CHAPTER - III AN OVERVIEW OF ENTREPRENEUR AND ORIGIN AND DEVELOPMENT OF TEXTILE INDUSTRY

CHAPTER - III AN OVERVIEW OF ENTREPRENEUR AND ORIGIN AND DEVELOPMENT OF TEXTILE INDUSTRY 3.1 EVOLUTION OF THE CONCEPT OF ENTREPRENEUR The word entrepreneur has been taken from the French language where it cradled and originally meant to designate an organiser of musical or other entertainments. Oxford English Dictionary (in 1897) also defined an entrepreneur in similar way as the director or a manager of a public musical institution, one who gets-up entertainment, especially musical performance. In the early 16th century, it was applied to those who were engaged in military expeditions. It was extended to cover civil engineering activities such as construction and fortification in the 17th century. 1 It was only in the beginning of the 18 th century that the word was used to refer to economic aspects. In this way, the evolution of the concept of entrepreneur is considered over more than four centuries. Since then, the term entrepreneur is used in various ways and various views. These views are broadly classified into three groups, namely, risk-bearer, organiser and innovator. The discussion of each views are given below. 1 T.C. Cochran, Entrepreneurial Behaviour and Motivation, Explorations and Entrepreneurial History, Vol.2, 1950, pp.304-307. 43

CHARACTERISTICS OF AN ENTREPRENEUR According to business, in history of India it is pointing out the names of persons who have emerged as successful entrepreneurs. For example, Tata, Birla, Modi, Dalmia, Kirlosker and others are well-known names of successful entrepreneurs in the country who started their business enterprises with small size and made good fortunes. Success or otherwise of a small enterprise is, to a great extent, attributed to the success or otherwise of the entrepreneur himself/herself. The following characters are mould up a man into entrepreneur. They are hard work, desire for high achievement, highly optimistic, independence, foresight, good organizer and innovative. FUNCTIONS OF AN ENTREPRENEUR An entrepreneur does perform all the functions necessary right from the genesis of an idea upto the establishment of an enterprise. These can be listed in the following sequential manner: Idea generation and scanning of the best suitable idea, determination of the business objectives, product analysis and market research, determination of form of ownership/organization, completion of promotional formalities, raising necessary funds, procuring machine and material, recruitment of men and undertaking the business operations. 44

TYPES OF ENTREPRENEURS Clarence Danhof 2, on the basis of his study of the American Agriculture, classified entrepreneurs in the manner that at the initial stage of economic development, entrepreneurs have less initiative and drive and as economic development proceeds, they become more innovating and enthusiastic. Basing on this, he classified entrepreneurs into four types. These are discussed in seriatim: Innovating Entrepreneurs, Imitative Entrepreneurs, Fabian Entrepreneurs and Drone Entrepreneurs. Following are some more types of entrepreneurs listed by some other behavioural scientists: Solo Operators, Active Partners, Inventors, Challengers, Buyers and Lifetimers. ENTREPRENEURSHIP CONCEPT OF ENTREPRENEURSHIP Like other economic concepts, entrepreneurship has been a subject of much debate and discussions. It is an elusive concept. Hence, it is defined differently by different authors. While some call entrepreneurship as risk-bearing, others view it innovating and yet others consider it thrill-seeking. Let us consider some important definitions of entrepreneurship to understand what entrepreneurship is all about. In a Conference on Entrepreneurship held in United States, the term entrepreneurship was defined as follows: 2 Clarence Danhof, Observation on Entrepreneurship in Agriculture, In : A. Cole (Ed.), Change and the Entrepreneur, Harvard University, Cambridge, 1949. 45

Entrepreneurship is the attempt to create value through recognition of business opportunity, the management of risk-taking appropriate to the opportunity and through the communicative and management skills to mobilise human, financial and material resources necessary to bring a project to fruition. 3 In the opinion of A.H. Cole, Entrepreneurship is the purposeful activity of an individual or a group of associated individuals, undertaken to initiate, maintain or aggrandise profit by production or distribution of economic goods and services. 4 According to Schumpeter, Entrepreneurship is based on purposeful and systematic innovation. It included not only the independent businessman but also company directors and managers who actually carry out innovative functions. 5 In all above definitions, entrepreneurship refers to the functions performed by an entrepreneur in establishing an enterprise. Just as management is regarded as what managers do, entrepreneurship may be regarded as what entrepreneurs do. In other words, entrepreneurship is the act of being an entrepreneur. Entrepreneurship is a process involving various actions to be undertaken to establish an enterprise. It is, thus, process of giving birth to a new enterprise. The Japanese proverb applies to him: Fall seven times, stand up eight. 3 4 5 John Kao and Howard Stevenson (Eds.), Entrepreneurship: What it is and How to Teach it?, Division of Research, Harvard Business School, 1984. Arthur H. Cole, Business Enterprise in its Social Setting, Harvard University Press, Cambridge, 1959, P.44. J.A. Schumpeter, op.cit., 1949 46

Though the term entrepreneur is often used interchangeably with entrepreneurship, yet they are conceptually different. The relationship between the two is just like the two sides of the same coin as depicted in the following Table 3.1. TABLE NO. 3.1 RELATIONSHIP BETWEEN ENTREPRENEUR AND ENTREPRENEURSHIP Entrepreneur Entrepreneurship Person Process Organiser Organisation Innovator Innovation Risk-bearer Risk-bearing Motivator Motivation Creator Creation Visualiser Vision Leader Leadership Imitator Imitation Thus, entrepreneurship is concerned with the performance and coordination of the entrepreneurial functions. This also means that entrepreneur precedes entrepreneurship. GROWTH OF ENTREPRENEURSHIP IN INDIA That a proper understanding of the growth of entrepreneurship of any country would evolve within the context of the economic history of the particular country becomes the subject matter of this section. The growth of entrepreneurship in India is, 47

therefore, presented into two sections, viz. Entrepreneurship during Pre-Independence and Post-Independence. Entrepreneurship during Pre-Independence The evolution of the Indian entrepreneurship can be traced back to even as early as Rigveda, when metal handicrafts existed in the society 6 This would bring the point home that handicrafts entrepreneurship in India was as old as the human civilization itself, and was nurtured by the craftsmen as a part of their duty towards the society Before India came into contact with the West, people were organised in a particular type of economic and social system of the village community. Then, the village community featured the economic7 scene in India. The Indian towns were mostly religious and aloof from the general life of the country The elaborated castebased diversion of workers consisted of farmers, artisans and religious priests (the Brahmins). The majority of the artisans were treated as village servants. Such compact system of village community effectively protecting village artisans from the onslaughts of external competition was one of the important contributing factors to the absence of localisation of industry in ancient India. 7 Unfortunately, so much prestigious Indian handicraft industry which was basically a cottage and small sector, declined at the end of the eighteenth century for various reasons. 8 These may be listed as: 6 7 8 R.V. Rao, Indian Handicrafts, Bookhomes Private Limited, Hyderabad, 1969, P.10. M.U. Deshpande, Entrepreneurship of Small-Scale Industries, Deep & Deep Publications, New Delhi, 1984, P.63. D.R. Gadgil, The Industrial Evolution of India in Recent Times (1860-1939), Oxford University Press, London, 1959, P.36. 48

1. Disappearance of the Indian Royal Courts, who patronised the crafts earlier; 2. The lukewarm attitude of the British Colonial Government towards the Indian crafts; 3. Imposition of heavy duties on the imports of the Indian goods in England; 4. Low-priced British-made goods produced on large scale which reduced the competing capacity of the products of the Indian handicrafts; 5. Development of transport in India facilitating the easy access of British products even to far-flung remote parts of the country; 6. Changes in the tastes and habits of the Indian, developing craziness of foreign products, and 7. Unwillingness of the Indian craftsmen to adapt to the changing tastes and needs of the people. The emergence of Managing Agency System which made its own contribution to the Indian entrepreneurship can be traced back to 1936 when Carr, Tagore & Co. assumed the management of Calcutta Steam Tug Association. The credit for this initiation goes to an Indian, Dwarkanath Tagore, who encouraged others to form joint-stock companies and invented a distinct method of management in which management remained in the hands of the firm rather than of an individual. Historical evidences also do confirm that after the East India Company lost monopoly in 1813, the European Managing Agency Houses entered business, trade and banking. 49

And, these houses markedly influenced eastern India s Industrial scene. It is.stated that the Managing Agency Houses were the real entrepreneur for that period particularly in Eastern India. Brinimer 9 holds the opinion that Agency Houses emerged to overcome the limitations imposed by a shortage of venture capital and entrepreneurial acumen though all may not agree squarely with this view. Before the review of entrepreneurial growth to the post-independence era, will be in the fitness of the things to shed some light on effects of partition on India s industrial economy so as to depict Independent India s industrial background. Entrepreneurship during Post-Independence After taking a long sigh of political relief in 1947, the Government of India tried to spell out the priorities to devise a scheme for achieving balanced growth. For this purpose, the Government came forward with the first Industrial Policy in 1948 which was revised from time to time. 10 The Government in her various industrial policy statements identified the responsibility of the State to promote, assist and develop industries in the national interest. It also explicitly recognised the vital role of the private sector in accelerating industrial development and, for this enough field was reserved for the private sector. The Government took three important measures in her industrial resolutions: 9 10 A.F. Brimmer, The Setting of Entrepreneurship in India, Quarterly Journal of Economics, Vol. 20(4), 1955, pp.555-560. S.C. Kuchhal, The Industrial Economy of India, Chaitanya Publishing House, Allahabad, 1963. 50

i) to maintain a proper distribution of economic power between private and public sector; ii) to encourage the tempo of industrialisation by spreading entrepreneurship from the existing centres to other cities, towns and villages, and iii) to disseminate the entrepreneurship acumen concentrated in a few dominant communities to a large number of industrially potential people of varied social strata. 11 The wave of entrepreneurial growth gained sufficient momentum after the Second World War. Since then the entrepreneurs have increased rapidly in numbers in the country Particularly, since the Third Five Year Plan, small entrepreneurs have experienced tremendous increase in their numbers. But, they lacked entrepreneurial ability however. The fact remains that even the small entrepreneurship continued to be dominated by business communities though at some places new groups of entrepreneurs too emerged. Also, there are examples that some entrepreneurs grew from small to medium-scale and from medium to large-scale manufacturing units during the period. The family entrepreneurship units like Tata, Birla, Mafatlal, Dalnua, Kirloskar and others grew beyond the normally expected size and also established new frontiers in business in this period. Notwithstanding, all this happened without the diversification of the entrepreneurial base so far as its socioeconomic ramification is concerned. 11 W. Malenbaum, Prospects of Indian Development, The Free Press. Glancoe, Illinois, 1962. 51

ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT The important role that entrepreneurship plays in the economic development of an economy can now be put in a more systematic and orderly manner as follows: Entrepreneurship promotes capital formation by moblising the idle saving of the public, it provides immediate large-scale employment. Thus, it helps reduce the unemployment problem in the country i.e., the root of all socio-economic problems, it promotes balanced regional development, it helps reduce the concentration of economic power, it stimulates the equitable redistribution of wealth, income and even political power in the interest of the country, it encourages effective resource mobilisation of capital and skill which might otherwise remain unutilized and idle, it also induces backward and forward linkages which stimulate the process of economic development in the country and last but no means the least, it also promotes country s export trade i.e., an important ingredient to economic development. Thus, it is clear that entrepreneurship serves as a catalyst of economic development. On the whole, the role of entrepreneurship in economic development of a country can best be put as an economy is the effect for which entrepreneurship is the cause. FACTORS AFFECTING ENTREPRENEURIAL GROWTH The emergence and development of entrepreneurship is not a spontaneous one but a dependent phenomenon of economic, social, political, psychological factors often nomendatured as supporting conditions to entrepreneurship development. These 52

conditions may have both positive and negative influences on the emergence of entrepreneurship. Positive influences constitute facilitative and conducive conditions for the emergence of entrepreneurship, whereas negative influences create inhibiting milieu to the emergence of entrepreneurship. This chapter aims at discussing some of the major conditions which influence the emergence of entrepreneurship in an economy. For analytical purposes, these conditions/factors are grouped and discussed under two categories, viz., economic factors and non-economic factors. These are discussed one by one. (i) ECONOMIC FACTORS From a strictly economic viewpoint, it can be said that the same factors which promote economic development account for the emergence of entrepreneurship also. Some of these factors are capital, labour, raw materials and market. (ii) NON-ECONOMIC FACTORS Sociologists and psychologists advocate that economic factors may be necessary conditions, but they are not sufficient conditions for the appearance of entrepreneurship. They view that the influence of economic factors on entrepreneurial emergence largely depends upon the existence of non-economic factors i.e., social and psychological factors in the society. Some major non-economic factors alleged to influence the emergence of entrepreneurship can be listed as social conditions like, legitimacy of entrepreneurship, marginality, security; psychological factors such as 53

need achievement, withdrawal of status respect, retreatist, ritualist, reformist, innovator and Government actions. ENTREPRENEURSHIP DEVELOPMENT PROGRAMMES (EDPs) An entrepreneur is the person with a vision, with the drive and with the ability to bear risk. He is the spark plug who transforms the economic scene. Hence, it is said that an economy is an effect for which entrepreneurship is the cause. Entrepreneurship development has, therefore, become a matter of great concern in all developed and developing countries all over the world. But, the real problem is how to develop entrepreneurship. Entrepreneurship development programmes (EDPs) are deemed to offer the solution to this problem. This is accordingly, devoted to expose the need and objectives of EDPs, their course contents, phases and evaluation. NEED FOR EDPs The entrepreneurs possess certain traits or competencies. Traits or competencies are underlying characteristics of the entrepreneurs which result in superior performance. 12 Then, the crucial question arises is: whether these characteristics are in born in the entrepreneurs or can be induced and developed? In other words, whether entrepreneurs are born or made? Behavioural scientists have tried to seek answers to these questions. A well known behavioural scientist David McClelland at Harvard University made an interesting investigation and found the need for achievement. It was need 12 Richard E. Boyatzis, The Competent Manager, John Wiley & Sons Inc., United Nations, 1982. 54

to achieve to motivate people to work hard. According to him, money making was incidental. It was only a measure of achievement, not its motivation. After this investigation people appreciate the need for and importance of the entrepreneurial training, now popularly known as EDP, to induce motivation and competence among the young prospective entrepreneurs. Based on this realisation, India embarked in 1971 on a massive programme of entrepreneurship development. Since then, there is no looking back. At present, some 686 all-india and state level financial institutions and public sector banks had so far conducted EDPs in hundreds giving training to the candidates in thousands. Programmes similar to India s EDPs are conducted in other countries also, for example, Junior Achievement programme based on the principle of catch them young in USA and Young Enterprises in the U.K. OBJECTIVES OF EDPs (EDPs) are: The important objectives of the Entrepreneurship Development Programmes i) Develop and strengthen their entrepreneurial quality, i.e., motivation or need for achievement. ii) Analyse environmental set up relating to small industry and small business. iii) iv) Select product. Formulate project for the product. 55

v) Understand the process and procedure involved in setting up a small enterprise. vi) Know the sources of help and support available for starting a smallscale industry. vii) Acquire the necessary managerial skills required to run a small enterprise. viii) ix) Know the pros and cons in becoming an entrepreneur. Appreciate the needed entrepreneurial discipline. Besides, some of the other important objectives of the EDPs are to: i) Let the entrepreneur himself/herself set or reset objectives for his/her business and strive for their realisation. ii) Prepare him/her to accept the uncertainty involved in running a business. iii) iv) Enable him/her to take decisions. Enable to communicate clearly and effectively. v) Develop a broad vision about the business. vi) vii) viii) Make him subscribe to industrial democracy. Develop passion for integrity and honesty. Make him learn compliance with law. COURSE CONTENTS AND CURRICULUM OF EDPs The course contents of an EDP are selected in line with the objectives of the EDPs. The training programme is usually to six weeks duration. It consists of the 56

following six inputs: General Introduction to Entrepreneurship, Motivation Training, Management Skills, Support System and Procedure, Fundamentals of Project Feasibility Study and Plant Visits. On the whole, the ultimate objective of entrepreneurship training programme is to make the trainees prepared to start their own enterprise after the completion of the training programme. This is the measure of success levels of the EDPs. PHASES OF EDPs An entrepreneurship development programme consists of the phases viz., Pretraining Phase, Training Phase and Post-training Phase (Follow-up). EVALUATION OF EDPs Developing entrepreneurship has become a movement in India in the recent years. EDPs have been considered as an effective instrument for developing entrepreneurship in the countryside. Hundreds of EDPs are conducted by some 686 organisations to import entrepreneurial training to participants in thousands. 13 As mentioned earlier, the main objective of EDPs is held to be enterprise creator. Hence, it seems necessary to see whether the objective of EDPs is fulfilled or not. In. simple words, there is a need to have a retrospective look into how many participants have actually started their own enterprises after completing the training. This calls for evaluation of EDPs. 13 S.K. Gupta, Entrepreneurship Development Training Programme in India, Small Enterprise Development, Vol.1, No.4, December 1990. 57

Problems faced by EDPs EDPs suffer on many counts. The problems and lacunae are on the part of all those who are involved in the process, be it the trainers and the trainees, the ED organisations, the supporting organisations and the state governments. The important problems EDPs face are listed as follows: Trainer-motivations are not found upto the mark in motivating the trainees to start their own enterprises, ED organisations lack in commitment and sincerity in conducting the EDPs. 14 In some cases, EDPs are used as a means to generate surplus (income) for the ED organizations, Non-conducive environment and constraints make the trainer-motivators role ineffective, The antithetic attitude of the supporting agencies like banks and financial institutions serves as stumbling block in the success of EDPs and Selection of wrong trainees also leads to low success rate of EDPs. Thus, it is clear that the problems are not with the strategy but with its implementation. One way of evaluating the EDPs is to assess their effectiveness in developing need for achievement among the entrepreneurs. This is also called the qualitative evaluation of EDPs. The behaviourial scientists 15 used the following criteria to assess the effectiveness of EDPs in motivating the entrepreneurs viz., activity level of the respondents, new enterprise established, total investments made, investments in fixed assets made, number of people employed, number of jobs created, increase in profit, increase in sales, quality of product/service improved and quicker repayment of loans. 14 15 V.G. Patel, A. Trivedi and H.C. Rawal, How to Successfully Fail in EDPs, Occasional Paper, Entrepreneurship Development Institute of India, Ahmedabad, 1984. D.C. McClelland and D.G. Winter: Op.Cit., 1969. 58

In other behavioural experiments, 16 the impact of EDPs is measured with the help of indices relating to the entrepreneurial behaviour. The entrepreneurial behavior is measured by four dimensions viz., planning orientation, achievement orientation, expansion orientation and management orientation. ORIGIN AND DEVELOPMENT OF TEXTILE INDUSTRY The Textile Industry occupies a vital place in the Indian economy and contributes substantially to its exports earnings. Textiles exports represent nearly 30 per cent of the country's total exports. It has a high weight age of over 20 per cent in the National production. It provides direct employment to over 15 million persons in the mill, powerloom and handloom sectors. India is the world s second largest producer of textiles after China. It is the world s third largest producer of cotton after China and the USA and the second largest cotton consumer after China. The textile industry in India is one of the oldest manufacturing sectors in the country and is currently it s largest. The Textile industry occupies an important place in the Economy of the country because of its contribution to the industrial output, employment generation and foreign exchange earnings. The textile industry encompasses a range of industrial units, which use a wide variety of natural and synthetic fibres to produce fabrics. The textile industry can be broadly classified into two categories, the organized mill sector and the unorganized mill sector. Considering the significance and contribution of textile sector in national economy, initiative and efforts are being made to take urgent 16 B.G. Sah, V.R. Gaikwad, T.V. Rao and Udai Pareek, An Interview Schedule to Measure Entrepreneurial Behaviours, JIM, Ahmedabad, 1974. 59

and adequate steps to attract investment and encourage wide spread development and growth in this sector. FIGURE NO.3.1 STRUCTURE OF INDIAN TEXTILE INDUSTRY History of Textile The history of textile is almost as old as that of human civilization and as time moves on the history of textile has further enriched itself. In the 6th and 7th century BC, the oldest recorded indication of using fiber comes with the invention of flax and wool fabric at the excavation of Swiss lake inhabitants. In India the culture of silk was introduced in 400AD, while spinning of cotton traces back to 3000BC. In China, 60

the discovery and consequent development of sericulture and spin silk methods got initiated at 2640 BC while in Egypt the art of spinning linen and weaving developed in 3400 BC. The discovery of machines and their widespread application in processing natural fibers was a direct outcome of the industrial revolution of the 18th and 19th centuries. The discoveries of various synthetic fibers like nylon created a wider market for textile products and gradually led to the invention of new and improved sources of natural fiber. The development of transportation and communication facilities facilitated the path of transaction of localized skills and textile art among various countries. Textile History in India Indian textile enjoys a rich heritage and the origin of textiles in India traces back to the Indus valley Civilization where people used homespun cotton for weaving their clothes. Rigveda, the earliest of the Veda contains the literary information about textiles and it refers to weaving. Ramayana and Mahabharata, the eminent Indian epics depict the existence of wide variety of fabrics in ancient India. These epics refer both to rich and stylized garment worn by the aristocrats and ordinary simple clothes worn by the common people. The contemporary Indian textile not only reflects the splendid past but also cater to the requirements of the modern times. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14 per cent of the total industrial production, contributes to nearly 30 per cent of the total exports and is the second largest employment generator after agriculture. The Indian textile industry is one of 61

the largest in the world with a massive raw material and textile-manufacturing base. Indian economy is largely dependent on the textile manufacturing and trade in addition to other major industries about 27 per cent of the exchange earning are on account of export of textiles and clothing alone. The textiles and clothing sector contributes about 14 per cent to the industrial production and 3 per cent to the gross domestic product of the country. Around eight per cent of the total excise revenue collection is contributed by the textile industry. So much so, the textile industry accounts for as large as 21 per cent total employment generated in the economy. Around 35 million people are directly employed in the textile manufacturing activities. Indirect employment including the manpower engaged in agricultural based raw material production like cotton and related trade and handling can be stated to be around another 60 million. Growth of Textile Industry The textile policy of 1985 and the economic policy of 1991 accelerated the economic growth during 1990s. Textile sector growth has been led by the spinning and the manmade fibre industry. The number of cotton4/ manmade fibre textile mills rose from 1035 in 87-88 to 1741 by December 1997. The number of spinning mills number rose to 1461 in December 1997 from 752 in 87-88. Liberalisation led to the installation of open-end rotors and setting up of Export Oriented Units (EOU) 17. Currently India has the second highest spindleage in the world after China. Aggregate production of cloth during 1996-97 was 34,265 million sq. metres, an 17 http://apparel.indiamart.com/lib/textile/textile07301998.html 62

increase of nine percent over 1995-96. India's contribution in world production of cotton textiles was about 12 per cent a decade back, while currently it contributes to about 15 per cent of world cotton textiles. India has the second-largest yarn-spinning capacity in the world (after China), accounting for roughly 20 percent of the world s spindle capacity. India s spinning segment is fairly modernized; approximately 35 to 40 percent of India s spindles are less than 10 years old. During 1989-98, India was the leading buyer of spinning machinery, accounting for 28 per cent of world shipments. India s production of spun yarn is accounted for almost entirely by the organized mill sector, which includes 285 large. Man-made fibers, wool and silk segment grew by modest 4.5 per cent per annum during the 5- year period 2000-01 to 2005-06.During the first year of quotafree global trade, production increased leaps and bounds. Textiles production increased 10 per cent over 2004. The growth was fuelled by a 22 per cent rise in production of other textiles (including apparels). Cotton textile also posted an increase of nine per cent. Textile Trend India is the world s second largest producer of textiles and garments after China. It is the world s third largest producer of cotton-after China and the USA - and the second largest cotton consumer after China. The textile and garment industry in India is one of the oldest manufacturing sectors in the country and is currently the 63

largest 18. The textile and garment industry fulfils a pivotal role in the Indian economy. It is a major foreign exchange earner and, after agriculture, it is the largest employer with a total workforce of 35 mn. In 2005 textiles and garments accounted for about 14 per cent of industrial production and 16 per cent of export earnings. In cotton yarn production India has made a mark in the world textile scenario. It is the largest exporter of the cotton yarns in the world. Besides yarn exports, India s growing garment industry is working as a driving force to improve the yarn quality and to increase the production of cotton yarn. During 2004-05, production of fabrics touched a peak of 45,378 million square meters. In the year 2005-06 up to November, production of fabrics registered a further growth of 9 per cent over the corresponding period of the previous year. Textile exports during April-November 2005 were at US$ 9,309.81 million, up 8.21 per cent from US$ 8,603.33 million during the corresponding period of the previous year. The first year of the non-quota regime for textiles has seen Indian exports to the US grow by 27 per cent year on year to US$ 4.6 billion, according to data released by the Office of Textiles and Apparels (OTEXA), USA. In keeping with the trend of textile companies increasing capacity and adding new manufacturing units, the last week of 2005 saw a substantial number of firms, both new and existing, queuing up to file an intent to manufacture document with the Department of Industrial Policy and Promotion (DIPP). Out of 161 companies that 18 China Council for the Promotion of International Trade (CCPIT TEX) India - the world's second largest producer of textiles and garments after China, 26 th January 2007 64

had filed Industrial Entrepreneur Memoranda (IEM) in the last week of December, textile firms accounted for more than a quarter of all new applications. In fact, in the last six years, an estimated US$ 6.7 billion has been invested in the textiles sector, aided by the Technology Up gradation Fund (TUF) scheme. The TUF scheme expires in March next year (2007) and the quotas on China will be lifted in 2008. Hence, companies will continue to add capacities over the next year. Also, according to CRISIL, the sector is likely to rise over US$ 3.5 billion from the capital markets in the next few years. Export of Textile in India World trade in textile in 2003 of which textile accounted for 43 per cent (US$169bn) and developed countries accounted for little over one third of world export in textile. The quota countries, USA, EU, and Canada accounted for 44 per cent of India s textile exports. In the overall basket of cotton textile products in India, the share of cotton Madeups has gone up from US$174.03 million in April 2005 to US$181.10 million during April 2006, registering a growth of 4.07 per cent. In the case of cotton yarn there has been a growth of 11.92 per cent, while in the case of cotton fabrics, there has been a decline of 2.53 per cent. Investment in Textile Industry Investment is the key for Indian textiles to make rapid strides. The Vision Statement prepared by the Indian Cotton Mills federation has projected that the industry has the potential to reach a size of $85 billion by 2010 from the current level 65

of $ 36 billion. Further, the vision statement has estimated that textile exports could touch $40 billion by 2010 from $ 11 billion in 2002. In the process, India s share in the global textile and clothing trade is expected to double from three percent in 2002 to six percent by 2010. To reach these ambitious target, it is estimated that new investment to the tune of Rs.1, 40,000 crores will be needed in the next five years. After analysing the capacity and technology levels in various segments of textile Industry and the need for modernisation, funds required for various segments have been below. S.No. TABLE NO.3.2 INVESTMENT IN TEXTILE INDUSTRY IN INDIA Segment Investment (Rs.in crore) 1. Ginning & Processing 1,800 2. Spinning 10,600 3. Weaving 22,950 4. Knitting 3,150 5. Woven Processing 25,800 6. Knit Processing 8,550 7. Clothing 24,000 8. Jute 500 9. Silk, Wool 1,200 Total 98,550 Source: http://texmin.nic.in Advantages to Indian Cotton Textile Industry In addition to availability of large labor force with required skills at a comparatively cheap rate, Indian Textile Industry has a great advantage in that India 66

is the third largest cotton producing country in the World. Moreover, India has the largest area under cotton in the world. Further the average cotton yields per hectare were as low as 310 kgs per hectare as against countries like China, Brazil and Australia where yield levels are over 1000 kgs per hectare and world average yield of 728 Kgs per hectare, no doubt in the previous two years, yield levels have gone up to 435 kgs. /hectare. The Indian Cotton Textile Industry can therefore, bank up on the domestic production of cotton to meet its raw material requirements. This is a major source of strength for the Indian Cotton Textile Industry. Of course, China and Pakistan are also major cotton producing countries and the cotton textile Industry in those countries also enjoy the same advantage as Indian Cotton Textile Industry. TEXTILE INDUSTRY IN TAMILNADU Textile industry is one of the traditionally well-developed industries in Tamil Nadu. Tamil Nadu has a strong production base and accounts for about 1/3 rd of Textiles production in the country. The net value addition in Textile industry in Tamil Nadu is about 37.5 per cent, the highest in the country. The Textile mills are concentrated in Coimbatore, Tirupur, Salem, Palladam, Karur and Erode. Tamil Nadu has around 3,50,000 power looms manufacturing cotton fabrics and accounts for about 30 per cent of India's export of textiles products. The Erode district in Tamil Nadu is well known for marketing of textile products of handloom, powerloom and readymade garments. The Textile Industry of Tamil Nadu has a significant presence in the National and State economy. It is the forerunner in Industrial development and in providing 67

massive employment in the State. Handloom, Powerloom, Spinning, Processing, Garment and Hosiery are the various sectors of the Textile Industry in Tamil Nadu. It is the largest economic activity next only to Agriculture in providing direct and indirect employment. Handloom Sector occupies a place of pride in preserving the country's heritage and culture and plays a vital role in the economy of the country. It has a long tradition par excellence in its craftsmanship. The Powerloom Sector in Tamil Nadu has also been playing an important role in meeting the clothing needs of the people. The Powerloom Sector in Tamil Nadu is next only to Maharashtra in terms of number of looms. The Textiles Sector in Tamil Nadu is predominantly in the private sector, spinning oriented and labour-intensive because of the preponderance of the decentralized sector in most of the segments of the industry. The Textile Industry has a very important role to play in the industrial field with regard to employment potential, overall economic and commercial activities. This Industry enables the Central and State Governments to earn substantial revenue besides foreign exchange through exports. During the year 2004-05, 3223.52 million kg of yarn was produced in the country, of which, Tamil Nadu contributed 1261.98 million kg of yarn. Successively this State is the number one producer of various varieties of yarn in the country. The Government should devise suitable measures to facilitate that the Textile Industry grows at the rate of 18 per cent per annum. The Government should also take efforts to address the labour laws related issues aiming at achieving the above growth. The required skilled labour force should be generated by creating new infrastructure and also by strengthening the existing ones. 68

Growth of the Textile Sector in Tamilnadu With the phasing out of quota regime, there is tremendous scope for the Indian Textile Industry in general and the State Textile Industry in particular to reap the advantages of post quota free regime. The State share of cloth production is 12000 million sq. metre (about 27 per cent) and is expected to reach upto 27000 million sq. metre. 16 new Spinning Mills have come up during 2005-06 with 6.20 lakh spindle capacity. Additional investment made in this sector alone was to the tune of Rs.5000 crore. Likewise, 50 new garment units have been set up and around 300 knitwear export units have expanded their capacity. With an investment of about Rs.700 crore, these have created an additional employment to about 15000 people. Under 'Technology Up gradation Fund Scheme ', 4383 projects were approved at the cost of Rs.33568 crore. The share of Tamil Nadu under the above scheme has been 22 per cent. The operation of the scheme has been instrumental in giving fillip to the growth of Textile Industry. However, as the scheme is going to expire by 31.3.2007, for the overall development of the textiles sector, the State Government has requested the Government of India to continue this during the entire XI Five Year Plan period. 69

Item Textile Mills (Non - SSI) Spinning Mills (Non-SSI) Composite Mills (Non-SSI) Unit 1999-2000 2000-01 TABLE NO.3.3 TEXTILE INDUSTRY OVERVIEW 2001-02 2002-03 2003-04 No. 1565 1565 1579 1599 1564 1566 1570 1608 1597 1653 1657* No. 285 281 281 276 223 223 210 200 176 177 177* Total No. 1850 1846 1860 1875 1787 1789 1780 1808 1773 1830 1834* Exclusive Weaving Mills (Non-SSI) No. 202 203 207 209 206 202 204 204 179 184 184* Spinning Mills (SSI) No. 921 996 1046 1146 1135 1161 1173 1236 1219 1247 1249* Powerloom Units Lakh No. 3.67 3.74 3.75 3.8 4.13 4.26 4.34 4.4 4.69 4.94 4.99 Capacity Installed Spindles (SSI + No 37.08 37.91 38.33 39.03 37.03 37.47 37.51 39.5 39.07 41.3 41.27* Non SSI) Rotors (SSI + Non SSI) No. 4.44 4.54 4.8 4.68 4.82 5 5.2 6.01 6.21 6.57 6.65* Looms (Organised Sector) No. 1.4 1.4 1.41 1.37 1.05 1.03 0.92 0.69 0.56 0.57 0.57* Powerloom No. 16.3 16.62 16.66 16.93 18.37 19.03 19.44 19.9 21.06 22.05 22.24* Handloom No. 38.91 38.91 38.91 38.91 38.91 38.91 38.91 38.91 38.91 38.91 38.91 Man-Made Fibres Kg 1066 1081 1090 1096 1101 1189 1191 1663.35 1659.22 1763.11 1763.11# Man-made Filament Worsted Spindles (Woolen) Non-Worsted Spindles (Woolen) Kg 1078 1128 1135 1191 1228 1337 1374 2053.436 2101.33 2143.22 2143.22# Thousand No. Thousand No. 2004-05 585 598 598 604 604 604 604 604 604 604 604 419 426 426 437 437 437 437 437 437 437 437 2005-06 2006-07 2007-08 2008-09 2009-10 70

Item Unit 1999-2000 2000-01 2001-02 2002-03 Production of Fibres Raw Cotton Lakhs bales 156.00 140.00 158.00 136.00 179.00 243.00 241.00 280.00 315.00 290.00 4.30# Manmade Fibre Million Kg. 835.00 904.00 834.00 914.00 953.00 1023.00 968.00 1139.47 1244.17 1067.33 107.51# Raw Wool Million Kg. 47.90 48.04 49.50 50.50 48.50 44.60 44.90 45.20 45.20 Raw Silk Million Kg. 15.21 15.86 17.35 16.32 15.74 16.50 17.31 18.47 18.32 18.37 Production of Yarns Cotton Yarn Million Kg. 2204.00 2267.00 2212.00 2177.00 2121.00 2272.00 2521.00 2823.59 2948.36 2898.42 254.06# Other Spun Yarn Million Kg. 842.00 893.00 889.00 904.00 931.00 951.00 937.00 989.70 1054.86 1015.84 90.00# Manmade Filament Yarn Fabric Production Cotton Yarn Blended 100% Non-Cotton (Including Khadi, Wool & Silk) 2003-04 Million Kg. 894.00 920.00 962.00 1100.00 1118.00 1109.00 1179.00 1370.48 1509.34 1416.01 123.65# Million Sq. Mtr. Million Sq. Mtr. Million Sq. Mtr. 2004-05 18989 19718 19769 19300 18040 20655 23873 26238 27196 26898 19084# 5913 6351 6287 5876 6068 6032 6298 6882 6888 6766 5033# 14306 14164 15978 16797 18275 18691 19406 19545 21173 20534 15791# Total 39208 40233 42034 41973 42383 45378 49577 52665 55257 54198 39908# Per Capita availability of cloth Sq.Mtr. 30.55 30.68 31.97 31.37 31.01 33.51 36.10 39.60 41.85 39.00 Production of Million US Textile Machinery $ 256.70 286.90 225.64 243.48 292.52 375.74 500.64 618.03 747.32 Textile Exports & Imports Exports (Including Million US Jute, Coir & $ Handicraft) 10521.3 12014.4 10801 12444.9 13532 14055.4 17553 19146 22146.8 20939.8 9431$ Imports Million US $ 1128.6 1172.4 1537.1 1645.5 2022 2239.4 2678.9 2839 3326.8 3499.4 1654.4$ Source: www.txcindia.com; Source: Export & Imports: Foreign Trade Statistics of India (Principal Commodities & Countries) P: Provisional * Figures upto Ocober'09 # Figures Upto November'09 April-September'09 2005-06 2006-07 2007-08 2008-09 2009-10 71

TABLE NO.3.4 TEXTILES EXPORT DURING 2006-07 TO 2010-11 (ITEMWISE) (ELEVENTH FIVE YEAR PLAN PERIOD - 2007-2012) Value - Rs. Crore S. No. Item 2006-07 2007-08 2008-09 2009-10 2010-11 % [P] variation A. Cotton Textiles 25197.2 27599.81 21795.4 27016.21 38038.19 40.8 % Share 29.06 30.97 22.63 25.48 31.16 1 Cotton Raw Incl. Waste 6107.81 8865.39 2865.86 9537.08 12981.04 36.11 2 Cotton Yarn, Fabrics & Madeups 19089.39 18734.42 18929.54 17479.13 25057.15 43.35 B. Manmade Textiles 10863.39 12785.02 15090.76 18783.13 21125.13 12.47 % Share 12.53 14.35 15.67 17.71 17.31 1 Manmade Staple Fibres 888.52 1121.72 1172.01 1690.68 1998.11 18.18 2 Manmade Yarn, Fabrics & Madeups 9974.87 11663.3 13918.75 17092.45 19127.02 11.9 C. Silk Textiles 3196.89 2646.75 3107.78 2819.46 2708.02-3.95 % Share 3.69 2.97 3.23 2.66 2.22 1 Natural Silk Yarn, Fabrics & Madeups 1976.9 1540.93 1664.82 1411.12 1578.4 11.85 2 RMG of Silk 1197.21 1093.67 1437.73 1383.42 1095.1-20.84 3 Silk Waste 22.78 12.15 5.23 24.92 34.52 38.52 D. Wool & Woollen Textiles 1919.36 1783.13 2199.49 2224.14 1955.31-12.09 % Share 2.21 2 2.28 2.1 1.6 1 Wool Yarn, Fabrics & Madeups 385.5 373.58 456.52 424.94 478.04 12.5 2 RMG Wool 1533.86 1409.55 1742.97 1799.2 1477.27-17.89 E. Ready Made Garments 37506.16 36497.79 47112.77 47608.39 48355.57 1.57 % Share 43.26 40.95 48.92 44.89 39.62 RMG of Cotton 1 including Accessories 31289.5 30335.79 38522.72 38070.33 37687.51-1.01 2 RMG Manmade Fibre 4225.88 3912.26 4721.94 5745.29 6489.07 12.95 3 RMG of Other Textile Material 1990.78 2249.74 3868.11 3792.77 4178.99 10.18 Total Textiles (A - E) 78683 81312.5 89306.2 98451.33 112182.2 13.95 % Share 90.75 91.24 92.73 92.84 91.91 72

S. No. Item 2006-07 2007-08 2008-09 2009-10 2010-11 % [P] variation F. Handicrafts 6181 5844.12 4949.23 4548.91 5445.45 19.71 % Share 7.13 6.56 5.14 4.29 4.46 1 Carpets (Excluding silk) 4066.73 3725.8 3506.37 3441.74 4444.96 29.15 Handmade 2 Handicrafts (Excluding 1981.91 2046.21 1384.19 1066.58 984.65-7.68 Handmade Carpets) 3 Silk Carpets 132.36 72.11 58.67 40.59 15.84-60.98 G. Jute 1178.39 1319.36 1375.78 1033.09 2076.34 100.98 % Share 1.36 1.48 1.43 0.97 1.7 1 Floor Covering of Jute 291.08 317.56 251.63 281.07 336.93 19.87 2 Other Jute Manufactures 269.18 322.22 491.64 300.19 505.58 68.42 3 Jute Yarn 242.32 215.14 216.92 144.2 533.9 270.25 4 Jute Hessian 375.81 464.44 415.59 307.63 699.93 127.52 H. Coir & Coir Manufactures 660.25 644.87 680.7 759.66 689.18-9.28 % Share 0.76 0.72 0.71 0.72 0.56 I. Handloom Products 1252.81 1662.89 32.73 % Share 1.16 1.36 Grand Total Textiles Exports 86702.64 89120.85 96311.91 106045.80 122056.08 15.10 Total Exports 571779.3 655863.5 840755.1 845533.6 1148170 % Textile Exports 15.16 13.59 11.46 12.54 10.63 % Growth of Textiles over 2.79 8.07 10.11 15.10 previous year P - Provisional Source- Foreign Trade Statistics of India (Principal Commodities & Countries) DGCI&S, Kolkata 73

S N TABLE NO.3.5 TEXTILES IMPORTS DURING 2006-07 TO 2010-11 (ITEMWISE) (ELEVENTH FIVE YEAR PLAN PERIOD - 2007-2012) Item 2006-07 2007-08 2008-09 April'09 - Mar'10 Rs. Crores April'10 -Mar'11 (P) % variation A. Raw Material 2683.25 2980.14 3786.7 3415.13 3351.81-1.85 % Share 20.87 22.26 23.36 20.97 18.2 1 Raw Jute 115.21 148.01 71.21 149.49 273.04 82.65 2 Raw Silk 673.37 734.44 901.74 933.7 938.44 0.51 3 Raw Wool 1078.1 1089.52 1032.95 1000.77 1418.94 41.78 4 Woollen and Cotton 153.5 96.03 90.62 89.8 117.01 30.3 Rags etc. 5 Cotton Raw & Waste 663.07 912.14 1690.18 1241.37 604.38-51.31 B. Semi-Raw Material 2952.45 3019.09 3633.63 4092.99 4899.25 19.7 % Share 22.97 22.55 22.41 25.14 26.6 1 Synthetic & 439.11 446.2 631.74 703.2 965.69 37.33 Regenerated Fibres 2 Man made filament/ 2513.34 2572.89 3001.89 3389.79 3933.56 16.04 spun yarn (inc. waste) C. Yarn & Fabrics 6563.98 6537.32 7131.87 7407.13 8384.72 13.2 % Share 51.06 48.83 43.99 45.49 45.53 1 Silk yarn & fabrics 900.49 833.07 812.74 876.8 767.53-12.46 2 Woollen Yarn & Fabrics 3 Other Textile Yarn, Fabrics & Made-up Articles 144.64 190.05 171.81 125.76 118.89-5.46 4077.28 4230.59 4938.31 5365.81 6403.29 19.34 4 Cotton Yarn & Fabrics 1441.57 1283.61 1209.01 1038.76 1095.01 5.42 D. Readymade 333.92 453.8 637.27 510.22 734.64 43.98 Garments (Woven & Knit) % Share 2.6 3.39 3.93 3.13 3.99 E. Made-up Textiles 322.67 396.98 1021.91 849.55 1033.86 21.7 Articles % Share 2.51 2.97 6.3 5.22 5.61 F. Handloom Products 7.38 11.64 57.72 % Share 0.05 0.06 Total Textiles imports 12856.27 13387.33 16211.38 16282.4 18415.92 13.10 (A+B+C+D+E+F) Overall Imports 840506.3 1012312 1374436 1363736 1605315 17.71 % of Textile Imports 1.53 1.32 1.18 1.19 1.15 % Growth of Textiles 4.13 21.09 0.44 13.10 over previous year P - Provisional Source- Foreign Trade Statistics of India (Principal Commodities & Countries) DGCI&S, Kolkata 74

CONCLUSION In this chapter, the researcher discussed about the history and overview of textile entrepreneurs. Further, the origin and development of textile industry in India and mainly focused in Tamilnadu State. 75