Figuring out the textile crisis

By downing shutters for a day this week, cotton spinning mill units may not have reduced the huge glut that has built up in yarn stocks. But they have succeeded in turning the spotlight on the complex web of public policy the central government has woven in the years since Independence. Few will quarrel with the objective of securing for cotton growers a remunerative price. Where the government has gone wrong is in simultaneously taking upon itself the burden of ensuring that high cotton prices do not result in high yarn prices for handloom weavers or for power looms. In this effort at squaring the circle, it has ended up creating a tangle of quantitative and tariff controls on cotton as well as yarn interspersed with duty drawback incentives, concessional lending to units engaged in the value chain of the textiles industry, and so on — in short, a bureaucratic process of Kafkaesque proportions. Much of this was supposed to be calibrated in real time in line with changes in global and domestic demand and supply. What is clear is that this policy framework is badly in need of a reality check in many crucial respects.

For instance, the continuous capacity addition in yarn manufacture ought to have tempered official fears of yarn shortage for weavers and knitted garment manufacturers while formulating policy. That has not been the case. Similarly, it is well recognised that as an approach to cloth-making hand weaving is now more expensive than mass manufacturing. It is no surprise that the poor of the land have found cheaper alternatives in fabrics woven by machine. Another anomaly is that while the law reserves several varieties for the handloom sector, these mass consumption fabrics whose parity depends on yarn prices are actually made by power looms. Yet official policy maintains the pretence that this mandated reservation is for the benefit of millions of handloom weavers — who are the poorest members of the value chain after farmers. Indeed, so out of tune with reality is official policy that the proportion of the total output a yarn manufacturer must compulsorily wind in a coil form (hank) so as to be amenable for use by handloom weavers has remained the same despite the substantial changes in mass clothing habits. Nothing in the track record of governance witnessed over the last six decades gives room for any optimism that the government can handle this complexity and deliver on desirable policy outcomes. It is time a comprehensive nation-wide enquiry was conducted into the economics of the cotton textile sector, covering all its constituents and seeing how they have fared. Appropriate policy changes can follow.