Problems and Prospects of Cotton Textile Industry in India:

The textile and garment industry in India is one of the oldest manufacturing sectors of the country. In
fact, India held world monopoly in the manufacturing of cotton textiles for about 3,000 years from
about B.C. 1500 to A.D. 1500. In the middle ages, Indian cotton textile products were in great demand
in the Eastern and European markets. The Indian cotton textile industry is composed looms and power
looms, (iii) the hosiery sector, and (iv) the garment sector.

In India, modern cotton textile industry made a beginning in 1818, when the first cotton mill was set up
on the Bowreah Estate at Ghoosury near Kolkata, but it was soon closed. A real start in the industry
came with the setting up of the Bombay Spinning and Weaving Company in Mumbai in 1851. The
new location proved so favourable for the industry that several mills came up here in quick succession.
The number of mills increased from only 8 in 1876 to 79 in 1885, 170 in 1890 and 252 in 1903. By
1939, the number of cotton mills was increased to 415. Mumbai, Ahmedabad, Coimbatore Chennai,
Kanpur, Ludhiana, Nagpur, Solapur became the centres of the textile industry. After independence the
growth of textile industry has gained new pattern. The total number of textile mills in the country is
1,719, out of which 188 mills are in public sector.

Due to favourable conditions for the growth of cotton textile industry, at present, India is the world's
third largest producer of cotton-after China and the USA — and the second largest Cotton consumer
after China. The Indian market is also the second largest in terms of consumption of Cotton, after
China. At present, cotton textile industry is the largest organised modern industry of India. There has
been a phenomenal growth of this industry during the last five decades. Cotton textile industry
accounts about 16 per cent of the industrial capital, 14 per cent of industrial production. Therefore, the
cotton textile plays major role economic development. Over 20 per cent of the industrial labour of the
country is engaged in the cotton textile industry of the country. The total employment in this industry
is well over 25 million workers. There are at present 1,719 textile mills in the country, out of which
188 mills are in public sector, 147 in cooperative sector and 1,384 in private sector. About three-
fourths are spinning mills and the remaining one-fourth composite mills. Apart from the mill sector,
there are several thousand small factories comprising 5 to 10 looms. Some of them have just one loom.
These are based on conventional handloom in the form of cottage industry and comprise decentralised
sector of this industry. Table 25.5 shows that the contribution of decentralised sector is much more
than the organised sector. It has increased rapidly from a mere 19.31 per cent in 1950-51 to 58.96 per
cent in 1980-81 and made a sudden jump to 87.95 per cent 1990-91. It gradually improved during the
first half of 1990s and stood at all time peak of 95.41 percent in 2007-08 and subsequently slightly
declined to become 94.36 percent 2011-12.

This huge growth could provide significant opportunities for foreign exporters to India and potential
foreign investors in the country, as well as for the Indian textile and clothing industry itself.

The cotton textile industry is expected to grow very fast in the near future due to following factors:

 The remarkable increase in the income levels of the Indian population

 Abundant availability of raw materials such as cotton, wool, silk, and jute result in a continuous
increase in the demand in the Indian textile industry
 Easy access to low cost and skilled manpower offering a competitive edge to the industry
 Better assistance in terms of building market entry strategy for global organization by
the management consulting firms in India
At present, India is the third largest producer of silk and the fifth largest producer of synthetic fibre.
India is the largest producer and exporter of cotton yarn and jute goods. The cotton and blended textile
industries are the largest group of industries in the organized sector in India. The cotton textile industry
was most firmly rooted in India before machine-made cloth from England entered the market in the
19th century. In India cotton textile industry is composed of four main sectors: (i) the mills including
spinning, weaving and composite units (ii) the hand loom and power looms (iii) the hosiery sector, and
(iv) the garment sectors.
Major Problems Faced by Cotton Textile Industry in India

However, Indian cotton textile industry faces some of the problems as discussed below:

(a) Shortage of raw materials-Raw material determines 35 % of the total production cost. The
country is short of cotton, particularly long- staple cotton which is imported from Pakistan, Kenya,
Uganda, Sudan, Egypt, Tanzania, U.S.A. and Peru. It is pity that despite largest area under cotton (26
% of the world acreage) the country accounts for only 9 percent of the world output of cotton.
Fluctuating prices and uncertainties in the availability of raw material cause low production and
sickness to the mills.

(b) Obsolete machinery-In India most of the cotton textile mills are working with old and obsolete
machinery. According to one estimate in India over 60 % of the spindles are more than 25 years old.
The automatic looms account for only 18 % of the total number of looms in the country against the
world average of 62 % and 100 % in the United States. Obsolete machinery leads to low output and
poor quality of goods as a result of which Indian textile goods are not able to face competition in the
international market.

(c) Power shortage-Textile mills are facing acute shortage of power. Supplies of coal are difficult to
obtain and frequent cuts in electricity and load shedding affect the industry badly. This leads to loss of
man hours, low production and loss in the mills.

(d) Low productivity of labour- On an average, an Indian factory worker only handles 380 spindles
and 2 looms as compared to 1,500-2,000 spindles and 30 looms in Japan. If the productivity of an
American worker is taken as 100, the corresponding figure for U.K. is 51 and for India only 13. Also,
industrial relations are not very good in the country. Strikes, layoffs, retrenchments are the common
features of many cotton mills in the country.

(e) Competition in foreign market-The Indian cotton textile goods is facing stiff competition in
foreign markets from Taiwan, South Korea and Japan whose goods are cheaper and better in quality. It
is really paradoxical that in a country where wages are low and cotton is internally available,
production costs should be so high.

(f) Competition from the decentralised sector- An important factor for the growing sickness of the
mill sector is the growth of the decentralised sector. Being a small-scale sector, the Government
allowed excise concessions and other privileges. This accompanied with low wages have led to the low
cost of production in the decentralised sector.
(g) Government controls and heavy excise duties-the cotton textile industry has greatly suffered due
to wrong and faulty policies of the Government. In the past, the Government has sought control of
price, distribution of yarn, the pattern of production, etc.

At one time the price of the cloth was fixed by the Government below the cost of production.
Similarly, under the yarn distribution scheme of 1972, the Government made it obligatory on all mills
to supply 50 % of the production of yarn to the decentralised sector at reduced rates.

The high import duty on imported cotton, an upward revision of the price of the indigenous cotton and
heavy excise duty on cotton cloths are other detrimental factors. Another problem of the mill sector is
related to the production of controlled cloths wherein mills are incurring huge loss.

(h) Sick mills-In India about 130 cotton mills are sick and incurring constant losses. The Government
has set up the National Textile Corporation (NTC) to run these sick mills. Although the government
has invested huge money to rehabilitate and modernise these mills, these mills are yet to become
profitable.

The cotton textile industry of the country is thus facing both short-term and long-term problems.
Former includes problems of high prices, shortage of raw materials, liquidity problems due to poor
sales and accumulation of huge stocks due to poor demand in the market. The long-term problems of
the industry include the slow pace of modernisation, outdated technology resulting in low productivity,
the high cost of production, low profitability and increasing sickness of mills.

Distribution of Cotton Textile Industry in India

The production of cotton textile has increased from 8,368 million sq metres in 1980-81 to 31718
million sq metres in 2010-11. Maharashtra is the leading producer of cotton textile, which produces
about 39 per cent of the country's total production followed by Gujarat 34.5 per cent and Tamil Nadu
6.4 per cent. The other cotton textile producing states are Punjab, Madhya Pradesh, Uttar Pradesh,
Rajasthan, Puducherry, Karnataka and Kerala. The important producing centres of cotton textile are as
follows:

Maharashtra: Mumbai, Solapur, Pune, Nagpur, Jalgaon, Akola, Sangli, Miraj, Kolhapur, Kalyan and
Thane
Gujarat: Ahmedabad, Bhavnagar, Bharuch, Kalol, Kadi, Kelot, Khambat, Nanded, Porbandar, Rajkot,
Vadodara and Viramgaon
Tamil Nadu: Coimbatore, Chennai, Madurai, Perambur, Salem, Tiruchirapalli, Tirnuveli and Tuticorin
Uttar Pradesh: Agra, Aligarh, Bareilly, Etawah, Lucknow, Mirzapur, Modinagar, Modipuram,
Moradabad, Saharanur and Varanasi
Madhya Pradesh: Bhopal, Dewas, Gwalior, Indore, Jabalpur, Ratlam and Ujjain
Punjab: Amritsar, Ludhiana and Phagwara.
Rajasthan: Bhilwara, Siganganagar, Kishangarh, Ajmer, Beawar, Jaipur, Pali and Udaipur
West Bengal: Kolkata, Haora, Hugli, Panihar, Murshidabad, Sirampur and Shiampur
Kerala: Alleppey, Alwaye, Kollam, Thiruvananthapuram and Trichur
Karnataka: Bangalore, Belgaum, Gulbarga, Chennapatnam, Chitradurga, Mangalore and Mysore
Andhra Pradesh/Telangana: East Godawari, Guntur, Hyderabad and Udaygiri
Bihar: Gaya, Bhagalpur and Patna
Haryana: Bhiwani, Hissar and Rohtak