Understanding handloom crisis 15th oct2008

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This is a presentation prepare by me in October, 2008 for a meeting organised, on crisis in handloom sector in India, for handloom weavers and their leadership

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Understanding handloom crisis 15th oct2008

  1. 1. Understanding the Crisis:Understanding the Crisis: Macro and Micro FactorsMacro and Micro Factors Dr. D. NarasimhaDr. D. Narasimha ReddyReddy
  2. 2. BasicsBasics Handloom and powerloom are competing sectorsHandloom and powerloom are competing sectors Most of the powerloom workers are previously handloomMost of the powerloom workers are previously handloom weavers. However, powerloom requires workers than weaversweavers. However, powerloom requires workers than weavers Policy makers previously have exhorted handloom weavers toPolicy makers previously have exhorted handloom weavers to shift to powerloom for enhancing incomesshift to powerloom for enhancing incomes Suicides are indicators of a crisis, across the sector, and notSuicides are indicators of a crisis, across the sector, and not specifically related to family issuesspecifically related to family issues Scale of production does not explain suicides; why now and notScale of production does not explain suicides; why now and not beforebefore Handloom and powerloom are part of a global change process inHandloom and powerloom are part of a global change process in textilestextiles
  3. 3. Micro factorsMicro factors Low incomes due to low, inadequate andLow incomes due to low, inadequate and inappropriate wagesinappropriate wages Exploitative relations of productionExploitative relations of production Lack of marketsLack of markets High level of indebtednessHigh level of indebtedness Increasing output but reducing wages andIncreasing output but reducing wages and enhanced vulnerabilitiesenhanced vulnerabilities
  4. 4. EXISTING CLUSTERS IN INDIA Handloom Powerloom Shrinagar, Amritsar, Ludhiana, Panipat, Baluchar, Banaras, Bhagalpur, Baluchar, Bhuvaneshwar- Cuttack, Chanderi, Maheshwar, Burhanpur, Lohit (Arunachal Pradesh), Aashval, Patan, Bhuj, Surat, Paithan, Malegaon, Solapur, Kotah, Sanganer, Kanchipuram, Karur, Kannur, Pochampally, Madurai, Nagari, Salem, Rajapalayam, Dharmavaram, Narayanpet, Gadwal, Amritsar, Ludhiana, Bhagalpur, Burhanpur, Surat, Malegaon, Solapur, Mau, Kanpur, Bhilwara, Kishangarh, Ahmedabad, Ichalkaranji, Erode, Salem, Komarapalayam, Nagari, Bhongir, Sircilla, Bangalore.
  5. 5. Major Handloom Clusters in AP Handloom clusters Major products Gadwal, Ghattu, Rajoli, Narayanpet in Mahbubnagar district Sarees Pochampally, Koyyalagudem, Choutuppal, Ghattupal in Nalgonda District Ikat textiles Mangalagiri in Guntur district Saris, Dress materials, Venkatagiri in Nellore Sarees Dharmavaram, Peddapappur, Tadipthri, Yadiki in Anantapur district Silk Sarees Adoni, Gudur, Kodumuru, Kosagi, Nagaladinna, and Yemmiganur in Kurnool district Bedsheets, towels, Lungis Kothawada in Warangal district Cotton Durries Chirala, Vetapalem Prakasam district Sarees, Dress Materials
  6. 6. Handloom 13% Powerloom 63% Hosiery 19% Mill 3% Khadi, wool & Silk 2% EXISTING PRODUCTION CAPACITY Sector-wise Cloth Production in India in quantity terms
  7. 7. EMPLOYMENT POSITION Present Employment Generation in Different Sector of cloth manufacturing Mill 1% Hosiery 21% Khadi,wool&Silk 7% POWELOOM 30% Handloom 42%
  8. 8. Quote “Increased unit productivity mainly benefits the trader, often at costs which are not immediately obvious, to society and the environment” S.P.VERMA, Deputy Director (Tech.)& OIC, Regional Office of the Textile Commissioner, Ahmedabad
  9. 9. Agreement on Textile and Clothing World Trade Organisation Free Textile Trade
  10. 10. Global Trade Indian textile sector Contextualizing the Indian Textile Industry
  11. 11. Powerloom Mills Handloom Contextualizing the Indian Textile Industry
  12. 12. Global Trade Indian textile sector
  13. 13. Mill Sector Powerloom Garment Exporter/ Importers
  14. 14. Silk Yarn Cotton Yarn Man-made fibre Exporter/ Importers
  15. 15. Exports/ Imports Handloom Mills Garment Powerloom Spinning
  16. 16. InterInter--Sectoral issues: Access to YarnSectoral issues: Access to Yarn Increasing exports of yarn, especially cottonIncreasing exports of yarn, especially cotton yarnyarn Increasing exports of raw cottonIncreasing exports of raw cotton Higher custom duties on yarn importsHigher custom duties on yarn imports –– silk 30silk 30 percent, wool 10 percentpercent, wool 10 percent Volatility in yarn pricesVolatility in yarn prices –– upwardly mobileupwardly mobile Poor sale distribution networkPoor sale distribution network Closure of cooperative spinning millsClosure of cooperative spinning mills
  17. 17. Sectoral issues: Access to capitalSectoral issues: Access to capital Decreasing private and public investments forDecreasing private and public investments for production inproduction in specific clustersspecific clusters Decline in institutional investment, esp.Decline in institutional investment, esp. NABARDNABARD Burgeoning debtsBurgeoning debts No/low loans from scheduled banksNo/low loans from scheduled banks
  18. 18. Per loom Scale of Finance (2004-05) Variety of cloth Existing scale of per loom finance Low Variety Cotton Rs.15,000 Special Variety Cotton Rs.24,000 Silk Rs.35,000 Polyester Rs.22,000
  19. 19. NABARD Targets for Credit Card Schemes Name of the scheme Target 2003-2004 2004-2005 Swarozgar Credit Card 50,000 (883) 75,000 Artisan Credit Card 30,000 (1603) 30,000 Figures in the bracket indicate the number of cards issued
  20. 20. Ground Level Credit & Refinance from NABARD (in crores) Year Total for NFS Working capital for weavers Coop Societies. 2001-2002 4,719 34 2002-2003 4,328 34 2003-2004 8,918 16 2004-2005 9,292 32
  21. 21. NABARD projections 2005-06 (in lakhs) Working Capital Activities PLP Projections Weavers Societies 11593.1 Powerlooms 95.63 Investment Credit Handloom 6507.29 Powerloom 176.8 Silk Reeling 33.0
  22. 22. Sectoral issues: Market distortionsSectoral issues: Market distortions DuplicateDuplicate handloom products in the markethandloom products in the market No legal protection to market transactions andNo legal protection to market transactions and handloom productshandloom products High disparity in production and marketingHigh disparity in production and marketing pricesprices Rising imports of fabrics and finished textilesRising imports of fabrics and finished textiles
  23. 23. Mills Garment Powerloom Imports
  24. 24. Threats Identified…Threats Identified… National Textile Policy 2000National Textile Policy 2000 National Foreign Trade PolicyNational Foreign Trade Policy Eleventh FiveEleventh Five--year Planyear Plan Apparel and Textile Policy of AP, 2005Apparel and Textile Policy of AP, 2005--1010 Annual budgets (State and Central)Annual budgets (State and Central)
  25. 25. Threats Identified…Threats Identified… Organised lobby groups such as CITI, AMFI,Organised lobby groups such as CITI, AMFI, CII, FICCI, etc.CII, FICCI, etc. Economists and bureaucrats (World BankEconomists and bureaucrats (World Bank trained)trained) Lethargy among handloom leaders and groupsLethargy among handloom leaders and groups
  26. 26. Sectoral TrendsSectoral Trends Policy, Institutional framework, Fiscal Instruments andPolicy, Institutional framework, Fiscal Instruments and interventions are straining the handloom sector as ainterventions are straining the handloom sector as a wholewhole Select powerloom clusters are reeling under depressedSelect powerloom clusters are reeling under depressed economic conditions due toeconomic conditions due to Increasing input costsIncreasing input costs Reduced trickling down of value created to the lower end ofReduced trickling down of value created to the lower end of the chainthe chain Limited adaptability and innovation thereby reducing marketLimited adaptability and innovation thereby reducing market access both in domestic and international marketsaccess both in domestic and international markets
  27. 27. Sectoral TrendsSectoral Trends Powerloom workers are more stressed thanPowerloom workers are more stressed than handloom weavershandloom weavers In a cost competition scenario, powerloom isIn a cost competition scenario, powerloom is unviable, without value addition andunviable, without value addition and government supportgovernment support Suicides in handloom sector are happening andSuicides in handloom sector are happening and are likely to increase. Only better policies canare likely to increase. Only better policies can prevent further suicidesprevent further suicides
  28. 28. Way ForwardWay Forward Review of national textile policyReview of national textile policy Review of AP Apparel and Textile PolicyReview of AP Apparel and Textile Policy Higher budget allocations for handloom in 11Higher budget allocations for handloom in 11thth five year planfive year plan Implementation of HR ActImplementation of HR Act Enactment of Textile Labelling Act, for nonEnactment of Textile Labelling Act, for non-- handloom productshandloom products Review of provisions for handloom in nationalReview of provisions for handloom in national foreign trade policyforeign trade policy
  29. 29. Way ForwardWay Forward Women oriented welfare and developmentalWomen oriented welfare and developmental programmesprogrammes HS classification for handloom productsHS classification for handloom products SHGs and cooperatives in remote areasSHGs and cooperatives in remote areas Cleaning of handloom cooperatives throughCleaning of handloom cooperatives through gradationgradation Handloom products in sensitive and specialHandloom products in sensitive and special productsproducts
  30. 30. Way ForwardWay Forward Inclusion of handloom sector in NREGAInclusion of handloom sector in NREGA Minimum wages have to be revised, to enable women to getMinimum wages have to be revised, to enable women to get proper and appropriate wages for their work, while beingproper and appropriate wages for their work, while being dynamic to the inflationary trends.dynamic to the inflationary trends. Women should get identity cards, artisan credit cards andWomen should get identity cards, artisan credit cards and insurance coverage.insurance coverage. Bridge schools for school dropouts have to be established inBridge schools for school dropouts have to be established in handloom clusters and villages.handloom clusters and villages. Households with problems of hunger should be providedHouseholds with problems of hunger should be provided with Antyodaya cards and ration cards.with Antyodaya cards and ration cards. Mobile health centres have to be established in major handloomMobile health centres have to be established in major handloom clusters and villages.clusters and villages. Exclusively for women, handloom cooperative societiesExclusively for women, handloom cooperative societies have to be established.have to be established. Hank yarn should be supplied to women through womenHank yarn should be supplied to women through women cooperatives and groups.cooperatives and groups.
  31. 31. Way ForwardWay Forward Cleaning up of All India Handloom Board and otherCleaning up of All India Handloom Board and other relevant committees of political and businessrelevant committees of political and business appointments, with knowledgeable handloomappointments, with knowledgeable handloom representativesrepresentatives Separate handloom growth and development policySeparate handloom growth and development policy Establishment of Handloom Chambers of CommerceEstablishment of Handloom Chambers of Commerce Establishment of HEPC offices in all State capitalsEstablishment of HEPC offices in all State capitals Review and improvements of handloom institutions,Review and improvements of handloom institutions, and their performancesand their performances Curtailing of handloom funds diverted to NIFTCurtailing of handloom funds diverted to NIFT
  32. 32. Thank You!Thank You!

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