South Asia – A major player
- South Asia became a major player in the global textiles and clothing market with the onset of the third wave of global production.
What the editorial is about?
- The prospects and challenges the Indian textile industry is facing.
Bangladesh sets an example
The civil war in Sri Lanka
- Bangladesh joined the league in the 1980s, owing to the outbreak of the civil war in Sri Lanka.
Supportive industrial policy
- Supportive industrial policy was an instrumental factor in the 1990s, with zero duty on raw material and capital machinery, as access to global markets led to the industry’s boom.
Indian labour costs
- Bangladesh overtook India in exports in the past decade as Indian labour costs resulted in products becoming 20% more expensive.
- Bangladesh has been ahead of time in adopting technology.
Lower production costs and free trade agreements
- Lower production costs and free trade agreements with western buyers are what favour Bangladesh, which falls third in the line as a global exporter.
Low-value and mid-market price segment
- Bangladesh also concentrates on cotton products, specialising in the low-value and mid-market price segment.
Status of India
- The progress of India (and Pakistan) in readymade garments is recent when compared to their established presence in textiles.
- India holds a 4% share of the U.S.$840 billion global textile and apparel market and is in the fifth position.
Technical Upgradation Fund Scheme (TUFS)
- India has been successful in developing backward links, with the aid of the Technical Upgradation Fund Scheme (TUFS), in the cotton and technical textiles industry.
- India is yet to move into man-made fibres as factories still operate in a seasonal fashion.
The shift in the focus of the Fourth Industrial Revolution (4IR)
From production machinery to integrating technology
- The Fourth Industrial Revolution (4IR) has been shifting focus from production machinery to integrating technology in the entire production life cycle.
Production life cycle
- The production cycle incorporates all digital information and automation including robotics, artificial intelligence (AI), virtual reality, 3D printing, etc.
- Robotic automation exemplifies production efficiency, especially in areas such as cutting and colour accuracy.
Anticipation by ADB and WB
- The Asian Development Bank anticipates the challenges of job losses and disruption, inequality and political instability, the concentration of market power by global giants and more vulnerability to cyberattacks.
- The World Bank expects this trend to accelerate in the post-COVID-19 market.
Case of India
- With a 7% unemployment rate, India faces the challenge of job creation in the wake of increased automation.
Thus, the 4IR may result in unemployment or poor employment generation, primarily affecting a low skilled workforce.
- It is an important consideration for foreign buyers.
Case of Bangladesh
- Bangladesh’s readymade garments initiated ‘green manufacturing’ practices to help conserve energy, water, and resources.
- Textile and apparel effluents account for 17%-20% of all water pollution.
Role to be Played by GOI
- The Indian government is committed to promoting sustainability through project sustainable resolution.
Access to affordable labour
- It continues to be an advantage for south Asia.
Case of India
- In addition, a country such as India with a very high number of scientists and engineers could lead, as is evident in the areas of drones, AI and blockchain.
- India’s potential lies in its resources, infrastructure, technology, demographic dividend and policy framework.
Centre for the Fourth Industrial Revolution
- The creation of a Centre for the Fourth Industrial Revolution is indicative of India’s intent.
Need of the hour
Digitalisation and automation
- Digitalisation and automation in areas such as design, prototyping, and production are key in order to stay abreast, and in controlling product quality and timely delivery.
- Quick transportation becomes important in cost control, as reshoring and near-shoring gain currency.
Large VS Medium and Small
- While a transition may be easier for large factories, medium and small-scale entities may suffer.
Product basket diversity
- Adoption of new technology and automation is closely linked to in-product basket diversity creation too.
- Sustainable practices such as regenerative organic farming (that focuses on soil health, animal welfare, and social fairness), sustainable manufacturing energy (renewable sources of energy are used) and circularity are being adopted.
Support the industry needs from government
- Tax exemptions or reductions in imported technology
- Accessibility to financial incentive
- Maintaining political stability
- Establishing good trade relations
Thus, there is a need for governments’ proactive support in infrastructure, capital, liquidity and incentivisation.
The U.S. trade war on China opens a door for India/her neighbours
- The U.S. trade war on China owing to human rights violations along with its economic bottlenecks opens doors for India and Pakistan as they have strong production bases.
- Bangladesh has also risen as a top exporter in a cost-competitive global market.
- Similar to China, India has a big supply — from raw material to garments.
Inevitable changes in store for South Asia
- Newer approaches in the areas of compliance, transparency, occupational safety, sustainable production, etc. are inevitable changes in store for South Asia to sustain and grow business.
Notable moves of India
- India’s proposed investments of US$1.4 billion and the establishment of all-in-one textile parks are expected to increase employment and ease of trade.
- India extended tax rebates in apparel export till 2024, with the twin goals of competitiveness and policy stability.
- Labour law reforms, additional incentives, income tax relaxations, duty reductions for man-made fibre, etc. are other notable moves.
Practice Question for Mains
- Ensuring government support for financial incentives, upgrading technologies and reskilling labour are key challenges of the south Asian textile industries. Examine. (250 Words, 15 Marks)