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An analysis of growth and development of textile industry in India

By  : Dr. P. Chellasamy, K. Karuppaiah

This Table shows the number of textile mills in India in the year 2003-04 and 2004-05. In India organized textile mill sector has increased from 1787 in 2003-04 to 1789 in 2004-05. During the year 2003-04 the production of yarn was 3051.07 million kg and it had increased to 3220.59 million kg in 2004-05. The number of workers worked in textiles mills during the year 2003-04 was 9,28,000 and it have decreased during the year 2004-05 was 9,18,000.

Growth of Textile Industry

The textile policy of 1985 and the economic policy of 1991 accelerated the economic growth during 1990s. Textile sector growth has been led by the spinning and the manmade fibre industry. The number of cotton/ manmade fibre textile mills rose from 1035 in 87-88 to 1741 by December 1997. The number of spinning mills number rose to 1461 in December 1997 from 752 in 87-88. Liberalisation led to the installation of open-end rotors and setting up of Export Oriented Units (EOU)2.

Currently India has the second highest spindleage in the world after China. Aggregate production of cloth during 1996-97 was 34,265 million sq. metres, an increase of nine percent over 1995-96. India's contribution in world production of cotton textiles was about 12 per cent a decade back, while currently it contributes to about 15 per cent of world cotton textiles

India has the second-largest yarn-spinning capacity in the world (after China), accounting for roughly 20 percent of the world’s spindle capacity. India’s spinning segment is fairly modernized; approximately 35 to 40 percent of India’s spindles are less than 10 years old. During 1989-98, India was the leading buyer of spinning machinery, accounting for 28 per cent of world shipments. India’s production of spun yarn is accounted for almost entirely by the “organized mill sector,” which includes 285 large. Man-made fibers, wool and silk segment grew by modest 4.5 per cent per annum during the 5-year period 2000-01 to 2005-06.During the first year of quota-free global trade, production increased leaps and bounds. Textiles production increased 10 per cent over 2004. The growth was fuelled by a 22 per cent rise in production of other textiles (including apparels). Cotton textile also posted an increase of nine per cent.

Textile Trend

India is the world’s second largest producer of textiles and garments after China. It is the world’s third largest producer of cotton-after China and the USA - and the second largest cotton consumer after China. The textile and garment industry in India is one of the oldest manufacturing sectors in the country and is currently the largest . The textile and garment industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner and, after agriculture, it is the largest employer with a total workforce of 35 mn. In 2005 textiles and garments accounted for about 14 per cent of industrial production and 16 per cent of export earnings. In cotton yarn production India has made a mark in the world textile scenario. It is the largest exporter of the cotton yarns in the world. Besides yarn exports, India’s growing garment industry is working as a driving force to improve the yarn quality and to increase the production of cotton yarn.

During 2004-05, production of fabrics touched a peak of 45,378 million square meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 per cent over the corresponding period of the previous year. Textile exports during April-November 2005 were at US$ 9,309.81 million, up 8.21 per cent from US$ 8,603.33 million during the corresponding period of the previous year. The first year of the non-quota regime for textiles has seen Indian exports to the US grow by 27 per cent year on year to US$ 4.6 billion, according to data released by the Office of Textiles and Apparels (OTEXA), USA.

In keeping with the trend of textile companies increasing capacity and adding new manufacturing units, the last week of 2005 saw a substantial number of firms, both new and existing, queuing up to file an intent to manufacture document with the Department of Industrial Policy and Promotion (DIPP). Out of 161 companies that had filed Industrial Entrepreneur Memoranda (IEM) in the last week of December, textile firms accounted for more than a quarter of all new applications.

In fact, in the last six years, an estimated US$ 6.7 billion has been invested in the textiles sector, aided by the Technology Up gradation Fund (TUF) scheme. The TUF scheme expires in March next year (2007) and the quotas on China will be lifted in 2008. Hence, companies will continue to add capacities over the next year. Also, according to CRISIL, the sector is likely to rise over US$ 3.5 billion from the capital markets in the next few years.

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