Rejuvenation of the Textile Industry for Socio-economic Development

Rejuvenation of the Textile Industry for Socio-economic Development

India wants to become one of the top economic powers in the world within the next ten years. In order to accomplish this mission in a timely manner, the Indian government has developed numerous strategies and policies, including “Make in India,” “Atmanirbhar Bharat,” “Industrial Corridor Development,” “Ease of Doing Business,” “PM Gati Shakti National Master Plan,” and “National Logistics Policy.”

Due to the manufacturing sector’s ability to employ skilled, semi-skilled, low-skilled, and no-skilled job seekers, experts and researchers believe that no economic development and progress is possible without the manufacturing sector’s significant contribution.

It is important to note that the Industrial Revolution of the 18th century contributed to the development of modern industrial society. As a result, special attention needs to be paid to the manufacturing sector in general and the sub-manufacturing sectors in particular.

The goal of this article is to provide readers with a bird’s-eye view of the issues facing the Indian textile industry, which has enormous employment growth potential when compared to agriculture. However, during the post-partition period, little stimulus was provided to this industry aside from public sector initiatives and the existing private ownerships of the textile mills, which also happened to be struggling with the threat of socialistic stymies.

To be more precise, the textile industry is dominated by small and medium-sized businesses, the majority of which are family-owned businesses, and is highly labor-intensive. In the textile industry, foreign investment is surprisingly minimal.

More than 45 million people could work in the textile industry. Despite having such a sizable potential to boost India’s economy and consistently increasing export revenues, the textile industry has been dealing with serious issues for decades, such as the decline in global demand, which has caused India’s apparel industry to first slow down to an abnormal magnitude and then eventually lead to shut down situations.

Due to the lack of expansion in the export market, there is no prospective trend for employment growth. The continuing depressing situation compelled the central government to change its policy in favor of promoting the textile industries. Which needs active persuasion for effective implementation and monitoring.

Magnificent probability is responsible for the textile industry’s contribution to socioeconomic development in addition to its potential for foreign exchange earnings. According to the available data, the textiles and apparel, including the apparel manufacturing sector, is capable of contributing about 15% of industrial production, 4% of the nation’s GDP, and about 27% of the nation’s total export revenues.

History bears witness to the illustrious past of the textile industry in India’s economic contribution to the exchequer, which served as the main source of appeal for colonial rulers and foreign plunderers. Weaving is one of the most important economic activities in India and the hand-loom industry helps to develop the country’s rural areas. It employs about 8 million people, about 40% of whom are women, and the majority of them come from low-skilled, illiterate, and severely underprivileged social strata.

The most in-demand products with significant global demand were Indian textile goods and raw materials, but over time, this sector of the economy deteriorated, became unproductive, and lost its competitive edge. Bangladesh has established itself as one of the leading centers for the production of textile goods on the Indian subcontinent, and it dominates the global apparel market, particularly in the more developed nations of the world and the North American market.

Bangladesh, which was formerly within easy reach of India, has benefited from the theory of comparative advantage. Gujarat, Maharashtra, Tripura, West Bengal, and some regions of the South Indian States used to be the centers of the country’s textile industry.

The majority of the textile mills in western India and West Bengal have long since disappeared. The reasons for this extinction include labor unrest, a lack of capital investment, technology absorption, outdated knowledge, a lack of innovation, and a lack of creativity. The most obvious factor that results from the dominant inefficiency of the above-mentioned critical success factors is the absence of cost leadership, which is Bangladesh’s key competitive advantage.

The Indian textile industry struggles due to a lack of access to cutting-edge technology and an inability to meet international quality standards. India’s low-cost and quality-containment rivals include China, Bangladesh, and Sri Lanka.
The textile and apparel industry in India faces a unique challenge that its rivals on the global market do not.

In particular, while there is no distinction made between cotton and man-made fibers globally, the two raw material categories are taxed differently in India. Natural fibers like cotton, wool, and flax are exempt from GST, whereas man-made fibers like filament and yarn are subject to a significant rate of duty. Fiber-neutral policies, in which manufacturing duties on cotton, cotton yarn, man-made fibers, and man-made yarn textiles are not treated differently, have been adopted by China, Pakistan, Sri Lanka, Indonesia, and Thailand.

Production of man-made fibers is a capital-intensive and technologically complex process that should be stimulated with enticing tax benefits in order to set a competitive price on the market.

Because it would draw investments that in turn create value along the inbound and outbound value chain, the reduction or concessions in manufacturing and fiscal duty on man-made fibers are likely to stimulate industry growth. This would result in increased export, increased employment, and increased foreign exchange earnings for the national exchequer. According to the researchers, tax breaks, relief, and rebates should improve the cost-competitiveness of the goods and increase the market share of textile products.

Over a period of ten years, the organised textile and apparel market is anticipated to expand at a Compound Annual Growth Rate (CAGR) of over 14%. It is high time for the textile industry to modernize the existing textile mills, adopt new technology and automation of the production processes in order to reduce waste and losses. The workforce must be exposed to digital skills and ongoing education pertaining to favorable workplace relations.

ERP must be installed and used in the textile industry to improve supply chain and logistics management. Strategic Cost Management (SCM), which includes Total Quality Management (TQM), Target Costing, Kaizen Technique, Value Chain Analysis, Just-in-Time, Activity Based Costing, Activity Based Budgeting, Activity Based Management, Throughput Accounting, Products Profitability, Customers Profitability Analysis, etc., is a modern management technique that can ensure the application of cost leadership and product differentiation strategies for long-term economic sustainability. A rise in both domestic and international demand bodes well for the Indian textile industry’s future.

The last piece of advice for decision-makers and strategists is to revitalize the textile industry through investment, making it technology-driven, digitally trained and skilled manpower sustained and cost leadership, product differentiation, innovation, and hassle-free foreign investment under the policy measures adopted by the federal government to be implemented in a timely manner.

The revitalization of the textile industry should be a joint effort between the provincial and federal governments, as advancement in the socioeconomic sphere as a whole may be impossible without the sector’s contribution.

Last but not least, it has been noted that many projects suffered from time overruns during the strategy implementation phases and subsequently from ineffective monitoring, which prevented operating leverage from producing benefits. So, in order to ensure overall economic success, policy implementation and operation monitoring during the post-implementation phase must be addressed.

Reference: dailyexcelsior

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