The textile industry was the first organised segment that facilitated the Industrial Revolution. It is time to bring in some reforms in its Indian counterpart, say Krrishan Singhania, Karan Dogra and Yuga Deodhar.
Textile Industry can be recognised as the first organised industry facilitating the industrial revolution in the 18th Century. Global industrialisation has witnessed the lead of apparel sector in generating employment and spreading out manufacturing and exports of countries. 'English East India Company' focused on the trade of Indian cotton and silk, that turned into one of the richest and powerful corporations of its time. Today, being the second largest manufacturing capacity on a global front, India accounts for 13 per cent of the world's production of textile, fibre and yarn.
In 2013, India ranked 2nd in terms of export in textile and garment across the world, surpassing Italy and Germany. As India is a sourcing hub of the textile industry with the abundant availability of raw materials and skilled workforce; this industry is honored as the second largest employer of the nation after the agriculture industry. Considering our glorious history and current headway, a package of Rs 6,000 Cr has recently been announced welcoming the splendid future of the Indian textile industry.
Seizing opportunities and pitching the right times:
'Multi Fibre Agreement' ("agreement") was an international trade agreement imposing ration or quotas on the quantity that developing countries may possibly export in the form of fabric, yarn, clothing to the countries, which were already developed (1974 - 2004). When this agreement was phased out, it was expected that India would derive some benefit out of it. But the textile industry didn't grow up in the manner it should have been, though India gets textile industry through its inheritance. Despite its import decision for competing with man-made fibres, obstinacy in the labour market, the export quotas in reference to cotton and logistics costs have prevented the country from making the most out of these benefits.
Now, due to its rising domestic wages, China has begun to exit from textile and apparel sector. This exit leaves a huge demand base for India to exploit. India is well positioned to seize the opportunity of China's deteriorating competitiveness because the wage costs in most of the Indian states are notably lower than China. But, the hurdle in this path is of the other competitors; since the space vacated by China is being occupied by Bangladesh and Vietnam and they are overtaking Indian apparel exports. Thus, the window of this opportunity is narrowing and India needs to act rapidly to regain competitiveness and apparel market share.
Fortunately, Indian government has foreseen this second opportunity to capture the market share and competitiveness in global textile marketplace and have announced this package.