India’s textile industry picks up pace, giving hope to PM Modi
By Krishna N. Das
HINDUPUR, India (Reuters) – At the factories of Texport Industries in southern India, thousands of mostly female workers are busy converting yarn and fabrics into T-shirts, shirts, spaghetti tops and garments for children for American customers of Tommy Hilfiger and Kohl’s Corp.
After being overtaken in recent years by neighboring Bangladesh and then hammered by the COVID-19 pandemic, India’s garment factories are now running near capacity – a rare labor market bright spot for Prime Minister Narendra Modi and his ruling party as they head towards an election in 2024.
“We’ve been so busy,” said Parashuram, the head of one of Texport’s one-name factories, as a group of 60 new recruits practiced sewing. “We are constantly looking to hire workers.”
The company is looking for land to add new factories around its main production base in Hindupur, about 100 km (60 miles) north of the technology hub of Bengaluru.
The sustained success of the textile and apparel (T&A) industry, the country’s largest employer after agriculture, is crucial if Modi is to successfully tame unemployment.
India’s unemployment rate is above 7% and is estimated to have exceeded the global average in five of the past six years – a huge problem for a country that must create millions of jobs each year just to keep pace with the arrival of young people on the labor market.
HIGHER LABOR COSTS
India is the world’s fifth-largest T&A exporter with a 4% share of the $840 billion global market, while China controls more than a third. India’s exports were on par with its closest rival Bangladesh a decade ago, but have lagged in recent years – particularly on clothing – partly due to labor costs – higher labor which makes Indian clothing about 20% more expensive.
Indian T&A firms say they are now adding new customers, selling more to old ones and increasing production capacity as overseas buyers seek to diversify their supply chains.
Other than China, only India has a large supply chain of everything from cotton to clothing.
Still, some industry leaders have said that unless India signs free trade deals with Western countries – which New Delhi says it is working on – it won’t be easy to overtake Bangladesh, which also enjoys preferential export conditions from many buyers as a less developed country.
Indian companies such as Texport, Welspun India and Raymond – whose buyers include Western retailers Amazon, Target, Costco, Walmart Inc, Tesco and Macy’s – have managed to boost sales in recent quarters.
Modi wants them to create some 1.5 million jobs in the sector over the next five years or so.
India’s junior textiles minister, Darshana Jardosh, on Wednesday listed recent announcements aimed at supporting the industry, such as the establishment of seven massive all-in-one textile parks for around $600 million to further increase the jobs and make it easier for foreign buyers to place orders and monitor supply chains. The government has also offered production-related incentives worth $1.4 billion.
The American Apparel & Footwear Association (AAFA) said India’s ongoing and planned investments had led “more companies to see India as a potential source of growth over the next few years”, without giving details.
Two industry sources with knowledge of the matter said that Fast Retailing’s Uniqlo and Gap Inc were in talks to increase their purchases in India. The companies, which source their supplies in India primarily from the country’s largest garment exporter, Shahi Exports, did not immediately respond to requests for comment.
Shahi Exports managing director Harish Ahuja declined to discuss individual buyers, but said demand was high from his existing customers.
India’s T&A exports from April to December soared 52% to $30.5 billion from the year-ago period, and the government has set a full-year target of $44 billion dollars, which would be a record.
While global textile exports recorded a compound annual growth rate of 2% between 2015 and 2019, India’s declined by 0.8%, according to an industry report. Bangladesh and Vietnam recorded growth of 10% or more.
One of the factors behind the surge in sales by Indian companies in the United States and Europe in recent quarters has been alleged rights violations in China’s main cotton-producing province, Xinjiang, where lives the Uyghur Muslim minority community.
In late December, US President Joe Biden signed into law a law banning imports from Xinjiang. China has dismissed accusations of forced labor or other abuse in Xinjiang.
The China Cotton Association referred Reuters to a December statement warning of a “serious impact” on its cotton textile industry due to the U.S. decision.
Raymond, an Indian exporter of men’s suits, jackets and jeans, said the Chinese postman recently helped him land new customers he had been looking for for a long time.
“At current capacity, we may not be able to pick up as much as the orders coming in, as much as the buyers want to ship out of China,” said Narendra Goenka, chairman of the Apparel Export Promotion Council of India and founder. of the Texport family company.
Goenka said his company is spending some $25 million to increase capacity by more than a quarter over the next two years, adding 8,000 jobs to its current workforce of more than 10,000.
For Lopamudra Patel, 19, from the eastern state of Odisha, whose family has struggled to survive on her father’s earnings as a part-time driver, the industry has come as a lifesaver. She joined Texport a few weeks ago for a monthly salary of $100.
“It was very difficult at home,” she said, standing next to humming sewing machines in the training room. “I will now be able to send money home.”
(Reporting by Krishna N. Das in Hindupur; Additional reporting by Dominique Patton in Beijing, Rocky Swift in Tokyo and Ruma Paul in Dhaka; Editing by Alex Richardson)
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