The loss in India's competitiveness in textiles and clothing can be seen to be a result of diminishing productivity, owing to a persistent skill gap in the sector. A severe shortage of skilled labour that India's textile industry faces today is beginning to pose a threat to the economic growth of the country, writes Prateek Kukreja.
We are a young nation, with around 62 per cent of our population in the working age group (15-59 years) and more than 54 per cent of the total population below 25 years of age. As we stand today at the threshold of becoming one of the world's fastest growing economies, a large and young labour pool, in fact, serves as a double-edged sword. While the demographic dividend that the country possesses is definitely an opportunity to climb up the growth ladder, it also reflects the inability of the government to employ India's upcoming generation of young workers. This inability to create jobs for the growing population is largely attributable to the persistent skill gaps and mismatches existing in the labour market.
On July 15, 2015, when Prime Minister Narendra Modi launched the Skill India campaign from Vigyan Bhawan, New Delhi, the aim was to train over 400 million people in India in various skills by 2022. The campaign encapsulated various initiatives like National Skill Development Mission; National Policy for Skill Development and Entrepreneurship, 2015; Pradhan Mantri Kaushal Vikas Yojana (PMKVY) and the Skill Loan scheme. The need for these initiatives was felt in the wake of dismal manufacturing performance, particularly in the organised sector, faced with low productivity and sluggish employment growth. Consequently, these were introduced realising the fact that India lags behind other nations in terms of its skilled workforce.
According to the National Policy on Skill Development and Entrepreneurship, 2015 estimates, before its inception, only 4.69 per cent of the total workforce in India had undergone formal skill training as compared to 68 per cent in UK, 75 per cent in Germany, 52 per cent in US, 80 per cent in Japan and an astonishing 96 per cent in South Korea. The Labour Bureau Report 2014 estimated the skilled workforce in India to be as low as 2 per cent, which was much lower than even other developing economies. As per a skillgap study conducted by the National Skill Development Corporation (NSDC) over 2010-14, there was an additional net increment requirement of 109.73 million skilled manpower by 2022 in twenty four key sectors, whereas the Economic Survey 2014-15 had clearly stated that there is a need of 120 million skilled people in the nonfarm sector for the period 2013-14, and the number has increased since then.
While a persistent skill mismatch has had an adverse impact on most industries, it is more pronounced in case of a labour-intensive industry like textiles, which is one of the largest sectors, not only in terms of size, but also in terms of providing employment. Being the second largest employer after agriculture, it provides direct employment to around 45 million people. India is also the world's second largest exporter of textile and clothing, after China. In order to meet the growing export demand, Indian textile industry currently requires around 10 million trained workers.