[Smriti Irani interacting with media persons, after taking charge as Union Textiles Minister in New Delhi on July 06, 2016.]
Before the cabinet rejig last week only few had anticipated that Smriti Irani will be removed as HRD Minister. Giving her the charge of the Textile Ministry was even more surprising. Some called it a “demotion” to an “insignificant ministry” from the all-important education portfolio, though those associated with the textile industry expect that she will add some significance and value to the ministry.
At the same time, they are also worried, because of her aggressive approach, that she should not end up creating controversies as she did as HRD Minister. For, at the time she has taken charge as Textile Minister the industry is going through its worst phase.
The slowdown in the Textile industry is not sudden. It has been more than two years now when the industry went into the reverse gear, and there is no sign and indication that it is on the course of bouncing back.
According to the Textile Ministry data, India has a total of 22.5 lakh power looms. Of them, more than 50% are in Maharashtra - with Bhiwandi and Malegaon, two Muslim dominated pockets, having the largest chunk. While Bhiwandi has about 8 lakh power looms, Malegaon has a little more than 2.5 lakhs producing more than 07-cr meters of grey fabrics every day.
Besides Bhiwandi and Malegaon, Ichalkaranji, Sholapur and Dhule are other major textile clusters in Maharashtra.
Elsewhere in the country, Surat and Ahmedabad in Gujarat, Coimbatore, Erode and Tirupur in Tamil Nadu, Panipat and Ludhiana in Haryna and Punjab respectively also have a good presence of textiles and associated trade. Pali, Balotra and the neighboring cities in Rajasthan are known for textile processing units while some big cotton yarn mills are located in Coimbatore, Tirupur and other South Indian cities.
However, market reports and surveys of the last six months indicate that almost every textile center is reporting slowdown and drastic decline in production. Slowdown and recession are not new for the people who are associated with the industry. But, the current scenario is not only worst but it is the longest.
Majority of the industrialists - some in the field since last more than thirty years, say they had never faced such a situation prevailing for such a long time. The situation has reached to a stage when few of the weavers who were not able to repay their debts committed suicide – a phenomenon, unlike in the case of farmers, not common in the textile industry.
Power loom industry is known for its 24/7 culture and work style. Owing to the slowdown, however, about three months ago, it was decided that the power looms will run 5-6 days in a week and for 16 hours a day only. It was expected that after a good monsoon the situation will take a positive turn. However, when the market opened after Eid vacations, it reported further decline. The result is that power loom units which were closed on July 6 for three days to celebrate Eid are still closed.
There are various reasons cited to explain the problems and difficulties faced by the industry. On top of them are the anti-dumping duty imposed on synthetic yarn and the free flow of Chinese cloths in local markets.
Power loom industrialists say that due to anti-dumping duty on synthetic yarn, the cost of cloths produced in the country is more than 30% as compared to the same quality produced in China. And, since the import from China does not have any restrictions, there is no way they can compete with Chinese fabrics. Duty should be imposed on Chinese imports, not on synthetic yarn, majority of them feel.
In case of cotton yarn, most of the spinning mills have currently stopped production due to the shortage of cotton, which is expected to improve only in October/September when the new crops come.
Interestingly, the government of India had few years back, giving the control of cotton yarn to the Cotton Corporation of India (CCI), fixed the uniform rate of cotton to help farmers. Industry insiders however allege that the CCI has been currently hijacked by few big players and hoarders. The result is that the cotton stock which is available at present is being sold at Rs.42,000 to 46,000 a candy (356 kg) as against Rs.30,000 to 32,000 about two months before. If the government does not take suitable action against the hoarders, situation will worsen even further, say the spinning mill owners.
Under the prevailing situation, textiles exports has drastically declined. To address the decline in export, the government had about a fortnight ago announced a package of about 6000 cr rupees. The industry insiders are however of the view that the focus of this package is just apparel and readymade garment industries. Whereas, they say, all sections of the industry are currently needing remedial measures and urgent attention.
Irregular and expensive electricity supply and lack of latest and modern machineries are other factors that are adding to the woes and poor state of the textile industry. The textile ministry had in the last decade through various schemes like Technology Upgradation Fund Scheme (TUFS) taken consistent efforts for modernization. Despite these efforts, the ministry was able to install just about 2.5 lakh modern looms, according to its own report.
Last 2-3 years has seen tremendous interest by the power loom owners who were eager to install modern machines using the funds provided under the TUF scheme. However, their interest ceded after the 2015-16 budget when the TUFS subsidy was reduced to 10% from the earlier 30%.
Textile industry is the largest in India after agriculture employing millions of people through direct and
indirect jobs. Any negligence or lackluster approach is bound to have a long term impact on the overall economic growth of the country. This is why people are looking with interest and anticipation at Smriti Irani – to know what the new Textile Minister has in her kitty for the betterment of the ailing industry.
[Aleem Faizee, Chief Editor of ummid.com, is Founder Secretary of Malegaon Industries & Manufacturers Association (MIMA). He can be reached at firstname.lastname@example.org]