Rejuvenation of Textile Industry for Socio-economic Development

Prof. D. Mukhopadhyay
India is aspiring to emerge as one of the leading global economic powers within the next decade and in order to achieve the mission in a time-bound manner, Government of India has framed many strategies and adopted many policies such as ‘Make in India’, ‘Atmanirbhar Bharat’, ‘Industrial Corridor Development’, ‘Ease of Doing Business’, ‘National Single Window System’, ‘PM Gati Shakti National Master Plan’, ‘National Logistics Policy’, ‘North East Industrial and Investment Promotion Policy’, ‘Special Industrial Packages for States and UTs’, ‘Udyami Bharat Scheme’ , ‘PM Mega Integrated Textile Region and Apparel’ and many more projects . The stalwarts and researchers are of the view that no economic progress and development is possible without a significant contribution from the manufacturing sector, as the manufacturing sector is an employment provider of skilled, semi-skilled, low-skilled and no-skilled employment seekers.
It is worth mentioning that the 18th Century’s Industrial Revolution is the cause of today’s industrialized society. Therefore, manufacturing sector in general and the sub- manufacturing sectors in particular need to be given special attention. The present write-up is intended to offer a bird’s eye view on the problems and challenges of the Indian textile industrial sector which, is of immense potential for employment generation next to the agricultural sector but, during the post portioned period , this sector was not given much stimulative attention except public sector initiatives besides the existing private ownerships of the textiles mills which happended to be sufferring from the menace of socialistic style of governance with the assistance of subsidies, economic protection devoid of competitiveness , lack of technology absoption and investment for modernization. To be more specific, the textile sector is extremely labour-intensive and dominated by small and medium-sized businesses, mostly family-owned businesses, and the majority belong to an unorganised industrial sector. Foreign investment is quite insignificant in the textile industry.
The textile industry has the capacity to employ more than 45 million people. Despite such a significant potential to contribute to India’s economy and sustained growth in export earnings, the textile industry has been facing severe challenges for decades including, decline in international markets and, consequently, causing India’s apparel industry initially to slowdown to an abnormal magnitude and eventually leading to, shut down situations. There is no prospective trend in growth in employment because of no growth in the export market. The ongoing depressive scenario prompted the central government to make a policy shift for the promotion of textile industries. Which needs active persuasion for effective implementation and monitoring. The contribution of the textile industry to socioeconomic development besides its potential for foreign exchange earnings is attributed to magnificent probability. According to the available statistics, the textiles and garments, including apparel manufacturing sector, is capable of contributing about 15% of industrial production, 4% to the country’s GDP and about 27% to the country’s total export earnings.
History is witnesses of the glorious past of the Indian textile sector’s economic contribution to the exchequer, which was the main source of attraction for the colonial rulers and foreign plunderers. The hand-loom industry in India assists in the economic development of rural India and weaving is one of the country’s most pivotal economic activities, employing about 8 million people of whom about 40 percent are women workforce and the bulk of them are low-skilled , less literate and severely impoverished strata of the society. Indian textile goods and raw materials were the most sought after products accompanied by substantial demand in the global market, but it gradually became sick and a non-performing economic segment and eventually lost its competitiveness. Bangladesh has emerged to be one of the most prominent textile goods manufacturing hubs in the Indian Peninsula and it dominates the North American garment market and other economically advanced countries in the world. The theory of comparative advantage has been benefiting Bangladesh, which was earlier within the comfortable reach of India. The Indian textile industry used to be concentrated and localized in Gujarat, Maharashtra, Tripura, West Bengal and some parts of the South Indian States. Most of the textile mills in western India and West Bengal are nothing but history and the causes of such extinction are labour unrest, lack of capital investment, technology absorption, out of date know-how, lack of innovation and creativity and the most prominent factor emerges out of the consequences of dominant inefficiency of the above mentioned critical success factors is absence of cost leadership which is the pivotal advantage of Bangladesh. The Indian textile sector suffers from a lack of access to cutting-edge technology and an incapability to achieve global quality benchmarks set in the international market. China, Bangladesh, and Sri Lanka are the low- cost and quality matching competitors of India.
The Indian textiles and apparels industry faces a special challenge which is not faced by the competitors in the international market. To be specific, globally, there is no distinction made between cotton and man-made fibres, in India there is a differential tax treatment for the two raw materials segments. GST duty on natural fibres like cotton, wool and flax is nil but man-made fibre, filament and yarn attract a substantial rate of duty. China, Pakistan, Sri Lanka, Indonesia and Thailand adopted fibre neutral policies where manufacturing duty on cotton, cotton yarn and man-made fibres and man-made yarn textiles are free from differential treatment.
Man-made fibre production is capital intensive and highly technology prone operation and it should be given stimulative treatment in terms of attractive fiscal relief benefits in order to determine competitive price in the market. The reduction or concessions in manufacturing and fiscal duty on man-made-fibres is likely to stimulate growth of the industry as it would attract investments, which in turn generate value in the inbound and outbound value chain and, as a consequence, it would lead to more export, more employment and more forex inflow to the national exchequer. The researchers are of the view that fiscal allowances, relief and rebates are expected to enhance the products’ cost competitiveness and more market share for the textile products.
The organised textile and apparel segment is expected to grow at a Compound Annual Growth Rate (CAGR) of more than 14 per cent over a timeline of 10-years. It is high time for the textile industry to modernize the existing textile mills, adopt new technology and automation of the production processes in order to reduce waste and losses. The workforce is required to be exposed to digital skills and continuing education relating conducive industrial relations. The textile sector is required to install and implement ERP to streamline the supply chain and logistics management. Strategic Cost Management (SCM) includes Total Quality Management(TQM), Target Costing, Kaizen Technique, Value Chain Analysis , Just-in-Time, Activity Based Costing, Activity Based Budgeting , Activity Based Management, Throughput Accounting, Products Profitability, Customers Profitability Analysis etc are some of the modern management techniques that can ensure practice of cost leadership and product differentiation strategies for long term economic sustainabilty under cut-throat competitive international market. The future for the Indian textile industry looks promising with a rise in domestic consumption and the export market as well.
The final recommendation for the policy makers and strategy formulators is to rejuvenate the textile industrial sector with an infusion of investment, making it technology driven, digitally trained and skilled manpower sustained and cost leadership, product differentiation, innovation and hassle-free foreign investment under the policy measures adopted by the federal Government to be implemented in timeboud manner. Both the provincial and federal Governments should work jointly to rejuvenate the textile sector and overall socioeconomic progress is perhaps impossible without the contribution of the textile and apparel manufacturing sector. Last but not the least, many projects are observed to have suffered from time overruns during the strategy implementation phases and subsequently inefficient monitoring and, as a result, operating leverage fails to generate benefits. Therefore, policy implementation and monitoring the operations in the post implementation stage is sine qua non for overall economic success and the same should be taken care of.
(The Author is Professor of Management and Director, ISEAM, Bangalore)