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Weaving economic progress.

Date: 14-09-2021
Subject: Weaving economic progress
At present, India is known as a leading manufacturer of cotton-based apparel and home textiles products. The Indian textiles and apparel (T&A) industry accounted for around 2.3% of GDP and 12% of merchandise exports in 2018–19 (11% in FY 2020–21) and employs around 45 million people directly. Women find this industry conducive for work and join it in large numbers. Urbanisation and increase in disposable income will drive demand in the future, which is expected to take textile production at over $300 billion by 2030.

India’s competitive advantage in this sector is that the entire value chain—from fibre to fashion—is located within the country. This, along with superior quality, puts India at a firm footing to become a global textile powerhouse, provided some key challenges are addressed.

The Indian textiles industry is small, fragmented, and dispersed, which drives up production costs. It also lacks economies of scale, making it difficult to be internationally competitive. Many of our global competitors belong to the LDC category and enjoy preferential trade arrangements with export destinations. Post the 1990s, there has been a shift in consumer preference from cotton and natural fibres towards manmade fibre (MMF). The wealthy patrons in cold countries use MMF apparel during the majority of the year; however, the Indian textiles industry is centred around cotton.

The Production Linked Incentive (PLI) scheme launched by the ministry of textiles is a significant step towards overcoming the disadvantages faced by the T&A industry. It builds upon the successful strategy followed by the ministry for boosting PPE production, which made India the second-largest producer of PPE kits worldwide.

The PLI Scheme aims to boost domestic manufacturing and processing of MMF fabric and apparel as well as technical textiles. It provides incentives on incremental sales subject to conditions on investments and turnover. With a budgeted outlay of Rs 10,683 crore, it will transform the processing and weaving segment and provide a strong base for apparel manufacturers. The scheme will also help place India among the frontrunning producers of technical textiles, thus unlocking huge application potential in sectors like agriculture, infrastructure, water, defence, automobiles, and health and hygiene, thereby improving their efficiency. After the National Technical Textile Mission aimed at R&D, the PLI scheme will induce investments and enhance production.

Targeted investment in the textiles sector is bound to be beneficial. The T&A industry is highly mobile with low capex, and high employment. This PLI scheme will lead to fresh investments worth more than Rs 19,000 crore, and cumulative turnover of over Rs 3 lakh crore, and additional direct employment opportunities for 7.5 lakh jobs. The Indian yarn spinning industry has the opportunity to expand activity to the weaving and processing segment.

The scheme also addresses the geographical disconnect between centres of apparel production and labour supply. The demography of most production centres being developed areas does not support such a labour-intensive industry, leading to dependence on migrant labour. The scheme adopts a paradigm-shifting approach of taking jobs to people, not vice-versa, by incentivising establishment of garment factories in aspirational districts and Tier-III and IV towns. Thus, workers will be able to find work closer to home, while the industry can get a reliable labour supply.

The PLI scheme is different from the previous initiatives as it is time-bound. There will be no permanent support and the production will happen during a fixed time frame to receive financial incentive. The ultimate objective is to support the creation of a viable enterprise and competitive industry in the long term by supporting them in initially.

Reaping full benefits of the scheme in the medium and long term will require collaboration between different agents and stakeholders. Collaboration between the buying houses for leading brands, fashion designers, and the knitting, weaving, and processing industries and the state and central governments would catalyse new investments.

Joint training projects in association with leading skill institutions will have to be developed for rapid growth of the industry and driving innovation. Along with the Mega Industrial Textile Areas announced in the 2021 budget, this PLI Scheme has the potential to completely transform the T&A industry and facilitate growth, economic development and industrialisation


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