Current Status and Challenges
- Stagnant Global Share: India’s apparel export share remains at 3%, despite being the second-largest employment sector after agriculture.
- Export Volume: Apparel exports are at $37.8 billion, while the global textile and apparel (T&A) market is worth $897.8 billion.
- MSME Dominance: Over 80% of apparel units are small-scale, leading to fragmentation, low scalability, and poor global integration.
Significance of the Textile and Apparel Sector
- Mass Employment Driver: Employs 45+ million people, especially in Tamil Nadu, Gujarat, and West Bengal.
- High Value Addition: Generates higher returns via full supply chain integration—from raw cotton to finished apparel.
- Export Potential: Key to India’s ambition to reach $40 billion in apparel exports by 2030.
- Boosts Ancillary Industries: Supports growth in dyes, logistics, chemicals, machinery, and retail.
- Women-Led Workforce: Nearly 70% of apparel workers are women, promoting gender-inclusive growth (e.g. Shahi Exports employs 70,000+ women).
Key Government Initiatives
- Textile-Focused:
- PM MITRA Parks: 7 mega integrated textile parks to lower logistics costs and enhance scale.
- Amended TUFS: Financial aid for technology upgradation in textile units.
- Apparel-Focused:
- RoSCTL: Refund of embedded taxes on exports.
- SAMARTH Scheme: Skill development for workers in the apparel value chain.
- PLI Scheme (Textiles): Incentivizes investment in MMF and technical textiles; PLI 2.0 aims to include large garment units.
Structural Bottlenecks
- Fragmented Ecosystem: MSMEs lack scale, affecting productivity and global competitiveness.
- Costly Capital: India’s high 9% interest rate limits expansion (vs. 3–4.5% in China/Vietnam).
- Labour Rigidity: Double overtime pay and complex regulations deter formal hiring and scalability.
- Inefficient Supply Chain: Dispersed production increases turnaround times and costs.
- Underutilized Female Labour: Despite high demand, female labour force participation (FLFP) remains low.
Policy Recommendations – The Way Forward:
- Subsidized Capital Expansion:
- Provide 25–30% capex subsidy and 5–7 years tax holiday for large units with 1,000+ machines.
- Flexible Labour Reforms:
- Align overtime payments to ILO standard (1.25x) and simplify compliance norms for apparel factories.
- MGNREGA-Wage Linkage:
- Use 25–30% of MGNREGA funds to subsidize wages in garment units to boost formal employment and cost competitiveness.
- Strategic MITRA Garment Hubs:
- Develop 2 integrated apparel-focused parks in Uttar Pradesh and Madhya Pradesh to reduce migration, enable clustering, and attract investment.
- Export-Linked Incentives (ELI):
- Transition from production-linked to export-linked incentives, rewarding global competitiveness and sustained market expansion.
