Global Financial Crisis Vs Handloom Textiles in India

The handloom Industry is the largest industry in terms of employment, but in monetary terms it may not be having such importance. 38 lakh handlooms giving employment to about 65 lakh families; but contributing only 13% of our Textile production. When considering the foreign exchange earnings, it has considerable clout over other sectors of the industry because; it amounts to between Rs.3000crores to Rs.3500crores per annum. Since now the industrial world is worrying over the influence of the so called Global financial crisis; it is worth to think about our handloom industry and how it spares with the present global crisis and what will be its effects on in coming days.

The volume of Handloom Exports in monetary terms as published by Government of India up to 2007-08 (Tentative) and the eight year record may quoted as below:

% deviation

These figures show two points into consideration:

1. The average increase per year in exports during the period of quota regime was around 5%, and for some years it was decreasing.
2. After the phase out of quota systems the rate of exports increased per year above 20%,

Since in the present financial crisis the epicenter is USA, we have to analyse the country wise exports of handloom goods from India. It is as below in 2002-03 terms.

That means, the major export target for Handloom goods country wise is USA. The Handloom fabrics and made ups, we all know it is for the consumers who buy's the items mostly from various stores/ through retail chain stores. 95% of US retailers are the single store type and rest the chains like Wal-Mart, Ikea etc. The sales figures available with Retail sector, the annual sales in USA through retail is of 3.8 trillion dollars with a per capita purchase of 11993 dollars. The Average sales growth rate in retail in previous years is:

These facts show that in the Export front, the per capita consumption of USA consumers is in the Driver seat or such consumption pattern which accounts for the increase in international trade.

Since the present financial crisis is countering the spending pattern of US consumers it may definitely hit our Exports. There are reports in the internet that even for apparels there is a decrease in sales for 2.2% this November. The matter is now in the forefront.

How?

1. The sales of consumer goods in USA are mainly based on two seasons'. Spring/.Summer & Autumn/ Winter. That also the Handloom products mostly home furnishings fall under the categories of Christmas sales. This Christmas sales are definitely going to decrease because of the change in spending pattern.
2. In response to this situation, many companies have started declaring discount in prices and this will in turn give pressure on producers for lowering prices.
3. Many of the Exporting units in the country has long term contracts or links with buyers abroad, so they may be a chance not to resort price cut directly. They may intensify their quantity & quality check, or redirect business terms or finding fault with domestic producers in order to delay or decrease the taking up of stocks or replenishments.
4. During the financial crisis, the buying companies may be subjected to taken over by strong players in the field. This will change the company profile, product lines, and supply chains. Due to this our producers will fall into trouble to cop with new situation.

So we have to apprehend that even though the global financial crisis is not directly hitting us, it is going to effect as indirectly. Our industry has to be cautious about and see that bad times have to be seen as on opportunity to tune our performance and quality too strict and healthy in long run. Our Human Assets instead of throwing out; has to be geared and rejuvenated for better performance so that we can look forward for sustainable markets including growing domestic market. We cannot be panic, but conceive it, study it, and counter it.

Courtesy:

1. www.fibre2fashion.com
2. www.hepcindia.com
3. KTEO Kannur

About the Author:

The author is Technical Supdt: (Processing) in Institute of Handloom & Textiles Technology, Kerala, Kannur.