at Boston from the cotton states. Cotton exports from India is given in table
2.1.5:
Table 2.1.5
COTTON EXPORTS FROM INDIA
Year Quantity (in lakh bales of
170 kgs) Value in ` /Crores
1996-97 16.82 1655.00
1997-98 3.50 313.62
1998-99 1.01 86.72
1999-00 0.65 52.15
2000-01 0.60 51.43
2001-02 0.50 44.40
2002-03 0.84 66.31
2003-04 12.11 1089.15
2004-05 9.14 657.34
2005-06 47.00 3951.35
2006-07 58.00 5267.08
2007-08 88.50 8365.98
2008-09 35.00 3837.13
2009-10 83.00 10270.21
2010-11 68.80 N.A.
2011-12 84.00 N.A.
Note: Value figures are estimated
NA : Not Available (A): Anticipated
Source: Cotton Advisory Board for Quantity figures
41
COTTON – IMPORTING MARKETS
Similarly, certain large cities have become prominent as the receiving
centers for the great cotton-importing countries. No city in the world receives
so much cotton as Liverpool. England's high rank as a cotton textile
producer accounts for this, although a great deal of cotton received in
Liverpool is reshipped in smaller quantities to various parts of Europe and
elsewhere. American spinners frequently buy Egyptian or East Indian cotton
in Liverpool. A few miles inland from Liverpool is another great cotton
market, Manchester, the very heart of the cotton textiles manufacturing
district of England. Cotton received here is used in the immediate vicinity.
Cotton import in India is given in table 2.1.6:
Table 2.1.6
COTTON IMPORTS IN INDIA
Year Quantity (in lakh bales of
170 kgs.)
Value
(`/Crores)
1996-97 0.30 56.42
1997-98 4.13 497.93
1998-99 7.87 772.64
1999-00 22.01 1967.92
2000-01 22.13 2029.18
2001-02 25.26 2150.01
2002-03 17.67 1789.92
2003-04 7.21 880.10
2004-05 12.17 1338.04
2005-06 5.00 695.77
2006-07 5.53 752.29
2007-08 6.38 978.54
2008-09 10.00 1377.80
2009-10 7.00 1195.64
2010-11 5.00 N.A.
2011-12 6.00 N.A.
Note: Value figures are estimated
NA : Not Available (A): Anticipated
Source: Cotton Advisory Board for Quantity figures
42
REVIVAL OF GINNING/SPINNING MILLS
Government has not received any representation regarding
closure of ginning factories, spinning mills or handloom units due to
recession in international market. However CITI has represented regarding
a slowdown in the Textiles industry due to demand contraction in cotton yarn
resulting in increased yarn stocks in the country.
Government of India, under Textile Workers Rehabilitation Fund
Scheme (TWRFS) provides interim relief to the textile workers rendered
unemployed as a consequence for permanent closure of any particular
portion or entire textile unit in the private sector. Assistance under the
Scheme is payable to eligible workers for the purpose of enabling them to
settle in another employment5. Table 2.1.7 show the details of funds
allocated and released – TWRFS.
Table 2.1.7
DETAILS OF FUNDS ALLOCATED AND RELEASED -TWRFS
Year Funds allocation Funds released
2009-10 ` 25 crore ` 24.45 crore
2010-11 ` 12.28 crore ` 12.28 crore
Source: Ministry of state for textiles
COTTON - SPINNING
Spinning machines have a metal spike called a spindle which the
thread winds around. The spindle is turned by attaching it with a pulley to a
larger wheel (or several wheels) which is rotated with one hand. One
complete turn of the large wheel makes the spindle turn many times, just like
gears on a bike. Each spinning cycle takes only a few seconds and involves
turning the wheel clockwise, anticlockwise and then clockwise again. This
cycle pulls fibers from the cylinder in the left hand, twisting the thread and
then winding the finished thread onto the spindle. After spinning, threads are
dyed and treated with chemicals to prevent shrinkage or creasing, before
weaving into fabrics.
43
The country’s cotton production has been steadily on the rise with
better farm practices. The average yield has increased to 500 kg per
hectare. From a level of importers of cotton, India has become an exporter of
cotton earning a name in the international market. Presently India is the
second largest cotton producer in the world next to US and is about to
overtake the US as the number one in the next couple of years. It is the
result of various factors. Primarily, because of rising cultivations of Bt.cotton
(Bacillus thuringnsis) and reduction of farmers input costs, while the yield as
well as quality are substantially much larger compared to traditional varieties.
In view of this development, the cotton cultivation acreage has been steadily
going up in India. The farmers have become more knowledgeable to follow
scientific methods to cultivate high yielding long staple cotton varieties.
Besides, individual mills are also simultaneously taking steps to
improve the cotton production along with Technology Mission on Cotton
(TCM), the cotton development research Associations of organizations
(CITI), South Indian Textiles Mills Association (SIMA) and Kerala State
Textile Corporation (KSTC). The resultant factor is that the quality and
quantity of raw material supply has substantially improved in the country.
Due to globalization of our economy, the consciousness of quality inputs and
pricing have become competitive to the international standards and prices.
The Indian textile industry is one of the largest in the world with a
massive raw material and textile-manufacturing base. Indian economy is
largely dependent on the textile manufacturing and trade in addition to other
major industries. About 27 percent of the exchange earning are on account
of export of textiles and clothing alone. In India, organized textile mill sector
has increased from 1787 in 2003-04 to 1789 in 2004-05.
The cotton textile industry, one of the oldest and major consumer
industries in India, has assumed national importance by virtue of size,
investment, output and employment. The industry produces a wide range of
fabrics to suit specific needs of consumers. Further, the cotton textile
industry occupies a pre eminent place in the Indian economy by contributing
a major share to the countries industrial production and providing cloth to its
44
millions. The industry also serves by providing direct employment to
60,00,000 workers in several of its related activities. India is one of the
largest textile producing countries in the world. The share of the industry in
the export basket of India is around 20 percent. However, textile industry is
the vast developing sector and when the competitions are exorbitant,
especially in its design and quality, we have to adopt modern technology
management machine so as to compete with other countries in the
international market6.
SPINNING AND TEXTILE INDUSTRY IN TAMILNADU
The Textile Mills are the backbone of Tamil Nadu’s industrial
development and are providing massive employment in the State,
predominantly spinning oriented. The State textile industry has a significant
presence in the national economy also. There are 3069 large, medium and
small spinning mills in India, of which, 1889 are located in Tamilnadu. The
spinning mills in the State comprise 18 Cooperative Spinning Mills
(5 functioning), 17 National Textile Corporation Mills (7 functioning) and 1854
Private Mills (including 23 Composite Mills). Those spinning mills provide
employment for around 2.40 lakh persons. The capacity of the spinning mills
in the State is around 18.92 million spindles. The State produces about 1612
million kg. of spun yarn per year and this is about 40 percent of the spun
yarn produced per year in the entire nation7.
At present, Tamil Nadu, despite its significant presence in the
industry, is not actively associated in the policy making processes of the
Government of India affecting the industry. It is felt that in all such matters,
the State should actively be involved in the decision making process.
According to the Annual Survey of Industries (92-93), Tamil Nadu was
the 3rd largest industrial state in the country. The gross output of its
industrial sector was `37,986 crores, accounting for 10.3 percent of the
national output. Its net value added to `7,303 crores was also 10.3 percent of
the national figure. Cotton textiles was prominent among the industry groups
that contributed to this ranking. In terms of gross output value, cotton textiles
45
increased from 18.8 percent of the national share (ranked 2) in 1982-83 to
32.2 percent (ranked 1) in 1992-93. In terms of net value added, the
corresponding figures were 18.4 percent (ranked 2) and 37.4 percent
(ranked 1). Other textile products accounted for 20.3 percent of the national
gross output value (ranked 2) in 1992-93 and 22.3 percent of that year's net
value added (ranked 2). However, in 1995-96, the textile sector as a whole in
Tamil Nadu registered a disturbing negative growth rate.
When we look at Tamil Nadu's Textile Sector in 94-95, the total yarn
production in the State was 695 million kgs, fully 33.3 percent of the
country's production. Within this, the production of cotton yarn was 611
million kgs, being 38.5 percent of the country's output and blended and
manmade fibres accounted for 84 million kgs, 16.7 percent of the national
output. This was the output of 617 textile mills (44.2 percent of the country),
comprising 595 spinning mills (52.7 percent) and 22 composite mills (8.2
percent) accounting for a total of 98.7 lakh spindles (32.5 percent). Included
in the spinning mills are 18 co-operative spinning mills accounting for 4.69
lakh spindles and 34 million kgs of yarn, a quantity sufficient to meet roughly
half the hank yarn requirement of the State.
In 1994-95, Tamil Nadu also produced 187 million metres of cloth, 11
percent of the national production, of which cotton accounted for 93 million
metres (8.4 percent) and blended varieties accounted for 94 million metre
(15.8 percent). This was the output of 7.7 lakh looms, being 5.1 percent of
the country's loomage. Of this, 4.3lakh looms were in the handloom sector
and 3.4 lakh in the powerloom and composite mill sectors.
Need for a State Textile Policy, the country's textile policy was last
specified through the Textile Policy Statement of June 1985. Prior to this, the
development of the textile industry was guided by policy announcements in
March 1981 and August 1978. The stated objective of the textile policy of
1985 was an increase in production of cloth of acceptable quality at
reasonable prices to meet the clothing requirements of growing population.
In pursuit of this objective, the employment and export potential of the
industry were also to be kept in view.
46
The national policy is a broad statement and covers every aspect of
the textile industry. However, in order to cater to the specific needs of
individual states, there is a felt need for a State Level Policy. The textile
industry continues to play a vital socio-economic role in Tamil Nadu. Hence,
the need for a dynamic, growth oriented policy is all the more important.
The objective of the State Textile Policy will be to produce textiles to
cater satisfactorily to the quantity, quality and price requirements of both
domestic and international markets, keeping in view the industry's potential
for employment8.
Until last year, spinning mills in Tamil Nadu were running round the
clock and were busy expanding their operational capacities. Textile mill in
Coimbatore districts plays a predominant part of the industry in South India.
Presently, a major part of the spinning mills which involves in manufacturing
yarn remains idle. Several units are closing down, putting the jobs of
thousands of the workers into jeopardy and many others have not received
their wages for months. 392 mills were closed during the previous year
leaving more than 2 lakh workers jobless. Saddled with recession, the
industry is tumbling down facing a steep fall in the export orders, especially
from the South East Asian markets. The economic liberalization, which was
believed to be the pivot of Coimbatore spinning mills’ success, is now being
blamed as a reason for the industrial turmoil.
The corresponding period during the previous year was a busy period
for the spinning mills in South India. The spindle capacity was doubled with
40 percent additional capacity. All these efforts have gone with the wind, with
the advent of global recession and power crisis. The fiscal year 2008-09 is
one of the most difficult periods in the history of textile mills in South India.
Cotton yarn production is already down by 20 percent during the last fiscal
year. Production which was 4003.44 million kg during 2007-08 dropped to
3239.17 million kg during the last year. Profile of textile industry in Tamil
Nadu is given in table 2.1.8:
47
Table 2.1.8
PROFILE OF TEXTILE INDUSTRY IN TAMIL NADU
ITEM ALL INDIA TAMILNADU
SPINNING SECTOR
No. of Spinning Mills 3069 1889
Workers (in lakh) 8.94 2.40
Spindles (in Million) 39.27 18.92
POWERLOOM SECTOR
Powerlooms (in lakhs) 19.03 3.66
Workers (in lakhs) 47.57 9.14
HANDLOOM SECTOR
Handlooms (in lakhs) 34.86 4.13
Weavers (in lakhs) 65.50 6.08
Handloom Cloth Production(Bn. Sq. Mt)
6.00 0.70
Value(` in Crore) 18000 1700
OTHER SECTOR
Power processing Units 2510 985
Hand Processing Units 10397 2614
Knitwear and Garment units 8000 4000
Source: Tamil Nadu - Industry Profile
The Textile Industry of Tamil Nadu has a significant presence in the
National and State economy. It is the forerunner in Industrial development
and in providing massive employment in the State. Handloom, Powerloom,
Spinning, Processing, Garment and Hosiery are the various sectors of the
Textile Industry in Tamil Nadu. It is the largest economic activity next only to
Agriculture in providing direct and indirect employment. Handloom Sector
occupies a place of pride in preserving the country's heritage and culture
and plays a vital role in the economy of the country. It has a long tradition
par excellence in its craftsmanship. The Powerloom Sector in Tamil Nadu
has also been playing an important role in meeting the clothing needs of the
people. The Powerloom Sector in Tamil Nadu is next only to Maharashtra in
terms of number of looms. The Textile Sector in Tamil Nadu is predominantly
in the private sector, spinning oriented and labour-intensive because of the
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preponderance of the decentralized sector in most of the segments of the
industry. The Textile Industry has a very important role to play in the
industrial field with regard to employment potential, overall economic and
commercial activities. This Industry enables the Central and State
Governments to earn substantial revenue besides foreign exchange through
exports9.
CHALLENGES FOR THE COTTON SPINNING INDUSTRY
Raw cotton and cotton yarn prices have historically moved in tandem
raw cotton prices being the base and indicating corresponding movement in
prices for cotton yarn. The prices of both the commodities have been stable
over the past several years apart from inhibiting seasonal volatility on
account of cyclical conditions of the industry. However in 2010, there was a
massive crop failure in China and Pakistan mainly on account of floods. In
Pakistan alone, reports suggested close to 1/5th of the total crop as
destroyed by floods. Thus, in the second of half of 2010-11, due to supply
constraints, strong international demand propelled the international prices of
cotton and cotton yarn to new heights in a very short period of time.
Prices of raw cotton, which were `32000/candy in August 2010, rose
to `44000/candy in November 2010 and `60,000/candy in March 2011. At the
same time, Indian cotton harvest increased albeit marginally on account of
adequate rainfall and increase in area under acreage. India produced 29.5
million bales of cotton in 2010 as against 29 million bales in 2009 while
increasing the area under acreage from 94.06 lakh acres to 103.10 lakh
acres in the same period. Thus, weak global supply and stable domestic
output presented a good opportunity to the Indian cotton exporters as foreign
importers looked towards India to procure their requirements of cotton and
cotton yarn.
During October – December 2010, there emerged a deficit situation of
cotton and cotton yarn in domestic market as manufacturers chased highly
remunerative international markets. Reacting to this deficit situation, the
Government of India imposed a ban on the exports of cotton yarn between
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January-March in 2011. Though higher realizations could be made in the
international market, exporters were unable to do so. Simultaneously,
ongoing production activities led to piling up of finished goods inventory for
majority of the cotton and cotton yarn manufacturing units in India. Industry
estimates quote the finished goods inventory of 500 to 550 million kgs as of
April 2011 in the Indian market which were produced at a higher input cost
when cotton prices were at their peak in Jan – March2011. This led to an
adverse industry situation wherein there is currently an excess supply of
finished stock manufactured at a higher input cost while customers are
waiting for prices to fall further. The average inventory as on March 31,
2011, of leading industry players, was approximately 4 months. The prices of
raw cotton have since corrected by approximately 25 percent from their peak
levels to `130/kg in May 2011.
Rising cotton imports from China and a capital on Indian cotton
exports which were the main factors driving up global cotton prices are
already experiencing a reversal and this is expected to continue with the
onset of monsoon and excess supply of finished stock in the Indian market in
2012. In the remaining months of the season, domestic cotton prices are
likely to soften, as exporters are in the process of exhausting their quota of
permissible exports and global cotton prices are also projected to decline.
Unless the quota of permissible exports is increased, cotton prices are
expected to fall further. Yarn prices have already dropped from a peak of
`280 a kg for the benchmark variety to `225 a kg in May 2011. The
Government had resumed yarn exports from April 2011, but removed export
incentives like duty drawback and Duty Entitled Pass Book scheme (DEPB)
since April 2010. This discouraged exports, as the prices in the international
markets too have also come down from its peak levels in February – March
2011 on account of tightening of export margins, reduction in Chinese
imports and an expectation of higher yield of cotton crop in 2011-12.
Moreover, resistance from domestic fabric producers would also act as a
constraining factor for hike in the prices of the yarn. Silver lining to the above
situation is the fact that the Government of India has increased the allocated
quota for the export of cotton from the present 5.5 million bales to 6.5 million
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bales for 2012. Volatile cotton prices, fluctuating currency markets and
global economic uncertainty have raised concerns about textile exports in
the past. Currently, the scenario is that of manufacturers curtailing
production and offloading existing inventory to stabilize prices. This will lead
to decline in capacity utilization levels for the industry. Apart from integrated
spinning players who can to some extent mitigate the cost of high cost
inventory to their fabric divisions, non-integrated spinning mills are expected
to report subdued financial performance in first half of the financial year 2012
as compared to financial year 2011.
Overall, spinning companies in India are expected to feel the effect of
piling up of high cost inventory and falling prices of cotton and cotton yarn in
first half of the financial year 2012. They would have procured large
inventory (3-4 months of raw material stock) for their cotton requirements for
2012 in last quarter of financial year 2011 when cotton prices had peaked
and this would have pushed up their procurement cost. Thus, overall growth
prospects for spinning companies are expected to be constrained on
account of subdued prices and decline in capacity utilization levels. CARE
Research expects the operating margins of spinning companies to decline
by around 250 to 300 bps in 2011-1210.
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Cotton / Man made fibre mills and closure position is given in table 2.1.9:
Table 2.1.9 COTTON / MAN MADE FIBRE MILLS AND CLOSURE POSITION
As on No. of Mills No. of mills closed
Spinning Spinning
31.03.02 1579 295
31.03.03 1599 350
31.03.04 1564 374
31.03.05 1566 379
31.03.06 1570 387
31.03.07 1608 381
31.03.08 1597 318
31.03.09 1653 340
31.03.10 1673 365
31.12.10 1766 471
31.01.2011* 1766 472
28.01.2011* 1766 472
* Figures are repeated since information from regional office under compilation.
Source: www.txcindia.com
SOME OF THE POPULAR COMPANIES ENGAGED IN THE INDIAN SPINNING INDUSTRY ARE LISTED BELOW
Bhilwara Spinners Ltd. (LNG Group) - polyester, viscose, wool-blended
fabrics and high-end products like lycra and linen. BSL Suitings and
Mayur Suitings are the two brands under Bhilwara Spinners Ltd.
Nitin Spinners Ltd. - manufactures single and multi-fold yarns in the
range from Ne 4 to Ne 40 appropriate for various applications such as
Knitted Fabrics, Woven Fabrics, Terry Towels, Denims, Furnishing
Fabrics, carpets and other Industrial Fabrics.
Sangam (India) Ltd. (Sangam Group of Companies) - Largest producer of
dyed yarn in India with a capacity of 64032 spindles in one location.
Ajay Group of Industries - Manufacturer and seller of polyester viscose,
polyester woolen and uniform fabrics.
The Spinning Industry in India is on set to hit the global market with other
fabrics as well like the cotton textiles with its enthusiasm and consistency in
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work. It has already reached a phenomenal status in India by beating the
obstacles that caused a downfall since past few years and is now on its way
to cover a wider area in the spinning sector11.
The Indian textile industry is one the largest and oldest sectors in the
country and among the most important in the economy in terms of output,
investment and employment. The sector employs nearly 35 million people
and after agriculture, is the second-highest employer in the country. The
Indian Spinning Industry is an integral part of the Indian Textile Industry.
India claims to be the second largest manufacturer as well as provider of
cotton yarn and textiles in the world
India holds around 25 percent share in the cotton yarn industry across
the globe
India contributes to around 12 percent of the world's production of cotton
yarn and textiles
India covers 61 percent of the international textile market
In terms of spindleage, the Indian textile industry is ranked second, after
China, and accounts for 23 percent of the world’s spindle capacity12.
Spinning mills in India have been producing a large number of counts
and varieties of yarns. Many mills, besides producing more number of
counts, very often change their product-mix. No doubt, introduction of a new
count would bring-in some immediate savings but such gain should be
looked from a long-term point of view.
In view of the tough competition and narrow profit margin for the
conventional varieties of yarns such as carded, combed and hosiery, some
mills have been manufacturing special types of yarns such as compact,
fancy, chemical processed, organic and core spun yarns.
The counts and varieties of yarns manufactured by a spinning mill
depend on a number of factors such as spindleage, availability of adequate
preparatory and post-spinning machinery, profit margin, market demand and
marketing capability13.