Tag: Associate Prof

Impact of Globalization on Indian Textile Industry (Author: S.Hariharaputhiran, Associate Prof. Dept.of Mgt.Studies VSB Engineering College, Karur)

ABSTRACT

Impact of Globalization on Indian Industry started when the government opened the country’s markets to foreign investments in the early 1990s. Globalization of the Indian Industry took place in its various sectors such as steel, pharmaceutical, petroleum, chemical, textile, cement, retail, and BPO.

Globalization means the dismantling of trade barriers between nations and the integration of the nations economies through financial flow, trade in goods and services, and corporate investments between nations. Globalization has increased across the world in recent years due to the fast progress that has been made in the field of technology especially in communications and transport. The government of India made changes in its economic policy in 1991 by which it allowed direct foreign investments in the country. As a result of this, globalization of the Indian Industry took place on a major scale.

The various beneficial effects of globalization in Indian Industry are that it brought in huge amounts of foreign investments into the industry especially in the BPO, pharmaceutical, petroleum, and manufacturing industries. As huge amounts of foreign direct investments were coming to the Indian Industry, they boosted the Indian economy quite significantly. The benefits of the effects of globalization in the Indian Industry are that many foreign companies set up industries in India, especially in the pharmaceutical, BPO, petroleum, manufacturing, and chemical sectors and this helped to provide employment to many people in the country. This helped reduce the level of unemployment and poverty in the country. Also the benefit of the Effects of Globalization on Indian Industry are that the foreign companies brought in highly advanced technology with them and this helped to make the Indian Industry more technologically advanced. The various negative Effects of Globalization on Indian Industry are that it increased competition in the Indian market between the foreign companies and domestic companies. With the foreign goods being better than the Indian goods, the consumer preferred to buy the foreign goods. This reduced the amount of profit of the Indian Industry companies. This happened mainly in the pharmaceutical, manufacturing, chemical, and steel industries. The negative Effects of Globalization on Indian Industry are that with the coming of technology the number of labor required decreased and this resulted in many people being removed from their jobs. This happened mainly in the pharmaceutical, chemical, manufacturing, and cement industries.

The effects of globalization on Indian Industry have proved to be positive as well as negative. The government of India must try to make such economic policies with regard to Indian Industry’s Globalization that are beneficial and not harmful. Impact of Globalization on Indian Textile Industry The initiation and development of globalization and Indian textile industry took place simultaneously in the 1990s. The Indian textile industry, until the economic liberalization of Indian economy was predominantly an unorganized industry. The economic liberalization of Indian economy in the early 1990s led to stupendous growth of this Indian industry. The Indian textile industry is one of the largest textile industries in the world and India earns around 27% of the foreign exchange from exports of textiles and its related products. Further, globalization of India textile Industry has seen a paradigm increase in the ‘total industrial production’ factor of this Industry, which presently stands at 14%. Furthermore, the contribution of the Indian textile Industry towards the gross domestic product (GDP) of India is around 3% and the numbers are steadily increasing. The process of globalization and Indian textile industry development was the effect of rapid acceptance of ‘open market’ policy by the developing countries, much in the lines of the developed countries of the world. The initiation and its subsequent development of globalization and Indian textile industry respectively, was effected by the Ministry of Textiles under the Government of India. The aggressive policy that was undertaken for the rapid development of globalization and Indian textile industry were really praiseworthy. The most significant step amongst them was introduction of “The National Textile Policy 2000”. This policy envisaged to address the following issues –

Increased global competition in the post 2005 trade regime under WTO Huge import volume of cheap textiles from other Asian neighbors High production cost with respect to other Asian competitors Use of outdated manufacturing technology Poor supply chain management and huge transit cost Huge unorganized and decentralized sector Further, this policy also aims at increasing the foreign exchange earnings to the tune of US $ 50 billion by the end of the year 2010. It includes rational projections for the overall development and promotion of all the sectors involved directly or indirectly with the Indian textile industry. Furthermore, this policy also envisages the inclusion of the huge unorganized and decentralized Indian textile sector under the organized textile industry. This is because the unorganized textile manufacturing sector in India accounts for 76% of the total textile production. The globalization of the Indian textile sector was the cumulative effect of the following factors – Huge textile production capacity Efficient multi-fiber raw material manufacturing capacity Large pool of skilled and cheap work force Entrepreneurial skills Huge export potential Large domestic market Very low import content Flexible textile manufacturing systems The Indian textile industry consist of the following sectors – Man-made Fiber Filament Yarn Industry Cotton Textile Industry Jute Industry Silk and Silk Textile Industry Wool & Woolen Industry Power loom Sector An approximate number of textile manufacturing companies operating in India are given below – Badges, emblems ribbons and allied products – 175 Bed covers, curtains, cushions and other draperies – 2471 Carpets and rugs – 270 Embroidery and embroidered garments, made ups and furnishing – 848 Fabrics and textiles – 3013 Yarns and threads – 1201 Jute products – 337 Kids apparel and garments -1052 Ladies apparel and garments – 2932 Men’s’ apparel and garments – 2936 Miscellaneous garments, textile and leather accessories – 1658 Yarns and threads – 1201 Wool, woolen garments, blankets and accessories – 468 Textile chemicals, dyeing and finishing chemicals – 239 The overall growth of the Indian textile industry can be attributed to the globalization. Today, the Indian textile industry employs around 35 million personnel directly and it accounts for 21% of the total employment generated in the economy. Globalization of the Indian textile industry has also facilitated introduction of modern and efficient manufacturing machineries and techniques in the Indian textile sector. Thus, much of India’s economic growth is largely dependent on textile manufacturing and exports. Impact of globalisation of textile industry on traditional weaving operations: It is significant to note that in spite of growing competitions and pressure caused by a modern textile sector and shortage/irregular availability of raw materials, almost all the weaver families surveyed have still been continuing their weaving operations to a limited scale. Nearly 26.5% of the surveyed women reported that the weaving activities of the family has seriously been affected due to competitive pressure of modern textile industry. About 58% of the women reported that their weaving operation has moderately been affected. The effect has been more sever for those women working under the co-operative societies and production centres. Majority (98%) of the women reported that modern textile items are available at relatively cheaper prices affecting market for handloom products. Nearly 87% of women respondents reported that growing consumer preference and test, in recent times, towards variety of modern fabrics has severely affected the demand for handloom items. Textile products being manufactured by organized spinning mills offer variety of design and fabrics and attract more number of consumers, squeezing the market size for traditional handloom products, as reported by 58% of the women respondents. The growing consumer preference for modern textile products is directly attributed to increasing investment made by the organized sector on advertisement and promotion. The opinion of the surveyed women respondents call for modernization and technological upgradation of the traditional handloom industry in order to retain its unique position and to achieve economy in competitive environment. Provision of sustainable supply of good quality of raw materials can greatly aid in smoothening the operational crisis in handloom sector. There has been steady decline of the functional performance of the weaver co-operative societies and production centres as a result of growing competition caused by the organised modern textile industries. Nearly 66.7% and 17.5% of the women respondents alleged that the functioning of their societies and production centres have severely and moderately been affected due to the competitive situation caused by the modern textile industry. The competitive situation caused by the modern textile industry has resulted in complete stoppage and stagnation of the societies, decreased sales volume, low and irregular supply of raw materials, irregularity of wage payment, reduction of members, weakening of the financial status, stoppage of bank credit loan etc. Nearly 52.5% of the respondents under co-operative sector reported that the function of the co-operative societies and production centres has drastically reduced to very low level. Even several societies and production centres have stopped working. The strength of membership has gradually been reduced in several societies and centres, as reported by 15.8% of the surveyed women. Sales volume of several societies has considerably been reduced. In spite of stiff competition and resulting weakening of their traditional business, almost all the surveyed weaver families are still continuing their traditional business, with much hardship. At present, nearly 69.4% of the surveyed families reported having one working loom with them. Hardly 2.9% of them reported the status of their loom as non-functioning condition. Nearly 27.7% of the surveyed weaver families reported possessing two working looms. It is noticed that maximum proportion (72.5%) of the weaver families is operating their looms 46-75 hours in week. The actual hours of utilisation of looms by surveyed families fall far behind the actual available hours per week. The low level of utilisation of loom is directly attributed to inadequate and irregular supply of raw materials, low demand/sales of the handloom products and associated financial problems faced by weavers and cooperative societies as well. The reasons for low utilisation looms mainly relate to stagnation of demand, shortage of raw materials, shortage of loom accessories etc. Excessive delay in receiving the raw materials through co-operative societies and production centres has greatly reduced the level of utilisation of their weaving assets as reported by 12.3% of the surveyed families. Only 26% of the surveyed weaver families reported that there is no scope of further increasing the level of operation, but remaining 74% of them expressed their hope for further increasing the level of operation. Nearly half of the surveyed families expressed their need for modernizing their loom either by replacement or by repairing their old looms. Most of the weaver families are conversant with their existing types of looms and hence needed replacement of similar type. About 40% of the weaver families, who expressed their need for modernisation, felt the need for repairing their old looms to make it more productive and functional. Around 43% of weaver families expressed the need for adding few more number of looms to their existing set up. All the weaver families opting for modernisation reported that such modernisation could result in increase in the processing of yarns and improving their level of operation. Nearly 17.5% of the weaver families who opted for modernization reported that such modernisation would contribute to improving the quality of their handloom products. It is noticed that the average quantity of yarns being processed per weaver family per month, in the co-operative sector, in the past was 4.9 kg. per month which has marginally come down to 3.9 kg. per month per household, in the current period, due to decline in sales of handloom products. In case of families under non-co-operative sector, the average consumption of yarn per family per month has marginally declined from 4.9 kg. (past) to 4.1 kg. in the current period. The average monthly consumption of dyes per household has marginally declined from 583 gm. (past) to 517 gm. in the current period, showing a decline of 11.3%. In keeping with this stagnating market for handloom products in the face of increasing competition posed by modern textile sector, demand for yarns per month per household shows decline from 5.1 kg. (past) to 4.7 kg. in the current period. As a whole, the monthly requirement of yarn in the current period varies in the range of 2 kg. to 12 kg. per household. The wide variation of requirement as well as consumption of yarns and dyes by different households reflects the great deal of variation of time and efforts needed for different type of handloom products, quality design and highly crafted fabrics needing relatively more time and processing efforts. As a whole, the actual monthly requirement of yarns per households is nearly 17.5% higher over what they receive and process, in the current period. The average monthly demand of dyes per household show a decline from 591 gm. to 520 gm. (a decline of 12 %) in the current period. Among the beneficiaries procuring yarns, the extent of dependance on co-operative societies as sources of supply has greatly decreased and most of the beneficiaries are now depending on local market for procuring yarns. While 54% of the weaver families were depending on co-operative societies as the source of supply of yarn. Currently only 9% of them are depending on the societies for this purpose. It is important to note that majority (89%) of the weaver families reported depending upon local market for procuring yarns for their weaving operation, while only 46% of them were depending on the local source of supply in the past years. The co-operative societies, which are earlier playing an important role for supplying raw material for traditional weaving, have been relegated to a very miserable position in this context. The scarcity of funds and operational weakness of most of the co-operative societies has been responsible for decreased dependence of the weaver communities on them for procuring raw materials. About 53% of the weaver families reported facing shortage of yarns and dyes required for processing their handloom products, at present. However, 47% of the surveyed families reported that they did not face any shortage of yarns and dyes. The percentage of weaver families reporting shortage of yarns and dyes relatively belongs more to the co-operative sector as compared to those not supported by co-operative sector. Nearly 40.5% of weaver families, who reported shortage of yarns and dyes to meet their production requirement, stated that their weaving operation has moderately been affected due to such shortage, at present. The weaver co-operative societies have failed to ensure steady supply of yarns and dyes to its members to maintain continuity in handloom operation. Nearly 50.5% of the surveyed families expressed their dissatisfaction on the role and performance of the co-operative societies in the context of arranging and supplying required quantity of yarns and dyes to its weaver members, at present. The major reasons of dissatisfaction of the weaver families on the services of co-operative societies mainly pertain to irregularity in supply, inadequate of quantity of supply and poor quality goods delivered. About 56.1% of the weaver families, who expressed dissatisfaction on the services of the societies, reported that supply of yarns and dyes by the societies is frequently irregular. Among the various kinds of woven goods, it is interesting to note that almost all the households engaged in weaving produces sarees. Only small number of families produces other items like dhotty, bedsheets, cloth pices, towels etc. The average number of pieces of sarees produced in a month per weaver household is nearly 8. The average number pieces of sarees produced per weaver households have come down form 10 (past) to 8, at present. Similarly, there has been reduction in monthly production of different category of woven products, as reported by surveyed weaver families. The average value of production of saree per household per month shows a decline from Rs.4,300/- (past) to Rs. 4,000/- at present. The handloom products having its own superb and distinct position in textile sector enjoy a wide spread market in both rural and urban areas. The competitive pressure exerted by modern textile products has not created any perceptible change in the acceptance and the choice of customer segment for handloom products. Due to growing deterioration of functional performance of the weaver co-operative societies and production centres, majority of the weaver community has switched over to direct marketing. The average monthly sale per household of handloom products in terms of pieces through co-operative societies has declined from 15 (past) to 3, at present. On the other hand, the average monthly sales of different handloom goods per month per household have increased from 7 (past) to 13 (current), through open market. In terms of change in value of woven products sold through co-operative societies, it is found that the average value of monthly sale per household has decreased from Rs. 5,000/- (past) to Rs. 1500/- at present. Conclusion : With liberalization of Indian economy, the modern textile industry has posed serious threat to the traditional handloom industry. Rapid technological upgradation and automation in modern textile industry has made high volume of production of a variety of quality synthetic and cotton textile items, enjoying competitive advantage over the handloom products. The handloom industry, both in co-operative and private sector, with its vast rural work force especially of weaver communities is confronted with challenge of competitive economic environment. The weakening position of handloom sector in the wake of global competition of textile industry has posed a serious threat to the socioeconomic life of the traditional weaver communities, in general and to the socioeconomic status of rural women of these weaver communities in particular.

Key word: Textile industry, Modern Textile Products, Traditional weaving operations.