TEXTILE AND SUGAR INDUSTRIES

The textile industry occupies a vital place in Indian economy and contributes substantially to its exports earnings. Textiles exports represent nearly 30% of the country's total exports. It has a high weightage of over 20% in the national production. It provides direct employment to over 15 million persons in the mill, powerloom and handloom sectors. India is the second largest producer of silk, largest producer of jute, one of the largest production base for cotton/Denims and never-tried-before blends of linen.

About six per cent of world merchandise trade is constituted by textile and clothing. Indian textile industry is worth around Rs.800billion (US$ 22.05 billion) accounting for approx. 20% of India's total industrial output. Textiles exports of US$ 10.5 billion achieved in 1997-98 accounted for more than one-third of India's overall exports. India's textiles exports are increasing at the rate of 20% annually and a target of US$ 20 billion has been set by 2000.

India is the largest consumer and second largest producer of sugar in the world. With over 450 sugar factories located throughout the country, the sugar industry is amongst the largest agro processing industries in India, with an annual turnover of Rs150bn.

Domestic sugar industry typically follows a 5 year cycle. Higher sugarcane and production results in a fall in sugar prices and non-payment of dues to farmers. This compels the farmers to switch to other crops causing a shortage, which in turn results in a increase in sugarcane prices and extraordinary profit. Taking into account the higher prices for cane, the farmers switch back to sugarcane, which completes the cycle.

Based on the estimation of 6% of GDP growth rate and population growth rate for the period 1998-99 to 2000-01, the demand for sugar is expected to grow at the rate 7% for the corresponding period. This will lead to increase in demand for sugar from 15.8 kg in 1997-98 to 1998-99 and 17.7 kg in 2000-01.

The production of sugar has increased in the past from 0.12mn ton in 1930-31 to 12.85 mn ton in 1997-98 at a CAGR of 7.23% The number of sugar mills for the corresponding period has increased from just 29 in 1930-31 to around 412 in 1997-98.