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Bring out the key challenges faced by textiles and apparel industry in India. Highlight some measures taken by the government to address them.

Topic : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.  Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

5. Bring out the key challenges faced by textiles and apparel industry in India. Highlight some measures taken by the government to address them. (250 words)

Reference: Hindustan Times 

Why the question:

The US restrictions on some textile imports from Xinjiang in China is likely to augur well for the Indian textile exporters, according to a report.

Key Demand of the question:

Discuss in detail the key challenges faced by textiles and apparel industry in India while highlighting measures taken by the govt. in the same direction.

Structure of the answer:

Introduction:

Indian textile industry is the second largest manufacturer and exporter in the world. It contributes 12.65 per cent to the manufacturing sector and 2.3 per cent to the GDP. However, the sector has just 5  percent share in the global textiles exports.

Body:

Give brief statistics relevant to the textiles sector in introduction.

Enlist the global and domestic challenges the sector faces; Challenges plaguing the textiles sector and apparel industry:

External challenges: Increased Competition: Indian garments face stiff competition due to higher tariffs, from countries like Bangladesh and Vietnam which enjoy zero/preferential duty access to key markets.

China factor: In recent years, China has lowered its imports of Indian yarn because of reduced production due to curbs placed by US.

Domestic challenges:

Higher costs: The central government in an attempt to safeguard cotton farmers has raised the MSP of cotton by 25%. It has forced millers to buy cotton at a much higher rate.

Technological gaps: While the ginning and spinning sectors are on par with international standards, marginal technological gap exists in weaving, processing and embroidery and larger gaps in knitting, technical textile and garmenting segments.

Domination of SMEs: Small and medium-sized enterprises (SMEs) constitute 80% of the textile industry. They face issue of fragmented production, lack of access to technology and finances. They are not able to match to cost and scale of production of bigger mills in other countries.

Discuss the measures taken by the government to address these challenges.

Conclusion:

Suggest a way forward.