FASHIONING A TURNAROUND
Indian textile and garment industry revs up as more customers seek to reduce sourcing from China. By Krishna N Das in Hindupur, India
At the factories of Texport Industries in Andhra Pradesh, thousands of mostly women workers are busy transforming yarn and fabrics into T-shirts, shirts, spaghetti tops and children’s clothes for US customers including Tommy Hilfiger and Kohl’s department stores.
After being outpaced in recent years by neighbouring Bangladesh and then hammered by the Covid-19 pandemic, India’s garment factories are now humming near full capacity — a rare bright spot in the labour market for Prime Minister Narendra Modi and his ruling party as they head toward a general election in 2024.
“We have been so busy,” said Parashuram, the head of one of the Texport factories who goes by one name, as 60 new women recruits practise stitching. “We are constantly looking to hire workers.”
The company is now scouting for land to add new factories around its main production base in Hindupur, about 100 kilometres north of the tech hub Bengaluru in southern India.
Sustained success for the textile and apparel industry, the country’s biggest employer after farming, is crucial if Modi is to succeed in taming unemployment.
India’s jobless rate is above 7% and is estimated to have exceeded the global average in five of the last six years. That’s a massive problem for a country that must create millions of jobs each year just to keep pace with the number of young people joining the labour market.
India is the world’s fifth biggest textile and apparel exporter with a 4% share of the US$840-billion global market, while China controls more than a third of it. India’s exports were on a par with closest rival Bangladesh about a decade ago but have lagged in recent years — especially for garments — partly because of
higher labour costs that make Indian clothes some 20% costlier.
Indian companies say they are now adding new clients, selling more garments to old ones and raising production capacity as foreign buyers seek to diversify their supply chains.
Other than China, only India has such a long supply chain of everything from cotton to garments.
Still, some industry leaders say that
unless India signs free trade agreements with Western countries — which New Delhi says it is working on — it would not be easy to outsell Bangladesh, which also enjoys preferential export terms and low tariffs from many buyers as a least developed country.
Indian companies such as Texport, Welspun India and Raymond — whose buyers include the Western retailers Amazon, Target, Costco, Walmart,
Tesco and Macy’s — have managed to lift sales in recent quarters.
Modi wants these companies to create some 1.5 million jobs in the sector over the next five years or so.
Darshana Jardosh, the country’s junior textiles minister, earlier this month outlined a series of measures to support the industry. They include setting up seven huge all-in-one textile parks for about $600 million to further increase employment and make it easier for foreign buyers to place orders and monitor supply chains. The government has also proposed production-linked incentives worth $1.4 billion.
India’s ongoing and planned investments have resulted in “more companies looking at India as a potential source of growth over the coming years”, the American Apparel & Footwear Association (AAFA) said recently.
Two industry sources with knowledge of the matter said that both Fast Retailing, the parent of the Japanese brand Uniqlo, and US-based Gap Inc were in talks to expand purchases from India. Currently, most of the clothing they source from India comes from the country’s biggest apparel exporter, Shahi Exports.
Shahi Exports managing director Harish Ahuja declined to discuss individual buyers but said demand was high from the company’s existing customers. Fast Retailing and Gap declined to comment.
Indian textile and apparel exports in the first nine months of fiscal 2021-22 (April-December) soared 52% year-onyear to $30.5 billion. The government has set a target for the full fiscal year of $44 billion, which would be a record.
While global textile exports recorded a compounded annual growth rate of 2% between 2015 and 2019, the figure for India shrank 0.8%, according to an industry report. Exports from both Bangladesh and Vietnam grew at 10% or more.
One factor behind the surge in sales for Indian companies to the United States and Europe in the past few quarters has been alleged rights abuses in China’s main cotton growing province of Xinjiang, where the minority Muslim Uyghur community lives.
US President Joe Biden in late December signed into law legislation that bans imports from Xinjiang. China has repeatedly denied accusations of forced labour or any other abuses in Xinjiang.
The China Cotton Association
“At current capacity, we may not be able to pick up as many of the orders coming our way, as much as buyers want to ship away from China”
NARENDRA GOENKA Chairman, Apparel Export Promotion Council of India
referred Reuters to a December statement that warned of “severe impact” on its cotton textile industry because of the US move.
Raymond, an Indian exporter of men’s suits, jackets and denim, said the China factor had helped it to sign up new clients that it had long been pursuing.
“At current capacity, we may not be able to pick up as many of the orders coming our way, as much as buyers want to ship away from China,” said Narendra Goenka, chairman of the Apparel Export Promotion Council of India and a founder of family-owned Texport.
Goenka said his company was spending some $25 million to raise its capacity by more than a quarter over the next two years, with the addition of 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 had been struggling to survive on her father’s income as a part-time driver, the industry has come as a saviour. She joined Texport a few weeks ago for a monthly wage equivalent to $100.
“It was very difficult at home,” she said, standing next to whirring sewing machines in the training room. “I will now be able to send some money home.”