Source: The post India’s Apparel Export Ambition Needs Scaled-Up Reforms has been created, based on the article “How to tailor the garment sector for exports” published in “Indian Express” on 9 June 2025. India’s Apparel Export Ambition Needs Scaled-Up Reforms.
UPSC Syllabus Topic: GS Paper3- Economy- growth, development and employment.
Context: India’s textile and apparel sector employs 45 million people and contributes 2.3% to GDP. However, its share in global trade is just 4.2%. Apparel exports alone account for only 3% — $15.7 billion out of $529.3 billion — a figure that has stagnated for two decades. This low growth demands urgent reforms.
For detailed information on Textile Sector in India read this article here
Stagnation in Apparel Exports
- Low Share and Declining Growth: Despite its workforce and legacy, India’s global apparel trade share remains modest. Apparel exports have declined at an annual average growth rate (AAGR) of –2% in recent years.
- Unrealised Potential: If the earlier AAGR of 8.5% (2004–2017) had continued, exports could have reached $31 billion by 2030. Under the 2004–2023 average, they may only reach $21 billion, falling far short of the $40 billion target.
- Need for Strategic Rethink: This data shows that without bold reforms, the 2030 goal is unrealistic. India needs policy and structural transformationto revive momentum.
Scale as the Central Bottleneck
- Highly Fragmented Sector: Over 80% of India’s apparel units are MSMEs. They are small, dispersed, and uncoordinated, limiting their ability to fulfil large global orders or gain economies of scale.
- Global Benchmarking: China, Vietnam, and Bangladesh have created large, integrated, export-focused factories. These setups attract global buyers, lower costs, and reduce lead times.
- Scope for Mass Employment: The apparel sector can generate mass formal jobs quickly. A worker can be trained in 60 days to operate a sewing machine, offering a path to employment for India’s youth.
Lessons from Shahi Exports
- Remarkable Growth Story: Shahi Exports, started in 1974 with 15 women, now has 50+ factories across 8 states, employing over 1,00,000 workers(70% women) and earning over $1 billion annually.
- Pillars of Success: Its growth was powered by professional operations, in-house fabric production (80%), women’s employment, and environmental sustainability.
- Inspiration for Replication: Shahi proves Indian firms can scale, but this took 50 years. To replicate this success faster, bold and enabling policies are essential.
Policy Reforms to Enable Scale
- Access to Affordable Capital: India’s capital cost (9%) is much higher than China (3–3.5%) and Vietnam (4.5%). A 25–30% capital subsidy for units with 1,000+ machines and 5–7-year tax holidays can encourage investment.
- Labour Law Flexibility: India’s 52 central labour laws create rigidities. Overtime wages are double the hourly rate vs. ILO’s 1.25 times, raising costs. Linking 25–30% of MGNREGA funds to subsidise garment labour can improve competitiveness.
- Focus on Skilling: Schemes like SAMARTH should be scaled up for short-cycle, demand-driven skilling, especially for women. India needs job creation, not just income support.
Infrastructure and Incentive Redesign
- Strategic Garment Hubs: At least two PM MITRA parks should be garment-focused in states like UP and MP to lower migration costs, reduce expenses, and promote inclusive growth.
- Export-Linked Over Production-Linked Incentives: India must adopt an Export-Linked Incentive (ELI) model that rewards global competitiveness, not just higher production volumes.
Conclusion:
The garment sector is crucial for both exports and employment. Scaling it up will uplift the entire textile value chain. But time is limited. Creating 10 Shahi-type enterprises in 10 years needs swift and visionary policy execution.
Question for practice:
Discuss how India can scale up its apparel sector to increase global export share and generate mass employment.
