Silk Industry Caught In Cocoon As Poor Quality Stunts Growth

The challenge is to develop technology that will suit the country's agro-climatic conditions. The raw material base of this industry is also rather weak. Superior quality raw material is in short supply, unlike in China - our main competitor.

This has resulted in the country depending mainly on imports - estimated at 40,000 tonnes in 1995-96.

However, Indian silk has vast export potential. To cash in on this potential, the industry has to be organised on a systematic basis.

Industry sources argue that imported silk scores over the indigenous variety as it is made of superior quality raw material which imparts it fine quality and uniform length.

 

Unfortunately, a few unscrupulous importers are substituting low-grade silk for quality silk. This has forced the government to adopt a strict import policy. About 1.2 kg of raw material is imported to export one kg of finished silk product.

The India Silk Promotion Council believes that if India succeeds in meeting the demand for high quality raw silk through indigenous production it will be able to attain a target of $1 billion by the end of the century.

This is where the catch lies. Low productivity is a bane of the Indian sericulture industry. Indian sericulturists produce just about 40 kg per hectare as against 100 kg in China. Silk production has yet to gain the required momentum even though sericulture is an age-old industry.

The growth in the raw silk output has been rather tardy all these years. Total raw silk production is estimated to rise by three per cent to around 15,496 tonnes (15,045 tonnes) in 1995-96. Production of mulberry silk may also rise by three per cent to 14,369 tonnes (13,913 tonnes) in 1995-96. Production of tassar raw silk may decline to 220 tonnes (257 tonnes) in 1995-96. The area under mulberry cultivation has increased by a measly one per cent from 3.4 lakh hectare to 3.5 lakh hectare in 1994-95.

Exports have also been rather disappointing. In 1995-96, silk exports fell in value as well as volume terms. Silk goods exports declined by 8.8 per cent to Rs 845.2 crore (Rs 927 crore) and by 19.3 per cent to 492.56 lakh square meters (610.33 lakh square meters).

The decline in silk goods exports is attributed to the failure of the industry in gauging the changing fashions in the international market.

All types of silk goods suffered a decline in exports. Customers preferred salwar khameez to sarees, affecting the demand for silk sarees.

However, export of mixed and blended silk rose by 14 per cent to Rs 26.5 crore (Rs 23.2 crore) in 1995-96. Mulberry silk export fell by eight per cent to Rs 793.4 crore (Rs 862.5 crore)in 1995-96.

China, whose domestic consumption is low and has large exportable surplus, fully exploited the situation by slashing its silk prices.

Mercifully, the unit value realisation of total silk goods has increased from Rs 151.7 per square meter (sq mt) in 1994-95 to Rs 171.6 per sq mt in 1995-96. Yet, the realisation was still below the Rs 173.4 per sq mt realised in 1991-92.

Unit realisation for mulberry silk improved from Rs 154.3 per sq mt in 1994-95 to Rs 174.9 per sq mt in 1995-96.

Despite the above constraints, six companies in the organised sector did well in their sales income and profits partly because of a low base in the previous year. Other factors like steady prices and an assured raw material supply also helped these companies to put in a commendable performance.

A sample of six select companies shows that the companies managed to raise their sales income by 28.6 per cent to Rs 172.7 crore (Rs 134.3 crore) in 1995-96.

Sagar Silk, Satyam Silk Mills and Sstella Silks achieved a higher growth rate despite a low base in the previous year. J J Exporters reported a fall of 1.8 per cent in its sales income during the year.

The operating profit of the six companies rose by 37.7 per cent to Rs 49.4 crore (Rs 35.9 crore). Gross profit of the six companies rose by 32 per cent to Rs 42.9 crore (Rs 32.5 crore).

The above three companies repeated their good performance. Net profit of the six companies rose by 25.3 per cent to Rs 35.3 crore (Rs 28.2 crore).

The six companies also improved their profit margins during the year. Operating profit margin rose to 28.6 per cent (26.7 per cent), gross profit margin to 24.9 per cent (24.2 per cent) and net profit margin to 35.3 per cent (28.2 per cent).

Zenith Exports could not be included in the study as its latest results were not available.

Indian sericulture has great potential if only constraints like low productivity and low quality of raw silk are removed with conscious efforts through research and development.

The global silk industry has been on an even keel in recent years. India's silk industry is quite capable of playing a pivotal role in the global silk scenario. It is heartening to note that Karnataka, the largest silk producer in the country, is setting up seven integrated silk growth centres to encourage organised growth of the sericulture industry.

According to the Central Silk Board (CSB), the successful introduction of bivoltine technology in south India can help India compete with China for high quality value-added silk products in the global market. The CSB has taken several protective measures to remove loopholes in silkworm rearing. It has systematised the release of hybrid silkworm and introduced an authorisation system for mulberry silkworm races.

The system is developed to meet the demand for authentic improved hybrids as also give sericulturists a wider option in terms of choice.

Sources feel that in a vast country like India, with wide geographical and climatic diversity, region-specific and season-specific bivoltine hybrids are imperative to increase production.

A national sericulture project has been taken up in the eighth five year plan to upgrade the quality of raw silk.

The success of these measures will depend on the competitiveness of the Indian silk industry in the global market.

However, trading in silk and silk goods has not been up to the mark.

For instance, the US - a major buyer of Indian silk, imported silk and silk goods worth Rs 256 crore (Rs 314 crore) in 1995-96 - down 18.4 per cent.

This does not augur well for the Indian silk industry as it indicates that India may be losing its hold in the international market. The industry not only needs to develop quality, but has also to tone up its marketing network. This can be done by monitoring the changing fashions in overseas markets to stay in the field. It may have to scout for other markets, besides the traditional outlets like the US, Germany, UK and the UAE .

This calls for a strategy that seeks to blend the needs of the silk industry with the efforts of sericulturists to develop quality raw silk.