Market Resurgence, Deregulation and Industrial Response: Indian Cotton Textiles in the 1990s

Abstract

It is now evident that, roughly from the end of the 1980s, cotton textiles manufactures in the integrated mills has seen a rival sorts, owing to, we shall argue here, market-resurgence, mill-restructuring, deregulation, and the 1990s trade reforms. The change has many elements, but together, they represent a departure from suitable historical characteristics of the industry, namely, low ad stagnant labour productivity, and the reputation of being technologically backward and ill-adaptive. Low productivity in Indian mills is a familiar topic in economic history and contemporary policy analyses. An example of the latter is the debate around sustained low profitability in the mill sector in the 1970s, and the associated problems f obsolescence, bankruptcy, and strained industrial relations. From about 1987-8, however, aggregate data show rising average productivity in the mills, a trends that might have been unthinkable six or seven years ago. In this paper, I ask: What has changed? Or, what features of the macroeconomic environment made technical change easier in the 1990s. Is this a general tendency, or a restricted one? The paper proceeds in three stages: background information and received wisdom about the mill crisis until 1985, main findings on the revival from 1985, and an assessment of the main findings. Section 1 deals with background material. Section 2-5 state the main findings, the detailed topics being, demand (Sec.2), market-share (Sec.3), relative price movements (Sec.4) and the technical change (Sec.5). Finally, Section 6 draws together some of the empirical findings in an attempt to interpret what they mean.