Recession effect, Indian textile industry, unemployment ratio, apparel manufacturing companies, fibre2fashion

Recession Cannibalizes more Indian Textile Jobs

Published : Feb 2009

Indian textile industry has gone through the metamorphosis from being a 'cottage industry' to the state of supremacy. The industry is the second largest employer in India, next to agriculture. It generates employment opportunities for approximately 33.17 million workers directly, and 54.85 million workers indirectly, making a massive total of 88.02 million. Until the clutch of recession took over, it was a doorsill of growth. Indian textile industry was one of the world's best performing industries, during the past few years, but now there is a downtrend in the industry graph. Industry analysts predict that by the end of April 2009, approximately half a million direct workers from textile, garment and handicraft sectors will lose their jobs. Considering the other people who are indirectly associated with the textile industries, total direct and indirect job losses are expected to reach 6 million.

Approximately, 60% of the total garments manufactured in India are exported to foreign markets like EU, US, and Japan, generating revenue of upto US$ 52 billion. Textile export houses are one of the biggest employers in the country. Economic slowdown in the US and EU has affected the textile business in India, resulting in a drastic decline in the country's garment exports. As meltdown diminishes the garment sales in US, Indian suppliers are beginning to feel the pinch. Food is the first preference over clothing. As the customers of the Western countries, curtail their expenses to fight slowdown, export market of apparels in countries like India began shrinking. To sustain themselves in the market, apparel manufacturers chose to go in for cost cutting; thereby opting for lay-offs. An estimate states that during 2008, almost 8, 00,000 garment and textile employees had lost their jobs.

During October 2008, as economic slowdown branched out, the total output of the textile sector came down by 10%. Simultaneously, investments in textiles were also decreasing, ultimately affecting the profitability of the industry. Some biggest apparel companies in India, which are mainly located in Ludhiana in Punjab generating employment for 4,00,000 jobs has suffered a 50% loss in sales; especially the exports during 2008. This has affected 20 to 30% of jobs. Gujarat and Tamil Nadu, the two largest textile manufacturing states of India have been knocked by the sag in garment exports. This has ultimately resulted in retrenchments and layoffs. Majority of the layoffs target the daily-wagers, who comprise 25-30% of a company's workforce. Textile industries are running on 75% of their capacities, or have reduced their three shifts into one.

Textile and apparel industry in India is hit hard by heavy interest rates, less domestic consumption, and cancelled export orders. It is feared by the textile industry people that the slowdown would not improve in the near future, making 2009 a gloomy year for the Textile and apparel industries. A further meltdown will be a huge blow on the economy of the country. The worst is not yet over for the textile and apparel sectors.

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