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.

Various schemes have been implemented to cater to the skilled manpower needs of various segments of the textiles industry. Apart from various schemes for textiles under the Skill India mission, the Integrated Skill Development Scheme (ISDS) for textiles, for which the government allocated $300 million, aimed to train over 2.67 million people up to 2017, covering all sub-sectors. However, as per the recent figures released by ministry of textiles, till date only 0.85 million people have been trained under ISDS, which is much lower than even 50 per cent of the target figure.

Two years into the campaign, the time is ripe to assess and evaluate its impact and effectiveness on employment and productivity. The fanfare and ballyhoo, coupled with ambitious targets, with which the Skill India mission was launched had no doubt, given a fresh spur to previous feeble efforts. It was hoped that the reconstituted efforts in the direction would certainly result in improved human development. An appropriate skill development framework was expected to be put in place which could effectively remove or at least reduce disconnect between demand for and supply of skilled manpower for existing and future jobs. The textiles sector, in particular, having the potential to create 45-50 per cent of direct jobs in rural India, was expected to drive the Skill India mission.

Unfortunately, this doesn't seem to be the case so far. A government-appointed panel itself reports that the PMKVY, which spent over Rs1500 crore in skilling, has failed to achieve the key objective of increased job creation, and has ended up monetarily benefiting a number of private training institutes. While the government claims to have trained about two million youth so far under the mission, there are found to be inconsistencies with respect to quality as well as transparency in candidate enrolment. This raises serious concerns over the efficacy of these government-subsidised initiatives introduced under the ambit of Skill India. Therefore, it wouldn't be wrong to say that the institutional framework set up by the government under this campaign has failed so far to meet its central objective of improving formal skill training of the population.

Undoubtedly, scarcity of a skilled workforce is a matter of concern and more so, in case of a labour-intensive industry like textiles. With a huge skill gap still persisting in the Indian labour market, what we require is an effective policy framework to empower an individual, by enabling him/her to realise his/her full potential through a process of lifelong learning. Notwithstanding a large pool of labour force in India, we are still incapable of meeting the rising global demand in textiles and clothing, with exports from countries like Vietnam and Bangladesh inching closer to India's exports. This loss in India's competitiveness in textiles and clothing is 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.

The effective policy framework should aim at making quality vocational training beneficial for both the employees as well as the employers, so that an employee sees it as a matter of choice and the employer acknowledges the productivity linked to skilled workforce by paying the requisite premium. Further, it is required to ensure both vertical as well as horizontal pathways to a skilled workforce for further growth by providing a seamless integration of skill training with formal education. Last and most importantly, the policy framework should be such that it promotes commitment and ownership of all stakeholders towards skill development and create an effective coordination mechanism.

About the author

Prateek Kukreja is with the Centre for Study of Regional Development, Jawaharlal Nehru University.