The cotton classic

Print edition : January 30, 2004

The turning of every crisis into an opportunity has been the key to the rise of Coimbatore since the days it was known as Kongu Nadu.

FROM relative obscurity until less than a century ago, Coimbatore has transformed itself into one of the 10 highly industrialised cities in the country and now ranks fourth in terms of the potential for growth.

Significantly, Coimbatore's industrial base has been nurtured by agriculture. The most striking feature of Coimbatore has been its diversity, enterprise and resilience. In its rise from strength to strength it converted to advantage even its disadvantages.

In olden times, the Coimbatore region, along with the present-day Periyar, Salem and parts of Madurai and Tiruchi districts, was a well-defined geographical unit, Kongu Nadu, ruled mostly by tribal chieftains. The best known among them was an Irula, Kovan, who lived with his people at Kovan Puthur. The name of the place got anglicised into Coimbatore. It is also known in Tamil Nadu as Kovai.

The early settlers of Kongu Nadu were the Gounders, essentially a farming community. Vested with irrigated land by the then rulers, they were quick to improvise, try and adopt new farming practices. To this region came the Kammavar Naidus, fleeing Muslim invaders from what is now Andhra Pradesh. With much of the irrigated land having been taken over by the Gounders, the migrants got the dry, rainfall-deficient and largely unused land. By dint of hard work, the Naidus developed an effective well-irrigation system, called "thottam", to put to best use the meagre water available. Even in those times very deep wells had to be dug. But the Naidus did all that and more, and made the land pay.

This strong will and innovative spirit did not dissipate over the years. In fact, most of the present industrialists in Coimbatore acknowledge this to be the main reason for their success.

When the `thottam' farmers discovered that the best crop for the largely black soil region was cotton and started cultivating it, little did they realise that they were sowing the seeds of industrialisation. When the British came, the farmers found a market at their doorstep. Cotton began to be sent to England to feed the textile mills there. With the increasing demand for cotton, the farmers took to cultivating it in a big way, and prospered.

The next major step towards the industrialisation of the region was taken in 1888, this time by the Britishers. With cotton available in abundance, they set up a textile unit, the Coimbatore Spinning and Weaving Mill. The enterprising Naidus quickly set up spinning and weaving mills, the first of which, Kaleeswara Mill, came up in 1907.

The transformation of the dry land farmer into an industrialist was complete. Soon textile mills of various sizes mushroomed in the region, giving its economy a high level of market, or commercial, orientation.

One significant advantage was location. Coimbatore straddles the north-south and the east-west trade routes, making it the pivot between the eastern and western coasts.

The road network was complemented by railways. A broad gauge line was laid as early as 1862 and extended in the 1910s and the 1920s. With this advantage, the region's infrastructure developed rapidly. This, in turn, further strengthened the market orientation of the agrarian economy.

A number of changes in the agricultural sector gave a boost to the development of the region during the 1920s. Government loans gave a thrust to well irrigation; over 15,000 wells were dug between 1911 and 1921. This, in turn, meant diversified agriculture. The commercialisation process was aided by the development of plantations in the nearby Anamalai hills.

A watershed of sorts in this development process was the First World War. The demand for cotton from the mills in Bombay (now Mumbai) increased as they not only had to meet the military requirements but also make good the shortfall in supplies to the domestic market due to the drop in inflows from Europe. In 1916, some 30 merchants from Bombay, desperate for cotton, came to Coimbatore and set up shop at Tirupur.

After 1922, when the Bombay textile industry went into an extended decline, Coimbatore displayed its resilience by expanding local mills. The enterprising Coimbatore cotton farmer got drawn into this cycle by selling at the right moment, rarely leaving the business to merchants. Even in the remotest villages of Kongu Nadu the cultivators had weekly, if not daily, information about the Bombay market.

The 1920s also witnessed industrial growth. During this period almost all the industries that had links with the agricultural sector grew. The number of ginneries increased from five in 1911 to 47 in 1921 and 90 in 1933. A number of cotton pressing factories were also started, and in 1928 the first hosiery unit came up at Tirupur. Four spinning mills were put up in this decade, largely because of the increased cotton production and also because of the handlooms, which offered a ready market for yarn.

ENGINEERING industries also got a head start in this period. In the early 1920s the PSG group started a small workshop - first for repair and then for the manufacture of ploughs and other farm equipment - followed by a foundry. This was the nucleus for the growth of engineering industries in general, and foundries in particular.

With cotton cultivation picking up, the use of pumps for irrigation increased and, hence their manufacture. The PSG group, which began by manufacturing spares, was soon making pumps. Thus the demands of commercialised agriculture provided the basis for the emergence of the engineering industry in the region.

The pump revolution gave a boost to cotton cultivation. The business was so secure that joint stock banks also became involved. When even this proved inadequate, a form of cooperative banks, called nidhis, emerged. By 1930, there were 125 nidhis recording a turnover of Rs.2 crores.

The buoyant markets of the 1920s collapsed during the Great Depression of the 1930s. The prices of cotton fell; there was a contraction of trade; and there was large-scale rural distress and consequent migration to urban areas. The credit pyramid also collapsed. But, paradoxically, there was no let-up in the industrialisation.

The contraction in trade led to changes in the cotton market credit structure. The excess supply made an elaborate credit structure superfluous. Most of the small nidhis collapsed.

Though cotton suffered in terms of exports and prices, the area under the crop did not decline because of the process of rationalisation in the major cotton market. Tirupur, which diversified into upstream activities such as ginning and spinning, sustained the demand for cotton in the face of a severe contraction in exports.

Then came the textile boom when 22 mills were set up. A combination of factors, including cheap labour, helped Coimbatore make full use of the changes in the tariff policies that encouraged new mills. The number of ginneries went up again from 90 in 1933 to 149 in 1941, thanks to the availability of power from the Pykara hydel project and the idle funds with the farmer.

But there was an element of haphazardness in the textile boom of the 1930s. The mushrooming of mills, especially the small ones, led to over-production. But the outbreak of the Second World War saved the situation as the demand for textiles rose. More mills were set up until the 1950s, leading to a revival in cotton production.

The structural deficiencies of the bloated textile industry led to frequent crises. But Coimbatore displayed its resilience, diversifying from textiles to other industrial and commercial activities.

The disruption of imports of electric motors and pumps during the War provided a start to this industry. There was also diversification into small foundries, machine shops and repair works. This laid the basis for light industries, in particular the manufacture of irrigation pumps. Between 1961 and 1971 there was a doubling of both value-added and productive capital in the large-scale industries.

In the 1970s and 1980s, agriculture, Coimbatore's traditional source of strength, went through a bad phase, largely because of a series of bad monsoons. The over-exploitation of groundwater during the Green Revolution in the 1960s led to a crisis in well irrigation. Groundwater utilisation exceeded the recharge, leading to a depletion of the water table.

This crisis, the recessionary conditions of the economy and competition from the modern synthetic mills in other parts of the country hit the textile industry, which touched a low in the 1970s. But a boom in the hosiery industry, aided largely by export incentives, offset the slump.

While Coimbatore's industrial diversification had all along been linked to textiles, the trend in the 1990s was to move away from this unpredictable area. Thus came units making myriad things, from automotive components to precision tools to wind energy equipment and photo-voltaic cells.

The diversified and inter-linked industrialisation was spatially well spread, leading to a high level of urbanisation. The increase in the urban population from the early 1900s to the early 1990s was over 1,900 per cent, four times higher than the increase in the State.

With a history of attracting people from other places, today the over 3.5 million population of Coimbatore is as diverse as its industries. With people from Tamil Nadu, Andhra Pradesh, Karnataka and Kerala residing in the city, at least six languages, including English and Hindi, are spoken there. A major seat of learning in the south, Coimbatore has three universities, 25 engineering colleges, 28 polytechnics, 43 arts and science colleges, 14 professional colleges, one Air Force Administration College and two medical colleges, besides paramedical institutions, ITIs and institutions for research and development.

While all this paints a rosy picture, there were problems beneath the surface through the 1990s. There was a slowing down of industry, set off in the early 1990s primarily by the crash in the textile sector. While crisis is not new to the textile industry, this time it was prolonged and severe. According to G.K. Sundaram of the Lakshmi group, "the crisis is government-induced".

The major local grouse is the frequently changing export policy on cotton and yarn. Says Sundaram: "As it is, the government's cotton production estimates are poor, leading to speculative trading. Add to this its policy of allowing yarn exports but stopping it suddenly, which means we cannot meet our commitments and we lose our credibility abroad."

The faulty production estimates, the restrictive and frequently changing export policies and the fall in international demand led to huge yarn accumulation. According to Sundaram, some small mills were carrying stocks worth Rs.16 crores when even stocks worth Rs.60-70 lakhs can be dangerous for them. Unable to pay interest, many are becoming sick, especially those of the National Textile Corporation (NTC). Activities of the powerlooms, hosiery units and mills fell by over 50 per cent. But they are not depressed. With 50 per cent of the mills closing down in Europe, they hope to fill in the gap. With the repeal of the quota system, they are hopeful that Indian textiles have an excellent future.

The textile crisis of the 1990s affected other industries as well, yet they seem to have emerged stronger. Those developed to feed textiles, such as foundries, have diversified and can now operate without the parent industry. Traditional industrialists are also shedding their old ways and modernising their production and administration practices. They are improving product quality, trimming costs and increasing efficiency at a feverish pace.

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