Focus: India's textile industry revs up, giving hope on jobs for PM Modi

KPR Mill

11/02/2022 02:00

By Krishna N. Das
    HINDUPUR, India, Feb 11 (Reuters) - At Texport Industries'
factories in India's south, thousands of mostly women workers
are busy converting yarn and fabrics into T-shirts, shirts,
spaghetti tops and kids' clothes for U.S. customers of Tommy
Hilfiger and Kohl's Corp  KSS.N .
    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
labour market bright spot for Prime Minister Narendra Modi and
his ruling party as they head towards an election in 2024.
    "We have been so busy," said Parashuram, the head of one of
the Texport factories who goes by one name, as a batch of 60 new
women recruits practiced stitching. "We are constantly looking
to hire workers."
    The company is scouting for land to add new factories around
its main production base in Hindupur, about 100 km (60 miles)
north of tech hub Bengaluru.
    Sustained success for the textile and apparel (T&A)
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% https://www.reuters.com/world/india/off-canada-indias-jobs-crisis-exasperates-its-youth-2022-01-25
 and estimated to have exceeded the global average in five of
the last six years - a massive problem for a country that must
create millions of jobs each year just to keep pace with the
young people joining the labour market.  urn:newsml:reuters.com:*:nL4N2TY0ZV
    
    HIGHER LABOUR COSTS
    India is the world's fifth biggest T&A exporter with a 4%
share of the $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 on garments - partly due to higher
labour costs that make Indian clothes some 20% costlier.
    Indian T&A companies say they are now adding new clients,
selling more to old ones and raising production capacity as
foreign buyers seek to diversify their supply chains.
    Other than China, only India has a big supply chain of
everything from cotton to garments.  urn:newsml:reuters.com:*:nL4N2UL242
    Still, some industry leaders said that unless India signed
free trade agreements with Western countries - which New Delhi
says it is working on https://pib.gov.in/PressReleasePage.aspx?PRID=1787473
 - it would not be easy to outsell Bangladesh, which also enjoys
preferential export terms from many buyers as a least developed
country.
    Indian companies such as Texport, Welspun India  WLSP.NS 
and Raymond  RYMD.NS  - whose buyers include Western retailers
Amazon  AMZN.O , Target  TGT.N , Costco  COST.O , Walmart Inc
 WMT.N , Tesco  TSCO.L  and Macy's  M.N  - have managed to lift
sales in recent quarters.
    Modi wants them to create some 1.5 million jobs in the
sector over the next five years or so.
    India's junior textiles minister, Darshana Jardosh, on
Wednesday listed recent announcements to support the industry,
such as 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 https://www.pib.gov.in/PressReleasePage.aspx?PRID=1753118
 worth $1.4 billion.
    The American Apparel & Footwear Association (AAFA) said
India's ongoing and planned investments had resulted in "more
companies looking at India as a potential source of growth over
the coming years", without giving specifics.
    Two industry sources with knowledge of the matter said both
Fast Retailing's  9983.T  Uniqlo and Gap Inc  GPS.N  were in
talks to expand purchases from India. The companies, who source
from India mainly from the country's biggest garments exporter
Shahi Exports, did not immediately respond to requests for
comment.
    Shahi Exports Managing Director Harish Ahuja declined to
discuss individual buyers but said demand was high from its
existing customers.
    
    CAPACITY CONSTRAINTS?
    India's April-December T&A exports soared 52% to $30.5
billion from the year-ago period, and the government has set a
full fiscal-year target of $44 billion, which would be a record.
    While global textile exports recorded a compounded annual
growth rate of 2% between 2015 and 2019, India's shrank 0.8%,
according to an industry report https://www.mycii.in/KmResourceApplication/77551.CreatingacompetitiveadvantageforIndiaintheglobaltextileandapparelindustry.pdf.
 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.
    U.S. President Joe Biden in late December signed into law
legislation that bans imports from Xinjiang. China has rejected
accusations of forced labour or any other abuses in Xinjiang.
 urn:newsml:reuters.com:*:nL1N2T81FM
    The China Cotton Association referred Reuters to a December
statement http://www.china-cotton.org//app/html/2021/12/27/91253.html
 that warned of "severe impact" on its cotton textile industry
because of the U.S. move.
    Raymond, an Indian exporter of men's suits, jackets and
denim, said the China factor helped it recently sign up new
clients that it had long pursued.
    "At current capacity, we may not be able to pick up as much
as 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 struggled 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 of $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."

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'Off to Canada': India's jobs crisis exasperates its youth   
 urn:newsml:reuters.com:*:nL4N2TY0ZV
Jobless Indian youngsters accuse government of 'playing with our
lives'     urn:newsml:reuters.com:*:nL4N2U81KG
India's high unemployment rate    https://tmsnrt.rs/3KBgLNn
India's low labour participation rate    https://tmsnrt.rs/3KyAVYt
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 (Reporting by Krishna N. Das in Hindupur; Additional reporting
by Dominique Patton in Beijing, Rocky Swift in Tokyo and Ruma
Paul in Dhaka; Editing by Alex Richardson)
 ((Krishna.Das@tr.com; https://twitter.com/krishnadas56 ;))