Dr. M. Dhanabakyam
Lecturer in Commerce
Department of Commerce
Bharathiar University
Coimbatore – 46
E mail: dhana_giri@rediffmail.com
Ph. No: 09345163052
M. Latha
M.Phil Scholar
Department of Commerce
Bharathiar University
Coimbatore – 46
E mail: latha_wellcomesu@yahoo.co.in
Ph. No: 099994500266


The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a pivotal role through its contribution to industrial output, employment generation, and the export earnings of the country. Currently, it contributes about 14 percent to industrial production, 4 percent to the GDP, and 17 percent to the country’s export earnings. It provides direct employment to about 35 million people, which includes a substantial number of SC/ST, and women. The Textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of this sector has a direct bearing on the improvement of the economy of the country.


The Cotton/ Man-made fibre textiles industry is the largest organized industry in the country in terms of employment (nearly 1 million workers) and number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes & chemicals. As on 31.10.2006, there were 1818 cotton/man-made fibre textile mills (non-SSI) in the country.

Over the years, production of cloth in the organized mill sector has been stagnating. It has declined from 1714 mn. sq. mtrs. in 1999-2000 to about 1434 mn. sq. mtrs. in 2003-04. However, since then, it is showing a constant increasing trend; 1526 mn. sq. mtrs. in 2004-05, 1656 mn. sq. mtrs. in 2005-06. In 2006-07, it is anticipated at 1900 mn. sq. mtrs. The total production of cloth by all sectors i.e. mill, powerlooms, handlooms, hosiery and khadi, wool and silk, has shown an up-ward trend in recent years. During 2006-07, the total production of cloth is anticipated to touch 49, 542 mn. sq. mtrs., compared to 52,000 mn. sq. mtrs. in 2005-06. The satisfactory performance of cloth production has resulted in favorable per capita domestic availability of cloth in the country. During 2004-05, the per capita availability of cloth was 32.63 sq. mtrs., and it is expected to increase to 43.33 Sq. mtrs. during 2006-07.


The Indian Textiles Industry has suffered from severe technology obsolescence and lack of economies of scale, which, in turn, had diluted its productivity, quality and cost effectiveness, despite distinctive advantages in raw material, knowledge base and skilled human resources. While the relatively high cost of state-of-the-art technology and structural anomalies in the industry have been major contributory factors, perhaps the single most important factor inhibiting technology up gradation has been the high cost of capital, especially for an industry that is squeezed for margins. Given the significance of this industry to the overall health of the Indian economy, its employment potential and the huge backlog of technology up gradation, it has been felt that in order to sustain and improve its competitiveness and overall long term viability, it is essential that the textiles industry has access to timely and adequate capital, at internationally comparable rates of interest in order to upgrade the level of its technology.

The Technology Up gradation Fund Scheme (TUFS), the flagship scheme of Ministry of Textiles was launched on 01.04.1999. Initially proposed for a period of five years, the scheme has now been extended till 31.03.2007, and is designed to ensure the availability of bank finance at rates comparable to global rates. Under this, the Government reimburses 5% of the interest charged by Banks and Financial Institutions, thereby ensuring credit availability for the up gradation of technology to industry at global rates.