Textile Sector
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Introduction:
The Textile Sector, also known as the textile and apparel industry, is a crucial part of global economy. It involves the production, processing, and distribution of various types of fabrics, fibers, and clothing.
Role of Textile Sector in India’s Economic Development:
1. Employment: Textile sector directly engages around 5 crores of the population and is the 2nd largest employer after Agriculture.
- It also has huge employment potential as it is a labor intensive sector.
2. Industrial Output: It contributes to around 10% of India’s industrial production and adds to value addition.
3. Export Earning: It is one of the largest contributors to India’s exports. In 2022-23, India’s textile and apparel exports were worth more than $40 billion.
4. Inclusive Growth:
- Textile mills provide a lot of opportunities weaker section and under privileged.
- Apparel sector provides opportunities for women who constitute
- Requires less training period (3-4 months) and thus is suitable for even unskilled workforce.
The sector has a lot of potential to grow:
- Rising cost of manufacturing in western countries (USA, Europe)
- Structural shift in Global industry
- China who was an undisputed leader for the 1980-2010 period have lost momentum after the 2009 economic crisis.
- It is vacating the global export markets due to high wages and shift in focus to the domestic market.
- India stands a good chance to capture a mammoth share of space ceded by China in global textile and apparel trade leveraging its raw material and manpower advantages.
- China who was an undisputed leader for the 1980-2010 period have lost momentum after the 2009 economic crisis.
- Abundance of skilled and cheap manpower.
- Vast natural resources and favorable economic policies.
- Easy raw material available of natural as well as manmade fibers
- Large domestic demand – increase in disposable income of consumers and their increasing propensity to spend on clothing items has been driving a double digit growth of the domestic market.
Key Challenges of textile sector:
- Financial Stress due to overcapacity: As per the Confederation of Indian Textile Industry (CITI), there is a 30% over-capacity in spinning and weaving sector. PM-MITRA parks may add further capacity in few years.
- Moderating Exports (compared to FY2021-22) due to Inflation, Russia Ukraine war etc.
- Cotton Import Duty
- Supply disruptions due to COVID-19 and war.
- FDI inflow in textile sector are yet to recover to pre-pandemic levels.
- Lack of Innovation: Indian textile industry has been slow to innovate. This has prevented the sector from penetrating certain markets.
- Lack of focus on man-made fibers whose demand has increased globally.
- Pollution: Textile and apparel effluents account for 17-20% of all water pollution.
Steps taken by government to promote textile sector:
1. PM MITRA announced in Budget 2022-23 is aimed at creating seven PM MITRA Parks which will increase investments, production and competitiveness of India’s textile sector. It will also lead to improved quality of the products and reduced logistics cost. All this will also contribute to employment generation in India.
2. Production Linked Incentives (PLIs) related to textile sectors have bene launched to promote investment and increase the production of Man-Made Fibre (MMF) Apparel, MMF Fabrics and Products of Technical Textiles.
3. Scheme for Capacity Building in Textiles Sector (SAMARTH) is a demand driven and placement oriented umbrella skilling program of Ministry of Textiles. It aims to incentivize and supplement the efforts of the industry in creating jobs in the organized textile and related sectors.
4. Labor Reforms like introduction of fixed term employment to ensure that the sector is able to easily hire workers during the peak season.
Way Forward:
- Digitalization and Automation in areas such as design, prototyping, and production are the key to the future. It will improve the production quality and timely delivery.
- PM MITRA and National Logistic Policy 2022, in implemented properly can be crucial in reducing the logistic cost.
- Focus on Sustainability: Regenerative organic farming (that focuses on soil health, animal welfare, and social fairness), sustainable manufacturing energy, and circularity should be adopted.
- Adaptability in meeting the demands of man-made textiles, other complex products and services are also important.
- Reskilling and upskilling of the labor force should be a priority for the region to stay aloft in the market.
- Finally, there is a need of government’s proactive support in infrastructure, capital, liquidity and incentivization.
Practice Question:
- What role does the textile sector play in the economic development of India? What are the major challenges faced by the industry in the current scenario. [15 marks, 250 words]