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Textile Industry and Policy in India

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Ayush Agrawal
Ayush Agrawal
Runs a private label fashion brand, We The Chic, engaged in the business of manufacturing, distributing and retailing licensed official merchandise of various popular American TV Shows, Comic book characters, musical bands, etc. in the Indian territory.

The textile industry in India is surely a huge part of our economy and it provides employment to a large section of people of the country, making it the second-largest employment generating division after the agricultural sector. India depends heavily on this industry as it contributes 14 percent to industrial production and 4 percent to our GDP. Presently, India is the largest producer of jute globally and is second in silk and cotton production. Apart from these encouraging statistics that tells us that the textile industry is a major contributor to our economic growth, it is important to note that the textile industry of India has its own history and culture. People from the older civilizations like the Harappan civilization or those from the Vedic Age would weave and spin regularly, according to historical data available.

There is also evidence that India used to export textiles to countries like China and Egypt. The modern textile industry was introduced to India in the early 1800s when our first textile mill was established at Fort Gloster near Calcutta. India’s textiles are mostly cotton and the first cotton mill of India was established in Bombay in 1854. Later, the first cotton mill in Ahmedabad grew to become the main competitor of the mill in Bombay. Soon, there were 178 mills in India and soon the textile industry was flourishing. Even today, the industry works by a lot of traditional methods of manufacturing, with it being a highly self-sufficient sector. However, the industry is now being threatened by newer methods of production and automation being introduced. India needs to consider several factors before allowing technology to take over a sector that it poses a major risk to.

With the textile industry gradually adopting automation, it will be a serious loss to the economy, as this will greatly reduce the number of jobs that the industry currently creates, leading to large-scale unemployment in a short span of time. Even though using new technology will increase the efficiency of production, the aspect of loss of people’s jobs needs to be considered before India makes the shift. It has been reported that the spinning, auto-coners and auto-splicers have replaced the job of 20 workers by 2 workers. This is a massive reduction in employment and India is not exactly at a point where we can afford to make such big changes. What we need at the moment is a national textile policy that will protect this precious industry. You may wonder why the textile industry needs to be given this much importance and here are a handful of reasons. The textile industry, as mentioned earlier, is an enormous contributor to employment and it has even been predicted that the employment can be doubled in the next seven years.

The textile industry also preserves our tradition and culture, considering the fact that this heritage has been surviving for centuries in the country. The last policy regarding the textile industry was brought out by the ministry of textiles in 1985. But this was highly criticized for not bringing about the desired results. The Multi Fibre Agreement, which was introduced in 1974, favours the protection of the textile industries in the United States of America and Europe. Though the conditions of MFA were over in 1994, they were still continued by the World Trade Organisation that later ended the agreement in 2005. This led to the loss of several jobs in the USA but for India, ending the MFA was supposed to be excellent. With the quotas of the MFA no longer functioning, India’s profits were expected to increase and our global exports were also to be benefited. Instead, India’s total share of global exports dropped to half of what it was in 1996.

India’s textile industry mainly focuses on cotton (organic cotton, genetically modified cotton, etc) production even though we have other fibres that can be produced with equal importance, like jute, polyester and viscose. Cotton is present in 70 percent of the garments in India as yarn and fabric, with only 30 percent from synthetic fibres. This is indeed unusual, as the global scenario is exactly the opposite, with 70 percent usage of man-made fibres and 30 percent natural fibre. This reflects the global demands of fashion and it also shows that India is giving the world precisely the reverse of what it wants. China had been hoarding cotton yarn in recent times and India used to export raw cotton to China. It can also be noted that bringing the Goods and Services Tax (GST) into effect has surely influenced the taxation system. With GST being brought into the picture, indirect taxation has been introduced into a sector where the cotton production was free from it. The dual GST structure, with 18 percent on upstream and 5 percent on downstream, causes an upturned tax arrangement. This has led to a lot of chaos, shown by strikes in major places for the industry, like Surat and Coimbatore.

An aspect that has been disturbing the economy is that the Chinese textile industry has a surplus capacity, as compared to the Indian fibre and yarn sector. This leads to the reduction of prices of Indian textiles and the danger of excess imports. Nevertheless, due to the increasing earnings of China, the labour-intensive sector is probably being given a rest, which will lead to better opportunities for production in India. But it is an efficient and consistent national textile policy document that can help us grab such prospects, before they are seized by other developing countries that are flourishing in the textile field.

The significance of the textile industry in India cannot be overlooked or dismissed as it is a sector that has an immense employment prospective that provides jobs for both skilled and unskilled workers. As a country, we need to look at issues like the various demands of the trends of the times, the requirement of high-tech machinery and automation, export incentives, tax policies that are fibre-neutral and numerous other factors. But it is certain that with a valuable and resourceful national policy that is appropriately executed and implemented, the textile industry cannot be stopped.

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Ayush Agrawal
Ayush Agrawal
Runs a private label fashion brand, We The Chic, engaged in the business of manufacturing, distributing and retailing licensed official merchandise of various popular American TV Shows, Comic book characters, musical bands, etc. in the Indian territory.
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