Gujarat was once considered the hub of India’s textile market with Ahmedabad known as the ‘Manchester of the East’ leading from the front. However, the state is slowly turning into a land of non-operational textile mills.
This has been found in the latest Assocham report which states the number of non-operational textile mills in Gujarat has increased 10 times between 2000-01 and 2010-11 from 290 to over 2,800. Due to this, over one lakh people have lost their jobs in the last decade.
The state has registered maximum growth about 39% CAGR in the non-operational textile units followed by Punjab (35%), Haryana (32%), Himachal Pradesh (26%) and Tamil Nadu (25%), which also registered the maximum number of factories being closed down.
About 30% of the total textile factories across India remained non-operational during 2000-2010 with Tamil Nadu having over half of them, according to a recently concluded study by the Associated Chambers of Commerce and Industry of India (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 a study titled ‘State-wise assessment of textile sector & recommendations’.
The total number of textile factories grew at a compounded annual growth rate (CAGR) of about 5% during the decade of 2000-01 and 2010-11, said DS Rawat, national secretary general of ASSOCHAM while releasing the findings of the study.
“The non-operational textile factories grew at a whopping 23%. On the other hand, under operation of textile factories grew at a CAGR of a meagre 2%,” he said.
Stating reasons, the study says that low productivity, lack of advanced manufacturing technology, 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.
“Increased domestic competition coupled with competition from global players and high initial investment cost for state-of-the-art production facilities are other emerging challenges being faced by the Indian textile industry,” said Rawat.
The share of jobs lost due to non-operation of textile factories in India has increased from over 6% to about 42%. “This is a matter of grave concern as the organised textile sector apart from creating significant number of jobs of over 14 lakh, it also contributes about 4% to the GDP and 10.1% to the total exports earnings,” added Rawat.