India’s Textile and Apparel Industry
Kartavya Desk Staff
Syllabus: Textile Industry
Source: IE
Context: A recent analysis highlighted India’s stagnant global apparel trade share (3%), stressing the urgent need for policy innovation to achieve the $40 billion export target by 2030.
About India’s Textile and Apparel Industry:
• Sector Overview: A heritage industry employing over 45 million, contributing 2.3% to GDP, and 12% of manufacturing employment.
• Export Status: India holds only 4.2% share in global T&A trade ($37.8 bn out of $897.8 bn); apparel alone is at 3%.
• MSME Dominance: Over 80% of apparel units are small, fragmented enterprises lacking integration and global scale.
Importance of Textile and Apparel Industry:
• Mass Employment Generator: Employs over 45 million people, making it the second-largest employer after agriculture.
E.g. Major source of livelihood in states like Tamil Nadu, Gujarat, and West Bengal.
• High Value Addition: From raw cotton to readymade garments, it adds value across every stage of the supply chain.
E.g. Apparel exports fetch higher returns than raw textile exports.
• Export Potential: Contributes ~$37.8 billion to global trade, with high potential to expand India’s share in global markets.
E.g. India’s target is $40 billion in apparel exports by 2030.
• Supports Ancillary Sectors: Boosts industries like dyes, chemicals, logistics, machinery, and retail.
E.g. A 10% rise in garment output raises demand for spinning and processing units.
• Women-Centric Employment: Around 70% of workers in major apparel hubs are women, aiding gender-inclusive growth.
E.g. Shahi Exports employs over 70,000 women across its factories.
Government Schemes (Textile & Apparel):
• For Textiles: PM MITRA Parks: 7 integrated textile parks to boost competitiveness and reduce logistics costs. Amended TUFS: Technology Upgradation Fund Scheme incentivizing modernization in textile units.
• PM MITRA Parks: 7 integrated textile parks to boost competitiveness and reduce logistics costs.
• Amended TUFS: Technology Upgradation Fund Scheme incentivizing modernization in textile units.
• For Apparel: RoSCTL Scheme: Refund of state and central taxes and levies on exports. SAMARTH: Focused skilling programme to train workers in textile/apparel operations. PLI Scheme for Textiles: Focus on MMF and technical textiles and PLI 2.0 draft proposes inclusion of large garment units.
• RoSCTL Scheme: Refund of state and central taxes and levies on exports.
• SAMARTH: Focused skilling programme to train workers in textile/apparel operations.
• PLI Scheme for Textiles: Focus on MMF and technical textiles and PLI 2.0 draft proposes inclusion of large garment units.
Key Structural Bottlenecks:
• Fragmented Units: Over 80% are MSMEs with limited scale, reducing competitiveness and global visibility.
• High Capital Cost: India’s 9% interest rate makes expansion costly vs. 3–4.5% in China/Vietnam.
• Rigid Labour Laws: Complex laws and high overtime costs (2x wage) deter formalisation and scaling.
• Supply Chain Inefficiencies: Dispersed production leads to longer delivery timelines and higher logistics costs.
• Low Female Workforce Participation: Despite high employment potential, FLFP in textiles remains underutilized.
Way Ahead:
• Subsidised Capital for Scale: 25–30% capex subsidy and 5–7-year tax holiday for units with 1,000+ machines.
• Flexible Labour Norms: Rationalize overtime payments (ILO standard: 1.25x), simplify compliance for formal hiring.
• Link MGNREGA with Wages: Use 25–30% funds to subsidize garment factory wages, ensuring employment and competitiveness.
• Designate MITRA Garment Hubs: Two parks in UP/MP can reduce migration, cut costs, and boost industrialization.
• Introduce Export-Linked Incentive (ELI): Shift from production-linked to export-linked schemes rewarding market competitiveness.
Conclusion:
India’s apparel sector holds immense potential for job creation and export growth. But realizing the $40 billion goal needs bold reforms, scalable models, and policy precision. The success of Shahi Exports proves that scale is achievable — but only if replicated through enabling ecosystems.
• Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the Government in this regard. (UPSC-2023)