THE SPINNING INDUSTRY IN INDIA KEY CHANGES AND
CHALLENGES AHEAD
UMANG PATODIA
GTN GROUP OF COMPANIES
INTRODUCTION
INDIA is the largest cotton producing country in the world and the
technology absorption is also second to none. Despite abundant raw material
supply the spinning industry in India has more challenges ahead. In this
article we briefly touch upon the transformational phase of Indian Spinning
Industry and the challenges it has to face.
History of Indian textile Industry
Let us have an introduction on Indian Textile Industry from the day of first
textile industry in India to our current period.
A: Before 1990 s : In 1818, the first textile mill in India was
established in Fort Gloster, Calcutta. However Cotton Textile Industry made
its real beginning only in 1850 s. Later in 1861 one cotton mill was started in
Ahmedabad. In short, 178 cotton mills and 4 lakhs looms were started
between 1850 and 1990s.
B: Between 1900- 1950 : India had 417 mills employing 5 lakh workers by
1945. Two world wars and our Swadeshi movement really provided
stimulus for growth to the Indian Textile Industry. Due to second world war,
India stopped the import of textiles from Japan and this resulted in
unprecedented growth of this Industry. During the partition of India, 14
mills came under Paksitan & India was left with 409.
C: 1951- 2000 : This is the period when the Indian Textile Industry has seen
many ups and downs :
Till 1985 mills were under License Regime
In 1991, Government delicensed in and Signed GATT
This makes old mills become uncompetitive.
In 1997, India has 32 million spindles and china has 40 million
spindles.
Trade Union Movement also gained strength and during this period
many mills introduced novel & attractive wages pattern for
employees.
Period 2000 - 2015 : TUF – Technology upgradation fund was launched and
it attracted a subsidy cap of US $ 420.65 million. As TUF helped mills to
restructure / modernise India was able to penetrate in to new yarn markets.
Free trade agreement with ASEAN countries and TPP ( Trans Pacific
Partnership ) agreement with European countries were under discussion.
Period 2016 - 2017 : Present Government has launched “ MAKE IN
INDIA” compaign which attracted manufacturers and FDI. Technical
Textile has been given focus with Technology mission fund. Union Budget
18 - 19 allotted US $ 1.1 million for Textile Industry. In 2018 India has 3409
textile mills out of which non SSI mills are 2009.
Market size in the corresponding period is provided in Table I
Table I
Market size of Indian Textile Industry
Period Market size in US $ Bn
2000 – 2010 70
2017 120
2025 Projection?
Textile Industry in India : Today & Tomorrow
Our Indian Textile Industry Contributes 13% of “Indian Exports” valueing
about US $ 37.74 Billion. Textile & Clothing has 51 & 49% respectively.
India’s share in world exports is 5% and the share of Textile & Clothing
43% & 57%.
Indian Textile Industry size is 6% of the GDP which is equivalent to US $
120 Bn and it is projected to reach US$ 220 Bn by 2025.
Global Textile and Clothing trade in 2017 is approximately USD 755 Bn and
expected to grow at 5% CAGR. At this rate the projection for 2025 is USD
1250 Bn and 56% of the trade will be apparel 44% is Textiles.
India is the largest producer of spun yarn & largest exporter of Cotton yarn
with a market share of 30% Leadership position of India can be seen from
Figure I
(Figure I)
India is exporting cotton yarn globally and the top five destinations by value
are provided in Table 2.
Table 2
Top 5 Destination for Indian Cotton Yarn
Year China Bangladesh Korea Egypt Paksistan
2013 42% 11% 5% 3% 3%
2015 44% 14% 4% 3% 3%
2017 27% 18% 8% 3% 4%
India’s Yarn Export to China is reduced from 42 to 27 & Bangladesh has
emerged to be a promising market by increasing the share from 11% to 18%
India’s share of cotton consumption has gone up from 2011 to 2015 with
one million Bales every year capping 22% in 2015–15. Thereafter, the share
declined to 20% in current period 2017–17 & projected to remain at 20% in
2018-19 also.
The growth in Yarn production, both Cotton & Blended Yarn is given below
( in million Kgs)
Phase 1 2000 to 2005
Phase 2 2006 to 2010
Phase 3 2010 to 2016
It is clear that the cotton yarn production in India has gone up by 80% in
comparison to Phase 1 & Blended Yarn remain at the same level.
Figure 2
Stagnation in Cotton Yarn production has been witnessed in 2017-18 with
just 6% increase in volume of production against 18% in spindles & 58%
increase in Rotors capacity in comparison to 2013-2014. This is due to the
changes in Global trade agreements and also due to subdued export demand.
In spinning it is 7 years now since when the new technology is introduced
and in garmenting it is 4 years only.
Products that emerge in this decade with Export potential
Indian spinning Industry is focusing on value added products to enhance
exports as below
a) Cotton rich Modal Blends
b) Cotton rich Polyester Blends.
c) 100% Cotton Fancy Yarns for knitting and weaving.
d) Fine count double gassed compact yarn for Niche Apparel market.
Steps to be taken to meet Global Competitiveness:
The average age of machinery in spinning mills range anywhere between 15-
20 years in the case of Ring Frames and it is 20-25 years in the case of
Preparatory machines. Hence replacement of obsolete / less modern
machinery is the need of the hour to :
Meet the Stringent Quality Requirements
Achieve Higher Productively
Conserve Energy
The approximate investment required to modernise our 33% of spindles
( Aged above 15 years ) amount to Rs 22500 Crores. This will sustain direct
employment of 3 lakh people and through indirect employment 250 lakh
people. India could consume 150 lakhs bales of cotton and the proposed sale
price of goods will be Rs 1,78,500 Crores.
Advantage India
The favorable climate for Indian Textile Industry is created by Robust
demand from organized retailers / increasing involvements by government
like Integrated Textile parks & TUF released in 2017 / policy support which
is opening the gates to 100% FDI in Textile sector, Free trade with ASEAN
Countries / competitive advantages due to abundant availability of raw
materials and skilled manpower with a relatively lower cost.
Key opportunities.
Indian Textile Industry has promising opportunities to enhance its cotton
yarn production as enumerated below.
Domestic consumption to increase multifold as per capita income
is growing
Multiplies effect of GST & Labour Reforms
Leveraging Technology, Increased Efficiency level of Labor
Inter State competation
Verticalisation and downstream investment of the Industry.
Key Challenges
Indian Textile Industry needs to face this challenges also to grap the
opportunities in front of it. The key challenges are :
Recent advent of MSP ( Minimum support price for cotton)
Rise in Employee costs.
Slow pace of change in fiber mix
Lowering the contamination in cotton & increasing the yield /
hectare.
Limited preferential trade agreements
Economics of scale in downstream.
Conclusion :
The Indian Textile Industry plans to grap the opportunities through
suitable measure to face the challenges. There is a clear direction of the
Indian Textile Industry.
