Understanding the Crisis: Understanding the Crisis:

Macro and Micro FactorsMacro and Micro Factors

Dr. D. Narasimha Dr. D. Narasimha ReddyReddy

BasicsBasics

�� Handloom and powerloom are competing sectorsHandloom and powerloom are competing sectors

�� Most of the powerloom workers are previously handloom Most of the powerloom workers are previously handloom weavers. However, powerloom requires workers than weaversweavers. However, powerloom requires workers than weavers

�� Policy makers previously have exhorted handloom weavers to Policy makers previously have exhorted handloom weavers to shift to powerloom for enhancing incomesshift to powerloom for enhancing incomes

�� Suicides are indicators of a crisis, across the sector, and not Suicides are indicators of a crisis, across the sector, and not specifically related to family issuesspecifically related to family issues

�� Scale of production does not explain suicides; why now and not Scale of production does not explain suicides; why now and not beforebefore

�� Handloom and powerloom are part of a global change process in Handloom and powerloom are part of a global change process in textilestextiles

Micro factorsMicro factors

�� Low incomes due to low, inadequate and Low incomes due to low, inadequate and

inappropriate wagesinappropriate wages

�� Exploitative relations of productionExploitative relations of production

�� Lack of marketsLack of markets

�� High level of indebtednessHigh level of indebtedness

�� Increasing output but reducing wages and Increasing output but reducing wages and

enhanced vulnerabilitiesenhanced vulnerabilities

EXISTING CLUSTERS IN INDIA

Handloom PowerloomShrinagar, Amritsar, Ludhiana,

Panipat, Baluchar, Banaras,

Bhagalpur, Baluchar,

Bhuvaneshwar- Cuttack, Chanderi,

Maheshwar, Burhanpur, Lohit

(Arunachal Pradesh), Aashval,

Patan, Bhuj, Surat, Paithan,

Malegaon, Solapur, Kotah, Sanganer,

Kanchipuram, Karur, Kannur,

Pochampally, Madurai, Nagari,

Salem, Rajapalayam, Dharmavaram,

Narayanpet, Gadwal,

Amritsar, Ludhiana,

Bhagalpur, Burhanpur,

Surat, Malegaon,

Solapur, Mau, Kanpur,

Bhilwara, Kishangarh,

Ahmedabad,

Ichalkaranji, Erode,

Salem, Komarapalayam,

Nagari, Bhongir, Sircilla,

Bangalore.

Major Handloom Clusters in AP

Handloom clusters Major products

Gadwal, Ghattu, Rajoli, Narayanpet in

Mahbubnagar district

Sarees

Pochampally, Koyyalagudem, Choutuppal,

Ghattupal in Nalgonda District

Ikat textiles

Mangalagiri in Guntur district Saris, Dress materials,

Venkatagiri in Nellore Sarees

Dharmavaram, Peddapappur, Tadipthri, Yadiki in

Anantapur district

Silk Sarees

Adoni, Gudur, Kodumuru, Kosagi, Nagaladinna,

and Yemmiganur in Kurnool district

Bedsheets, towels,

Lungis

Kothawada in Warangal district Cotton Durries

Chirala, Vetapalem Prakasam district Sarees, Dress Materials

Handloom13%

Powerloom63%

Hosiery19%

Mill3%

Khadi, wool & Silk2%

EXISTING PRODUCTION CAPACITY

Sector-wise Cloth Production in India in quantity terms

EMPLOYMENT POSITIONPresent Employment Generation in Different Sector of cloth

manufacturing

Mill

1%

Hosiery

21%

Khadi,wool&Silk

7%

POWELOOM

30%

Handloom

42%

Quote

“Increased unit productivity mainly

benefits the trader, often at costs which

are not immediately obvious, to society

and the environment” S.P.VERMA,

Deputy Director (Tech.)& OIC,Regional Office of the TextileCommissioner, Ahmedabad

Agreement on Textile and Clothing

World Trade Organisation

Free Textile Trade

Global Trade

Indian textile

sector

Contextualizing the Indian Textile Industry

PowerloomMills

Handloom

Contextualizing the Indian Textile Industry

Global Trade Indian textile

sector

Mill Sector

Powerloom

Garment

Exporter/Importers

Silk Yarn

Cotton Yarn

Man-made fibre

Exporter/Importers

Exports/

Imports

Handloom Mills

Garment

Powerloom

Spinning

InterInter--Sectoral issues: Access to YarnSectoral issues: Access to Yarn

�� Increasing exports of yarn, especially cotton Increasing exports of yarn, especially cotton yarnyarn

�� Increasing exports of raw cottonIncreasing exports of raw cotton

�� Higher custom duties on yarn imports Higher custom duties on yarn imports –– silk 30 silk 30 percent, wool 10 percentpercent, wool 10 percent

�� Volatility in yarn prices Volatility in yarn prices –– upwardly mobileupwardly mobile

�� Poor sale distribution networkPoor sale distribution network

�� Closure of cooperative spinning millsClosure of cooperative spinning mills

Sectoral issues: Access to capitalSectoral issues: Access to capital

�� Decreasing private and public investments for Decreasing private and public investments for

production inproduction in specific clustersspecific clusters

�� Decline in institutional investment, esp. Decline in institutional investment, esp.

NABARDNABARD

�� Burgeoning debtsBurgeoning debts

�� No/low loans from scheduled banksNo/low loans from scheduled banks

Per loom Scale of Finance (2004-05)

Variety of cloth Existing scale of perloom finance

Low Variety Cotton Rs.15,000

Special Variety Cotton Rs.24,000

Silk Rs.35,000

Polyester Rs.22,000

NABARD Targets for Credit Card Schemes

Name of thescheme

Target

2003-2004 2004-2005

SwarozgarCredit Card

50,000(883)

75,000

Artisan CreditCard

30,000(1603)

30,000

Figures in the bracket indicate the number of cards issued

Ground Level Credit & Refinance

from NABARD (in crores)

Year Total for NFS Working capital for weavers Coop

Societies.

2001-2002 4,719 34

2002-2003 4,328 34

2003-2004 8,918 16

2004-2005 9,292 32

NABARD projections 2005-06 (in

lakhs)

Working Capital

Activities PLP Projections

Weavers Societies 11593.1

Powerlooms 95.63

Investment Credit

Handloom 6507.29

Powerloom 176.8

Silk Reeling 33.0

Sectoral issues: Market distortionsSectoral issues: Market distortions

�� DuplicateDuplicate handloom products in the markethandloom products in the market

�� No legal protection to market transactions and No legal protection to market transactions and

handloom productshandloom products

�� High disparity in production and marketing High disparity in production and marketing

pricesprices

�� Rising imports of fabrics and finished textilesRising imports of fabrics and finished textiles

Mills Garment

Powerloom

Imports

Threats Identified…Threats Identified…

�� National Textile Policy 2000National Textile Policy 2000

�� National Foreign Trade PolicyNational Foreign Trade Policy

�� Eleventh FiveEleventh Five--year Planyear Plan

�� Apparel and Textile Policy of AP, 2005Apparel and Textile Policy of AP, 2005--1010

�� Annual budgets (State and Central)Annual budgets (State and Central)

Threats Identified…Threats Identified…

�� Organised lobby groups such as CITI, AMFI, Organised lobby groups such as CITI, AMFI,

CII, FICCI, etc.CII, FICCI, etc.

�� Economists and bureaucrats (World Bank Economists and bureaucrats (World Bank

trained)trained)

�� Lethargy among handloom leaders and groupsLethargy among handloom leaders and groups

Sectoral TrendsSectoral Trends

�� Policy, Institutional framework, Fiscal Instruments and Policy, Institutional framework, Fiscal Instruments and interventions are straining the handloom sector as a interventions are straining the handloom sector as a wholewhole

�� Select powerloom clusters are reeling under depressed Select powerloom clusters are reeling under depressed economic conditions due to economic conditions due to

�� Increasing input costsIncreasing input costs

�� Reduced trickling down of value created to the lower end of Reduced trickling down of value created to the lower end of

the chainthe chain

�� Limited adaptability and innovation thereby reducing market Limited adaptability and innovation thereby reducing market

access both in domestic and international marketsaccess both in domestic and international markets

Sectoral TrendsSectoral Trends

�� Powerloom workers are more stressed than Powerloom workers are more stressed than

handloom weavershandloom weavers

�� In a cost competition scenario, powerloom is In a cost competition scenario, powerloom is

unviable, without value addition and unviable, without value addition and

government supportgovernment support

�� Suicides in handloom sector are happening and Suicides in handloom sector are happening and

are likely to increase. Only better policies can are likely to increase. Only better policies can

prevent further suicidesprevent further suicides

Way ForwardWay Forward

�� Review of national textile policyReview of national textile policy

�� Review of AP Apparel and Textile PolicyReview of AP Apparel and Textile Policy

�� Higher budget allocations for handloom in 11Higher budget allocations for handloom in 11thth

five year planfive year plan

�� Implementation of HR ActImplementation of HR Act

�� Enactment of Textile Labelling Act, for nonEnactment of Textile Labelling Act, for non--handloom productshandloom products

�� Review of provisions for handloom in national Review of provisions for handloom in national foreign trade policyforeign trade policy

Way ForwardWay Forward

�� Women oriented welfare and developmental Women oriented welfare and developmental

programmesprogrammes

�� HS classification for handloom productsHS classification for handloom products

�� SHGs and cooperatives in remote areasSHGs and cooperatives in remote areas

�� Cleaning of handloom cooperatives through Cleaning of handloom cooperatives through

gradationgradation

�� Handloom products in sensitive and special Handloom products in sensitive and special

productsproducts

Way ForwardWay Forward�� Inclusion of handloom sector in NREGAInclusion of handloom sector in NREGA

�� Minimum wages have to be revised, to enable women to get Minimum wages have to be revised, to enable women to get proper and appropriate wages for their work, while being proper and appropriate wages for their work, while being dynamic to the inflationary trends.dynamic to the inflationary trends.

�� Women should get identity cards, artisan credit cards and Women should get identity cards, artisan credit cards and insurance coverage.insurance coverage.

�� Bridge schools for school dropouts have to be established in Bridge schools for school dropouts have to be established in handloom clusters and villages.handloom clusters and villages.

�� Households with problems of hunger should be provided Households with problems of hunger should be provided with Antyodaya cards and ration cards.with Antyodaya cards and ration cards.

�� Mobile health centres have to be established in major handloom Mobile health centres have to be established in major handloom clusters and villages.clusters and villages.

�� Exclusively for women, handloom cooperative societies Exclusively for women, handloom cooperative societies have to be established.have to be established.

�� Hank yarn should be supplied to women through women Hank yarn should be supplied to women through women cooperatives and groups.cooperatives and groups.

Way ForwardWay Forward

�� Cleaning up of All India Handloom Board and other Cleaning up of All India Handloom Board and other relevant committees of political and business relevant committees of political and business appointments, with knowledgeable handloom appointments, with knowledgeable handloom representativesrepresentatives

�� Separate handloom growth and development policySeparate handloom growth and development policy

�� Establishment of Handloom Chambers of CommerceEstablishment of Handloom Chambers of Commerce

�� Establishment of HEPC offices in all State capitalsEstablishment of HEPC offices in all State capitals

�� Review and improvements of handloom institutions, Review and improvements of handloom institutions, and their performancesand their performances

�� Curtailing of handloom funds diverted to NIFTCurtailing of handloom funds diverted to NIFT

Thank You!Thank You!