After being hit by neighboring Bangladesh in recent years and then by the COVID-19 pandemic, India’s garment factories are now humming near full capacity – a bright spot for Prime Minister Narendra Modi and his ruling party as they head into 2024. Moving on to the election.
“We have become so busy,” said Parashuram, the head of one of the texport factories, which, by one name goes, practiced sewing as a batch of 60 new female recruits. “We are constantly looking to hire workers.”
The company is exploring land to connect new factories around its main production base in Hindpur, about 100 km (60 mi) north of tech hub Bengaluru.
continued success for textile and apparel The country’s largest employer (T&A) industry after agriculture is crucial if Modi is to be successful in overcoming unemployment.
India’s unemployment rate is above 7% and is projected to be higher than the global average in five of the past six years – a major problem for a country that must create millions of jobs each year to help young people enter the labor market. be able to join
high labor cost
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 of it. India’s exports were almost on par with that of nearest rival Bangladesh a decade ago, but have lagged in recent years – particularly on clothing – partly due to higher labor costs that make Indian clothing nearly 20% more expensive.
Indian T&A companies say they are now adding new customers, selling more of the old ones and increasing production capacity as foreign buyers seek to diversify their supply chain.
Apart from China, only India has a huge supply chain of everything from cotton to garments.
Still, some industry leaders said that unless India signs free trade agreements with Western countries – which New Delhi says it is working on – it will not be easy to oust Bangladesh, which As the least developed country that enjoys preferential export conditions from many buyers.
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 increase sales in recent quarters.
Modi wants them to create around 15 lakh jobs in this sector in the next five years.
India’s junior textile minister, Darshan Zardosh, on Wednesday listed out recent announcements to support the industry, such as seven giants for around $600 million to further increase employment and make it easier for overseas buyers to place orders. To set up an all-in-one textile park. Monitor supply chain. The government has also proposed $1.4 billion in production-linked incentives.
The American Apparel and Footwear Association (AAFA) said India’s ongoing and planned investments would result in “more companies looking to India as a potential source of growth in the years to come”, without giving details.
Two industry sources with knowledge of the matter said that both Uniqlo and Gap Inc of Fast Retailing were in talks to increase purchases from India. Companies originating from India, mainly from Shahi Exports, the country’s largest clothing exporter, did not immediately respond to requests for comment.
Shahi Exports managing director Harish Ahuja declined to discuss individual buyers, but said the demand from its existing customers was high.
capacity constraints?
India’s April-December T&A exports rose 52% to $30.5 billion from the year-ago period, and the government has set a full fiscal year target of $44 billion, which would be a record.
According to an industry report, global textile exports registered a compound annual growth rate of 2% between 2015 and 2019, while India declined by 0.8%. Bangladesh and Vietnam both grew by 10% or more.
One factor behind the increase in sales of Indian companies in the United States and Europe over the past few quarters is alleged rights abuses in China’s main cotton-producing province of Xinjiang, where the minority Muslim Uighur community lives.
In late December, US President Joe Biden signed legislation banning imports from Xinjiang. China has denied allegations of forced labor or any other abuse in Xinjiang.
The China Cotton Association cited a December statement to Reuters that warned of a “serious impact” on its cotton textile industry due to the US move.
Raymond, an Indian exporter of men’s suits, jackets and denim, said the China factor recently helped it sign up new customers, whom it had long followed.
“At the current capacity, we will not be able to pick up as many orders that are coming to us as buyers want to be shipped away from China,” said Narendra Goenka, chairman and one of the founders of the Apparel Export Promotion Council of India. Family owned texport.
Goenka said his company is spending about $25 million to increase its capacity by more than a quarter over the next two years, which includes 8,000 jobs on top of its current workforce of more than 10,000.
For 19-year-old Lopamudra Patel from the eastern state of Odisha, whose family struggled to survive on her father’s income as a part-time driver, the industry has come as a savior. She joined Texport a few weeks back for a monthly salary of $100.
“It was very difficult at home,” she said, standing next to the whistle of sewing machines in the training room. “I’ll be able to send some money home now.”
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