Views from Mr. Unni Krishnan, Thermax
The textile industry has undergone major changes in recent years. From an inward looking industry essentially catering to the domestic market, it has now become a vibrant exporter, bringing in precious foreign exchange. While continuing to be the largest employer in India after agriculture, the industry has also been trying to modernise and invest in plant and machinery to boost output. Though the current economic slowdown in Indian and global markets has slowed the tempo of changes, it is clear that the textile industry is poised on the threshold of an era of transformation.
The process of globalisation has played its part in ushering in this change. Supplying to global players and addressing overseas markets, the industry today is aware of the need to integrate its value chains and to modernise its operations. Underlining the importance of the textile industry in India’s economic life, the Government has also facilitated several welcome changes. Some of the policy initiatives introduced in recent years include the Technology Upgradation Fund scheme, the Technology Mission on cotton, Scheme for integrated textile park, reduction in customs duty to import modern machinery, setting up of apparel training and design centres, 100% foreign direct investment in the sector, etc. These are bound to have a positive impact in the industry. Several textile players have become respectable brands in the global markets.
For further expansion and growth, the textile industry has several pluses in its favour. In terms of domestic availability of major fibres and yarns, India has a strong base in raw materials, being among the world’s leading nations in the production of cotton, jute and silk. As one of the oldest and established industries in India, it has established facilities from spinning mills to garmenting units. It has a rich heritage to sustain the country’s considerable talent in design and fashion. In recent decades, the industry has also gained considerable experience working with global firms.
However, the country’s contribution to the world’s textile output is about 3%, underlining the fact that there is tremendous scope for growth. The positive changes and modernisation attempts are not uniform across various segments of the industry or over the regional textile clusters of India. The industry has to scale up its exports and it also has to cater to the growing requirements of a prosperous middle class that has the purchasing power and access to global products. This cannot be done by an industry saddled with issues that hinder its growth. Some of these issues that need to be addressed for the Indian textiles to grow to its potential are briefly touched upon:
Consolidation and integration of units: At present, it is only the spinning segment of the textile industry that has been consolidated to a large extent. Other segments like weaving, knitting and processing units still remain fragmented. Thousands of units work in backward conditions without access to efficient processes, equipment or timely credit. This has been an inheritance from the earlier years when several aspects of the textile industry had been reserved for the small scale sector and our processes were not geared up for the export markets. In today’s changed context, to face the onslaught of global competition, Indian units have to hasten the move towards integration. Consolidation will help the industry to operate with economies of scale so that it gets viable to infuse new technology, modernise equipment, increase output and improve quality.
Automation and modern technology: Several studies have pointed out that by installing modern equipment textile units in India can achieve higher productivity and minimise fabric defects. While the spinning segment has made progress on this front, modernisation is yet to happen in the weaving and related fabric manufacturing, and garment units. Machines to provide higher speeds
and wider widths and software to monitor the efficiency of operations are prerequisites for units that would like to make their mark in global markets.
Removing infrastructural bottlenecks: Indian textile industry is seriously hampered by infrastructural bottlenecks. Available and reliable power tops the list of infrastructural essentials. Extended power outages have almost destroyed established textile centres like Coimbatore in Tamil Nadu. While existing units are languishing, any talk of modernisation without access to power will be meaningless.
Captive power is an option, but the small and fragmented nature of textile operations call for co-ordination and planning among the various units for a common facility. If common effluent treatment plants can work in textile industry clusters there is no reason why the concept of shared captive power plants cannot emerge as a viable option. Textile associations and apex organisations can take the lead, and with the support of financial institutions, local government and power developers this option can be the answer to the shortages that plague the industry.
People focus: As millions depend on this sector for their livelihood, we need measures to make the transition to a modernised industry as painless as possible. Thousands of people continue to suffer as a result of the decline of textile units in several parts of the country, especially in Mumbai. Hence, as we move ahead it is important to consider and resolve people related issues with sensitivity, in all aspects ranging from the choice of technologies and changes in labour laws to skill development and the offer of credit facilities.
A well planned and comprehensive skill development plan has to go hand in hand with enabling technologies and financial support for modernisation. Such a programme will prepare the ground for the change in the mindsets of people that is so necessary for transformations. This again calls for an integrated approach involving agencies and people across various sectors.
Ensuring internal efficiencies: In the age of globalisation, a host of factors such as sourcing, technology, wage structures, governmental support etc. contribute to the competitiveness of enterprises. However, many of these are dependent on extraneous conditions and in the anxiety to influence them, often the conditions within the industry and within individual units are neglected. Prudent industrial practices show us that there is immense scope for bringing in internal efficiencies that can result in incremental savings and add to the profitability of operations.
Power shortage is endemic in the country and while grids and captive power plants can alter the overall situation, there is much that can be done internally to conserve this precious resource. On the energy side, fabric manufacturing needs heating, cooling and power inputs and today there are viable technologies like cogeneration and vapour absorption that integrate these inputs to provide optimal efficiencies. Energy audits to plug wasteful leaks and targeted retrofits and upgrades to bolster efficiencies can help units improve their competitiveness.
Water, another essential resource, has already become as critical as power both in terms of availability and quality. Again, textile units can make use of technologies to treat effluent and recycle water for their processes. They can drastically bring down the spiralling cost of water and conserve the nation’s depleting stock of ground water.
To conclude, as in every country that aims for the revival and expansion of its traditional industries, the Indian textile industry also will continue to need a supportive policy framework. As indicated
earlier, from the government there have been several enabling moves in the last decade, though what has been done tends to fall short of what needs to be done. However, as a changed global economic context persuades every industry to look beyond state support and solutions, it is in the interests of our textile sector also to harness its internal strengths and overcome its structural flaws for a vibrant phase of growth.
