UP textile industry going through tough time

Uttar Pradesh textile industry is going through hard time with low productivity, lack of advanced technologies, lack of foreign investments, supply chain bottlenecks, lack of economies of scale, labour issues and challenges emerging from a fragmented industry and weak brand positioning have emerged key reasons for non-operation of textile units.

The number of non-operating textile units in UP rose from 30 to 182 between 2000-01 and 2010-11.

Besides, 11,400 jobs were lost during 2010-11 against merely 2,300 jobs lost in 2000-10, according to a study titled ‘State-wise assessment of textile sector & recommendations’ by Associated Chambers of Commerce and Industry of India (ASSOCHAM).

According to ASSOCHAM secretary general D S Rawat, increased domestic and global competition and high initial investment cost for modern production facilities are other emerging challenges being faced by the textile industry.

During the period, the total number of textile units in UP rose from 586 to 809, however the number of operational units increased from 556 to just 627. Further, the number of people employed in these factories decreased significantly from over 44,200 to about 39,400 employees during 2000-11.

The gross value of input in the state textile factories increased by 170% from Rs 2,500 crore in 2000-01 to Rs 6,700 crore in 2010-11. Similarly, the gross value of output witnessed hike of 140% from about Rs 3,200 crore to Rs 7,700 crore during the corresponding period.

The narrowing ratio between output and input portrays massive decline in profit margins, which is a key reason leading to increasing number of non-operating textile units as input costs rose at a higher rate compared to output received.

UP also suffered decline in the share of textile units from 5.28% in 2000-01 to 4.94% as of 2010-11. The state registered a% decline in the total share of employment generated by textile industry across India; from about 4% in 2000-01 to 3% in 2010-11.

About 30% of total textile factories across India remained non-operational during the period; against total 17,987 textile units, about 12,688 and 5,300 units were operational and non-operational respectively.

This is of grave concern as organized textile sector apart from creating significant number of jobs of over 1.4 million, also contributes about 4% to the Gross Domestic Product (GDP), about 14% to industrial production and 10.1% to India’s exports earnings.

Tamil Nadu, Gujarat, Punjab, Maharashtra and UP together are the five states which accounts for 88% of all such non-operating factories. TN accounts for about 54% of non-operating textile units followed by Gujarat (16%), Maharashtra (over 10%), Punjab (over 4%) and UP (over 3%).

According to ASSOCHAM, to reverse the negative pattern it is necessary have technology and skill up-gradation, inflow of foreign investments, partnership with international labels, brand promotion and flexible labour policy.