Meltdown Hits the Indian textile industry

Current indications are that at least 1.2 million workers in this industry are going to be without jobs by the end of March. Assuming four others depend on each individual rendered jobless, the total number adversely impacted in this labour-intensive sector would reach six million.

The textiles and garments industry is the second-largest employer in India after agriculture as it directly employs 35 million people and indirectly provides a livelihood to an additional 88 million.

Two years ago, the Indian textiles industry was supposed to have been on the threshold of rapid growth. Today it is in urgent need for resuscitation. Even the figure of 1.2 million job losses put out by the association, the Confederation of Indian Textiles Industry (CITI), could prove to be an underestimate.

Roughly half the total production of textiles and garments in India is exported, 60 percent of it to markets in the United States, Japan and the European Union. The recession in the West had adversely impacted these economies the most as a result of which exports from India are projected to fall sharply in the coming months.

Rising prices of raw cotton have become a contentious issue for the industry. The government is reluctant to reduce the prices paid to cotton farmers as suicides have been widespread in cotton-growing areas.

India is the world’s second-largest producer, exporter and consumer of cotton. With cotton prices rising by 30 percent over the last year, cotton textiles and garments are being priced out of international markets. A number of textile mills have begun ‘voluntary retirement schemes’ for workers.

India’s junior minister for commerce Jairam Ramesh announced last week that India will be joining the global supply chain, meaning, the country will be sending both workers and garments to countries like Bangladesh, which has overtaken India in apparel exports.