Problems with the Indian textile sector

By | November 25, 2013

An employee works at a textile plant in Liaocheng

The textile sector in India is a very important sector of the Indian industrial sector. India is the second largest producer of fabric in the world. The textile sector is one of the biggest employment generating sectors which include both skilled as well as unskilled laborers. It is in fact the second largest employment generating sector in India.

The textile industry in India has a share of nearly 10% in the total exports our country does. The size of the industry is estimated to be around $77 Billion out of which $50 Billion are meant for the domestic use and the rest is dedicated for exports. The Indian exports are generally in the lower value segment due to the old and obsolete technologies being used in the country.

The Indian government has been regularly trying to boost this sector to boost the exports as India has a relative advantage over the other countries because it is one of the largest producers of cotton in the world. The Indian government has come up with a variety of schemes such as Technology Up gradation Fund Scheme (TUFS) which aims at providing capital to the textile industry so that they could enhance their technologies. The Indian government has also come with a variety of schemes for the Micro Small & Medium Enterprises (MSME) to help Indian industry to have a competitive edge over the global industries.

But the Indian textile sector is under a lot of pressure and is facing many hurdles due to many reasons. This sector is plagued because:

  1. Due to the employment generation capacity of this sector, automation is largely discouraged which has an adverse effect on the quality and pricing of the finished goods and hence they are unable to compete with the global automated products with better quality.
  2. The productivity levels in the Indian textile sector are very low. The Indian productivity level is of the order of only 10-15 pieces per person per day which is very low as compared to Chinese 25-30 pieces a day and Bangladeshi 15-20 pieces.
  3. This industry is highly fragmented due to the vote bank politics and still today, there are no large industries in this sector.
  4. This industry requires continuous modernization which means that it is highly capital intensive in nature and has a very low return as compared to the other sectors in the country.
  5. There is an increasing unavailability of skilled as well as unskilled labor in the high textile areas of Ludhiana and Surat. Also many of the Indian states face a power crunch which further affects the growth of the sector as it is highly power intensive in nature.
  6. India has the lowest average number of sewing machines per plant in the world with only 100-200 of them in a plant.

These were few of the problems plaguing the Indian textile sector which need to be addressed as early as possible to achieve healthy employment opportunities and grab hefty and pricy imports from the textile industry.

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