Ludhiana's textile entrepreneurs introspect, invest in value addition and adopt energy-saving technology.
Ludhiana’s half-century-old textile and hosiery cluster, which houses about 3,500 small- and medium-sized enterprises and employs over half a million skilled and semi-skilled workers, is losing an estimated 30 per cent of its annual export earnings of Rs 1,200 crore due to the slump in international orders.
The cluster had experienced a revival only a few years back after a business upheaval caused by the disintegration of the erstwhile Soviet Union and the decade-long militancy in Punjab. Faced with an adverse business climate yet again, the state’s smaller entrepreneurs are resorting to diversification, innovation and cost cutting by opting for energy-saving technology. Over the past year most units have either shelved or deferred their expansion plans, and local bankers confirm that outstanding loans totalling Rs 10,000 crore have been restructured.
Many SMEs have been devoting their energies to making themselves more cost effective in order to survive. “The slowdown motivated us to introspect on how we can make ourselves more competitive, since only the fittest survive,” says an entrepreneur. These entrepreneurs have discovered an opportunity amidst the crisis.
Many manufacturing units have hired consultants to implement state-of-the-art technologies to conserve power and save on power costs. Since power constitutes about 15 per cent of the running cost for a textile unit, the judicious use of power would fetch a recurring benefit for the units, stakeholders say.
Further, taking a clue from global players who have been eyeing India as a promising market, entrepreneurs in Ludhiana have recently gone ahead with value additions in yarn and fabric.
Quite a few units have launched their own garment brands and chain of outlets and some have enhanced their scale of operation. The new brands have been rolled out in most towns of the northern region and the intention is to spread the network throughout India in stages.
The global meltdown was the proverbial last straw for an industry that was already reeling under the pressure of a steep revision in the minimum support price of cotton (about 45 per cent over last year’s price), acute power shortages and a local tax structure that is not conducive to the health of the textile industry.
Entrepreneurs are now opting for new technology to manufacture polyester fibre by recycling PET bottles. These bottles, imported by the tonne from the developed countries, will be used as raw material in the manufacture of dress material, home textiles and technical textiles (non-woven). The entrepreneurs are also scouting for opportunities to manufacture spandex fibre used for making stretchable garments.
A large number of computerised knitting machines have been installed for making woollen garments. Multi-head computerised machines have also been set up for embellishments.
Machines for linking up woollen garments and the dyeing and processing units for knitted fabric have also been added.
Ludhiana evolved as a textile hub over the years after the partition of India. Small knitting units were set up in the town by families with a business legacy who migrated from Lahore and Gujranwala after Independence. Business was done only for survival, without aiming for professional excellence. This is probably why Tirupur surpassed Ludhiana over the years, as entrepreneurs there thought beyond their bread and butter.
In the early 1960s, spinning units came into existence as a result of the quota regime for inputs (marina wool). In the early 1970s, the industry got another big push as a result of the bilateral agreement with the erstwhile Soviet Union, which required India to provide certain commodities to that country in lieu of armaments. That is how exports to the Soviet Union from Ludhiana began.
But the real breakthrough came in the 1980s, when the Punjab State Knitwear and Hosiery Development Corporation, funded by the United Nations Development Programme (UNDP), was set up. It helped install the latest machinery and trained entrepreneurs in innovative technologies.
Then came the break-up of the Soviet Union and militancy in the state— both big blows to the textile and hosiery cluster. However, it bounced back in the early 1990s after the economic reforms were introduced, as restrictions on the import of capital equipment were lifted.
Thereafter, the concessions given by the Punjab Government helped in the rise of Lalru (10 km from Ambala) as a new growth centre for spinning mills. The TUF (Technological Upgradation Fund) has also helped the textile industry expand. In the past five years some units have expanded operations in neighbouring Himachal Pradesh and Uttarakhand to qualify for tax holidays and take advantage of cheap and adequate power.
The downturn has no doubt undermined the industry and resulted in the deferment of major new investments. But Ludhiana’s textile entrepreneurs are a resilient breed, and have opted for product innovation, green technology, penetration into new markets and cost cutting.
