Given the level of distress in the textile and apparel sector, the steps announced by the Union Cabinet on Wednesday to rejuvenate the industry to create more jobs and promote exports are not just welcome but long overdue. If all the decisions taken by the Cabinet are effectively implemented, India can expect to regain its share in the world market for apparels, some of which it had lost to Bangladesh and Vietnam over the last decade-and-a-half. India has slipped to fifth position as an apparel exporter, with both Bangladesh and Vietnam ahead of it. Implementing the Cabinet decisions can, over the next three years, create one crore jobs, mostly for women, increase exports to $30 billion, and pull in investment worth ₹74,000 crore, according to the Government’s estimates.
The Government has recognised the seasonal nature of the apparel industry and the problems affecting India’s export competitiveness. Thus, the decision to introduce fixed-term employment for workers in the garment industry is significant. Despite the non-permanent nature of employment, fixed-term workers will be considered on a par with permanent workers in terms of working hours, wages, allowances and other statutory dues, despite the seasonality of the apparel industry. They will be entitled to a maximum of eight hours a week of overtime. The Centre has also decided to bear the employer’s contribution of 12 per cent to the Employees’ Provident Fund Scheme for all new employees earning less than ₹15,000 a month. Another key decision involves refund of state levies borne by exporters — this measure will reduce costs and enhance their competitiveness. Together, the measures, which are based on the recommendations of an expert committee chaired by Ajay Shankar, should give a boost to the textile and apparel industry.
However, other problems remain. India is losing out in apparel exports to neighbouring countries such as Bangladesh which enjoy preferential tariff access to key markets such as the US and the EU. Further, the core of the textile sector is still deeply troubled. It has experienced the highest job losses as old textile mills, unable to upgrade their technology, lost out to newer and more modern manufacturers. According to government estimates, about 592 textile mills lay shut as of April 2016, with 39 of them under the Official Liquidator. These 592 mills employed around three lakh workers. Of the others, many are beyond revival. Despite this, the textile and apparel sector is the second largest employer in India after agriculture, with about 45 million people directly employed in it. Despite all its troubles, the sector still accounts for about 10 per cent of all manufacturing production, two per cent of the nation’s GDP, and 13 per cent of export earnings. Careful nurturing and stronger policy support for the sector are essential if its fortunes are to be turned around. And reviving this sector is essential if India’s continuing slump in exports is to be reversed.