India steps up textile industry overdrive as Bangladesh, Vietnam remain elephants in the room
The country’s textile industry is upbeat about the government’s rollout of four new labour codes on 21 November, particularly the decision to allow women to work night shifts, saying this would help factories increase RMG production.
Facing mounting competitive pressure from Bangladesh and Vietnam, India has unveiled a series of policy measures between 9 and 19 November aimed at boosting the efficiency, scale and cost competitiveness of its textile and garment industry.
Bangladesh is the one constant but often unstated refrain behind three major policy interventions, including an amendment to the labour code allowing women to work night shifts in RMG units.
On 9 November, the Indian textile ministry came out with substantial amendments to the Production Linked Incentive (PLI) Scheme for textile products with an aim to address challenges faced by the industry and encourage fresh investments.
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Among the measures are the expansion of eligible products to include eight new codes for Man-Made Fibre (MMF) apparel and nine new codes for MMF fabrics; easing of norms for setting up new companies so that applicants can now establish project units within existing companies; and halving the minimum investment threshold with effect from October this year for all new applicants from Rs300 crore to Rs150 crore and from Rs100 crore to Rs50 crore.
On 19 November, the textile ministry approved 17 additional applicants under the PLI scheme for textiles industries.
The scheme, introduced in September 2021 with an approved outlay of Rs10,683 crore to promote the production of MMF apparel and fabrics, and products of technical textiles, aims to enable the textile industry to achieve the necessary size and scale, become globally competitive and create substantial employment opportunities.
The country's textile industry is upbeat about the government's rollout of four new labour codes on 21 November, particularly the decision to allow women to work night shifts, saying this would help factories increase RMG production.
RMG exporters say the change would improve productivity and make Indian garments more competitive in global markets.
The new labour codes come at a time when the textile and apparel industry is staring at an uncertain future in the face of steep US tariffs of up to 50% on Indian goods. The industry is also pushing for deeper integration into global supply chains as India goes into an overdrive in looking for new markets in Europe and Latin America.
The Indian textile and apparel exports stood at $36.55 billion in FY25, up from $34.40 billion the previous year. A marginal growth, no doubt, but reflects its resilience in the face of American tariffs, according to the latest report of the country's largest nationalised commercial bank the State Bank of India.
Amit Thapar, president of Ganga Acrowools Limited, a yarn manufacturer and exporter, said in a statement the change in labour codes would encourage workers to stay longer in factories, addressing the long-standing issue of high attrition in spinning units.
Thapar, however, said the new rule allowing workers to receive gratuity after just one year of service could increase attrition. Earlier, workers could receive their gratuity only after completing five years at a company.
According to Mithileshwar Thakur, secretary general of Apparel Export Promotion Council (AEPC), the four labour codes simplify a plethora of existing labour laws. The textile sector would benefit immensely from permitting women to work in night shifts in all types of jobs across establishments.
It may be mentioned that Section 66 (1)(b) of the Indian Factories Act of 1948, which prohibited women from working in factories at night, was considered a major impediment to the introduction of double shifts in the apparel sector where women dominate the workforce.
Though some states had introduced their own laws permitting women to work in factories at night, it was not so in all states.
"This change will immediately address the capacity-augmentation challenges in the sector and help India emerge as a major global sourcing hub for clothing," Thakur said.
Durai Palanisamy, chairman of Southern India Mills' Association (SIMA), welcomed the government's move to simplify the labour laws saying it would facilitate compliance with various social security and accountability norms prescribed by key export markets like the EU and the US with whom India is in advanced negotiations for bilateral trade deals.
He pointed out that the EU has decided that any exporting country must comply with the Corporate Sustainability Due Diligence Directive requirements to get access into the European market.
Although extending welfare benefits under the new labour code may increase costs for companies, the wider market access is expected to outweigh the additional expenditure, he said.
Bangladesh, Vietnam and China are almost always the elephants in the room and shape India's policy initiatives to boost the competitive edge of the domestic textile industry.
A textile ministry official, asked to comment on recent media reports, told The Business Standard that the Indian government is working on a three-pronged strategy to prepare a comprehensive cost reduction roadmap to bring the cost of production down.
The three key components of the plan are short-term (two years), medium-term (five years) and long-term measures with the focus on the overall cost structure including raw materials, taxation and labour costs.
According to the official, the Indian textile industry is losing competitiveness because its eastern neighbour Bangladesh has moved forward with lowering production costs, introducing skilled labour and adopting modern technology.
Bangladesh and Vietnam have now become major competitors for India, especially in the export sector.
