Page last updated at 08:07 GMT, Monday, 29 December 2008

India's textiles industry suffers

Shilpa Kannan
Business reporter, BBC News, Bangalore

Garment factory workers, Bangalore
Many Indian textile factories are laying off workers
India has been one of the world's best-performing economies in recent years - but in the last few months it has begun to slow down.

The country's exports have declined and industrial production has registered negative growth for the first time in a decade.

One of the worst-affected industries is the textile industry in Bangalore.

With garment sales in the United States drying up, suppliers in India are beginning to feel the pinch.

A crowd of young people huddle around the stove in the neighbourhood tea stall.

'Daily struggle'

It is a gloomy winter morning in Bangalore and for 22-year-old Roopa Mahesh Kumar this is a daily wait.

A trained tailor, she has been out of work for over two months. For just three dollars a day she used to work for eight hours in a garment export house.

But she and other temporary workers have lost jobs in the last few months because Indian textile manufacturers are facing slower orders from recession-hit countries in North America and Europe.

Roopa says she has lost her job for reasons that she doesn't understand. And it's tough living in a city like Bangalore if you don't have a job.

"It's difficult to manage daily expenses, I have not paid my house rent. It's a daily struggle to buy food, and my husband has lost his job too."

"Companies are so erratic, they hire us one week and then the next week we are laid off. If we continue to be unemployed, we can't live here, we will be forced to go back to our hometown."

Shorter shifts

In a crowded industrial zone on the outskirts of Bangalore hundreds of factories are packed in tightly in narrow alleyways.

Indian textile worker
Orders have slowed as the recession has hit in the US and Europe

Most of them are garment or textile firms. Textile export houses are one of the largest employers in the country.

At every street crossing there are hundreds of workers gathered around, they are waiting for the factories to open their gates and put out signs to say they are hiring. But that's rare these days.

Already 500,000 of these workers are already out of job. Any further slowdown will be a huge blow on the country's economy.

In most textiles firms, employees have been doing shorter shifts and taking longer breaks. They don't have a choice, to avoid layoffs many companies are enforcing three-day weeks and partial closures.

As a row of thermal military-style jackets move down the assembly line, women in brightly-coloured saris hunch over them fixing labels.

80% of these products are being made for American retailers.

At Gokuldas Exports, a textile firm controlled by the global private-equity giant Blackstone, there are over 50,000 employees and the company is trying hard not to resort to layoffs.

Rajendra Hinduja, the managing director of Gokaldas Exports says that though they have managed to hold on so far, the first quarter of 2009 will be critical for them.

"Already many orders are getting delayed. Retail sales figures from the US and Europe have been bad - many shops are shutting down. "

"This means inventories are getting piled up in the West, which translated into fewer orders for companies like us."

"The Thanksgiving sales were bad, Christmas was slow and now January looks dull too," he said.

His company has now put on hold all its expansion plans and is trying to improve efficiencies in every department.

He says: "We haven't pressed the panic button yet. We are adopting a wait-and-watch stance."

Government subsidies

Outside Bangalore the situation is far worse. Small and medium-sized exporters are struggling to keep their factories open.

Less than 50 kilometres from Bangalore amidst lush vineyards and coconut trees, a vast field of concrete buildings is taking shape, amid hopes of beating the global economic downturn.

The buildings form the Doddaballapur integrated textile park.

It is a special zone with tax benefits for textile and garment firms to set-up shop.

The government hopes that this dedicated textile park, located close to the cotton-growing belt, will attract foreign investment in the sector.

To help construct buildings and to create infrastructure for the site, the government provides a 40% subsidy while the rest is shared by the entrepreneurs.

The aim of the park is that a businessmen can walk in with adequate money and start manufacturing almost immediately.

The managing director of Doddaballapur's textile park, Harsha Gangadhar, says this is the only solution to resist the slowdown.

"For small and medium scale industries like us sharing the infrastructure - machinery, technology is the only way to survive."

"The orders have gone down tremendously in the last couple of months. Without support like this, we cannot compete with larger players from China, and now Vietnam and Cambodia."

Training opportunities

For local youths this is good news, as youngsters from the local farming communities have been chosen for a training programme.

Indian textile workers
Smaller firms are being helped to join forces and share costs

It is run by the Infrastructure Leasing & Financial Services Company (IL&FS) in partnership with Textiles ministry.

At one of the buildings in the textile park activity is in full swing. A group of young girls with bright blue lab coats are sitting behind rows of sewing machines.

Once they complete the training course, they are offered jobs in the local factories.

For 19-year-old Latha Mani, this is a dream come true.

With only high school education she was unsure about getting a job in a city like Bangalore and back home in her village - job options simply don't exist.

"There were no employment opportunities here. I'm scared of going to the city to find work. Now with this textile park, young people from my village can find employment," she said.

From a neighbouring village, 18-year-old Manjula Gurumurthy also thinks the training is the best thing that happened to her.

"My family was struggling to make ends meet. We have a small plot of land and my father grows corn on it. I'm really happy that I too can now work and earn money to contribute to the expenses," she said.

These are the lucky few who are still finding employment. India's textile industry employs nearly 85 million people overall, compared with just 2 million in the IT sector.

Even as the government is struggling to provide short term relief measures, workers are running out of options.

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