Reviving The Weaves: What Modi Government Has Done For India’s Textile Industry In The Last Five Years
The wide-ranging initiatives taken up by the government to revive the textile sector will help augment an industry that is a big opportunity for India in terms of job generation and foreign exchange earnings.
Considering that the some of the largest and most prosperous states in the Union are textile powerhouses, and Smriti Irani, one of the most spirited MPs, is in charge of the Ministry of Textiles, this sector was always going to be in the news.
Though the sector is the second largest employment generator (directly employing over 5.1 crore people and indirectly, about 7 crore), it has been largely out of step with recent times.
The textiles and garments industry in India is valued at around $127 billion. On the face of it, the complete value chain exists within the country — fibre, yarn, fabric and finished goods to export and local consumption — apart from abundant labour.
Yet, India’s share in global textiles exports is just 5 per cent, whereas China’s is at 38 per cent and Bangladesh and Vietnam together at 3 per cent. The value is around 13 per cent, with previous highs hitting 25 per cent of the total exports basket in FY 2002. Finished products, or value-added downstream products, are at 3.5 per cent for India, 40 per cent for China and about 5 per cent each for Bangladesh and Vietnam. These figures are a cause for concern.
Issues affecting India’s textile sector include outdated technology, unskilled labour, lack of access to infrastructure and capital, as well as the fragmented nature of the industry. The disconnect between the cotton growing areas and the areas where cotton is processed into cloth (owing to access to power, infra, credit etc) and the resultant disconnect in employment and cash flows are significant reasons. The textile sector comprises 80 per cent of Ministry of Micro, Small and Medium Enterprises (MSME) players. They need flexible labour laws and a skilled workforce but lack the structural support to bring about these initiatives, themselves.
Confederation of Indian Textile Industry (CITI) data says the export of apparel and textiles has grown significantly in the financial year 2018-19. In October 2018, these exports registered 38 per cent year on the year growth, followed by 14 per cent in November 2018. So, what has the Ministry of Textiles under Smriti Irani done to align India with global competitiveness and help this sector flourish?
Credit Availability And Tax Rebates
Under the Centre’s Samarth scheme, Rs 1,300 crore was disbursed to the sector, and another Rs 6,000 crore was earmarked for the downstream package. Along with state incentives, increase in import duties on textiles and apparels, this is directly credited for the revival. The Union cabinet approved a scheme to rebate state and central embedded taxes that made exports of apparel and made-ups (textile commodities other than apparel) zero-rated.
Pradhan Mantri Rojgar Protsahan Yojana (PMRPY)
Beneficiaries of the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY), aimed at catalysing formal job creation, have crossed 1 crore this fiscal. The number of establishments covered under the scheme stood at 1.24 lakh in January 2019.
The PMRPY is being implemented by the Ministry of Labour and Employment through the Employees’ Provident Fund Organisation (EPFO). The textile sector had availed this scheme at 12 per cent governmnt contribution to employee provident fund (EPF) scheme. This is crucial for labour in the sector to move out of informal to formal work backed by a social security safety net.
This has led to nearly all the big grower and producer states to compete to promote setting up of new factories, brand and GI (geographical indication)-tag their handloom products, encourage clustering for better bargaining for smaller weavers, and give conservation support for water-power-environment, as well as support to set up global buyer fairs.
Access To Power
To solve the issue of patchy access to power that impacts the power-loom sector directly, the Ministry of Power along with the Ministry of Textiles launched an initiative called sustainable and accelerated adoption of efficient textile technologies to help small Industries (SAATHI).
Under SAATHI, the Energy Efficiency Services Limited (EESL) would procure energy-efficient power looms, motors and rapier kits and provide them to MSME power loom units at no upfront cost. With SAATHI, the government expected energy and capital cost savings to accrue to the unit. These savings would enable repayment over five years to EESL.
Middlemen source cheap raw material from big states by placing orders with master weavers, who outsource to smaller power loom weavers who are paid daily wages. This restricts the business potential of local weavers. In Tamil Nadu, power loom weaver clusters have volunteered to form companies, and produce grey (raw) and value-added, dyed and printed fabric. This provides them MSME status and representation, and the Textiles Ministry has promised them further support.
In the knitwear sector, the Yarn Bank Scheme is aimed at enabling small units to purchase yarn at wholesale rates through a special purpose vehicle (SPV), to which the government will provide an interest-free corpus fund, maximum of up to Rs 2 crore, per bank. Again, this will eliminate middlemen in the sector.
Access To New Markets For Handlooms
Under their ‘Look East’ initiative, the government continues to eye new physical markets in South East Asia, Korea and Japan. Its integrated marketing plan for textiles, revealed in 2017, identified 13 countries as target markets, and aligning our product lines with demand in each market. The countries included Germany, France, Italy, the US, China, Hong Kong, Turkey, Australia, Russia, the UAE, Brazil, Egypt and Chile. A common umbrella brand and converged marketing space was also recommended.
Modernisation, Digitisation, Preservation And Conservation Of Textile Heritage
Irani has tasked the various National Institutes of Fashion Technology (NIFTs) with assisting in the modernisation, digitisation and preservation of textile heritage and knowledge. Their artificial- intelligence-led initiatives, trend-forecasting service and innovation labs will guide the handloom sector in deciphering seasonal trends in keeping with India’s national and regional socio-cultural constructs and market requirements, and develop products that hit the spot in terms of trends, design and colour.
Through the Craft Cluster Initiative, the Ministry of Textiles intends to create textile and craft knowledge, fed into a nation-wide Indian textile and craft repository. This repository will house resources currently spread out over weaver service centres, crafts museums, and private collections. Virtual museums will be set up to help in easy sourcing of traditional and contemporary designs. The design innovation and incubation (DII) lab will facilitate collaborations and incubation support.
Khadi And Village Industries Commission
Khadi and village industries are a big priority for Prime Minister Narendra Modi's rural development initiatives. India has a rich and ancient handloom heritage, which needs to be preserved and (GI) tags ensured. In fact, enough demand can be generated within the country itself for khadi and related items.
From 2014 to now, the production of khadi cloth has increased from 9 crore square metres (sq m) to 15.65 crore sq m now. With 1,010 additional new sales centres, and all 8,500 of them staying open on Sundays, average business has grown by Rs 7 crore per year. The MSME had made a provision of Rs 550 crore for the adoption of solar charkhas, which is expected to add to rural job creation.
Promotion Of Wool, Knitting And Knitwear Sector
The Ministry of Textiles has launched a comprehensive scheme for development of the knitting and knitwear sector called PowerTex India. This scheme would be in operation up to 31 March 2020. In the textile value chain, knitting constitutes 27 per cent of the total fabric produced in the country, 15 per cent of which is exported. Some of the major knitwear clusters in the country are in Tirupur, Ludhiana, Kanpur, and Kolkata. The scheme encourages clustering of weavers with equipment and machinery support.
The total outlay for PowerTex India Scheme and Knitwear Scheme is Rs 487 crore. Of this, Rs 439 crore is for power loom units for three years (FY 2017-2020) and Rs 48 crore for the Knitwear Scheme. A significant part of the budget will be spent on skilling, facilitation, IT, awareness, studies, surveys, and market development and publicity.
Promotion Of Silk Especially In The North East
Under the Integrated Scheme for Development of Silk industry (ISDS), the Ministry of Textiles is providing automatic reeling machines to increase the production of quality Bivoltine silk by almost 60 per cent by 2020. This will cut down our dependence on Chinese silk imports in the next three to four years itself. This ties in with sector employment targets of a crore and training of 50,000 weavers. The production of Bivoltine silk has grown recently by 12-13 per cent.
The government will provide financial assistance to individual farmers and silk producers to develop infrastructure, bearing 50 per cent of their costs. Producers will get subsidies by Direct Benefit Transfer. In case of beneficiaries from northeast states, Jammu and Kashmir, Himachal Pradesh, Uttarakhand, Jharkhand and Chhattisgarh, the Centre will bear 80 per cent of the cost.
Given that the Ministry for Textiles is being led by a woman, it’s only natural that the ministry has schemes specifically for the upliftment of women employed in the sector. About 77 per cent of workers employed in the handloom sector are women. The Ministry of Textiles launched four exclusive schemes for them – National Handloom Development Programme, Handloom Weavers’ Comprehensive Welfare Scheme, Yarn Supply Scheme and Comprehensive Handloom Cluster Development Scheme.
Women belonging to the Scheduled Castes and Scheduled Tribes and below poverty line (BPL) families can utilise a 100 per cent subsidy for construction of worksheds under the National Handloom Development Programme. The women also get 75 per cent fee subsidy at Indira Gandhi National Open University and National Institute of Open Schooling.
The number of women employed in silk manufacturing is expected to hit 55 lakh by 2020. The ministry has also been skilling close to 6.42 lakh women through Prime Minister Narendra Modi’s first term, of which 5.3 Lakh women have been placed in different sectors in the textiles industry.
Few people have an idea of the diverse investments, the clear policy-line and albeit protectionist, but very forward-looking policy directives of the current Ministry of Textiles. Under Irani’s leadership, the ministry has made relentless efforts to become more market-oriented, generated employment and promote entrepreneurship.
At the Textile Conclave at the Vibrant Gujarat Global Summit, Irani announced the government’s resolve to roll out the first-of-a-kind ‘Size India’ project across the country. This means India will have its own standardised apparel size, based on a survey. Indian design and fashion are now a formally recognised industry. Standard sizing makes the jobs of producers, designers and buyers, easier, and would boost our domestic and international market.
The textile industry remains a great opportunity for India to generate employment at scale, and at the same time earn precious foreign exchange. The efforts made under this government to revive this sector have been wide-ranging and progressive with Smriti Irani’s personal engagement and interest making a big difference in this ministry.
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