INTRODUCTION

Indian textile industry can be compared to a pyramid of ice floating in water1."Only a tenth of the pyramid is visible, in the form of large textile mills in the organized sector. The body of the textile pyramid consists of the decentralized power loom and handloom sectors, which account for the bulk of India's production. The base of the pyramid is the downstream apparel and household textile sectors. The entire pyramid employs about fifteen million (as in 1998, it was estimated 20 million) workers- most of whom work in small firms in the decentralized sector". Indeed, the structure of the Indian textile industry is as varied and deep-rooted as is its reform challenging and daunting.

OVERVIEW OF CURRENT STRUCTURE

Being an item of mass consumption meant to satisfy basic human need, and due chiefly to the state controls emanating from the highly interventionist industrial policy regime at the time of independence, textile industry has been probably the most regulated industry in India. The essence of govt. intervention during independent India has been freezing of capacities of the organized sector, and scuttling of economic incentives for modernization. It is no coincidence, therefore, that the share of the organized (composite) textile mills in total fabric production
Has [crest] fallen from almost 80% in 1950-51 to 36% in 1980-81 and to a petty5.4% in 1997-98 and this includes the production from the NTC mills as well as from non-SSI Weaving Units. The number of power looms, on the other hand, has increased from 23,800 in 1951 to 145,800 in 1964, 836,000 in 1985 and to an estimated 1,500,000 in 1998.That there was hardly any modernization in the weaving technology in Indian textile industry is borne out by table 1 below.

Table 1

Shuttle less Shuttle Total Shuttle less Shuttle Total

India 4426 41026 45452 7968 32761 40729

China 17406 1016 18422 67753 34615 102368

S. Korea 23725 69207 92932 80807 33031 113838

Indonesia 7473 13202 20675 30223 17201 47424

Asia 171893 174608 346501 303000 130120 433120

World 408124 206471 614595 519155 136076 655231

World Cumulative Shipment of Weaving Machinery

1979-88 1987-96

The total number of modern shuttle less looms shipped into India was only 7,968
During the 10 year period between: 1987-96, compared to 67,753 into China,
80,807 into South Korea, and 30,223 into Indonesia. Thus, only 2.6% of shipments of
Shuttle less looms into Asia flowed into India, against 22.4% into China. And given the nascent domestic textile machinery manufacturing, which is nowhere near world-class in weaving, a virtual absence of modernization in the textile industry is deductible. The situation is better in spinning, both in terms of cumulative shipments and domestic machinery manufacture. The number of spinning mills sky rocketed from 400 in 1980 to 1489 in 1998, alongside a decline in the number of composite mills from 291 to 278 in the same period. The overall capacity utilization of looms in mills declined from 78% in 1980-81 to 42% in 1996-97 and to 33% in 1997-98. In respect of working mills, capacity Utilization was 59% in 1997-98. In case of spindles, capacity utilization declined marginally from 71.25% to 70.97% between 1996-97 and 1997-98. In respect of working mills, however, it improved from 84.63% to 85.47% over the period. This is an improvement from 77% in 1980-81. A noticeable, yet scarcely noted, structural deficiency of the industry is the yawning gap between the per capita availability of cloth against per capita consumption. With an estimated cloth production of 36,186 million sq. meter for a population of 952 million in 1997-98, the per capita availability works out to a whopping 38 sq. meter. per capita. The consumption data for recent period is not available, but there are strong reasons to believe that it would not exceed 18 sq. meters per capita. Only 10% of all textile production in India was exported in 1997-98. Hence, the per capita domestic plus export consumption of cloth would be approximately 22 square meters only. That still leaves 16 sq. meters. (Which is 42% of total availability) to be explained. Net inventory of cloth for a year is assume to be constant.

Textile exports earn almost 18% of foreign exchange for India, yet its share in global trade is dismal, having declined from 10.9% in 1955 to 3.23% in 1996. More significantly, share of China in world trade in textiles, in 1994, was 13.24%, up from 4.36% in 1980. Hong Kong too improved its share from 7.06% to 12.65% over the same period. Growth rate, in US$ terms, of export of textile, including apparel, was over 17% between: 1993-94 to 1995-96. It declined to 10.5% in 1996-97 and to 5% in 1997-98. Another disconcerting aspect that reflects the declining international competitiveness of Indian textile industry is the surge in imports in the last two years. Import grew by 12% in dollar terms in 1997-98, against an average of 5.8% for all imports into India. Imports from China went up by 50% while that from Hong Kong jumped by 23%.
Like the weaving, apparel sector too is largely in the decentralized sector, primarily due to reservation of garment manufacturing for small-scale sector. Out of 77,000 garment manufacturers, 80% operate at small, tiny and cottage levels. At 72%, fabricators hold the bulk of the production capacity.

Table 2

Category No. of Machines % Share
Large Scale > 50 6%
Medium Scale 21 - 49 14%
Small Scale < 20 80%
To be constant

THE INDIAN APPAREL PRODUCTION STRUCTURE

The results are obvious- poor productivity, obsolete technology, low unit value realization from exports etc. Compared to an index of labour productivity in Germany = 100, India is at 40, whereas USA and Hong Kong are 90, South China is 75 and Thailand & S. Korea are 653. The Development Matrix developed by Werner International succinctly sums up India's position on Competitiveness. India falls in Group III (developing country)
Group I
Developed
Group II
Emerging
Group III
Developing
Labour cost US $ per Hour > 5.00 2.00 - 5.00 < 1.00
Energy: Key/ Cap >4000 1000-4000