INDIAN TEXTILE AND HANDLOOM INDUSTRY

Relevance: Mains: G.S paper III: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.Inclusive growth and issues arising from it.

Components of our Textile Industry:

The textile industry in India comprises three sectors —

• Power looms contribute 61.32 per cent
• Mills contribute 3.34 per cent
• Handlooms contribute 11.28 per cent

Market:

Currently estimated at around US$ 150 billion, is expected to reach US$ 250 billion by 2019. The sector contributed

• 7% of the industry output (in value terms) of India in 2017-18
• 2% to the GDP of India and employed more than 45 million people in 2017-18
• 15% to the export earnings of India in 2017-18

The production of raw cotton in India is estimated to have reached 36.1 million bales in FY19

The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries.

EMPLOYMENT GENERATOR

India needs to generate jobs that are formal and productive, provide bang-for-buck in terms of jobs created relative to investment, have the potential for broader social transformation, and can generate exports and growth. The apparel (or garment) sector meets all these criteria, making it an excellent vehicle for an employment creation strategy.

From a social transformation perspective, apparel generate large number of jobs for women, substantially more than in any other sector. In Bangladesh, female education, total fertility rates, and women’s labour force participation moved positively due to the expansion of the apparel sector. India’s low and declining female labour force participation could be similarly boosted by this initiative.

WEAK TEXTILE SECTOR IN INDIA REASONS

• India’s competitors enjoy better market access by way of zero or lower tariffs to the two major importing markets, namely the US and Europe.
• On logistics, India is handicapped relative to competitors in a number of ways.
• The costs and time involved in getting goods from factory to destination are greater than those for other countries.
• Further, few large containers come to Indian ports to take cargo. So all exports have to be trans-shipped through Colombo, which adds to travel costs and hence reduces the flexibility for manufacturers.
• Labour costs, which is perhaps one of India’s only source of comparative advantage in this sector, also seems not to work in India’s favour.

The problems are well-known:

• Regulations on minimum overtime pay
• Onerous contributions that become de facto taxes for low paid workers
• Lack of flexibility in part-time work
• High minimum wages in some cases
• The world demand is increasingly shifting toward clothing based on man-made fibres while Indian domestic tax policy favours cotton-based production and the tariff policy shields an inefficient man-made fibre sector. These factors undermine the clothing industry’s competitiveness.
• The government is taking very seriously the impact of Indian exporters being disadvantaged in foreign markets. India will still need to carefully weigh the benefits and costs of negotiating new free trade agreements. But in this calculus, the impact on export- and job-creating sectors such as apparel, compared to other sectors that do not share these characteristics (luxury cars, for example), will receive high priority.

VARIOUS INITIATIVES BY GOVERNMENT

• The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from India Scheme (MEIS) for two subsectors of Textiles Industry – Readymade garments and Made ups – from 2 per cent to 4 per cent.
• As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.
• The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunity and attract investments worth Rs 80,000 crore
• The Government of India has taken several measures including Amended Technology Upgradation Fund Scheme (A-TUFS) scheme which is estimated to create employment.
• Integrated Wool Development Programme (IWDP) approved by Government of India to provide support to the wool sector starting from wool rearer to end consumer.

VARIOUS SCHEMES

1. PRADHAN MANTRI CREDIT SCHEME FOR POWERLOOM WEAVERS UNDER MUDRA YOJNA
2. SOLAR ENERGY SCHEME FOR POWERLOOM SECTOR
3. YARN BANK SCHEME
4. IN-SITU UPGRADATION SCHEME FOR PLAIN POWERLOOM
5. Scheme for Integrated Textile Parks
6. SAMARTH- scheme for capacity building in Textile Sector
7. Silk Samagra- integrated silk development scheme
8. North Eastern Region Textile Promotion Scheme (NERTPS)
9. National Handicraft Development Programme (NHDP)

• Comprehensive Handicrafts Cluster Development Scheme (CHCDS)
• Scheme for promoting usage of geotechnical textiles in North East Region (NER) ETC.

Way Forward:

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. There is a need to work on challenges in the form of outdated technology, inflexible labour laws and infrastructure bottlenecks. The government also needs to re-look at fibre neutrality and evaluate various trade agreement opportunities.

• The government needs to move away from export-specific subsidy, which violates WTO norms, to focus on regional and cluster subsidies, technology upgradation and skill development subsidies, which benefit all the producers.
• Need to align our production with the global consumption patterns.
• While India has abundant supply of labour, flexibility in labour laws and adequate skilling will give a big boost to the textiles industry. For instance, women should be allowed to work in all three shifts, after taking into account adequate safeguard measures. This will enable the industry to employ more female workforce.
• Technology upgradation schemes will help Indian players to increase both their productivity and competitiveness, as SMEs, which makes up around 80% of the industry find it difficult to manage the latest technology.
• Indian textiles industry needs to move up the value chain. India has a high share in global export market in upstream products, such as fibre and yarn (14% each). However, India has a low share in value-added downstream segments.
• Handloom and even more so khadi generates the most employment per meter of cloth can also be used to promote this cloth.The consciousness for energy-conservation as well as reducing greenhouse gas emissions are increasing. From this point of view hand-woven cloth has an obvious edge, particularly when it is also hand-spun.
• Massive amounts of money are spent on imparting vocational education, including industrial skills in an institutional set-up. But in the informal set-up of handlooms and several related crafts and artisan skills, an informal structure exists for imparting invaluable and intricate skills to the next generation without the government spending any money.
• Mobilization and organization of weavers and related artisans can play a big role in creating conducive conditions for better implementation of protective laws and promotional schemes.
• Focus on building research, design, development and marketing capabilities
• International Quality Standards need to be maintained across all levels of production;
• Improving productivity of sector through training, skill building and managerial capabilities and through retention of work force.