India’s Apparel Export Ambition Needs Scaled-Up Reforms

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

1. 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.
2. 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.
3. 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

1. 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.
2. Global Benchmarking: China, Vietnam, and Bangladesh have created large, integrated, export-focused factories. These setups attract global buyers, lower costs, and reduce lead times.
3. 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

1. 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.
2. Pillars of Success: Its growth was powered by professional operations, in-house fabric production (80%), women’s employment, and environmental sustainability.
3. 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

1. 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.
2. 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.
3. 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

1. 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.
2. 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.