Missing the bus Business Standard / New Delhi February 02, 2005 Finance Minister P Chidambaram has aired his concerns over India’s jobless growth. But when India got a 10-year notice to create enormous employment opportunities in one of its key manufacturing sectors, successive governments were found wanting in their efforts. This is tragic because if there ever was an industry which widely contributed to the economic growth in many Asian economies, it was the textile and clothing industry. It still does: the sector commands almost 25 per cent of China’s merchandise exports, around 30 per cent of India’s exports, and about 80 per cent of Bangladesh’s. It was obvious that the end of the multi-fibre arrangement from January 1 this year would offer almost limitless opportunities for developing countries like India. Since it has been known for almost a decade that that was going to happen, most developing countries have been making structural changes in their domestic industries to prepare for the open competition that would emerge. India could have been the winner in the game, but apart from some tinkering with the tax regime and de-reservation in the garment sector, India has been tardy off the blocks on all other fronts—labour law reforms, power availability, and tariffs, scale of manufacturing operations, etc. The textiles ministry on its part waited till just a fortnight before the MFA was scheduled to end to announce its Vision 2010, which envisages India’s textile economy growing from the current $37 billion to $85 billion. The paper, however, had no concrete roadmap on how to get to the declared end-point. India simply can’t afford to miss the bus, considering the blue-collar job opportunities that the sector can provide. Employment in the organised garment industry is estimated to be 331,000 and the number for the informal sector 4.5 million. Given the impetus that could come from the removal of quotas, the government itself has estimated the creation of another 12 million jobs in the sector by 2010. But the absence of a coordinated game plan for the industry is only too obvious. India’s textile industry (or rather its 10 or 12 leading leading companies) has invested $11 billion in the last four years in capacity expansion, against $35 billion in China. While the average turnover of China’s top 10 textile firms is $600 million, the average turnover of the top 10 firms in India is half that. Size is turning out to be of crucial importance. Large buyers in the West have already indicated that they want to place orders with only those companies that have the capacity to execute large orders. That China is miles ahead of India becomes all the more evident when one considers that China has set up around 150 professional colleges and 120 research institutions exclusively for the apparel industry. The government should now make up for lost time by setting up a powerful steering group to oversee investment and coordinated action to realise the textile industry’s potential for growth and employment.
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