Slow down effect: Annual rate of closure of textile units in Gujarat is 39% over a decade; one lakh jobs lost

Textile industry in Gujarat, once considered the Manchester of India, are all set to see a thing of the past in the state. A new study by the Associated Chambers of Commerce and Industry in India (ASSOCHAM), of the top industry bodies, has said that Gujarat, over the decade between 2000-01 and 2010-11 experienced closure of 39 per cent of textile units per year, which is the highest for any state. “Gujarat registered maximum growth of about 39 per cent compound annual growth rate (CAGR) in non-operational textile units, i.e. from over 290 factories to over 2,800 factories during 2000-01 and 2010-11", the study said.

This was "followed by Punjab (35 per cent), Haryana (32 per cent), Himachal Pradesh (26 per cent) and Tamil Nadu (25 per cent)”, it said in a statement, adding, Gujarat alone has registered a loss of jobs to one lakh workers as a result. Poor show by Gujarat is particularly alarming, as the state happens to the highest producer of raw cotton -- about one-fourth of the country -- and has even come up with a textile policy in order to attract modern textile technology. Most of the cotton produced in Gujarat is exported either out of India or goes down south, mainly Tamil Nadu.
“About 30 per cent of total textile factories across India remained non-operational during 2000-2010 with Tamil Nadu alone having over half of the total non-operating textile factories”, said the study by apex industry body ASSOCHAM. “Of the total 17,987 textile factories across India, about 12,688 factories were operational and about 5,300 were non-operational as of 2010-11,” according to the study titled ‘State-wise assessment of textile sector & recommendations,” conducted by ASSOCHAM.
“While the total number of textile factories grew at a CAGR of about five per cent during the decade of 2000-01 and 2010-11, the non-operational textile factories grew at a whopping 23 per cent and the textile factories under operation grew at a CAGR of a meagre two per cent,” said Mr D.S. Rawat, national secretary general of ASSOCHAM while releasing the findings of the study.
The five states of Tamil Nadu, Gujarat, Punjab, Maharashtra and Uttar Pradesh (UP) together accounted for about 88 per cent of these non-operating textile factories, highlighted the ASSOCHAM study. “Tamil Nadu alone accounts for about 54 per cent of non-operating textile units followed by Gujarat (16 per cent), Maharashtra (over 10 per cent), Punjab (over four per cent) and UP (over three per cent).”
“Low productivity, lack of advanced manufacturing technologies, lack of foreign investments, supply chain bottlenecks, lack of economies of scale, labour related challenges, issues arising due to a fragmented industry and weak brand positioning are certain key reasons for non-operation of textile units,” said Rawat. “Increased domestic competition together with competiton from global players and high initial investment cost for state of the art production facilities are other emerging challenges being faced by Indian textile industry.”
The share of jobs lost due to non-operation of textile factories in India has increased from over six per cent in 2000-01 to about 42 per cent in 2010-11. “This is a matter of grave concern as the organized textile sector apart from creating significant number of jobs of over 14 lakh, it also contributes about four per cent to the Gross Domestic Product (GDP) and 10.1 percent to the total exports earnings,” added the ASSOCHAM secretary general.
As per the ASSOCHAM Research Bureau, Tamil Nadu has incurred maximum loss of over two lakh job opportunities followed by Gujarat which has lost over one lakh employment opportunities due to non-operation of textile factories.
Technology up-gradation, skill up-gradation, inflow of foreign investments, partnership with international labels, brand promotion, flexible labour policy are certain key suggestions listed by ASSOCHAM to make the textile industry financially viable thereby minimising the share of non-operational factories.

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