The world had witnessed a financial tsunami in 2008 and the
effect is still lingering. Officially, the United States has been in a recession
for at least a year or so. And, as the author pens down this article news from the
United Kingdom is such that the recession has been officially declared there.
Although India and Asian economies are not totally decoupled from this global
economic tsunami, the effect is not as harsh as in the developed economies.
Recent statistics indicate that Asia grew around 8.7% while banks were
bellying-up in the United States. It is expected that China's GDP will grow around 8% and India will grow around 7%, whereas the GDP growth in the US and Europe will be less than 1%. Taking the case of India specifically, the growth expectations
can be met if there is a cautiously regulated growth policy spanning three
important sectors, i.e., service, manufacturing and agriculture.
What is happening in India Recently?
A day after Oscar nominations, it is a feel good story for India. The I ndia centric SlumDog Millionaire has received 10 Oscar nominations and is
second in the Oscar ranking this year for maximum nominations. One may ask what
this has got to do with the Indian textile industry. As we all know and agree, economy
is based on facts as well as perception. This we experience in our day-to-day
life with the rise and fall of the stock market which is not only based on
economic numbers but also perception. India Inc. is really doing relatively well.
The author was in Gujarat recently in January. He feels honored to be invited
to present a paper in the Seminar on Textiles and Apparels of the Vibrant
Gujarat Global Investors Summit. Surely, Gujarat and India have showcased to
the world that there is no recession and there is progression. At this time,
where on earth that one can experience such vibrancy and see a forward looking
industry than India? It is really mind boggling to note that investments worth $
241 billion dollars have been inked. This is quite a contrast to the situation
in the USA where President Obama and the Democratic Congress are pushing for a
stimulus package worth 825 billion dollars. This consists of tax credits and
loans as part of the Governments plan to boost the economy. Whereas, results
from the Vibrant Gujarat show that India Inc is optimistic and highly confident
to sign Memoranda of Understanding with the State of Gujarat for investments
worth nearly 1/3rd of the United States stimulus package. This
clearly shows that the economic pendulum is swinging from west to east. The
optimism and the confidence that are vibrant in India should be ceased upon to
translate into tangible projects. Indian Inc., Government of India and the
international community have to cash in on the current opportunities so that cash
flows really kick in within two to three years. Although, it is really
ambitious to see return on investments on proposed projects within 12 months,
due to the global consumer and economic negative situations, it would be judicious
to expect positive signals beyond summer 2010. This is a good opportunity for
the Indian manufacturing industry and more specifically the Indian textile
industry to have some breathing space to concentrate and focus on
diversification beyond the commodity textile borders.
Diversification in the Textile Industry: The Need of the
Hour
Microsoft and Intel are household names and it would have been
unimaginable to see them downsize and layoff people a few years back. But the
reality is that, within the next 24 months it is reported that Microsoft and
Intel will lay off 5000 staff each and possibly downsize their operations. This
situation clearly sends a signal to Indian Inc. that the old financial adage is
correct, "do not put all eggs in one basket." No doubt that India flourished and prospered due to its service sector since the 90s. It is not at all
possible for India to just focus on service sector alone anymore. Other two
major sectors such as the manufacturing industry which is in the mushy middle
between the service and agriculture sectors provides us with a nice platform
for growing India economically. And, within the manufacturing sector,
traditional segments such as textile and leather industries occupy an important
role as they not only help with export earnings but also provide ample job
opportunities. With over 70 % of Indian population still living in semi-urban
and rural areas, these traditional sectors that have employment generation opportunities
have to grow.
Is this possible in the current economic situation? As the
outputs from these traditional sectors are predominantly non-essentials, with
the consumer buying power shrinking in the world, how can these industries grow?
Textile industry is quite fortune to have an edge over the leather sector as this
industry can deliver some important products which have reached near essentials
status. These products include those textile items that are on the border line
of indispensible items in our day-to-day life such as medical textiles, hygiene
products such as baby and adult diapers and baby wipes, etc. Another segment
which has a defined market albeit tough to penetrate is the defense textile
sector. As it is evident from the above mentioned products although these are
not life saving essentials, due to their functionalities and applications in
our day-to-day life, they have become somewhat essential commodities. This puts
the textile industry in a better situation and gives an opportunity for diversification
even in the current economic scenario.
