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

1. Understanding the Crisis:Understanding the Crisis:
Macro and Micro FactorsMacro and Micro Factors
Dr. D. NarasimhaDr. D. Narasimha ReddyReddy

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. 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. 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. 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. 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. EMPLOYMENT POSITION
Present Employment Generation in Different Sector of cloth
manufacturing
Mill
1%
Hosiery
21%
Khadi,wool&Silk
7%
POWELOOM
30%
Handloom
42%

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. Agreement on Textile and Clothing
World Trade Organisation
Free Textile Trade

11. Global Trade
Indian textile
sector
Contextualizing the Indian Textile Industry

12. Powerloom
Mills
Handloom
Contextualizing the Indian Textile Industry

13. Global Trade Indian textile
sector

14. Mill Sector
Powerloom
Garment
Exporter/
Importers

15. Silk Yarn
Cotton Yarn
Man-made fibre
Exporter/
Importers

16. Exports/
Imports
Handloom Mills
Garment
Powerloom
Spinning

17. 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

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. Mills Garment
Powerloom
Imports

25. 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)

26. 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

27. 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

28. 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

29. 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

30. 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

31. 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.

32. 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

33. Thank You!Thank You!