India's Textiles and Apparel Sector
India has a rich tradition in textiles and apparel, employing 45 million people and contributing 2.3% to the GDP. However, its global trade share is low, at 4.2% or $37.8 billion out of $897.8 billion. In the apparel segment, the share is even lower at 3% or $15.7 billion out of $529.3 billion, and this has remained stagnant for two decades.
Challenges and Opportunities
- India's apparel exports target for 2030 is $40 billion, but recent trends show a decline at an AAGR of -2%.
- If the AAGR of 8.5% from 2004-2017 was maintained, exports could reach $31 billion by 2030. With an 8.5% AAGR from 2004-2023, it suggests exports reaching $21 billion by 2030.
- A critical issue is India’s lack of scale, with over 80% of apparel units being MSMEs.
Comparative Analysis
- Countries like China, Vietnam, and Bangladesh have established large-scale, export-oriented factories.
- Large-scale operations attract global buyers, reduce costs, shorten delivery timelines, and increase employment.
Case Study: Shahi Exports
Shahi Exports, founded by Sarla Ahuja in 1974, is India's largest apparel exporter. It has over 50 factories, three mills, and employs over 100,000 workers, with 70% being women. It emphasizes professional operations, vertical integration, and sustainability.
Strategies for Growth
- Make capital accessible and affordable through subsidies and tax holidays to encourage scale-focused investments.
- Reform labor laws for flexibility and consider linking MGNREGA funds to subsidize labor costs.
- Enhance skilling schemes like SAMARTH, focusing on women and youth employment.
- Develop garment-focused hubs in PM MITRA parks in states with lower labor costs.
- Implement an Export-Linked Incentive (ELI) to encourage global competitiveness.
These strategies aim to expand employment, increase India’s share in global apparel trade, and lift the entire textile value chain. Bold policies and swift execution are essential to achieve these goals and replicate the success of Shahi Exports.
