A study by the Associated Chambers of Commerce and Industry of India (Assocham) reveals that textile sector in India is under crises with Tamil Nadu accounted for 54 per cent of the non-operative mills, followed by Gujarat (16 per cent), Maharashtra (10 per cent), Punjab (four per cent) and Uttar Pradesh (three per cent). The study was based on a comparative analysis between FY00-01 and FY10-11 and an annual survey by the statistics and programme implementation ministry.

But experts are turning optimistic that textile sector can revival, as some spinning mills could be restarted if they manage to upgrade themselves. According to them last year were encouraging and the current one will also fetch good business as demand (export orders) is consistent and supply of crop good. Non-operative units can be restarted with the revival of the Technology Upgradation Fund Scheme.

K Selvaraj, general secretary of the South India Textile Millers’ Association, said that the sector undergone tough phase during 2008-2012. The impact of the global slowdown had coincided with price volatility of cotton. The crisis in Tamil Nadu was worsened with an acute power shortage that rendered many private mills unviable. The changing global environment in terms of higher demand for Indian cotton yarn and a surge in domestic demand has put this sector on a higher growth trajectory. He added the power situation in Tamil Nadu had drastically improved.

He further said that in the past few years, no state had registered any new investment in the sector.

To remain more competitive in the global market, the sector needs to modernize. According to the Assocham study, low productivity, lack of advanced technologies and foreign investments, supply-chain bottlenecks, lack of economies of scale, labour challenges, a fragmented industry and weak brand positioning are the key reasons for the non-operation of mills.

While the private millers said that the bulk of the non-operational mills fell in the cooperative and government sector (National Textile Company), the loss to the private sector is not small.

About 383 spinning mills are non-operational. Of these, 184 are in Tamil Nadu. The latter and Gujarat have 70 per cent of non-operating mills. Gujarat has the second-highest number of closed mills.

Tamil Nadu has the most mills (2,000 in the large, medium and small categories). It has a spindle capacity of 23 million.