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As per the recently released FY 2021-22 export figures, India recorded the highest-ever textiles and apparel exports valued at $44.4 billion. This indicates a substantial increase of 41 percent and 26 percent vis-à-vis figures in FY21 and FY20, respectively.
However, the ongoing Russia-Ukraine war, hike in cotton yarn prices, and freight charges have hit textile hubs across India, including Panipat, in Haryana, where export the business has been hit by 60 percent. Pandemic-induced shipping delays, and elevated natural gas prices have only added to the pain of exporters.
Given the situation, it is important that the government fast-track negotiations with key export markets to level the playing field for the Indian textiles industry.
Most of us have read about Panipat in history textbooks for the three battles fought there to gain control of the resource-rich region in North India. Today, Panipat is better recognised as Asia’s blanket hub, producing three out of four blankets made in India. The origination of the woollen industry here can be traced back to World War II, when small house units in Panipat supplied to the British Army. During the Partition phase, the displaced weavers’ community from Pakistan settled in Panipat, contributing to first the development of the carpet industry in the 1970s and ’80s, and blankets in the 1990s.
With the turn of the 21st century, fast fashion compelled mass-market retailers to quickly produce cheap clothing to supply the latest fashion trends. In response, Panipat transformed into the ‘Castoff Capital’ where imported rags were recycled to make yarn. This recycling industry, referred to as ‘Shoddy’, a term colloquially meaning ‘trashy’, cleaned up the world’s sartorial spillover, and comprised 400-plus mills run by contract labour from Northeast India. Panipat at one point supplied over 90 percent of the shoddy-wool relief blankets bought by international aid agencies.
Panipat’s historic battlefields have witnessed another turf war in the last two decades- between shoddy and polyester. Chinese mink blankets from polyester yarns being lighter, cheaper, warmer, more durable, and supple, made for an edgy alternative to shoddy blankets. So, while discarded cloth from abroad flowed in, demand for shoddy blankets soon dissipated. The employment numbers reflect this — the remaining ~100 shoddy mills today employ around 7,000 people, down from 90,000 in the early 2000s. In retrospect, it seems like the shoddy industry was always operating on a slippery surface — it was surviving on the back of a crisis or violence in some part of the world, making a windfall during disasters like the earthquake in Nepal, or Bhuj.
Today, though some shoddy factories are operating to serve the small demand segment from aid agencies, most have switched business to mink and polar fleece blankets. The production season of the domestic fleece blanket industry in Panipat runs from August to January to meet the winter demand. In the off-season, the manufacturers have diversified into cotton yarn to produce handloom, home furnishings, and even apparel. The domestic fleece blankets give stiff competition to the Chinese blankets in the international market with comparable quality.
Despite Panipat’s good export performance, local producers lament high import duty on shoddy, and chemicals. The domestic alternatives for these inputs are expensive, and of inferior quality. Also, the Air Quality Management Commission (AQMC) has decided to phase out industrial coal in the National Capital Region by September, which has forced the Panipat manufacturers to quickly take up natural gas. A recent ruling by the central pollution regulator has allowed the use of biomass for setting up new textile units in the NCR, but greater investment and fiscal support to green energy is needed to make it available at an affordable cost.
A sustained push to the textile industry through infrastructure augmentation, fiscal support, strengthening of vocational training institutes, and facilitation of domestic machine manufacturing to better leverage cluster synergies is the pressing priority for Panipat. The government recently announced the Mega Integrated Textile Region and Apparel (MITRA) parks scheme which will enable small textile units to attract large investments and boost employment.
Under the ‘One District, One Product’ initiative, Panipat has been chosen to focus on ‘textiles and handloom’. However, it would serve the district better if one product, a blanket or bed sheet or carpet, is chosen for exclusive branding and export. Over the last 20 years, Panipat has also benefited from the ‘Town of Export Excellence’ status for woollen blankets which has allowed blanket manufacturers to avail financial assistance on a priority basis for export promotion.
The textiles sector is the second-largest employment generator in India, and contributes to 12 percent of India’s export earnings. While textile exports from Bangladesh, Sri Lanka, and Vietnam enjoy duty-free access to markets in the European Union and the United Kingdom, Indian textiles attract an import duty of 9.5 percent. This needs to go away.
While Panipat’s shoddy industry continues to clear up ‘clothing waste’ to aid India’s global sustainability efforts, the mink blanket producers must invest in branding, and research and development to move into high-value manufacturing, and enable an Aatmanirbhar Bharat.
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