Textile industry in India: a beacon of hope

Interview

Rajendra Agarwal has been a pioneer in the textile industry for over three decades now. Being a mentor and spokesperson for GRADO - new power brand by GBTL (formerly known as Grasim Bhiwani Textiles Ltd) and OCM, he is a firm believer of challenging the convention and daring to dream things that are otherwise seen as impossible.

He has been the driving force of innovative concepts like a combination gift box which has a pre-matched shirt length and trouser length and is used for festive gifting, and installation of a state-of-the-art liquid ammonia treatment plant to make wrinkle-free cotton in India.

In conversation with Deccan Herald’s Dalu Jose, Agarwal evaluates the present scenario of the Indian textile industry.

How important is the textile Industry for the Indian economy?

The second largest industry in India is Textile, the first being Agriculture, in terms of economic contribution and employment generation. Textile has been an old industry amalgamating itself with a rich cultural heritage. The textiles produced in India represent every sector of the country and are interlinked with people and their customs.

It traverses across hand woven in the unorganised segment and moves towards capital-intensive technological segments. According to many data, India is the largest jute producer in the world and the second producer of cotton and silk worldwide. This robust manufacturing only boosts employment opportunities, especially for people in rural areas.

Can you explain the history of the textile industry in India?

Indian history has always been illustrious – across a variety of industries. The traditional textile industry dipped during the colonial regime and shifted to modernised techniques around World War I and II. The Indian sub-continent was ripe for the growth of natural fabrics. It further gained impetus through independence regime where only ‘Swadeshi’ fabrics were promoted.

When it comes to natural fabrics, cotton was indigenously produced in the mid-1800s in pockets of Maharashtra and Gujarat. These areas continue to see growth to date. Wool mills sprang up in the north as well. As trade flourished, the manufacturing was not just restricted to cotton and wool but increased to poly blends as well.

In a nutshell, how would you explain the evolution of the textile industry in India?

The evolution of the textile Industry has been phenomenal. From being a country that produced to take care of domestic requirements, the sector has grown manifold to become the 2nd largest producer in the world.

Textile structures in technical applications are creating new market potential. Creative and successful considerations of a textile investment in widely diverse fields will shape our future and provide assurance.

The growth and success of Indian textile industries lie in the vertical integration of the policies and framework which have helped manufacturers in domestically subjugating the entire process which also bears an impact on the overall cost like raw material treatment, captive power generation etc. This has also led to the in-house production of cotton, jute etc to complement and support their own manufacturing portfolio. This again has an impact on the overall cost of the finished goods.

How has GST affected the industry?

Natural fibres (cotton, wool), which are currently exempt from tax, are taxed under GST. For example, it is levied at 5% for cotton and 18% for synthetics, while silk and jute are exempt. Despite this, the textile industry as a whole would benefit from the introduction of GST due to following changes-:

Breaking the input credit chain

There is an eminent gap in the flow of input tax credit especially because of a large portion of the industry functions in the unorganised sector.

An input tax credit is not allowed if the inputs are procured by registered taxpayers under the composition scheme or for the unorganised sector.

GST enables a smoother input credit system to shift the balance of power to the organised sector. GST would enable a smoother input credit system, which would shift the balance towards the organised sector.

Reduction in manufacturing costs

With the advent of GST, various fringe taxes like Octroi, entry tax, luxury tax etc are subsumed. This helps reduce costs for manufacturers.

Input credit allowed on capital goods

Currently, the excise duty paid is not allowed as an input tax credit. The import cost of procuring the latest technology for manufacturing textile goods is expensive. Whereas under GST, there will be input tax credit available for the tax paid on capital goods.

How would you describe the modernisation of the textile industry?

Modernisation is an ongoing process to fulfil both manufacturing and machinery requirements. It boosts not just production efficiency but helps rationalise labour, reduce maintenance and reduce the cost of production. Wonderful finishing technologies in processing imparted comforts and easy care to all fibre-based products.

While it is imperative for any manufacturing industry to audit internal systems and upgrade technology, government aids have also been commercially viable to invest in such areas. To eradicate the technological obsolesce in the industry, the government launched TUFS (Technology Upgradation Fund Scheme) in the mid-90s with a view to modernising the weaving and processing sectors. This fared well in the economy and a lot of manufacturers turned to this scheme.

However, modernisation is a continuous process and thereby interlinked with the development of high-tech machinery and adopting practices to make the workflow efficient and to optimise on production capacities.

What are the different types of fibres used in the industry?

Fundamentally, there are 4 types of fibres – natural, man-made, regenerated and metallic. Natural fibres are created from fibres of animal coats/ cocoons, and from various flora. They are usually breathable, soft and biodegradable.

Examples include cotton, silk, wool, linen, hemp, jute etc.

Man-made fibres are synthetic and completely made from organic or inorganic materials. They are properties based on what they are blended with or made from – they can be lightweight, moisture resistant etc.

Examples include polyester, nylon, acrylic, spandex, latex etc.

They are strong fibres and have a low cost of production.

In manmade fibre industry, Reliance and Aditya Birla Group revolutionised the production of polyester and viscose. For Grado brand fabrics we use both natural, manmade and its blends to give unique products to customers.

For regenerated fibres, the basic ingredient is natural but it is processed chemically. For example, viscose is made when wood pulp is treated chemically.

Metallic fibres are derived from lurex or silver. Zari in sarees is a common and well-known example. Apart from this, lurex is used on men’s fabric material for the selvedge.

Any eco-friendly technology that is being used in the textile Industry?

Eco-friendly technology in textiles is pioneered through biotechnology right from fibre production to final processing.

How does one keep up with the constantly changing trends and customer preferences in the industry?

Being completely entrenched in market dynamics is essential. Customer preferences, apart from being deeply rooted in native culture, are also steadily shifting to more westernised sensibilities. Colours, designs, blends vary not just across state borders but across age, income and social status. It is a very complex consumer psychographic that fits into this bracket.

How will textile industry be in the next 5-10 years?

The rise in income levels is expected to drive demand in the textile industry. India has abundant availability of raw materials such as cotton, wool, silk and jute. It also enjoys a comparative advantage in terms of skilled manpower and in the cost of production 100% FDI is allowed in the textile sector. To boost exports, free trade with ASEAN is allowed.