Relative Efficiency of Weaving Industry in India using Data Envelopment Analysis

Abstract

In the globalization market, it is essential for the fabric manufacturers to produce fabrics with minimum
cost of production. It can be achieved by improving the efficiency of the loomshed. For this, inter-loomshed
comparison will be an effective way to evaluate the relative performance and assess themselves with the
benchmarks. The purpose of this paper is to evaluate the efficiency of loomsheds in Indian weaving industry,
using a linear programming based Data Envelopment Analysis technique. The study finds that the overall
efficiency of the weaving industry has largely affected due to technical inefficiency in the loomsheds. Scale
efficiency scores show that the small-scale loomsheds are less scale efficient than the large-scale category.
Most of the small-scale loomsheds exhibit increasing returns to scale indicating requirement in the
expansion of scale-size. Furthermore, some large-scale loomsheds are found to have decreasing returns to
scale, indicating the downsizing of the existing production capacity. Slack analysis depicts that the loomshed
have efficiently utilized the raw material but high amount of slacks are observed in the power & fuel
consumption.
Keywords: DEA, loomshed, Technical efficiency, Weaving industry.