Question

Describe the problems and the solutions of cotton textile industry in India?

Answer 1

Following are some of the problems faced by the industry.

(a) Shortage of raw materials-Raw material determines 35 % of the total production cost. The country is short of cotton, particularly long- staple cotton which is imported from Pakistan, Kenya, Uganda, Sudan, Egypt, Tanzania, U.S.A. and Peru. It is pity that despite largest area under cotton (26 % of the world acreage) the country accounts for only 9 percent of the world output of cotton. Fluctuating prices and uncertainties in the availability of raw material cause low production and sickness to the mills.

(b) Obsolete machinery-In India most of the cotton textile mills are working with old and obso­lete machinery. According to one estimate in India over 60 % of the spindles are more than 25 years old. The automatic looms account for only 18 % of the total number of looms in the country against the world average of 62 % and 100 % in the United States. Obsolete machinery leads to low output and poor quality of goods as a result of which Indian textile goods are not able to face competition in the international market.

(c) Power shortage-Textile mills are facing acute shortage of power. Supplies of coal are diffi­cult to obtain and frequent cuts in electricity and load shedding affect the industry badly. This leads to loss of man hours, low production and loss in the mills.

(d) Low productivity of labour- On an average, an Indian factory worker only handles 380 spindles and 2 looms as compared to 1,500-2,000 spindles and 30 looms in Japan. If the productivity of an American worker is taken as 100, the corresponding figure for U.K. is 51 and for India only 13. Also, industrial relations are not very good in the country. Strikes, layoffs, retrenchments are the common features of many cotton mills in the country.

(e) Competition in foreign market-The Indian cotton textile goods is facing stiff competition in foreign markets from Taiwan, South Korea and Japan whose goods are cheaper and better in quality. It is really paradoxical that in a country where wages are low and cotton is internally available, production costs should be so high.

(f) Competition from the decentralised sector- An important factor for the growing sickness of the mill sector is the growth of the decentralised sector. Being a small-scale sector, the Government allowed excise concessions and other privileges. This accompanied with low wages have led to the low cost of production in the decentralised sector.

(g) Government controls and heavy excise du­ties-the cotton textile industry has greatly suffered due to wrong and faulty policies of the Government. In the past, the Government has sought control of price, distribution of yarn, the pattern of production, etc.

At one time the price of the cloth was fixed by the Government below the cost of production. Similarly, under the yarn distribution scheme of 1972, the Government made it obligatory on all mills to supply 50 % of the production of yarn to the decentral­ised sector at reduced rates.

The high import duty on imported cotton, an upward revision of the price of the indigenous cotton and heavy excise duty on cotton cloths are other detrimental factors. Another prob­lem of the mill sector is related to the production of controlled cloths wherein mills are incurring huge loss.

(h) Sick mills-In India about 130 cotton mills are sick and incurring constant losses. The Govern­ment has set up the National Textile Corporation (NTC) to run these sick mills. Although the govern­ment has invested huge money to rehabilitate and modernise these mills, these mills are yet to become profitable.

The cotton textile industry of the country is thus facing both short-term and long-term problems. Former includes problems of high prices, shortage of raw materials, liquidity problems due to poor sales and accumulation of huge stocks due to poor demand in the market. The long-term problems of the industry include the slow pace of modernisation, outdated technology resulting in low productivity, the high cost of production, low profitability and in­creasing sickness of mills.

Answer 2

The problems and solutions of cotton textile industry in India,are as follows -

• Old technology :

The machines and technical equipments which are used in the cotton textile industries,are very old and have low production efficiency.

Solution : Establishment of the newer technology for the industrial production process.

• Foreign competition :

The foreign countries are also coming forward in the market competition with their latest technology and great marketing strategies.

Solution : We have to upgrade our production process and marketing strategies.

• Insufficient resources :

In our country,there are many resource related problems. Like the insufficient amount of efficient labour in reasonable rates, insufficient amount of raw materials and power supply etc.

Solution : There is no direct solution about this,only industrial revolution can solve these major problems.

• Government taxation :

Inspite of insufficient production,the government is still applying a large amount of taxes on the industry which is not a good sign for a healthy of these industries.

Solution : The only solution of this problem is relief packages from the government.