a
POWERLOOM INDUSTRY IN INDIA
DON'T QUIT WHEN 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. Ill
P a r ti
Power loom industry in India
How old is Weaving?
Weaving is the method by which threads are interlaced to make cloth. The
principals of weaving have not changed through the ages. Modern textile mills do quickly on machines what ancient peoples did slowly by hand.
Cavemen, who lived about thirty thousand years ago, learned how to weave. They used straw, stalks of reed, or other materials to weave by man in prehistoric times.
What these ancient peoples did not realize was that cords, could be interlaced to make soft fabrics or cloths. The idea of 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 of are these:
The Near East, about 5000 B.C.; Egypt, about 4000 B.C.; central Europe, about
2500 B.C.; South American Peruvian coast about 1500 B.C. and China, about 1200 B.C.
The use of different fibres for weaving developed in various places. Wool was first used when the sheep was domesticated, about 1600 B.C. Cotton was first used in India and
Spread from there to Asia and finally to Europe. Silk fibres were first used in China. On the other side of 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. Method of spinning, the various materials used etc. are also mentioned in these ancients scripts. The history of
Textiles is told many times over in the epics, the Puranas. the Graeco- Roman sources of
Indian history, and the classical Tamil Sangam Literature. Various techniques of weaving, designing, needlework etc have survived through the centuries.
110 The foundations of the Indian textile trade with other countries began as early as the second century BC. Kalyan, a port, is place in that time from where textiles were exported.
A variety of fabrics, including cotton brocade, is mentioned in Chinese literature as Indian products exported to China
History of weaving in India
From the time immemorial India has been the home of cotton. It is undoubted that the birthplace of the cotton industry of the world is India, but there are differences of 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,
Mahabharta and Puranas contain references to the production of cotton goods in India
Mr. F.W. Thomas has said that the earliest mention (of cotton) appears to be in ashvalayana Saruta Sutra (say 800 B.C.) where the material was contrasted with silk and hemp as that of which was made the sacred thread of the Brahmins.
The Indian cotton Fabrics had a worldwide importance and was exported to foreign lands during the Buddhist period. Indian excellent handloom products were in great demand not only inside the country but in much foreign land. They were sent abroad in sizeable quantities even in the days of lord Buddha. Since ancient days handloom continued to flourish and in medieval times as well as her cloth manufactured were famous of high artistic skill of craftsman through out the world. Indian cotton was demanded by eastern market from Cairo to china as well as by European market. India exported more than 200 varieties of the cotton through out the world; some of its famous products were Muslin of Decca known as Ab-I-rawan (running water). Bahati hawa
(woven air) and shabnam (evening dew).
The art of weaving is one of the oldest arts known to mankind. Many of odds and ends of civilization that existed at the beginning of the history show evidence of the art of weaving. It was very early that this art reached a degree of development from a standpoint of texture, beautify and utility that compares favorably with the products of today. The tapestries of the middle ages are unrivalled, as are the silk of ancient China. The modem manufacturer has produced no new products but utilizes the improvements in the process of production that have been brought about in modern times. The spinning wheel has been replaced by the modern automatic Power loom.
II The principle on which looms are constructed, is that of manipulating two series of 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 of weft. This operation is called picking and the stand of thread left by the shuttle is called a pick. The shuttle leaves the weft at some distance from the edge (called fell) of the cloth already woven. It is therefore necessary to push it for ward of the cloth. This process is called beating up and is done by the ‘slay of the loom’. The slay consists of a large heavy price of wood extending across the width of the loom supported by two pivoted arms called ‘slay swords'. 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 of the cloth.
After completing the forward movement to beat up the weft, the slay moves 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 of the weft. This completed the series of fundamental operations necessary to weave cloth.
History of power weaving
The idea of starting factory production of cotton cloth and yarn in India took shape during the first two decades of 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
Weaving mill came into existence in Bombay in February 1856.
The Indian textile industry consist of.
a. Traditional handloom sector with primitive technology
b. Power loom sector which is technologically improved from of handlooms and
c. Composite mill sector with its advanced technology.
Among 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 of which is composite having spinning, weaving and processing under the same roof
112 Power weaving a change
There was a change in the fortunes of 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 weaver could
not turn out four yards of cloth, while a Power loom on the same hour produces ten times
the quality and quantity.
The advent of the mill industry to the country was in the great interest of the
situation. The birth of the industry was the necessity of environment. Indian mills slowly replaced imported yarn and started supplying yarn to the handloom sector; the use of mill
yarn by handloom weavers has brought a profound change in the social and economical
status of the handloom weavers.
Power loom- the third eye
The traditional handlooms and textile mills were trying to fix their places in the
industry. But both of them have certain limitations, it gave chance to rise Power loom as a
third pillar in the industry to overcome these limitations. Handlooms 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 weavers started installing Power loom as 'Decentralised' units.
Power loom industry in India
After independence many units in mill sector started facing the problems. The technological changes were the need of the time and the mill sector could not meet this
requirement. The labor problem also got multiplied due to non-availability of skilled and
trained workers. This resulted in high cost of production and heavy losses to many units and
finally closer of the mills. This adverse situation of mills also helped power looms to prosper fast. The factors like the wars, failure of mills and the reservation for the handlooms
helped power loom units to prosper very fast. All these are the external factors. Some
internal factors also helped a lot for the development of these units. The very nature of the decentralized power looms is such that:
❖ It has reduced strain of operations
❖ It is less expensive ❖ 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 of small entrepreneurs and in scattered and far off areas.
But this development is entirely unplanned. Today the power loom sector has developed as controversial subject. At one end. the handlooms- the traditional weaving says that the power loom units are eating its share in production and development and that's why handlooms are lacking behind. Secondly handlooms cannot compete with the power looms because of their speedy production. At the other end the organized mills complains that many units are becoming sick because of power looms.
The inception of power looms in India
There are no authentic records as to indicate the first introduction of power loom in the country. The First power loom unit started in Ichalkranji town in Maharashtra 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 inception I. Ichalkaranji Maharashtra 1904 2. Cannanere Kerala 1917 3. Surat Gujrat 1920 4. Banglore Karnataka 1928 5. Madhurai Tamil Nadu 1928 6. Burhanpur Madhya Pardesh 1932 7. Calcutta West Bengal 1932 S.Amritsar Punjab 1933 9. Malegaon Maharashtra 1933 lO.Tanda Uttar Pardesh 1934 Source: Power loom Inquiry committee reports 1964 Ashok Mehta. The Marketing problems of power loom sector in Malegaon. By Riyaz Ansari
The First World War brought prosperity to many industries. One of them was power loom industry. Initially the small entrepreneurs purchased looms discarded by mills in
Bombay and Ahmedabad and installed as power looms. This practice is continued even today but now manufactured power looms are also in evidence. During 1940’s because of second world war. the power loom industry got chance to prosper. The whole textile industry in the country had to gear its machinery towards huge war production demands.
114 The task was behind the capacity of the mill sector alone and as a result the decentralized
power loom sector again accelerated the pace of its growth.
Table 3.2 State-wise registration of power looms and employment
No. Of power looms Employment States 1990-91* 2000-01 2001-02 2002-03 2000-01 2001-02 2002-03 A. P. 19,000 43,535 43,923 43,976 108,838 109,808 109,940
A ssam 3 0 0 0 2 ,726 2 ,7 2 6 2,726 6,815 6,815 6,815 Bihar 3000 2,894 2,894 2,894 7,235 7,235 7,235 Delhi NA 1,102 1,102 1,102 2,755 2,755 2,755 G oa N A 122 122 122 305 305 305 Gujrat 2,2 5 ,0 0 0 3.18,263 3,18,263 3,18,263 7,95,658 7,95,658 7,95,658 Haryana 8,000 9,882 9,882 9,882 24,705 24,705 24,705 Himachal NA 1,302 1,302 1,461 3,255 3,255 3,653 J & K N A 65 65 65 163 163 163 Karnatka 43,000 79,636 80,985 81,832 199,090 202,463 204,580 Kerala 2,000 2,689 2,703 2,703 6,723 6,758 6,758 M.P. 32,0 0 0 4 3 ,648 43,785 45.598 109,120 109,463 113,995 Maharashtra 3,98,000 7 07,145 709,438 730,945 17,67,863 17,73,595 18,27,363 Orissa 3,000 3 ,317 3 ,319 3.319 8,293 8,298 8,298 Punjab 21,000 22,681 22,681 23,606 56,703 56,703 59,015 Rajasthan 26,000 31,9 5 0 31,950 31,950 79.875 79,875 79,875 Sikkim NA Nil N il Nil Nil Nil Nil r . N . 2 ,0 1,000 3 1 8 ,9 4 4 319,244 320,196 797,360 798,110 8 0 0 ,4 9 0 U. P. 64,000 65,934 65,934 65,934 164,835 164,835 164,835 West Bengal 4,000 4,361 4,361 4,361 10,903 10,903 10,903 Union Territories
Chandigarh 42 42 42 105 105 105
Dadra. 4 ,0 0 0 Nager 482 482 930 1,205 1,205 2,325 Haveli Pondichery 830 830 830 2.075 2,075 2,075
Total 10,57,000 16,61,550 16,66,033 16,92,737 41,53,879 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 meeting the clothing
needs of the country. Production of cloth as well as generation of employment 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 employment to millions of people. The
power-loom industry produces a wide variety of cloth, both grey as well as processed with
intricate designs. The contribution of power-loom sector to the total cloth production is to
the extent of 59.15% and it contributes significantly to the export earnings of the country.
Table 3.4: Growth in the Power Loom Sector Name of the State/l'nion Units /looms registered I'nits/looms covered under the Textile (D <& R Updated position oT No of No Territory under the erstn hile textiles order) 1992 and the textiles (1) & R) order units/looms workers (Control) order A 1988 1003 and T (D & R ) order 2001 No of No of No of No of No of No of No of No of Units looms Units looms Units looms Units looms (,5.A+4.A+.v^) (3B+4B+.'B) 2 3A 3B 4A 4B 5A 5B 6.^ (.8 7 1 State 2 A. P 5656 37696 3962 6296 8 22 9626 44014 110035 J Assam 261 2726 0 0 0 0 261 2726 6815
4 Bihar 1439 2850 4 44 0 0 1443 2894 7235
5 Goa 18 122 0 0 0 0 18 122 305 6 Gujrat 28167 257658 3889 61839 45 907 32101 320404 801010 7 Haryana 1647 9844 6 38 0 0 2653 9882 24705 8 H.P. 159 1302 23 159 0 0 182 1461 3653
9 J.&K. 0 0 56 65 0 0 56 65 163
10 Karnataka 21146 61967 3433 19902 0 0 24579 81869 204673
II Kerala 434 1971 226 760 0 0 660 2731 6828 12 M.P. 15106 32981 11142 32753 455 1032 26703 66766 166915 13 Maharashtra 146749 472509 63558 363390 1091 1266 211398 837165 209293
14 Orissa 754 3151 37 168 0 0 791 3319 8298
15 Punjab 3412 21618 244 1988 0 0 3656 23606 59015 16 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 0 0 0 0 0 0 0 0 Arunachal 22 Pardesh/Manipur Union 23 Territory 24 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
Andaman & NIcobar. Daman & 27 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
116 The above two tables indicate that the growth of Power loom as compare to mill
sector and handlooms is much faster because the Power loom were free from excise taxes
and had a much shorter list of restrictions on items they produced with respect to mills. The
growth of unlicensed unit also increased the total number of Power looms and its share in
total cloth production. Power loom used the same type of technology with probably
somewhat no-automatic looms than used by the mills. It uses twice 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 of these 17,00,000 power looms only 30.000 are automatic (1.8%). and 5.000
shuttle less looms (0.3%) 4,00,000 semi-automatic drop-box looms but half of its are
obsolete. Remaining 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 Years 2002-03 2003-04 2004-05 2005-06 2006-07 Mill 1888 2070 2274 2490 2730 Percentage 5.22 5.40 5.61 5.80 6.00 Power loom 24360 25406 26510 27670 28875 Percentage 67.29 66.33 65.38 64.42 63.46 Handloom 3258 3450 3650 3865 4095 Percentage 9 9.01 9.00 9.00 9.00 Hosiery 6080 6740 7460 8245 9100 Percentage 16.80 17.60 18.40 19.20 20.00 Khadi, Wool, Silk 614 634 656 680 700 Percentage 1.70 1.66 1.62 1.58 1.54 Total 36200 38300 40550 42950 45500 Percentage 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
emerging challenges of globalization and liberalization. In these difficult times, there is an
urgent need for all sectors related to textile industry and, policy making government, bodies,
industry, trade, financing institutions, ancillar\' industries to have online access to authentic
information about production, consumption, demand and supply of various products, about
past trends and future projections, about quality and cost, about raw materials, about major
domestic and international policies, which affect these industries. Moreover to retain our
competitive advantage, it is imperative to develop and demonstrate information technology
117 (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 of textiles 2002-03 and vvww.texindia.com ♦Up-to September 2005
Table 3.7: Production of cloth in Power loom sector (Mn. Sq. Mtr) 2004-05 Type of 1998- 1999- 2000- 2001- 2002- 2003- 2003- (Up-to cloth 99 GO 01 02 03 04 04 Sept.05) Cotton 5855 6291 6584 6473 6761 6370 7361 4263 Blended 4356 4613 5071 5025 4695 4688 4562 2332 100% N on 10748 12283 12148 13694 14498 15889 16438 8291 cotton Total 20689 23187 23803 25192 25954 26947 28325 14814 Percentage 57.27 59.14 59.16 59.93 61.83 62.34 63.25 63.89 Grand 36127 39208 40233 42034 41973 42447 43776 44258 Total Percentage 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
Source: www.txcindia.com Compendium of 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 of the mill sector, which stood at 11.10 percent in 1990-91. came down to 3.56 percent in 2002-03 whereas that of decentralized sector handlooms 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 of important power-loom centers in the country Estimated No. Power loom Center Fabrics Produced number of looms Nylon. Polyester/Viscose Surat Filament Sarees. Dress material & 3,50,000 shirting.______Sheeting, Long cloth Poplin from 2 Ahmedabad 30.000 cotton and Polyester/ Cotton T Ichalkaranji Cotton dhoti, cambric and Poplin 55.000 Cotton grey sarees, poplin 4 MaJegaon 80,000 Cambric, Polyester/cotton Lungis T Sholapur Turkish towels/ cotton Sheeting 55.000 Mulls, cambric, dress Material, 6 Bhiwandi polyester shirting Viscose saree 4,50,000 material/ Polyester viscose suitings Polyester/Viscose suiting/ Shirting 7 Bhilwara 40,000 and cotton sheeting______Cotton/grey fabric suitings Poplin. Burhanpur 40,000 cotton, dhotis/ Polyester Sarees______Cotton grey suiting, dyed/ Checked Salem/Erode 1,75,000 fabrics mainly From cotton yarn 10 Kanpur Dyed and heavy canvas Dosuti 20,000 11 Amritsar Blankets, shawls, lohis Twills. 35.000
Source: Compendium of textiles 2004-05
Table 3.9: Share of various sectors Percent share in production Sector 2000-01 2006-07 Mill 5 6 Power loom 68 63 Handloom 9 9 Hosiery 16 20 Khadi. Wool. Silk 2 2 Total 100 100 Source: Compendium of textiles 2004-05
Existing Technology Level In Power-looms
In spite of the basic strength of 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 primarily in
the weaving and processing sectors. The woeful lack of modernization is most visible in the
power-loom sector, which accounts for a major portion of cloth produced in the country.
119 Most of the looms installed in the country are low speed shuttle looms. While India may boast of the largest loomage in the world, the low speed, lack of quality control, frequent breakdowns and idle loomage do not permit high capacity utilization and production of defect-free quality fabric. Most of the mills have outlived their utility and normal life. Most of the looms in the country that come under the power-loom sector are more than 40 years old and more than 75% of those are conventional type without any extra attachment 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 power loom industry is going through a difficult phase on account of various factors. Exports of cotton power loom textiles during 2001-2002 amounted to Rs. 40,125 million as against Rs. 43,353 million in previous year, recording a decline of 8.4 per cent.
The competitive position of the industry has been very much eroded on account of the high cost of raw materials and power, inadequate infrastructure, lack of modernization, etc. In the year 2004, cotton yarn prices have moved up by 18 per cent. The increase in yarn prices will make fabrics more uncompetitive. In view of the reversionary conditions, it may not be possible to secure a corresponding increase in fabric prices. This will reduce the profit margin of manufacturers.
The power costs is to extent of 8.87 cents/kwh in India, which is quite high as compared to 6.04 cent/kwh in China. As far as the cost of 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 of working capital, it works out quite high due to the high interest rate of 13-15 per cent. In respect of capital availed of for technological up gradation, interest reimbursement to the extent of 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 shortcomings, the power loom industry is also confronted with restrictions on the foreign trade front. Repeated anti dumping initiatives on imports of bed linen from India by the European Union has affected exports. Formation of
120 regional trade block, preferential tariff arrangements, etc. has also restricted the scope for expansion of 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. Completion of the Cenvat chain would benefit those members of the value chain who were paying Cenvat but could not claim the benefit.
The effects of CENVAT are:
❖ Imposition of 8 per cent excise on power-looms means small operators will have to
maintain records, file returns and register themselves with the Department of Excise.
❖ Power-loom operators also have to contend with higher input cost, especially of cotton
and man-made yarns.
❖ They would have to incur other indirect costs that would push up prices of the final
product, most of which will be passed on to consumers.
The issue at hand is the completion of the Cenvat chain that would create a level- playing field in the textile industry, encourage transparency and healthy competition.
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
Government rules.
The positive aspects of these moves are that they would encourage accountability, and provide full information on various loom operations. The negative side is that more small power-looms would enter the excise net and voluminous records would have to be maintained. Right now the textile industry is not equipped to comply 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 of understanding of the implications, and the imposition of VAT. This was compounded by the fact that even
Government officials and tax consultants had not understood the issues. If VAT and additional excise duty were levied at the same time, it would amount to double taxation.
Steps however have been taken to modernize power looms with a view to producing polyester- blend fabrics, which have considerable demand in the market. Schemes are implemented for Government's participation in the share capital of power loom co-op. societies for strengthening their share base so as to attract working capital from NABARD.
121 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 t Regional Regional Regional Regional Co-director Co-director Co-director Co-director (Nagpur) (Sholapur) (Aurangabad) (Mumbai)
The ministry of textiles is contemplating a set of relief measures for the power loom
industry in order to prepare it for an increasingly competitive market.
The Textile Committee has launched a National Programme for capacity building of textile small and medium enterprises (SMEs) through cluster-based approach with a view to
strengthening the capability of Indian textile SMEs to avail themselves of the ample opportunities emerging out of globalize free trade.
Under this programme. 23 clusters in different parts of the country with concentration of textile SMEs have been identified for focused and coordinated intervention aimed at capacity building of the SMEs over a span of three years with each of the Regional
Offices of the Textile Committee, located in the identified cluster being designated as the
Cluster Development Office to implement it.
The 23 clusters include Agartala (handlooms). Nau Patna/Bhubaneswar
(handlooms). Coimbatore, Bhawani (power looms & handloom home furnishings),
Sendhwa/Indore (cotton ginning and pressing). Pochampalli/Hyderabad (handlooms).
122 Guntur, (cotton ginning and pressing). Ichalkaranji (power loom weaving). Sanganer/Jaipur
(hand block printing and apparel manufacturing). 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/Madurai (surgical textiles). Nagari (power loom weaving and processing),
Noida (apparel manufacturing), Panipat (handlooms and made-ups). Salem (power loom weaving and processing), Sholapur (power looms - towels and chaddars), Surat (power loom weaving and processing), Tirupur (cotton knitwear) and Tarapore/Mumabi
(processing).
Various clusters, across the country, have emerged for identifiable activities over a span of 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 emerging as apparel manufacturing clusters; Guntur and Indore are the known clusters for cotton ginning and pressing activity; Coimbatore and Madurai are known cotton-spinning clusters.
There are three major partners/stakeholders in the development strategy designed at textile SMEs viz., support service institutions including government organizations, policy makers and business development services providers, (ii) SMEs themselves and related enterprises and (iii) industry associations of 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 of vision, focus and coordination. The multiplicity of organizations further compounds the problem of coordination with most of these players working in isolation without aiming at synergising their endeavors.
Power loom Service Centers in India:
Out of 44 power loom Service Centers, 13 Power-loom Service Centers (PSCs) are functioning under the office of the Textile Commissioner and 31 Power-loom Service
Centers under the Textile Research Associations. The PSCs have, been providing services to the weavers free of charge. A system of charging a nominal fee for some of the services was introduced with effect from 1.3.1995.
These Power loom Service Centers are providing training, consultancy, design development support, textile testing and information dissemination in the country. Out of
123 these, twenty-one Power loom Service Centers are equipped with modern looms,
accessories and teaching aids at the cost of Rs 16 crores. Fourteen laboratories of PSC's
have been upgraded at the cost of Rs II crores for the benefit of the weavers. Moreover, for
fostering value addition through new designs, motifs and patterns, seventeen Computer
Aided Design Centers in the various textile centers have been sanctioned.
Activities of the Power-loom Service Centers
The objectives of 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 of loom working, loom maintenance and
tuning, loom repairs and servicing;
(c) To disseminate knowledge and techniques to power-loom weavers by visiting
groups of such weavers on certain fixed days of every month, in increasing
productivity and efficiency, reducing wastage and minimizing cloth damage at
minimum possible costs;
(d) To guide the power-loom weavers about modernization, the manner 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 compile statistical information on the
number of power-loom units and looms and also on the number of power-looms
modernized and to make an assessment of the effect of such modernization on
production, productivity and quality of the products of the units;
(f) To guide the power-loom weavers in marketing their products, including availing
themselves of the export opportunities;
(g) To provide testing facilities to the power-loom sector;
(h) To conduct Seminars/Workshops and organize exhibitions for the benefit of the
power-loom sector;
124 (IJ To co-ordinate the power-loom development activities with the State Government Authorities;
{j| To act as an agent to transmit the problems of 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 development and diversification of
activities so as to facilitate their achieving economy in the scale of operations.
Computer Aided Design Centers;
To facilitate the creation of new designs, improve the designs and production in the fast changing global tradition in fashion, the Computer Aided Design (CAD) system plays a vital role. The fabric simulation technique available with this system helps create fabric like appearance on the computer screen without actually going in for various colour combinations and weaving of sample clothe. The simulated fabric design could be sent for approval of the buyer/consumer 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 of CAD system though high, pays off in the long run as CAD replaces the time consuming and labour intensive manual card punching method. Competitiveness also increases as CAD enables them to respond quickly to the changing fashion.
In order to facilitate the creation of new' designs, improvement of the designs and production in the fast changing global trends in fashion. 17 Computer Aided Design (CAD)
Centers have been set up at Coimbatore. Karur. Komarapalayam and Somanur (Tamil
Nadu). Surat and Ahmedabad (Gujarat), Solapur, Icchalkaranji, Bhiwandi and Mumbai
(Maharashtra), Bhilwara (Rajasthan), Ghaziabad (U.P.). Bangalore and Dodballapur
(Karnataka), Burhanpur and Indore (M.P.), and Panipat (Haryana). The Government provides a recurring grant of Rs. 6.75 lakhs per annum to each center, which include salaries of staff. Each CAD Center is expected to be self sufficient with regard to recurring expenditure within a period of five years. Out of 17 CAD Centers, seven Centers have alread\ completed the norm period of 5 years. Rs. 2 crores has been provided by the
125 Government to continue to fund the CAD Centers, which have not completed the five-year
norm period.
New Initiatives To Modernize Power Loom Sector
In view of the removal of Quantitative Restrictions (Q.R.) from 1st January 2005,
there is a need to work in a coordinated and focused manner to build a modern power loom
industry, which will be able to face competition from domestic and export markets.
Government is making efforts to make yarn available at reasonable price to the power loom
weavers at Malegaon, Ichalkaranji and Solapur through joint efforts of Maharashtra State
Power loom Corporation and N.T.C. North and South Maharashtra. A new scheme is being
envisaged for making available indigenous semi auto, auto-shuttle less looms and allied
machinery at a subsidized rate to the power loom weavers who want to modernize but
cannot avail bank finance. Besides, automatic 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 marketing 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 Government support. Two such Parks have been
sanctioned - one in Surat, Gujarat and the other in Troica 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 Million 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
Achievements 31.37 31.01 31.89 — -
Source: Compendium of textiles 2004-05 The Tenth five-year Plan (2002-2007) articulates the Government's development strategy. The Plan sets a target of 8.0% annual growth, especially in employment-intensive
sectors, to ensure that there is rapid and well-distributed growth of income to sustain the pace of poverty reduction accomplished during the past decade. The Plan underscores that development cannot be measured in terms of increased GDP or per capita income alone, but should take into account human well-being, i.e.. the reduction in both "income poverty" and
"human poverty". Consequently, the Plan sets out specific monitorable targets for a few key
indicators of human development.
126 The lO"' Plan envisages up gradation of the power-loom sector so as to improve the
quality of 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 WTO requirements and urgency for technological up gradation of the
sector, the priority to the sector has been up-scaled. The Planning Commission 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 of the Power-loom Schemes are to make
investment in the sector attractive by decreasing the size of capital investment required; to increase productivity thereby bringing about cost competitiveness; to improve significantly the quality of fabric - defect-free fabric as the essential standard and compatibility with world standards as the desirable criterion; to continue to provide avenues of employment; to provide a social safety net for the workers; and to improve export performance. The major scheme in the 10“^ Plan will be strengthening and modernization of the Power-loom Service
Centers (PSCs). The Ministry of Textiles had set up a Committee to review of the funding, functioning and management of the PSCs. The Government has accepted the recommendations of the Committee. Scheme-wise break up of the lO"’ Plan outlays are;
Table 3.11: Tenth Plan Outlay for the Power loom Sector (Rs. in lakhs) XPIan Allocation Annual Allocation Name of scheme (2002-07) Plan (2002-03) for 2002-03 Modernization and strengthening 5500 850 595.00 O fP S C s Support to computer-aided 200 200 74.11 Design Centers Welfare of workers 300 150 22.35 Total 6000 1200 691.46
Source: Compendium of textiles 2004-05
Present Policy Relating to Installation of Power looms
In terms of Textile (Development & Regulation) Order, 1993. every person on installing the power-looms in the SSI sector should submit an Information Memorandum in a prescribed form to an officer, notified in this behalf by the State Government within whose territory the power-loom has been installed, with a copy thereof to the Textile
Commissioner, Mumbai, and every person on installing any power-loom in non-SSI (other than units requiring Industrial Licenses), should file an Information Memorandum to the
Textile Commissioner. Mumbai, within 30 days of installation for obtaining an acknow ledgement thereof.
127 Export Promotion
The government deals with the issuance of memorandum to the New Investors
Entitlement (NIE) for export of garments; Manufacturer Exporters Entitlement (MEE) for
export of yarn, fabric and made ups. Povver-loom Exporters Entitlement (PEE) quota for
exports for power-loom products manufactured in the small scale Decentralized sectors and
scrutiny of PEE quota applications.
The Textile Commissioner is the Chairman of the Enforcement Committee (E.C.)
constituted under quota policy, and staff committee of AEPC, ISEPC and PDEXCIL. The
Enforcement Committee examines cases of mis-declaration and fraudulent action on the
part of exporters for appropriate debarment and legal action. Senior officers’ appellate
committee constituted by the Textile Commissioner hears the appeals on the forfeiture of
BG/EMD for non-fulfillment of export obligation.
Other developmental activities
In addition to the functions of the Textile Commissioner's Office enumerative above, the following activities/aspects will be worth noting. This office provides all
technical, fiscal, trade and production related inputs to the Ministries of Textiles, Industry,
Commerce and Finance as and when required.
The Textile Commissioner’s office is being now fully involved with the
coordination among the TRAs. compilation of their research results, dissemination thereof
to the industry and generally assisting the TRAs in upgrading their research facilities and
problem solving capabilities.
All India Power Loom Board
The All-India Power-loom Board was first constituted as an Advisory Body in
November 1981. This Board was reconstituted on 21-12-2000 for a period of two years. It
has representatives of the Central and State Govts. Power-loom Federation / Association of
Power-loom industry, as its members and is headed by the Union Minister of Textiles as the
Chairman. The Union Secretary (Textiles) and the Textile Commissioner are the Vice
Chairman and Member Secretary respectively of the AIPB. The Board advises the
(jovernment on the power-loom related matters.
128 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 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 power
loom owners came under the excise registration regulations and the tax net. The government
believes that they need to become more accountable.
As in the case of other traditional manufacturing systems, cotton textile traders do
not keep books on transactions and trade. Extending the CENVAT chain to all the important
stages in the fabric-making process is expected to ensure that accounts are rendered and
nobody evades tax.
But the loom owners argue that the highly fragmented nature of the industry, its
close linkages with agriculture and the vast rural employment potential it holds out, justify the sector being left out of CEN VAT cover.
However, as a result of hectic lobbying by power loom owners' federations across the country, the Central government suspended the imposition of CENVAT on grey fabric.
In early May, Finance Minister announced that power looms that have an annual turnover of up to Rs.20 lakhs would be exempted from CENVAT. Further, the government has relaxed the precondition of registration for traders of fabrics and yarns. Manufacturers 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 a turnover of Rs.20 lakhs in four months is possible. The majority of owners will not get any exemption because above
80 per cent of them operate more than 20 looms.
The Power loom sector has been particularly troubled by the huge production losses it
suffers on account of the high cost and frequent disruptions of 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 composite mills, which manufacture
cotton yarn as use it internally, are exempt from sales tax while it is imposed by various
129 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, Moreover this levy is not refundable even on the export of the finished product rendering them uncompetitive in the overseas market. Similarly, octroi levied on raw material transported to production centers is also not refunded at the time of export. There is disparity in the excise refund granted in the form of drawbacks at the time of exports of the finished products. For instance duty on unbleached fabrics is 8 percent, while the drawback rate is mere 5.5 percent.
However exemption of excise duty on automatic shuttle looms and reduced customs 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 of 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 of the existing one will encourage capacity expansion.
2001-2002 budgets extended the 16 percent aggregate duty applicable to cotton and man- made-fabrics to. The present budget leaves this levy untouched, whist reducing the other aggregate duty to 12 percent has now widened to 9 percent.
There should be unbroken CENVAT chain through imposed duty on hank yarn and withdrawal of all exemptions. It explained that breaking the CENVAT chain at the grey fabric stage assisted duty evasion on both yarn and processed fabrics, subjecting grey fabric to duty would facilitate withdrawal of deemed CENVAT credit at the stages of process houses and garments and weavers would actually see their incomes well through paying excise duty.
There is key concern of the sector in the share of the Power loom exporters entitlement
(PEE) at 10 percent of the overall textile export quota, undue protection accorded to the handloom sector including by way of the handloom Reservation Order (HRO). that disadvantages the Power loom sector. Power loom sector is not accorded any special preference as granted to the handloom industry by way of procurement of raw material, finance and marketing.
Though the rate of interest of the Prime Lending Rate (PLR) for export credit is lower than the commercial rates, small-scale Power loom are not in position to take advantage. There are limitations of power looms in accessing credits; with banks hesitant to
130 bank non-them as many of them have defaulted on repa\ments in the past. This has
impeded modernization and up gradations. As the Reserve Bank refinance part of 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 of interest, especially for export production.
Power loom co-operative societies in Malegaon 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
Malegaon 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 power 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 of other traditional manufacturing systems, cotton tei^^i^^aers do not keep books on transactions and trade. Extending the CENVAT chain to all the important stages in the fabric-making process is expected to ensure that accounts are rendered and nobody evades tax. Malegaon accounts for about 200 million meters of 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 of the industry, its close linkages with agriculture and the vast rural employment potential it holds out, justify the sector being left out of CENVAT cover. According to Sandeep Jain, executive director.
Power loom Development and Export Promotion Council (PDEXCIL). there are historical reasons for the low rates of 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 of hectic lobbying by power loom owners' federations across the country, the Central government has suspended the imposition of CENVAT on grey fabric. In early May 2004, Finance Minister announced that power looms that have an annual turnover of up to Rs.20 lakhs would be exempted from CENVAT. Further, the government has relaxed the precondition of registration for traders of fabrics and yarns.
131 Manufacturers 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 of
Rs.20 lakhs in four months. The majority of ow ners w ill not get any exemption because above 80 per cent of the owners in Malegaon operate more than 20 looms.
Malegaon growth into a thriving power loom town began with the closure of textile mills in Mumbai and Gujarat over the past two decades. While power loom sheds mushroomed in Malegaon. Ichalkaranji, Solarpur and Madhavpur. it was Malegaon proximity to Mumbai'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 of their cloth from looms in Malegaon.
The textile trade in these centers combines the practices of a small-scale industry and traditional traders. This is one reason why the concept of taxation is so alien here.
However, over the years this once-bustling power loom town has seen rapid decline, primarily owing to the Central government’s liberalization policies.
By lowering imports duties, government has flooded the market with cheap fabric from China and Hong Kong, thereby jeopardizing not only India’s fabric production but increasing exports. Malegaon. being a central point of grey fabric production, has been hit hard by the new policies. If government imposes taxes on this sector of the industry, the costs will go up and power looms will be unable to offer competitive prices in the export market. As it is. India’s exports in the world market are just 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 reforms and too much taxation.
The power loom industry in Malegaon has for some time now been in a precarious situation owing to fluctuating demand for fabric, power problems and communal trouble.
Malegaon workers had to grab and hold on to any job at any wage for they never know when a loom will close down.
A government ruling in 1971 set down minimum wages for workers, but rarely are they given the stipulated monthly salary ot approximately Rs.3. 000. Loom owners have
132 exploited a situation where there is no dearth of labour to pay well below the minimum
wage. Such is the desperation in Malegaon that you can pick up anyone off the road and he
is willing to work in the loom for any amount.
The prices of mill made and power loom cloth
The market prices of power-loom grey cloth for cotton and synthetic increased by
8.3 percent and 9.2 percent in March 2003 as compared to March 2002. The prices of
blended cloth remained at the same level. During the five-year period, that is March 1998 to
March 2003, prices of cotton cloth increased by 27.9 percent, blended cloth by 0.9 percent while synthetic cloth declined by 0.7 percent. In terms of compounded rate of growth
(CARG), the prices of 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.
Mill Cloth Power-loom Cloth (Grey) Cotton Cloth Blended Cloth Synthetic Cloth Market Prices Period Synthe Ex- Cotton Blended Retail Ex-mill Retail Ex-mill Retail tic mill Cloth Cloth Cloth 1998 31.98 46.39 43.04 66.51 51.47 82.03 12,39 17.00 9.66 1999 32.30 47.08 43.10 65.82 52.30 82.37 14,56 17.15 7.49 2000 32.47 45.80 44.67 64.79 52.67 76.91 14.79 17.15 8.63 2001 31,68 45.32 44.87 63.87 51.35 75.63 15.22 17.15 8.91 2002 33.15 49.71 46.20 68.88 51.35 75.63 14.63 17.15 8,78 2003 34.37 50.20 46.89 68.52 54.30 76,27 15.85 17.15 9.59 Note: Retail prices inclusive of Hxcisc dun' and sales rax .Source: Price reports from the mills and Power-loom cloth- I'ecoya trend
COTTON FABRICS MADE UPS TOTAL % YEAR Sq.mtrs % Rs. % Rs. %
1461.20 11.05 22941.65 4.72 26152.15 12.29 49093.80 8.62 1998-99
1315.80 3.53 21908.25 9.43 2 3 2 90.68 16.06 4 5 1 98.93 12.75 1997-98
1270.94 27.26 20020.97 20.79 2 0 0 6 8 .4 8 24.65 40089.45 22.69 1996-97
9 9 8 .6 9 5.20 16574.98 18.01 16100.05 18.10 32675.03 18.05 1995-96
949.28 30.88 14045.64 50.87 13632.47 44.98 27678.11 47.91 1994-95
725.29 - 9309.46 - 9 40 3 .2 6 - 18712.72 - 1993-94
Source: Office of Pedexil. Mumbai.
133 Part II
Power loom Sector in Maharashtra
Maharashtra, Shivaji’s country, is a rugged land befitting people with a long history
of velour and artistic skill. Maharashtra is the third largest State in India both in area and
population. The State is bounded by the Arabian Sea in the west. Gujarat in the northwest.
Madhya Pradesh in the north, Andhra Pradesh in the southeast, and Karnataka and Goa in
the south. Historically, Maharashtra falls into three regions; western Maharashtra, Vidarbha,
and Marathwada. The State of Maharashtra forms a huge irregular triangle with its base on
the west coast of India, over looking the Arabian Sea. The Central Indian tableland merges
with undulating hill ranges, which grow into the majestic Western Ghats before swooping
down to palm- fringed beaches. Caves and temples with artistic embellishments of
unimaginable beauty mark the land and attest to the skill of a cultured people. Today, this agricultural land is one of the major industrial States of the country. About 70% of the
people in Maharashtra depend on agriculture. The principal food crops are rice, wheat, jawar. bajra, and pulse. The important cash crops are cotton, sugarcane, groundnut and tobacco. With its key location linking the northern and southern parts of the country,
Maharashtra is India's Industrial and economic back bone and provides opportunity galore for enterprising entrepreneurs. Although the State accounts for 9.2% of the total population of the country, it shares about 11% of industrial units, over 17% of labour, about 16% of investment, and 23% of the value of the industrial output.
Table 3.14: Maharas itra at a glance I Items 2000-01 2001-02 1. A) Revenue Receipts 12.26.095 12.702.33 b) Subsidy for State Govt. 373.25 00 Total receipts (a+b) 11,887.70 12.702.33 2. A) Expenditure 14.003.47 13.549.46 b) Less expenses Capitalized 1) Interest & Finan.charges 161.64 101.12 II) Other expenses 205.79 220.25 Total (I+II) 367.43 321.37 c) Other Expenses 233.65 204.23 Total Expenses ((a-b+c) 13,869.69 13,432.32 3. A) Profit before Tax -1981.99 -729.99 B) Prior period charges -859.52 190.53 Deficit -2.842.51 -539.46 Ref. I 'x-onormc Sun'ev of Maharashtra, 21102 - 03
Directorate of Economics & Statistics, Planning Departnnent, Govt, of Maharashtra, Mumbai.
134 Table 3.15: Maharashtra At A Glance (Selected items) II Item 1960-61 1970-71 1980-81 1990-91 2001-02 * 1) Geographical Area Thousand Sq.Km. 306 308 308 308 308 2) Administrative Setup Revenue Divisions 4 4 6 6 6 District 26 26 28 31 35
Tahesils 229 235 301 303 353 Inhabited Villages 35,851 35.778 39.354 40.412 43.412 Un-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 96,752 Male 20,429 26,116 31.415 40.826 50,334 Female 19,125 24.296 30.369 38.111 46,418 Rural 28,391 34,701 40,791 48,395 55,732 Urban 11,163 15,711 21,993 30.542 41,020 Scheduled caste 2,227 3,177 4,480 8.758 N.A. Scheduled Tribe 2.397 3.841 5.772 7,318 N.A. Density of Population per Sq.Km 129 164 204 257 314 Literacy rate 35-1 45-8 57-1 64-9 77-3 Sex Ratio 936 930 937 934 922 % Of Urban Population 28 31 35 38 42 4) Electricity (Mil ion K WF[) Total generation 3.268 9.134 18,751 37.311 64.138 Total Consumption 2,920 7.650 14,034 30.775 46.338 Indus. Consumption 1.853 5.312 8.130 14.706 17,435 Agricultural Consumption 15 356 1.723 6,604 8,730 Domestic Consumption 260 732 1.779 5 11.901 5’ Co-operation Primary Agricultural Co-operatives. 21,400 20,420 18,577 19,565 20,674 Membership (’000) 2,170 3,794 5,416 7,942 10,340 Total No. Of Co-operatives 31,565 42,597 60,747 1,04,620 1,65,789 Total Membership {'000) 4,191 8,581 14,783 26,903 43,939 Working Capital (In crores) 291 1,490 5,210 24,283 1,41,004 Ref, Economic Sun t'V of Maharashtm, 2002 - 03
The above two tables, Maharashtra at a glance I and II highlight the following details.
The numbers of districts in Maharashtra have increased from 26 to 35 and the
number of towns from 268 to 378 from 1960 to 2001. The number of towns and
urban population has been increasing continuously very fast.
From 1960 to 2000. in a span of fort\ >ears. its population has increased by 2.5
times and reached to 96,752 lakhs
135 *> In Maharashtra 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 of 11.163 thousand. It
records an increase of 267.46 percent.
❖ Literacy ratio has gone up from 35.1 percent to 77.3 percent which means an increase of 1.2 times.
❖ Maharashtra has more electricity generation than it's consumption requirements. It means it has surplus electricity.
*1* The numbers of co-operative societies have increased from 31,565 to 1.65.789, an
increase of 4.25 times in a span of forty ears.
♦♦♦ Industrial cities population is 5.95 percent of the total population of 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 Maharashtra (2000-01) Name of the Industry Percentage Industry Percentage Chemicals 17.60% Basic Metals 5.80% Food products & beverages 16.10% Motor Vehicles 4.70% Refined Petroleum 12.90% Furniture 3.30% Machines & Engineering. 8.00% Others 24.70% Textiles 6.90% TOTAL 100.00% Source; Ref. Economic Survey of Maharashtra. 2002 - 0.i
In Maharashtra 5"^ top industry is te.xtile with a share of 6.90 percent.
136 Table 3.17: Growth of Textile Industry in Maharashtra Item s U nit 1998-99 1999-00 2000-01 2001-02 2002-03 Cotton/IMan-made Fibre No 201 205 207 207 209 Textile Mills Spinning Mills (Non-SSI) No 124 128 130 129 131 Composite Mills (Non-SSI) No 77 77 77 78 78 Spinning Mills (SSI) No 11 11 12 15 15 Exclusive Weaving Mills No 68 69 69 70 71 (Non-SSI) 100% Export oriented Units No 17 18 17 18 19 Power loom units No. 175.135 178,402 183,459 183,837 188,268 Man-made fibre units No. 5 5 5 5 5 Man-made filament yarn No. 9 9 9 9 9 units No. of power processing No. 249 NA NANANA units Capacity Installed Spindles (SSI+Non-SSI) No. 000 5043 5166 5212 5218 5173 Rotors (SSI+Non-SSl) No. 43860 44364 45972 46572 47212 Looms -Organized Sector No. 42317 41732 41203 41227 41504 No. of Power looms No. 672102 692603 707145 709438 730945 Man-made Fibres Mn.Kg 246.75 246.75 244.95 244.95 246.75 Man-made filament Mn.Kg 281.30 281.30 306.30 302.70 325.80 Production of "ibres Raw cotton LakhBales 26.50 38.00 20.50 33.50 26.00 Man-made fibres Kg. 000 226360 236971 253959 252427 263699 Workers on roll Spinning Mills and No I769I8 178782 180541 180926 180682 Composite Mills (Non-SSI) Spinning Mills (SSI) No 723 723 854 1084 lOIO Exclusive Weaving Mills No 8199 5794 5982 5997 6199 (Non-SSI) 100% Export oriented Units No 5844 6885 7075 7630 7853 Cotton consumption by Mills Non-SSI Kg. 000 340442 336132 329798 308661 291225 SSI Kg. 000 1992 3545 j 4275 5348 5818 Production of Yarn Cotton Yarn Kg. 000 268386 272069 271961 251325 234901 Blended Yam Kg. 000 79038 81434 75332 66627 62806 100% NOn-cotton Yam Kg. 000 6977 9026 14498 20640 26413 Total Spun Yarn Kg. 000 354401 362529 361791 338592 324120 Man-made filament Yam Kg. 000 270728 279338 293803 308254 352517
Sourcc: ('ompendium of Textiles. 2003
The growth of textiles in Maharashtra has not been significant. All three sectors of textiles have grown slightly. Maharashtra has the highest number of power looms in India.
The number of power looms has increased from 6.72.102 in 1998-99 to 7.30.945 showing an increase of only 8.75 percent in a span of 4 years. This is a very slow growth rate of power looms in the state.
137 Maharashtra Government’s steps for the power looms
Revival of Power-looms With Foreign Assistance
Government has launched the Technology Mission on Cotton (TMC) to improve the productivity and quality of cotton, ensuring the availability of quality cotton.
❖ For modernization of textile industry, the Technology Up gradation fund Scheme (TUFS) has been launched w.e.f 1.4.99 for a period of 5 years.
❖ A chain of textile testing laboratories has been set up to held industry in assessing the quality of textiles.
<♦ For import of capital goods, the Export Promotion of capital Goods (EPCG) scheme has been simplified.
❖ Import of cotton is also under OGL to help industry to import requisite quality of raw cotton.
❖ Efforts are on to rationalize fiscal duty structure in consultation with industry and other concerned organizations.
❖ Initiated measures for application of information technology in the textile trade and industry.
The Power-loom specific schemes - Modernization of Power-loom Service Centers
(PSCs); Up gradation of PSC labs; Group Insurance Scheme for power-loom workers; setting up of Computer Aided Design Centers and enhancement of Power-loom Exporters
Entitlement quota from 10% to 15% are under operation.
Government has announced the new National Textile Policy - 2000. The main objectives of the new Policy are to facilitate the textile industry to attain a pre-eminent global standing in the manufacture and export of clothing; to equip the Industry to withstand pressures of import penetration and maintain a dominant presence in the domestic market; to liberalize controls and regulations so that the different segments of the textile industry are enabled to perform in a greater competitive environment.
Rs 175 crores Package for Power-looms
In an attempt to boost the power-loom production in the state, the government of
Maharashtra announced Rs 175-crore revival package in 2002. This package will attract more investment in the state, and also strengthen the existing units, the majority of which are facing higher cost of 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 government) of outstanding loans (to the lending agencies), and restructuring of the
power rates. Here are over 17 lai^hs power-looms across the country. Of this, there are around 7.5 lakhs are in Maharashtra alone. The package should benefit power-loom clusters
located in Solapur, Bhiwandi. Malegaon, Ichalkaranji and Nagpur region.
The state package is aimed at helping the local power-looms units. If implemented, state power-looms will be strengthened, and will help them make their production cost- effective Power tariffs too will directly help the state's power-looms units to become more competitive as compared to the domestic as well the international market. The package will also attract new investments in the state. The package includes power tariff of Rs 1 per unit, against Rs 1.86 per unit charged. As per the revival package, the state government will offer a five per cent interest subsidy on capital loans for all power-looms. semi-auto, auto, jacquards, shuttle-less, terry towel looms and imported ones up to a capital investment of Rs
1 crores. Existing units too will be eligible to claim the 5 per cent interest subsidy under the
Central government's existing Technology Up gradation Fund (TUFs) scheme.
Furthermore. 50 per cent of the unpaid debt or the Non-Performing Assets (NPA) of existing power-loom units will be paid by the government directly to the lending agencies and the balance 50 per cent will have to be paid by the units over a span of five years.
However, even the balance 50 per cent amount will also simultaneously be eligible for the five per cent subsidy from the state as well as central government. Add to that, capital investment 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 make effort to become 'powerful' 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 of the scheme despite a number of relaxations like 5% rebate on interest reimbursement under TUFs, an offer of direct Capital Credit linked subsidy, exemption of 16% excise duty on automatic looms etc.
The problem appeared to be because of inadequate book keeping by the weavers and the reluctance of 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 Part III
History of power weaving in Malegaon
Power weaving in Malegaon
The power loom industry has a long history of its development and progress. In the
year 1857 due to war of the independence (Mutiny) in the North part of India, some
persons had migrated from U.P. and settled down at the bank of Maosam river due to
availability of ample water, some of 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 Madanpura area. The weaving process at that time was on primary stage
therefore they used handlooms for manufacturing the cloth. The handloom industry at that
time was commonly adopted and nobody desired to install the Power loom. Even the
commission agent being the major participant discouraged for such installation by
refusing to sell the sarees produced on Power loom. At that time the simple design of the
coloured sarees were produced. They used old production technique and method for dying
sizing and warping the beams. The production was also on a small scale covering a
limited area of Maharashtra. All transactions were completely on cash basis. They
enjoyed the prosperity of war period and owned much more than ever. The product
manufactured was always in demand and source in its availability. In India all sectors of
economy accepted the effect of industrial revolution and hence this industry has no
exception. Due to usage of mechanized machines in the other sector of economy the
production had accelerated rapidly.
One manufactures 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 company named. The Amalgamated
Company established its units at Malegaon. This company generated the electricity with
the help of diesel engines. It's head office was in Bombay. In the beginning as weavers
had limited funds, for promoting its usage the company had provided certain incentives to
the manufacturers. The incentives were in the form of free installation of equipments and
other services required from time lo time along with the exemptions of any deposit. In
1980 the unit was taken over by the Maharashtra State Electricity Board (MSEB). The
140 industry enjoyed to its highest peai< during and after the period of control on cloth textile.
By the year 1940. the number of Power loom increased to 2000 and by 1943 to over 3000.
The establishment of common weaving shed and equipping such sheds with high power
diesel engines for generation of power become a common feature to this center. The first
weaving shed in the town was set up in 1950 having 24 Power loom urged by the
prosperity of the industry, more and more common sheds sprang on some of the sheds
were only in kaccha construction. The growth of 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 Malegaon. was purchased
from one mill discarding the old looms. The weavers realized the higher speed of 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 of cloth, the number of Power loom increased very fast. Initially some
people started establishing " Common Weaving 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 Malegaon. Nearly 70% of the population of the city depends upon this industry. It has population of three lakhs, forty two thousand, and four hundred and thirty one. In direct employment per loom comes to 2.5 persons per loom and indirect employment is nearly 2 persons per loom. The Power loom industry of the city is the source of income to the Government too. The town generates crores of rupees of revenue because of Power loom The Malegaon municipality collects nearly 70% of its total Octroi from yarn.
Profile of Industry in Malegaon
Really speaking this city is true symbol of a national integration due to its complex business structure and relation. The Muslim and non Muslim population is so mixed and tightened together w ith each other in the business relation that we cant separate them. Some parts of this industr\ are handled and developed with the efforts and contribution of
Muslims and other part is managed and controlled by non-Muslims. It is on excellent blend
141 of divergent community. It is surprising to note that whatever is the present condition of the
industry; it is developed and achieved with the efforts and contribution of their own hard
work. The real cause for the establishment of Power loom industry of Malegaon is the
availability of skilled and unskilled labour force at cheaper rate*
Table 3.18:The present situation of Power loom industry in Malegaon
Headings Details
Ownership Majority 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 Maharashtra, Karnataka and Andhra Pardesh.
Weekly requirements of one Power loom around 35-kilo gram. Cotton of 30 to 50 count.
Production 60% cotton. 30% polyester. 10% others
Machines Plain looms. Tration machines. Winding Machines,
Finance Limited bank loans, Most private loans from middlemen
Working Capital Business with limited working capital or no working capital
Electricity Supplied by Maharashtra State Electricity Board (MSEB).
Few number of oil or diesel engine used.
Personnel Labours. Mukadams, Tration machine operators, winders etc.
Accessories Purchased from Ahmedabad and Mumbai.
Demand Pattern Slack Season 8 months to 10 months every year.
Break even 1 month
Good Season: 1 month
Registration As per the registration order of 1986
Power loom Service Center in Malegaon
During 1997-98. modernization of PSCs at Malegaon was taken up.
142 Conclusion:
The power loom sector, an integral part of textile industry has completed hundred years of its inception. But unfortunately even today it is not fully developed and at par with the world standards in terms of quality and production. The sector in India. Maharashtra and
Malegaon is more or less in the same situation of backwardness. Though there is increase in the number of power loom units but it is haphazard and unsystematic.
An urgent and massive policy and action from the government and all other concerned is needed to put the sector on the right track of development.
Hope this study will prove positive in this regard.
143