Textile Industry in India

What is the context  ?

South Asia became a major player in the global textiles and clothing market with the onset of the third wave of global production.

What is status of textile industry in Bangladesh ?

  • Bangladesh overtook India in exports in the past decade as Indian labour costs resulted in products becoming 20% more expensive.
  • Bangladesh joined the league in the 1980s, owing to the outbreak of the civil war in Sri Lanka.
  • Lower production costs and free trade agreements with western buyers are what favour Bangladesh, which falls third in the line as a global exporter.
  • Bangladesh has been ahead of time in adopting technology.
  • Bangladesh also concentrates on cotton products, specialising in the low-value and mid-market price segment.

Where does India stand?

  • The progress of India and Pakistan in readymade garments is recent when compared to their established presence in textiles.
  • India holds a 4% share of the U.S.$840 billion global textile and apparel market, and is in fifth position.
  • India has been successful in developing backward links, with the aid of the Technical Upgradation Fund Scheme (TUFS), in the cotton and technical textiles industry.
  • However, India is yet to move into man-made fibres as factories still operate in a seasonal fashion.

What are the Challenges ahead ?

(i) Fourth Industrial revolution and robotic automation

  • The Fourth Industrial Revolution (4IR) has been shifting focus from production machinery to integrating technology in the entire production life cycle.
  • The production cycle incorporates all digital information and automation including robotics, artificial intelligence (AI), virtual reality, 3D printing, etc.
  • Robotic automation exemplifies production efficiency, especially in areas such as cutting and colour accuracy.
  • The Asian Development Bank anticipates the challenges of job losses and disruption, inequality and political instability, concentration of market power by global giants and more vulnerability to cyberattacks.
  •  With a 7% unemployment rate, India faces the challenge of job creation in the wake of increased automation.
  • The World Bank expects this trend to accelerate in the post-COVID-19 market.
  • The 4IR may result in unemployment or poor employment generation, primarily affecting a low skill workforce.

(ii) Sustainability challenge

  • Sustainability is also an important consideration for foreign buyers.
  • Bangladesh’s readymade garments initiated ‘green manufacturing’ practices to help conserve energy, water, and resources.
  • Textile and apparel effluents account for 17%-20% of all water pollution.
  •  The Indian government is committed to promoting sustainability through project sustainable resolution.

 (iii) Labour issues

  • Access to affordable labour continues to be an advantage for south Asia.
  •  In addition, a country such as India with a very high number of scientists and engineers could lead, as is evident in the areas of drones, AI and blockchain.
  • India’s potential lies in its resources, infrastructure, technology, demographic dividend and policy framework.
  • The creation of a Centre for the Fourth Industrial Revolution is indicative of India’s intent.

What can be the way forward ?

  • Digitalisation and automation in areas such as design, prototyping, and production are key in order to stay abreast, and in controlling production quality and timely delivery.
  • Sustainable practices such as regenerative organic farming (that focuses on soil health, animal welfare, and social fairness), sustainable manufacturing energy (renewable sources of energy are used) and circularity are being adopted.
  • Tax exemptions or reductions in imported technology, accessibility to financial incentives, maintaining political stability and establishing good trade relations are some of the fundamental forms of support the industry needs from governments.
  • The U.S. trade war on China owing to human rights violations along with its economic bottlenecks, opens doors for India and Pakistan as they have strong production bases.
  • Similar to China, India has a big supply — from raw material to garments.
  • Bangladesh has also risen as a top exporter in a cost competitive global market.
  • India’s proposed investments of US$1.4 billion and the establishment of all-in-one textile parks are expected to increase employment and ease of trade.
  • India extended tax rebates in apparel export till 2024, with the twin goals of competitiveness and policy stability.
  • Labour law reforms, additional incentives, income tax relaxations, duty reductions for man-made fibre, etc. are other notable moves.
  •  Newer approaches in the areas of compliance, transparency, occupational safety, sustainable production, etc. are inevitable changes in store for South Asia to sustain and grow business.
  • Finally, there is a need for governments’ proactive support in infrastructure, capital, liquidity and incentivisation.

Ensuring government support for financial incentives, upgrading technologies and reskilling labour are key challenges.