a

POWERLOOM INDUSTRY IN INDIA

DON'T QUITWHEN THIN6S GO WRONG, AS THEY SOMETIMES WILL, WHEN THE ROAD YOU'RE TRUDSINS SEEMS ALL UPHILL,

WHEN THE FUNDS ARE LOW AND DEBTS ARE HISH, AND YOU WANT TO SMILE AND YOU HAVE A SISH,

WHEN CARE IS PRESSINS YOU DOWN A BIT,REST YOU MUST, BUT DON'T YOU QUIT,

LIFE IS QUEER WITH ITS TWIST AND TURNS,AS EVERYONE OF US SOMETIMES LEARNS,

AND MANY A FAILURE TURNS ABOUT...............WHEN HE MISHT HAVE WON HAD HE STUCK IT OUT.

DON'T eiVE UP THOUGH THE PACE SEEMS LOW- YOU MAY SUCCEED WITH ANOTHER BLOW. SUCCESS IS FAILURE TURNED INSIDEOUT-

THE SILVER TINTS OF THE CLOUDS OF DOUBT,AND YOU CAN NEVER TELL HOW CLOSE YOU ARE,

IT MAY BE NEAR WHEN IT SEEMS SO FAR;SO STICK TO THE FILGHT WHEN YOU ARE HARDEST HIT ITS WHEN THINGS SEEN WORST THAT YOU MUST WIN.

Chapter No. I ll

P a r t i

Power loom industry in India

How old is Weaving?

W eaving is the method by which threads are interlaced to make cloth. The

principals o f w eaving have not changed through the ages. M odern textile mills do quickly

on m achines what ancient peoples did slowly by hand.

Cavem en, who lived about thirty thousand years ago, learned how to weave. They

used straw, stalks o f reed, or other m aterials to w eave by man in prehistoric times.

W hat these ancient peoples did not realize was that cords, could be interlaced to

make soft fabrics or cloths. The idea o f w'eaving cloth seems to have developed in certain

particular places and then spread all over the world.

The most ancient woven clothes that we have records o f are these:

The N ear East, about 5000 B.C.; Egypt, about 4000 B.C.; central Europe, about

2500 B.C.; South Am erican Peruvian coast about 1500 B.C. and China, about 1200 B.C.

The use o f different fibres for weaving developed in various places. W ool was first

used when the sheep was domesticated, about 1600 B.C. Cotton was first used in India and

Spread from there to A sia and finally to Europe. Silk fibres were first used in China. On the

other side o f the world, in ancient Peru, the cotton plant and llamas and apices were

providing material for making cloth. And since man has always liked to have colorful

clothing, it is interesting to know that the ancient Peruvians had already found ways to have

more than 150 tints and shades in their cloth.

References to weaving are found in the Vedic literature. M ethod o f spinning, the

various materials used etc. are also m entioned in these ancients scripts. The history o f

Textiles is told m any times over in the epics, the Puranas. the G raeco- Roman sources o f

Indian history, and the classical Tamil Sangam Literature. Various techniques o f weaving,

designing, needlework etc have survived through the centuries.

110

The foundations o f the Indian textile trade with other countries began as early as the

second century BC. Kalyan, a port, is place in that tim e from where textiles were exported.

A variety o f fabrics, including cotton brocade, is m entioned in Chinese literature as Indian

products exported to China

History of weaving in India

From the tim e immemorial India has been the hom e o f cotton. It is undoubted

that the birthplace o f the cotton industry o f the world is India, but there are differences o f

opinions as to exactly when the industry began. Some historians consider that India was

in flourishing condition during the time Rig Veda was written. The Ramayana,

M ahabharta and Puranas contain references to the production o f cotton goods in India

Mr. F.W. Thom as has said that the earliest mention (o f cotton) appears to be in

ashvalayana Saruta Sutra (say 800 B.C.) where the m aterial was contrasted with silk and

hemp as that o f w hich was made the sacred thread o f the Brahmins.

The Indian cotton Fabrics had a worldwide im portance and was exported to

foreign lands during the Buddhist period. Indian excellent handloom products were in

great dem and not only inside the country but in much foreign land. They were sent

abroad in sizeable quantities even in the days o f lord Buddha. Since ancient days

handloom continued to flourish and in medieval times as well as her cloth manufactured

were famous o f high artistic skill o f craftsman through out the world. Indian cotton was

dem anded by eastern m arket from Cairo to china as well as by European market. India

exported more than 200 varieties o f the cotton through out the world; some o f its famous

products were M uslin o f Decca known as Ab-I-rawan (running water). Bahati hawa

(woven air) and shabnam (evening dew).

The art o f weaving is one o f the oldest arts known to mankind. Many o f odds and

ends o f civilization that existed at the beginning o f the history show evidence o f the art o f

weaving. It was very early that this art reached a degree o f developm ent from a standpoint

o f texture, beautify and utility that com pares favorably w ith the products o f today. The

tapestries o f the m iddle ages are unrivalled, as are the silk o f ancient China. The m odem

m anufacturer has produced no new products but utilizes the im provem ents in the process o f

production that have been brought about in modern tim es. The spinning wheel has been

replaced by the modern autom atic Power loom.

II

The principle on which looms are constructed, is that o f m anipulating two series o f

yarn warp and sift so that sharp will be drawn slowly through the loom and interlaced with

weft, in order to make cloth some warp threads must be raised and others lowered to

product a space though which the weft carried by the shuttle can be passed. This space is

called shed. Through this shed the shuttle is thrown leaving a stand o f weft. This operation

is called picking and the stand o f thread left by the shuttle is called a pick. The shuttle

leaves the weft at some distance from the edge (called fell) o f the cloth already woven. It is

therefore necessary to push it for ward o f the cloth. This process is called beating up and is

done by the ‘slay o f the loom ’. The slay consists o f a large heavy price o f wood extending

across the width o f the loom supported by two pivoted arms called ‘slay sw ords'. In the slay

is placed a grate like comb called the reed through which the warp threads are drawn. The

reed evenly spaces the warp yarn and pushes the weft unto the fell or edge o f the cloth.

After com pleting the forward m ovem ent to beat up the weft, the slay m oves backward and

the healed raises and lowers the warp threads forming a new shed for the shuttle to pass

through and leave the next pick o f the weft. This com pleted the series o f fundamental

operations necessary to weave cloth.

History of power weaving

The idea o f starting factory production o f cotton cloth and yarn in India took shape

during the first two decades o f the nineteenth century. The first cotton mill in India was

established in Calcutta in 1818. The second cotton mill came into existence in 1830 in

Bengal. The industry however found its most hospitable home in western India and

especially in Mumbai. The first cotton textile mill called the Bombay Spinning and

W eaving mill came into existence in Bombay in February 1856.

The Indian textile industry consist of.

a. Traditional handloom sector with prim itive technology

b. Power loom sector which is technologically improved from o f handloom s and

c. Com posite mill sector with its advanced technology.

Am ong all the three the handloom sector is more scattered and spread through out

the country, and is seen in the villages, power loom sector is decentralized-scattered in and

around some identifiable centers and the mill sector which is well organized and integrated

to a large extent, a part o f which is com posite having spinning, weaving and processing

under the same ro o f

112

There was a change in the fortunes o f the industry when yarn and cloth began to be

produced on mass scale on power driven machines. The household enterprise handlooms

could not face the changing situation. From sunrise to sun down a handloom w eaver could

not turn out four yards o f cloth, while a Power loom on the same hour produces ten times

the quality and quantity.

The advent o f the mill industry to the country was in the great interest o f the

situation. The birth o f the industry was the necessity o f environm ent. Indian mills slowly

replaced imported yarn and started supplying yarn to the handloom sector; the use of mill

yarn by handloom w eavers has brought a profound change in the social and economical

status o f the handloom weavers.

Power loom- the third eye

The traditional handloom s and textile mills were trying to fix their places in the

industry. But both o f them have certain limitations, it gave chance to rise Power loom as a

third pillar in the industry to overcom e these limitations. Handloom s at one hand have the

least speedy production at higher cost and mills on the other hand require huge capital

investments and scientific advanced technology. For speedy production on small scale at

distant places, the w eavers started installing Power loom as 'D ecentralised ' units.

Power loom industry in India

After independence many units in mill sector started facing the problems. The

technological changes were the need o f the time and the mill sector could not meet this

requirement. The labor problem also got multiplied due to non-availability o f skilled and

trained workers. This resulted in high cost o f production and heavy losses to many units and

finally closer o f the mills. This adverse situation o f m ills also helped power looms to

prosper fast. The factors like the wars, failure o f m ills and the reservation for the handloom s

helped power loom units to prosper very fast. All these are the external factors. Some

internal factors also helped a lot for the developm ent o f these units. The very nature o f the

decentralized pow er looms is such that:

❖ It has reduced strain o f operations

❖ It is less expensive

Power w eaving a change

❖ Its installments are very easy because these are very small units.

❖ No labor laws are applicable.

All these favorable factors led the power loom sector to develop in small villages in

the hands o f small entrepreneurs and in scattered and far o ff areas.

But this developm ent is entirely unplanned. Today the power loom sector has

developed as controversial subject. At one end. the handloom s- the traditional weaving says

that the pow er loom units are eating its share in production and developm ent and th a t's why

handloom s are lacking behind. Secondly handloom s cannot com pete with the power looms

because o f their speedy production. At the other end the organized mills com plains that

many units are becoming sick because o f power looms.

The inception of power looms in India

There are no authentic records as to indicate the first introduction o f power loom in

the country. The First power loom unit started in Ichalkranji town in M aharashtra in 1904

was also the first to start in the decentralized sector in India.'

Table 3.1: Centers and State wise inception of Power loom in India.Centers State Year of inceptionI. Ichalkaranji M aharashtra 19042. Cannanere Kerala 19173. Surat Gujrat 19204. Banglore Karnataka 19285. M adhurai Tamil Nadu 19286. Burhanpur M adhya Pardesh 19327. Calcutta W est Bengal 1932S.Amritsar Punjab 19339. Malegaon Maharashtra 1933lO.Tanda Uttar Pardesh 1934

Source: Power loom Inquiry committee reports 1964 Ashok Mehta.The Marketing problems o f power loom sector in Malegaon. By Riyaz Ansari

The First W orld W ar brought prosperity to many industries. One o f them was power

loom industry. Initially the small entrepreneurs purchased looms discarded by mills in

Bombay and Ahm edabad and installed as pow er looms. This practice is continued even

today but now manufactured power looms are also in evidence. During 1940’s because o f

second world war. the power loom industry got chance to prosper. The whole textile

industry in the country had to gear its m achinery towards huge war production demands.

114

The task was behind the capacity o f the mill sector alone and as a result the decentralized

power loom sector again accelerated the pace o f its growth.

Table 3.2 State-wise registration of power looms and employment

N o. O f p o w er loom s Em p loym en t

S tates 1990-91* 2000-01 2001-02 2002-03 2000-01 2001-02 2002 -03A . P. 1 9 , 0 0 0

4 3 , 5 3 5 4 3 , 9 2 3 4 3 , 9 7 6 1 0 8 , 8 3 8 1 0 9 , 8 0 8 1 0 9 , 9 4 0

A s s a m 3 0 0 0 2 , 7 2 6 2 , 7 2 6 2 , 7 2 6 6 , 8 1 5 6 , 8 1 5 6 , 8 1 5

B ih a r 3 0 0 0 2 , 8 9 4 2 , 8 9 4 2 , 8 9 4 7 , 2 3 5 7 , 2 3 5 7 , 2 3 5

D e lh i N A 1 ,1 0 2 1 ,1 0 2 1 ,1 0 2 2 , 7 5 5 2 , 7 5 5 2 , 7 5 5

G o a N A 122 1 2 2 1 22 3 0 5 3 0 5 3 0 5

Gujrat 2 , 2 5 , 0 0 0 3 . 1 8 , 2 6 3 3 , 1 8 , 2 6 3 3 , 1 8 , 2 6 3 7 , 9 5 , 6 5 8 7 , 9 5 , 6 5 8 7 , 9 5 , 6 5 8

H a r y a n a 8 , 0 0 0 9 , 8 8 2 9 , 8 8 2 9 , 8 8 2 2 4 , 7 0 5 2 4 , 7 0 5 2 4 , 7 0 5

H im a c h a l N A 1 ,3 0 2 1 ,3 0 2 1 ,461 3 , 2 5 5 3 , 2 5 5 3 , 6 5 3

J & K N A 6 5 6 5 6 5 163 163 1 6 3

K a r n a tk a 4 3 , 0 0 0 7 9 , 6 3 6 8 0 , 9 8 5 8 1 , 8 3 2 1 9 9 , 0 9 0 2 0 2 , 4 6 3 2 0 4 , 5 8 0

K e r a la 2 , 0 0 0 2 , 6 8 9 2 , 7 0 3 2 , 7 0 3 6 , 7 2 3 6 , 7 5 8 6 , 7 5 8

M . P . 3 2 , 0 0 0 4 3 , 6 4 8 4 3 , 7 8 5 4 5 . 5 9 8 1 0 9 , 1 2 0 1 0 9 , 4 6 3 1 1 3 , 9 9 5

M a h a r a s h tr a 3 , 9 8 , 0 0 0 7 0 7 , 1 4 5 7 0 9 , 4 3 8 7 3 0 , 9 4 5 1 7 ,6 7 , 8 6 3 1 7 , 7 3 , 5 9 5 1 8 , 2 7 , 3 6 3

O r i s s a 3 , 0 0 0 3 , 3 1 7 3 , 3 1 9 3 . 3 1 9 8 ,2 9 3 8 , 2 9 8 8 , 2 9 8

P u n ja b 2 1 , 0 0 0 2 2 ,6 8 1 2 2 ,6 8 1 2 3 , 6 0 6 5 6 , 7 0 3 5 6 , 7 0 3 5 9 , 0 1 5

R a ja s th a n 2 6 , 0 0 0 3 1 , 9 5 0 3 1 , 9 5 0 3 1 , 9 5 0 7 9 . 8 7 5 7 9 , 8 7 5 7 9 , 8 7 5

S i k k i m N A N i l N i l N i l N i l N i l N i l

r . N . 2 , 0 1 , 0 0 0 3 1 8 , 9 4 4 3 1 9 , 2 4 4 3 2 0 , 1 9 6 7 9 7 , 3 6 0 7 9 8 , 1 1 0 8 0 0 , 4 9 0

U . P. 6 4 , 0 0 0 6 5 , 9 3 4 6 5 , 9 3 4 6 5 , 9 3 4 1 6 4 , 8 3 5 1 6 4 ,8 3 5 1 6 4 , 8 3 5

W e s t B e n g a l 4 , 0 0 0 4 ,3 6 1 4 ,3 6 1 4 ,3 6 1 1 0 ,9 0 3 1 0 ,9 0 3 1 0 ,9 0 3

U nion T err ito r ie s

C h a n d ig a r h

4 , 0 0 0

4 2 4 2 4 2 105 105 105

D a d ra .

N a g e r

H a v e l i

4 8 2 4 8 2 9 3 0 1 ,2 0 5 1 ,2 0 5 2 , 3 2 5

P o n d ic h e r y 8 3 0 8 3 0 8 3 0 2 . 0 7 5 2 , 0 7 5 2 , 0 7 5

T otal 10,57 ,000 16 ,61 ,550 16,66 ,033 16 ,92 ,737 4 1 ,53 ,879 41 ,65 ,083 4 2 ,3 1 ,8 4 6

Soiircc: Reports ol'AII India I'edcration ofCo-operati\e spinning Mills. 1^91 and Compendium ot'Textiles '02

Table 3.3: Employment in Power loom Sector In Millions

2000-2001 Projected for 2006-07 Increase

4.15 4.25 0.10

Source: \v\v\v. T.xcindia.com

Ashok Mehta Report 1964

115

The decentralized power-loom sector plays a pivotal role in m eeting the clothing

needs o f the country. Production o f cloth as well as generation o f em ploym ent has been

rapidly increasing in the power-loom sector. This sector not only contributes significantly to

the cloth production in the country but also provides em ploym ent to m illions o f people. The

power-loom industry produces a wide variety o f cloth, both grey as well as processed with

intricate designs. The contribution o f power-loom sector to the total cloth production is to

the extent o f 59.15% and it contributes significantly to the export earnings o f the country.

Table 3.4: Growth in the Power Loom Sector

No

Name of the State/l'nion Territory

Units /looms registered under the erstn hile textiles (Control) order A 1988

I'nits/looms covered under the Textile (D <& R order) 1992 and the textiles (1) & R) order 1003 and T (D & R ) order 2001

Updated position oT units/looms

No of workers

No o f UnitsN o o f looms

No o f Units

No o f looms

No o f Units

No o f looms

No o f Units

No o f looms

2 3A 3B 4A 4B 5A 5B(,5.A+4.A+.v )̂

6.^(3B+4B+.'B)

(.8 71 State2 A. P 5656 37696 3962 6296 8 22 9626 44014 110035J Assam 261 2726 0 0 0 0 261 2726 68154 Bihar 1439 2850 4 44 0 0 1443 2894 72355 Goa 18 122 0 0 0 0 18 122 3056 Gujrat 28167 257658 3889 61839 45 907 32101 320404 8010107 Haryana 1647 9844 6 38 0 0 2653 9882 247058 H.P. 159 1302 23 159 0 0 182 1461 36539 J .& K . 0 0 56 65 0 0 56 65 16310 Karnataka 21146 61967 3433 19902 0 0 24579 81869 204673II Kerala 434 1971 226 760 0 0 660 2731 682812 M.P. 15106 32981 11142 32753 455 1032 26703 66766 16691513 Maharashtra 146749 472509 63558 363390 1091 1266 211398 837165 20929314 Orissa 754 3151 37 168 0 0 791 3319 829815 Punjab 3412 21618 244 1988 0 0 3656 23606 5901516 Rajasthan 3624 27793 389 4370 2 8 6 4015 32249 80623

17 Tamil Nadu 56365 227135 12287 107237 0 0 68652 334372 835930

18 U. P. 25028 65366 99 568 0 0 25127 65934 164835

19 West Bengal 806 4180 28 193 0 0 834 4373 2755

20 Delhi 124 1102 0 0 0 0 124 1102 0

21 ArunachalPardesh/Manipur

0 0 0 0 0 0 0 0

22

23Union

Territory24 Chandigarh 11 42 0 0 0 0 11 42 105

25 Havel i 17 444 19 486 0 0 36 930 2325

26 Pondechary 117 830 0 0 0 0 117 830 2075

27

Andaman & NIcobar. Daman &

D ili. Lakshadeep 0 0 0 0 0 0 0 0 0

Total 312040 1233287 99402 600256 1601 3313 413043 1836856 4592140

Source: www.txcindia .com

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The above two tables indicate that the growth o f Power loom as com pare to mill

sector and handloom s is much faster because the Power loom were free from excise taxes

and had a much shorter list o f restrictions on items they produced with respect to mills. The

growth o f unlicensed unit also increased the total num ber o f Power looms and its share in

total cloth production. Power loom used the same type o f technology with probably

som ewhat no-autom atic looms than used by the mills. It uses tw ice as much labour per loom

but had wage level significantly less than half the mill wages, so that the labour cost were

low in Power looms than in mills.

Out o f these 17,00,000 power looms only 30.000 are automatic (1.8%). and 5.000

shuttle less looms (0.3%) 4,00,000 sem i-autom atic drop-box looms but h a lf o f its are

obsolete. Rem aining are conventional looms with virtually no process control and quality

control attachments.

Table 3.5: Sector wise and year wise cloth production (Mn. Mtrs.)

Sector Years2002-03 2003-04 2004-05 2005-06 2006-07

Mill 1888 2070 2274 2490 2730Percentage 5.22 5.40 5.61 5.80 6.00Power loom 24360 25406 26510 27670 28875Percentage 67.29 66.33 65.38 64.42 63.46Handloom 3258 3450 3650 3865 4095Percentage 9 9.01 9.00 9.00 9.00Hosiery 6080 6740 7460 8245 9100Percentage 16.80 17.60 18.40 19.20 20.00Khadi, Wool, Silk 614 634 656 680 700Percentage 1.70 1.66 1.62 1.58 1.54Total 36200 38300 40550 42950 45500Percentage 100.00 100.00 100.00 100.00 100.00

Source: www.txcindia.com

The Indian power loom industry is striving to realize its full potential and face the

em erging challenges o f globalization and liberalization. In these difficult times, there is an

urgent need for all sectors related to textile industry and, policy m aking government, bodies,

industry, trade, financing institutions, ancillar\' industries to have online access to authentic

information about production, consum ption, demand and supply o f various products, about

past trends and future projections, about quality and cost, about raw materials, about m ajor

dom estic and international policies, which affect these industries. M oreover to retain our

com petitive advantage, it is im perative to develop and dem onstrate information technology

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(IT) to the textile industry that help in increasing productivity, lowering costs, improving

quality and help in quick response.

Production Pattern in Power-loom Sector:

Table 3.6: production of cloth (Mn. Sq. Mtr.)

Year Production % Total % Year Production % Total %

1990-91 13348 57.21 23330 100 1998-99 20689 57.27 36127 100

1991-92 13262 57.72 22978 100 1999-00 23187 59.14 39208 100

1992-93 14644 57.48 25475 100 2000-01 23803 59.16 40233 100

1993-94 15994 57.33 27898 100 2001-02 25192 59.93 42034 100

1994-95 15976 55.85 28606 100 2002-03 25954 61.83 41973 100

1995-96 17201 53.82 31958 100 2003-04 26947 62.51 43108 100

1996-97 19352 55.55 34838 100 2004-05 28325 63.79 44403 100

1997-98 20951 55.96 37441 100 2005-06* 14814 64.42 22995 100

Source; Compendium o f textiles 2002-03 and vvww.texindia.com ♦Up-to September 2005

Table 3.7: Production of cloth in Power loom sector (Mn. Sq. Mtr)

Type of cloth

1998-99

1999-GO

2000-01

2001-02

2002-03

2003-04

2003-04

2004-05 (Up-to

Sept.05)Cotton 5855 6291 6584 6473 6761 6370 7361 4263

Blended 4356 4613 5071 5025 4695 4688 4562 2332100% N on­

cotton10748 12283 12148 13694 14498 15889 16438 8291

Total 20689 23187 23803 25192 25954 26947 28325 14814Percentage 57.27 59.14 59.16 59.93 61.83 62.34 63.25 63.89

GrandTotal 36127 39208 40233 42034 41973 42447 43776 44258

Percentage 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Source: www.txcindia.com Compendium o f textiles 2002. 03, 04, 05

The above table reveals that the after 1990, the mill sector has been losing to the

decentralized sector both in absolute and relative terms. The share o f the mill sector, which

stood at 11.10 percent in 1990-91. cam e down to 3.56 percent in 2002-03 w hereas that o f

decentralized sector handloom s declined from 18.41 percent to 14.25 percent during the

same period. The decentralized power loom sector has shown a progress in the share from

57.21 percent to 6 1.83 percent in the same period.

Table 3.8: The production pattern o f im portant power-loom centers in the country

No. Power loom Center Fabrics Produced Estimated number of looms

SuratNylon. Polyester/ViscoseFilament Sarees. Dress material & shirting.____________________________

3,50,000

2

TAhm edabad Sheeting, Long cloth Poplin

cotton and Polyester/ Cottonfrom

30.000

Ichalkaranji Cotton dhoti, cam bric and Poplin 55.000

4

T

MaJegaon Cotton grey sarees, poplin Cambric, Polyester/cotton Lungis 80,000

Sholapur Turkish tow els/ cotton Sheeting 55.000

6

7

BhiwandiMulls, cambric, dress M aterial, polyester shirting Viscose saree m aterial/ Polyester viscose suitings

4,50,000

Bhilwara Polyester/V iscose suiting/ Shirting and cotton sheeting__________________

40,000

BurhanpurCotton/grey fabric suitings Poplin. cotton, dhotis/ Polyester Sarees______

40,000

Salem/ErodeCotton grey suiting, dyed/ Checked fabrics mainly From cotton yarn

1,75,000

10 Kanpur Dyed and heavy canvas Dosuti 20,00011 Amritsar Blankets, shawls, lohis Twills. 35.000

Source: Compendium o f textiles 2004-05

Table 3.9: Share of various sectors

Sector Percent share in production2000-01 2006-07

Mill 5 6Power loom 68 63Handloom 9 9Hosiery 16 20Khadi. Wool. Silk 2 2Total 100 100Source: Compendium o f textiles 2004-05

Existing Technology Level In Power-looms

In spite o f the basic strength o f having a strong fiber and production base, the Indian

Textile industry has not been able to increase its share in the global market for textiles and

clothing beyond 2.5% . This is mainly due to outdated technology that is used prim arily in

the weaving and processing sectors. The woeful lack o f modernization is most visible in the

power-loom sector, which accounts for a m ajor portion o f cloth produced in the country.

119

Most o f the looms installed in the country are low speed shuttle looms. While India may

boast o f the largest loomage in the world, the low speed, lack o f quality control, frequent

breakdowns and idle loomage do not permit high capacity utilization and production o f

defect-free quality fabric. Most o f the mills have outlived their utility and normal life. Most

o f the looms in the country that come under the power-loom sector are more than 40 years

old and m ore than 75% o f those are conventional type w ithout any extra attachm ent such as

weft stop motion, warp stop motion, weft pick motion, weft reeler etc. required for

producing fault-free fabric at higher efficiency.

Performance of the power loom sector and its difficulties

The pow er loom industry is going through a difficult phase on account o f various

factors. Exports o f cotton power loom textiles during 2001-2002 am ounted to Rs. 40,125

million as against Rs. 43,353 million in previous year, recording a decline o f 8.4 per cent.

The com petitive position o f the industry has been very much eroded on account o f

the high cost o f raw m aterials and power, inadequate infrastructure, lack o f m odernization,

etc. In the year 2004, cotton yarn prices have moved up by 18 per cent. The increase in

yarn prices will make fabrics more uncom petitive. In view o f the reversionary conditions, it

may not be possible to secure a corresponding increase in fabric prices. This will reduce the

profit m argin o f manufacturers.

The pow er costs is to extent o f 8.87 cents/kwh in India, which is quite high as

com pared to 6.04 cent/kwh in China. As far as the cost o f capital is concerned, the interest

rate on export credit is 8-9 per cent against less than 6 per cent in China.

As regards the cost o f working capital, it works out quite high due to the high

interest rate o f 13-15 per cent. In respect o f capital availed o f for technological up

gradation, interest reim bursem ent to the extent o f five per cent is available in India and the

net interest charged is 8-10 per cent as against 3-4 per cent in China. It is therefore not

surprising that in India only 11,000 shuttle less looms have been installed as against more

than 84,000 shuttle less looms in China.

Apart from internal constraints and shortcom ings, the power loom industry is also

confronted with restrictions on the foreign trade front. Repeated anti dum ping initiatives on

imports o f bed linen from India by the European Union has affected exports. Formation o f

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regional trade block, preferential tariff arrangements, etc. has also restricted the scope for

expansion o f exports to various markets.

Two years ago there was no excise on fabric made on power-looms. Previously, it

was made optional and now compulsory. Com pletion o f the Cenvat chain would benefit

those members o f the value chain who were paying Cenvat but could not claim the benefit.

The effects o f CENVAT are:

❖ Imposition o f 8 per cent excise on power-loom s m eans small operators will have to

maintain records, file returns and register them selves with the Departm ent o f Excise.

❖ Power-loom operators also have to contend with higher input cost, especially o f cotton

and man-made yarns.

❖ They would have to incur other indirect costs that would push up prices o f the final

product, most o f which will be passed on to consum ers.

The issue at hand is the com pletion o f the Cenvat chain that would create a level-

playing field in the textile industry, encourage transparency and healthy com petition.

Textile players, including small units, hitherto outside the excise and tax net. claim that

these are detrimental to the textile trade because they are not conversant with the new

Governm ent rules.

The positive aspects o f these m oves are that they would encourage accountability,

and provide full information on various loom operations. The negative side is that more

small power-loom s would enter the excise net and volum inous records would have to be

maintained. Right now the textile industry is not equipped to com ply with the provisions,

and this had much to do with resistance to change. It is a major hindrance.

However, a real issue affecting small units is the lack o f understanding o f the

implications, and the imposition o f VAT. This was com pounded by the fact that even

G overnm ent officials and tax consultants had not understood the issues. I f VAT and

additional excise duty were levied at the same time, it would am ount to double taxation.

Steps however have been taken to m odernize power looms with a view to producing

polyester- blend fabrics, which have considerable demand in the market. Schemes are

implemented for Governm ent's participation in the share capital o f power loom co-op.

societies for strengthening their share base so as to attract working capital from NABARD.

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Necessary financial assistance has also been provided to few societies for acquiring modern

looms and accessories.

Power loom Sector and Government

Chart 3.1: Structure of cloth industry (handloom and power-loom)

D irector

Assistant D^ector (Government) Assistant Director (Engilieering)

Assistant Working Engineer Co-Director (Accounting)

Co-Director (Cotton Mills) Assistant Director (Handlooms)

Assistant Director Assistant Director (Power-looms)

Special account auditor Assistant Director (Mills)

Weaving-exports Accountant

Assistant Director (Administration And management)

t t J tRegional Regional Regional RegionalC o-director Co-director C o -d irec to r Co-director(Nagpur) (Sholapur) (Aurangabad) (M umbai)

The ministry o f textiles is contem plating a set o f re lie f measures for the power loom

industry in order to prepare it for an increasingly com petitive market.

The Textile Com mittee has launched a National Programm e for capacity building o f

textile small and medium enterprises (SM Es) through cluster-based approach with a view to

strengthening the capability o f Indian textile SM Es to avail them selves o f the ample

opportunities emerging out o f globalize free trade.

Under this programme. 23 clusters in different parts o f the country with

concentration o f textile SM Es have been identified for focused and coordinated intervention

aim ed at capacity building o f the SM Es over a span o f three years with each o f the Regional

Offices o f the Textile Committee, located in the identified cluster being designated as the

C luster Developm ent Office to implement it.

The 23 clusters include Agartala (handloom s). Nau Patna/Bhubaneswar

(handlooms). Coimbatore, Bhawani (power looms & handloom home furnishings),

Sendhwa/Indore (cotton ginning and pressing). Pocham palli/Hyderabad (handlooms).

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Guntur, (cotton ginning and pressing). Ichalkaranji (pow er loom weaving). Sanganer/Jaipur

(hand block printing and apparel m anufacturing). Jodhpur (hand processing). Kannur

(handlooms home furnishings). Kanpur (defense-related textiles). Karur (handloom made-

up and home furnishings). Kolkata (cotton hosiery). Ludhiana (woollen knitwear),

Rajapayalam /M adurai (surgical textiles). Nagari (power loom weaving and processing),

Noida (apparel m anufacturing), Panipat (handloom s and made-ups). Salem (pow er loom

weaving and processing), Sholapur (power looms - tow els and chaddars), Surat (power

loom w eaving and processing), Tirupur (cotton knitwear) and Tarapore/M um abi

(processing).

Various clusters, across the country, have em erged for identifiable activities over a

span o f period. For instance, the power loom activity is concentrated in clusters such as

Surat, Bhiwandi, Ichalkaranji, Malegaon, Erode, Salem and Burhanpur; the knitwear

activity has clustered in and around Ludhiana and Tirupur; Kannur, Karur and Panipat have

emerged as home furnishing clusters: Bangalore. Chennai and Delhi are em erging as

apparel m anufacturing clusters; G untur and Indore are the known clusters for cotton ginning

and pressing activity; Coim batore and M adurai are known cotton-spinning clusters.

There are three m ajor partners/stakeholders in the developm ent strategy designed at

textile SM Es viz., support service institutions including governm ent organizations, policy

makers and business developm ent services providers, (ii) SM Es them selves and related

enterprises and (iii) industry associations o f SMEs. There had been no collective strategy

entailing all these three actors and even if there was one, it was more reactive than

proactive, adding that lack o f vision, focus and coordination. The m ultiplicity o f

organizations further com pounds the problem o f coordination with most o f these players

working in isolation without aiming at synergising their endeavors.

Power loom Service Centers in India:

Out o f 44 power loom Service Centers, 13 Power-loom Service Centers (PSCs) are

functioning under the office o f the Textile C om m issioner and 31 Power-loom Service

Centers under the Textile Research Associations. The PSCs have, been providing services

to the weavers free o f charge. A system o f charging a nom inal fee for some o f the services

was introduced with effect from 1.3.1995.

These Power loom Service Centers are providing training, consultancy, design

developm ent support, textile testing and information dissem ination in the country. Out o f

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these, twenty-one Power loom Service Centers are equipped with modern looms,

accessories and teaching aids at the cost o f Rs 16 crores. Fourteen laboratories o f PSC 's

have been upgraded at the cost o f Rs II crores for the benefit o f the weavers. M oreover, for

fostering value addition through new designs, motifs and patterns, seventeen Com puter

A ided Design Centers in the various textile centers have been sanctioned.

Activities of the Power-loom Service Centers

The objectives o f the Power-loom Service Centers are broad-based as below

(a) To impart practical training and skill to power-loom weavers and those who are

interested in taking to this vocation to help them acquire the requisite knowledge and

skill in weaving to improve their efficiency and skill in producing better quality

clothes and in stepping up their productivity;

(b) To impart training in the various aspects o f loom working, loom maintenance and

tuning, loom repairs and servicing;

(c) To dissem inate knowledge and techniques to power-loom weavers by visiting

groups o f such weavers on certain fixed days o f every month, in increasing

productivity and efficiency, reducing w astage and m inim izing cloth dam age at

minimum possible costs;

(d) To guide the power-loom weavers about m odernization, the m anner in which they

may go about it and the which agencies to approach for financial assistance for it;

(e) To carry out an annual survey to collect and com pile statistical inform ation on the

num ber o f power-loom units and looms and also on the num ber o f power-loom s

modernized and to make an assessm ent o f the effect o f such modernization on

production, productivity and quality o f the products o f the units;

(f) To guide the power-loom weavers in m arketing their products, including availing

them selves o f the export opportunities;

(g) To provide testing facilities to the power-loom sector;

(h) To conduct Sem inars/W orkshops and organize exhibitions for the benefit o f the

power-loom sector;

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(IJ To co-ordinate the power-loom developm ent activities with the State Governm ent

Authorities;

{j| To act as an agent to transmit the problem s o f the power-loom sector to appropriate

quarters for solving them;

(k) To provide technical consultation facility by rendering technical service; and

To advise and guide power-loom units in design developm ent and diversification o f

activities so as to facilitate their achieving economy in the scale o f operations.

Computer Aided Design Centers;

To facilitate the creation o f new designs, improve the designs and production in the

fast changing global tradition in fashion, the C om puter Aided Design (CAD) system plays a

vital role. The fabric simulation technique available with this system helps create fabric like

appearance on the com puter screen without actually going in for various colour

com binations and weaving o f sample clothe. The sim ulated fabric design could be sent for

approval o f the buyer/consum er before going in for a large-scale production, thereby saving

time and money. This can also be stored, retrieved and also altered very quickly depending

upon the design and size. Manual design and card punching takes, more than 15 days,

whereas this system reduces the time to a day or two. The initial cost o f CAD system

though high, pays o ff in the long run as CAD replaces the time consum ing and labour

intensive manual card punching method. C om petitiveness also increases as CAD enables

them to respond quickly to the changing fashion.

In order to facilitate the creation o f new' designs, improvement o f the designs and

production in the fast changing global trends in fashion. 17 Com puter Aided Design (CAD)

Centers have been set up at Coimbatore. Karur. Kom arapalayam and Somanur (Tamil

Nadu). Surat and Ahm edabad (Gujarat), Solapur, Icchalkaranji, Bhiwandi and M umbai

(M aharashtra), Bhilw ara (Rajasthan), Ghaziabad (U.P.). Bangalore and Dodballapur

(Karnataka), Burhanpur and Indore (M .P.), and Panipat (Haryana). The Governm ent

provides a recurring grant o f Rs. 6.75 lakhs per annum to each center, w hich include

salaries o f staff. Each CAD Center is expected to be se lf sufficient with regard to recurring

expenditure within a period o f five years. Out o f 17 CAD Centers, seven Centers have

alread\ com pleted the norm period o f 5 years. Rs. 2 crores has been provided by the

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Governm ent to continue to fund the CAD Centers, which have not com pleted the five-year

norm period.

New Initiatives To Modernize Power Loom Sector

In view o f the removal o f Quantitative Restrictions (Q.R.) from 1st January 2005,

there is a need to work in a coordinated and focused m anner to build a modern power loom

industry, which will be able to face com petition from domestic and export markets.

Governm ent is making efforts to m ake yarn available at reasonable price to the power loom

weavers at M alegaon, Ichalkaranji and Solapur through jo in t efforts o f M aharashtra State

Power loom Corporation and N.T.C. North and South M aharashtra. A new scheme is being

envisaged for making available indigenous semi auto, auto-shuttle less looms and allied

m achinery at a subsidized rate to the power loom weavers who want to m odernize but

cannot avail bank finance. Besides, autom atic and shuttle less looms have been exempted

from excise duty and the import duty on shuttle less looms has been reduced. In order to

boost export and formulate innovative m arketing strategies, weaving, processing and

garment industry have been identified as the thrust areas. A scheme for Integrated Apparel

Parks has been started with the Central Governm ent support. Two such Parks have been

sanctioned - one in Surat, Gujarat and the other in T roica City, UP. Five others are under

active consideration.

Tenth Plan and the Power loom Sector: Targets and Achievements

Table 3.10: Per Capita Availability of cloth M illion Sq. Mtr.

Item 2002-03 2003-04 2004-05 2005-06 2006-07

10*'’ plan projections 24.69 25.48 26.29 27.13 28.00

Achievem ents 31.37 31.01 31.89 — -

Source: C om p en diu m o f texti les 2 0 0 4 -0 5

The Tenth five-year Plan (2002-2007) articulates the G overnm ent's developm ent

strategy. The Plan sets a target o f 8.0% annual growth, especially in em ploym ent-intensive

sectors, to ensure that there is rapid and w ell-distributed growth o f income to sustain the

pace o f poverty reduction accom plished during the past decade. The Plan underscores that

developm ent cannot be measured in term s o f increased GDP or per capita incom e alone, but

should take into account human well-being, i.e.. the reduction in both "incom e poverty" and

"human poverty". Consequently, the Plan sets out specific m onitorable targets for a few key

indicators o f human developm ent.

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The lO"' Plan envisages up gradation o f the power-loom sector so as to improve the

quality o f production and productivity, at the same time providing welfare measures for

ensuring a social safety net to the povver-loom workers and weavers. Taking into

consideration the W TO requirem ents and urgency for technological up gradation o f the

sector, the priority to the sector has been up-scaled. The Planning Com mission has allocated

Rs.60 crores during the lO"̂ Plan period, and the revised annual budget outlay for the year

2002 - 03 is Rs.691.46 lakhs. The main objectives o f the Power-loom Schem es are to make

investment in the sector attractive by decreasing the size o f capital investment required; to

increase productivity thereby bringing about cost com petitiveness; to improve significantly

the quality o f fabric - defect-free fabric as the essential standard and com patibility with

world standards as the desirable criterion; to continue to provide avenues o f em ploym ent; to

provide a social safety net for the workers; and to improve export perform ance. The m ajor

scheme in the 10“̂ Plan will be strengthening and modernization o f the Power-loom Service

Centers (PSCs). The M inistry o f Textiles had set up a Com mittee to review o f the funding,

functioning and m anagem ent o f the PSCs. The Governm ent has accepted the

recom m endations o f the Com m ittee. Schem e-wise break up o f the lO"’ Plan outlays are;

Table 3.11: Tenth Plan Outlay for the Power loom Sector (Rs. in lakhs)

Name of scheme XPIan(2002-07)

Allocation Annual Plan (2002-03)

Allocation for 2002-03

M odernization and strengthening O fP S C s 5500 850 595.00

Support to com puter-aided Design Centers

200 200 74.11

W elfare o f workers 300 150 22.35Total 6000 1200 691.46

Source: C om p en d iu m o f texti les 2 0 0 4 - 0 5

Present Policy Relating to Installation of Power looms

In term s o f Textile (Developm ent & Regulation) Order, 1993. every person on

installing the power-loom s in the SSI sector should submit an Information M emorandum in

a prescribed form to an officer, notified in this behalf by the State G overnm ent within

whose territory the power-loom has been installed, with a copy thereof to the Textile

Com missioner, M umbai, and every person on installing any power-loom in non-SSI (other

than units requiring Industrial Licenses), should file an Information M emorandum to the

Textile Com missioner. M umbai, within 30 days o f installation for obtaining an

acknow ledgement thereof.

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The governm ent deals with the issuance o f memorandum to the New Investors

Entitlement (NIE) for export o f garm ents; M anufacturer Exporters Entitlement (M EE) for

export o f yarn, fabric and made ups. Povver-loom Exporters Entitlem ent (PEE) quota for

exports for power-loom products m anufactured in the small scale Decentralized sectors and

scrutiny o f PEE quota applications.

The Textile Com missioner is the Chairm an o f the Enforcem ent Com mittee (E.C.)

constituted under quota policy, and s ta ff com m ittee o f AEPC, ISEPC and PDEXCIL. The

Enforcem ent Com m ittee examines cases o f m is-declaration and fraudulent action on the

part o f exporters for appropriate debarm ent and legal action. Senior officers’ appellate

com m ittee constituted by the Textile Com m issioner hears the appeals on the forfeiture o f

BG/EM D for non-fulfillm ent o f export obligation.

Other developmental activities

In addition to the functions o f the Textile C om m issioner's O ffice enum erative

above, the following activities/aspects will be worth noting. This office provides all

technical, fiscal, trade and production related inputs to the M inistries o f Textiles, Industry,

Com m erce and Finance as and when required.

The Textile Com m issioner’s office is being now fully involved with the

coordination am ong the TRAs. com pilation o f their research results, dissem ination thereof

to the industry and generally assisting the TRA s in upgrading their research facilities and

problem solving capabilities.

All India Power Loom Board

The A ll-India Power-loom Board was first constituted as an Advisory Body in

Novem ber 1981. This Board was reconstituted on 21-12-2000 for a period o f two years. It

has representatives o f the Central and State Govts. Power-loom Federation / Association o f

Power-loom industry, as its members and is headed by the Union M inister o f Textiles as the

Chairm an. The Union Secretary (Textiles) and the Textile C om m issioner are the Vice

Chairm an and M em ber Secretary respectively o f the AIPB. The Board advises the

(jovernm ent on the power-loom related matters.

Export Promotion

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Power loom sector and Value Added Tax (VAT)

Powerlooms across the country were shut down on 1'’* April 2003 in protest against

the proposal in the Union Budget to levy 10 per cent Central Value Added Tax (CENVAT)

on "grey" or unfinished fabric, This duty is over and above the excise duty payable on yarn

and finished cloth. The Central government reasons that the grey fabric is the only variety in

the CENVA T chain that is not taxed and will now be brought under the new Value Added

Tax (VAT) regime. Besides, the government believes that it is time the prosperous power

loom owners came under the excise registration regulations and the tax net. The governm ent

believes that they need to become more accountable.

As in the case o f other traditional m anufacturing systems, cotton textile traders do

not keep books on transactions and trade. Extending the C EN V A T chain to all the important

stages in the fabric-m aking process is expected to ensure that accounts are rendered and

nobody evades tax.

But the loom owners argue that the highly fragm ented nature o f the industry, its

close linkages with agriculture and the vast rural em ploym ent potential it holds out, justify

the sector being left out o f CEN VAT cover.

However, as a result o f hectic lobbying by power loom owners' federations across

the country, the Central government suspended the imposition o f CENVAT on grey fabric.

In early May, Finance M inister announced that power looms that have an annual turnover o f

up to Rs.20 lakhs would be exempted from CENVAT. Further, the government has relaxed

the precondition o f registration for traders o f fabrics and yarns. M anufacturers in the textile

sector are allowed to pay excise duty first without obtaining registration.

But power loom owners are hardly jub ilant over this. The exemption will benefit

only those who have less than 10 power looms. With 10 looms a turnover o f Rs.20 lakhs in

four months is possible. The m ajority o f owners will not get any exemption because above

80 per cent o f them operate more than 20 looms.

The Power loom sector has been particularly troubled by the huge production losses it

suffers on account o f the high cost and frequent disruptions o f power, with the power tariff

in same states as high as Rs 3.70 per unit. Decrying also the excessive sales tax excise and

octrio levies inhilating trade, pdexil laments that the com posite mills, which manufacture

cotton yarn as use it internally, are exem pt from sales tax w hile it is imposed by various

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states on Power loom for this their main raw material as well as on raw' cotton, chemicals,

dyes, packing materials and the like, adding to the overall production cost, M oreover this

levy is not refundable even on the export o f the finished product rendering them

uncom petitive in the overseas m arket. Similarly, octroi levied on raw material transported

to production centers is also not refunded at the time o f export. There is disparity in the

excise refund granted in the form o f drawbacks at the time o f exports o f the finished

products. For instance duty on unbleached fabrics is 8 percent, while the drawback rate is

mere 5.5 percent.

However exemption o f excise duty on autom atic shuttle looms and reduced custom s

duty on shuttle looms and processing machinery. This concession should have been

extended to the other textile machinery also as the Power loom industry requires various

types o f looms and other machinery for up gradation. However the additional 15 percent

depreciation provided on new plant and machinery in a new unit or for expansion o f the

existing one will encourage capacity expansion.

2001-2002 budgets extended the 16 percent aggregate duty applicable to cotton and man-

m ade-fabrics to. The present budget leaves this levy untouched, w hist reducing the other

aggregate duty to 12 percent has now widened to 9 percent.

There should be unbroken CENVA T chain through imposed duty on hank yarn and

withdrawal o f all exemptions. It explained that breaking the CEN VA T chain at the grey

fabric stage assisted duty evasion on both yarn and processed fabrics, subjecting grey fabric

to duty would facilitate withdrawal o f deemed CENVAT credit at the stages o f process

houses and garments and weavers would actually see their incomes well through paying

excise duty.

There is key concern o f the sector in the share o f the Power loom exporters entitlem ent

(PEE) at 10 percent o f the overall textile export quota, undue protection accorded to the

handloom sector including by way o f the handloom Reservation O rder (HRO). that

disadvantages the Power loom sector. Power loom sector is not accorded any special

preference as granted to the handloom industry by way o f procurem ent o f raw material,

finance and marketing.

Though the rate o f interest o f the Prime Lending Rate (PLR) for export credit is

lower than the commercial rates, sm all-scale Power loom are not in position to take

advantage. There are limitations o f power looms in accessing credits; with banks hesitant to

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bank non-them as many o f them have defaulted on repa\m ents in the past. This has

impeded m odernization and up gradations. As the Reserve Bank refinance part o f the export

credit extended by banks, the latter should have no difficulty in providing credits to the

Power loom for export production, perhaps at a rate o f interest, especially for export

production.

Power loom co-operative societies in M alegaon looms across the country were shut

down on April 1,2003, in protest against the proposal in the Union Budget to levy 10 per

cent Central Value Added Tax (CENVAT) on "grey" or unfinished fabric, which is

M alegaon specialty. This duty is over and above the excise duty payable on yarn and

finished cloth. The Central government reasons that the grey fabric is the only variety in the

CENVAT chain that is not taxed and will now be brought under the new Value Added Tax

(VAT) regime. Besides, the government believes that it is time the prosperous pow er loom

owners came under the excise registration regulations and the tax net. Th^

believes that they need to become more accountable.

As in the case o f other traditional m anufacturing systems, cotton te i^ ^ i^ ^ a e r s do

not keep books on transactions and trade. Extending the CENVAT chain to all the important

stages in the fabric-m aking process is expected to ensure that accounts are rendered and

nobody evades tax. M alegaon accounts for about 200 m illion m eters o f grey fabric a week.

At Rs.5 a meter on an average, the weekly turnover is Rs. 100 crores. Not a paisa is paid as

income tax on this.

But the loom owners argue that the highly fragmented nature o f the industry, its

close linkages with agriculture and the vast rural em ploym ent potential it holds out, justify

the sector being left out o f CENVAT cover. According to Sandeep Jain, executive director.

Power loom Developm ent and Export Promotion Council (PDEXCIL). there are historical

reasons for the low rates o f excise duty charged on textile yarn and the rationale needs to be

retained in order that looms may continue to exist.

However, as a result o f hectic lobbying by pow er loom owners' federations across

the country, the Central governm ent has suspended the imposition o f CENVAT on grey

fabric. In early M ay 2004, Finance M inister announced that power looms that have an

annual turnover o f up to Rs.20 lakhs would be exempted from CENVAT. Further, the

government has relaxed the precondition o f registration for traders o f fabrics and yarns.

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M anufacturers in the textile sector are allowed to pay excise duty first without obtaining

registration.

But power loom owners are hardly Jubilant over this. The exemption will benefit

only those who have less than 10 power looms. With 10 looms they touch a turnover o f

Rs.20 lakhs in four months. The majority o f ow ners w ill not get any exem ption because

above 80 per cent o f the owners in M alegaon operate more than 20 looms.

M alegaon growth into a thriving pow er loom town began with the closure o f textile

mills in M umbai and Gujarat over the past two decades. W hile pow er loom sheds

m ushroom ed in M alegaon. Ichalkaranji, Solarpur and M adhavpur. it was M alegaon

proxim ity to M um bai's textile trading market and its already established handloom mills

that made it a viable area for production. In fact, several well-known mill brands now get

most o f their cloth from looms in M alegaon.

The textile trade in these centers com bines the practices o f a sm all-scale industry

and traditional traders. This is one reason why the concept o f taxation is so alien here.

However, over the years this once-bustling power loom town has seen rapid decline,

prim arily owing to the Central governm ent’s liberalization policies.

By lowering imports duties, governm ent has flooded the market with cheap fabric

from C hina and Hong Kong, thereby jeopardizing not only India’s fabric production but

increasing exports. M alegaon. being a central point o f grey fabric production, has been hit

hard by the new policies. If governm ent imposes taxes on this sector o f the industry, the

costs will go up and power looms will be unable to offer com petitive prices in the export

market. As it is. India’s exports in the world market are ju s t 2 per cent in textiles and

apparel. Against China's 20 per cent and Hong Kong’s 33 per cent, our presence is

negligible. Even Bangladesh exports more than India. Something is terribly wrong with the

industrial policy. There are no labour reform s and too much taxation.

The power loom industry in M alegaon has for som e tim e now been in a precarious

situation ow ing to fluctuating dem and for fabric, power problem s and com m unal trouble.

M alegaon workers had to grab and hold on to any jo b at any wage for they never know

when a loom will close down.

A governm ent ruling in 1971 set down minimum wages for workers, but rarely are

they given the stipulated monthly salary ot approxim ately Rs.3. 000. Loom owners have

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exploited a situation where there is no dearth o f labour to pay well below the minimum

wage. Such is the desperation in M alegaon that you can pick up anyone o ff the road and he

is w illing to work in the loom for any amount.

The prices of mill made and power loom cloth

The market prices o f power-loom grey cloth for cotton and synthetic increased by

8.3 percent and 9.2 percent in March 2003 as com pared to March 2002. The prices o f

blended cloth remained at the same level. During the five-year period, that is M arch 1998 to

March 2003, prices o f cotton cloth increased by 27.9 percent, blended cloth by 0.9 percent

while synthetic cloth declined by 0.7 percent. In term s o f com pounded rate o f growth

(CARG), the prices o f power-loom cotton and blended cloth increased by 5.1 percent

andO.2 percent respectively during the last five years. Synthetic cloth declined by 0.2

percent during the same period.

Period

Mill Cloth Power-loom Cloth (Grey)Cotton Cloth Blended Cloth Synthetic Cloth Market Prices

Ex-mill Retail Ex-mill Retail Ex-mill Retail Cotton

ClothBlendedCloth

Synthetic

Cloth1998 3 1 .9 8 4 6 .3 9 4 3 .0 4 66.51 5 1 .47 8 2 .03 12,39 17.00 9 .6 61999 3 2 .3 0 4 7 .0 8 4 3 .1 0 6 5 .8 2 5 2 .30 8 2 .3 7 14,56 17.15 7 .4 92 0 0 0 3 2 .4 7 4 5 .8 0 4 4 .6 7 6 4 .7 9 5 2 .6 7 76.91 14.79 17.15 8.632001 3 1 ,6 8 4 5 .3 2 4 4 .8 7 6 3 .8 7 51 .35 7 5 .6 3 15.22 17.15 8.912 0 0 2 3 3 .15 49.71 4 6 .2 0 6 8 .8 8 51 .35 75 .63 14.63 17.15 8 ,7820 0 3 3 4 .3 7 5 0 .2 0 4 6 .8 9 6 8 .5 2 54 .30 7 6 ,2 7 15.85 17.15 9 .5 9

N ote: Retail prices inclusive o f Hxcisc dun ' and sales rax.Source: Price reports from the mills and Pow er-loom cloth- I'ecoya trend

COTTON FABRICS MADE UPS TOTAL %

YEAR Sq.mtrs % Rs. % Rs. %

1 9 9 8 - 9 9 1 4 6 1 . 2 0 1 1 .0 5 2 2 9 4 1 . 6 5 4 . 7 2 2 6 1 5 2 . 1 5 1 2 .2 9 4 9 0 9 3 . 8 0 8 .6 2

1 9 9 7 - 9 81 3 1 5 . 8 0 3 .5 3 2 1 9 0 8 . 2 5 9 .4 3 2 3 2 9 0 . 6 8 1 6 .0 6 4 5 1 9 8 . 9 3 1 2 .7 5

1 9 9 6 - 9 71 2 7 0 . 9 4 2 7 . 2 6 2 0 0 2 0 . 9 7 2 0 . 7 9 2 0 0 6 8 . 4 8 2 4 . 6 5 4 0 0 8 9 . 4 5 2 2 . 6 9

1 9 9 5 - 9 69 9 8 . 6 9 5 . 2 0 1 6 5 7 4 . 9 8 18 .01 1 6 1 0 0 . 0 5 1 8 . 1 0 3 2 6 7 5 . 0 3 1 8 .0 5

1 9 9 4 - 9 59 4 9 . 2 8 3 0 . 8 8 1 4 0 4 5 . 6 4 5 0 . 8 7 1 3 6 3 2 . 4 7 4 4 . 9 8 2 7 6 7 8 . 1 1 4 7 .9 1

1 9 9 3 - 9 47 2 5 . 2 9 - 9 3 0 9 . 4 6 - 9 4 0 3 . 2 6 - 1 8 7 1 2 . 7 2 -

Source: Office o f Pedexil. Mumbai.

133

M aharashtra, Shivaji’s country, is a rugged land befitting people with a long history

o f velour and artistic skill. M aharashtra is the third largest State in India both in area and

population. The State is bounded by the Arabian Sea in the west. G ujarat in the northwest.

M adhya Pradesh in the north, Andhra Pradesh in the southeast, and Karnataka and Goa in

the south. H istorically, M aharashtra falls into three regions; western M aharashtra, Vidarbha,

and M arathwada. The State o f M aharashtra forms a huge irregular triangle with its base on

the west coast o f India, over looking the Arabian Sea. The Central Indian tableland merges

with undulating hill ranges, which grow into the majestic W estern Ghats before swooping

down to palm- fringed beaches. Caves and tem ples with artistic em bellishments o f

unim aginable beauty mark the land and attest to the skill o f a cultured people. Today, this

agricultural land is one o f the m ajor industrial States o f the country. A bout 70% o f the

people in M aharashtra depend on agriculture. The principal food crops are rice, wheat,

jaw ar. bajra, and pulse. The important cash crops are cotton, sugarcane, groundnut and

tobacco. With its key location linking the northern and southern parts o f the country,

M aharashtra is India's Industrial and economic back bone and provides opportunity galore

for enterprising entrepreneurs. Although the State accounts for 9.2% o f the total population

o f the country, it shares about 11% o f industrial units, over 17% o f labour, about 16% o f

investment, and 23% o f the value o f the industrial output.

Part II

Power loom Sector in Maharashtra

Table 3.14: Maharas itra at a glance IItems 2000-01 2001-02

1. A) Revenue Receipts 12.26.095 12.702.33b) Subsidy for State Govt. 373.25 00Total receipts (a+b) 11,887.70 12.702.33

2. A) Expenditure 14.003.47 13.549.46b) Less expenses

Capitalized1) Interest & Finan.charges 161.64 101.12II) O ther expenses 205.79 220.25

Total (I+II) 367.43 321.37c) O ther Expenses 233.65 204.23

Total Expenses ((a-b+c) 13,869.69 13,432.323. A) Profit before Tax -1981.99 -729.99

B) Prior period charges -859.52 190.53Deficit -2.842.51 -539.46

Ref. I 'x-onormc Sun'ev o f M aharashtra, 21102 - 03

Directorate of Economics & Statistics, Planning Departnnent, Govt, of Maharashtra, Mumbai.

134

Table 3.15: Maharashtra At A Glance (Selected items) IIItem 1960-61 1970-71 1980-81 1990-91 2001-02 *

1) Geographical AreaThousand Sq.Km. 306 308 308 308 308

2) Administrative SetupRevenue Divisions 4 4 6 6 6District 26 26 28 31 35

Tahesils 229 235 301 303 353Inhabited Villages 35,851 35.778 39.354 40.412 43.412Un-inhabited Villages 3,016 2.883 2.479 2.613 N.A.Towns 266 289 I 307 336 378

3) Population as per census (In thousands)Total 39,554 50.412 62,784 79,937 96,752Male 20,429 26,116 31.415 40.826 50,334Female 19,125 24.296 30.369 38.111 46,418Rural 28,391 34,701 40,791 48,395 55,732Urban 11,163 15,711 21,993 30.542 41,020Scheduled caste 2,227 3,177 4,480 8.758 N.A.Scheduled Tribe 2.397 3.841 5.772 7,318 N.A.Density o f Population per Sq.Km 129 164 204 257 314Literacy rate 35-1 45-8 57-1 64-9 77-3Sex Ratio 936 930 937 934 922% O f Urban Population 28 31 35 38 42

4) Electricity (Mil ion K WF [)Total generation 3.268 9.134 18,751 37.311 64.138Total Consumption 2,920 7.650 14,034 30.775 46.338Indus. Consumption 1.853 5.312 8.130 14.706 17,435Agricultural Consumption 15 356 1.723 6,604 8,730Domestic Consum ption 260 732 1.779 5 11.901

5’ Co-operationPrimary Agricultural Co-operatives. 21,400 20,420 18,577 19,565 20,674Membership (’000) 2,170 3,794 5,416 7,942 10,340Total No. Of Co-operatives 31,565 42,597 60,747 1,04,620 1,65,789Total Membership {'000) 4,191 8,581 14,783 26,903 43,939Working Capital (In crores) 291 1,490 5,210 24,283 1,41,004

Ref, E conom ic S u n t'V o f M aharashtm , 2002 - 03

The above two tables, M aharashtra at a glance I and II highlight the following details.

The num bers o f districts in M aharashtra have increased from 26 to 35 and the

number o f tow ns from 268 to 378 from 1960 to 2001. The number o f towns and

urban population has been increasing continuously very fast.

From 1960 to 2000. in a span o f fort\ >ears. its population has increased by 2.5

times and reached to 96,752 lakhs

135

*> In M aharashtra urbanization is at a faster speed. The rural population has increased

from 28.391 thousand to 55.732 thousand (96.30 percent), whereas the urban

population has gone up to 41.020 thousand from a low o f 11.163 thousand. It

records an increase o f 267.46 percent.

❖ Literacy ratio has gone up from 35.1 percent to 77.3 p ercen t which m eans an

increase o f 1.2 times.

❖ M aharashtra has more electricity generation than it's consum ption requirements. It

means it has surplus electricity.

*1* The num bers o f co-operative societies have increased from 31,565 to 1.65.789, an

increase o f 4.25 times in a span o f forty ears.

♦♦♦ Industrial cities population is 5.95 percent o f the total population o f the state.

Chart 3.2: Major Power loom Centers in Maharshtra

Others

Nagpur

Solapur

Ichalkaranji

Malegaon Rest of India

Bhiwandi□ Rest of India @ Bhiwandi □ Malegaon □ Ichalkaranji ■ Solapur O Nagpur 0 Others

Source: Bombav Textile Research Association. Mumbai.

Table 3.16: Share of Industry Groups In Gross Output In M aharashtra (2000-01)

Name of the Industry Percentage Industry PercentageChem icals 17.60% Basic Metals 5.80%Food products & beverages 16.10% M otor Vehicles 4.70%Refined Petroleum 12.90% Furniture 3.30%M achines & Engineering. 8.00% Others 24.70%Textiles 6.90% TOTAL 100.00%

Source; Ref. Economic Survey o f Maharashtra. 2002 - 0.i

In M aharashtra 5"̂ top industry is te.xtile with a share o f 6.90 percent.

136

Table 3.17: Growth of Textile Industry in MaharashtraItem s U nit 1998-99 1999-00 2000-01 2001-02 2002 -03

C otton/IM an-m ade F ibre T ex tile M ills

N o 201 205 207 207 209

Spinning Mills (N on-SSI) N o 124 128 130 129 131Composite Mills (N on-S S I) N o 77 77 77 78 78Spinning Mills (SSI) N o 11 11 12 15 15Exclusive W eaving Mills (N on-SSI)

N o 68 69 69 70 71

100% Export oriented Units N o 17 18 17 18 19Power loom units No. 175.135 178,402 183,459 183,837 188,268Man-made fibre units No. 5 5 5 5 5Man-made filament yarn units

No. 9 9 9 9 9

No. o f power processing units

No. 249 N A NA N A N A

C a p a c ity Insta lledSpindles (SSI+N on-SSI) N o. 000 5043 5166 5212 5218 5173Rotors (S S I+ N o n -S S l) No. 43 86 0 44364 45972 46572 47 21 2Looms -Organized Sector No. 42317 41732 41203 41 22 7 41 50 4N o. o f P o w er loom s No. 672102 692603 707145 709438 730945Man-made Fibres Mn.Kg 246.75 246 .75 244 .95 244 .95 246.75Man-made fi lament Mn.Kg 281.30 281 .30 306 .30 302 .70 325 .80

P rod u ction o f "ibresRaw cotton LakhBales 26.50 38 .00 20 .50 33 .50 26 .00Man-made fibres Kg. 000 22 63 60 236971 2 53959 252427 2 63 69 9

W o rk ers on rollSpinning Mills and C omposite Mills (N on -S S I)

N o I76 9I8 178782 180541 180926 180682

Spinning Mills (SSI) N o 723 723 854 1084 lOIOExclusive W eaving Mills (N on-SSI)

N o 8199 5794 5982 5997 61 99

100% Export oriented Units N o 5844 6885 7075 7630 7853C otton co n su m p tio n by M ills

Non-SSI Kg. 000 340442 336132 329798 308661 291225

SSI Kg. 000 1992 3545 j 4275 5348 5818

P rod u ction o f Y arnCotton Yarn Kg. 000 268386 2 72069 271961 251325 234901

Blended Yam Kg. 000 79038 81434 75332 66 62 7 6 28 06

100% NOn-cotton Y am Kg. 000 6977 9026 14498 20640 26413

T ota l S p un Y arn Kg. 000 354401 36 25 29 361791 3 38592 3 24 12 0

Man-made fi lament Y am Kg. 000 270728 2 79338 293803 308254 3 52 51 7

Sourcc: ( 'om pend ium o f Textiles. 2003

The growth o f textiles in M aharashtra has not been significant. All three sectors o f

textiles have grown slightly. M aharashtra has the highest num ber o f power looms in India.

The number o f pow er looms has increased from 6.72.102 in 1998-99 to 7.30.945 showing

an increase o f only 8.75 percent in a span o f 4 years. This is a very slow growth rate o f

power looms in the state.

137

Maharashtra Government’s steps for the power looms

Revival of Power-looms With Foreign Assistance

G overnm ent has launched the Technology M ission on Cotton (TM C) to im prove the

productivity and quality o f cotton, ensuring the availability o f quality cotton.

❖ For modernization o f textile industry, the Technology Up gradation fund Scheme (TUFS) has been launched w .e .f 1.4.99 for a period o f 5 years.

❖ A chain o f textile testing laboratories has been set up to held industry in assessing the quality o f textiles.

<♦ For import o f capital goods, the Export Promotion o f capital G oods (EPCG) scheme has been sim plified.

❖ Import o f cotton is also under OGL to help industry to import requisite quality o f raw cotton.

❖ Efforts are on to rationalize fiscal duty structure in consultation with industry and other concerned organizations.

❖ Initiated measures for application o f information technology in the textile trade and industry.

The Power-loom specific schemes - M odernization o f Power-loom Service Centers

(PSCs); Up gradation o f PSC labs; Group Insurance Schem e for power-loom workers;

setting up o f Com puter Aided Design Centers and enhancem ent o f Power-loom Exporters

Entitlement quota from 10% to 15% are under operation.

Governm ent has announced the new National Textile Policy - 2000. The main

objectives o f the new Policy are to facilitate the textile industry to attain a pre-em inent

global standing in the manufacture and export o f clothing; to equip the Industry to withstand

pressures o f import penetration and maintain a dom inant presence in the domestic market;

to liberalize controls and regulations so that the different segm ents o f the textile industry are

enabled to perform in a greater com petitive environment.

Rs 175 crores Package for Power-looms

In an attem pt to boost the power-loom production in the state, the governm ent o f

M aharashtra announced Rs 175-crore revival package in 2002. This package will attract

more investm ent in the state, and also strengthen the existing units, the majority o f which

are facing higher cost o f production and high debt. Under the package, the government has

announced a live per cent interest subsidv on capital purchases, 50 per cent remittal (by

138

state governm ent) o f outstanding loans (to the lending agencies), and restructuring o f the

power rates. Here are over 17 lai^hs power-loom s across the country. O f this, there are

around 7.5 lakhs are in M aharashtra alone. The package should benefit power-loom clusters

located in Solapur, Bhiwandi. M alegaon, Ichalkaranji and N agpur region.

The state package is aimed at helping the local power-loom s units. If implemented,

state power-loom s will be strengthened, and will help them m ake their production cost-

effective Power tariffs too will directly help the sta te 's power-loom s units to become more

com petitive as com pared to the dom estic as well the international market. The package will

also attract new investm ents in the state. The package includes power ta riff o f Rs 1 per unit,

against Rs 1.86 per unit charged. As per the revival package, the state governm ent will

offer a five per cent interest subsidy on capital loans for all power-loom s. semi-auto, auto,

jacquards, shuttle-less, terry towel looms and imported ones up to a capital investment o f Rs

1 crores. Existing units too will be eligible to claim the 5 per cent interest subsidy under the

Central governm ent's existing Technology Up gradation Fund (TUFs) scheme.

Furthermore. 50 per cent o f the unpaid debt or the N on-Perform ing Assets (NPA) o f

existing power-loom units will be paid by the governm ent directly to the lending agencies

and the balance 50 per cent will have to be paid by the units over a span o f five years.

However, even the balance 50 per cent am ount will also sim ultaneously be eligible for the

five per cent subsidy from the state as well as central government. Add to that, capital

investm ent subsidy at around 30-35 per cent depending on the zone has also been extended.

It is now up to the power-loom industry how they react with the state initiatives and

m ake effort to become 'pow erfu l' in real terms. It is now up to the power-loom weavers to

avail the benefits and show results.

Reaction by the power loom owners sector

The power loom sector, did not take any significant advantage o f the scheme despite

a num ber o f relaxations like 5% rebate on interest reim bursem ent under TUFs, an offer o f

direct Capital Credit linked subsidy, exemption o f 16% excise duty on autom atic looms etc.

The problem appeared to be because o f inadequate book keeping by the weavers and the

reluctance o f the bankers to fund small projects. The concessions to the textile industry

include reduction in excise duty from 10 to five per cent on predominantly hand processed

fabrics on which a few specified finishing processes are carried out with power or steam for

pure cotton fabrics and from 10 to eight per cent for other fabrics.

139

History of power weaving in Malegaon

Power weaving in Malegaon

The pow er loom industry has a long history o f its developm ent and progress. In the

year 1857 due to w ar o f the independence (M utiny) in the North part o f India, some

persons had m igrated from U.P. and settled down at the bank o f M aosam river due to

availability o f am ple water, some o f the them continued their flocking to the west and

south end and settled down to Bombay. Bhiwandi, and Dhulia as well. As their main

occupation was weaving hence they had established the instrument for weaving the cloth,

due to this reason we find weavers in Dhulia. Bhinwandi as well as in Bombay

particularly in M adanpura area. The weaving process at that time was on primary stage

therefore they used handlooms for m anufacturing the cloth. The handloom industry at that

time was com m only adopted and nobody desired to install the Power loom. Even the

com m ission agent being the m ajor participant discouraged for such installation by

refusing to sell the sarees produced on Power loom. At that time the sim ple design o f the

coloured sarees were produced. They used old production technique and method for dying

sizing and w arping the beams. The production was also on a small scale covering a

limited area o f M aharashtra. All transactions were com pletely on cash basis. They

enjoyed the prosperity o f war period and owned much more than ever. The product

m anufactured was always in demand and source in its availability. In India all sectors o f

economy accepted the effect o f industrial revolution and hence this industry has no

exception. Due to usage o f m echanized m achines in the other sector o f economy the

production had accelerated rapidly.

One m anufactures named Abdul Razzaque Seth residing in Islampura installed 10

Power loom factory in the year 1933. The electric power was not available; firstly it

started on diesel engine. In 1938 one electricity com pany named. The Am algam ated

Com pany established its units at M alegaon. This com pany generated the electricity with

the help o f diesel engines. It 's head office was in Bombay. In the beginning as weavers

had limited funds, for promoting its usage the com pany had provided certain incentives to

the m anufacturers. The incentives were in the form o f free installation o f equipm ents and

other services required from time lo time along with the exem ptions o f any deposit. In

1980 the unit was taken over by the M aharashtra State Electricity Board (M SEB). The

Part III

140

industry enjoyed to its highest peai< during and after the period o f control on cloth textile.

By the year 1940. the num ber o f Power loom increased to 2000 and by 1943 to over 3000.

The establishm ent o f com m on weaving shed and equipping such sheds with high power

diesel engines for generation o f power become a com m on feature to this center. The first

weaving shed in the town was set up in 1950 having 24 Power loom urged by the

prosperity o f the industry, more and more common sheds sprang on some o f the sheds

were only in kaccha construction. The growth o f Power loom in this center has been very

repaid even thought its has faced many upswings and down swing.

In 1933 the first power loom, which was brought in M alegaon. was purchased

from one mill discarding the old looms. The weavers realized the higher speed o f the

Power loom therefore they started buying the looms from mills in Bombay and

Ahmedabad, many people shifted from handlooms to Power loom.

The power weaving get a big push during the Second World War and due to

increase demand o f cloth, the num ber o f Power loom increased very fast. Initially some

people started establishing " Com mon W eaving Sheds" first such a shed was established in

1950. In the beginning these were " Kaccha sheds " made up with wood, but afterwards the

sheds w'ith brick and lime were made.

Importance of Industry in Malegaon

The Pow er loom industry is the main occupation in M alegaon. Nearly 70% o f the

population o f the city depends upon this industry. It has population o f three lakhs, forty two

thousand, and four hundred and thirty one. In direct em ploym ent per loom com es to 2.5

persons per loom and indirect em ploym ent is nearly 2 persons per loom. The Power loom

industry o f the city is the source o f income to the G overnm ent too. The town generates

crores o f rupees o f revenue because o f Power loom The M alegaon m unicipality collects

nearly 70% o f its total Octroi from yarn.

Profile of Industry in Malegaon

Really speaking this city is true symbol o f a national integration due to its com plex

business structure and relation. The M uslim and non M uslim population is so mixed and

tightened together w ith each other in the business relation that we cant separate them. Some

parts o f this industr\ are handled and developed with the efforts and contribution o f

M uslims and other part is managed and controlled by non-M uslim s. It is on excellent blend

141

o f divergent community. It is surprising to note that whatever is the present condition o f the

industry; it is developed and achieved with the efforts and contribution o f their own hard

work. The real cause for the establishm ent o f Power loom industry o f Malegaon is the

availability o f skilled and unskilled labour force at cheaper rate*

Table 3.18:The present situation of Power loom industry in Malegaon

Headings Details

Ownership M ajority Single man ownership

Few units in partnership with family members only

Ninety eight co-operative societies

Sheds Sheds containing 4 looms to 120 looms

Management Traditional

Raw-material Purchased from M aharashtra, Karnataka and A ndhra Pardesh.

Weekly requirem ents o f one Power loom around 35-kilo gram. Cotton o f 30 to 50 count.

Production 60% cotton. 30% polyester. 10% others

Machines Plain looms. Tration machines. W inding M achines,

Finance Limited bank loans, M ost private loans from m iddlemen

Working Capital Business with limited working capital or no working capital

Electricity Supplied by M aharashtra State Electricity Board (M SEB).

Few num ber o f oil or diesel engine used.

Personnel Labours. M ukadams, Tration m achine operators, w inders etc.

Accessories Purchased from Ahm edabad and Mumbai.

Demand Pattern Slack Season 8 months to 10 months every year.

Break even 1 month

Good Season: 1 month

Registration A s p e r th e re g is tra tio n o rd e r o f 1986

Power loom Service Center in Malegaon

During 1997-98. m odernization o f PSCs at M alegaon was taken up.

142

The power loom sector, an integral part o f textile industry has completed hundred

years o f its inception. But unfortunately even today it is not fully developed and at par with

the world standards in term s o f quality and production. The sector in India. M aharashtra and

M alegaon is more or less in the same situation o f backwardness. Though there is increase in

the number o f power loom units but it is haphazard and unsystematic.

An urgent and m assive policy and action from the governm ent and all other

concerned is needed to put the sector on the right track o f developm ent.

Hope this study will prove positive in this regard.

Conclusion:

143