Textile Industry in Gujarat
- a challenges ahead

Indian Textile Industry is probably the only industry, which is self-reliant and complete in the whole value chain. This industry is becoming more and more vibrant and, today has become one of the fastest growing segments in terms of new investment and employment generation, aiming both for domestic and international market. India’s recent economical growth and huge domestic market has further prompted several international companies to look at establishing manufacturing base of Textile and Clothing and retail set up in the country. In the recent past, country has become prominent with a remarkable growth in export of yarn, made-ups and apparel.
It is now well accepted that India and China are the two biggest beneficiaries from the phase-out of the quotas. But then India's share in the global textiles market is still around 4% against 17% share held by China. While China finds it difficult to meet the smaller, custom made requirements, India is well equipped to provide fashion driven products on a small scale. Further, the Indian Textile and Apparel with their striking and rich designs and excellent finish, are finding favour with a section of high-end buyers in West Europe, North America and other parts of the world.  In order to achieve a competitive advantage and to access International Market, many Indian Textile giants are also looking for consolidations, amalgamation or acquisition worldwide.
The major factors responsible for further growth of Indian Textile Industry are-

In the recent past and to enter more and more liberalised economy, a series of Preferential Trade Agreement have been signed with countries like Sri Lanka, Mercosur, Singapore, South Africa, Bangladesh, Thailand, China and now many are on the cards.

This situation is also true for the leading textile state like Gujarat. There is a significant economic importance of this sector in the state in the whole value chain – from farm to fabric and garments with innovative idea and diversified product.  Gujarat, being the largest producer of Cotton in the country, is also having the largest Manmade Filament Yarn base at Surat.  40% of art-silk fabric produced in the country is from Surat alone. Surat has now become the hub of Machine Embroidery activities in the country. Gujarat accounts for over 12% of India’s textile exports mainly in the area of fabric and made ups 24-28% of fixed investment, production value and employment in the SSI sector of the state is from textiles. This sector accounts for 23% of Gujarat’s GSDP. 35% of fabric from the organised sector and over 25% from the power loom sector of country is produced in Gujarat. Historically, too, Gujarat has been the leading textile producing state of the country.

With the open economy and fast changing world, another segment is gaining importance and momentum is Technical or Industrial Textiles like development of specialised fibre and yarn for industrial use, besides manufacturing of hygiene products, medical textiles, domestic wipes, geo-textiles, geo-nets, shoe material, decorative felts, auto textile etc. which are adding value to our life style. It is quite evident that now textile entrepreneurs have to think just differently from the regular commodity products and come out with novel products with innovative idea and marketing techniques. Indian presence in Technical Textile area is relatively small at present but considering the size of the country and a fast growing economy coupled with diverse raw material base, it is expected that Technical Textiles in the country will emerge as new opportunities and grow at a significant rate during next 5 years.  Looking to the huge Potential of Technical and Industrial Textile, Govt. of Gujarat has set up a Working Group on Technical Textile to prepare an Action Plan to promote this sector in Gujarat.  State has already identified various opportunities in the field of Technical Textile. The state is also considering setting up a Centre of Excellence of Technical Textile at Surat and Ahmedabad, along with extending financial support for new unit in the field.

In an another initiative by the state government, Gujarat Industrial Development Corporation (GIDC), has set up two Apparel Parks, both SEZs, in Surat and Ahmedabad besides ongoing development of exclusive textile park at Ichhapur (Surat). In Ahmedabad Apparel Park, this has been done on the lands of closed textile mills, which is a sure beginning in reviving the textile sector in Ahmedabad city. Union Minister of Textiles has also sanctioned another six textile parks in the state under the Scheme for Integrated Textile Parks at Surat, Ahmedabad and Mundra.

Under the Gujarat Industrial Policy 2003, the state government has announced and implemented many schemes for assisting the entrepreneurs such as by providing interest subsidy @ 5% p.a. to new SMEs for 5 years, providing interest subsidy @ 3% p.a. for 5 years to existing units for technology upgradation, providing financial assistance up to Rs.2 crore for setting up Apparel Training Centres and financial assistance up to Rs.2.5 crore for setting up Industrial Parks.

In addition to the Technology Mission scheme of Ministry of Textile, Government of India, the state government has extended support to Ginning & Pressing industries under its Cluster and R&D Development Programme on the one hand and indigenous low cost Rapier Loom Development for decentralized Powerloom sector on the other. With the on-going industrial development, environment issues have become one of the major concerns for the State Administration. Therefore, Common Effluent Treatment Plants (CEPT) for Textile Processing is being assisted in different places of the state. In addition to 25% capital subsidy provided by Ministry of Environment & Forest, state government also extends 25% capital subsidy for setting up CEPT in Gujarat. 

Looking to the future demand of skilled manpower, the state has evolved a special scheme to set up Apparel Training Institutes, both in private and government sectors, besides providing training for powerloom and garment sector through ATIRA, MANTRA and NIFT.   In the recent past, the state has come out with a policy on Contract Farming and Corporate Farming separately, which are expected to give a further boost to Cotton cultivation, thereby, promoting export of Cotton from the state. Otherwise also, Gujarat, the largest producer of cotton in the country, is exporting Cotton to countries like Bangladesh, Indonesia and even to China.

Textile & Apparel is a labour intensive sector. Our competitive advantage is mainly due to low labour cost.  However, many times the country is losing this ground due to lack of flexibility in labour laws, especially when this sector is much more seasonal.  Higher electricity cost is one of the major hindrances for the faster growth of this sector in the state especially for the cotton spinning which is much energy intensive.  Government of Gujarat’s policy exempts the electricity duty for any new unit amounting to 15% reduction on energy bill for 5 years.  However, Textile Industries in Gujarat, in general, are encouraged more to go for captive power based on Natural Gas to become cost competitive.

Gujarat has its strength world over, in production of cotton, made-ups and denim.  But major denim producers in the state are very much influenced with ups and down of the international market.  On the other hand, development of medium and large size garment sectors are not impressive, as yet both in the state and the country, who otherwise would be the major consumer of denim fabric.  A need is, therefore, felt to attract international garment Buyers, manufacturers and retailers to set up their establishment in Gujarat.  As a supporting activity, and for the promotion of Garment sector, state is trying to promote world-class laundry and garment washing/finishing activities or a specific Textile Park for such activities with a provision of common effluent treatment plant and other common facilities at different places in Gujarat.  But, industry still lags in some decisive factors like high cost of power, delay in shipment, and rigid labour laws, which protect inefficiency rather than protecting workmen.  Textile Industry, in fact, is facing and shortage of skilled manpower, which needs to be addressed separately. 

Indian Textile Industry and, in specific, in the state of Gujarat, is undergoing a transition phase.  Major textile exports from the country are from Apparel (50%), Fabrics (18%), Yarn (14%) and Made ups (12%) where Gujarat is having its strong base in fabric and made-ups only.  Now, the state is looking for export of cotton too.  In the current year (2006), the state is achieving over 100 lakh bales of cotton with all time record figure.  Though, state is quite strong in man-made filament textiles production, this sector is yet to establish its notable position in the international market.  However, many of them are already diverting their product-mix towards fabric for specialised garment or fabric for specialised industrial use.  It is definite that an inefficient capacity is giving way to efficient ones with a move towards consolidation.  Finally, success is going to depend more on technology, innovation, adaptability and prompt in service.

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