Post on 06-Apr-2023
CHAPTER II
A. TEXTILE INDUSTRY IN INDIA
2.1 Introduction
2.2 New Economic Policy
2.3 GATT & Textile Industry
2.4 World Trade Organization
2.5 WTO - Textile & Clothing
2.6 Origin & Growth of Spinning Mills in India
2.7 Current Scenario
2.8 Recent Amendments in Textile Industry
2.9 Buoyancy in Cotton Yarn Industry
B. TEXTILE INDUSTRY IN MAHARASHTRA
2.10 Introduction
2.11 Details of Co-operative Spinning Mills in
Maharashtra (2004-05)
2.12 Review of the Performance of the Co
operative Spinning Mills in Production
C. TEXTILE INDUSTRY IN ICHALKARANTI
2.13 Historical Background
2.14 Growth of Textile Industry during
Independence
2.15 Growth of Powerlooms in Ichalkaranji.
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CHAPTER II
A. TEXTILE INDUSTRY IN INDIA
2.1 INTRODUCTION
The Textile Industry occupies a unique place in our
Country and it is oldest Industry in India. It accounts for
14% of the total industrial production and contributes
nearly 30% of the total exports and is the second largest
employment generator after agriculture.
Textile Industry is providing one of the most basic
needs of people and it holds importance, maintaining
sustained growth for improving quality of life. It has a
unique position as a self-reliant industry. From the
production of raw materials to the delivery of finished
products with substantial value-addition to each stage of
processing.
It has the vast potential for creation of employment
opportunities in the agricultural, industrial, organized and
decentralized sectors both in rural and urban areas,
particularly for women.
The Government accepted a new economic policy in
the year 1991. It gave stress on the liberalization and
globalization. The policy has made some fundamental
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changes in the trade and commerce in order to promote the
free trade policy. It aimed at competitive environment,
product quality and participation in the globalization
programme and using all resources for the good of the
common people. This policy has proved good results on the
economic front of our nation and is going to promote
industrial development in India. There are also some
negative impacts on our economy also.
Co-operative sector is the golden mean between
capitalism and socialism, (i.e. Private & Public Sector). It
gives equal importance to capital and labour. But now a
days, the Co-operative Sector is becoming a sick sector due
to outdated technology and machinery, inefficiency,
unhealthy competition, decreasing productivity, corruption,
nepotism and political interference in the administration
etc.
2.2 NEW ECONOMIC POLICY
It is evident that the new economic policy and WTO
have passed a challenge to the Co-operative sector. Hence,
it has to prove its efficiency in work, performance and
capacity to raise capital & ability to complete with other
industry. If it does not accept this challenge, its very
existence is likely to be in danger. In such circumstances,
10wumneb mmm lihuit
IVAJI UBIVEBS1TY. ItOLMAraa.
the co-operative sector has to be vigilant. It should adopt
scientific and effective method of management and work
consciously & honestly to become self-sufficient. It should
prove that the co-operative sector is an inevitable factor in
the balanced and healthy progress of Nation.
2.3 GATT AND TEXTILE INDUSTRY
The General Agreement on Tariff & Trade ( GATT )
was established in 1948 in Geneva.
OBJECTIVES :
The objective of free trade is order to encourage
growth and development of all member countries.
THE PRINCIPLE PURPOSE :
GATT was to ensure competition in commodity trade
through the removal or reduction of trade barriers.
GATT held seven rounds of talks at different places to
remove obstacles in world trade. The first seven rounds of
negotiations conducted under GATT were aimed at
stimulating international trade through reduction in tariff
restrictions on imports imposed by member countries.
The eight rounds of talks known as Uruguay started
in 1986 and continued till recently in Uruguay. The issues
covered in earlier rounds have been —
1. Tariffs.
n
2. Protection
3. Production in Arid lands.
4. Production in Natural resources.
5. Textile.
6. Agriculture Production and Price etc.
7. GATT Laws.
8. Restrictions
9. Multi Negotiations
10. Subsidies etc.
11. Dispute Settlement System
12. Working System of GATT.
GATT & Textile & Clothing
GATT agreement has made certain proposal; to
liberalize the trade of textile and clothing. These proposals
are very important for developing countries since textile
export. Ironically, developed countries that claim to be the
greatest champions of free trade have imposed most
comprehensive quota restrictions under the Multi-Fibre
Agreement [MFA] quotas over a ten year period (1993 to
2003) and to fully liberalize the textile sector at the end of
the ten years period.
The act was divided the 10 years period into the
phases of three years. In the first phase, 16 percent of the
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textile exports to the developed countries will be liberalized
to be followed by 17 percent in the second phase and
another 18 percent in the third phase. Thus, the end of the
10 years period. Thus, only 51 percent of Textile market
will be liberalized. Thus a substantial portion (49 percent)
shall have to wait for the second wave of liberalization after
2003 A.D. What is intriguing is that textiles are defined in
such a way that textile sector included items that are not
currently under quota restrictions in developing countries.
Thus creating real liberalization and withdrawing non-tariff
restrictions in developed countries.. Thus, instead of
creating real liberalization and withdrawing non-tariff
restrictions, the myth of liberalization has been created.
The Ministry of Commerce has made this Point Clear. " It
is a fact that the Textile agreement is not evenly balanced
in the sense in the initial years. There is minimal
liberalization and significant steps for liberalization are left
only to last three years. This is one of the points of
dissatisfaction for India and we are strongly urging the
importing countries to bring forward the liberalization
processes".
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2.4 WORLD TRADE ORGANIZATION: -
The World Trade Organization (WTO) contained in the
final act was established on the 1st Jan. 1995 and India
became a founder member of WTO by ratifying the WTO
agreement on 30th Dec. 1994. This World Trade
Organization is administering the new global trade rules
establishing the rule of law in International Trade.
WTO works towards mutually supportive and trade
and environment policies and promotion of sustainable
development.
2.5 WTO : TEXTILE AND CLOTHING :-
The WTO has adopted discriminatory quantitative
restrictions in the textile and clothing sector by over 30
years under short-term agreement, long term agreements
in 1974 and multi-fibre agreement (MFA) upto 31st
December 1994. The MFA is a series of bilaterally
negotiated quotas to limit the access of developing country.
Textile exports to the developed countries during the fifties.
It was assigned to protect the US Textile Producers for the
booming Japanese Textile export. Later on it was extended
to many other developing countries including India. These
quantitative restrictions had covered a growing number of
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products over the years and had become increasingly
restrictive.
1. The agreement on Textiles and Clothing has the
provision for prohibitions on any such restriction on
free exports and elimination of MFA arrangement.
The quantitative restrictions only affect exports of
developing Countries to the industrial countries and
not the trade among the industrial countries
themselves. The implementation of the agreement by
the WTO on Textile and clothing would mean the
elimination of all non-tariff measures in textile and
clothing industries over a period of 10 years (1994-
2004). Thus, it is integration of textile and clothing
sector on January 1, 2005 into free trade system
under WTO.
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2. Division of 10 Years Period was in three Stages: -
Stages Time period Percentage of Phasing
Out
Phase I January 1, 1998 16% of total 1990
imports
Phase II January 1, 1998 17% of total 1990
imports
Phase III January 1, 2002 18% of total 1990 ^
imports
Phase IV January 1, 2005 Remainder of Textile
Imports
3. The countries can introduce discriminatory
restrictions on the products under WTO Provision,
which were not already made subject to GATT or WTO
rules or which they do not have under existing
bilateral agreement.
4. The interest of developing countries has been kept
safe under certain safeguards mechanism which is
applicable maximum for three years period. The
developing countries allowed to follow non-tariff
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measures in certain circumstances if imports are
threat to their domestic industries.
The Textile and Clothing is very sensitive sector and
significant for developing and least developing countries.
As simple industrial countries embarking on
industrialization usually begin with textile & clothing
industries. They account 24% of export for sub-saharan
Africa, 14% Asia & 8% for Latin America. For Bangla Desh
and Sri Lanka, they account for half of all export earnings.
Through the quota system 18% developing countries export
was affected. The agreement on Textile and Clothing aims
to remove both (over 10 years period) the non-tariff and
tariff barriers. Through the reduction of tariff barriers is
less satisfactory than the non-tariff barriers. The
advalorem tariff for Textiles and Clothing is 12% just more
than times higher tariffs level than the 3.8% advalorem
average tariffs for all industrial products. Similarly, 22%
tariffs cut in industrial countries for textile and clothing fall
short of the average tariffs out of 38%. For more than half
of the textile and clothing goods tariff remains above 10%,
for more than one quarter of goods tariff will be charged
13.25% and only 4% of the textile clothing trade will be
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duty free, after the implementation of the reduction
commitments.
The major benefit occurring from it is that the
exceptional treatment of textiles and clothing products will
come to a half and industrial products will be treated
equally. Tariffs, either than quotas, will remain the
principle trade policy instruments. Under MFA (Multi Fibre
Agreement) quotas were more restrictive factor than the
tariffs. A key effect of MFA had/has to restrain countries to
developed countries. Many studies have established the
link between export of textile and clothing and interest of
developing countries. In 1986, UNCTAD ( United Nations
Conference on Trade & Development ) made an estimate
that complete non-discriminatoiy liberalization (involving
tariff & quota) could increase developing country export of
clothing by 135% and textiles by 78%. According to a
study by Kirmani, Molajani & Mayer, developing country
exports to Major OCED countries could increase by 82% for
textile & 93% for clothing if both restrictions were removed.
While developing countries have experienced a cap on
their export through the MFA, it should be said that many
of them have benefited from the system through the
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predictable environment, which it has created, as well as
through the quota results. So the magnitude of the gains
for developing countries will be influenced by the actual
method used to allocated internal KFA quota. At the same
time, however, there is no unanimous view as to what the
real implications of MFA on developing countries have
been, ipso facto, the real effects of liberalization.
The scope of the application of safeguard measure has
been tested by WTO Dispute Settlement Body in the case of
US Measures affecting imports of Woven Wool Shirts &
Blouses from India. The Panel in this Case concluded that
the US restraint on Imports of Woven Wool Shirts &
Blouses, Category 440 from India and its extensions had
violated the Provisions of Articles 2 of the Conclusions of
the Panel had been upheld by the Appellate Body. Thus,
India's Fundamental Stand taken through out the long run
and arduous Process of bilateral consultations and two
reviews by the Textile Monitoring Body (TMB) that the US
safeguard action was unjustified had been upheld by the
Panel and Appellate Body.
In this case, the panel pursued jurisprudence on
onus probandi in two layers. The first is that the
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complainant should submit a prima facie case of violation
and then after the complained party has to prove that at
the time of its determination, it had respected the
requirements of Article 6 of the ATC. It is well known that
the Article 6 of the ATC is the only Provision in the WTO
legal framework that permitted Members to impose
discriminatory trade measures to protect domestic
procedures against legitimate trade, during the transition
period. Due to its special nature, India had argued that the
Art 6 is to consider as an exception measure under
ATC. But the Appellate Body declined to consider Article 6
as an exception and applying the GATT 1947's
jurisprudence in this regard.
The appellate Body citing from the previous report on
US Restrictions on Imports of Cotton & Man-made Fibre,
used the argument of the balance of rights and obligation
for opposite ends. In these two cases, the Appellate Body
applied two different approaches, in one case to justify a
narrow interpretation and in the other to arrive at an
expansive interpretation of the same provision of the ATC.
Though, on the question of burden of Proof, the Appellate
Body laid down the real-presumption, which states that "
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We agree with the Panel that it was upto India to present
evidence and arguments sufficient to establish a
Presumption that the transitional safeguard determination
by the US was inconsistent with its obligations under
Article 6 of the ATC. With this presumption thus
established, it was then up to the US to bring evidence and
arguments to rebut the presumption
Capability of developing countries in one side and
brought textile 86 clothing from the grip of Protection to the
rule based multilateral system in another side, which
undoubtedly, facilitates benefit to developing and least
developing countries.
Although the development of textile sector was earlier
taking place in terms of general policies, in recognition of
the importance of this sector, for the first time a separate
policy statement was made in 1985 with regard to
development of textile sector.
The textile policy of 2000 aims at achieving the target
of textile and apparel exports of Us $ 50 billion by 2010 of
which the share of garments will be Us $ 25 billion. The
main market for Indian textiles and apparels are USA, UK,
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UAE, Germany, France, Italy, Russia, Canada, Bangladesh
and Japan.
The main objective of the textile policy 2000 is to
provide cloth of acceptable quality at reasonable prices for
the vast majority of the population of the Country, to
increasingly contribute to the provision of sustainable
employment and the economic growth of the nation and to
compete with confidence for an increasing share of the
global market.
2.6 : ORIGIN & GROWTH OF SPINNING MILLS IN
INDIA.
The Co-operative movement was started in India as
early as 1891 in Punjab. But the Co-operative movement in
India began actually in 1904, with the enactment of Co
operative Credit Societies Act. However, systematic and
integrated programmes for development of co-operatives in
the field of agricultural credit, marketing, processing of
agricultural produce and supply of agricultural inputs were
developments in the second, third, fourth and fifth Five
Years Plans. During the Fourth Plan, the objective was to
encourage the growth of Co-operatives and integrated
development of various types of Co-operative Organizations.
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The Fifth Five Years Plan aims at strengthening
agricultural co-operatives, marking consumer co-operative
more viable, correcting the regional imbalances and
focussing the activities of the Co-operative more and more
on small / marginal farmers and workers sections of the
population.
The co-operative movement has branched out in
diverse such as credit, marketing, processing and storage
for agricultural credit, processing manufacturing and
distribution of supplies for small and medium industries,
rural electrification and public distribution of goods and
food grains. Although the beginning of the processing
industry in the Co-operative Sector can be traced back to
1917 when cotton ginning and pressing unit was
established in the erstwhile Mysore state, the real start
was, however, taken after 1908 with the establishment of
the Co-operative Sector at Prawaranagar in the
Maharashtra State.
Today, the Co-operative industry has diversified itself
in different directions and sectors of the economic activity.
The establishment of Spinning Mills in Co-operative
Sector in India is relatively of recent Origin (In 1951 at
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Guntkal sponsored by the Madras State Handloom
Weavers' Federal Co-operative Society) in 1958 another Co
operative Spinning Mill was registered in the State of
Madras with the special objective of providing employment
mainly to Indian repatriates from Sri Lanka and Burma. By
the end of the Second Five Year Plan, as many as 21 Co
operative Spinning Mills have been organized in the
Country. During the third Year Plan period, the
programme for establishment of Co-operative Spinning
Mills classed as processing Co-operatives, was launched
with the help of the National Development Corporation of
India. As a result, by 1973, 24 co-operative spinning mills
of cotton growers were registered in the Country. Besides
the Co-operative Spinning Mills of Weavers and Cotton
growers, a third category came into existence during 1961-
62 in which both the growers and weavers were enrolled as
members. Such mills were classed as mixed sector Mills.
There are in all 82 Co-operative Spinning Mills in
production in the Country having a total spindleage of
20.58 lakhs. This accounts for just over 8 percent of the
total spindleage. Out of the 82 installed Mills, 38 mills are
of growers and 44 of weavers.
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2.7 EXPORT ORIENTED UNITS IN INDIA
Foreign capital helps in the development of a country
by filling two gaps, viz. Resource gap & foreign exchange
gap. In the initial level of development, the country is not
able to generate enough resources over & above the
consumption requirement of the country. In the absence of
enough savings coming forward for capital formation the
country remains under the vicious circle of under
development.
Foreign capital provides the essential resources &
helps in breaking this vicious circle. It also helps in the
development process, by providing the essential foreign
exchange that enables the purchases of imported raw
materials, improved machinery & advanced technology.
Most of the under developed countries try to
channelise these flows in the areas & sectors that are
highly export oriented with the aim that along with the
overall production with higher level of exports are achieved
which then could be used to meet the foreign exchange
requirement of the Country.
It has also pursued a similar kind of strategy over a
period of time and started Export Oriented Unit by
providing a traditional sector like Textile and tea have
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faired much better than modem sector like Engineering
and Chemical because of high export intensity of export. In
textile export oriented Unit, many of Units uses indigenous
raw material and this textile sector is having much higher
export intensity of the sales, which helps in higher foreign
currency for the Country. As far as import intensity of
export is concerned, in many of the Mills imported
improved machinery and advanced technology to produce
high quality of textile for exports market. This is one time
investment that is at time of starting of the mill and
because of this for longer period of time the overall import
intensity of export for textile export oriented unit became
very low. For ideal case, the export intensity of export for a
EOU is zero.
The Government has given concessions to these
EOUs in the excise duties on purchase of raw material
machinery imports and exports of good to enhance the
export of the country. The Government has also put higher
excise duty on selling of goods in local market from these
export oriented Unit.
2.8 CURRENT SCENARIO
Developing countries with both textile and clothing
capacity may be able to prosper in the new competitive
26
environment after the textile quota regime of quantitative
import restriction under the multi-fibre agreement (MFA)
came to an end on 1st January 2005 under the World
Trade Organization (WTO) Agreement on Textile 8b Clothing.
As a result, the textile industry in developed countries
will face intensified competition in both, their export and
domestic markets. However, the migration of textile
capacity will be influenced by the objective competitive
factors and will be hampered by the presence of distorting
domestic developed countries. The elimination of quota
restriction will open the way for the most competitive
developing countries to develop stronger clusters of textile
expertise, enabling them to handle all stages of the
production chain from growing natural fibers to producing
finished clothing.
The OECD Paper says that while low wages can still
give developing countries a competitive edge in world
markets, time factors now play a far more crucial role in
determining international competitiveness. Countries that
aspire to maintain an export-led in textile and clothing
need to complement their cluster of expertise in
manufacturing by developing their expertise in the high
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value-added service segments of the supply chain such as
design, sourcing or retail distribution. To pursue these
avenues, national suppliers need to place greater emphasis
on education and training of service-related skills and to
encourage the establishment of joint structures where
domestic suppliers can share market knowledge and offer
more integrated solutions to prospective buyers.
The textile industry is undergoing a major
reorientation towards non-clothing applications of textiles,
known as technical textiles, which are growing roughly at
twice rate of textile production. The Processes involved in
producing technical textiles require expansive equipments
and skilled workers and are, for the moment, concentrated
in developed countries. Technical textiles have many
applications, including bed sheets, filtration and abrasive
materials, Furniture and healthcare upholstery, thermal
protection and blood absorbing and applications. India
must take adequate measures for capturing its market by
promoting research and development in this Sector.
The mood in the Indian textile industry given the
phase-out of the quota regime of the multi-fibre
arrangement (MFA) is upbeat with new investment flowing
28
in and increased orders for the industry as a result of
which capacities are fully booked up to April, 2005. As a
result of various initiatives taken by the Government, there
has been new investment of Rs.50,000/- Crore in the
textile industry in last five years. Nine textile majors
invested Rs.2,600/- Crore and Plan to invest another
Rs.6,400/- Crore. Further, India's Cotton Production
increased by 57% over the last five years and 3 million
additional spindles and 30,000 Shuttle-less looms were
installed.
The Industry expected investment of Rs. 1,40,000/-
Crore in this sector in the Post-MFA Phase. A vision 2010
for textile formulated by the Government after intensive
interaction with the industry and Export Promotion
Councils to capitalize on the upbeat mood aims to increase
India's Share in World's textile trade from the current 4%
to 8% by 2010 and to achieve export value of US $ 50
billion by 2010 vision 2010 for textiles envisages growth in
Indian textile economy from the current US $ 37 billion to
85 billion by 2010 creation of 12 billion new jobs in the
textile sector and modernization and consolidation for
creating a globally competitive textile industry.
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There will be opportunities as well as challenges for
the Indian Textile Industry in the Post-MFA era. But India
has natural advantages which can be capitalized on strongV,
raw material base - cotton, man-made fibers, jute, silk large
production capacity ( Spinning - 21% of World capacity &
Weaving - 33% of World capacity but of low technology )
vast pool of skilled manpower entrepreneurship, Flexibility
in Production Process and long experience with US / EU (
European Union ). At the same time, there are constraints
relating to fragmented industry, constraints of Processing
quality of Cotton, Concerns over Power Cost, labour
reforms and other infrastructural constraints and
bottlenecks, e.g. cost of power was Rs.8/~ per garment in
India whereas in China it was only Rs.2/- per garment.
Further, for the benefit of exporters, there should be
'State-Owned Cargo Shipping Mechanism, Several
initiatives have already been taken by the Government to
overcome some of these concerns including through the
Technology Upgradation Fund Scheme (TUFS) setting up of
Apparel Parks & liberalization of respective regulatory
practices. Shri Kamal Nath, Union Minister of Commerce &
Industry, has said that India will take up the issue of non-
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tariff barriers (NTBs) in the World Trade Organization
(WTO), Doha round of multilateral trade negotiations,
which are expected to gather steam from March 2005
onwards.
On the eve of Republic Day, Hon. President Shri
Kalam said that" India is presently exporting six billion US
Dollars worth of garments, whereas with the WTO regime in
place, we can increase the production and export of
garments upto 18 to 20 billion US Dollars within next Five
years. This will enable generation of employment in general
and in rural areas in particular. By tripping the export of
apparels, we can add more than 5 million direct jobs and 7
million indirect jobs in the allied sector, primarily in the
cultivation of Cotton. Concerted efforts are needed in
cotton research, technology generation, transfer of
technology, modernization and upgrading of ginning and
1. Ministiy of Finance has added 165 new textile
products under duty drawback schedule. The new
products included wool tops, cotton yam, acrylic
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yam, viscose yam, various blended yam/fabrics,
fishing nets etc. Further, the existing entries in the
drawback schedule relating to garments have been
expanded to create separate entries of garments made
up of (1) cotton, (2) man made fibers blend and (3)
MMF, Separate rates have been prescribed for these
categories of garments on the basis of composition of
textiles.
2. After the phasing out of quota regime under the
multi-fibre pact, India can envisage its textile sector
becoming $100b industry by 2010. This will include
exports of 50b. The proposed targets would be
achieved provided reforms are initiated in textile
sector and local manufacturers adopt measures to
improve their competitiveness. A 5-pronged strategy
aiming to attract FDI by making reforms in local
market, replacement of existing indirect taxes with a
single nationwide VAT, liberalization of contract
norms for textile and garment units, elimination of
restrictions that cause poor operational and
organizational performance of manufacturers, was
suggested.
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3. The Former Union Textile Minister Shri
Shannkarsinh Vaghela said that the Board for
Industrial and Financial Reconstruction (BIFR) had
approved rehabilitation schemes for sick NTC mills at
a cost of Rs.3,900.00 Crore. Of the 66 mills, 65
unviable mills have been closed after implementing
voluntary retirement scheme (VRS) to all employees.
According to him, the government has already
constituted assets sale committees comprising
representatives of Central and State Governments,
operative agency, BIFR, NTC and the concerned NTC
subsidiary to effect sale of assets through open tender
system.
4. Proposals for modernization of NTC mills have been
made to the consultative committee members,
including formation of a committee of exports to
improve management of these mills. Even the
present status of jute industry was under the scanner
of the consultative committee.
5. The Government had announced change from the
value-based drawback rate hitherto followed to a
weight-based structure for textile exports that will
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discourage raw material exports and also curtail the
scope for misusing the drawback claims by boosting
invoice value of exports.
6. NCDEX launched its silk contract (raw silk and
cocoon) on Thursday, January 20, 2005. With this
launch, the total number of products offered by
NCDEX goes up to 27. The launch of the silk contract
will offer the entire suite of fibres to the entire value
chain ranging from farmers to textile mills. With the
objective of protecting the interests of the those
affected but WTO agreements and globalization
process, Government of India jointly with NCDEX has
adopted a policy of encouraging future contracts of
silk. The Ministry of Textiles and the Central Silk
Board (CSB) had decided to introduce futures trading
in mulberry cocoons and raw silk on NCDEX. The
basic purpose is to mitigate the risk associated with
the changing prices through an efficient price
discovery mechanism. Features of Trading on the
NCDEX will provide an alternative trading avenue for
farmers, weavers and traders and help them make a
better price discovery for their produce. It will also
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help them to reduce risks associated with price
volatility through hedging.
2.10 BUOYANCY IN COTTON YARN INDUSTRY
The removal of quotas on January 1, 2005 has
ushered in a new era in world textiles. This move has
created to a large extent a level playing field for all players
in the Industry/Countries. In other words, the need for a
sustainable global competitiveness can never be
overemphasized as today our economy is being integrated
with the world economy. Local problems can not be an
excuse for being uncompetitive - and no one can save a
company, there will be no Government, no restrictive
policies to protect a unit/company. However, differential
tariffs and regional trade agreements would keep
influencing the movement of goods and trade flow for times
to come.
In anticipation of removal of quantitative restrictions,
countries like China and to a lesser extent India had
started building capacities and preparing itself to increase
it's share in the global textile market. There is an expected
restricting of the sourcing strategies of the developed
countries and economics are seen to be the main driver of
deciding where to buy. The textile manufacturing base is
35
fast falling in Europe and North America and Asian and
African countries are filling up the gap at an increasing
pace - the removal of quotas has hastened the process, as
there are no limitations on quantities purchased from any
country.
CHINA THE LARGEST BENEFICIARY :
China was expected and is the largest beneficiary of
the new order in the textiles world. They have been
installing capacities at a rapid pace in anticipation since
1999 and today have the capacity to make huge supplies at
very competitive rates to the developed world. In short,
they are the first choice of every buyer. India did not plan
its expansion in a systematic way and the industry /
Government only woke up in 2004 to the impending
opportunity. The result ? The gap between China and
India has become so large, that it is unfair to call India
No.2 player in the global textile industry. However, as the
saying goes: 'Do not put all your eggs in one basket", every
large buyer wants to diversify its sourcing base and
countries like India / Pakistan / Bangladesh are a ready
choice depending on the type of item.
It is clear that the textile world of manufacturing is
undergoing restructuring and new buying strategies are
36
evolving. Textile clusters are getting stronger around a
limited number of countries. India is gaining because of its
strong textile background on both technical and raw
material base - it is the second best alternative to China
especially for Cotton Textiles - yam /fabric /garments.
However, things are not as rosy as it seems and sounds.
Pre-2005, many Indian suppliers who held quotas were
able to get premium equivalent to the quota prices for the
products. They overnight lost that, leading to a reduction
in their realizations. There has been a drop in prices due to
removal of quota in order to match prices of China and
other low cost countries - this however has been coupled
with volumetric growth in garment orders. Orders are
increasing from the West, but prices are very tight (as that
is the incentive to come to India).
This pressure on garment suppliers to deliver more
and more - means more demand for downstream raw
materials like fabric and yam. India's base of manmade
fibres is not very strong and hence India does not have a
cost advantage on this side, hence import of blended fabric
would grow from China / Pakistan / Indonesia / Thailand.
However, on the cotton side, India is very strong. India has
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a large and growing raw cotton fibre base, which, is more
than sufficient to meet, expected future demand of the
Industry. Hence, this is where opportunities lie. There
would be tremendous demand pull for cotton yam and
fabric from the garment industry. India is one of the lowest
cost manufactures of cotton based raw materials in the
world and the Indian garment industry would be largely
dependent on the domestic industry for its needs.
INDIA AND TEXTILE INDUSTRY :
In India a major expansion of domestic demand for
cotton yam/fabric in increasing. Today, India has 40%
market share of the global combed yarn trade - however
with the growing need of quality yam by the domestic
industry, exports would be replaced by domestic sales.
Realisation in export sales are 3-5% lower than domestic
sales. However, due to lack of volume demand companies
had to export. This scenario is fast changing, which means
that margins for quality yam manufacturing companies
would go up. Further, it is important to note that gestation
/ lead time for garment / fabric unit is 6 months, while for
a yam unit it is 18-24 months. Hence, there would be a
mismatch in growth of capacity in these two sectors leading
to a tight yam supply situation leading to upward pressure
38
on prices. An example of this is China, which is still
importing a lot of cotton yam to meet its demand of fabric /
garments.
Today, India has about 37 million spindles out of
which may be about 25 million spindles are worthy to give
quality yam. The two main suppliers of spindles in India
have a maximum capacity of 2 million spindles, hence we
cannot add more than 8% yam capacity annually unless
whose go for Chinese machinery - which is yet to be tested
or used in India and whose quality delivery is under
question (Indian yam is expected to be better than Chinese
yam in terms of consistency and quality). The Government
is envisaging multiple fold growth for textiles exports in the
next 5 to 10 years, and not to forget the growing domestic
market - this means major pressure on downstream inputs
which are more commodities in nature - fibre and yam. As
it is well known the price - demand elasticity for commodity
type products is very high and this means the yam
industry can see very high upward movement of prices in
the coming few years.
39
B. TEXTILE INDUSTRY IN MAHARASHTRA
2.11 INTRODUCTION
. Maharashtra possesses a large number of Powerlooms
and Handlooms. There are about 627 lakh Powerlooms in
Maharashtra, which requires Cotton Yam. Powerlooms are
concentrated in sizable numbers around Mumbai,
Bhiwandi, Thane, Malegaon, Ichalkaranji, Solapur, Dhule
and Sangli in the state of Maharashtra. Merely half of
Powerlooms are located in Maharashtra. Handlooms and
Powerlooms get their supplies of raw material, i.e. cotton
yam from Cotton Mills. With a view to protect the interests
of Handlooms & Powerlooms, the Govt, of Maharashtra
have adopted a number of measures relating to financial
assistance, differential rates of excise duties, reservation of
certain cloth varieties etc. for Handloom & Powerloom
Weavers in decentralized sector. A notable feature in the
history of Co-operative Spinning Mills in the year of 1960 in
which first Co-operative Spinning Mills was established in
Maharashtra, i.e. The Deccan Co-operative Spinning Mills
Ltd., at Ichalkaranji, District Kolhapur.
40
In 1950, a typical attempt to run a mill on co
operative basis was made at Bhor. In 1943, Shri Laxmi
Textile Mills was established at Bhor as Private Company
by State Government of Raja of Bhor. In 1953, Laxmi
closed down. In 1959, the workers of closed Unit formed a
Co-operative Society, i.e. Shri Shivaji Textile Workers Co
op. Spinning Mills Ltd. with the assistance of State.
The concept of Co-operative Spinning Mills Ltd. was
thus rooted in Maharashtra in 1959-60 in the form of two
significant attempt denoted the desire to step into a new
field of individual activity with a view to secure economic
benefits for these numbers. Then the Proposals for the
establishment of Co-operative Spinning Mills were received
from Weavers of Nagpur and Solpaur on the lines of Deccan
and the units were installed and went into production in
1968 and 1967 (Solapur). In third Five-Year Plan Period
(Nagpur) Government Of India decided to give preference to
Co-operative Department. In pursuance of the policy, 14
proposals were prepared with the help of National Co
operative Development Corporation. In 1964, Yeotmal
District Cotton Growers Co-op. Spinning Mills Ltd. was
established out of these 14 Co-operative Spinning Mills
14788A41
licensed in growers sector Kolhapur, Amaravati,
Shrirampur, Latur, Bhusawal, Nanded. Units were
installed in 1969 while other Units installed later.
Industrial Finance Corporation, Maharashtra Co-op. Bank
Ltd. provided financial aid for the installation of Co
operative Spinning Mills.
The present condition of the Textile Industry in
Maharashtra can be seen from number of Spinning Mills as
44 installed, 78 composite mills, total spindles of the State
49,77,000 of rotors 5012.
In 1988-99, textile industry in Maharashtra belongs
to Co-operative Sector as 40 Co-op. Spinning Mills, 613
Powerloom Co-operatives, 685 Handloom Co-operatives,
and three Co-op. Processing Houses.
Maharashtra State plays very important role in
respect of Co-op. Spinning Mills in India of which 40 Co
operative Spinning Mills are installed in Maharashtra.
2.12 DETAILS OF CO-OPERATIVE SPINNING MILLS IN
MAHARASHTRA (2004-051
Table No. 2.1
42
DET
AIL
S O
F C
O-O
PER
ATI
VE S
PIN
NIN
G M
ILLS
IN M
AH
AR
ASH
TRA
1515
205
8864
+ 4
32 T
extu
risin
g Sp
indl
es97
0717
5520
1015
lakh
Kgs.
7.5
lakh
Bal
es
Inst
alle
d S
pind
les
Inst
alle
d R
otor
s W
orki
ng S
pind
les
Wor
king
Rot
ors
Annu
al Y
arn
Prod
uctio
n (la
kh K
gs.)
Annu
al C
otto
n R
equi
red
I Total Cap
acity
1171
177
+151
2R
2306
4 +
5336
R43
2 Te
xt.
I Spdls.
I32
0964
+ 20
16 R
CO
122
I 151520
5 II
8854
|
a
I Prim
ary I
Stag
eII « CM - CO
I Under I
Con
stru
ctio
n
I Spindle
s |T“ t ' 36 CM 39
I Liqu
idat
ed I
and
sold ©
*oC& 10
1308
I» l
I 101308
I
Liqu
idat
ion
Spin
dles
I Roto
rs I
T—
3461
88
1175
CM
968
CO
[ 34
6188
I I m
2
j
I Conv
erte
d IM
ills 1 CM t li CM
I C
lose
d M
ills
j
Spin
dles
I Roto
rs
iO
9699
2 3 12
00 432
(Tex
t. (O■o a c0 |
00
I 96
992
8CMt— 43
2 |
I W
orki
ng M
ills
Spin
dles
I Roto
rs
CDT—
6266
89
336
o>
2306
4 31
68
2232
0964
20
16
50i 97071
7I
5520
I Tota - Mills
I
43 to s ,, CO 122
I Fi
ve Y
ear P
lan
j
Upt
o 6th Fiv
e Year
Plan 7t
h Fi
ve Y
ear P
lan
8th
Five
Yea
r Pla
n
10th
Yea
r Pla
n
Tota
l Mill
s <0©*oC‘5
O) Rot
ors
Tota
l Tex
. Spi
ndle
s
v.> No. - CM CO Sour
ces :
MAH
ARAS
HTR
A S
TATE
CO
-OPE
RAT
IVE
TEXT
ILE
FED
ERAT
ION
LIM
ITED
2.13 : REVIEW OF THE PERFORMANCE OF THE
CO-OPERATIVE SPINNING MILLS IN PRODUCTION
IN MAHARASHTRA FOR THE YEAR - 2004-05.
At the end of March 2005 there dare 77 Spinning
Mills and one texturising Unit in Co-operative Sector of the
State of Maharashtra. The board break-up of these Mills is
as under.
1. 60 Mills of Ring Spinning are having 14,81,749
Spindles and 840 Rotors.
2. 11 Mills of Open End Spinning are having 6008
Rotors.
3. 6 Mills of Mixed Pattern are having 33,456 spindles &
2016 Rotors.
4. 1 Texturising Unit is of 432 Spindles.
Total installed capacity of Co-operative Spinning Mills
in 2004-05 in the State was 15,15,205 Spindles, 8,864
rotors and 432 Spindles of texturising.
Classification of the Performance For the Year 2004-05
The efficient management in both technical and
financial aspects of a Spinning Mill, by effective use of main
resources, (i.e. main, machine, material and methods ) is
43
very essential for obtaining good results. Considering the
above factors, exercise is made to find out the top five Mills
which can be classified as technically and financially " Best
Managed Mills ", Machine Productivity Index, Productivity
Index & Cash Gain/Loss earned per workable Spindle in
rupees are the factors considered for ranking purpose.
The following Mills have been considered as the First
Five Best managed Mills for over all performance during the
year 2004-05.
Sr.No. Name of the Mills
1. Sagareshwar Sahakari Soot Girani Ltd. Kadegaon
2. Shri Swami Samarth Shetkari Wa Vinkari Sahakari
Soot Girani Ltd. Valsang.
3. Shetkari Sashakari Soot Girani Ltd. Sangole.
4. Babasaheb Kedar Shetakari Sahakari Soot Gimi Ltd.,
Hingna, Nagpur.
5. Loknayak Jayprakash Narayan Shetkari Sahakari
Soot Gimi Ltd. Shahada.
As regards Technical Performance, since MPI is the
combination of capacity utilization and 40s converted
production, this index plays a more important role in
operational performance. Considering " Machine
44
Productivity Index and Productivity Index " the ranking for
" Best Technical Performance " is done.
Following First Five Mills have been considered for "
Best Technical Performance " during the Year 2004-05.
Sr.No. Name of the Mill
1. Mahalaxmi Magasvargiya Sahakari Soot Gimi Ltd.
Kadepur
2. Indira Gandhi Mahila Sahakari Soot Gimi Ltd.
Ichalkaranji.
3. Mahatma Phule Magasvargiya Shetkari Sahakari Soot
Gimi Ltd., Peth Vadgaon.
4. Loknayak Jayprakash Narayan Shetkari Sahakari
Soot Gimi Ltd., Shahada.
5. Shetkari Sahakari Soot Gimi Ltd. Sangola.
45
C. TEXTILE INDUSTRY IN ICHALKARANJI
2.14 HISTORICAL BACKGROUND
By the turn of the last century, Ichalkaranji
was a small unimposing town devoid of any industrial
activity. It was connected with main places of
business, with no source of assured raw material
supply in the vicinity, nor that of skilled workers. The
growth of the powerloom industry in Ichalkaranji has
come up by passing all text-book laws of economics.
It goes to the credit of erstwhile Jahagirdar of
Ichalkaranji Shrimant Narayanrao Ghorapade that no
conceived an establishment and a development of the
industry and set in motion factors conducive for it.
The first powerloom unit started in the town in 1904,
was also the first one to start in the decentralised
textile sector, in India. The Jahagirdar, induced
many skilled handloom weavers to shift their families
from the surrounding handloom centres like Rabkavi,
Rendal, Budhgaon and Banhatti and made
arrangements for them f land, water and housing at
only a token cost. Finance made available on easy
terms and concessions granted in taxes proved to be
46
the decisive factors in fostering the development of
the industry in the town. Thanks to these benevolent
steps. The weaving industry settled down in the town
and by 1950, about 15,000 Handlooms and about
2,000 Powerlooms were working in the Town.
During the first half of the century, the town
developed mainly as a handloom centre, and
Powerlooms existed but in a scattered manner.
The production was concentrated as fancy
coloured sarees "Patalas" a typical local sort, which
became extremely popular all over the State and had
a large demand even, as far as, in the upper Indian
States. With the increased demand pushing up the
need to step up the pace and quantum of production,
the handloom weaver could no longer cling to the
slow working Handloom. Thus, obliging him to shift
production from Handlooom to Powerloom.
A close study of this phenomenon will ally the
fears of some of the Advocates of the Handloom
industry, that the transformation brings in its wake a
displacement of labour. AS a matter of fact, even with
47
100% increase in the labour force during this period,
Ichalkaranji has been still running short of labour.
As a measure of providing protection to the
Handloom weavers, the Government of India put a
ban on the production of coloured sarees on
Powerlooms. This posed serious problem to the
Industry since the entire loomage in Ichalkaranji then
was displaced on the production of coloured sarees.
The weavers in Ichalkaranji, however, took up the
challenge and with the characteristic ingenuity
devised a system of providing sized beams and weft
pirns to the weavers for the manufacture of dhoties
and mulls. This system fitted in so well, that within a
very short period, entire production in the town was
shifted from the coloured sarees to dhoties and mulls.
The basic short-coming of the weaver is the
dirth of finance, which gave rise to a system of
'Master-Weavers' or 'Middle-Men' who supplied them
raw material and took back cloth woven on their
looms. Although this system solved the weaver's
problems of the supply of raw material and of
marketing of the cloth, it made him totally dependent
48
on the Master Weavers. As a matter of fact, the
Government's short-sighted policy of levying excise
duty on slab basis has worked as a deterrent to the
process of integration in the industry. So long as this
policy continues, there is no change of industry
grouping itself into an economically viable units and
running their businesses in open competition of the
market. The need to give protection to the small units
in the sector cannot be over-emphasized. But the
care must be taken to see that such a policy itself
does not induce owners to remain small perpetually.*
ORGANIZATIONS :
In 1961, some enterprising weavers came
together to form a Co-operative Society with a view to
providing weavers sized beams and pirns and thereby
eliminating the need for a master weaver. Named and
styled as Yantramag Audyogik Sahakari Society Ltd.
it aimed at ensuring fair returns to the weavers for
their fair day's work. But the Society could not do
much progress for want of adequate current capital
and the command over marketing. The Society was
only in the initial stqge of development and could not
withstand the sti^ips of fierce competition of the
49
speculative cloth market. These good efforts would
not have gone in vain had the Government lent the
Society a helping hand.
On the top of these difficulties was the
prejudicial view taken by the Government in judging
the role of this benevolent Society. The Society was
bracketed with the master weavers only because it
supplied yam to the Members and their cloth was
taken back by the Society. It took great efforts to
convince the authorities the impropriety of measuring
the role of the society and of the master weavers with
the common rod.
The Ichalkaranji Powerloom Weavers Co
operative Association Ltd. registered in 1948, is the
Central body in the town having a majority of looms
under their membership. Apart from redressing the
grievances of the industry to the Governments, State
and the Central, the Association conducts many
useful activities in matters of excise, labour and
textile problems.
In 1973, during the period of yam control, the
Association acted as the nominee of the Maharashtra
50
State Powerloom Corporation Ltd. for the distribution
of yam to the Weavers in Ichalkaranji.
In 1974, the Association started a production
programme on a modest scale. The working of the
Scheme is similar to that of the programme run by
the Maharashtra State Powerloom Corporation Ltd.
described elaborately in this note.
SPINNING MILLS :
Having studied over year, the problem of the
occasional shortages in the supply of yam and the
fluctuations in its prices arising out of the same, it
became evident that the ultimate solution lies in
establishing the Spinning Mills owned by the Weavers
themselves.
In pursuance of this aim, The Deccan Co
operative Spinning Mills Ltd. was started in 1960 with
the pioneering efforts of Shri Abasaheb Kulkami,
M.P., Shri Dattajirao Kadam, M.P. and Shri Anantrao
Bhide. It needs a special mention that many persons
who took Shares of this Mills had no enough financial
resources at their command. The experiment of
establishing the Mill was completely new to the
weavers. On the background of this fact the weavers
51
ran a risk in raising the loan from the Ichalkaranji
Urban Co-operative Bank Ltd. for buying of Shares.
The faith reposed by them in the leadership proved
worth the risk, since the economic position of all
these weavers today has improved beyond
recognition. Another Co-operative Spinning Mills was
brought into being in 1965 under the leadership of
Veteran Co-operator, Shri Ratnappa Kumbhar, viz.
Kolhapur Zilha Shetkari Vinkari Sahakri Soot Gimi
Ltd.
Yet another Spinning Mill is being set up with
25,000 Spindles capacity, viz. The Ichalkaranji Co
operative Spinning Mills Ltd. and is expected to go in
production in the near future. It is pertinent to note
here that even after the completion of the third Mill,
the total loomage that can be served by these Mills
will be about 3,000 or merely 14% of the total
loomage working in the town. The rest of the looms
will inevitably remain dependent on the supply of
yam from the outstations.
PROCESSING HOUSE
Lack of processing facilities has been working as
an another serious impediment in the progress of the
52
Industry. Embolden by the success met within the
establishment of the Spinning Mill, v the weavers
launched two co-operative processing houses under
the name and style of The Laxmi Co-operative
Processors Ltd. (1959) and The Yashwant Co
operative Processors Ltd. (1963). This has provided a
new dimension to the Powerloom Industry in
Ichalkaranji.
2.15 GROWTH OF POWERLOOMS IN ICHALKARANJI
Ichalkaranji is one of the biggest and most important
Centre of Textile Industry in Western Maharashtra. It
is a humming Centre of Powerloom Industry. The
Centre is producing mainly Cotton and Polyester
Cloth on the powerlooms. Dhoti, Sarees, Papline,
Cambric, Mulls, Khadi, etc. are different varieties
manufactured at Ichalkaranji.
Around 1945, there were hardly 1600 to 1800
Powerlooms. The number gradually increased to
around about 5000 in late fifties. With the spread of
Spinning Mills and other ancillary Industries in and
around the Town, Powerloom Industry took a great
leap in the last three decades. It is the magic touch of
53
Co-operation that changed this sector in one of the
important center of textile in Decentrlized Sector.
Growth of Powerlooms at lchalkaranji is shown
in the following Table
Table No.2.2 : GROWTH OF POWERLOOMS ATICHALKARANJI.
Year POwerlooms (P) Handlooms (H)
Powerlooms per 000
1845 236 H —1882 350 H —
1911 N.A. —
1931 N.A. ■ —1941 1,500 H 12.281951 2,000 P 13.72
1961 1,000 H 46.3410,000 P 5.09
1971 900 H 97.4718,000 P 4.87
1981 300 H 445.6830,000 P 4.45
1991 Nil H —
60,000 P/Auto 3.581994 90,000 P/Auto
Nil H3.00
1997 86,000 P4,500 A
2000 82,000 P6,000 A
The Table No.2.2 shows that there are about
90,000 Power-looms in Town present. Powerloom
Industry in lchalkaranji is the main themes of
Industrial, social and cultural development of the
54
town. The significant role being played by Powerloom
Industry with regard to Country's Economy is well-
accepted. Today it has became centre of attrition for
national, as well as foreign traders. The population of
Ichalkaranji has been growing rapidly. This is due to
rapid expansion of the industries at the Ichalkaranji.
The number of job opportunities have given impetus
to migration and growth of the town. The powerloom
town of Ichalkaranji drew up the jobless, landless
common workers and it offered a fair scope for the
ambition, enterprising people who rushed to the town
to make their fortune. The main cause for the growth
of population in the town is the powerloom industry,
which attracted people from the neighboring areas
and villages in the vicinity of the town. The
immigration can be attributed to the rising Industrial
and commercial activities that boosted up within a
short period of time. One notable feature is that
almost 2/8 of the population of the city is connected
with the powerloom industry.
It would be rather increasing to get acquainted
with other factors apart from powerloom industry,
55
which have humble claim of having a small
contribribution in the spread of the name of
Ichalkaranji as Manchester of Maharashtra.
2.16 ICHALKARANJI CLUSTER AT A GLANCE
-2005
Workers in the Textile
Number of Sizing Units
Number of Hand Processing Units-
Number of Power Processing- 23
Number of Yam Merchants
Number of Fabrics Merchants
Number of Powerlooms
@ 1.2 lakh
@120
@50
@110
@300
@ 1,13,500
Number of Technical Institutions
Number of Training Facilities
Number of Financial Institutions
Number of Industrial Estates
Number of Spinning Units
Item of Manufactured Yam Blended
1
1 (BTRA PSC)
28
4
@15
Cotton,
Yam
T^pe of Fabrics manu- - Dhoti,Poplin,Cambric,facturedShirting, Suitings,Canvas,Wider width Fabrics, Dobby,design Fabrics etc.
56