Textile industry in India, one of the oldest industries in Indian economy, is expected to generate 50 million jobs, majority of them for women by 2025, if the industry achieves breakout growth as per its potential. This has been stated in a report – ‘Weaving the Way: Breakout Growth Agenda for the Indian Apparel, Made-ups and Textile Industry’ by the Confederation of Indian Industry (CII) and Boston Consulting Group (BCG). The potential economic benefits have been identified as revenue of US $ 300 billion by 2025, a multiple of three from the current position. In this, the domestic market could account for a 2.5 times jump to US $ 150 billion and even the foreign exchange earnings could go up to a similar size.
Small scale, fragmented clusters, restrictive labour laws and unpredictable wage movements, high operating costs due to taxation and subsidy structures, market access barriers in key markets such as the EU and the US, high cost of working capital, low brand visibility, poor infrastructure, logistics delays, and lack of product development and process improvement have emerged as key obstacles in meeting this potential.
The report has also suggested some labour regulation changes like more flexible work hours and fixed term employment, as per industry concerns. The report found that job-linked scale through a ‘Make in India’ scheme could provide a slab-based incentive linked to the number of additional jobs created, to be availed of by entrepreneurs or industrial parks.
The report also recommends rationalization of duties and taxes to avoid inefficiencies and high energy and overall costs. A power subsidy, inclusion of power charges under GST, and similar rates for both cotton and synthetic products are recommended. Industry should engage in driving productivity through extensive training and investments in process improvements and automation, added the report.
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To encourage hybrid domestic-export models, the report suggests the China model of VAT rebates, and the exempt-credit-offset method of carrying forward unadjusted rebates. This would also help overcome the issues under the Merchandise Export Incentive Scheme which will have compliance issues with WTO in 2017. Logistics support is a key recommendation, especially integration with Bangladesh through single-day transit. Shipping turnaround times must be improved and adequate hinterland connectivity built with key textile parks. Besides, the report strongly calls for a Free Trade Agreement with the EU.
