Travel makes a person wiser. This is true in my case, which
enables me to gain global perspective and share my observations with the
outside world on issues that are of interest to the textile and manufacturing
sectors. The long air travels from the US to India, which I do frequently these
days is a delight for me as these give me opportunities to pick up global
newspapers such as Wall Street Journal, London Times, Gulf News, Straight
Times, etc. and gather textile industry related global news. Such a broad based
news gathering is important to have a good understanding of whats happening
around the world, which is particularly critical when the global economy is in
a slump, as it has a direct impact on the Indian textile industry and the
economic health of the country. You may wonder why do I use some space in this
article to explain about usefulness of the banal global travel, which has
become common place these days? Although my recent air travel in April was
uneventful, it was such a delight as I could get hold of nearly dozen of magazines and papers during my air trip all for free-thanks to Emirates airlines. What a
coincidence, there were many reports that are pertinent to global and Indian
textile industry. How lucky am I to gather relevant information, all pro bono
and use them for this column. Actually, I started penning this column on my
return 16 hour non-stop flight from Dubai to Houston with news input from
latest issues of Time, Forbes, etc. while listening to soothing African
classics mix. What a luxury! This article carries real hot juice of global
economy and my fresh observations from my recent India trip based on my many
interactions with textile and cotton industry people during my latest 10 day
trip to India. Believe me, those interactions, the new world order and the
economy assure me that the future of the Indian industry is in diversification
with value-addition across its entire supply chain. So if possible, tune on to
some good music and ride with me in the following sections where I ramble about
the future of the Indian textile industry.
Indian Textile Industry: Quo Vadis?
One of the worlds most popular weekly magazines, Time in its April 27th issue beams its cover with a troubling article "Going
Home." The cover article in the Time which catches the attention of
many in the world talks about the job losses and the plight of the migrant
workers who are returning back to their native lands creating major shifts and
problems in the economic order. These migrant workers from remote places to
urban cities are the indices of manufacturing, growth and productivity. The
latest Time article depicts a reverse trend showing manufacturing decline and
economic downtown. What does the reverse migration indicate? Export oriented
economies, which are dependent on the consumer buying power are subjected to
the fluctuations in their home economy can quickly cause economic havocs in
exporting countries resulting in huge job losses. In the case of textiles, the
exporting countries are over populated developing nations, where the livelihood
of several million migrant workers is dependent on the export. The countries
that are predominantly affected are China, India, Bangladesh and Vietnam. As the economy swings up and down in cycles, it is not certain that the world economy
will be strong in the next decade as it was before. If there is a recession
wave again, developing world will be hit hard again. Such economic tsunamis
will collapse the economic stability and will put the developing nations in a reverse
path towards growth. What is the long term solution? The panacea for such a
recurring complexity is to grow the three sectors of the economy: 1)
Agriculture, 2) Manufacturing and 3) Service. The lack of the manufacturing
sectors growth in developed economies, especially in the US and UK over the last two decades is one of the reasons for the economic downtown the world is
witnessing today. As the textile industry provides bread and butter to many
millions in India, it is deeply woven into the fabric of the Indian economy and
efforts are needed to create a platform of stability and growth. How can we
achieve this? There will be a demand for commodity goods, but competition will
be fierce from low-wage countries. Time is ripe in India to expand its textiles
product basket and develop indigenous base in technical textiles that can cater
to both the growing domestic and export markets.
Immediate Actions Necessary by the Indian Textile Industry
As delineated above, in the ever changing nature of the
world, both politically and economically, it will be difficult for nations to
be competitive just based on price alone. Two other factors that need immediate
attention are: 1) Scale and 2) Functionality (or value-addition). In this harsh
economic situation with credit crunch and low consumer confidence, it is
extremely difficult and may even sound irrational to think of huge investments.
Majority of economic forecasts indicate that growth will happen during the 3rd
and 4th quarters of 2010 and big recovery will start happening in 2011.
This gives two-year window for the Indian manufacturing and textile sectors to
rebound.
