Getting the textile industry back could be Maharashtra's golden ticket

On the face of it, the Maharashtra government’s decision to allow sick cooperative mills to sell off their excess lands for survival seems to be a practical solution. Given its substantial investments to keep the mills running, it is but obvious that the state is eager to cut losses and look for a viable financial solution. Fifty per cent of these mills — mostly located in the small towns and districts of Maharashtra — have piled up losses over the years. The cumulative amount — with each unit adding to the burden Rs20-Rs40 crore — runs into well over a thousand crore of rupees. But, how much of this amount can be recovered by selling surplus land is the moot question since real estate prices in the rest of the state cannot be compared to the rates in Mumbai — the most expensive city in the country. 

It remains to be seen how such a move fits into the government’s overall scheme of shoring up the once thriving textile industry. The much-touted textile hub policy, which has been expanded to include nine districts where mills would be set up to stem the spate of farmer suicides, has been formulated to realise that objective. The decision to choose Amravati as a site to encourage a whole range of activities — from processing to marketing — was the first step to test the waters for a series of public-private partnerships across the state for similar textile townships. But, with existing mills becoming a cause of financial stress, the government will be ill-advised to pursue a grand plan. 

In spite of the textile department’s claim in 2014 that private players have invested Rs6,500 crore in the sector, the benefits of the cash-infusion are yet to show. On the contrary, the situation has grown even more precarious as cooperative mills in the state has decided to go for a day-long strike on September 1 to draw the government’s attention to lack of business. With no purchase orders for the past one month, owing partly to the Chinese stock market crash, mills are increasingly becoming irrelevant. 

The plight of the textile industry is at odds with the growing demand for man-made fibres worldwide. There is also a huge global market for textile machinery, which Maharashtra can tap into if it can persuade European, Japanese and Chinese textile machinery manufacturers to set up base in the state. India continues to import 50% of its textile machinery. In spite of the many cuts the sector has suffered, Maharashtra’s powerloom capacity is still enormous — about one-third of the country’s total potential. 

There is an urgent need to revive the textile industry. The state government’s ambitious  dream of setting up hubs for which it is looking at an investment of Rs80,000 crore over five years should also include measures to make the cooperative mills run on their own steam and not fall back on government largesse for survival. 

However, such a move also runs the risk of turning into a cause for a major political stir. Already, opposition parties are crying foul over the government’s decision to allow mills to sell unutilised land — sensing a design of the BJP-Sena government to weaken the Congress and NCP’s hold over these cooperatives. If these sick establishments do not embark on a course-correction, it will be prudent for the government to gradually withdraw patronage.