35% workers in textile sector remain unemployed
No other sector of industry employs so many people as textiles. But now the textile barons are busy handing out pink slips.
The textile commissioner's office in Bombay says that almost 349,000 of the total 997,000 workers in the industry remained 'unemployed' as on June 30, 2001. In other words, 35 per cent of the workers 'remained unemployed' on the day.
Textile industry sources say that some 15,000 jobs have been lost over a period of 15 months during March 2000 and June 2001. According to senior textile ministry officials, the current financial year will not provide any respite and a higher number of workers are likely to be 'left unemployed'.
The downsizing follows the sagging fortunes of the industry. The latest data available with the textile commissioner's office show that as many as 396 textile units, out of the total 1,850 registered mills in the country, had downed their shutters by June 30, 2001. Forty-seven mills have closed down in the last 15 months alone.
Reliance Industries, as a part of its rightsizing plan, has laid off some 4,600 workers at its textiles division, more than half the 7,800 employed last year. The Aditya Birla group flagship Grasim Industries has reduced its workforce by almost 1,350 in the textiles and fibres divisions.
The Nusli Wadia flagship Bombay Dyeing is planning to reduce its existing workforce by 50 per cent during the current year from the total employee strength of around 5,500 people. The move follows the finalisation of a recast plan which will result in its entire processing, dyeing, printing facilities and a major part of the spinning and weaving activities moving out of Bombay to reduce employee costs.
Bombay Dyeing has also closed down operations at its Jamnagar (Gujarat) spinning unit and the Roha (Maharashtra) processing unit and earlier, had offered VRS to all the employees of the plants. The company, however, did not disclose details of the move.
A senior Bombay Dyeing official said: "Employee costs are fixed costs and have a major impact on the total expenditure. Hence, apart from downsizing, there is no other alternative to improve performance in such a competitive environment."
"Outsourcing is a cheaper alternative as it gives one the advantage of flexibility and requires no infrastructure set up," he added. The government's recent decision to impose a 16 per cent excise duty on garments has put pressure on margins, resulting in re-enforcing the outsourcing model.
Others, like the Basant Kumar Birla-controlled Century Textiles, have chosen to regulate and reduce production as per the demand. Century Textiles has undertaken a production cut of 20 per cent at its main plant in Bombay. Senior Century officials said, "VRS is a continuous process and one always looks at this possibility."
While the primary reason for the large-scale closure is unviable operations that have resulted from the use of outdated technology, what has compounded the problem is a shift in the consumer preference from cotton textiles to synthetics and semi-synthetics, industry sources said. In fact, the synthetic market has overtaken the cotton fabric market in size, thanks to the cost advantage enjoyed by it.
"The world over, synthetic fibre is considered to be meant for the masses and cotton for the higher-end market. There is no reason why the same should not happen in India," says, OP Lohia, managing director, Indo Rama Synthetics (I).
If the past was tense, the future seems imperfect for the industry.
For a while, the Indian textile industry did thrive on exports to the West, especially the USA. However, competition from countries like China and Bangladesh has started hitting domestic export to the US very hard.
The government, on its part, has set a target of exports worth $50 billion by 2010, up from the current $12 billion.
Few in the industry expect to touch the target.